Honolulu, Hawaii



RE:    H.B. No. 1140

       H.D. 1

       S.D. 1




Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii




     Your Committee on Energy and Environment, to which was referred H.B. No. 1140, H.D. 1, entitled:




begs leave to report as follows:


     The purpose and intent of this measure is to establish a temporary income tax credit for the cost of upgrading or converting a cesspool to a septic system or an aerobic treatment unit system or connecting a cesspool to a sewer system.


     Your Committee received testimony in support of this measure from the Department of Health, Hawaii Farm Bureau, The Nature Conservancy, Surfrider Foundation Hawaii Chapters, Hawaii Association of REALTORS, and two individuals.  Your Committee received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, and two individuals.


     Your Committee finds that contamination from cesspools poses a risk to the water quality in ocean water, surface water, and groundwater.  Upgrading or converting cesspools to septic systems or aerobic treatment unit systems or connecting cesspools to sewer systems will protect the quality of the State's nearshore waters and drinking water supplies.  However, there are significant costs associated with cesspool conversion.  Implementation of this measure will ease the financial burden associated with cesspool conversions and incentivize cesspool owners to upgrade or convert their cesspool systems.


     Your Committee has amended this measure by:


     (1)  Amending section 1 to clarify that priority should be given to cesspool owners who request financial assistance to upgrade, convert, or connect cesspools that affect public drinking water wells or are within two hundred feet of the shoreline, streams, or wetlands;


     (2)  Limiting the cesspool upgrade, conversion, or connection income tax credit to the qualified expenses of the taxpayer, up to $5,000;


     (3)  Authorizing the Director of Health to adopt rules under chapter 91, Hawaii Revised Statutes, including rules that prioritize upgrades for cesspool locations with the highest risk of harm to public health and the environment; and


     (4)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1140, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1140, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.


Respectfully submitted on behalf of the members of the Committee on Energy and Environment,