HB2505 SD2

PART I.

SECTION 1. Renewable energy resources offer Hawaii important economic, environmental, and energy security benefits, especially since Hawaii's dependency on petroleum is the highest in the nation, accounting for approximately ninety per cent of the State's energy needs. This high petroleum dependency makes consumers extremely vulnerable to any oil embargo, supply disruption, international market dysfunction, and many other factors beyond Hawaii's control.

Recognizing the importance and economic and environmental benefits of increasing energy self-sufficiency, over the past four years, the legislature and the department of business, economic development, and tourism have committed to energy objectives geared toward achieving dependable, efficient, and economical statewide energy systems, increased self-sufficiency, greater energy security, and reduction of greenhouse gas emissions.

Act 272, Session Laws of Hawaii 2001, recognized the economic, environmental, and fuel diversity benefits of renewable energy resources and the need to encourage the establishment of a market for renewable energy in Hawaii using the State's renewable energy resources. Act 240, Session Laws of Hawaii 2006, provided a framework for energy self-sufficiency. The State has also committed to a renewable energy standard, where twenty per cent of electricity sold will be generated from renewable resources by the end of 2020 and has sought to encourage private sector development of renewable energy projects.

However, renewable energy projects are often complex, large-scale undertakings requiring a number of permits. The process for obtaining the necessary permits for renewable energy projects and developments and the process for meeting state, county, and federal regulations has for decades been described as overly time-consuming, cumbersome, onerous, and costly. In fact, the "Hawaii Integrated Energy Policy Report" of 1991 found that the permit and approval process required for the development and siting of energy facilities for a single project can take up to seven years to complete. Thus, the inefficiency of the permitting and development process acts as a barrier to meeting Hawaii's renewable energy goals.

Understanding that renewable energy projects can provide substantial and long-term benefits to the State and that development of renewable energy projects would further state policies of developing indigenous renewable energy resources and decreasing Hawaii's dependency on imported fossil fuels, the legislature finds that there is a need to streamline the permitting process to provide predictability and to encourage private companies to commit substantial amounts of capital, time, and effort necessary to develop such projects. Towards these ends the legislature also recognizes that investment in additional personnel is essential.

The purpose of this part is to appropriate funds to establish a full-time, permanent renewable energy facilitator position in the department of business, economic development, and tourism.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201- Renewable energy facilitator; establishment; duties. (a) There is established within the department of business, economic development, and tourism, the position of renewable energy facilitator, which shall be a permanent position exempt from chapter 76. The renewable energy facilitator shall possess a requisite level of knowledge and expertise in the areas of renewable energy, state and county permitting processes, and management necessary to carry out the duties of the position.

(b) The renewable energy facilitator shall have the following duties:

(1) Facilitate the efficient permitting of renewable energy projects;

(2) Initiate the implementation of key renewable energy projects by permitting various efficiency improvement strategies identified by the department;

(3) Administer the day-to-day coordination for renewable energy projects on behalf of the department and the day-to-day operations of the renewable energy facility siting process under chapter ; and

(4) Submit periodic reports to the legislature on renewable energy facilitation activities and the progress of the renewable energy facility siting process.

SECTION 3. There is appropriated out of the energy security special fund, the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for the establishment of one full-time equivalent (1.00 FTE) permanent renewable energy facilitator position in the department of business, economic development, and tourism.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this part.

PART II.

SECTION 4. The legislature finds that under the Hawaii Constitution, the State is responsible for providing its people with a healthful environment; protecting the public health; conserving and protecting the natural beauty and natural resources of the State, including the land, water, air, minerals, and energy resources; balancing the development and conservation of the State's natural resources; and protecting the State's marine resources and water resources.

In an effort to meet these constitutional responsibilities, the State established a long-term energy strategy that includes:

(1) Providing dependable, efficient, and economical statewide energy systems that are capable of supporting the needs of the people and increasing energy self-sufficiency and energy security;

(2) Establishing greenhouse gas and energy consumption reduction goals for state facilities and requiring the use of energy-efficient products in state facilities;

(3) Providing incentives for the deployment of energy-efficient devices and renewable energy technologies;

(4) Establishing an enforceable renewable energy portfolio standard under which a percentage of Hawaii's electricity is to be generated from renewable resources;

(5) Reducing greenhouse gas emissions from energy supply and use;

(6) Increasing hydrogen and biofuel research and use in the State; and

(7) Supporting the achievement of alternate fuel standards.

While the State has made great strides in the last several years to update its long-term energy strategy and give key state agencies direction regarding the state energy objectives that need to be met, the legislature finds that committed financial resources are necessary to develop a long-term energy strategy to secure a sustainable energy future for Hawaii.

In 1991, the Hawaii integrated energy policy found that adequate staffing, funding, and relevant statutory authority are more important to effective state energy management than a specific organizational option. Similarly, a 1995 feasibility study by the legislative reference bureau determined that the creation of an energy commission would be expensive and counterproductive. The recommendation was to periodically review the energy resource coordinator and the energy division's progress toward completing projects intended to further the state energy objectives.

The legislature further finds that for decades, the energy program within the strategic industries division of the department of business, economic development, and tourism stewarded Hawaii's federal oil overcharge funds, known as petroleum violation escrow funds, and invested these funds in energy projects and program activities. These funds supported the energy program's ability to develop innovative policy initiatives, including programs that focused on energy emergency preparedness and ethanol and biofuels strategies.

However, the legislature further finds that in recent years, as the energy program's assignments and functions have expanded, it has become much more difficult to maintain and improve the program's effectiveness due to declining federal funding. This situation has resulted in diminished program budgets and reduced staff positions. Currently, oil overcharge funds support 66.6 per cent of the strategic industries division's energy program budget, but the availability of these funds is diminishing, and the funds will be exhausted in approximately four years at the current expenditure rate.

Furthermore, Act 253, Session Laws of Hawaii 2007, established the energy systems development special fund, to be administered by the Hawaii natural energy institute, for the purpose of developing an integrated approach and portfolio management of renewable energy and energy-efficiency technology projects that would reduce Hawaii's dependence on fossil fuels and imported oil and other imported energy resources and move Hawaii toward energy self-sufficiency. No funding for this important endeavor has been appropriated, therefore a portion of the environmental response and energy security tax will be dedicated for this purpose.

The legislature further finds that the success of achieving Hawaii's energy policy objectives is dependent on adequate funding and staff and, in light of waning federal funds, increased state funding is necessary to support core energy program functions as well as to carry out other mandates passed in previous years.

The purpose of this part is to provide additional funding for the energy initiatives to carry out Hawaii's long-term energy strategy through the environmental response and energy security tax and energy security special fund to secure a sustainable energy future for Hawaii.

SECTION 5. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201- Energy security special fund; uses. (a) There is created within the state treasury an energy security special fund, which shall consist of:

(1) Moneys appropriated to the fund by the legislature;

(2) All interest attributable to investment of money deposited in the fund;

(3) Moneys generated by the environmental response and energy security tax pursuant to section 243-3.5;

(4) Fees generated by the renewable energy facility siting process pursuant to chapter ; and

(5) Moneys allotted to the fund from other sources;

provided that any amount to be deposited into the energy security special fund from the revenues collected pursuant to section 243-3.5 that causes the energy security special fund to exceed $10,000,000 shall be deposited into the general fund. No further deposits from the revenues collected pursuant to section 243-3.5 shall be made into the energy security special fund until the balance of the energy security special fund drops below $5,000,000, in which event the appropriate portion of the revenues collected pursuant to section 243-3.5 shall be deposited into the energy security special fund until the balance equals $10,000,000.

(b) Moneys from the fund shall be expended by the department of business, economic development, and tourism for the following purposes, and shall be used for no other purposes except for those set forth in this section:

(1) To support its energy program, including projects that ensure dependable, efficient, and economical energy, promote energy self-sufficiency, and provide greater energy security for the State;

(2) To fund the renewable energy facilitator pursuant to section 201- ; and

(3) To support the renewable energy facility siting process pursuant to chapter ."

SECTION 6. Section 128D-2, Hawaii Revised Statutes, is amended to read as follows:

"§128D-2 Environmental response revolving fund; uses. (a) There is created within the state treasury an environmental response revolving fund, which shall consist of moneys appropriated to the fund by the legislature, moneys paid to the fund as a result of departmental compliance proceedings, moneys paid to the fund pursuant to court-ordered awards or judgments, moneys paid to the fund in court-approved or out-of-court settlements, all interest attributable to investment of money deposited in the fund, moneys generated by the environmental response and energy security tax established in section 243-3.5, and moneys allotted to the fund from other sources; provided that [when the total balance of the fund exceeds $20,000,000, the department of health shall notify the department of taxation of this fact in writing within ten days. The department of taxation then shall notify all distributors liable for collecting the tax imposed by section 243-3.5 of this fact in writing, and the imposition of the tax shall be discontinued beginning the first day of the second month following the month in which notice is given to the department of taxation. If the total balance of the fund thereafter declines to less than $3,000,000, the department of health shall notify the department of taxation which then shall notify all distributors liable for collecting the tax imposed by section 243-3.5 of this fact in writing, and the imposition of the tax shall be reinstated beginning the first day of the second month following the month in which notice is given to the department of taxation.] any amount to be deposited into the environmental response revolving fund from the revenues collected pursuant to section 243-3.5 that causes the environmental response revolving fund to exceed $20,000,000 shall be deposited into the general fund. No further deposits from the revenues collected pursuant to section 243-3.5 shall be made into the environmental response revolving fund until the balance of the environmental response revolving fund drops below $3,000,000, in which event the appropriate portion of the revenues collected pursuant to section 243-3.5 shall be deposited into the environmental response revolving fund until the balance equals $20,000,000.

(b) Moneys from the fund shall be expended by the department for response actions and preparedness, including removal and remedial actions, consistent with this chapter; provided that the revenues generated by the [~~"environmental response tax"~~] environmental response and energy security tax and deposited into the environmental response revolving fund:

(1) Shall also be used:

(A) For oil spill planning, prevention, preparedness, education, research, training, removal, and remediation; and

(B) For direct support for county used oil recycling programs; and

(2) May also be used to support environmental protection and natural resource protection programs, including but not limited to [~~energy conservation and alternative energy development, and to address~~] addressing concerns related to air quality, global warming, clean water, polluted runoff, solid and hazardous waste, drinking water, and underground storage tanks, including support for the underground storage tank program of the department and funding for the acquisition by the State of a soil remediation site and facility."

SECTION 7. Section 243-3.5, Hawaii Revised Statutes, is amended to read as follows:

"§243-3.5 Environmental response and energy security tax; uses. (a) In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed [~~at times provided in section 128D-2~~] a state environmental response and energy security tax of [5] 15 cents on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user, other than a refiner, of petroleum product[~~; provided that cents of the tax on each barrel shall be used pursuant to section 128D-2 to address concerns relating to drinking water~~]. The tax imposed by this subsection shall be paid by the distributor of the petroleum product.

(b) Revenues collected pursuant to this section shall be distributed as follows, with the excess revenues, if any, to be deposited into the general fund:

(1) 5 cents of the revenue collected on each barrel shall be deposited into the environmental response revolving fund established in section 128D-2;

(2) 7 cents of the revenue collected on each barrel shall be deposited into the energy security special fund established in section 201- ; and

(3) 3 cents of the revenue collected on each barrel shall be deposited into the energy systems development special fund established in section 304A-2169.

[~~(b)~~] (c) Each distributor subject to the tax imposed by subsection (a), on or before the last day of each calendar month, shall file with the director, on forms prescribed, prepared, and furnished by the director, a return statement of the tax under this section for which the distributor is liable for the preceding month. The form and payment of the tax shall be transmitted to the department of taxation in the appropriate district.

[~~(c)~~] (d) Notwithstanding section 248-8 to the contrary, the environmental response and energy security tax collected under this section shall be paid over to the director of finance for deposit [~~into the environmental response revolving fund established by section 128D-2.~~] pursuant to subsection (b).

[~~(d)~~] (e) Every distributor shall keep in the State and preserve for five years a record in such form as the department of taxation shall prescribe showing the total number of barrels and the fractional part of barrels of petroleum product sold by the distributor during any calendar month. The record shall show such other data and figures relevant to the enforcement and administration of this chapter as the department may require."

SECTION 8. Section 304A-2169, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The special fund shall be funded by:

(1) Appropriations from the legislature; [~~and~~]

(2) Investment earnings, gifts, donations, or other income received by the [[]Hawaii natural energy[]] institute[.]; and

(3) Moneys generated by the environmental response and energy security tax pursuant to section 243-3.5."

SECTION 9. There is appropriated out of the environmental response revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for deposit in the energy security special fund for the purpose of providing initial funding for the renewable energy facilitator position until adequate revenue from the environmental response and energy security tax is deposited.

SECTION 10. There is appropriated out of the energy security special fund the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for the purpose of this Act.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

PART III.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	2505
TWENTY-FOURTH LEGISLATURE, 2008		H.D. 2
STATE OF HAWAII		S.D. 2