Report Title:

Hawaii Fuel Authority; Establishment

 

Description:

(1) Establishes the Hawaii Fuel Authority to deliver gasoline and diesel fuel to Hawaii residents at prices comparable to the mainland.

(2) Repeals Chapter 486J, Hawaii Revised Statutes.

(3) Authorizes the issuance of revenue bonds for the construction or purchase of storage tanks and distribution systems for gasoline and diesel fuel by the Authority on each island.

(4) Requires a two-thirds vote of the city or county council when increasing county fuel taxes.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1494

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

relating to FUEL.

 

 

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

 


PART I

     SECTION 1.  The legislature finds that Hawaii is overpaying for imported oil, allowing over $225,000,000 annually to flow out of the state and out of the local economy.  The legislature also finds that by establishing a publicly owned entity to buy and import gasoline and diesel fuel from the mainland, storing the gasoline on each of the islands, selling the fuel directly to the public or to the private sector through independent retail gas service station outlets, and essentially providing a third participant in the wholesale gasoline market, the cost of gas in Hawaii can be more in line with mainland prices. 

     The purpose of this Act is to provide a comprehensive solution to combat the high price of gasoline, specifically by:

(1)  Establishing the Hawaii fuel authority, a publicly owned entity to buy, import, store, and sell gasoline and diesel fuel to Hawaii residents at prices comparable to the rest of the country;

(2)  Establishing an alternative energy special fund and allowing the authority to deposit 1 cent from the wholesale price of each gallon of gasoline and diesel fuel sold by the authority into the special fund, to be used to address transportation issues such as traffic congestion;

(3)  Impeding increases of county fuel taxes by requiring a two-thirds vote to approve increases;

(4)  Repealing chapter 486J, Hawaii Revised Statutes, the Petroleum Industry Information Reporting Act; and

     (5)  Authorizing the issuance of revenue bonds to cover the         costs of purchasing, leasing, or making capital                    improvements to build, construct, or convert                   facilities for use as a fuel storage or distribution               facility, on all islands.

PART II

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:


Chapter

HAWAII FUEL AUTHORITY

     §     -1 Definitions.  As used in this chapter, unless the context otherwise requires:

     "Board" means the board of directors of the fuel authority established in section    -2, and any successor thereto.

     "Department" means the department of business, economic development, and tourism.

     "Distribution facility" means any mobile or immobile structure or vehicle built to handle any aspect in the chain of distribution of gasoline or diesel fuel, including any area for loading vehicles for transferring the fuel to independent retail gas service stations.

     "Fuel authority" means the Hawaii fuel authority established by section  -2.

     "Gasoline" includes gasoline, benzol, benzine, naphtha, and any other liquid prepared, advertised, offered for sale, sold for use as, or used for, the generation of power for the propulsion of motor vehicles, including any product obtained by blending together any one or more petroleum products with or without other products, if the resultant product is capable of the same use.

     "Independent retail gas service station" means a retail gas service station that is not bound by any franchise or other agreement with a petroleum producer, refiner, wholesaler, or distributor to exclusively buy gasoline or diesel fuel from the producer, refiner, wholesaler, or distributor.

     "Storage facility" means any container, building, or structure built within the state to handle the storage or containment of gasoline or diesel fuel for the purpose of storing the fuel between importing and distribution, including facilities used to refine, compound, mix, or otherwise prepare the fuel for sale in compliance with state and local laws.

     §     -2 Establishment of the Hawaii fuel authority; purpose.  (a)  There is established the Hawaii fuel authority, which shall be a public body corporate and politic and an instrumentality and agency of the State.  The fuel authority shall be placed within the department of business, economic development, and tourism for administrative purposes, pursuant to section 26-35, except sections 26-35(4) and 26-35(5).  The purpose of the fuel authority shall be to provide reasonably priced wholesale gasoline and diesel fuel to independent retail gas service station operators.  Its duties shall include:

     (1)  Importing gasoline and diesel fuel from mainland or            overseas spot markets suitable for use in motor                    vehicles;

     (2)  Storing the imported gasoline and diesel fuel on each              of the islands; and

     (3)  Distributing the wholesale gasoline and diesel fuel to         independent retail gas service stations within the

          state at reasonable prices.

     (b)  The governing body of the fueling authority shall consist of a board of directors comprised of nine voting members to be appointed by the governor; provided that:

(1)  Three members shall be appointed by the governor from a list of five nominees submitted by the speaker of the house of representatives;

(2)  Three members shall be appointed by the governor from a list of five nominees submitted by the senate president;

     (3)  Two members shall be appointed by the governor; and

(4)  The director of business, economic development, and tourism shall serve as an ex officio voting member.

Six of the appointed members shall be from the general public and selected on the basis of their knowledge, interest, and proven expertise in one or more of the following fields:  gasoline, marketing, finance, economics, engineering, commerce and trade, and corporate management.  All appointed members of the board shall continue in office until their respective successors have been appointed.  The director of business, economic development, and tourism shall serve as the chairperson until such time as the chairperson is elected by the board from the membership.  The board shall elect such other officers as it deems necessary.

     (c)  The members of the board appointed under subsection (b) shall serve without compensation, but may be reimbursed for expenses, including travel expenses, incurred in the performance of their duties. 

     (d)  The board shall appoint a chief executive officer, who shall serve at the pleasure of the board and shall be exempt from chapter 76.

     §     -3  Powers, generally; exemptions.  (a)  The fuel authority shall have all the powers necessary to carry out its purposes, including the powers to:

     (1)  Sue and be sued;

     (2)  Have a seal and alter the same at its pleasure;

     (3)  Make and execute, enter into, amend, supplement, and carry out contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter;

     (4)  Make and alter bylaws for its organization and internal management;

     (5)  Adopt rules under chapter 91 necessary to effectuate this chapter in connection with the operations, properties, and facilities of the fuel authority;

     (6)  Through its chief executive officer, appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapter 76;

     (7)  Issue revenue bonds in the name of the fuel authority subject to the approval of the legislature; provided that all revenue bonds shall be issued pursuant to part III, chapter 39;

     (8)  Pledge or assign all or any part of the receipts and revenues of the fuel authority for purposes of meeting bond liabilities;

     (9)  Provide imported gasoline and diesel fuel to the public;

    (10)  Deposit any moneys of the fuel authority in any banking institution within or without the state, and appoint one or more persons to act as custodians of the moneys of the fuel authority for the purpose of making deposits;

    (11)  Prepare or cause to be prepared development plans for storage and distribution facilities;

    (12)  Set prices for wholesale gasoline and diesel fuel sold by the fuel authority without regard to chapter 91;

    (13)  Acquire, construct, own, lease, hold, assign, exchange, convey, clear, improve, install, equip, and rehabilitate real, personal, or mixed property and assign, exchange, transfer, convey, lease, sublease, or encumber any transport vehicle, storage or distribution facility, including by way of easements;

    (14)  Prepare, or cause to be prepared, plans, specifications, designs, and estimates of cost for the acquisition, construction, reconstruction, improvement, installation, equipping, development, or maintenance of any storage or distribution facility, and from time to time modify the plans, specifications, designs, or estimates;

    (15)  Engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

    (16)  Call upon the attorney general for such legal services as the fuel authority may require;

    (17)  Procure insurance against any loss in connection with its property and other assets and operations in amounts and from insurers as it deems desirable;

    (18)  Accept and expend gifts or grants in any form from any public agency or from any other source;

    (19)  Promote and market the sale of the wholesale gasoline and diesel fuel imported by the fuel authority and develop programs that assist sales to independent retail gas service stations in Hawaii by assessing the needs of these stations and providing coordination to overcome any obstacles to sale;

    (20)  Finance, conduct, assist, or cooperate in financing to enable the building, leasing, purchase, or sale of gas stations to independent retail gas service station owners that can sell gasoline sold by the fuel authority, by making and entering into contracts and other appropriate arrangements, including the provision of loans, start-up and expansion capital, loan guaranty, loans convertible to equity, equity charged and received by the fuel authority, and other forms of assistance, if the board determines that the retail market does not adequately offer the reasonably priced gasoline and diesel fuel provided by the fuel authority to the public;

    (21)  Provide advice, technical and marketing assistance, support, and promotion to enterprises in which investments have been made;

    (22)  Acquire, hold, and sell qualified securities;

    (23)  Consent, subject to the provisions of any contract with noteholders or bondholders, whenever the fuel authority deems it necessary or desirable in the fulfillment of the purposes of this chapter, to the modification, with respect to rate of interest, time of payment of any installment of principal or interest, or any other terms, of any contract or agreement of any kind to which the fuel authority is a party;

    (24)  Invest any funds held in reserves or sinking funds, or any funds not required for immediate disbursement, in such investments as may be lawful for fiduciaries in the state; and

    (25)  Do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this chapter.

     (b)  The fuel authority shall be exempt from chapter 103D.

     §     -4  Contracts for services necessary for management and operation of authority.  The fuel authority may contract with others, public or private persons, for the provision of all or a portion of the services necessary for the management and operation of the authority.  The fuel authority shall have the power to use all appropriations, grants, contractual reimbursements, and all other funds not appropriated for a designated purpose to pay for the proper general expenses and to carry out the purposes of the authority.

     §     -5  Use of public lands.  The governor may set aside available public lands to the fuel authority for the purposes specified in this chapter; provided that the setting aside would not impair any covenant between the State or any department or agency thereof and holders of any bonds issued by the State or such department or agency thereof.  The fuel authority also may lease available state lands from the department of land and natural resources.

     §     -6  Hawaii fuel authority revolving fund.   There is established in the state treasury a fund to be known as the Hawaii fuel authority revolving fund for the purpose of paying for the costs of operating the fuel authority as set forth in this chapter, including meeting any debt service requirements.  All moneys generated as profit from the operations of selling imported gasoline and diesel fuel to gas stations in the state shall be deposited into the Hawaii fuel authority revolving fund.  Revenues provided in this section shall be at least sufficient to pay the costs of operation of the fuel authority.

     §     -7  Alternative energy special fund.  There is established in the state treasury the alternative energy special fund, to be administered by the department of business, economic development, and tourism.  One cent from the wholesale price of each gallon of gasoline and diesel fuel sold by the fuel authority shall be deposited in the alternative energy special fund. 

     Moneys in the alternative energy special fund shall be expended by the department to provide financial assistance to public agencies and private entities involved in addressing transportation issues such as traffic congestion.

     The department shall adopt rules in accordance with chapter 91 for the purposes of this section.

     §     -8  Compliance with federal, state, and county fuel taxes.  All revenues and receipts derived by the import and sale program of the fuel authority shall comply with federal, state, and county fuel taxation requirements.

     §     -9  Annual reports.  The fuel authority shall report annually to the legislature twenty days prior to the convening of the regular session, which report shall include:

     (1)  An itemized account of the income to and the expenditure from the fuel authority revolving fund during the previous year;

     (2)  An itemized account of the income to and the expenditure from the alternative energy special fund during the previous year; and

     (3)  The impact of the wholesale price of gasoline and diesel fuel sold by the fuel authority on the wholesale or retail price of gasoline and diesel fuel within the state."


PART III

     SECTION 3.  Section 243-5, Hawaii Revised Statutes, is amended to read as follows:

     "§243-5  County fuel tax.  The amount of the "county of Hawaii fuel tax", "city and county of Honolulu fuel tax", "county of Maui fuel tax", and "county of Kauai fuel tax", respectively, shall be determined by resolution of the county or the city council of each county adopted in the manner provided by law relating to resolutions involving the expenditure of public money[.]; provided that the county or city council may increase the tax only by an affirmative vote of two-thirds of the members to which each council is entitled.  The amount fixed by the resolution may be, per gallon, one or more cents or a fraction of a cent or both, or it may be zero.  The amount fixed for alternative fuels may be proportional to the energy contents of the fuels, as determined by their lower heating values, times one-half.  No resolution shall be adopted until the county or the city council shall conduct a public hearing on the amount of tax proposed.  Public notice of the hearing shall be given in the county at least twice within a period of thirty days immediately preceding the date of hearing.  If the resolution is adopted, it shall take effect on the first day of the second month following the date of adoption of the resolution.  The county or the city council shall notify the department of taxation of any county fuel tax changes within ten days after the resolution is adopted. 

     Until and unless otherwise provided by resolution adopted as above provided, the amount of the "county of Hawaii fuel tax" shall be zero, the amount of the "city and county of Honolulu fuel tax" shall be 2-1/2 cents per gallon, the amount of the "county of Maui fuel tax" shall be 2 cents per gallon, and the amount of the "county of Kauai fuel tax" shall be 2 cents per gallon."

PART IV

     SECTION 4.  Chapter 486J, Hawaii Revised Statutes, is repealed.

PART V

     SECTION 5.  Upon determination by the board of the fuel authority that the retail market does not adequately offer the reasonably priced gasoline and diesel fuel provided by the fuel authority to the public, the board shall request the legislature to establish a loan guarantee program for persons who are willing to become owners of independent retail gas service stations that sell gasoline and diesel fuel sold by the fuel authority to be administered by the fuel authority.  The request shall include necessary proposed legislation. 

PART VI

     SECTION 6.  The Hawaii fuel authority, with the approval of the director of finance and the governor, is authorized pursuant to part III, chapter 39, Hawaii Revised Statutes, to issue revenue bonds in an aggregate principal amount not to exceed
$       , at such times and in such amounts as it deems advisable for the purpose of purchasing, leasing, or making capital improvements to build, construct, or convert facilities for use as fuel storage tanks or distribution facility systems for gasoline and diesel fuel purchased by the Hawaii fuel authority on each island, to allow the authority to store imported gasoline and diesel fuel on each island and distribute reasonably priced gasoline and diesel fuel to independent retail gas service stations within the state.

     The proceeds of such revenue bonds shall be deposited into the Hawaii fuel authority revolving fund created in section      -6, Hawaii Revised Statutes.

     The revenue bonds authorized under this Act shall be issued pursuant to part III, chapter 39, Hawaii Revised Statutes.

     The principal of, premium, if any, and interest on the revenue bonds shall be payable from the revenues and receipts collected or to be collected by the Hawaii fuel authority generally.

     SECTION 7.  There is appropriated out of the revenue bond proceeds authorized by this Act the sum of $        or so much thereof as may be necessary for fiscal year 2007-2008 and the sum of $        or so much thereof as may be necessary for fiscal year 2008-2009 to carry out the purposes of this Act.

     The sums appropriated shall be expended by the Hawaii fuel authority.

     SECTION 8.  The authorization to issue revenue bonds under this Act shall lapse on June 30, 2012.

PART VII

     SECTION 9.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 10.  This Act shall take effect on July 1, 2007.

 

INTRODUCED BY:

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