SB743 HD1

SECTION 1. The legislature finds that coffee is one of the largest agricultural crops in the State and is a highly valued commodity in Hawai‘i's economy. In recent years, the coffee berry borer, a small beetle, has infested coffee crops in the Kona and Ka‘ū regions of Hawai‘i island, and more recently has been detected on O‘ahu, Maui, Kaua‘i, and Lana‘i. In 2020, coffee leaf rust, caused by a fungal pathogen, was discovered for the first time in the State on Maui and Hawai‘i island. These two pests threaten the viability of the State's entire coffee industry. Efforts to control coffee berry borer and coffee leaf rust are critical to the local coffee industry, and it is incumbent upon the State to continue to support these efforts.

The legislature further finds that in response to these threats to the industry, the coffee berry borer pesticide subsidy program was established by Act 105, Session Laws of Hawaii 2014 (Act 105), to assist Hawai‘i coffee farmers with offsetting the cost of pesticides containing the fungus Beauveria bassiana, which is known to control coffee berry borer. Due to a longer-than-anticipated implementation of Act 105, in 2017, the legislature extended the pesticide subsidy program from its original sunset date of June 30, 2019, to June 30, 2021, via Act 65, Session Laws of Hawaii 2017 (Act 65). After continued programmatic success and the initial discovery of coffee leaf rust in the islands, in 2021, the legislature extended the pesticide subsidy program for another two years, adding a subsidy for coffee leaf rust pesticides.

As of December 9, 2022, the department of agriculture has received nine hundred eighty receipts for reimbursement under the coffee berry borer pesticide subsidy program, expending a total of $812,319.99 for the mitigation of coffee berry borer and coffee leaf rust throughout the State. The legislature finds that, as illustrated by program demand, coffee berry borer and coffee leaf rust continue to pose a severe threat to the State's coffee industry, and it is incumbent upon the State to continue supporting farmers' mitigative efforts, including through reducing the financial burden of having to purchase certain pesticides at market value.

The legislature additionally finds that in addition to pesticides, fertilizers are also vital to soil health and plant nutrition, which can improve the health of coffee plants and their resistance to pests and thereby ultimately increase the quantity and quality of Hawaii's premium coffee crop.

Accordingly, the purpose of this Act is to:

(1) Include the costs to purchase certain fertilizers under the grant subsidies provided through the pesticide subsidy program;

(2) Rename the program as the pesticide and fertilizer subsidy program and the manager position as the pesticide and fertilizer subsidy program manager;

(3) Extend the pesticide and fertilizer subsidy program to June 30, 2025;

(4) Extend the pesticide and fertilizer subsidy manager position, including the position's exemptions from civil service and collective bargaining laws, until June 30, 2026; and

(5) Appropriate funds for the program and program manager position.

SECTION 2. Act 105, Session Laws of Hawaii 2014, as amended by section 1 of Act 152, Session Laws of Hawaii 2015, as amended by section 2 of Act 65, Session Laws of Hawaii 2017, as amended by section 2 of Act 32, Session Laws of Hawaii 2018, as amended by section 43 of Act 111, Session Laws of Hawaii 2019, as amended by section 2 of Act 138, Session Laws of Hawaii 2021, is amended as follows:

1. By amending section 3 to read:

"SECTION 3. (a) There is established in the department of agriculture a pesticide and fertilizer subsidy program to be administered by the department beginning on July 1, 2014, and ending on June 30, [~~2023.~~] 2025. The department shall grant subsidies to coffee growers to assist the coffee growers in offsetting the costs of purchasing any pesticide or fertilizer that is listed by the department pursuant to subsection (f).

(b) Applications for subsidies by coffee growers shall be submitted on a form furnished by the department and shall be filed with accompanying documentation of the costs of purchasing the pesticide[;] or fertilizer; provided that:

(1) The applicant shall indemnify and hold harmless the State and its officers, agents, and employees from all claims arising out of or resulting from the pesticide or fertilizer purchased; and

(2) The department may request that an applicant provide necessary information for the purposes of verifying the size or sale weight, as applicable, and amount of the pesticide or fertilizer purchased.

(c) Documentation of pesticide or fertilizer costs, as requested by the department, shall be filed for pesticides or fertilizers purchased within the immediately preceding fiscal year of filing and shall be effective for pesticide or fertilizer costs incurred after June 30, 2014, and before July 1, [~~2023.~~] 2025.

(d) Funds shall be disbursed upon approval on an annual basis by the department to the coffee grower for up to [~~seventy‑five~~]:

(1) Seventy-five per cent of the costs incurred for the purchase of the pesticide or fertilizer before July 1, 2016[~~, and for up to fifty~~];

(2) Fifty per cent of the costs incurred for the purchase of the pesticide or fertilizer for the period beginning after June 30, 2016, and before July 1, 2023[.]; and

(3) Seventy-five per cent of the costs incurred for the purchase of the pesticide or fertilizer for the period beginning July 1, 2023, through June 30, 2025.

(e) The department shall aggregate the total subsidy applications pursuant to this section and divide and distribute the available subsidy funds on a pro rata basis; provided that no single coffee grower shall receive subsidies that are more than $600 per year for coffee berry borer control and more than $600 per year for coffee leaf rust control per acre of land in coffee production; provided further that no single coffee grower shall receive subsidies that are more than $9,000 per year; provided further that no single coffee grower shall receive subsidies that total more than $6,000 per year for the period after June 30, 2018, and before July 1, 2021; provided further that no single coffee grower shall receive subsidies that total more than $12,000 per year for the period after June 30, 2021, and before July 1, [~~2023.~~] 2025.

(f) The department shall establish a list of [~~pesticides~~]:

(1) Pesticides that are registered with the United States Environmental Protection Agency and are licensed with the State that contain Beauveria bassiana, a fungus known to eradicate the coffee berry borer, as an active ingredient[. ~~The department shall also establish a list of pesticides~~];

(2) Pesticides that are registered with the United States Environmental Protection Agency; are licensed with the State; and are contact and systemic fungicides that, when combined, are effective against coffee leaf rust[.]; and

(3) Fertilizers that are synthetic substances allowed for use in organic crop production under the National List of Allowed and Prohibited Substances pursuant to title 7 Code of Federal Regulations section 205.601 and approved by the department for use on coffee plants.

(g) There is established within the department a pesticide and fertilizer subsidy program manager position, which shall be a full-time, temporary position exempt from chapters 76 and 89, Hawaii Revised Statutes. The pesticide and fertilizer subsidy program manager shall possess a requisite level of knowledge and expertise in the area of program management necessary to carry out the duties of the position. The pesticide and fertilizer subsidy program manager shall:

(1) Facilitate the efficient division and distribution of available subsidy funds; and

(2) Manage the day-to-day coordination for the pesticide and fertilizer subsidy program.

The pesticide and fertilizer subsidy program manager shall receive a salary of not more than $50,000 per year. The pesticide and fertilizer subsidy program manager position, including the position's exemption from chapters 76 and 89, Hawaii Revised Statutes, shall expire on June 30, [~~2024.~~] 2026.

(h) Not later than twenty days prior to the convening of the regular session of [~~2023,~~] 2025, the department shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature on the results of the subsidy program and whether the program should be allowed to expire or be extended, and if extended, with or without modification.

(i) Actions taken by the department pursuant to this section shall be exempt from the rulemaking requirements of section 91-3, Hawaii Revised Statutes.

(j) As used in this Act, "department" means the department of agriculture."

2. By amending section 6 to read:

"SECTION 6. This Act shall take effect on July 1, 2014; provided that:

(1) Section 3 shall be repealed on June 30, [~~2023,~~] 2025, except that section 3(g) shall be repealed on June 30, [~~2024;~~] 2026; and

(2) The amendment made to section 149A-13.5(b), Hawaii Revised Statutes, under section 2 of this Act shall not be repealed when section 149A-13.5(b), Hawaii Revised Statutes, is repealed and reenacted on June 30, 2015, by section 4 of Act 168, Session Laws of Hawaii 2010."

SECTION 3. Section 149A-13.5, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) There is established within the treasury of the State, a pesticide use revolving fund. The fund shall be administered by the department for the purposes of this section. The fund shall consist of:

(1) Licensing and registration fees and charges collected by the department under section 149A-13(b);

(2) All fees collected by the department through the collection of training fees in accordance with subsection (c);

(3) Funds appropriated for the pesticide and fertilizer subsidy program established under Act 105, Session Laws of Hawaii 2014; and

(4) All penalties and fines collected by the department under section 149A-41.

(b) Moneys in the pesticide use revolving fund shall be expended by the department:

(1) To support the pesticide program's registration and licensing, certification and education, and compliance monitoring activities;

(2) To establish pesticide training workshops and educational programs, including, but not limited to, eradication and control programs for pests designated in section 141-3, using the best available technology and best practices in a manner consistent with state and federal law;

(3) To develop integrated pest management strategies, the pesticide and fertilizer subsidy program created under Act 105, Session Laws of Hawaii 2014, and other services for pesticide users such as the agricultural pest control industry, the structural pest control industry, and consumer users of pesticides, which provide pesticide instruction in areas, including but not limited to the collection, disposal, and recycling of pesticide containers; and

(4) For all other pesticide services deemed necessary by the department.

Moneys from the revolving fund may be used for personnel, services, materials, and equipment for the purposes of this section.

Moneys expended by the department from the pesticide use revolving fund for training workshops, educational programs, and other services for the agricultural pest control industry, the structural pest control industry, and consumer groups shall be expended in a manner that appropriately addresses the needs of each category of pesticide user."

SECTION 4. 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 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 to be deposited into the pesticide use revolving fund established under section 149A-13.5, Hawaii Revised Statutes.

SECTION 5. There is appropriated out of the pesticide use revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 for the operation and implementation of the pesticide subsidy and fertilizer program.

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

SECTION 6 Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on June 30, 3000; provided that sections 4 and 5 of this Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	743
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII		H.D. 1