SB879.DOC

SECTION 1. The legislature finds that the health and welfare of the State's citizens depend in large part on their ability to access essential water and sewer services. The State public utilities commission regulates water and sewer services provided by private companies, but not those same services as provided by the counties. To better ensure that the commission has all the necessary authority to take proactive measures on behalf of customers when a regulated water or sewer utility either fails to provide adequate and reasonable service to its customers, or fails in such a way that there is serious and imminent threat to the health and welfare of its customers, the legislature believes that the commission should have the power to appoint a receiver to ensure that utility services are continued or brought back up to appropriate standards.

The legislature further finds that while the Hawaii public procurement code promotes fair and equitable treatment, fosters broad-based competition, and increases public confidence in the way state government spends taxpayer dollars, that process could add significant delay to what in all likelihood would inherently be an urgent or sudden need for the commission to appoint a receiver for a regulated water or sewer utility. In light of the sudden or urgent circumstances leading the commission to appointment of a receiver as contemplated in this Act, the legislature finds that an exemption from the requirements of the procurement code is necessary.

The purpose of this Act is to provide the public utilities commission with authority to appoint a receiver to take such temporary action as is necessary to assure continued adequate water or sewer service, and to provide an exemption from the Hawaii public procurement code for the services of a receiver and any additional outside counsel, consultant, or staff resources that the receiver or commission may deem necessary under the circumstances.

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§269- Appointment of receiver for public utilities. (a) Whenever the commission finds that a regulated private water utility or regulated private sewer utility is failing, or that there is an imminent threat of the utility failing, to provide adequate and reasonable service to its customers, and that such failure is a serious and imminent threat to the health, safety, and welfare of those customers of the utility, the commission may appoint a receiver to take such temporary action as is necessary to assure continued service, or to bring the service up to appropriate regulatory standards. The commission may also appoint a receiver to take such temporary action as is necessary to assure continued service if, after notice and hearing, the commission finds that any private water or any private sewer utility regulated under this chapter is consistently failing to provide adequate and reasonable service. In carrying out its responsibilities, the receiver, and any additional outside legal counsel, consultants, or staff the commission or receiver may deem necessary under the circumstances, shall have the authority to gain access to all of the company utility assets and records, and to manage those assets in a manner that will restore or maintain an acceptable level of service to customers. The receiver shall be authorized to expend existing company utility revenues for labor and materials and to commit additional expenditures as are essential to providing an acceptable level of service, such expenditures to be funded in accordance with generally accepted ratemaking practices. Any costs incurred by the commission, its staff, or the appointed receiver under this section shall be the responsibility of the utility in receivership or its ratepayers. Control of and responsibility for the utility shall remain in the receiver until the utility can, in the best interests of its customers, be returned to the original owners, transferred to new owners, or liquidated, whichever the commission may determine to be in the public interest.

(b) If the commission determines that the utility's action, or inaction, that caused it to be placed under the control and responsibility of a receiver under this section, was due to intentional misappropriation or wrongful diversion of the assets or income of such utility or to other wilful misconduct by any director, officer, or manager of the utility, it may require such director, officer, or manager to make restitution to the utility.

SECTION 3. Section 103D-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Notwithstanding subsection (a), this chapter shall not apply to contracts by governmental bodies:

(1) Solicited or entered into before July 1, 1994, unless the parties agree to its application to a contract solicited or entered into prior to July 1, 1994;

(2) To disburse funds, irrespective of their source:

(A) For grants or subsidies as those terms are defined in section 42F-101, made by the State in accordance with standards provided by law as required by article VII, section 4, of the State Constitution; or by the counties pursuant to their respective charters or ordinances;

(B) To make payments to or on behalf of public officers and employees for salaries, fringe benefits, professional fees, or reimbursements;

(C) To satisfy obligations that the State is required to pay by law, including paying fees, permanent settlements, subsidies, or other claims, making refunds, and returning funds held by the State as trustee, custodian, or bailee;

(D) For entitlement programs, including public assistance, unemployment, and workers' compensation programs, established by state or federal law;

(E) For dues and fees of organizations of which the State or its officers and employees are members, including the National Association of Governors, the National Association of State and County Governments, and the Multi-State Tax Commission;

(F) For deposit, investment, or safekeeping, including expenses related to their deposit, investment, or safekeeping;

(G) To governmental bodies of the State;

(H) As loans, under loan programs administered by a governmental body; and

(I) For contracts awarded in accordance with chapter 103F.

(3) To procure goods, services, or construction from a governmental body other than the University of Hawaii bookstores, from the federal government, or from another state or its political subdivision;

(4) To procure the following goods or services which are available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State:

(A) Services of expert witnesses for potential and actual litigation of legal matters involving the State, its agencies, and its officers and employees, including administrative quasi-judicial proceedings;

(B) Works of art for museum or public display;

(C) Research and reference materials including books, maps, periodicals, and pamphlets, which are published in print, video, audio, magnetic, or electronic form;

(D) Meats and foodstuffs for the Kalaupapa settlement;

(E) Opponents for athletic contests;

(F) Utility services whose rates or prices are fixed by regulatory processes or agencies;

(G) Performances, including entertainment, speeches, and cultural and artistic presentations;

(H) Goods and services for commercial resale by the State;

(I) Services of printers, rating agencies, support facilities, fiscal and paying agents, and registrars for the issuance and sale of the State's or counties' bonds;

(J) Services of attorneys employed or retained to advise, represent, or provide any other legal service to the State or any of its agencies, on matters arising under laws of another state or foreign country, or in an action brought in another state, federal, or foreign jurisdiction, when substantially all legal services are expected to be performed outside this State;

(K) Financing agreements under chapter 37D; and

(L) Any other goods or services which the policy board determines by rules or the chief procurement officer determines in writing is available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State; [~~and~~]

(5) For services of a receiver appointed by the public utilities commission, along with any additional outside counsel, consultants, or staff resources that the receiver or commission may deem necessary under the circumstances pursuant to section 269- ; and

[~~(5)~~] (6) Which are specific procurements expressly exempt from any or all of the requirements of this chapter by:

(A) References in state or federal law to provisions of this chapter or a section of this chapter, or references to a particular requirement of this chapter; and

(B) Trade agreements, including the Uruguay Round General Agreement on Tariffs and Trade (GATT), which require certain non-construction and non-software development procurements by the comptroller to be conducted in accordance with its terms."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

By Request

THE SENATE	S.B. NO.	879
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII