Critics: Water Bill Could Hurt Customers And The Environment

The Sierra Club is mounting a last-minute push amid worries the measure will remove private water distribution companies from state regulation.

Honolulu Civil Beat - April 28, 2017

The Hawaii chapter of the Sierra Club is trying to persuade lawmakers to amend a bill that the organization fears would remove governmental oversight of private companies that distribute non-potable water.

House Speaker Joseph Souki and Rep. Ryan Yamane introduced House Bill 1536 to help farmers by clarifying that the Board of Agriculture can use eminent domain to acquire and run irrigation systems.

The proposal also sought to ensure that those state-owned irrigation systems would be exempted from oversight by the Public Utilities Commission.

The bill received strong support from farmers and groups that represent the agricultural industry, along with the state Department of Agriculture.

“Affordable and reliable waters for irrigation is a basic requirement for sustainable agriculture,” wrote Randy Cabral from the Hawaii Farm Bureau Federation in supporting testimony.

Why Opponents Are Concerned

Townsend says the Sierra Club supports the idea of clarifying the Department of Agriculture’s eminent domain power and exemption from the Public Utilities Commission. But she said that an amendment added by the House could have unintended consequences by exempting private distributors of non-potable water from oversight as well.

The Office of Hawaiian Affairs and Dean Nishina, who leads the Hawaii Division of Consumer Advocacy, raised similar concerns.

“The Consumer Advocate contends that exempting all non-potable water facilities from Commission review, especially when such services are also offered in conjunction with regulated water or wastewater services could adversely expose customers to various rate issues, quality and access issues, as well as possible subsidization issues for the customers of the regulated operations,” Nishina wrote.

The Public Utilities Commission said in testimony that the exemption would affect 11 utilities that are currently regulated.

Sen. Mike Gabbard, who is leading negotiations for the Senate and heads the chamber’s environmental committee, proposed Wednesday changing the bill to get rid of the language that the Sierra Club, OHA and Consumer Advocate are concerned about.

“It’s about making sure that that there’s not a profit motive behind the distribution of water,” Townsend said after the hearing, suggesting that the exemption could benefit companies like Alexander and Baldwin and the Wailuku Water Co.

What Water Companies Say

Darren Pai, spokesman for A&B, said that the company is aware of the bill but hasn’t taken a position on it.

“We have been concentrating on our efforts to transition the former plantation lands into diversified agriculture, and prefer not to speculate about how the proposed bill might or might not apply to us,” he wrote.

Avery Chumbley, a former state senator who leads Wailuku Water Co., said while he would like his company to be exempt from PUC oversight, he isn’t sure that the language of the bill would accomplish that.

“Bluntly, we would welcome this bill if it does what (Townsend) says,” he said, adding that he needs to read the bill more carefully to determine its potential impact. “I don’t have the same interpretation of it as the opponents do. I’m not sure it exempts us.”

He said that his company has been tied up at the PUC since 2008, and has been suspended from seeking new customers, raising rates and selling assets.

“For nine years in a row this company has lost money,” he said, noting that when Hawaiian Commercial and Sugar Company shut down its sugar operations, his water company lost 35 percent of its revenue. He says if the situation lasts much longer, his business won’t survive.

“It’s just been very burdensome and ridiculous that we’ve been stuck nine years in this process,” he said.

Negotiating Until The Last Minute

Like Chumbley, Rep. Ryan Yamane also doesn’t share opponents’ concerns about the bill.

“The House was confident about the language being tight enough so that it still has the proper enforcement and oversight,” Yamane told Civil Beat after Wednesday’s hearing.
He added that the purpose of the bill is to help farmers get access to water for crops.

“We are making an emphasis on growing our food and the most important thing for agriculture is water,” he said.

Advocates and opponents will have to wait until 3:30 p.m. Friday to find out what happens with the bill. Even then, any decisions could be pushed back until later that afternoon. The deadline to finalize bills for the 2017 session is the end of the day Friday.

“This is kind of like a poker game of sorts and so they have to play their cards close,” Townsend said. “That’s just the way it is.”