STAND. COM. REP. NO.  633-08

Honolulu, Hawaii

                , 2008

RE:   H.B. No. 3410

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Sir:

     Your Committees on Energy & Environmental Protection and Water, Land, Ocean Resources & Hawaiian Affairs and Agriculture, to which was referred H.B. No. 3410 entitled:

"A BILL FOR AN ACT RELATING TO BIODIESEL,"

beg leave to report as follows:

     The purpose of this bill is to provide various market stimulation incentives for the development of biodiesel, including:

(1)  Making state agricultural lands available for biodiesel fuel crops;

(2)  Establishing a state biodiesel feedstock crop and biodiesel fuel purchasing program; and

(3)  Creating tax exemptions for oil seed crushing facilities and lands used for biodiesel feedstock crops.

     Pacific Biodiesel, Hawaiian Electric Company, Inc., Maui Electric Company, and Hawaii Electric Light Company testified in support of this bill.  The Department of Land and Natural Resources supported the intent of this measure.  The Department of Taxation, Department of Agriculture, Tax Foundation of Hawaii, and Life of the Land provided comments.

     Your Committees have amended this bill by:

(1)  Removing the requirement that the Board of Land and Natural Resources lease lands with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B;

(2)  Removing the requirement that the Board of Land and Natural Resources lease lands at nominal consideration;

(3)  Removing the provision exempting the lands used for the production of biodiesel feedstock crops from real property taxes;

(4)  Clarifying that the income tax exemption applies to the income derived from the operation of an oil seed crushing facility;

(5)  Removing from the definition of an "oil seed crushing facility" the provision specifying that it is a facility separate and distinct from a biodiesel production facility; and

(6)  Making technical, nonsubstantive amendments for style, clarity, and consistency.

     As affirmed by the records of votes of the members of your Committees on Energy & Environmental Protection and Water, Land, Ocean Resources & Hawaiian Affairs and Agriculture that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 3410, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 3410, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Energy & Environmental Protection and Water, Land, Ocean Resources & Hawaiian Affairs and Agriculture,

____________________________ KEN ITO, Chair	____________________________ HERMINA MORITA, Chair
	____________________________ CLIFT TSUJI, Chair