STAND. COM. REP. NO. 302-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2204
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development and Business
Concerns, to which was referred H.B. No. 2204 entitled: 

     "A BILL FOR AN ACT RELATING TO ETHANOL,"

begs leave to report as follows:

     The purpose of this bill is to encourage private sector
investment in Hawaii-based ethanol production facilities by
providing an income tax credit for the production of fuel grade
ethanol produced at a qualifying ethanol production facility in
Hawaii.

     The Department of Business, Economic Development, and
Tourism, Worldwide Energy Group Inc., ED&F Man Alcohol Inc., the
'Aina Institute, Hawaiian Commercial & Sugar Company, and the
Hawaii Renewable Energy Alliance testified in support of this
measure.  The Department of Taxation (DOTAX) and the Western
States Petroleum Association testified in opposition to this
measure.  Comments were submitted by the Tax Foundation of Hawaii
and the Clean Fuels Development Coalition.

     Your Committee has amended this bill by:

     (1)  Deleting the provision that refunds to the taxpayer the
          excess of tax credit over the taxpayer's income tax
          liability;


 
 
 
 
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     (2)  Deleting the provision that allows DOTAX to adopt rules
          pursuant to the Hawaii Administrative Procedure Act;

     (3)  Sunsetting the bill on June 30, 2010; and

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

     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of H.B. No. 2204, as amended herein, and
recommends that it be referred to the Committee on Finance, in
the form attached hereto as H.B. No. 2204, H.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development and Business
                                   Concerns,



                                   ______________________________
                                   ROBERT N. HERKES, Chair