STAND. COM. REP. NO. 2036

Honolulu, Hawaii

RE:    S.B. No. 2764

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Energy and Environment, to which was referred S.B. No. 2764 entitled:

"A BILL FOR AN ACT RELATING TO ETHANOL FACILITY TAX CREDIT,"

begs leave to report as follows:

     The purpose of this measure is to encourage the construction and operation of large-capacity ethanol production facilities.

     Specifically, this measure repeals the qualifying capacity limits of ethanol production facilities, provides a vehicle to change the total ethanol facility tax credits allowed per year, and repeals the sunset provision with respect to the total nameplate capacity for qualifying ethanol production facilities.

     Testimony in support of this measure was submitted by Alexander & Baldwin, Inc. and Hawai‘i BioEnergy LLC.  Comments were submitted by the Department of Taxation; Department of Business, Economic Development, and Tourism; and the Tax Foundation of Hawaii.

     Your Committee finds that in regards to the ethanol facility tax credit, repealing the nameplate capacity qualifying limits would allow flexibility in the size of an ethanol facility and would encourage the construction and operation of small and large-capacity ethanol production facilities.

     The Department of Business, Economic Development, and Tourism has suggested to your Committee that completely repealing the cap on credits allowed for each facility or for the maximum aggregate annual credits payable could be problematic. 

     Accordingly, your Committee has amended this measure by allowing both large and small facilities to receive the same tax credit for their first 15 million gallons of ethanol produced each year of production.

     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2764, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2764, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committee on Energy and Environment,

____________________________

RON MENOR, Chair