HB2700

SECTION 1. The legislature finds that as the risk of catastrophic wildfires in Hawaii has increased, so has the threat of property damage from such fires. Although most property owners have insurance, some do not, and others' insurance may not fully cover their losses.

The legislature further finds that when the cause of a wildfire is uncertain or contested, costly and protracted litigation ensues. Litigation regarding wildfire damages can impose massive costs, including on the State, counties, utilities, landowners, and other defendants that may be alleged to have contributed to catastrophic wildfires. Such costs can overwhelm these major institutions of the community, undermining their ability to make investments that the State needs. Indeed, even the possibility of litigation regarding a future catastrophic wildfire can create a cloud of uncertainty that threatens to impair the ability of these entities to attract capital on reasonable terms--capital that is vital to make investments in wildfire prevention, among other priorities. Such an outcome harms everyone.

The legislature also finds that the risk of property damage stemming from catastrophic wildfires may lead property insurers to raise rates or refuse to provide coverage for certain losses, or certain high-risk areas, of Hawaii--as occurred in the wake of hurricane Iniki with respect to hurricanes.

The legislature additionally finds that it is in the public interest to take steps to ensure that property insurance remains available to cover losses associated with wildfires by providing benefits to property insurers. Furthermore, the legislature finds that it is in the public interest to ensure that the threat of wildfires does not make investment in Hawaii's public utilities so financially risky that it becomes too costly or impossible for them to raise capital to implement vital plans, including plans to mitigate wildfire risk, and to provide safe, reliable, and affordable service to the people of the State.

Moreover, the legislature finds that it is in the public interest to avoid the costs of litigation arising out of catastrophic wildfires in order to protect Hawaii's economy and encourage investment in the State. Therefore, the purpose of this Act is to serve the public interest in the event of a devastating wildfire by establishing a response to provide compensation for property damage resulting from wildfires, regardless of cause.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

WILDFIRE RELIEF FUND

§ -1 Definitions. As used in this chapter:

"Administrator" means the wildfire relief fund administrator appointed pursuant to section -5.

"Board" means the wildfire relief fund board of directors created pursuant to section -4.

"Catastrophic wildfire" means a wildfire occurring on or after the effective date of this Act that damages or destroys more than five hundred residential or commercial structures.

"Contributor" means any person who contributes to the wildfire relief fund as provided in section -3.

"Cooperative utility" means a public utility owned by customers and overseen by a board of directors elected by customers.

"Corporation" means the wildfire relief fund corporation established pursuant to section -3.

"Electric utility" means a public utility that exists for the furnishing of electrical power.

"Investor-owned utility" means a public utility that is owned by shareholders and overseen by a board of directors elected by shareholders.

"Other governmental entities" refers to governmental entities, including county government agencies, other than state government agencies.

"Public utility" has the same meaning as in section 269-1.

"Wildfire relief fund" means the wildfire relief fund established pursuant to section -2.

"Wildfire risk management plan" means a plan approved by the public utilities commission pursuant to section -9.

§ -2 Wildfire relief fund; establishment. (a) There is established outside the state treasury a wildfire relief fund and any accounts thereunder to carry out the purposes of this chapter.

(b) The wildfire relief fund shall be placed within the department of commerce and consumer affairs for administrative purposes. The fund shall be a public body corporate and politic.

(c) Moneys deposited in the wildfire relief fund and any accounts thereunder shall be held by the fund, as trustee, in a depository, as defined in section 38-1, or according to a similar arrangement at the discretion of the board.

(d) All moneys received by the wildfire relief fund corporation under this chapter shall be paid immediately to the director of finance and shall become a part of the wildfire relief fund.

(e) All payments authorized to be made by the corporation by this chapter, including all payments for claims for catastrophic wildfire damages, all salaries, and all other expenses, shall be made from the wildfire relief fund.

(f) The moneys in the wildfire relief fund shall be invested according to the same investment plans developed for the Hawaii retirement savings special fund pursuant to chapter 389, and the earnings from such investments shall be credited to the wildfire relief fund.

(g) All moneys in the wildfire relief fund shall be appropriated and expended exclusively for the uses and purposes set forth in this chapter; provided that this section shall not be deemed to amend or impair the force or effect of any law of this State specifically authorizing the investment of moneys from the wildfire relief fund.

§ -3 Wildfire relief fund corporation; establishment; purposes; duties. (a) The wildfire relief fund corporation is hereby established as an independent public body corporate and politic.

(b) The corporation shall be established within the department of commerce and consumer affairs for administrative purposes.

(1) Eligible claims arising from catastrophic wildfires from the wildfire relief fund; and

(2) Contributions of contributors to the wildfire relief fund.

(d) The corporation shall:

(1) Receive, process, and determine payments for eligible claims for property damage arising from catastrophic wildfires from the wildfire relief fund;

(2) Determine and enforce the collection of contributions from contributors to the wildfire relief fund;

(3) Retain, employ, or contract with officers; experts; employees; accountants; actuaries; financial professionals; and other advisers, consultants, attorneys, and professionals, as may be necessary in the administrator's judgment, for the efficient operation, management, and administration of the corporation;

(4) Enter into contracts and other obligations related to the operation, management, and administration of the corporation;

(5) Purchase insurance or take other actions to maximize the claims-paying resources of the wildfire relief fund;

(6) Pay costs, expenses, and other obligations of the corporation from the wildfire relief fund's assets;

(7) Take any actions necessary to collect any amounts owed to the wildfire relief fund; and

(8) Undertake such other activities as are related to the operation, management, and administration of the wildfire relief fund, as approved by the board.

§ -4 Wildfire relief fund corporation; board of directors. (a) There is established a wildfire relief fund board of directors, which shall consist of members appointed by the governor in accordance with section 26-34. The board shall be the policy-making body of the corporation. Accordingly, the board shall be responsible for adopting policies for the administration and operation of the wildfire relief fund and the performance of other duties and functions assigned to the fund, to the degree not specified in this chapter.

(b) The members of the board shall serve staggered terms, with one-half of the members' initial terms ending four years after the initial appointment, and one-half of the members' initial terms ending six years after the initial appointment. Thereafter, each member shall serve four-year terms. Vacancies shall be filled for the remainder of any unexpired term in the same manner as the original appointments.

(c) The chairperson of the board shall be elected from among the appointed members of the board. A majority of all members currently appointed to the board shall constitute a quorum to conduct business, and the concurrence of a majority of all members currently appointed to the board shall be necessary to make any action valid, if not otherwise specified in this chapter.

(d) Members of the board shall be appointed to ensure:

(1) A broad and balanced representation, with proper judgment, character, expertise, skills, and knowledge useful to the oversight of the corporation; and

(2) Diversity with regard to viewpoints, background, work experience, and demographics.

The members of the board shall serve without compensation but shall be reimbursed for actual and necessary expenses, including travel expenses, incurred in the discharge of their duties.

(e) The board shall meet at least once every three months at a time and place determined by the board. The board shall meet at such other times and places as determined by the call of the chairperson or by a majority of the members of the board.

(f) No later than twenty days before the convening of each regular session, the board shall submit to the legislature and governor a report regarding the activities and operations of the corporation during the preceding year. The report shall include, at a minimum, a description of:

(1) The effectiveness of the wildfire relief fund's claims-payment process; and

(2) The level of participation in the wildfire relief fund by all eligible participants, including property owners, property insurers, and contributors.

The legislature shall consider the report in determining whether any adjustments to the wildfire relief fund are necessary.

(g) Each member of the board shall retain all immunities and rights provided to a member pursuant to section 26-35.5.

§ -5 Administrator; wildfire relief fund corporation. (a) The board shall appoint an administrator and oversee the administrator's management and administration of the corporation.

(b) The administrator shall serve at the pleasure of the board and shall be exempt from chapter 76.

(c) The administrator shall have such powers as are necessary to carry out the functions of the corporation, subject to the policy direction of the board.

(d) The administrator may employ, terminate, and supervise employees, including assistants, experts, field personnel, and clerks, as may be necessary in the administration of the corporation.

(e) The board may overturn any decision of the administrator through a majority vote.

(f) At the direction of the board, the administrator shall prepare and present for approval a plan of operations related to the operations, management, and administration of the wildfire relief fund on an annual basis. At least annually and at the direction of the board, the administrator shall present the plan of operations to the appropriate policy committees of the legislature. The plan shall include but not be limited to reporting on the wildfire relief fund's assets and projections for the duration of the fund.

(g) At the direction of the board, the administrator shall at least annually prepare and publish on the corporation's website a public-facing report that describes the operations and activities of the corporation and wildfire relief fund during the preceding year, including a description of the financial condition of the wildfire relief fund.

§ -6 Wildfire relief fund corporation; audit. (a) The auditor shall conduct an annual audit of the corporation and wildfire relief fund pursuant to chapter 23. As part of this audit, the auditor may contract with a firm qualified to perform an independent actuarial review.

(b) The auditor shall determine the scope of the review required by this section, which shall include but is not limited to:

(1) A review of the sources and uses of the moneys in the wildfire relief fund;

(2) A reconciliation of changes in actuarial assumptions and reserve values from the preceding year;

(3) An examination of the development of claim reserve inadequacies or redundancies over time; and

(4) An assessment of the future financial viability of the wildfire relief fund.

(c) The corporation shall cooperate with the actuarial firm in all respects and shall permit the firm full access to all information the firm deems necessary for a true and complete review. Information provided to the actuarial firm conducting the annual review is subject to the same limitations on public inspections as required for the records of the corporation.

(d) The audit required by this section shall be conducted using both generally accepted accounting principles and the statutory accounting principles published by the National Association of Insurance Commissioners.

(e) The cost of the audit required by this section shall be paid by the corporation.

(f) The auditor shall issue an annual report to the governor, president of the senate, and speaker of the house of representatives on the results of the audit and review. The audit and report of the review performed by the independent actuarial firm shall be available for public inspection, in accordance with the auditor's established rules and procedures governing public disclosure of audit documents.

(g) The legislature shall consider whether, after review of the annual report in subsection (f), any adjustments to the wildfire relief fund should be implemented.

§ -7 Wildfire relief fund; participation. (a) The following entities may participate in the wildfire relief fund as contributors:

(1) The State;

(2) Electric utilities;

(3) Public utilities that are not electric utilities that contribute to the risk of occurrence or severity of a catastrophic wildfire, including but not limited to public utilities for the production, conveyance, transmission, delivery, or furnishing of gas and for the conveyance of telecommunications messages;

(4) Other governmental entities; and

(5) Private landowners who own, or whose affiliated persons or entities own in the aggregate, at least one thousand acres of land in Hawaii.

(b) To participate in the wildfire relief fund, an entity shall:

(1) Notify the administrator that it intends to participate in the wildfire relief fund by in the year preceding the year in which the entity seeks to participate in the wildfire relief fund; and

(2) Have made required contributions to the wildfire relief fund pursuant to section -8.

(c) A contributor that is also a property owner in Hawaii may make a claim to the wildfire relief fund for compensation in the same manner provided for in section -13 as other property owners; provided that the contributor:

(1) Retains all of the rights, privileges, and obligations of a contributor; and

(2) Notwithstanding any other provisions of this chapter and regardless of the existence of a depletion event under section -16(c), is bound by the limitation on claims under section -18.

(d) Any person or entity that poses a risk of causing or exacerbating the severity of a catastrophic wildfire that is not eligible to participate as a contributor in the wildfire relief fund may submit an application to the board for participation.

(e) The board shall adopt rules pursuant to chapter 91 and issue criteria for applications submitted under subsection (d).

(f) The board shall include in its annual report to the legislature and governor under section -4 all applications submitted under subsection (d) and shall recommend to the legislature whether participation criteria for contributors should be broadened.

§ -8 Wildfire relief fund; funding. (a) Total capitalization. The total capitalization amount of the wildfire relief fund shall be $ . Neither the board nor the administrator may modify the total capitalization amount, except as otherwise expressly provided in this chapter.

(b) Actuarial study. The board shall commission an actuarial study to be completed in 2024 to assess whether the total capitalization amount should be increased or decreased based on a holistic assessment of the risk of catastrophic wildfires in Hawaii, and the potential exposure of the fund to claims arising out of such wildfires. The board shall include this assessment in the annual report that it submits to the legislature and governor under section -4. The legislature shall consider that assessment, as well as other information submitted in the annual report, to determine whether adjustments to the wildfire relief fund, including to its total capitalization amount, should be implemented.

(c) Time to total capitalization. The administrator shall recommend to the board, and the board shall, by majority vote, approve initial contribution amounts under $ for potential contributors, other than the State and electric utilities, based on the actuarial factors identified in subsection (b) and with the goal of, to the extent reasonably possible, having the wildfire relief fund reach the total capitalization amount within five years of the effective date of this Act, taking into consideration reasonably expected investment returns and assuming no payments will be made by the wildfire relief fund during that time period.

(d) Capitalization amounts. With the exception of the contribution made by the State in paragraph (4), contribution amounts shall be divided by the administrator into an initial contribution amount to be made by , and annual contribution amounts to be made over a five-year period, subject to the administrator's ability to increase payments under the insufficient funding provision in subsection (g).

The wildfire relief fund shall be capitalized by the following contributions:

(1) From other governmental entities that are eligible to elect to participate in the wildfire relief fund, an amount determined by the administrator based on an actuarial assessment of the risk of payments to these entities by the fund resulting from catastrophic wildfires created by such entities, as well as the risk of potential payments made by the fund resulting from catastrophic wildfires created by these entities;

(2) From public utilities other than electric utilities and private landowners that are in all cases eligible to participate in the wildfire relief fund, an amount determined by the administrator based on an actuarial assessment of the risk of potential payments by the wildfire relief fund resulting from catastrophic wildfires created by these entities;

(3) From electric utilities, $ ; and

(4) From the State, $ .

(e) The board shall determine the contribution amounts of eligible contributors by ; provided that this date is thirty days before the date by which participants are required to notify the administrator of their intention to participate in the wildfire relief fund. If an eligible contributor declines to notify the administrator that the eligible contributor wishes to participate in the wildfire relief fund and become a contributor, the board shall reduce the total capitalization amount by subtracting the amount the board allocated to that eligible contributor.

(f) If an electric utility, public utility other than an electric utility, other governmental entity, or private landowner elects to become a contributor after the initial capitalization of the wildfire relief fund, the electric utility, public utility other than an electric utility, other governmental entity, or private landowner shall provide, by in the year before the year in which the electric utility, public utility other than an electric utility, other governmental entity, or private landowner seeks to become a contributor, an initial contribution in an amount determined by the board by a majority vote upon the administrator's recommendation, based on an up-to-date consideration of the factors identified in subsection (b), such that the previous and present initial contributions by all contributors reflect their relative contributions to the risk of future payments from the wildfire relief fund.

If necessary to achieve such an allocation of initial contributions, and if the election is made prior to the fifth year of fund operation, the administrator shall reduce the amount of annual contributions by one or more contributors who previously made initial contributions until such an allocation is reached. The administrator shall increase the total capitalization amount of the fund by the amount of the initial contribution of the new fund contributor. The administrator may, in the administrator's discretion, permit a new contributor under this subsection to make payments over a five-year period.

(g) Insufficient funding. If the administrator determines that payments made by the wildfire relief fund, and expected future contributions by contributors and investment returns, will result in the fund's: failing to reach the total capitalization amount, as adjusted, as applicable, under subsection (a), by the fifth year; or falling below the total capitalization amount after the fifth year--including, in either case, as a result of the legislature increasing the total capitalization amount--the administrator shall recommend that the board establish a supplemental contribution to be contributed to the wildfire relief fund. Responsibility among contributors for the supplemental contribution shall be allocated as follows:

(1) The administrator shall recommend to the board, and the board shall determine by majority vote, the respective portions of the supplemental contribution amount to be paid by each electric utility, other public utility, other governmental entity, and private landowner contributor, based on an up-to-date assessment of the factors identified in subsection (b); and

(2) The remaining amount of the supplemental amount shall be paid by the State, subject to legislative appropriation.

(h) The administrator may allow contributors to pay supplemental contributions via annual contributions, or in part via an initial contribution followed by annual contributions, unless the administrator determines such a contribution schedule will create a material risk that the wildfire relief fund will not reach or return to its total capitalization amount within a reasonable period of time to perform the functions identified in this chapter.

(i) If the board establishes a supplemental contribution pursuant to subsection (g), before the wildfire relief fund receives the supplemental contribution, the wildfire relief fund may issue revenue bonds up to the amount of the supplemental contribution, which shall be backed by future contributions to the wildfire relief fund.

(j) The board may order supplemental contributions under this chapter even if an investigation under the replenishment process under section -9 is ongoing. In the event that payments are later made under that replenishment process, the board, provided that other conditions of the refunds section are met pursuant to section -11, may refund supplemental contributions in whole or in part.

(k) Utility contribution. An investor-owned utility's contributions to the wildfire relief fund, including initial and supplemental contributions, shall be recovered from its customers in rates, unless the public utilities commission directs otherwise pursuant to section -9.

(l) If the total amount of payments that the administrator determines should be paid in connection with a catastrophic wildfire pursuant to sections -13, -14, and -15 exceeds the current balance of the wildfire relief fund, the State may provide a loan to the wildfire relief fund. The loan shall be repaid over time through annual contributions by contributors.

§ -9 Replenishment of the wildfire relief fund; determination of prudence. (a) If the administrator, or an agency of the State with responsibility for determining the causes of wildfires, informs the public utilities commission that a catastrophic wildfire may have been ignited by the facilities of an investor-owned utility that is a contributor, the public utilities commission shall initiate a proceeding to review the investor-owned utility's conduct leading to the catastrophic wildfire and make findings. The public utilities commission may, even without formal notice from the administrator or the agency, initiate this proceeding of its own accord.

(b) The public utilities commission shall evaluate the prudence of the conduct of the investor-owned utility in connection with a catastrophic wildfire as follows:

(1) If the investor-utility has a wildfire risk mitigation plan that was approved by the public utilities commission, the investor-utility's conduct will be deemed to have been prudent, unless a party to the proceeding creates a serious doubt as to the prudence of the investor-owned utility's conduct; or

(2) If the investor-utility does not have a wildfire risk mitigation plan that was approved by the public utilities commission, or if the public utilities commission determines that the presumption is overcome, the public utilities commission shall determine whether the investor-owned utility acted prudently, considering only acts that may have caused the ignition and evaluating the utility's actions in the context of the utility's overall systems, processes and programs, such that an error by a utility employee would not be a basis for a finding of imprudence, unless that error was the result of an imprudent system, process, or program.

(c) In evaluating prudence under this section, the public utilities commission shall determine whether the actions of the investor-owned utility were consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances, at the relevant point in time, and based on the information available to the investor-owned utility at the relevant point in time.

Reasonable conduct shall not be limited to the optimum practice, method, or act to the exclusion of others, but rather shall encompass a spectrum of possible practices, methods, or acts consistent with utility system needs, the interest of ratepayers, and the requirements of governmental agencies of competent jurisdiction.

(d) If the public utilities commission determines that imprudent conduct by the investor-owned utility caused the catastrophic wildfire, the public utilities commission shall determine whether to order the utility to reimburse the wildfire relief fund in whole or in part for payments from the fund made in connection with the catastrophic wildfire. In determining the amount of reimbursement, if any, the public utilities commission shall consider the extent and severity of the utility's imprudence and factors within and beyond the utility's control that may have led to or exacerbated the costs from the catastrophic wildfire, including but not limited to humidity, temperature, winds, fuel, merged wildfires with independent ignitions, third-party actions that affected the spread of the wildfire, and fire suppression activities.

(e) The public utilities commission shall not order the investor-owned utility to reimburse the wildfire relief fund in an amount that exceeds the lesser of:

(1) The costs that the public utilities commission determines were due to the investor-owned utility's imprudence; or

(2) Twenty per cent of the investor-owned utility's transmission and distribution equity rate base minus the amounts the utility has reimbursed, or is required to reimburse, the wildfire relief fund during the period of three consecutive calendar years ending on December 31 of the year in which the calculation is being performed.

(f) If the public utilities commission orders the investor-owned utility to reimburse the wildfire relief fund, the utility shall not recover the amount of the reimbursement in rates charged to ratepayers.

(g) If the administrator, or an agency of the State with responsibility for determining the causes of wildfires or other catastrophic wildfires concludes that the conduct of a cooperative utility, other governmental entity, or private landowner that is a contributor may have caused the occurrence or contributed to the severity of a catastrophic wildfire, the administrator shall assess the prudence of the contributor's conduct, applying the same standard of prudence applied to investor-owned utilities pursuant to subsection (c).

(h) If the administrator determines that the contributor acted imprudently and that such imprudence caused or contributed to the severity of the catastrophic wildfire, the administrator shall recommend that the board require such contributor to reimburse the wildfire relief fund in whole or in part for payments that the fund made in connection with the catastrophic wildfire, considering the factors set forth in subsection (d), subject to a cap of ten per cent of the contributor's assets within Hawaii, measured over a rolling three-year period.

§ -10 Failure to make contributions to wildfire relief fund. (a) Contributors shall notify the administrator if they will make, or fail to make, a required contribution, whether initial, annual, or supplemental, to the wildfire relief fund at least days before the contribution is due.

(b) If a contributor fails to make a required contribution to the wildfire relief fund, that contributor will no longer be a contributor as of the date that the contribution was due. That entity may, however, rejoin the fund under the process for joining the fund after initial capitalization set forth in section -8.

(c) The administrator shall not refund to an entity that fails to make a contribution any previous payments made to the wildfire relief fund. However, the administrator shall credit all such previous contributions when determining the amount of payment to be made if a participant rejoins the fund under subsection (b).

§ -11 Refunds. (a) In the event that the total amount in the wildfire relief fund exceeds one hundred twenty per cent of the total capitalization amount, the administrator may recommend that the board authorize refunds to be made to the contributors; provided that the refunds do not deplete the wildfire relief fund below one hundred twenty per cent of the total capitalization amount.

(b) Refunds shall be made in proportion to the total amount contributed by the contributors to the wildfire relief fund as of the date of the refund, excluding any payments made under the replenishment provisions under section -9.

(c) The administrator has no obligation to recommend, and the board has no obligation to authorize, a refund. The board shall make a refund only if it takes into consideration all relevant factors and circumstances and determines that making a refund will be unlikely to result in the wildfire relief fund's falling below one hundred twenty per cent of total capitalization within three years after the refund.

(d) Any contributor may request that the board make a refund whenever the conditions under this section are met.

(e) If the board elects to issue a refund or elects not to do so after receiving a request under subsection (d), the administrator shall issue an order explaining the board's decision.

§ -12 Processing of claims. (a) With the approval of the board, the administrator shall establish and approve procedures for the review, approval, and timely payment of claims for reimbursement from the wildfire relief fund. The procedures may be revised from time to time by the administrator with the approval of the board.

(b) In the event of a catastrophic wildfire within the State, the administrator shall process claims made for compensation against the wildfire relief fund related to the catastrophic wildfire, consistent with the requirements of this chapter.

§ -13 Claims by property owners. (a) To be eligible for compensation from the wildfire relief fund for damage to property from a catastrophic wildfire, a property owner shall not have opted out from participation in the wildfire relief fund before the occurrence of the catastrophic wildfire.

(b) County tax assessors shall include, with each real property tax assessment sent to a property owner in the State, a prominent notice regarding participation in the wildfire relief fund. The notice shall be in a form prescribed by the administrator and shall clearly explain the property owner's right to opt out of participation in the wildfire relief fund by submitting a request to opt out to the administrator within a specific time. A property owner who does not submit a timely request to opt out shall be deemed to participate in the wildfire relief fund as of the deadline for submitting a request to opt out.

(d) In order to opt out of participation in the wildfire relief fund with regard to property either in areas within the State that have been assigned extreme, high, and moderate wildfire risk classes by , a property owner shall submit documentation of insurance coverage for such property along with the property owner's request to opt out of the wildfire relief fund, and the administrator shall approve such documentation as adequate evidence of insurance for the applicable property.

(e) Following a catastrophic wildfire, to make a claim for compensation from the wildfire relief fund for damage to property from the wildfire, a property owner shall submit to the administrator documentation establishing:

(1) That the catastrophic wildfire damaged the owner's property;

(2) The extent of the losses to the owner's property caused by that catastrophic wildfire; and

(3) Any insurance policy providing coverage for those losses.

(f) Within ninety days after a property owner submits a claim for compensation from the wildfire relief fund, including the documentation required in this section, the administrator shall determine whether the documentation is adequate and, if so, the appropriate amount of the payment to the property owner from the wildfire relief fund. If the administrator determines that the property owner has not submitted sufficient documentation for the administrator to evaluate the claim, the administrator may request additional documentation from the property owner and may set a date by which the additional information shall be provided by the property owner.

(g) If no insurance policy provides coverage for the losses for which a property owner seeks compensation from the wildfire relief fund, the property owner shall be eligible to receive as compensation from the wildfire relief fund a maximum of $ .

(h) If an insurance policy provides coverage for the losses for which a property owner seeks compensation from the wildfire relief fund, the property owner shall be eligible to receive as compensation from the wildfire relief fund an amount up to the lesser of:

(1) per cent of the amount by which the property owner's losses exceed the amount of insurance coverage for such losses; or

(2) per cent of the property owner's insurance coverage applicable to such losses;

provided that the property owner submits adequate documentation of those losses, as required by this section.

§ -14 Claims by property insurers. (a) To be eligible for compensation from the wildfire relief fund, a property insurer shall have elected to participate in the fund prior to the annual policy period in which the catastrophic wildfire occurred. The administrator shall establish a process for property insurers to annually submit an election to participate in the fund to the administrator within a specified time.

(b) All property insurers who elect to participate in the wildfire relief fund shall be eligible to receive as compensation from the wildfire relief fund per cent of their total payments for property damage claims in Hawaii as a result of a catastrophic wildfire.

(c) Following a catastrophic wildfire, to make a claim for compensation from the wildfire relief fund based on claims resulting from the catastrophic wildfire, an eligible property insurer shall submit to the administrator documentation establishing the number, nature, and total value of insurance claims that the property insurer paid pursuant to its policies for damage resulting from the catastrophic wildfire as well as documentation sufficient to assess the reasonableness of the property insurer's payment of such claims.

(d) After receipt of a property insurer's claim for compensation from the wildfire relief fund, including the documentation required in this section, the administrator shall:

(1) Review via an expedited procedure the property insurer's claim for compensation from the wildfire relief fund; and

(2) Determine:

(A) Whether the documentation provided is adequate; and

(B) The appropriate amount of the payment to the property insurer from the fund.

§ -15 Claims by the State and other governmental entities. (a) The State may submit claims for compensation from the wildfire relief fund for damages it incurred resulting from a catastrophic wildfire, including damage to infrastructure or other property, costs of fire suppression, and natural resource damages, to the extent recovery of such losses is authorized by law.

(b) Other governmental entities may submit claims for compensation from the wildfire relief fund for damages they incurred resulting from a catastrophic wildfire, including damage to infrastructure or other property and other losses, to the extent recovery of such losses is authorized by law; provided that to be eligible for compensation from the wildfire relief fund related to a catastrophic wildfire, another governmental entity shall elect to be a contributor and shall have satisfied contribution obligations pursuant to section ‑8 before the occurrence of the catastrophic wildfire.

(c) To make a claim under this section, the State or other governmental entity shall submit to the administrator documentation establishing:

(1) That the catastrophic wildfire caused the damages;

(2) The extent of the damages caused by the catastrophic wildfire; and

(3) Any other documentation necessary to establish the State's or other governmental entity's right to recover such losses pursuant to law.

(d) After receipt of a claim for compensation from the wildfire relief fund pursuant to this section, the administrator shall determine whether the State or other governmental entity is authorized to recover damages under applicable law and, if so, the appropriate amount of the payment.

§ -16 Fund depletion. (a) Within thirty days of a catastrophic wildfire, the administrator shall assess whether the total payments that the wildfire relief fund is projected to make to eligible property owners, property insurers, and the State and other governmental entities under sections ‑13, -14, and -15, respectively, are expected to exceed seventy-five per cent of the total available money remaining in the wildfire relief fund. The board shall adopt rules pursuant to chapter 91 regarding the performance of this assessment.

(b) If the administrator assesses pursuant to subsection (a) that the total payments that the wildfire relief fund is projected to make to eligible property owners, property insurers, and the State and other governmental entities under sections -13, -14, and -15, respectively, are expected to exceed seventy-five per cent of the total available money remaining in the wildfire relief fund, the administrator shall seek to increase the total amount of money in the fund using all available methods under this chapter.

(c) Depletion event. If the administrator is unable, despite taking the steps under subsection (b), to secure sufficient additional funding for the wildlife relief fund, including credible pledges for future funding, to reverse the administrator's assessment under subsection (a) within forty-five days, the administrator shall declare the existence of a depletion event.

(d) Depletion percentage. If the administrator declares the existence of a depletion event, the administrator shall determine what percentage of total eligible payments the wildlife relief fund can make without the likelihood that the payments will exceed seventy-five per cent of the total available money in the wildlife relief fund. This percentage shall be deemed the depletion percentage.

(e) Depletion payment. The administrator shall thereafter offer all property owners, property insurers, the State, and other governmental entities that submit claims for compensation from the wildfire relief fund and would otherwise, under sections -13, -14, and -15, respectively, be entitled to a particular payment amount, that amount multiplied by the depletion percentage. This amount shall be deemed the depletion payment.

(f) All claimants that are offered the depletion payment may choose to accept or decline the payment. Any property owner or property insurer, other than a contributor, that declines to accept the depletion payment shall:

(1) Be ineligible for any payments by the wildfire relief fund with respect to the catastrophic wildfire for which the claim was made; and

(2) Not be bound by the limitation on claims under section -18 with respect to only that catastrophic wildfire.

(g) After the payments to all claimants who accepted the depletion payment have been made, the administrator may recommend to the board, and the board may decide, in its discretion, to make a further payment to all claimants who accepted the depletion payment. The board shall adopt rules pursuant to chapter 91 for the making of this decision.

(h) Multiple catastrophic events. The board shall adopt rules pursuant to chapter 91 regarding how to pay claims in the event that one or more catastrophic wildfires occur while the corporation is in the process of assessing, receiving, determining, or paying claims from an earlier catastrophic wildfire.

§ -17 Hearings and appeals of determinations. (a) Within thirty days after the administrator's determination of the amount of payment due to any claimant from the wildfire relief fund pursuant to sections -13, -14, and -15, respectively, or the board's determination of a contributor's allocation for any contribution, the affected person or entity may request a review and hearing on that determination before the department of commerce and consumer affairs.

(b) Upon receipt of a request for review of the administrator or board's determination, the department of commerce and consumer affairs shall refer the request for hearing to the office of administrative hearings for determination as expeditiously as possible. A hearing shall be scheduled for a date no more than days after receipt by the department of commerce and consumer affairs of the request for a hearing.

(c) Following the conclusion of any hearing or prior to the conclusion of the hearing, with the concurrence of the parties, the office of administrative hearings shall promptly, and no later than days after the hearing, decide the matter and make an order in accordance with the administrative judge's decision.

(d) Within days after the date on which a copy of the office of administrative hearings' order is mailed to the parties, a party may seek judicial review of the order by filing a petition for review in the applicable circuit court, with a right of appeal as allowed by law. If no such petition is timely filed, the order of the office of administrative hearings shall be final.

§ -18 Limitations on claims. (a) No suit, claim, or other civil legal action may be instituted or maintained against contributors or their affiliates, employees, agents, or insurers:

(1) For recovery of losses or damages of a type for which compensation may be sought from the wildfire relief fund; and

(2) By persons or entities:

(A) Who are contributors, property owners who do not opt out of the wildfire relief fund, or property insurers who elect to participate in the wildfire relief fund; or

(B) Who seek indemnity or contribution for amounts paid, or that may be paid, to contributors, property owners who do not opt out of the wildfire relief fund, or property insurers who elect to participate in the wildfire relief fund.

(b) Persons or entities who are eligible to seek compensation from the wildfire relief fund for property damage arising from a catastrophic wildfire may not seek to recover for such damage from electric utilities, public utilities other than electric utilities, the State, or private landowners who are contributors, notwithstanding that the claimed property damage may exceed the amount of payment by the wildfire relief fund for such damage.

(c) The wildfire relief fund shall be subrogated to the rights of the contributors, property owners who do not opt out of the wildfire relief fund, and property insurers who elect to participate in the wildfire relief fund, to the extent of any payment made by the wildfire relief fund to such person or entity, such that the wildfire relief fund may pursue claims against a person or entity that is not a contributor for damages resulting from the catastrophic wildfire."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for deposit into the wildfire relief fund.

The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for the establishment of one full-time equivalent (1.0 FTE) administrator position, who shall be exempt from chapter 76, Hawaii Revised Statutes, to support the Hawaii wildfire relief fund corporation; provided that in all subsequent fiscal years, all funding for the administrator position shall be paid from the wildfire relief fund.

The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 5. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37‑91 and 37‑93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in H.B. No. , will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. In addition, the appropriation contained in this Act will cause the general fund expenditure ceiling for fiscal year 2024‑2025 to be further exceeded by $ or per cent. The combined total amount of general fund appropriations contained in only these two Acts will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. The reasons for exceeding the general fund expenditure ceiling are that:

(1) The appropriation made in this Act is necessary to serve the public interest; and

(2) The appropriation made in this Act meets the needs addressed by this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2024.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2700
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII