Shipping of Oahu's trash to the mainland is expected to start by late September under an agreement between the city and a private company.

The agreement announced yesterday settles a challenge filed by Hawaiian Waste Systems over the rejection of its bid to contract with the city to provide the service.

The company will be allowed to ship up to 100,000 tons of solid waste off-island each year, at a cost of $99 per ton. The city budget had approved $10 million for shipping.

The agreement stipulates shipping is to be on an interim basis, until a third boiler is operational at the city's waste-to-energy HPOWER plant by late 2011 or early 2012, officials said.

Mayor Mufi Hannemann said he was pleased with the settlement because the city retains “;flow control,”; the ability to determine what waste goes to the Waimanalo Gulch landfill, what goes to HPOWER and what is shipped.

“;I've always said I was not opposed to shipping,”; Hannemann said. “;I just wanted to do it the right way, and the right way was for the city to always exercise total flow control.

“;If the settlement did not indicate that the city had total flow control, I would not have agreed to go forward.”;

Jim Hodge, chief executive officer of Hawaiian Waste Systems, said in a news release he was glad to be able to work out differences with the city.

Hawaiian Waste Systems had been declared the lowest among three bidders for the waste shipping project a year ago, and had set up operations on Oahu based on what it said was communication with the city indicating it would receive a contract.

Operations include a new $10 million processing facility at Campbell Industrial Park.

A week before the service was supposed to start in July, the company's bid was terminated after the city said Hawaiian Waste Systems had been “;non-responsive”; in getting proper permits and for prematurely constructing a weighing scale at its processing facility, raising questions over who would control the trash flow.

Hodge said the company has no problem with turning over operations of the weigh station to the city.

After his bid was rejected and his subsequent protest of that action was also turned away by the city, Hodge filed a petition with the Department of Commerce and Consumer Affairs, which handles procurement disputes such as this. Had a settlement not been reached, a decision was expected by Monday.

Tim Steinberger, city director of environmental services, said the city plans to purchase the scale at a cost of about $120,900.