H.B. NO.














relating to geothermal royalties.





     SECTION 1.  The legislature finds that geothermal technology facilitates the generation of power from heat and energy found below the earth's surface.  Currently, mining leases may be obtained from the State to conduct geothermal resource development on lands for which mineral rights are reserved to the State.  A geothermal mining lease may involve the payment of royalties to the State for the utilization of geothermal resources.  Thirty per cent of the royalties received by the State from geothermal resources must be paid to the county in which the mining operations are situated.

     The purpose of this Act is to ensure that the county share of geothermal royalties from state leases is expended in a manner that directly benefits public schools in the vicinity of geothermal mining operations.

     SECTION 2.  Section 182-7, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  The payments to the State as fixed by the board shall be specified; provided that:

     (1)  In the case of bauxite, bauxitic clay, gibbsite, diaspore, boehmite, and all ores of aluminum, the amount of royalties for each long dry ton of ore as beneficiated shall not be less than twenty-five cents or the equivalent of the price of one pound of virgin pig aluminum, whichever is higher, nor shall it exceed the equivalent of the price of three pounds of virgin pig aluminum;

     (2)  The rate of royalty for ore processed into aluminous oxide in the State shall be set at eighty per cent of the rate of royalty for ore not processed to aluminous oxide in the State; and

     (3)  The royalty shall be fixed at a rate which will tend to encourage the establishment and continuation of the mining industry in the State.

     The prices of virgin pig aluminum for the purpose of determining the royalties under this section shall be the basic price on the mainland United States market for virgin pig, not refined, f.o.b. factory.  The royalties shall be in lieu of any severance or other similar tax on the extracting, producing, winning, beneficiating, handling, storing, treating, or transporting of the mineral or any product into which it may be processed in the State, and shall not be subject to reopening or renegotiating for and during the first twenty years of the lease term.

     In the event the lessee desires to mine other minerals, the lessee, before mining the minerals, shall so notify the board in writing, and the board and the lessee shall negotiate and fix the royalties for the minerals.

     Any other law to the contrary notwithstanding, thirty per cent of all royalties received by the State from [geothermal resources shall be paid to the county in which] mining operations covered under a state geothermal resource mining lease shall be paid to the Hawaii state energy office of the department of business, economic development, and tourism for allocation among all public schools located within the public school district in which the mining operations under the lease are situated."

     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.








Report Title:

Geothermal Mining; Royalties



Reallocates the county share of state geothermal royalties to DBEDT's Hawaii State Energy Office for allocation among all public schools located in the school district where geothermal mining operations under state leases are situated.




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