STAND. COM. REP. NO. 1040

Honolulu, Hawaii

RE:    S.C.R. No. 85

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committees on Water, Land, and Housing and Judiciary and Labor, to which was referred S.C.R. No. 85 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE ATTORNEY GENERAL TO INVESTIGATE GEOTHERMAL ROYALTIES,"

beg leave to report as follows:

     The purpose and intent of this measure is to request the Attorney General to conduct an investigation relating to the payment of geothermal royalties by Puna Geothermal Venture, among other things, to determine whether geothermal royalties are administered in a fair, legal, and ethical manner.

     Your Committees received testimony in support of this measure from Robert K. Lindsey, Jr., member of the Board of Trustees of the Office of Hawaiian Affairs, and Indigenous Consultants, LLC.  Your Committees received testimony in opposition to this measure from the Department of the Attorney General.  Your Committees received comments on this measure from the Department of Land and Natural Resources.

     Your Committees find that section 182-18, Hawaii Revised Statutes, requires the Board of Land and Natural Resources to fix the payment of royalties to the State for the utilization of geothermal resources at a rate that will encourage the initial and continued production of such resources.  Section 26-18, Hawaii Revised Statutes, requires, among other things, that the Department of Business, Economic Development, and Tourism undertake energy development and management across the State.  This measure takes steps to ensure that the development of geothermal resources is continued in a fair, legal, and ethical manner. 

     Your Committees have amended this measure by:

(1)  Requesting the Auditor to conduct an audit of the State's program of geothermal leasing and royalty payments, rather than requesting the Attorney General to conduct an investigation, and making conforming amendments, including amendments to the title; and

(2)  Adding language describing the statutory responsibilities of the Board of Land and Natural Resources and the Department of Business, Economic Development, and Tourism, as they relate to mining of geothermal resources and energy development and management;

(3)  Deleting language related to "avoided cost formula", contracts between Hawaii Electric Light Company, Inc., and Puna Geothermal Venture, and possible criminal activity associated with geothermal royalties; and

(4)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Water, Land, and Housing and Judiciary and Labor that are attached to this report, your Committees concur with the intent and purpose of S.C.R. No. 85, as amended herein, and recommend that it be referred to the Committee on Ways and Means, in the form attached hereto as S.C.R. No. 85, S.D. 1.

Respectfully submitted on behalf of the members of the Committees on Water, Land, and Housing and Judiciary and Labor,

____________________________ CLAYTON HEE, Chair

____________________________ DONOVAN M. DELA CRUZ, Chair