Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1429
                                     S.D. 1
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Energy and Environmental Protection, to
which was referred S.B. No. 1429, S.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to exclude from the definition
of "public utility" any facility that reclaims wastewater,
provided that at least ten percent of the wastewater processed is
used by the State or county.

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

     According to the testimony, the City is under federally
mandated requirements for wastewater reuse.  If these
requirements are not fulfilled, the City will be subject to fines
and penalties.  Following the issuance of a request for
proposals, the City entered into a public/private partnership
with U.S. Filter Operating Services, Inc., that will result in
the construction of a water treatment facility in the Ewa Plains
to process wastewater from the City's Honouliuli treatment
facility.  Approximately 10 million gallons per day of recycled
water will be produced.  A portion of the water will be resold to
the City at a price established through a competitive bidding

                                 STAND. COM. REP. NO. 1345
                                 Page 2

process.  After undergoing a demineralization process, the
remaining water will be sold to companies at Campbell Industrial
Park for use in certain industrial processes.

     Your Committee has amended this bill by:

     (1)  Specifying that the primary, rather than sole, function
          of an exempt facility shall be the processing of
          secondary treated wastewater;

     (2)  Deleting the distribution of secondary treated
          wastewater as a primary function of an exempt facility;

     (3)  Prohibiting an exempt facility from distributing or
          making direct sales of water to residential customers;

     (4)  Authorizing an exempt facility to distribute and sell
          processed wastewater to entities not covered by a state
          or county service contract; provided that, in the
          absence of regulatory oversight and direct competition,
          the distribution and sale of processed wastewater shall
          be reasonable and fair; and

     (5)  Making technical, nonsubstantive amendments for the
          purpose of clarity.

     As affirmed by the record of votes of the members of your
Committee on Energy and Environmental Protection that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 1429, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 1429, S.D. 1, H.D. 1, and be referred to the
Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Energy and
                                   Environmental Protection,

                                   HERMINA M. MORITA, Chair