Eliminates the collection of mineral and geothermal royalties by the Board of Land and Natural Resources.

A BILL FOR AN ACT

SECTION 1. The purpose of this Act is to eliminate geothermal royalties.

SECTION 2. Section 182-7, Hawaii Revised Statutes, is amended by amending subsection (c) as follows:

"(c) The payments to the State as fixed by the board shall be specified; provided that:

The prices of virgin pig aluminum for the purpose of determining the royalties under this section shall be the basic price on the mainland United States market for virgin pig, not refined, f.o.b. factory. The royalties shall be in lieu of any severance or other similar tax on the extracting, producing, winning, beneficiating, handling, storing, treating, or transporting of the mineral or any product into which it may be processed in the State, and shall not be subject to reopening or renegotiating for and during the first twenty years of the lease term.

In the event the lessee desires to mine other minerals, the lessee, before mining the minerals, shall so notify the board in writing, and the board and the lessee shall negotiate and fix the royalties for the minerals.

Any other law to the contrary notwithstanding, thirty per cent of all royalties received by the State from geothermal resources shall be paid to the county in which mining operations covered under a state geothermal resource mining lease are situated."

SECTION 3. Section 182-18, Hawaii Revised Statutes, is amended to read as follows:

"[§182-18] Geothermal royalties. (a) The board shall not fix the payment of royalties to the State for the utilization of geothermal resources for any purpose. [at a rate which will encourage the initial and continued production of such resources.] With respect to all geothermal mining leases previously issued or to be issued, where the board determines that it is necessary to encourage the initial or continued production of geothermal resources, the board shall not require [have the authority to waive] royalty payments to the State [for any fixed period of time up to but not exceeding eight years].

(b) The board shall not [adopt, amend, or repeal rules pursuant to chapter 91 to] establish [the basis upon which] the amount and duration of royalty payments to the State [will be fixed or waived]. The board's assessment of each application shall include[, but not be limited to, the examination of such factors as] the progress of geothermal development taking place in the State at the time of the application, the technical and financial capabilities of the applicant to undertake the project, and the need for providing a financial incentive in order for the applicant to proceed. [The granting of any favorable terms to an applicant for the payment of royalties under this section may be revoked by the board if the applicant fails to satisfy any of the terms and conditions established by the board, or if the applicant wholly ceases operations and for reasons other than events which are outside the control of the parties and which could not be avoided by the exercise of due care by the parties.]

[(c) The board shall submit a written report of all geothermal royalty dispositions to the legislature in accordance with section 171-29.]"

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.