Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1277
                                        H.D. 1
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Labor and Environment, to which was
referred H.B. No. 1277, H.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this measure is to exclude from the
definition of "public utility" any facility that reclaims
wastewater, provided that:

     (1)  At least ten per cent of the wastewater processed is
          used by the State or county under a service contract;

     (2)  The sole function of the facility is the processing and
          distribution of secondary treated wastewater;

     (3)  The facility is not processing food wastes; and

     (4)  The facility is not selling water to the residential

     The Department of Health, the City and County of Honolulu
Department of Environmental Services, and U.S. Filter Operating
Services, Inc., presented testimony in support of this measure.
The Consumer Advocate testified in opposition.

     Your Committee finds that the City and County of Honolulu
(City and County) has recently entered into a contract with U.S.

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Filter Operating Services, Inc. (U.S. Filter), to process the
secondarily treated wastewater at Honouliuli for distribution and
use by both the City and County and large commercial users in the
Ewa plain.  This project, which was the result of a Consent
Degree entered into by the U.S. District Court in response to a
suit filed by the U.S. Environmental Protection Agency, will not
provide reclaimed water to residential users.

     Your Committee further finds that the purposes of this
project are to help meet the City and County's obligations to
find beneficial uses for wastewater that is currently discharged
in the ocean after treatment, and to return treated water to the
City and County for use at Honouliuli and for City and County
irrigation purposes.  As such, the project serves no broad public
purpose and should not be regulated as a public utility.

     Your Committee notes, however, that commercial entities
operating in the area have expressed concerns that they would be
forced to purchase the recycled water produced by U.S. Filter at
a price that is not affordable.

     Your Committee has amended this measure by:

     (1)  Adding as a person excluded from the definition of
          public utility, one who owns a facility for the
          reclamation of wastewater;

     (2)  Clarifying that the function of the facility is the
          processing of secondary treated wastewater and
          distribution of the water produced;

     (3)  Adding a provision providing that the purchase of
          reclaimed or recycled water from the exempt facility by
          commercial entities shall be voluntary and available at
          market prices; and

     (4)  Reformatting the new statutory material for the purpose
          of clarity.

     As affirmed by the record of votes of the members of your
Committee on Labor and Environment that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 1277, H.D. 1, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B.
No. 1277, H.D. 1, S.D. 1, and be referred to the Committee on
Commerce and Consumer Protection.

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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and

                                   BOB NAKATA, Chair

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