“HAWAII ADMINISTRATIVE RULES

TITLE 15

DEPARTMENTOF BUSINESS, ECONOMICDEVELOPMENTANDTOURISM

CHAPTER 35

ETHANOL CONTENT IN GASOLINE

§15-35-1§15-35-2§15-35-3§15-35-4§15-35-5§15-35-6§15-35-7

§15-35-8

§15-35-9§15-35-10§15-35- 11§15-35-12§15-35-13

Purpose.Definitions.Schedule of ethanol content requirement.Minimum ethanol content requirement.Monitoring of ethanol content.Ethanol based additives.Monthly reporting requirements ofdistributors.Opportunity for quarterly reporting bydistributors.Request for an exemption.Process for granting an exemption.Violations.Severability.Referral to attorney general.

Historical Note: The mandate requiring blendingof ten per cent ethanol in motor fuel in the State wasoriginally introduced in 1994 through Act 199. Theethanol mandate language in Act 199 became part ofchapter 486E, Hawaii Revised Statutes. Chapter 486Ewas replaced in 1997 by Chapter 486J, Hawaii RevisedStatutes. Substantive changes relative to the ethanolblending mandate have been made to incorporateprovisions of Act 77, SLH 2002, which amended chapter486J, Hawaii Revised Statutes, by: 1) requiring the“petroleum commissioner” to refer intentionalviolations to the attorney general, who may exercise

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§15-35-1

appropriate legal or equitable remedies available tothe State; and 2) changing references to thedepartment and the director of business, economicdevelopment, and tourism in the Petroleum ReportingAct to the “petroleum commissioner”, who is to be thehead of the department’s energy, resources, andtechnology division.

§15-35-1 Purpose. The purpose of this chapteris to provide rules governing implementation of therequirement that gasoline sold in the State for use inmotor vehicles contain ten per cent ethanol by volume,as authorized nd~r cha ter 486J-10 Hawaii RevisedStatutes. [EffbC~ 02 2~O4 ] (Auth: HRS § 486J-lO)(Imp: HRS § 486J-l0)

§15-35-2 Definitions. As used in this chapter,unless a different meaning clearly appears in thecontext:

“Certified” means signed by an authorized companyrepresentative and declared to be complete, true, and

accurate.“CIF Honolulu terminal” denotes the quoted sales

price of motor fuel, which includes the cost,insurance, excise tax, and freight charges to anyterminal in Honolulu, Hawaii.

“Comparable grade” means the grade, based onoctane rating, of the finished (blended) fuel.“Regular” refers to gasoline having an octane ratinggreater than or equal to 85 and less than 88.“Midgrade” refers to gasoline having an octane ratinggreater than or equal to 88 and less than or equal to90. “Premium” refers to gasoline having an octanerating greater than 90.

“Competitively priced” means fuel-grade ethanolCIF Honolulu terminal for which the wholesale price,minus the value of all applicable federal, state, andcounty tax credits and exemptions, is not more thanthe average posted wholesale rack price of unleaded

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gasoline of comparable grade, as published by the U.S.Department of Energy, Energy InformationAdministration in Petroleum Marketing Monthly, Table31 and available on the Energy InformationAdministration website, or as otherwise published orposted, as prescribed by the petroleum commissioner.

“Denatured fuel ethanol” means fuel-grade ethanolwhich meets specification ASTM D 4806, “StandardSpecification for Denatured Fuel Ethanol for Blendingwith Gasoline for Use as Automotive Spark IgnitionEngine Fuel” published by the American Society forTesting and Materials.

“Distributor” means and includes:(1) Every person who refines, manufactures,

produces, or compounds spark ignition enginefuel in the State, and sells it at wholesaleor to retail dealers;

(2) Every person who imports or causes to beimported into the State or exports or causesto be exported from the State, any sparkignition engine fuel;

(3) Every person who acquires spark ignitionengine fuel through exchanges with anotherdistributor; and

(4) Every person who acquires spark ignitionengine fuel from a licensed distributor as awholesaler thereof.

“Gasoline” includes conventional, oxygenated, andreformulated gasolines.

“Person” means any person, firm, association,organization, partnership, business trust, limitedliability corporation, corporation, or company.“Person” also includes any city, county, publicdistrict or agency, the State or any department oragency thereof, and the United States to the extentauthorized by federal law.

“Petroleum commissioner” or “commissioner” is asdefined in §486J-l, Hawaii Revised Statutes.

“Retail dealer” means and includes a person whopurchases liquid fuel from a licensed distributor, and

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sells the liquid fuel at retail. Only sales ofgasoline for consumption or used by the purchaser, andnot for resale, are sales at retail.

“Ten per cent ethanol by volume” means a blend ofgasoline and ethanol which has an ethanol content,exclusive of denaturants and permitted contaminants,that is not less than 9.2 per cent by volume and notmore than 10.0 per cent by volume of the blend asdetermined by an appropriate United StatesEnvironmental Protection Agency or American Society ofTesting Materials standard method of analysis ofalcohol content in motor fuels. [Eff.OCT 02 2004(Auth: HRS §8 486J-l and 486J-lO) (Imp: HRS §8 486J-land 486J-lO)

§15-35-3 Schedule of ethanol contentrequirement. Starting no later than eighteen monthsafter the promulgation of this rule, at least eighty-five per cent of all gasoline supplied to a retailer,sold at retail, or sold to a private, state, ormunicipal fleet for use in motor vehicles, andintended as a final product for fueling motor vehiclesin the state of Hawaii, shall contain ten per centethanol by volume. [Eff.OCT 02 2004 1 (Auth: HRS §486J-l0) (Imp: HRS § 486J-l0)

§15-35-4 Minimum ethanol content requirement.Each distributor supplying fuel to one or more retail

stations or to one or more private or municipal fleetsshall meet the minimum ethanol content requirement ofthis chapter on a monthly basis. If a distributor iseligible for quarterly reporting as described inSection 15-37-8, the distributor shall meet theminimum ethanol content requirement on a quarterly

basis. [EffOCT 02 2004 1 (Auth: HRS § 486J-lO)(Imp: HRS § 486J-l0)

§15-35-5 Monitoring of ethanol content.Distributors shall permit the petroleum commissioneror authorized agent(s) thereof to inspect the rack

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meter loading facilities of the distributor, takesamples, and review records during regular businesshours to ensure the mandated volume of ethanol isincluded in gasoline sold by the distributor.[Eff. OCT 02 2004 (Auth: HRS § 486J-lO) (Imp: HRS

§ 486J-l0)

§15-35-6 Ethanol based additives. (a) Gasolineblended with an ethanol-based product, such as ethyltertiary butyl ether, shall be considered to be in

conformance with this chapter if the quantity ofethanol used in the manufacture of the ethanol-basedproduct represents ten per cent, by volume, of thefinished motor fuel.

(b) Ethanol used in the manufacture of ethanol-based gasoline additives, such as ethyl tertiary butylether, may be considered to contribute to thedistributor’s conformance with this section; providedthat the total quantity of ethanol used by thedistributor is an amount equal to or greater than theamount pf. ethanol required under this section.[Eff.ULII 022004 1 (Auth: HRS § 486J-l0) (Imp: HRS§ 486J-lO)

§15-35-7 Monthly reporting requirements of

distributors. (a) Each distributor shall file withthe petroleum commissioner monthly in the manner andon forms prescribed, prepared and furnished by thepetroleum commissioner, a statement certified by thechief executive officer or other authorized officer ofthe distributor showing:

(1) The number of gallons of fuel-grade ethanolpurchased by the distributor during thecalendar month of the report;

(2) The price and amount of ethanol availablefor sale by the distributor during thecalendar month of the report;

(3) The number of gallons of ethanol blendedgasoline, by grade, purchased during thecalendar month of the report;

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(4) The number of gallons of non-ethanol-blended

gasoline purchased by the distributor duringthe calendar month of the report;

(5) The number of gallons of ethanol-blendedgasoline, by grade, sold by the distributorduring the calendar month of the report;

(6) The number of gallons of non-ethanol-blendedgasoline, by grade, sold by the distributorduring the calendar month of the report;

(7) The complete name and address of supplier orsuppliers from whom the distributorpurchased the ethanol or ten per centethanol blended gasoline reported above; and

(8) Any other information the petroleumcommissioner determines from time to time asbeing required to ensure compliance withchapter 486J-l0, Hawaii Revised Statutes.

(b) Individual retail dealers shall not berequired to file the monthly report unless they arealso a distributor or compound or blend ethanol intogasoline other than at the distributor’s terminalloading rack.

(c) The monthly report shall be filed on orbefore the last day of the calendar month followingthe month of the report.

(d) In the case of a failure to file a monthlyreport required under this section on the date and inthe manner prescribed herein, or a failure to includeany of the information required to be shown on themonthly report filed under this section or to show the

correct information, the distributor shall be assessed$300 for each day during which the failure continues.The maximum penalty under this subparagraph onfailures with respect to any one monthly report shallnot exceed $10,000.

(e) Payment of late filing fees imposed pursuantto this section must be made by cash, cashier’s check,or certified check made payable to the “State ofHawaii” and delivered to the petroleum commissioner.The name of the distributor for whom ~a~’ment is madeshall be written on the check. [Eff.(JLJ 02 2004 ii(Auth: HRS § 486J-lO) (Imp: HRS § 486J-lO)

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§15-35-8

§15-35-8 Opportunity for quarterly reporting bydistributors. (a) Upon satisfying the ethanolblending and reporting requirements on a timely basisfor at least six consecutive months, the distributor,upon notification by the petroleum commissioner, mayelect to file quarterly reports, in lieu of monthlyreports.

(b) Quarterly reports shall be filed, in themanner and on forms prescribed, prepared and furnished

by the petroleum commissioner, for quarters ending onMarch 31, June 30, September 30 and December 31.

(c) Reports shall be filed on or before the lastday of the calendar month following the last month ofthe quarterly report.

(d) In the case of a failure to file a quarterlyreport required under this section on the date and inthe manner prescribed therefor, or a failure toinclude any of the information required to be shown onthe quarterly report filed under this section or toshow the correct information, the distributor shall beassessed $300 for each day during which the failurecontinues. The maximum penalty under thissubparagraph on failures with respect to any onequarterly report shall not exceed $10,000.

(e) Payment of late filing fees imposed pursuantto this section must be made by cash, cashier’s check,or certified check made payable to the “State ofHawaii” and delivered to the petroleum commissioner.The name of the distributor for whom payment is madeshall be written on the check.

(f) In the case of failure to meet the ethanolblending or quarterly reporting requirements, and uponnotification by the petroleum commissioner,distributors previously approved for quarterlyreporting may be required to once again file monthlyreports, in lieu of quarterly reports, beginning withthe calendar month in which notice of such is given bythe commissioner. [Eff. OCT 02 2OnA ] (Auth: HRS §486J-l0) (Imp: HRS § 486J-l0)

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§15-35-9

§15-35-9 Request for an exemption. Thepetroleum commissioner may authorize the sale ofgasoline that does not meet the requirement of ten percent ethanol if the petroleum commissioner determinesthat

(1) Sufficient quantities of competitively-priced ethanol are not available to meet the

minimum requirements of this chapter; or(2) In the event of any other circumstance for

which the petroleum commissioner determinescompliance with this chapter would causeundue hardship. [Eff.~01 o~2nnA(Auth: HRS § 486J-l0) ~mp:~~86J-l0)

§15-35-10 Process for requesting an exemption.(a) To obtain an exemption, in whole or in part, fromthe ethanol blending requirements, a distributor shallsubmit to the petroleum commissioner, in a mannerallowed by the petroleum commissioner, a request forexemption, along with supporting documentation whichmust demonstrate that--

(1) Sufficient quantities of competitively-priced ethanol are not available to meet theminimum requirements of this chapter; or

(2) Compliance with the ethanol blendingrequirement would cause undue hardship.

(b) Requests for exemption may be submitted atany time and must be accompanied by supportingdocumentation.

(c) Exemptions may be granted for up to ninetydays, and they may be renewed, if supportingdocumentation is provided.

(d) Exemptions may be granted in whole or inpart. When granting an exemption in part, thecommissioner may, depending upon the circumstances,completely relieve a distributor from complying with aportion of blending requirements, or the commissionermay require a distributor to blend all or some of theexempted fuel in future months.

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(e) If a distributor is seeking an exemption --

(1) Under paragraph (a) (1) of this section, the

types of documentation that are to accompanythe request must include, but are notlimited to, actual price and quantity quotesfrom vendors or suppliers, with contactinformation (address, phone number, email,and website) of said vendors and suppliers,and additional documentation that exhibitsgood faith efforts to meet the ethanolblending requirement; or

(2) Under paragraph (a) (2) of this section, thedistributor must identify what portion ofthe ethanol blending requirement should besubject to the exemption, describe thespecific nature of the hardship thatprecludes compliance, with documentation,and provide additional documentation thatexhibits good faith efforts to meet theethanol blending requirement.

(3) Retroactively, due to sudden and unforeseen

circumstances beyond the control of thedistributor (such as war, strikes, lockouts,or acts of God) , the distributor shallnotify the petroleum commissioner, in amanner allowed by the petroleumcommissioner, within thirty days of theevent, of the distributor’s intent torequest an exemption, the reason for theexemption request, and the anticipatedperiod of the exemption request. Thedistributor shall submit a formal requestfor exemption within 60 days of the event.If the exemption request is subsequentlydenied, penalties for nonconforming fuel maybe assessed.

(f) Requests for exemption shall be signed andcertified by the chief executive officer or otherauthorized officer of the company and addressed to theHawaii State Department of Business, Economic

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Development and Tourism, Petroleum Commissioner, P0Box 2359, Honolulu Hawaii, 96804, or to such otheraddress as the commissioner may post or announce onthe Department website.

(g) The petroleum commissioner shall endeavor toprovide to the distributor, within forty-five days ofreceipt of a request that complies with this section,

a written determination as to whether thedistributor’s request has been granted or denied.

(h) While a request for an exemption is pendingand prior to the issuance of a written determinationas to whether the distributor’s request is granted, noassessment or accr~ial of penalties shall occur.[Eff.OCJ 02 2004 1 (Auth: HRS § 486J-l0) (Imp: HRS§ 486J-l0)

§15-35-11 Violations. Any person who engages ina practice which does not comply with the requirementsof this chapter or exemption issued pursuant theretoshall be in violation of this chapter and shall besubject to enforcement action by the petroleum

commissioner. [Eff. OCT 02 7~Q4] (Auth: HRS § 486J-10) (Imp: HRS § 486J-lO)

§15-35-12 Severability. If any provision ofthis chapter is held invalid, the invalidity shall notaffect the remainder of this chapter and, to this end,the provisions of this chapter are severable.[Eff. OCT 02 2004 1 (Auth: HRS § 486J-l0) (Imp: HRS§ 486J-lO)

§15-35-13 Referral to attorney general. Thepetroleum commissioner shall refer any violations ofany provision of this chapter to the attorney general,who may exercise appropriate legal or equitableremede available to the State.”[Eff.b~T 022004 1 (Auth: HRS § 486J-9(b)) (Imp:HRS § 486J-9(b))

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