SB2164

SECTION 1. The legislature finds that while the current dam and reservoir safety rules, regulations, guidelines, and laws move in the direction of fulfilling several public safety initiatives, the aggregation of these regulations are producing a significantly negative impact on the owners and operators of existing dams. These negative impacts are often significant, latently observed, and experienced solely by the dam owners.

The legislature further finds that several underlying issues impede dam owners' ability to implement the necessary repairs to dams located on their property. The weight of the current regulations place a significant burden on dam owners who do not possess the reserve capital or funding capability to satisfy the requirements issued by the department of land and natural resources. These regulations are inherently onerous and represent an unfunded mandate on independent dam owners.

The legislature additionally finds that the current dams, reservoirs, and spillways in the State function as key agricultural components to the overall environmental health of the State, providing conventional and practical benefits of water storage; the potentiality of tying into water delivery systems; erosion control; reductions in sediment loading; wildfire management capabilities; and structures that can serve as a reserve supply of potable water sources. However, as the legislature has argued and demonstrated in previous legislative sessions, these benefits are often offset by the increases in compounding costs that are experienced by owners over time, in the form of higher costs for materials, shipping, manufacturing, and labor, which are considered in excess of the existing operating costs that owners experience. Furthermore, access to the necessary capital to implement improvements is consistently out of reach for private dam owners, and cost estimates often fluctuate according to economic shifts in the cost of goods and services.

The legislature notes that Act 232, Session Laws of Hawaii 2024, established a special fund to receive funds for the dam and appurtenance improvement or removal grant program and to reappropriate program funds to financially assist owners of private dams to improve or remove these structures. However, private dam owners still face significant barriers to maintaining dams or reservoirs in the interest of public safety. Private dam owners may not possess the specialized knowledge, financial capacity, or ability to locate assessment firms to conduct rigorous unbiased risk assessments, which may lead to potential delays in improvement and removal projects or inaccurate reporting. In contrast, the legislature finds that the department of land and natural resources is uniquely positioned to assess the risks posed by dams, spillways, and reservoirs in the State due to its access to technical resources, comprehensive oversight capabilities, and public safety mandates. By shifting the burden of proof in risk assessments to the department of land and natural resources, the State can ensure that assessments are performed uniformly, free of conflicts of interest, and truly aligned with public safety standards.

Therefore, the legislature asserts that in the interest of public safety and efficient resource management, the department of land and natural resources should assume the burden of proof regarding the determinations of risk assessment associated with dam ownership, thereby establishing a multi-level partnership between the State, the department, and private dam owners to ensure an equitable and efficient process where the safety of Hawaii's infrastructure and communities are prioritized by the most suitable entity.

The legislature concludes that the department of land and natural resources is the most appropriate entity to assess risks posed by dams, spillways, and reservoirs, because it has the necessary expertise in hydrology, civil engineering, and environmental science to accurately and consistently evaluate the safety of these critical structures. The legislature acknowledges that the intent of this measure is to balance public safety, ensure financial feasibility, and adequately address the persistent challenges that dam and reservoir owners face in the process of maintaining critical infrastructural water resources for the State.

Accordingly, the purpose of this Act is to:

(1) Require the department of land and natural resources to incorporate into their assessment process the possession of dam liability insurance or the active seeking of dam liability insurance by private dam owners, as part of their valid mitigation measures, in conjunction with approved modifications or repairs;

(2) Authorize the department of land and natural resources to relax any restrictions and stringent standards on a dam or appurtenance upon verification of certain insurance coverage;

(3) Authorize the department of land and natural resources to consider a dam, reservoir, or appurtenance safe absent certain documents;

(4) Shift the burden of proof onto the department of land and natural resources to find that a dam is categorized as high hazard;

(5) Revise the definition of "hazard potential" to include the consideration of dam liability insurance as a hazard mitigation measure;

(6) Expand the definition of "high hazard" to include major economic losses; and

(7) Establish additional requirements for the department of land and natural resources and board of land and natural resources regarding the dam and appurtenance improvement or removal grant program.

SECTION 2. Chapter 179D, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§179D- Inspections; risk assessment; risk mitigation; insurance coverage; burden of proof; high hazard. (a) In conducting investigations pursuant to this part, the department shall consider:

(1) Whether an owner has or is in the process of obtaining insurance coverage that:

(A) Subjects the dam, reservoir, or appurtenance to reclassification; and

(B) Mitigates the risks associated with the dam, reservoir, or spillway;

(2) Whether the owner has other financial assurances to mitigate the risks associated with the dam, reservoir, or spillway; and

(3) The results of any engineering risk assessments conducted pursuant to subsection (d).

(b) The department shall consider proof of insurance or financial assurances pursuant to subsection (a)(1) or (2) a valid hazard mitigation measure. The department shall not classify a dam, reservoir, or appurtenance as high hazard based only on the department's findings pursuant to subsection (a)(3).

(c) The department shall have the burden of proof to affirmatively establish that a dam, reservoir, or appurtenance is a high hazard dam, reservoir, or appurtenance, including when the owner does not possess dam liability insurance or other financial assurances acceptable to the department.

(d) Any finding that a dam, reservoir, or appurtenance qualifies as high hazard shall be supported by:

(1) An engineering report from a licensed engineer of the department that finds that the failure of the dam, reservoir, or appurtenance will result in probable loss of human life; and

(2) An engineering study or report from a certified hydraulic engineer that considers:

(A) Distances, including the distance to potentially threatened residences and properties;

(B) Natural water courses;

(D) A realistic assessment that the failure of the dam, reservoir, or appurtenance will result in probable loss of human life.

(e) The department may consider, as part of their assessment process, that any dam, reservoir, or appurtenance is safe absent the documents required under subsection (d).

(f) The department may relax any restrictions and stringent standards on a dam, reservoir, or appurtenance; provided that the owner verifies valid insurance coverage that meets the conditions of subsection (a).

(g) Nothing in this section shall be construed to relieve an owner or operator of any legal duties, obligations, or liabilities incident to the ownership, operation, or maintenance of a dam or reservoir."

SECTION 3. Section 179D-3, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "hazard potential" to read:

""Hazard potential" means the possible adverse incremental consequences that result from the release of water or stored contents due to the failure of the dam or reservoir or the misoperation of the dam, reservoir, or appurtenances. The hazard potential classification of a dam or reservoir shall not reflect in any way on the current condition of the dam or reservoir and its appurtenant works, including the dam's or reservoir's safety, structural integrity, or flood routing capacity. The hazard potential classification of a dam or reservoir shall take into consideration the presence of dam liability insurance as an acceptable, viable, and valid hazard mitigation measure."

2. By amending the definition of "high hazard" to read:

""High hazard" means a dam's or reservoir's failure will result in probable loss of human life[.], and major economic loss that is not mitigated by dam liability insurance."

SECTION 4. Section 179D-27, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) If, upon inspection or upon completion to the satisfaction of the board of all work that may be ordered, the board finds that the dam and reservoir are safe to impound water, a certificate of approval to impound shall be issued. The board may find that the dam or reservoir will not safely impound water, taking into consideration both structural and non-structural factors, including whether the owner possesses dam liability insurance as a recognized hazard mitigation measure pursuant to section 179D- (b), and may refuse to issue a certificate of approval to impound[.] where the board finds that the mitigating measures are insufficient to minimize hazard potential. Upon finding that the dam or reservoir is unsafe to impound water, the board shall issue a written notice to the owner. After receipt of the notice, the owner shall no longer cause or allow the dam and reservoir to impound water[.] until the board, upon further inspection and consideration of remedial actions or mitigating measures, including but not limited to the purchase of dam liability insurance, determines that the dam, reservoir, or appurtenance is eligible for a certificate of approval to impound."

SECTION 5. Section 179D-31, Hawaii Revised Statutes, is amended to read as follows:

"§179D-31 Dam and appurtenance improvement or removal grant program; special fund; established. (a) There is established a dam and appurtenance improvement or removal grant program, to be developed and administered by the department for the improvement or removal of deficient dams in the State.

(b) The dam and appurtenance improvement or removal grant program shall provide funding to owners of private dams for plans, design, construction, and equipment to improve or remove deficient dams and appurtenances, as determined by the department.

(c) Each award shall be approved by the board before disbursement and shall be subject to conditions imposed by the board. The board shall consider any existing insurance policy in its assessment of risks associated with a dam.

(d) The department [~~may~~] shall award grants based on criteria that shall be developed by the department. The criteria developed by the department under this section shall be made publicly available.

(e) Each applicant shall meet the following requirements:

(l) The applicant shall be an owner of a high hazard or significant hazard dam or appurtenance that is regulated under this chapter;

(2) The applicant shall be the owner of a regulated dam or appurtenance that has been determined to have one or more deficiencies; provided that priority shall be given to dams or appurtenances rated to be in poor or unsatisfactory condition;

(3) The applicant shall indicate on the application that the proposed plans, design, construction, and equipment shall be intended for remediation or removal of the dam or appurtenance;

(4) If the applicant is an entity other than an individual, the applicant shall:

(A) Be licensed to conduct business in the State; and

(B) Have bylaws or policies that describe the manner in which business is conducted, prohibit nepotism, and provide for the management of potential conflicts of interest;

(5) The applicant shall agree to comply with all applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, sexual orientation, disability, or any other characteristic protected under applicable federal or state law;

(6) The applicant shall agree that grant moneys are not to be used for purposes of entertainment or perquisites;

(7) The applicant shall agree that all activities and improvements undertaken with funds received shall comply with applicable federal, state, and county laws, including statutes, ordinances, applicable building codes, and rules;

(8) The applicant shall agree to make available to the department all records that the applicant may have relating to the grant and allow state agencies to monitor the applicant's compliance with the purpose of this chapter;

(9) The applicant shall establish, to the satisfaction of the department, that sufficient funds are available for the completion of plans, design, and construction, or equipment needed for the purpose for which the grant is awarded; provided that the grant amount shall be included among the calculation of sufficient funds; and

(10) The applicant shall comply with other requirements or conditions as the department or board may prescribe[.]; provided that:

(A) The board shall prescribe other requirements or conditions in a manner that is consistent with the principles of fairness and equal treatment;

(B) The other requirements or conditions shall be:

(i) Based on reasonable and justifiable grounds and relevant to the purpose for which the grant is awarded;

(ii) Communicated to the applicant in a clear, transparent, and reasonable manner; and

(iii) Readily available to the applicant in writing, with one copy submitted to the applicant and another made publicly available; and

(f) The applicant may appeal the board's determination of its application in accordance with section 179D-7.

[~~(e)~~] (g) Notwithstanding any provision to the contrary, there is established in the department a special fund to be designated as the dam and appurtenance improvement or removal grant program special fund. The fund shall be administered by the department. The following shall be deposited into the dam and appurtenance improvement or removal grant program special fund:

(1) Appropriations by the legislature;

(2) Moneys derived from public or private sources to benefit dam and appurtenance improvement or removal;

(3) Any other moneys collected pursuant to this section or any rules adopted pursuant to this section; and

(4) Moneys derived from interest, dividends, or other income from other sources.

[~~(f)~~] (h) The department may expend moneys from the dam and appurtenance improvement or removal grant program special fund in accordance with this section and other purposes for the administration of the dam and appurtenance improvement or removal grant program under this section or any rule adopted pursuant to this section, including but not limited to funding for permanent or temporary positions."

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.	2164
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII