REPORT TITLE:
Ethanol; Gasoline; Counties


DESCRIPTION:
Authorizes the counties to enact and enforce ordinances to
require that gasoline sold in the county for use in motor
vehicles contain not more than 10% ethanol by volume.  Requires
the department of business, economic development, and tourism to
provide technical assistance to the counties as needed.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2205
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO ALTERNATIVE FUELS.



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

 1      SECTION 1.  The legislature finds that the use of
 
 2 alternative transportation fuels, particularly ethanol, could
 
 3 provide a substantial part of Hawaii's transportation energy
 
 4 demand, and that local production of these fuels could diversify
 
 5 energy supplies while producing environmental and economic
 
 6 benefit to the public.
 
 7      The legislature finds that ethanol is a liquid alcohol fuel
 
 8 produced by fermenting a sugar solution with yeast.  A variety of
 
 9 crops can be used to provide the sugars that are needed to
 
10 manufacture ethanol; currently more than ninety per cent of all
 
11 ethanol in the United States comes from corn.  A bushel of corn
 
12 will yield approximately 2.5 gallons of ethanol, as well as other
 
13 valuable by-products.  In 1994, more than 1.2 billion gallons of
 
14 ethanol were produced in the United States.
 
15      Opponents of ethanol claim that nearly as much energy is
 
16 used to produce a gallon of ethanol as it yields.  However, a
 
17 recent study by the Oak Ridge National Laboratories concluded
 
18 that, although it takes approximately 58,000 Btus to grow and
 
19 process a gallon of ethanol, each gallon contains approximately
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1 76,000 Btu of energy, an overall energy gain of approximately
 
 2 twenty per cent.
 
 3      The major drawback to the widespread use of E100 (one
 
 4 hundred per cent ethanol) is its cost and the lack of a refueling
 
 5 infrastructure.  Despite federal and state tax incentives,
 
 6 ethanol is more expensive than other alternative fuels.  This is
 
 7 a result of higher production, storage, and transportation costs.
 
 8 It appears that ethanol's market will be as a gasoline additive
 
 9 (to form E10, or gasohol) or as feedstock to ethyl tertiary butyl
 
10 ether (ETBE), an oxygenate for reformulated gasoline.
 
11      Among the advantages of ethanol are that ethanol vehicles
 
12 emit less carbon monoxide and nitrogen oxides than gasoline-
 
13 powered vehicles.  Volatile organic compound emissions from pure
 
14 ethanol are less than those of gasoline, decreasing its ozone-
 
15 forming potential.  Moreover, ethanol production receives
 
16 extensive support from federal tax incentives.  Fuels containing
 
17 a minimum of ten per cent alcohol receive an exemption of 5.4
 
18 cents per gallon from the federal 14.3 cents per gallon excise
 
19 tax on gasoline.  In addition, ethanol fuel eliminates the toxic
 
20 benzenes that are found in gasoline emissions.  Finally, ethanol
 
21 can be used in flexible fuel vehicles; one vehicle can operate on
 
22 both ethanol and gasoline, depending on which fuel is available.
 
23 Ethanol vehicles have a similar refueling system to those powered
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1 by gasoline in that they use the same nozzles to refuel.  This
 
 2 allows the manufacturer to make fewer design and engine changes.
 
 3      The legislature further finds that opportunities exist on
 
 4 several islands, particularly on Maui and Kauai, for the
 
 5 development of molasses-to-ethanol production facilities on those
 
 6 islands.  One of the impediments to this type of project,
 
 7 however, is the continued unwillingness on the part of Hawaiian
 
 8 gasoline marketers to blend ethanol (at the prescribed ten per
 
 9 cent ethanol, ninety per cent gasoline rate), despite the
 
10 existence of a statutorily mandated ethanol content requirement
 
11 and the existence of an attractive state tax exemption for
 
12 ethanol blends.  These fiscal incentives would allow gasoline
 
13 marketers to either increase margin and profitability on gasoline
 
14 sales or lower the price of the finished blended gasoline to
 
15 local consumers, or both.
 
16      The purpose of this Act is therefore to provide increased
 
17 tax incentives for ethanol production and to authorize the
 
18 counties to mandate an ethanol blend.  The legislature finds that
 
19 this Act has the potential to encourage the continuation of
 
20 Hawaii's agricultural industry to produce ethanol and related by-
 
21 products and to provide an incentive for the establishment of an
 
22 ethanol industry that will provide alternative fuel for
 
23 transportation and power generation.  The legislature further
 

 
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 1 finds that ethanol derived from such products as sugar cane
 
 2 biomass and related agricultural products has the potential of
 
 3 boosting the State's economic development by encouraging the
 
 4 development of an indigenous ethanol industry in Hawaii,
 
 5 contributing to economic self-sufficiency for the counties, and
 
 6 creating a new industry for Hawaii that will reduce the State's
 
 7 dependency on imported fossil fuels.
 
 8      SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended
 
 9 by adding a new section to be appropriately designated and to
 
10 read as follows:
 
11      "235 -     Indigenous fuel production; producers excise tax
 
12 incentive credits.  (a) There shall be allowed an indigenous fuel
 
13 production credit to each individual and corporate resident
 
14 taxpayer who produces indigenous fuel in this State.  The
 
15 indigenous fuel production credit shall be equal to the number of
 
16 gallons of indigenous fuel sold by the taxpayer in a taxable year
 
17 multiplied by the following rates:
 
18      (1)  Anhydrous ethanol, 35 cents per gallon;
 
19      (2)  Hydrous ethanol, 35 cents per gallon, multiplied by the
 
20           percentage ethanol in the mixture; and
 
21      (3)  Other indigenous fuels, in accordance with their energy
 
22           content.
 
23      (b)  Negotiable excise tax credit certificates shall be
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1 serial numbered and in $100 and $1,000 denominations prepared by
 
 2 the director of finance which may be used by the bearer to pay
 
 3 excise taxes owed to the State.
 
 4      (c)  The director of taxation shall prepare forms necessary
 
 5 to claim a credit under this section.  The director may also
 
 6 require the taxpayer to furnish reasonable information in order
 
 7 that the director may ascertain the validity of the claim for
 
 8 credit made under this section.  The director may adopt rules
 
 9 necessary to effectuate the purposes of this section pursuant to
 
10 chapter 91.
 
11      (d)  After December 31, 2005, the credit shall be reduced to
 
12 30 cents per gallon.  After December 31, 2010, the credit shall
 
13 be reduced to 25 cents per gallon.  Further credit reductions may
 
14 be made based on an evaluation of Hawaii's dependency on imported
 
15 fossil fuels.
 
16      (e)  For ethanol production, the director of taxation and
 
17 the qualified ethanol producer shall enter into a written
 
18 agreement.  The producer shall agree to produce ethanol at the
 
19 designated facility and any expansion thereof.  The director of
 
20 taxation, on behalf of the State, shall agree to furnish ethanol
 
21 producer's credits in the form as provided for in this section
 
22 which shall take effect on the date of the agreement.  The
 
23 agreement to produce ethanol in return for the credits shall be
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1 sufficient consideration, and the agreement shall be binding upon
 
 2 the State.  No credit shall be given to any producer of ethanol
 
 3 who fails to produce ethanol in Hawaii in compliance with this
 
 4 agreement.  The agreement shall include:
 
 5      (1)  The name of the producer;
 
 6      (2)  The address of the ethanol facility;
 
 7      (3)  The date of initial eligibility of the ethanol facility
 
 8           to receive ethanol producer's credits;
 
 9      (4)  The name plate design capacity of the ethanol facility
 
10           as of the date of its initial eligibility; and
 
11      (5)  The name plate design capacity which the facility is
 
12           intended to have after the completion of any expansion.
 
13           If no expansion is contemplated at the time of the
 
14           initial agreement, the agreement may be amended to
 
15           include any proposed expansion.
 
16      (f)  As used in this section:
 
17      "Indigenous fuel" means liquid fuels produced in Hawaii from
 
18 non-petroleum feedstocks.
 
19      "Qualified ethanol producer" means an ethanol production
 
20 facility located in Hawaii, at which all fomentation,
 
21 distillation, and dehydration takes place, with production
 
22 facilities capable of producing not less than five million
 
23 gallons of hydrous ethanol per year from qualified feedstocks and
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1 with facilities capable of producing anhydrous ethanol as
 
 2 required for blending with other motor fuels.
 
 3      "Qualified feedstocks" means agricultural starches, sugars,
 
 4 and lignocellulosic biomass grown in Hawaii or extracted from the
 
 5 municipal solid waste stream generated in Hawaii."
 
 6      SECTION 3.  Section 46-1.5, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "46-1.5  General powers and limitation of the counties.
 
 9 Subject to general law, each county shall have the following
 
10 powers and shall be subject to the following liabilities and
 
11 limitations:
 
12      (1)  Each county shall have the power to frame and adopt a
 
13           charter for its own self-government, which shall
 
14           establish the county executive, administrative, and
 
15           legislative structure and organization, including, but
 
16           not limited to, the method of appointment or election
 
17           of officials, their duties, responsibilities, and
 
18           compensation, and the terms of their office.
 
19      (2)  Each county shall have the power to provide for and
 
20           regulate the marking and lighting of all buildings and
 
21           other structures that may be obstructions or hazards to
 
22           aerial navigation, so far as may be necessary or proper
 
23           for the protection and safeguarding of life, health,
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1           and property.
 
 2      (3)  Each county shall have the power to enforce all claims
 
 3           on behalf of the county and approve all lawful claims
 
 4           against the county, but shall be prohibited from
 
 5           entering into, granting, or making in any manner any
 
 6           contract, authorization, allowance payment, or
 
 7           liability contrary to the provisions of any county
 
 8           charter or general law.
 
 9      (4)  Each county shall have the power to make contracts and
 
10           to do all things necessary and proper to carry into
 
11           execution all powers vested in the county or any county
 
12           officer.
 
13      (5)  Each county shall have the power to maintain channels,
 
14           whether natural or artificial, including their exits to
 
15           the ocean, in suitable condition to carry off storm
 
16           waters; and to remove from the channels, and from the
 
17           shores and beaches, any debris that is likely to create
 
18           an unsanitary condition or become a public nuisance;
 
19           provided that, to the extent any of the foregoing work
 
20           is a private responsibility, the responsibility may be
 
21           enforced by the county in lieu of the work being done
 
22           at public expense.  Counties also shall have the power
 
23           to construct, acquire by gift, purchase, or by the
 

 
Page 9                                                     2205
                                     H.B. NO.           
                                                        
                                                        


 1           exercise of eminent domain, reconstruct, improve,
 
 2           better, extend, and maintain projects or undertakings
 
 3           for the control of and protection against floods and
 
 4           flood waters, including the power to drain and
 
 5           rehabilitate lands already flooded, and to enact zoning
 
 6           ordinances providing that lands deemed subject to
 
 7           seasonable, periodic, or occasional flooding shall not
 
 8           be used for residence or other purposes in a manner as
 
 9           to endanger the health or safety of the occupants
 
10           thereof, as required by the Federal Flood Insurance Act
 
11           of 1956 (chapter 1025, Public Law 1016).
 
12      (6)  Each county shall have the power to exercise the power
 
13           of condemnation by eminent domain when it is in the
 
14           public interest to do so.
 
15      (7)  Each county shall have the power to exercise regulatory
 
16           powers over business activity as are assigned to them
 
17           by chapter 445 or other general law.
 
18      (8)  Each county shall have the power to fix the fees and
 
19           charges for all official services not otherwise
 
20           provided for.
 
21      (9)  Each county shall have the power to provide by
 
22           ordinance for the improvement or maintenance
 
23           assessments of districts within the county.
 

 
Page 10                                                    2205
                                     H.B. NO.           
                                                        
                                                        


 1     (10)  Except as otherwise provided, no county shall have the
 
 2           power to give or loan credit to, or in aid of, any
 
 3           person or corporation, directly or indirectly, except
 
 4           for a public purpose.
 
 5     (11)  Where not within the jurisdiction of the public
 
 6           utilities commission, each county shall have the power
 
 7           to regulate by ordinance the operation of motor vehicle
 
 8           common carriers transporting passengers within the
 
 9           county and adopt and amend rules the county deems
 
10           necessary for the public convenience and necessity.
 
11     (12)  Each county shall have the power to enact and enforce
 
12           ordinances necessary to prevent or summarily remove
 
13           public nuisances and to compel the clearing or removal
 
14           of any public nuisance, refuse, and uncultivated
 
15           undergrowth from streets, sidewalks, public places, and
 
16           unoccupied lots, and in these connections, to impose
 
17           and enforce liens upon the property for the cost to the
 
18           county of removing and completing the necessary work
 
19           where the owners fail, after reasonable notice, to
 
20           comply with the ordinances.  The authority provided by
 
21           this paragraph shall not be self-executing, but shall
 
22           become fully effective within a county only upon the
 
23           enactment or adoption by the county of appropriate and
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1           particular laws, ordinances, or rules defining "public
 
 2           nuisances" with respect to each county's respective
 
 3           circumstances.  The counties shall provide the property
 
 4           owner with the opportunity to contest the summary
 
 5           action and to recover the owner's property.
 
 6     (13)  Each county shall have the power to enact ordinances
 
 7           deemed necessary to protect health, life, and property,
 
 8           and to preserve the order and security of the county
 
 9           and its inhabitants on any subject or matter not
 
10           inconsistent with, or tending to defeat, the intent of
 
11           any state statute, provided also that the statute does
 
12           not disclose an express or implied intent that the
 
13           statute shall be exclusive or uniform throughout the
 
14           State.
 
15     (14)  Each county shall have the power to make and enforce
 
16           within the limits of the county all necessary
 
17           ordinances covering:  all local police matters; all
 
18           matters of sanitation; all matters of inspection of
 
19           buildings; all matters of condemnation of unsafe
 
20           structures, plumbing, sewers, dairies, milk, fish, and
 
21           morgues; all matters of the collection and disposition
 
22           of rubbish and garbage; and to provide exemptions for
 
23           homeless facilities and any other program for the
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1           homeless authorized by chapter 201G, for all matters
 
 2           under this paragraph; and to appoint county physicians
 
 3           and sanitary and other inspectors as necessary to carry
 
 4           into effect ordinances made under this paragraph, who
 
 5           shall have the same power as given by law to agents of
 
 6           the department of health, subject only to limitations
 
 7           placed on them by the terms and conditions of their
 
 8           appointments; and to fix a penalty for the violation of
 
 9           any ordinance, which penalty may be a misdemeanor,
 
10           petty misdemeanor, or violation as defined by general
 
11           law.
 
12     (15)  Each county shall have the power to provide public
 
13           pounds, to regulate the impounding of stray animals and
 
14           fowl, and their disposition, and to provide for the
 
15           appointment, powers, duties, and fees of animal control
 
16           officers.
 
17     (16)  Each county shall have the power to purchase and
 
18           otherwise acquire, lease, and hold real and personal
 
19           property within the defined boundaries of the county
 
20           and to dispose of the real and personal property as the
 
21           interests of the inhabitants of the county may require,
 
22           except that:  any property held for school purposes may
 
23           not be disposed of without the consent of the
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1           superintendent of education; no property bordering the
 
 2           ocean shall be sold or otherwise disposed of; and all
 
 3           proceeds from the sale of park lands shall be expended
 
 4           only for the acquisition of property for park or
 
 5           recreational purposes.
 
 6     (17)  Each county shall have the power to provide by charter
 
 7           for the prosecution of all offenses and to prosecute
 
 8           for offenses against the laws of the State under the
 
 9           authority of the attorney general of the State.
 
10     (18)  Each county shall have the power to make appropriations
 
11           in amounts deemed appropriate from any moneys in the
 
12           treasury, for the purpose of community promotion and
 
13           public celebrations, the entertainment of distinguished
 
14           persons as may from time to time visit the county, for
 
15           the entertainment of other distinguished persons as
 
16           well as public officials when deemed to be in the best
 
17           interest of the community, and the rendering of civic
 
18           tribute to individuals who, by virtue of their
 
19           accomplishments and community service, merit civic
 
20           commendations, recognition, or remembrance.
 
21     (19)  Each county shall have the power to:
 
22           (A)  Construct, purchase, take on lease, lease,
 
23                sublease, or in any other manner acquire, manage,
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1                maintain, or dispose of buildings for county
 
 2                purposes, sewers, sewer systems, pumping stations,
 
 3                waterworks, including reservoirs, wells,
 
 4                pipelines, and other conduits for distributing
 
 5                water to the public, lighting plants, and
 
 6                apparatus and appliances for lighting streets and
 
 7                public buildings and manage, regulate, and control
 
 8                the same;
 
 9           (B)  Regulate and control the location and quality of
 
10                all appliances necessary to the furnishing of
 
11                water, heat, light, power, telephonic, and
 
12                telegraphic service to the county;
 
13           (C)  Acquire, regulate, and control any and all
 
14                appliances for the sprinkling and cleaning of the
 
15                streets and the public ways and for flushing the
 
16                sewers; and
 
17           (D)  Open, close, construct, or maintain county
 
18                highways or charge toll on county highways;
 
19                provided that all revenues received from a toll
 
20                charge shall be used for the construction or
 
21                maintenance of county highways.
 
22     (20)  Each county shall have the power to regulate the
 
23           renting, subletting, and rental conditions of property
 

 
Page 15                                                    2205
                                     H.B. NO.           
                                                        
                                                        


 1           for places of abode by ordinance.
 
 2     (21)  Unless otherwise provided by law, each county shall
 
 3           have the power to establish by ordinance the order of
 
 4           succession of county officials in the event of a
 
 5           military or civil disaster.
 
 6     (22)  Each county shall have the power to sue and be sued in
 
 7           its corporate name.
 
 8     (23)  Each county shall have the power to establish and
 
 9           maintain waterworks and sewer works; to collect rates
 
10           for water supplied to consumers and for the use of
 
11           sewers; to install water meters whenever deemed
 
12           expedient; provided that owners of premises having
 
13           vested water rights under existing laws appurtenant to
 
14           the premises shall not be charged for the installation
 
15           or use of the water meters on the premises; to take
 
16           over from the State existing waterworks systems,
 
17           including water rights, pipelines, and other
 
18           appurtenances belonging thereto, and sewer systems, and
 
19           to enlarge, develop, and improve the same.
 
20     (24)  (A)  Each county may impose civil fines, in addition to
 
21                criminal penalties, for any violation of county
 
22                ordinances or rules after reasonable notice and
 
23                requests to correct or cease the violation have
 

 
Page 16                                                    2205
                                     H.B. NO.           
                                                        
                                                        


 1                been made upon the violator.  Any administratively
 
 2                imposed civil fine shall not be collected until
 
 3                after an opportunity for a hearing under chapter
 
 4                91.  Any appeal shall be filed within thirty days
 
 5                from the date of the final written decision.
 
 6                These proceedings shall not be a prerequisite for
 
 7                any civil fine or injunctive relief ordered by the
 
 8                circuit court.
 
 9           (B)  Each county by ordinance may provide for the
 
10                addition of any unpaid civil fines, ordered by any
 
11                court of competent jurisdiction, to any taxes,
 
12                fees, or charges, with the exception of fees or
 
13                charges for water for residential use and sewer
 
14                charges collected by the county.  Each county by
 
15                ordinance may also provide for the addition of any
 
16                unpaid administratively imposed civil fines, which
 
17                remain due after all judicial review rights under
 
18                section 91-14 are exhausted, to any taxes, fees,
 
19                or charges, with the exception of water for
 
20                residential use and sewer charges, collected by
 
21                the county.  The ordinance shall specify the
 
22                administrative procedures for the addition of the
 
23                unpaid civil fines to the eligible taxes, fees, or
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1                charges and may require hearings or other
 
 2                proceedings.  After the unpaid civil fines are
 
 3                added to the taxes, fees, or charges as specified
 
 4                by county ordinance, the unpaid civil fines shall
 
 5                be deemed immediately due, owing and delinquent
 
 6                and may be collected in the same manner as the
 
 7                taxes, fees, or charges.  The procedure for
 
 8                collection of unpaid civil fines authorized in
 
 9                this paragraph shall be in addition to any other
 
10                procedures for collection available to the State
 
11                and county by law or rules of the courts.
 
12           (C)  Each county may impose civil fines upon any person
 
13                who places graffiti on any real or personal
 
14                property owned, managed, or maintained by the
 
15                county.  The fine may be up to $1,000 or may be
 
16                equal to the actual cost of having the damaged
 
17                property repaired or replaced.  The parent or
 
18                guardian having custody of a minor who places
 
19                graffiti on any real or personal property owned,
 
20                managed, or maintained by the county shall be
 
21                jointly and severally liable with the minor for
 
22                any civil fines imposed hereunder.  Any such fine
 
23                may be administratively imposed after an
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1                opportunity for a hearing under chapter 91, but
 
 2                such a proceeding shall not be a prerequisite for
 
 3                any civil fine ordered by any court.
 
 4                     As used in this subparagraph, "graffiti"
 
 5                means any unauthorized drawing, inscription,
 
 6                figure, or mark of any type intentionally created
 
 7                by paint, ink, chalk, dye, or similar substances.
 
 8           (D)  At the completion of an appeal in which the
 
 9                county's enforcement action is affirmed and upon
 
10                correction of the violation if requested by the
 
11                violator, the case will be reviewed by the county
 
12                agency that imposed the civil fines to determine
 
13                the appropriateness of the amount of the civil
 
14                fines that accrued while the appeal proceedings
 
15                were pending.  In its review of the amount of the
 
16                accrued fines, the county agency may consider the
 
17                following:  nature and egregiousness of the
 
18                violation, duration of the violation, number of
 
19                recurring and other similar violations, effort
 
20                taken by the violator to correct the violation,
 
21                degree of involvement in causing or continuing the
 
22                violation, reasons for any delay in the completion
 
23                of the appeal, and other extenuating
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1                circumstances.  The civil fine which is imposed by
 
 2                administrative order after this review is
 
 3                completed and the violation is corrected is
 
 4                subject to only judicial review, notwithstanding
 
 5                any provisions for administrative review in county
 
 6                charters.
 
 7           (E)  After completion of a review of the amount of
 
 8                accrued civil fine by the county agency which
 
 9                imposed the fine, the amount of the civil fine
 
10                determined appropriate, including both the initial
 
11                civil fine and any accrued daily civil fine, shall
 
12                immediately become due and collectible following
 
13                reasonable notice to the violator.  If no review
 
14                of the accrued civil fine is requested, the amount
 
15                of the civil fine, not to exceed the total accrual
 
16                of civil fine prior to correcting the violation,
 
17                shall immediately become due and collectible
 
18                following reasonable notice to the violator, at
 
19                the completion of all appeal proceedings.
 
20           (F)  If no county agency exists to conduct appeal
 
21                proceedings for a particular civil fine action
 
22                taken by the county, then one shall be established
 
23                by ordinance before the county shall impose that
 

 
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                                     H.B. NO.           
                                                        
                                                        


 1                civil fine.
 
 2     (25)  Any law to the contrary notwithstanding, any county
 
 3           mayor may exempt by executive order donors, provider
 
 4           agencies, homeless facilities, and any other program
 
 5           for the homeless under chapter 201G from real property
 
 6           taxes, water and sewer development fees, rates
 
 7           collected for water supplied to consumers and for use
 
 8           of sewers, and any other county taxes, charges, or
 
 9           fees; provided that any county may enact ordinances to
 
10           regulate and grant the exemptions granted by this
 
11           paragraph.
 
12     (26)  Each county shall have the power to enact and enforce
 
13           ordinances to require that gasoline sold in the county
 
14           for use in motor vehicles contain not more than ten per
 
15           cent ethanol by volume; provided that the ordinances
 
16           shall be consistent with rules adopted by the
 
17           department of business, economic development, and
 
18           tourism pursuant to section 486J-10."
 
19      SECTION 4.  Section 243-5, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "243-5 County fuel tax.  The amount of the "county of
 
22 Hawaii fuel tax", "city and county of Honolulu fuel tax", "county
 
23 of Maui fuel tax", and "county of Kauai fuel tax", respectively,
 

 
Page 21                                                    2205
                                     H.B. NO.           
                                                        
                                                        


 1 shall be determined by resolution of the county or the city
 
 2 council of each county adopted in the manner provided by law
 
 3 relating to resolutions involving the expenditure of public
 
 4 money.  The amount fixed by the resolution may be, per gallon,
 
 5 one or more cents or a fraction of a cent or both, or it may be
 
 6 zero.  The amount fixed for alternative fuels may be proportional
 
 7 to the energy content of the fuels as determined by lower heating
 
 8 values.  No resolution shall be adopted until the county or the
 
 9 city council shall conduct a public hearing on the amount of tax
 
10 proposed.  Public notice of the hearing shall be given in the
 
11 county at least twice within a period of thirty days immediately
 
12 preceding the date of hearing.  If the resolution is adopted, it
 
13 shall take effect on the first day of the second month following
 
14 the date of adoption of the resolution.  The county or the city
 
15 council shall notify the department of taxation of any county
 
16 fuel tax changes within ten days after the resolution is adopted.
 
17      Until and unless otherwise provided by resolution adopted as
 
18 above provided, the amount of the "county of Hawaii fuel tax"
 
19 shall be for the period July 1, 1955, to June 30, 1957, 1 cent
 
20 per gallon and thereafter zero, the amount of the "city and
 
21 county of Honolulu fuel tax" shall be 2-1/2 cents per gallon, the
 
22 amount of the "county of Maui fuel tax" shall be for the period
 
23 July 1, 1955, to June 30, 1957, 3 cents per gallon and thereafter
 

 
Page 22                                                    2205
                                     H.B. NO.           
                                                        
                                                        


 1 2 cents per gallon, and the amount of the "county of Kauai fuel
 
 2 tax" shall be for the period July 1, 1955, to June 30, 1957, 3
 
 3 cents per gallon and thereafter 2 cents per gallon."
 
 4      SECTION 5.  Section 486J-10, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]486J-10[]]  Ethanol content requirement.(a)  The
 
 7 department shall adopt rules in accordance with chapter 91 to
 
 8 require that gasoline sold in the State for use in motor vehicles
 
 9 contain ten per cent ethanol by volume.  The amounts of gasoline
 
10 sold in the State containing ten per cent ethanol shall be in
 
11 accordance with rules as the director may deem appropriate.  The
 
12 director may authorize the sale of gasoline that does not meet
 
13 these requirements as provided in subsection (d).
 
14      (b)  Gasoline blended with an ethanol-based product, such as
 
15 ethyl tertiary butyl ether, shall be considered to be in
 
16 conformance with this section if the quantity of ethanol used in
 
17 the manufacture of the ethanol-based product represents ten per
 
18 cent, by volume, of the finished motor fuel.
 
19      (c)  Ethanol used in the manufacture of ethanol-based
 
20 gasoline additives, such as ethyl tertiary butyl ether, may be
 
21 considered to contribute to the distributor's conformance with
 
22 this section; provided that the total quantity of ethanol used by
 
23 the distributor is an amount equal to or greater than the amount
 

 
Page 23                                                    2205
                                     H.B. NO.           
                                                        
                                                        


 1 of ethanol required under this section.
 
 2      (d)  The department may authorize the sale of gasoline that
 
 3 does not meet the provisions of this section:
 
 4      (1)  To the extent that sufficient quantities of
 
 5           competitively-priced ethanol are not available to meet
 
 6           the minimum requirements of this section; or
 
 7      (2)  In the event of any other circumstances for which the
 
 8           department determines compliance with this section
 
 9           would cause undue hardship.
 
10      (e)  Each distributor, at such reporting dates as the
 
11 director may establish, shall file with the director, on forms
 
12 prescribed, prepared, and furnished by the director, a certified
 
13 statement showing:
 
14      (1)  The price and amount of ethanol available;
 
15      (2)  The amount of ethanol-blended fuel sold by the
 
16           distributor;
 
17      (3)  The amount of non-ethanol-blended gasoline sold by the
 
18           distributor; and
 
19      (4)  Any other information the department shall require for
 
20           the purposes of compliance with this section.
 
21      (f)  Provisions with respect to confidentiality of
 
22 information shall be the same as provided in section 486J-7.
 
23      (g)  Any distributor or any other person violating the
 

 
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 1 requirements of this section shall be subject to a fine of not
 
 2 less than $2 per gallon of nonconforming fuel, up to a maximum of
 
 3 $10,000 per infraction.
 
 4      (h)  The department, in accordance with chapter 91, shall
 
 5 adopt rules for the administration and enforcement of this
 
 6 section.
 
 7      (i)  The department shall provide such technical assistance
 
 8 as may be requested by each county seeking to enact ordinances to
 
 9 require that gasoline sold in the county contain ethanol as
 
10 provided in section 46-1.5(26)."
 
11      SECTION 6.  Section 237-27.1, Hawaii Revised Statutes, is
 
12 repealed.
 
13      ["237-27.1  Exemption of sale of alcohol fuels.(a)  There
 
14 shall be exempted from and excluded from the measure of the taxes
 
15 imposed by this chapter all of the gross proceeds arising from
 
16 the sale of alcohol fuels for consumption or use by the purchaser
 
17 and not for resale. 
 
18      (b)  As used in this section, "alcohol fuels" means neat
 
19 biomass-derived alcohol liquid fuel or a petroleum-derived fuel
 
20 and alcohol liquid fuel mixture consisting of at least ten volume
 
21 per cent denatured biomass-derived alcohol commercially usable as
 
22 a fuel to power aircraft, seacraft, spacecraft, automobiles, or
 
23 other motorized vehicles. 
 

 
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 1      (c)  The director of taxation shall annually submit a
 
 2 written report to the governor and legislature prior to the
 
 3 regular session of the legislature indicating a comparison of the
 
 4 number of gallons and average price per gallon of alcohol fuels
 
 5 and gasoline sold in the State. 
 
 6      (d)  The director of taxation shall adopt rules pursuant to
 
 7 chapter 91 necessary to administer this section."]
 
 8      SECTION 7.  Statutory material to be repealed is bracketed.
 
 9 New statutory material is underscored.
 
10      SECTION 8.  This Act shall take effect upon its approval;
 
11 provided that:
 
12      (1)  Section 2, upon its approval, shall apply to taxable
 
13           years beginning after December 31, 2000; and
 
14      (2)  Section 4 shall take effect on July 1, 2000.
 
15 
 
16                              INTRODUCED BY:______________________