SB 678: RELATING TO AGRICULTURE.

A BILL FOR AN ACT

RELATING TO AGRICULTURE.

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

     SECTION 1.  Chapter 141, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§141-    Agricultural development and food security special fund; establishment.  (a)  There is established within the state treasury the agricultural development and food security special fund.

     (b)  The following moneys shall be deposited into the special fund:

     (1)  The portion of the environmental response, energy, and food security tax specified under section 243-3.5;

     (2)  Any appropriation by the legislature into the special fund;

     (3)  Any grant or donation made to the special fund; and

     (4)  Any interest earned on the balance of the special fund.

     (c)  Subject to legislative appropriation, moneys in the special fund may be expended for the following purposes:

     (1)  The awarding of grants to farmers for agricultural production or processing activity;

     (2)  The acquisition of real property for agricultural production or processing activity;

     (3)  The improvement of real property, dams, reservoirs, irrigation systems, and transportation networks necessary to promote agricultural production or processing activity, including investigative studies to identify and assess necessary improvements to dams, reservoirs, irrigation systems, and transportation networks;

     (4)  The purchase of equipment necessary for agricultural production or processing activity;

     (5)  The conduct of research on and testing of agricultural products and markets;

     (6)  The funding of agricultural inspector positions within the department of agriculture;

     (7)  The promotion and marketing of agricultural products grown or raised in the State;

     (8)  Water quality testing and improvement;

     (9)  Any other activity intended to increase agricultural production or processing that may lead to reduced importation of food, fodder, or feed from outside the State; and

    (10)  The procurement of locally produced agricultural products during federally declared disasters or state emergencies to address food insecurity and stabilize agricultural markets.

     (d)  The applications for grants awarded under subsection (c)(1) shall be submitted to the department of agriculture and contain the information required by rules adopted thereunder.  At a minimum, the applicant shall:

     (1)  Be licensed or accredited, in accordance with federal, state, or county statutes, rules, or ordinances, to conduct the activities or provide the services for which a grant is awarded;

     (2)  Provide a detailed plan outlining the scope, objectives, and projected impact of the project or projects and a clear breakdown of how grant funds will be used;

     (3)  Agree to use state funds exclusively for the purposes of agricultural production or processing activity;

     (4)  Indicate capability to properly use the grant for the purposes of agricultural production or processing activity;

     (5)  Comply with all applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, sexual orientation, disability, or any other characteristic protected under applicable federal or state law;

     (6)  Agree to not use state funds for purposes of entertainment or perquisites;

     (7)  Comply with other requirements as the department of agriculture may prescribe;

     (8)  Comply with all applicable federal, state, and county statutes, rules, and ordinances;

     (9)  Agree to indemnify and save harmless the State and its officers, agents, and employees from and against any and all claims arising out of or resulting from activities carried out or projects undertaken with funds provided hereunder and procure sufficient insurance to provide this indemnification if requested to do so by the department of agriculture; and

    (10)  Agree to make available to the department of agriculture all records the applicant may have relating to the grant, to allow state agencies to monitor the applicant's compliance with this section.

     (e)  The department of agriculture shall submit a report to the legislature no later than twenty days prior to the convening of each regular session on the status and progress of existing programs and activities and the status of new programs and activities funded under the agricultural development and food security special fund.  The report shall also include:

     (1)  The spending plan of the agricultural development and food security special fund;

     (2)  All expenditures of agricultural development and food security special fund moneys;

     (3)  The targeted markets of the expenditures, including the reason for selecting those markets;

     (4)  The persons to be served using the expenditures; and

     (5)  The specific objectives of the expenditures, including measurable outcomes."

     SECTION 2.  Section 243-3.5, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed a state environmental response, energy, and food security tax on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user of petroleum product, other than a refiner.  The tax shall be $1.05 on each barrel or fractional part of a barrel of petroleum product that is not aviation fuel; provided that of the tax collected pursuant to this subsection:

     (1)  5 cents of the tax on each barrel shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  4 cents of the tax on each barrel shall be deposited into the energy security special fund established under section 201-12.8;

     (3)  5 cents of the tax on each barrel shall be deposited into the energy systems development special fund established under section 304A-2169.1;

     (4)  3 cents of the tax on each barrel shall be deposited into the electric vehicle charging system subaccount established pursuant to section 269-33(e); [and]

     (5)  3 cents of the tax on each barrel shall be deposited into the hydrogen fueling system subaccount established pursuant to section 269-33(f)[.]; and

     (6)        cents of the tax on each barrel shall be deposited into the agricultural development and food security special fund established under section 141-  .

     The tax imposed by this subsection shall be paid by the distributor of the petroleum product.

     (b)  In addition to subsection (a), the tax shall also be imposed on each one million British thermal units of fossil fuel sold by a distributor to any retail dealer or end user, other than a refiner, of fossil fuel.  The tax shall be 19 cents on each one million British thermal units of fossil fuel; provided that of the tax collected pursuant to this subsection:

     (1)  4.8 per cent of the tax on each one million British thermal units shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  14.3 per cent of the tax on each one million British thermal units shall be deposited into the energy security special fund established under section 201‑12.8; [and]

     (3)  9.5 per cent of the tax on each one million British thermal units shall be deposited into the energy systems development special fund established under section 304A-2169.1[.]; and

     (4)        per cent of the tax on each million British thermal units shall be deposited into the agricultural development and food security special fund established under section 141-  .

     The tax imposed by this subsection shall be paid by the distributor of the fossil fuel."

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

     SECTION 4.  This Act shall take effect on July 1, 2050.

Report Title:

Department of Agriculture; Agricultural Development and Food Security Special Fund; Environmental Response, Energy, and Food Security Tax

Description:

Establishes the Agricultural Development and Food Security Special Fund.  Requires a portion of the Environmental Response, Energy, and Food Security Tax to be deposited into the Special Fund.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to agriculture.

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

     SECTION 1.  Chapter 141, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§141-   Agricultural development and food security special fund; establishment.  (a)  There is established within the state treasury the agricultural development and food security special fund.

     (b)  The following moneys shall be deposited into the special fund:

     (1)  The portion of the environmental response, energy, and food security tax specified under section 243-3.5;

     (2)  Any appropriation by the legislature into the special fund;

     (3)  Any grant or donation made to the special fund; and

     (4)  Any interest earned on the balance of the special fund.

     (c)  Subject to legislative appropriation, moneys in the special fund may be expended for the following purposes:

     (1)  The awarding of grants to farmers for agricultural production or processing activity;

     (2)  The acquisition of real property for agricultural production or processing activity;

     (3)  The improvement of real property, dams, reservoirs, irrigation systems, and transportation networks necessary to promote agricultural production or processing activity, including investigative studies to identify and assess necessary improvements to dams, reservoirs, irrigation systems, and transportation networks;

     (4)  The purchase of equipment necessary for agricultural production or processing activity;

     (5)  The conduct of research on and testing of agricultural products and markets;

     (6)  The funding of agricultural inspector positions within the department of agriculture;

     (7)  The promotion and marketing of agricultural products grown or raised in the State;

     (8)  Water quality testing and improvement; and

     (9)  Any other activity intended to increase agricultural production or processing that may lead to reduced importation of food, fodder, or feed from outside the State.

     (d)  The department of agriculture shall submit a report to the legislature no later than twenty days prior to the convening of each regular session on the status and progress of existing programs and activities and the status of new programs and activities funded under the agricultural development and food security special fund.  The report shall also include:

     (1)  The spending plan of the agricultural development and food security special fund;

     (2)  All expenditures of agricultural development and food security special fund moneys;

     (3)  The targeted markets of the expenditures, including the reason for selecting those markets;

     (4)  The persons to be served using the expenditures; and

     (5)  The specific objectives of the expenditures, including measurable outcomes."

     SECTION 2.  Section 243-3.5, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed a state environmental response, energy, and food security tax on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user of petroleum product, other than a refiner.  The tax shall be $1.05 on each barrel or fractional part of a barrel of petroleum product that is not aviation fuel; provided that of the tax collected pursuant to this subsection:

     (1)  5 cents of the tax on each barrel shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  4 cents of the tax on each barrel shall be deposited into the energy security special fund established under section 201-12.8;

     (3)  5 cents of the tax on each barrel shall be deposited into the energy systems development special fund established under section 304A-2169.1;

     (4)  3 cents of the tax on each barrel shall be deposited into the electric vehicle charging system subaccount established pursuant to section 269-33(e); [and]

     (5)  3 cents of the tax on each barrel shall be deposited into the hydrogen fueling system subaccount established pursuant to section 269-33(f)[.]; and

     (6)        cents of the tax on each barrel shall be deposited into the agricultural development and food security special fund established under section 141-  .

     The tax imposed by this subsection shall be paid by the distributor of the petroleum product.

     (b)  In addition to subsection (a), the tax shall also be imposed on each one million British thermal units of fossil fuel sold by a distributor to any retail dealer or end user, other than a refiner, of fossil fuel.  The tax shall be 19 cents on each one million British thermal units of fossil fuel; provided that of the tax collected pursuant to this subsection:

     (1)  4.8 per cent of the tax on each one million British thermal units shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  14.3 per cent of the tax on each one million British thermal units shall be deposited into the energy security special fund established under section 201‑12.8; [and]

     (3)  9.5 per cent of the tax on each one million British thermal units shall be deposited into the energy systems development special fund established under section 304A-2169.1[.]; and

     (4)        cents of the tax on each million British thermal units shall be deposited into the agricultural development and food security special fund established under section 141-  .

     The tax imposed by this subsection shall be paid by the distributor of the fossil fuel."

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to increase the base budget of the department of agriculture to an amount equal to three per cent of the state budget.

     The sums appropriated shall be expended by the department of agriculture for the purposes of this Act.

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2025.

Report Title:

DOA; Agricultural Development and Food Security Special Fund; Environmental Response, Energy, and Food Security Tax; State Budget; Appropriations

Description:

Establishes the Agricultural Development and Food Security Special Fund.  Requires a portion of the Environmental Response, Energy, and Food Security Tax to be deposited into the special fund.  Appropriates funds for the Department of Agriculture in an amount equal to three per cent of the State Budget.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 163

Honolulu, Hawaii

RE:    S.B. No. 678

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Agriculture and Environment, to which was referred S.B. No. 678 entitled:

"A BILL FOR AN ACT RELATING TO AGRICULTURE,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Establish the Agricultural Development and Food Security Special Fund;

     (2)  Require a portion of the Environmental Response, Energy, and Food Security Tax to be deposited into the Special Fund; and

     (3)  Appropriate funds to the Department of Agriculture in an amount equal to three percent of the State Budget.

     Your Committee received testimony in support of this measure from the Department of Agriculture; Hawaiʻi Farmers Union United; Hawaiʻi Farm Bureau; Hawaii Cattlemen's Council, Inc.; Hawaii Food Industry Association; and three individuals.

     Your Committee received comments on this measure from the Department of Taxation, Department of Budget and Finance, Department of the Attorney General, and Tax Foundation of Hawaii.

     Your Committee finds that the Environmental Response, Energy, and Food Security Tax was intended to support critical investments in clean energy, local agricultural production, and environmental response to reduce the State's dependence on imported fossil fuels and food products.  Your Committee further finds that a portion of this tax was allocated to the Agricultural Development and Food Security Special Fund established pursuant to section 141-10, Hawaii Revised Statutes.  Your Committee recognizes that the Agricultural Development and Food Security Special Fund was repealed in 2021 to fortify the general fund due to the COVID-19 pandemic and that since then Hawaii's economy has rebounded and stabilized.  The re-establishment of the Agricultural Development and Food Security Special Fund will promote agriculture and food security, making the State less vulnerable to national and global disruptions.

     According to testimony received by your Committee, this measure, in its current form, contains an appropriation that does not appear to relate to the Agricultural Development and Food Security Special Fund as established in this measure nor does it appropriate funds into or out of the Special Fund.  Your Committee also notes concerns from the Department of the Attorney General that although this measure allows moneys in the Special Fund to be expended to award grants to farmers, it does not provide any qualifying standards for the award of these grants.  Accordingly, amendments to this measure are necessary to address these concerns.

     Your Committee has amended this measure by:

     (1)  Allowing the funds in the Agricultural Development and Food Security Special Fund to be used for the procurement of locally produced agricultural products during federally declared disasters or state emergencies to address food insecurity and stabilize agricultural markets;

     (2)  Inserting qualifying standards for applicants of grants awarded with funds from the Agricultural Development and Food Security Special Fund;

     (3)  Deleting language that would have appropriated funds to the Department of Agriculture in an amount equal to three percent of the State Budget;

     (4)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 678, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 678, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,