SB37.DOC

SECTION 1. The legislature finds that the residents of West Maui are served by only one highway and one small airport. Residents on the island of Lanai have only one feasible means of transport to Maui – by intra-county ferry from Lanai to Lahaina. However, the Lahaina small boat harbor is already overused and is shared by commercial fishing activities and cruise ships that add to already congested surface traffic.

The legislature finds that an alternate ferry route from Lanai to Maalaea harbor will:

(1) Provide more convenient travel for the residents of Lanai and West Maui;

(2) Ease the congestion in and around Lahaina and its boat harbor; and

(3) Make emergency ferry operations out of Lahaina a feasible reality as a component of an emergency transportation system should the only highway in West Maui be closed.

However, any ferry route to and from Maalaea harbor and Lahaina requires priority assigning of mooring space. In addition, the added fuel costs of this route would require an exemption from the general excise and fuel tax for fuel purchases for the ferry service.

The purpose of this Act is to provide:

(1) Priority assignment of mooring space for a new ferry route from Maalaea harbor to Lahaina;

(2) An exemption of the proceeds from the sale of liquid fuels consumed in the operation of certain intra-county ferry services from the general excise tax; and

(3) An exemption for fuel purchases for certain intra-county ferry services from the fuel tax.

SECTION 2. Any other law to the contrary notwithstanding, the department of land and natural resources shall assign priority mooring space to any intra-county ferry service regulated by the public utilities commission that serves a county:

(1) With a population of less than five hundred thousand residents; and

(2) That includes at least three islands inhabited by permanent residents.

SECTION 3. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Exemption for sale of liquid fuel for intra-county ferries operations. (a) There is exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the value or gross proceeds arising from the sale of liquid fuel consumed in the operation of an intra-county ferry service that serves a county with a population of less than 500,000 and that includes at least three islands inhabited by permanent residents.

(b) For purposes of this section "liquid fuel" shall have the same meaning as defined in section 243-1."

SECTION 4. Section 243-7, Hawaii Revised Statutes, is amended to read as follows:

"§243-7 Tax not applicable, when. (a) This chapter requiring the payment of license fees shall not be held or construed to apply to fuel imported into the State in interstate or foreign commerce while and so long as such fuel is beyond the taxing power of the State, nor to any such fuel exported or sold to the government of the United States or any department thereof for official use of the government, nor to any fuel exported or sold to another licensed distributor; but every distributor shall be required to report such imports, exports, and sales as provided by this chapter and in such detail as the department of taxation shall require.

(b) This chapter shall also not apply to the sale of liquid fuel sold or used in the State for ultimate use by an intra-county ferry service that serves a county with a population of less than five hundred thousand residents and that includes at least three islands inhabited by permanent residents."

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2009.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	37
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII