Bill Text: HI SB772 | 2011 | Regular Session | Amended
Bill Title: Biofuel Production Facilities; Nameplate Capacity; Certified Credits
Spectrum: Moderate Partisan Bill (Democrat 6-1)
Status: (Engrossed - Dead) 2011-04-29 - (H) Conference Committee Meeting will reconvene on Friday, 04-29-11 at 5:10pm in Conference Room 225. [SB772 Detail]
Download: Hawaii-2011-SB772-Amended.html
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THE SENATE |
S.B. NO. |
772 |
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TWENTY-SIXTH LEGISLATURE, 2011 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 2 |
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A BILL FOR AN ACT
RELATING TO BIOFUEL FACILITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that green diesel, biodiesel, biojet, and ethanol are examples of fuels that could be produced in Hawaii from locally grown feedstock. The local production of these biofuels could contribute to Hawaii's renewable energy objectives, reduce the impact of world oil price volatility, provide a measure of energy security, provide economic diversification, encourage increased agricultural production, and circulate Hawaii's energy expenditures within Hawaii's economy.
The purpose of this Act is to expand the existing ethanol facility tax incentive to include other liquid biofuels generated from agricultural feedstocks.
SECTION 2. Section 235-110.3, Hawaii Revised Statutes, is amended as follows:
"§235-110.3 [Ethanol] Biofuel production facility
tax credit. (a) [Each year during the credit period,] Beginning
January 1, 2014, there shall be allowed to each taxpayer subject to the
taxes imposed by this chapter, [an ethanol] a biofuel production
facility tax credit that shall be applied to the taxpayer's net income tax
liability, if any, imposed by this chapter for the taxable year in which the
credit is properly claimed.
For each [qualified ethanol] qualifying biofuel production
facility, the annual dollar amount of the [ethanol] biofuel
production facility tax credit during the eight-year period, for the
biofuel production facility, shall be equal to thirty per cent of its annual
nameplate capacity if the facility's nameplate capacity is greater than
five hundred thousand [but less than fifteen million] gallons. [A]
For each qualifying biofuel production facility, a taxpayer may claim
this credit [for each qualifying ethanol facility]; provided that:
(1) The claim for this credit by
any taxpayer of a qualifying [ethanol] biofuel production facility
shall not exceed one hundred per cent of the total of all investments made by
the taxpayer in the qualifying [ethanol] biofuel production
facility [during the credit period];
(2) The qualifying [ethanol]
biofuel production facility operated at a level of production of at
least seventy-five per cent of its nameplate capacity on an annualized basis;
(3) The qualifying biofuel production facility uses agricultural feedstock for at least seventy-five per cent of its production output;
[(3)] (4) The
qualifying [ethanol] biofuel production facility is in production
on or before January 1, 2017; and
[(4)] (5) No
taxpayer that claims the credit under this section shall claim any other tax
credit under this chapter for the same taxable year.
(b) As used in this section:
"Agricultural feedstock" includes but is not limited to:
(1) Sugar cane, byproducts from sugar cane, sweet sorghum, sorghum, sugar beets, woody biomass, grasses, vegetable or seed oil, fiber, and other materials grown on agricultural lands or other lands approved by the State for the harvesting of biomass; and
(2) Unused byproducts of food, feed, fiber, or other products;
provided that used cooking oils shall not be considered agricultural feedstock.
"Biofuel" means ethanol, biodiesel, renewable diesel, renewable jet fuel, or any other liquid fuel that meets the relevant fuel specifications of ASTM International and is produced from agricultural feedstock.
"Credit period" means a maximum period of eight years beginning from
the first taxable year in which the qualifying [ethanol] biofuel
production facility begins production, even if actual production is not
at seventy-five per cent of nameplate capacity.
"Investment" means a nonrefundable capital expenditure related to the
development and construction of any qualifying [ethanol] biofuel
production facility, including processing equipment, boilers, turbines,
generators, waste treatment systems, pipelines, and liquid storage tanks at
the facility or remote locations, including expansions or modifications[.];
provided that the term "investment" shall include direct capital
expenditures in agricultural infrastructure, including irrigation and drainage
systems, land clearing and leveling, establishment of crops, planting, and
cultivation where the biofuel production facility and agricultural operations
are integrated. Capital expenditures shall be those direct and
certain indirect costs determined in accordance with section 263A of the
Internal Revenue Code, relating to uniform capitalization costs, and utility
costs incurred during construction that are capitalized and not expensed,
but shall not include expenses for compensation paid to officers of the
taxpayer, pension and other related costs, rent for land, the costs of
repairing and maintaining the equipment or facilities, training of operating
personnel, [utility costs during construction,] property taxes, costs
relating to negotiation of commercial agreements not related to development or
construction, or service costs that can be identified specifically with a
service department or function or that directly benefit or are incurred by
reason of a service department or function. For the purposes of
determining a capital expenditure under this section, the provisions of section
263A of the Internal Revenue Code shall apply as it read on March 1,
2004. For purposes of this section, investment excludes land costs and
includes any investment for which the taxpayer is at risk, as that term is used
in section 465 of the Internal Revenue Code (with respect to deductions limited
to amount at risk).
"Nameplate capacity" means the qualifying [ethanol] biofuel
production facility's net production design capacity, in gallons of [motor
fuel grade ethanol] biofuel per year.
"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.
"Qualifying [ethanol] biofuel production" means [ethanol]
biofuel produced or generated from [renewable, organic feedstocks,
or waste materials, including municipal solid waste.] agricultural
feedstock. All qualifying production shall be fermented, distilled, transesterified,
gasified, pyrolized, combusted, or produced by other physical,
chemical, biochemical, or thermochemical conversion methods [such as
reformation and catalytic conversion and dehydrated] at the facility.
"Qualifying [ethanol] biofuel production facility" or
"facility" means a facility located in Hawaii [which] that
produces [motor] or generates, directly from agricultural feedstock,
fuel grade [ethanol meeting the minimum specifications by the American
Society of Testing and Materials standard D-4806, as amended.] biofuel,
meeting the relevant ASTM International specifications for the particular fuel.
(c) In the case of a taxable year in which the cumulative claims for the
credit by the taxpayer of a qualifying [ethanol] biofuel
production facility [exceeds] exceed the cumulative investment
made in the qualifying [ethanol] biofuel production facility by
the taxpayer, only that portion that does not exceed the cumulative investment
shall be claimed and allowed.
(d) The department of business, economic development, and tourism shall:
(1) Maintain records of the total amount of investment made by each taxpayer in a facility;
(2) Verify the amount of the qualifying investment;
(3) Total all qualifying and cumulative investments that the department of business, economic development, and tourism certifies; and
(4) Certify the total amount of the tax credit for each taxable year and the cumulative amount of the tax credit during the credit period.
Upon each determination, the department of business, economic development, and tourism shall issue a certificate to the taxpayer verifying the qualifying investment amounts, the credit amount certified for each taxable year, and the cumulative amount of the tax credit during the credit period. The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation. Notwithstanding the department of business, economic development, and tourism's certification authority under this section, the director of taxation may audit and adjust certification to conform to the facts.
If in any year, the annual amount of certified credits reaches $12,000,000 in the aggregate, the department of business, economic development, and tourism shall immediately discontinue certifying credits and notify the department of taxation. In no instance shall the total amount of certified credits exceed $12,000,000 per year. Notwithstanding any other law to the contrary, this information shall be available for public inspection and dissemination under chapter 92F.
(e) If the credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1. All claims for a credit under this section must be properly filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(f) If a qualifying [ethanol] biofuel production facility
or an interest therein is acquired by a taxpayer prior to the expiration of the
credit period, the credit allowable under subsection (a) for any period after
such acquisition shall be equal to the credit that would have been allowable
under subsection (a) to the prior taxpayer had the taxpayer not disposed of the
interest. If an interest is disposed of during any year for which the
credit is allowable under subsection (a), the credit shall be allowable between
the parties on the basis of the number of days during the year the interest was
held by each taxpayer. In no case shall the credit allowed under
subsection (a) be allowed after the expiration of the credit period.
[(g) Once the total nameplate capacities of qualifying ethanol production
facilities built within the State reaches or exceeds a level of forty million
gallons per year, credits under this section shall not be allowed for new
ethanol production facilities. If a new facility's production capacity
would cause the statewide ethanol production capacity to exceed forty million
gallons per year, only the ethanol production capacity that does not exceed the
statewide forty million gallon per year level shall be eligible for the credit.
(h)] (g) Prior to construction of any new qualifying [ethanol]
biofuel production facility, the taxpayer shall provide written notice
of the taxpayer's intention to begin construction of a qualifying [ethanol]
biofuel production facility. The information shall be provided to
the department of taxation and the department of business, economic
development, and tourism on forms provided by the department of business,
economic development, and tourism, and shall include information on the
taxpayer, facility location, facility production capacity, anticipated
production start date, and the taxpayer's contact information.
Notwithstanding any other law to the contrary, this information shall be
available for public inspection and dissemination under chapter 92F.
[(i)] (h) The taxpayer shall provide written notice to the
director of taxation and the director of business, economic development, and
tourism within thirty days following the start of production. The notice
shall include the production start date and expected [ethanol fuel] biofuel
production for the next twenty-four months. Notwithstanding any other law
to the contrary, this information shall be available for public inspection and
dissemination under chapter 92F.
[(j)] (i) If a qualifying [ethanol] biofuel
production facility fails to achieve an average annual production of at least
seventy-five per cent of its nameplate capacity for two consecutive years, the
stated capacity of that facility may be revised by the director of business,
economic development, and tourism to reflect actual production for the purposes
of determining [statewide production capacity under subsection (g) and]
allowable credits for that facility under subsection (a). Notwithstanding
any other law to the contrary, this information shall be available for public
inspection and dissemination under chapter 92F.
[(k) Each calendar year during the credit period,] (j) At a time
and frequency specified by the director of business, economic development, and
tourism, the taxpayer shall provide information to the director of
business, economic development, and tourism on the [number of] gallons [of
ethanol produced] and type of biofuel produced and sold during the
previous calendar year, how much was sold in Hawaii versus overseas, [feedstocks]
the percentage of Hawaii-grown agricultural feedstock and other agricultural
feedstock used for [ethanol] biofuel production, the number
of employees of the facility, and the projected [number of] gallons of [ethanol]
biofuel production for the succeeding year.
[(l)] (k) In the case of a partnership, S corporation,
estate, or trust, the tax credit allowable is for every qualifying [ethanol]
biofuel production facility. The cost upon which the tax credit is
computed shall be determined at the entity level. Distribution and share
of the tax credit shall be determined pursuant to section 235-110.7(a).
[(m)] (l) Following each year in which a credit under this
section has been claimed, the director of business, economic development, and
tourism shall [submit a written] include in the director's annual
report to the governor and legislature [regarding the production and sale of
ethanol. The report shall include:] the following:
(1) The
number, location, and nameplate capacities of qualifying [ethanol] biofuel
production facilities in the State;
(2) The
total number of gallons [of ethanol produced] of biofuel produced
and sold by those facilities, and total biofuel sales during the previous
year; [and]
(3) The
projected number of gallons [of ethanol production for] of biofuel
expected to be produced in the succeeding year[.]; and
(4) The total number of employees employed by each facility, including those employed in agricultural operations.
[(n)] (m) The director of taxation shall prepare forms that
may be necessary to claim a credit under this section. Notwithstanding
the department of business, economic development, and tourism's certification
authority under this section, the director may audit and adjust certification
to conform to the facts. The director may also require the taxpayer to
furnish information to ascertain the validity of the claim for credit made
under this section and may adopt rules necessary to effectuate the purposes of
this section pursuant to chapter 91."
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, 2030, and shall apply to taxable years beginning after December 31, 2013.
Report Title:
Biofuel Production Facilities; Nameplate Capacity; Certified Credits
Description:
Amends the existing ethanol facility income tax credit to include other biofuel production and to enable larger facilities to be eligible for the tax incentive. Effective July 1, 2030. (SB772 HD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
