CONFERENCE COMMITTEE REPORT NO.69

                            Honolulu, Hawaii
                                            , 1999

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




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

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

Sir:

     Your Committee on Conference on the disagreeing vote of the
House of Representatives to the amendments proposed by the Senate
in H.B. No. 1277, H.D. 1, S.D. 1, entitled:

    "A BILL FOR AN ACT RELATING TO WASTEWATER TREATMENT
    FACILITIES,"

having met, and after full and free discussion, has agreed to
recommend and does recommend to the respective Houses the final
passage of this bill in an amended form.

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

     (1) At least ten percent 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,
         distribution, and sale of secondary treated wastewater
         produced by a municipal wastewater treatment facility;


 
 
                            CONFERENCE COMMITTEE REPORT NO.69
                            Page 2



     (3) The facility is not selling water to residential
         customers;

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

     (5) The purchase of reclaimed and recycled water by
         commercial entities is voluntary and available at market
         prices.

     Your Committee on Conference finds that the public interest
will be best served by exempting certain wastewater processing
facilities from Public Utilities Commission (PUC) regulation.
This bill, in particular, will address the City and County of
Honolulu's (City) contract with U.S. Filter Operating Services,
Inc. for a water reclamation facility on Oahu.  The genesis of
this project is a federal consent decree pursuant to a lawsuit
brought against the City by the U.S. Environmental Protection
Agency.  Should the City fail to meet the conditions and schedule
of the consent decree, fines of up to $18,000 per day may be
imposed on the City.

     U.S. Filter's water reclamation facility will prevent
approximately 12 million gallons per day of secondary sewage from
being discharged into ocean waters through an outfall.  Instead,
the recycled or reclaimed water can be used for beneficial
purposes such as agricultural and irrigation uses.  This, in
turn, will also reduce the need to draw from other fresh and
brackish water resources.

     Your Committee on Conference recognizes the need to
establish a policy and regulatory framework that supports the
advantages of wastewater reuse.  However, it cannot allow a
project which is clearly beneficial to the public interest and
the environment to be "placed on the back burner" while the
Legislature sorts through an interagency, bureaucratic maze to
address every detail.

     The Consumer Advocate's concerns warrant some attention.  At
the same time, however, it would not serve the best interest of
the public and the environment to delay implementing a recycled
water policy due to pricing issues that involve less than thirty
percent of the total volume of wastewater processed at the
facility.

     Accordingly, your Committee on Conference has amended this
bill by:

     (1) Allowing the facility to distribute and sell recycled or
         reclaimed water to entities not covered by a state or

 
                            CONFERENCE COMMITTEE REPORT NO.69
                            Page 3



         county service contract; provided that, in the absence
         of regulatory oversight and direct competition, the
         distribution and sale of recycled or reclaimed water
         shall be voluntary and its pricing fair and reasonable;
         and

     (2) Requiring the City Department of Environmental Services
         to submit a report to the Legislature in 2004 on:

         (A)  The volume of recycled or reclaimed water
              distributed; and

         (B)  The sale prices of recycled or reclaimed water
              charged;

         by U.S. Filter at its Ewa wastewater reclamation
         facility to entities not covered by a state or county
         service contract.

     Should the distribution and sale of recycled or reclaimed
water not be fair and reasonable, the Legislature may seek remedy
of the situation through revocation of the exemption and by
requiring PUC regulation.

     This bill has been further amended by:

     (1) Clarifying that the primary function of the facility,
         rather than its sole function, is the processing of
         secondary treated wastewater;

         and

     (2) Making technical, nonsubstantive amendments for the
         purpose of consistency.

     Finally, the ramifications of wastewater reuse require a
continued review of such a policy.  Your Committee on Conference
has taken the first step by stating a water reuse policy and
defining recycled and reclaimed water in H.B. No. 1548, HD1, SD1,
CD1.  However, the importance of interagency cooperation to
resolve jurisdictional issues and conflicting policies needs to
be considered, and rule and legislative changes need to be
addressed to further facilitate a wastewater reuse policy.


 
 
 
 
                            CONFERENCE COMMITTEE REPORT NO.69
                            Page 4



     Your Committee on Conference is in accord with the intent
and purpose of H.B. No. 1277, H.D. 1, S.D. 1, as amended herein,
and recommends that it pass Final Reading in the form attached
hereto as H.B. No. 1277, H.D. 1, S.D. 1, C.D. 1.

                                   Respectfully submitted,

MANAGERS ON THE PART OF THE        MANAGERS ON THE PART OF THE
           SENATE                              HOUSE
                                   
                                   
                                   
______________________________     ______________________________
BOB NAKATA, Co-Chair               HERMINA MORITA, Co-Chair
                                   
                                   
                                   
______________________________     ______________________________
BRIAN KANNO, Co-Chair              DWIGHT Y. TAKAMINE, Co-Chair
                                   
                                   
                                   
______________________________     ______________________________
MARSHALL K. IGE, Member            NESTOR R. GARCIA, Member
                                   
                                   
                                   
______________________________     ______________________________
SAM SLOM, Member                   BRIAN SCHATZ, Member
                                   
                                   
                                   
                                   ______________________________
                                   CYNTHIA THIELEN, Member