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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2262 |
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TWENTY-SIXTH LEGISLATURE, 2012 |
H.D. 2 |
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STATE OF HAWAII |
S.D. 2 |
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A BILL FOR AN ACT
RELATING TO ENERGY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
PART I
Renewable Transportation Fuels Production Facility Tax Credit
SECTION 1. Section 235-110.3, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.3 [Ethanol] Renewable
transportation fuels production facility tax credit. (a) Each year
during the credit period, there shall be allowed to each taxpayer subject to
the taxes imposed by this chapter, [an ethanol] a renewable
transportation fuels production facility tax credit that shall be applied
to the taxpayer's net income tax liability, if any, imposed by this chapter for
the taxable year in which the credit is properly claimed[.]; provided
that the taxpayer shall not claim a credit under this section for more than
five taxable years.
For each [qualified ethanol] qualifying
renewable transportation fuels production facility, the annual dollar
amount of the [ethanol] renewable transportation fuels facility
tax credit during the [eight-year] five-year period shall be
equal to [thirty per cent of its nameplate capacity if the nameplate
capacity is greater than five hundred thousand but less than fifteen million
gallons.] 30 cents per one hundred fifteen thousand British thermal
units of renewable transportation fuels using the lower heating value produced
for distribution in Hawaii; provided that the production by the renewable transportation
fuels production facility is not less than fifteen billion British thermal
units of renewable transportation fuels per year; and provided further that the
amount of tax credit claimed under this section by a taxpayer shall not exceed
$3,000,000 per taxable year. A taxpayer may claim this credit for each
qualifying [ethanol] renewable transportation fuels production
facility; provided that:
(1) The claim for this credit by any taxpayer of a
qualifying [ethanol] renewable transportation fuels production
facility shall not exceed one hundred per cent of the total of all investments
made by the taxpayer in the qualifying [ethanol] renewable
transportation fuels production facility during the credit period; and
[(2) The qualifying ethanol production
facility operated at a level of production of at least seventy-five per cent of
its nameplate capacity on an annualized basis;
(3) The qualifying ethanol production
facility is in production on or before January 1, 2017; and
(4)] (2) No taxpayer that claims the
credit under this section shall claim any other tax credit under this chapter
for the same taxable year.
(b) As used in this section:
"Credit period" means a maximum
period of [eight] five years beginning from the first taxable
year in which the qualifying [ethanol] renewable transportation fuels
production facility begins production [even if actual production is not at
seventy-five per cent of nameplate capacity.] at a level of at least
fifteen billion British thermal units of renewable transportation fuels per
year.
"Investment" means a nonrefundable
capital expenditure related to the development and construction of any
qualifying [ethanol] renewable transportation fuels production
facility, including processing equipment, waste treatment systems, pipelines, geothermal
wells, and liquid storage tanks at the facility or remote locations,
including expansions or modifications. Capital expenditures shall be those
direct and certain indirect costs determined in accordance with section 263A of
the Internal Revenue Code, relating to uniform capitalization costs, but shall
not include expenses for compensation paid to officers of the taxpayer, pension
and other related costs, rent for land, the costs of repairing and maintaining
the equipment or facilities, training of operating personnel, utility costs
during construction, property taxes, costs relating to negotiation of
commercial agreements not related to development or construction, or service
costs that can be identified specifically with a service department or function
or that directly benefit or are incurred by reason of a service department or
function. For the purposes of determining a capital expenditure under this
section, the provisions of section 263A of the Internal Revenue Code shall
apply as it read on March 1, 2004. For purposes of this section, investment
excludes land costs and includes any investment for which the taxpayer is at
risk, as that term is used in section 465 of the Internal Revenue Code (with
respect to deductions limited to amount at risk).
["Nameplate capacity" means the
qualifying ethanol production facility's production design capacity, in gallons
of motor fuel grade ethanol per year.]
"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.
"Qualifying [ethanol] renewable
transportation fuels production" means [ethanol produced from
renewable, organic feedstocks, or waste materials, including municipal solid
waste. All qualifying production shall be fermented, distilled, gasified, or
produced by physical chemical conversion methods such as reformation and
catalytic conversion and dehydrated at the facility.] production of
renewable transportation fuels from renewable feedstocks produced from within
the State; provided that the renewable transportation fuels shall be sold in
the State.
"Qualifying [ethanol] renewable
transportation fuels production facility" or "facility"
means a facility located in Hawaii [which] that produces [motor]
from renewable feedstocks fuel grade [ethanol meeting the minimum
specifications by the American Society of Testing and Materials standard
D-4806, as amended.] renewable transportation fuels meeting the relevant
ASTM International specifications for the particular fuel or other industry specifications
for production of:
(1) Methanol, ethanol, or other alcohols;
(2) Hydrogen;
(3) Biodiesel or renewable diesel;
(4) Biofuels derived from biological materials, including algae; or
(5) Renewable jet fuel, renewable gasoline, or liquid or gaseous fuels.
(c) In the case of a taxable year in which the
cumulative claims for the credit by the taxpayer of a qualifying [ethanol]
renewable transportation fuels production facility exceeds the
cumulative investment made in the qualifying [ethanol] renewable
transportation fuels production facility by the taxpayer, only that portion
that does not exceed the cumulative investment shall be claimed and allowed.
(d) The department of business, economic development, and tourism shall:
(1) Maintain records of the total amount of investment made by each taxpayer in a facility;
(2) Verify the amount [of the qualifying
investment;] and type of renewable transportation fuels produced,
including the purpose for which the fuel was produced;
(3) Total all qualifying [and cumulative
investments] renewable transportation fuels production that the
department of business, economic development, and tourism certifies; and
(4) Certify the total amount of the tax credit for each taxable year and the cumulative amount of the tax credit during the credit period.
Upon each determination, the department of
business, economic development, and tourism shall issue a certificate to the
taxpayer verifying the qualifying [investment amounts,] amounts of
renewable transportation fuels production, the credit amount certified for
each taxable year, and the cumulative amount of the tax credit during the
credit period. The taxpayer shall file the certificate with the taxpayer's tax
return with the department of taxation. Notwithstanding the department of
business, economic development, and tourism's certification authority under
this section, the director of taxation may audit and adjust certification to
conform to the facts.
If in any year, the annual amount of certified
credits reaches $12,000,000 in the aggregate, the department of business,
economic development, and tourism [shall] may immediately
discontinue certifying credits and notify the department of taxation. [In
no instance shall the total amount of certified credits exceed $12,000,000 per
year.] Alternatively, the department of business, economic development,
and tourism may increase the cap to $15,000,000 if there is sufficient qualified
renewable transportation fuels production; provided that the department shall
report to the legislature on the rationale and justification of any such
increase. Notwithstanding any other law to the contrary, this information
shall be available for public inspection and dissemination under chapter 92F.
(e) If the credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1. All claims for a credit under this section must be properly filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(f) If a qualifying [ethanol] renewable
transportation fuels production facility or an interest therein is acquired
by a taxpayer prior to the expiration of the credit period, the credit
allowable under subsection (a) for any period after such acquisition shall be
equal to the credit that would have been allowable under subsection (a) to the
prior taxpayer had the taxpayer not disposed of the interest. If an interest
is disposed of during any year for which the credit is allowable under
subsection (a), the credit shall be allowable between the parties on the basis
of the number of days during the year the interest was held by each taxpayer.
In no case shall the credit allowed under subsection (a) be allowed after the
expiration of the credit period.
[(g) Once the total nameplate capacities of
qualifying ethanol production facilities built within the State reaches or
exceeds a level of forty million gallons per year, credits under this section
shall not be allowed for new ethanol production facilities. If a new
facility's production capacity would cause the statewide ethanol production
capacity to exceed forty million gallons per year, only the ethanol production
capacity that does not exceed the statewide forty million gallon per year level
shall be eligible for the credit.
(h)] (g) Prior to [construction
of] production by any new qualifying [ethanol] renewable
transportation fuels production facility, the taxpayer shall provide
written notice of the taxpayer's intention to begin [construction] production
of [a] qualifying [ethanol production facility.] renewable
transportation fuels. The information shall be provided to the department
of taxation and the department of business, economic development, and tourism
on forms provided by the department of business, economic development, and
tourism, and shall include information on the taxpayer, facility location,
facility production capacity, anticipated production start date, and the
taxpayer's contact information. Notwithstanding any other law to the contrary,
this information shall be available for public inspection and dissemination
under chapter 92F.
[(i)] (h) The taxpayer shall
provide written notice to the director of taxation and the director of business,
economic development, and tourism within thirty days following the start of
production. The notice shall include the production start date and expected [ethanol]
renewable transportation fuel production for the next twenty-four
months. Notwithstanding any other law to the contrary, this information shall
be available for public inspection and dissemination under chapter 92F.
[(j) If a qualifying ethanol production
facility fails to achieve an average annual production of at least seventy-five
per cent of its nameplate capacity for two consecutive years, the stated
capacity of that facility may be revised by the director of business, economic
development, and tourism to reflect actual production for the purposes of
determining statewide production capacity under subsection (g) and allowable
credits for that facility under subsection (a). Notwithstanding any other law
to the contrary, this information shall be available for public inspection and
dissemination under chapter 92F.
(k)] (i) Each calendar year
during the credit period, the taxpayer shall provide information to the
director of business, economic development, and tourism on the number of [gallons]
British thermal units of [ethanol] renewable transportation
fuels produced and sold during the previous calendar year, how much was
sold in Hawaii versus overseas, feedstocks used for [ethanol] renewable
transportation fuels production, the number of employees of the facility,
and the projected number of [gallons] British thermal units of [ethanol]
renewable transportation fuels production for the succeeding year.
[(l)] (j) In the case of a
partnership, S corporation, estate, or trust, the tax credit allowable is for
every qualifying [ethanol] renewable transportation fuels
production facility. The cost upon which the tax credit is computed shall be
determined at the entity level. Distribution and share of credit shall be
determined pursuant to section 235-110.7(a).
[(m)] (k) Following each year in
which a credit under this section has been claimed, the director of business,
economic development, and tourism shall submit a written report to the governor
and legislature regarding the production and sale of [ethanol.] renewable
transportation fuels. The report shall include:
(1) The number, location, and nameplate capacities of
qualifying [ethanol] renewable transportation fuels production
facilities in the State;
(2) The total number of [gallons] British
thermal units of [ethanol] renewable transportation fuels
produced and sold during the previous year; and
(3) The projected number of [gallons] British
thermal units of [ethanol] renewable transportation fuels
production for the succeeding year.
[(n)] (l) The director of
taxation shall prepare forms that may be necessary to claim a credit under this
section. Notwithstanding the department of business, economic development, and
tourism's certification authority under this section, the director may audit
and adjust certification to conform to the facts. The director may also
require the taxpayer to furnish information to ascertain the validity of the
claim for credit made under this section and may adopt rules necessary to
effectuate the purposes of this section pursuant to chapter 91."
PART II
Biofuel Production Facility Tax Credit
SECTION 2. The purpose of this part is to:
(1) Encourage the development and construction of biofuel production facilities in Hawaii by creating an income tax credit for investments in the construction and development of biofuel production facilities in the State; and
(2) Clarify the circumstances under which an environmental assessment is required for an action proposing an oil refinery by adding a new definition of oil refinery.
SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235‑ Biofuel production facility income tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a biofuel production facility income tax credit that shall be deducted from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.
(b) The amount of the credit shall be equal to fifteen per cent of the qualified development and construction costs of a biofuel production facility. The credit allowed under this section shall be claimed against the net income tax liability for the taxable year in which the biofuel production facility is placed in service. Total tax credits claimed per qualified biofuel production facility shall not exceed $60,000,000.
(c) As used in this section:
"Capital expenditures" means those certain direct and indirect costs determined in accordance with section 263A of the Internal Revenue Code, relating to uniform capitalization costs, but shall not include expenses for compensation paid to officers of the taxpayer, pension and other related costs, rent for land, the costs of repairing and maintaining the equipment or facilities, training of operating personnel, property taxes, costs relating to negotiation of commercial agreements not related to development or construction, or service costs that can be identified specifically with a service department or function or that directly benefit or are incurred by reason of a service department or function.
"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.
"Qualified biofuel production facility" means a facility that produces liquid or gaseous fuels from organic sources, including biomass crops, agricultural residues, and oil crops, including palm, canola, soybean, and waste cooking oils; grease; food wastes; locally produced municipal solid wastes and industrial wastes; and animal residues and wastes that can be used to generate energy.
"Qualified development and construction costs" means capital expenditures related to the development and construction of any qualified biofuel production facility, including costs for agricultural infrastructure, design, processing equipment, waste treatment systems, pipelines, and liquid storage tanks at the facility or remote locations, including expansions or modifications, interest accrued during construction if the project is not capitalized and not expensed, and utility costs incurred during construction if the utility costs are capitalized and not expensed. For purposes of this section, investment excludes land costs and includes any investment for which the taxpayer is at risk, as that term is used in section 465 of the Internal Revenue Code (with respect to deductions limited to amount at risk).
(d) Qualified biofuel production facilities shall comply with this section. To qualify for this credit, the biofuel production facility shall:
(1) Be located within the State;
(2) Meet the definition of a qualified biofuel production facility;
(3) Have a biofuel production capacity of no less than five million gallons;
(4) Have qualified development and construction costs totaling at least $10,000,000; and
(5) Be in production on or before January 1, 2017.
(e) To receive the tax credit, the taxpayer shall first prequalify a biofuel production facility for the credit by registering with the department of business, economic development, and tourism during the development or construction stage. Failure to comply with this provision may constitute a waiver of the right to claim the credit.
(f) Every taxpayer claiming a tax credit under this section for a qualified biofuel production facility, no later than ninety days following the end of the taxable year in which the biofuel production facility is placed in service, shall submit a written, sworn statement to the department of business, economic development, and tourism, identifying:
(1) All qualified development and construction costs as defined in subsection (c), if any, incurred; and
(2) The number of hires related to the development or construction of the qualified biofuel production facility in the taxable year.
(g) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability shall be refunded to the taxpayer; provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to properly claim the credit shall constitute a waiver of the right to claim the credit.
(h) A recipient of tax credits under this section shall refund to the State the entire amount of the cumulative credits earned and claimed, in one payment, in the tenth taxable year after the recipient obtains the final tax credit.
(i) The department of business, economic development, and tourism shall:
(1) Maintain records of the names of the taxpayers and qualified biofuel production facilities claiming the tax credit under this section;
(2) Obtain and total the aggregate amounts of all qualified development and construction costs for each qualified biofuel production facility for each taxable year; and
(3) Provide a letter to the director of taxation specifying the amount of the tax credit for each qualified biofuel production facility for each taxable year that a tax credit is claimed and the cumulative amount of the tax credit for all years claimed.
Upon each determination required under this subsection, the department of business, economic development, and tourism shall issue a letter to the taxpayer specifying the qualified development and construction costs and the tax credit amount qualified for in each taxable year a tax credit is claimed. The taxpayer for each qualified biofuel production facility shall file the letter with the taxpayer's tax return for the qualified biofuel production facility to the department of taxation. Notwithstanding the authority of the department of business, economic development, and tourism under this section, the director of taxation may audit and adjust the tax credit amount to conform to the information filed by the taxpayer.
(j) If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for those costs for which the deduction is taken.
The basis for eligible property for depreciation of accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed.
No taxpayer that claims the costs allowable for the credit under this section shall claim those same costs toward any other tax credit under this chapter.
(k) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable shall be for qualified development and production costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of the tax credit shall be determined under section 704(b) (with respect to a partner's distributive share) of the Internal Revenue Code.
(l) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director may require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to implement this section pursuant to chapter 91."
SECTION 4. Section 343-2, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:
""Oil refinery" means:
(1) A new facility that processes fossil fuels into refined products; or
(2) The expansion of an existing fossil fuel refinery."
SECTION 5. Section 343-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Except as otherwise provided, an environmental assessment shall be required for actions that:
(1) Propose the use of state or county lands or the use of state or county funds, other than funds to be used for feasibility or planning studies for possible future programs or projects that the agency has not approved, adopted, or funded, or funds to be used for the acquisition of unimproved real property; provided that the agency shall consider environmental factors and available alternatives in its feasibility or planning studies; provided further that an environmental assessment for proposed uses under section 205‑2(d)(11) or 205-4.5(a)(13) shall only be required pursuant to section 205-5(b);
(2) Propose any use within any land classified as a conservation district by the state land use commission under chapter 205;
(3) Propose any use within a shoreline area as defined in section 205A-41;
(4) Propose any use within any historic site as designated in the National Register or Hawaii Register, as provided for in the Historic Preservation Act of 1966, Public Law 89-665, or chapter 6E;
(5) Propose any use within the Waikiki area of Oahu, the boundaries of which are delineated in the land use ordinance as amended, establishing the "Waikiki Special District";
(6) Propose any amendments to existing county general plans where the amendment would result in designations other than agriculture, conservation, or preservation, except actions proposing any new county general plan or amendments to any existing county general plan initiated by a county;
(7) Propose any reclassification of any land classified as a conservation district by the state land use commission under chapter 205;
(8) Propose the construction of new or the expansion or modification of existing helicopter facilities within the State, that by way of their activities, may affect:
(A) Any land classified as a conservation district by the state land use commission under chapter 205;
(B) A shoreline area as defined in section 205A-41; or
(C) Any historic site as designated in the National Register or Hawaii Register, as provided for in the Historic Preservation Act of 1966, Public Law 89-665, or chapter 6E; or until the statewide historic places inventory is completed, any historic site that is found by a field reconnaissance of the area affected by the helicopter facility and is under consideration for placement on the National Register or the Hawaii Register of Historic Places; and
(9) Propose any:
(A) Wastewater treatment unit, except an individual wastewater system or a wastewater treatment unit serving fewer than fifty single-family dwellings or the equivalent;
(B) Waste-to-energy facility;
(C) Landfill;
(D) Oil refinery[;], as defined in
section 343-2; or
(E) Power-generating facility."
PART III
Miscellaneous Provisions
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect on July 1, 2050; provided that:
(1) Section 1 of this Act shall apply to taxable years beginning after December 31, 2012; and
(2) Section 3 of this Act shall:
(A) Apply to taxable years beginning after December 31, 2011;
(B) Apply to qualified development and construction costs of qualified biofuel production facilities incurred on or after July 1, 2011, and before January 1, 2017; and
(C) Be repealed on January 1, 2029.
Report Title:
Renewable Transportation Fuels; Biofuel Production Facility; Tax Credit; Environmental Impact Statement
Description:
Amends the ethanol facility income tax credit to apply to various types of renewable transportation fuel, with production and minimum required capacity to be measured in British thermal units. Increases maximum available amount of tax credit available to an individual facility to $3,000,000. Decreases minimum production required to claim the tax credit. Applies to taxable years beginning after December 31, 2012. Creates an income tax credit for development and construction costs for qualifying biofuel production facilities. Repeals 1/1/2029. Defines "oil refinery". Clarifies that an environmental assessment is required for an action proposing an oil refinery. Effective 7/1/50. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.