STAND. COM. REP. NO. 842-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2835
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred H.B. No.
2835, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO WATERSHED PROTECTION,"

begs leave to report as follows:

     The purpose of this bill is to establish the infrastructure
and a dedicated source of funds to protect, preserve, and enhance
important watershed areas by:

     (1)  Establishing a Watershed Protection Trust Fund (Trust
          Fund) to fund public and private watershed management
          projects benefiting water quality, water quantity, and
          general watershed values within designated watershed
          areas;

     (2)  Establishing a Watershed Protection Trust Fund Review
          Board (Review Board) to, among other things, identify
          watershed management areas; and

     (3)  Imposing a Watershed Protection Tax (Protection Tax) on
          all water from municipal and private water systems.

     The Department of Land and Natural Resources, the Sierra
Club of Hawaii, the Hawaii Society of American Foresters, and
several individuals testified in support of this measure.  The
Hawaii County Department of Water Supply and the Nature
Conservancy of Hawaii testified in support of the intent of this
measure.  The Hawaii Farm Bureau Federation opposed this measure.

 
 
                                 STAND. COM. REP. NO. 842-00
                                 Page 2

 
The Honolulu Board of Water Supply and the Kauai County
Department of Water opposed the collection of a Protection Tax on
water used by consumers to fund watershed protection projects.
The Tax Foundation of Hawaii, the Land Use Research Foundation of
Hawaii, and University of Hawaii's Environmental Center submitted
comments.

     Your Committee has amended this measure by:

     (1)  Removing the following projects and activities that the
          Trust Fund may be used for:

          (A)  Alien species control and eradication;

          (B)  Control of feral animals;

          (C)  Water quality and stream studies; and

          (D)  Administrative costs;

     (2)  Clarifying that the Commission on Water Resource
          Management (Commission) shall approve, instead of
          designate, watershed management projects and
          activities;

     (3)  Deleting duties and powers of the Review Board relating
          to:

          (A)  The levy, assessment, and collection of the
               Protection Tax;

          (B)  Identification of water users that are not
               contributing to the Trust Fund; and

          (C)  The equitable collection of the Protection Tax;

     (4)  Deleting the Protection Tax on all water from municipal
          and private water systems;

     (5)  Assessing the county water agencies and private water
          systems a fee:

          (A)  Based on the consumption of water for domestic
               purposes at a rate of not more than an unspecified
               amount per one thousand gallons;

          (B)  To be collected by the Public Utilities Commission
               (PUC) from utility companies that the PUC
               regulates; and

 
                                 STAND. COM. REP. NO. 842-00
                                 Page 3

 
          (C)  To be deposited into the Trust Fund;

     (6)  Authorizing the Commission to adopt rules to provide
          for the process and method of establishing the
          assessment; and

     (8)  Making technical, nonsubstantive amendments for
          purposes of clarity and style.

     Your Committee is concerned that the cost assessment is
discretionary, which is the reason why the assessment amount is
unspecified.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2835, H.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as H.B. No. 2835, H.D.
2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair