Report Title:

Nawiliwili Harbor Fuel Storage Facility Lease

 

Description:

Allows the department of transportation to negotiate a lease for the existing fuel storage facility at Nawiliwili Harbor.

 

THE SENATE

S.B. NO.

750

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to harbors.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that current direct flights between Lihue Airport and the continental United States benefit the economy of the State and should be continued. Tesoro Hawaii Corporation currently supplies all the jet fuel needs for Lihue Airport. Tesoro unloads its jet fuel at Nawiliwili Harbor, stores the fuel in storage tanks owned by Shell Oil Company, and then transports the fuel to the airport in tanker trucks. To meet current jet fuel requirements for Lihue Airport, Tesoro's operation requires the use of storage tanks owned by Shell.

Shell's fuel storage facility is located on state land and Shell currently occupies the land pursuant to a month-to-month revocable permit. The department of transportation would like to issue a long-term lease for the fuel storage facility. Chapter 171, Hawaii Revised Statutes, however, generally requires that leases of state land be issued through a public auction process.

Shell has informed the State that if an auction for the fuel storage facility land were held, and Shell was not the successful bidder, it would have to remove the fuel storage tanks and remediate the site to minimize Shell's hazardous material liability. If Shell did remove its facilities, it is estimated that construction of new jet fuel storage tanks would take approximately three years and result in a disruption of jet fuel for Lihue Airport.

The purpose of this Act is to except this fuel storage facility lease negotiation from certain limitations under the public land lease negotiation law.

SECTION 2. Section 171-59, Hawaii Revised Statutes, is amended to read as follows:

"§171-59 Disposition by negotiation. (a) A lease of public land may be disposed of through negotiation upon a finding by the board of land and natural resources that the public interest demands it. Where the public land is being sought under this section by a sugar or pineapple company, and the company is the owner or operator of a mill or cannery, then, for the purposes of this section, the economic unit shall be that acreage of public land which when taken together with the lands already owned or controlled or available to the company, when cultivated is found by the board to be necessary for the company's optimum mill or cannery operation. In all other cases, public land to be sold under this section shall be an economic unit as provided in section 171-33(3).

After a determination is made to negotiate the disposition of a lease, the board shall:

(1) Give public notice as in public auction, in accordance with the procedure set forth in section 171-16(a), of its intention to lease public land through negotiation setting forth the minimum conditions thereunder, the use for which the public land will be leased. Any person interested in securing the lease shall file an application with the board not later than forty-five days after the first publication of the notice;

(2) Establish reasonable criteria for the selection of the lessee; provided that where the intended use of the land is agriculture, the department of agriculture shall establish the criteria;

(3) Determine the applicants who meet the criteria for selection set by the board or the department of agriculture, as the case may be, and notify all applicants of its determination. Any applicant may examine the basis of the determination, which shall be in writing, to ascertain whether or not the conditions and criteria established by the board or the department of agriculture were followed; provided that if any applicant does not notify the board of the applicant's objections, and the grounds therefor, in writing, within twenty days of the receipt of the notice, the applicant shall be barred from proceeding to seek legal remedy for any alleged failure of the board to follow the conditions and criteria.

If only one applicant meets the criteria for selection of the lessee, the board may, after notice as provided in paragraph (3)[, above], dispose of the lease by negotiation.

If two or more applicants meet the criteria for the selection of the lessee, the board shall select the lessee who submits the highest offer contained in a sealed bid deposited with the board.

(b) Disposition of public lands for airline, aircraft, agricultural processing, cattle feed production, aquaculture, marine, and maritime operations may be negotiated without regard to the limitations set forth in subsection (a) and section 171-16(c); provided that:

(1) The disposition encourages competition within the aeronautical, agricultural, aquaculture, and maritime industries;

(2) The disposition shall not exceed a maximum term of thirty-five years; and

(3) The method of disposition of public lands for cattle feed production as set forth in this subsection shall not apply after December 31, 1988.

For the purpose of this subsection "agricultural processing" means the processing of agricultural products, including dairying, grown, raised, or produced in Hawaii.

(c) The department of transportation may negotiate a lease for the existing fuel storage facility at Nawiliwili Harbor without regard to the limitations set forth in subsection (a) and section 171-16(c)."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval; provided that on June 30, 2002, section 2 of this Act shall be repealed and section 171-59, Hawaii Revised Statutes, is

reenacted in the form in which it read on the day before the approval of this Act.

INTRODUCED BY:

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