From the outhouse to the State House to the court house, the biggest issue in Massachusetts these days is feces--tons of it.

No one knows what to do with it.

At least 12 billion gallons a year of human waste and toxic chemicals flow into Boston Harbor, polluting the beaches, turning the Harbor's fish into swimming carcinogens, and creating a health hazard for residents of the North and South Shore.

The Metropolitan District Commission (MDC), which is responsible for the aging and byzantine sewage system that serves two million people in Boston, Cambridge, and dozens of neighboring communities, has been unable to handle the waste that flows into the MDC's two treatment plants.

Some days, especially during rainfall, the MDC must allow the sewage, untreated, to flow directly into the already stinking, polluted harbor.

In past years, a number of groups have pressured the commission to act on the Harbor pollution problem. But it was suits filed by the town of Quincy and later by the Environmental Protection Agency that brought the issue to a head.

The water around the Quincy beaches is so polluted that last August an engineering firm found coliform bacteria levels off the city's shore that were 50 times higher than the maximum acceptable levels for swimming water.

Superior Court Judge Paul W. Garrity last year appointed Brandeis Professor of Law Charles M. Haar as special master to study the problem and propose a solution.

Haar, with the subsequent endorsement of Garrity, the Bank of Boston and Gov. Michael S. Dukakis, put forth a proposal for a sewer authority independent of the MDC and the State, which would be specifically responsible for handling the area's sewage and cleaning up the harbor.

The plan, if implemented, would greatly increase chances for improvements in harbor cleanup and sewage treatment, said Metropolitan District Commission executive assistant Stephen P. Burgay.

Unlike the MDC, which is responsible to and funded by the Commonwealth, a new sewer commission would have the authority to finance itself through bond issues and levies on all users of the sewage system.

"The crucial thing is to have the financing," Haar explained yesterday.

Burgay said the proposed sewer authority would be able to raise the more than $1 billion needed over the next 20 years to completely overhaul the system and clean the harbor. Under the proposed legislation, the state would assume nearly all the commission's liabilities.

Dukakis filed legislation earlier this year to include a sewer authority in a broader water and waste treatment package. Though the Dukakis bill received discussion in the State House over the summer, neither the Senate not the House acted on the proposal.

Reenter Judge Garrity, Last week, the judge declared a moratorium on all new sewer connections in Boston and its suburbs. He also announced hearings set for today to decide whether he will place the MDC's sewer division under court receivership.