SB2744

SECTION 1. The legislature finds that article I, section 5, of the Hawaii State Constitution and the Fourteenth Amendment of the United States Constitution provide that no person shall be deprived of life, liberty, or property without due process of law. These guarantees apply fully to the administrative actions of state agencies when the actions materially affect protected liberty, property, or livelihood interests.

The legislature further finds that state executive departments exercise substantial authority over matters including agricultural land tenure, natural resource management, biosecurity enforcement, public assistance eligibility, child welfare, professional licensure, unemployment benefits, educational services, environmental permitting, and infrastructure development. Actions taken in these domains can impose significant economic, legal, and personal consequences on affected individuals and entities.

The legislature recognizes that judicial decisions, legislative audits, investigative reporting, and sworn testimony have identified recurring procedural due process deficiencies across multiple state departments. These deficiencies include inadequate or untimely notice, denial of contested case hearings, lack of impartial adjudication, opaque decision-making, and the implementation of adverse actions while appeals remain pending. Collectively, these practices have resulted in avoidable financial harm to affected parties, including lost income, disrupted operations, civil penalties, fines, and litigation costs.

The legislature additionally finds that, under existing law, the financial consequences of unconstitutional or procedurally deficient agency actions are frequently borne by affected persons or by the State's general fund, rather than by the department whose conduct caused the violation. This structure, which does not subject the responsible department to fiscal consequences, weakens institutional incentives for compliance, diffuses accountability, and allows recurring procedural failures.

Accordingly, the purpose of this Act is to:

(1) Require state agencies to provide an affected person with written notice containing certain information before taking final administrative actions that materially and adversely affect the person's protected liberty or property interest;

(2) Prohibit a state agency from implementing a final adverse action until the completion of any timely requested contested case proceeding unless the state agency makes certain written findings;

(3) Require state agencies to take certain steps to ensure impartial decision-making;

(4) Require each state agency to submit an annual report to the legislature and make the report available on the agency's website;

(5) Require a claim against the State for a violation of a procedural due process requirement to be satisfied from the operating budget of the state agency whose action or omission gave rise to the violation and not from the general fund; and

(6) Clarify that reporting of due process rights violations is protected under the State's Whistleblowers' Protection Act.

SECTION 2. Chapter 91, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§91-A Procedural due process; minimum requirements for state agencies. (a) Before taking any final administrative action that materially and adversely affects a protected liberty or property interest, a state agency shall provide the affected person with written notice that includes:

(1) A clear description of the proposed action and the factual basis supporting the action;

(2) Citation to any statute, rule, or formally adopted policy the state agency relied on to take the proposed action;

(3) Notice of the person's right to request a contested case hearing or administrative appeal, whichever is applicable; and

(4) A clear statement of the deadlines and procedures for exercising the rights listed in paragraph (3).

(b) Where a contested case hearing is timely requested in response to a proposed state agency action implicating a protected liberty or property interest, the state agency shall not implement the final adverse action until completion of the contested case proceeding unless the state agency makes written findings that immediate action is necessary to prevent imminent harm to public health, safety, or the environment.

(c) Each state agency shall, to the extent practicable, maintain functional separation between investigative, prosecutorial, and adjudicatory roles to ensure impartial decision-making.

(d) Nothing in this section shall be construed to expand or diminish any substantive right but shall be interpreted to ensure the meaningful availability of due process protections guaranteed by the United States Constitution and Hawaii State Constitution.

(e) For the purposes of this section, "state agency" means any board, commission, department, office, bureau, agency, or other establishment or institution of the state government, and any officer, employee, or member thereof, authorized by law to adopt rules, adjudicate contested cases, or otherwise take final administrative actions that may materially or adversely affect the liberty or property interest of a person protected under the due process clause of the United States Constitution and Hawaii State Constitution except those in the legislative or judicial branches.

§91-B Procedural due process; state agency reporting requirements. (a) Each state agency shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session detailing:

(1) The number of contested case hearings and administrative appeals requested;

(2) The number of contested case hearing and administrative appeal requests granted, denied, or withdrawn;

(3) The average time each contested case hearing or administrative appeal took to resolve; and

(4) The number of state agency decisions reversed, remanded, or modified after administrative or judicial review.

(b) Each state agency shall make the report required pursuant to subsection (a) available on the agency's publicly accessible website.

§91-C Procedural due process violations; fiscal accountability. (a) Where a court of competent jurisdiction or a final administrative or appellate decision determines that a state agency has violated procedural due process requirements under the United States Constitution, Hawaii State Constitution, or this chapter, and the violation results in:

(1) Monetary damages, fines, penalties, restitution, or settlements;

(2) Attorneys' fees or costs awarded against the State; or

(3) Documented financial harm requiring compensation or remedial payment,

the financial obligation shall be satisfied, to the extent permitted by law, from the operating budget of the state agency whose action or omission gave rise to the violation, and not from the general fund.

(b) The department of budget and finance shall, upon notice of a determination satisfying the requirements of subsection (a), adjust departmental allotments or impose internal accounting transfers as necessary to effectuate subsection (a); provided that no adjustment shall impair any constitutionally or federally mandated service.

(1) Waive sovereign immunity beyond any existing law;

(2) Create a private right of action; or

(3) Limit the authority of the legislature to appropriate funds.

(d) Each state agency shall include in the state agency's annual budget submission a summary of:

(1) Any expenditures made or determinations satisfying the requirements of subsection (a); and

(2) The nature of the violation resulting in the expenditure or determination and any corrective measures the state agency has implemented to prevent repetition of similar violations.

(e) For the purposes of this section, "state agency" has the same meaning as defined in section 91-A."

SECTION 3. Section 378-62, Hawaii Revised Statutes, is amended to read as follows:

"§378-62 Discharge of, threats to, or discrimination against employee for reporting violations of law. An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because:

(1) The employee, or a person acting on behalf of the employee, reports or is about to report to the employer, or reports or is about to report to a public body, verbally or in writing, a violation or a suspected violation of:

(A) A law, rule, ordinance, or regulation, adopted pursuant to law of this State, a political subdivision of this State, or the United States[~~; or~~], including any procedural due process right or requirement of chapter 91, such as improper denial of a right to a hearing or abuse of discretion; or

(B) A contract executed by the State, a political subdivision of the State, or the United States, unless the employee knows that the report is false; or

(2) An employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in 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 upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2744
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII