STAND. COM. REP. NO. 2531

Honolulu, Hawaii

RE: S.B. No. 3229

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committees on Energy, Economic Development, and Tourism and Government Operations, to which was referred S.B. No. 3229 entitled:

"A BILL FOR AN ACT RELATING TO GEOTHERMAL ROYALTIES,"

beg leave to report as follows:

The purpose and intent of this measure is to:

(1) Increase the percentage of royalties received by the State from geothermal resources that are to be paid to the county in which the geothermal resources are located;

(2) Require the royalties paid to a county to be used for further geothermal resources discovery and development; and

(3) Require the county to submit an annual report to the Legislature on how the royalties distributed to them were used.

Your Committees received testimony in support of this measure from three individuals. Your Committees received testimony in opposition to this measure from the Department of Land and Natural Resources. Your Committees received comments on this measure from the Hawaii State Energy Office.

Your Committees find that geothermal energy is a firm source of cost-effective, renewable energy in Hawaii that will reduce the State's reliance on fossil fuels, contribute to Hawaii's energy diversification, and help the State reach its renewable energy standard goals. According to testimony received by your Committees, none of the geothermal royalties distributed have been used for assessing and exploring geothermal resources in the State.

Your Committees recognize that geothermal royalties help support the annual operating budget of Department of Land and Natural Resources' Mineral Resources Program, which regulates well drilling operations and manages the mining and leasing of geothermal resources in the State. According to testimony from the Department, geothermal royalties also support the annual operating budget of their Land Division, Office of Conservation and Coastal Lands, and Dam Safety Program.

Accordingly, your Committees have amended this measure by:

(1) Reverting the percentage of royalties from geothermal resources that are paid to a county to thirty percent and capping the amount at $600,000;

(2) Establishing the University of Hawaii Geothermal Exploration Special Fund for the Hawaii Groundwater and Geothermal Resources Center at the university to further the discovery and development of geothermal resources;

(3) Requiring the Department of Land and Natural Resources and the University of Hawaii to submit annual reports to the Legislature on how they utilized the royalties distributed to them;

(4) Establishing a cap of $1,000,000 on the amount of royalties distributed by the Board of Land and Natural Resources to the State; and

(5) Inserting an effective date of July 1, 2050, to encourage further discussion.

As affirmed by the records of votes of the members of your Committees on Energy, Economic Development, and Tourism and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 3229, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 3229, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Energy, Economic Development, and Tourism and Government Operations,

________________________________ SHARON MORIWAKI, Chair

________________________________ GLENN WAKAI, Chair