THE SENATE

S.B. NO.

2171

THIRTY-THIRD LEGISLATURE, 2026

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to water carriers.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  Chapter 271G, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

     "§271G-    Certificates of public convenience and necessity for water carriers.  (a)  No person which holds itself out to the general public to engage in the transportation by water of passengers or property or any class or classes thereof for compensation, between points in the State, shall operate, unless there is in force with respect to the water carrier a certificate of public convenience and necessity issued by the department authorizing the transportation; provided that this section shall not apply to any water carrier to the extent that the carrier is excluded from the definition of a public utility under section 269-1(2)(E) and (F).

     (b)  Applications for certificates shall be made in writing under oath to the department in the form as it requires.

     (c)  A certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operations covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules, and regulations of the department, and that the proposed service, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise the application shall be denied.  Any certificate issued shall specify the service to be rendered and the routes and ports that the water carrier is to serve and there shall be attached to the exercise of the privileges granted by the certificate, at the time of issuance and from time to time thereafter, the reasonable conditions and limitations as the public convenience and necessity may require.

     (d)  The department may at any time suspend, change, or revoke the certificate in the manner provided in section 271G‑15.

     §271G-    Preferential water carrier service rates for agricultural activities.  The department may authorize preferential water carrier service rates by tariff for ratepayers that engage in agricultural activities.  The application process for obtaining preferential water carrier service rates by tariff may be established by the department.

     §271G-    Liability of initial and delivering water carrier for loss; limitation of liability; notice and filing of claim.  Any water carrier receiving property for transportation from a point in Hawaii to a point in Hawaii shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to the property caused by it or by any water carrier to which the property may be delivered or over whose line or lines the property may pass when transported on a bill of lading, and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt the water carrier from the liability imposed; provided that if the loss, damage, or injury occurs while the property is in the custody of the water carrier the liability of the water carrier shall be determined by the bill of lading of the water carrier and by and under the laws and regulations applicable to transportation by water, and the liability of the initial or delivering carrier shall be the same as that of the water carrier; provided further that nothing in this section shall deprive any holder of the receipt or bill of lading of any remedy or right of action which the holder has under existing law; provided further that it shall be unlawful for any such receiving or delivering water carrier to provide by rule, contract, regulation, or otherwise a shorter period for the filing of claims than four months, and for the institution of suits than two years, the period for institution of suits to be computed from the day when notice in writing is given by the water carrier to the claimant that the water carrier has disallowed the claim or any part or parts thereof specified in the notice."

     SECTION 2.  Section 269-1, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read as follows:

     ""Public utility":

     (1)  Includes every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use for the transportation of passengers or freight; for the conveyance or transmission of telecommunications messages; for the furnishing of facilities for the transmission of intelligence by electricity within the State or between points within the State by land, water, or air; for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil; for the storage or warehousing of goods; or for the disposal of sewage; provided that the term shall include:

          (A)  An owner or operator of a private sewer company or sewer facility; and

          (B)  A telecommunications carrier or telecommunications common carrier; and

     (2)  Shall not include:

          (A)  An owner or operator of an aerial transportation enterprise;

          (B)  An owner or operator of a taxicab as defined in this section;

          (C)  Common carriers that transport only freight on the public highways, unless operating within localities, along routes, or between points that the public utilities commission finds to be inadequately serviced without regulation under this chapter;

          (D)  Persons engaged in the business of warehousing or storage unless the commission finds that regulation is necessary in the public interest;

          (E)  A carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State; provided that the towing, salvage, hauling, or carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally;

          (F)  A carrier by water, substantially engaged in interstate or foreign commerce, that transports passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure;

          (G)  Any user, owner, or operator of the Hawaii electric system as defined under section 269-141;

          (H)  A telecommunications provider only to the extent determined by the public utilities commission pursuant to section 269-16.9;

          (I)  Any person who controls, operates, or manages plants or facilities developed pursuant to chapter 167 for conveying, distributing, and transmitting water for irrigation and other purposes for public use and purpose;

          (J)  Any person who owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that:

               (i)  The services of the facility are provided pursuant to a service contract between the person and a state or county agency and at least ten per cent of the wastewater processed is used directly by the state or county agency that entered into the service contract;

              (ii)  The primary function of the facility is the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility owned by a state or county agency;

             (iii)  The facility does not make sales of water to residential customers;

              (iv)  The facility may distribute and sell recycled or reclaimed water to entities not covered by a state or county service contract; provided that, in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water shall be voluntary and its pricing fair and reasonable.  For purposes of this subparagraph, "recycled water" and "reclaimed water" means treated wastewater that by design is intended or used for a beneficial purpose; and

               (v)  The facility is not engaged, either directly or indirectly, in the processing of food wastes;

          (K)  Any person who owns, controls, operates, or manages any seawater air conditioning district cooling project; provided that at least fifty per cent of the energy required for the seawater air conditioning district cooling system is provided by a renewable energy resource, such as cold, deep seawater;

          (L)  Any person who owns, controls, operates, or manages plants or facilities primarily used to charge or discharge a vehicle battery that provides power for vehicle propulsion;

          (M)  Any person who:

               (i)  Owns, controls, operates, or manages a renewable energy system that is located on a customer's property; and

              (ii)  Provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to the customer on whose property the renewable energy system is located; provided that, for purposes of this subparagraph, a customer's property shall include all contiguous property owned or leased by the customer without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way; and

          (N)  Any person who owns, controls, operates, or manages a renewable energy system that is located on the person's property and provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to lessees or tenants on the person's property where the renewable energy system is located; provided that:

               (i)  An interconnection, as defined in section 269-141, is maintained with an electric public utility to preserve the lessees' or tenants' ability to be served by an electric utility;

              (ii)  The person does not use an electric public utility's transmission or distribution lines to provide, sell, or transmit electricity to lessees or tenants;

             (iii)  At the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission;

              (iv)  The rate schedule or formula shall be established for the duration of the lease, and the lease agreement entered into by the lessee or tenant shall reflect the rate schedule or formula;

               (v)  The lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for nonpayment of electric utility services or rules regarding health, safety, and welfare; and

              (vi)  The lease agreement shall disclose:  (1) the rate schedule or formula for the duration of the lease agreement; (2) that, at the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission; (3) that the lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for nonpayment of electric utility services or rules regarding health, safety, and welfare; and (4) whether the lease is contingent upon the purchase of electricity from the renewable energy system; provided further that any disputes concerning the requirements of this provision shall be resolved pursuant to the provisions of the lease agreement or chapter 521, if applicable.

     If the application of this chapter is ordered by the commission in any case provided in paragraph (2)(C), (D), (H), and (I), the business of any public utility that presents evidence of bona fide operation on the date of the commencement of the proceedings resulting in the order shall be presumed to be necessary to the public convenience and necessity, but any certificate issued under this proviso shall nevertheless be subject to terms and conditions as the public utilities commission may prescribe, as provided in [sections] section 269‑16.9 [and 269-20]."

     SECTION 3.  Section 269-19.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  For purposes of this section "affiliated interests" with a public utility includes the following:

     (1)  Every person owning or holding, directly or indirectly, ten per cent or more of the voting securities of a public utility, and every person having ownership of ten per cent or more of voting securities of a person owning ten per cent or more of the voting securities of a public utility;

     (2)  Every corporation ten per cent or more of whose voting securities is owned by any person owning ten per cent or more of the voting securities of a public utility;

     (3)  Every person who is an officer or director of a public utility;

     (4)  Every corporation operating a public utility, or providing engineering, accounting, legal, or similar service to public utilities [or common carriers by water, which] that has three or more officers or three or more directors in common with a public utility, and every other corporation which has directors in common with a public utility where the number of common directors is more than one-third of the total number of the utility's directors."

     SECTION 4.  Section 269-23, Hawaii Revised Statutes, is amended to read as follows:

     "§269-23  Liability of initial and delivering common carrier for loss; limitation of liability; notice and filing of claim.  Any common carrier receiving property for transportation from a point in Hawaii to a point in Hawaii shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to the property caused by it or by any common carrier or transportation company to which the property may be delivered or over whose line or lines the property may pass when transported on a through bill of lading, and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt the common carrier from the liability imposed; and any [such] common carrier so receiving property for transportation or any common carrier or transportation company delivering the property so received and transported shall be liable to the lawful holder of the receipt or bill of lading or to any party entitled to recover thereon, whether the receipt or bill of lading has been issued or not, for the full actual loss, damage, or injury to [such] the property caused by it or by any common carrier or transportation company to which the property may be delivered or over whose line or lines the property may pass when transported on a through bill of lading, notwithstanding any limitation of liability or limitation of the amount of recovery or representation or agreement as to value in any receipt or bill of lading, or in any contract, rule, regulation, or in any tariff filed with the public utilities commission; and any [such] limitation, without respect to the manner or form in which it is sought to be made is declared to be unlawful and void[; provided that if the loss, damage, or injury occurs while the property is in the custody of a carrier by water the liability of the carrier shall be determined by the bill of lading of the carrier by water and by and under the laws and regulations applicable to transportation by water, and the liability of the initial or delivering carrier shall be the same as that of the carrier by water]; provided that the provisions [hereof] respecting liability for full actual loss, damage, or injury, notwithstanding any limitation of liability or recovery or representation or agreement or release as to value, and declaring any [such] limitation to be unlawful and void, shall not apply, first, to baggage carried on passenger trains [or boats], or trains [or boats] carrying passengers; second, to property, except ordinary livestock, received for transportation concerning which the carrier shall have been or shall be expressly authorized or required by order of the commission to establish and maintain rates dependent upon the value declared in writing by the shipper or agreed upon in writing as the released value of the property, in which case the declaration or agreement shall have no other effect than to limit liability and recovery to an amount not exceeding the value so declared or released, and any tariff schedule which may be filed with the commission pursuant to the order shall contain specific reference thereto and may establish rates varying with the value [so] declared and agreed upon; and the commission may make [such] the order in cases where rates dependent upon and varying with declared or agreed values would, in its opinion, be just and reasonable under the circumstances and conditions surrounding the transportation; provided further that nothing in this section shall deprive any holder of the receipt or bill of lading of any remedy or right of action which the holder has under the existing law; provided further that it shall be unlawful for any [such] receiving or delivering common carrier to provide by rule, contract, regulation, or otherwise a shorter period for the filing of claims than four months, and for the institution of suits than two years, [such] the period for institution of suits to be computed from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice; [and] provided further that the liability imposed by this section shall also apply in the case of property reconsigned or diverted in accordance with the applicable tariffs filed as provided by the commission."

     SECTION 5.  Section 269-33, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  There is established in the state treasury a public utilities commission special fund to be administered by the public utilities commission.  The proceeds of the fund shall be used by the public utilities commission and the division of consumer advocacy of the department of commerce and consumer affairs for all expenses incurred in the administration of chapters 269, 271, [271G,] 269E, and 486J, and for costs incurred by the department of commerce and consumer affairs to fulfill the department's limited oversight and administrative support functions; provided that the expenditures of the public utilities commission shall be in accordance with legislative appropriations.  On a quarterly basis, an amount not exceeding thirty per cent of the proceeds remaining in the fund after the deduction for central service expenses, pursuant to section 36‑27, shall be allocated by the public utilities commission to the division of consumer advocacy and deposited in the compliance resolution fund established pursuant to section 26‑9(o); provided that all moneys allocated by the public utilities commission from the fund to the division of consumer advocacy shall be in accordance with legislative appropriations.

     (b)  All moneys appropriated to, received, and collected by the public utilities commission that are not otherwise pledged, obligated, or required by law to be placed in any other special fund or expended for any other purpose shall be deposited into the public utilities commission special fund including, but not limited to, all moneys received and collected by the public utilities commission pursuant to sections 92-21, 243-3.5, 269‑28, 269-30, 271-27, 271-36, [271G-19,] 269E-6, 269E-14, and 607-5."

     SECTION 6.  Section 271G-3, Hawaii Revised Statutes, is amended to read as follows:

     "§271G-3  Administration[; governing provisions of other acts].  This chapter shall be administered by the [public utilities commission of the State] department and the provisions of this chapter [and of chapter 269, not inconsistent with this chapter,] shall govern its administration[; provided that sections 269-16 to 269-28 shall not apply in any respect to the regulation of water carriers]."

     SECTION 7.  Section 271G-5, Hawaii Revised Statutes, is amended as follows:

     1.   By adding a new definition to be appropriately inserted and to read:

     ""Department" means the department of transportation."

     2.  By amending the definitions of "document" and "enforcement officer" to read:

     ""Document" includes any application, complaint, pleading, brief, answer, motion, memorandum, declaration, exhibit, certificate of service, and other papers filed by or with the [commission.] department.

     "Enforcement officer" means any person employed and authorized by the [commission] department to investigate any matter on behalf of the [commission] department."

     3.  By repealing the definition of "commission".

     [""Commission" means the public utilities commission."]

     SECTION 8.  Section 271G-7, Hawaii Revised Statutes, is amended to read as follows:

     "§271G-7  General duties and powers of the [commission.] department.  The general duties and powers of the [public utilities commission] department shall be:

     (1)  To regulate water carriers, and to that end the [commission] department shall have and utilize [the investigative powers set forth in section 269-7 as well as] all of the duties and powers specifically enumerated in this chapter[, and water carriers shall be subject to the duties set forth in sections 269-8 and 269-9 as well as all of the duties specifically enumerated herein].

     (2)  To establish [such] just and reasonable classifications of water carriers as the special nature of the services performed by the carriers shall require, and [such] just and reasonable rules, regulations, and requirements, consistent with this chapter, to be observed by the carriers so classified or grouped, as the [commission] department deems necessary or desirable in the public interest.  [Such] The classifications, rules, regulations, and requirements shall be adopted and promulgated pursuant to the provisions of chapter 91 and shall have the force and effect of law.

     (3)  Upon complaint in writing to the [commission] department by any person or body politic, or upon its own initiative without complaint, the [commission] department may investigate whether any water carrier has failed to comply with any provision of this chapter, or with any rule or order adopted or issued [hereunder.] under this section.

     (4)  The [commission] department may investigate any person acting in the capacity of or engaging in the business of a water carrier within the State, without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter or the rules promulgated under this chapter."

     SECTION 9.  Section 286-271, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  This section shall not apply to:

     (1)  Any motor vehicle rental company as defined in section 431:9A-141 that periodically ships in quantities of ten vehicles or more;

     (2)  Licensed dealers who periodically ship in quantities of ten vehicles or more, or whose primary business is the auction of insurance salvage vehicles;

     (3)  Except for a lessee of a rental motor vehicle under paragraph (4), drivers of vehicles transported by any water carrier authorized by the [public utilities commission] department of transportation to transport vehicles interisland; provided that the driver presents identification, a current certificate of registration for the vehicle, and proof of motor vehicle insurance.  The interisland water carrier shall keep a record of transporting the vehicle by recording the vehicle identification number and retaining the information for three years after the date of travel; or

     (4)  A lessee of a rental motor vehicle; provided that:

          (A)  The rental motor vehicle is transported by any water carrier authorized by the [public utilities commission] department of transportation to transport vehicles interisland;

          (B)  The water carrier has a written agreement with the owner of the rental motor vehicle; and

          (C)  The water carrier records and retains the information required under subsections (d) and (f).

     For purposes of this subsection, "lessee" and "rental motor vehicle" have the same meanings as [those terms are] defined in section 437D-3."

     SECTION 10.  Section 269-20, Hawaii Revised Statutes, is repealed.

     ["§269-20  Certificates of public convenience and necessity for water carriers.  (a)  No person which holds itself out to the general public to engage in the transportation by water of passengers or property or any class or classes thereof for compensation, between points in the State of Hawaii, shall operate unless there is in force with respect to such carrier a certificate of public convenience and necessity issued by the commission authorizing such transportation; provided that this section shall not apply to any carrier by water to the extent that the carrier is excluded from the definition of a public utility under section [269-1(2)(E) and (F)].

     (b)  Applications for certificates shall be made in writing under oath to the commission in such form as it requires.

     (c)  A certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operations covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules and regulations of the commission thereunder, and that the proposed service, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied.  Any certificate issued shall specify the service to be rendered and the routes and ports which the water carrier is to serve and there shall be attached to the exercise of the privileges granted by the certificate, at the time of issuance and from time to time thereafter, such reasonable conditions and limitations as the public convenience and necessity may require.

     (d)  The commission may at any time suspend, change or revoke such certificate in the manner provided in section 271-19."]

     SECTION 11.  Section 269-26.6, Hawaii Revised Statutes, is repealed.

     ["[§269-26.6]  Preferential water carrier service rates for agricultural activities.  The public utilities commission may authorize preferential water carrier service rates by tariff for ratepayers that engage in agricultural activities.  The application process for obtaining preferential water carrier service rates by tariff may be established by the public utilities commission."]

     SECTION 12.  Sections 271G-7.5, 271G-8, 271G-9, 271G-10, 271G-12, 271G-13, 271G-14, 271G-15, 271G-16, 271G-17, 271G-17.5, 271G-18, 271G-19, 271G-20, 271G-21, 271G-22, 271G-23, 271G-23.5, 271G-24, and 271G-25, Hawaii Revised Statutes, are amended by substituting the term "department of transportation", "department", or similar term, wherever the term "public utilities commission", "commission", or similar term, appears, as the context requires.

     SECTION 13.  All rights, powers, functions, and duties of the public utilities commission are transferred to the department of transportation as it relates to the Hawaii water carrier act.

     All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

     No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

     An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

     If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

     SECTION 14.  All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the public utilities commission relating to the functions transferred to the department of transportation shall be transferred with the functions to which they relate.

     SECTION 15.  All rules, policies, procedures, guidelines, and other material adopted or developed by the public utilities commission to implement provisions of the Hawaii Revised Statutes that are made reenacted or applicable to the department of transportation by this Act shall remain in full force and effect until amended or repealed by the department of transportation pursuant to chapter 91, Hawaii Revised Statutes. In the interim, every reference to the public utilities commission in those rules, policies, procedures, guidelines, and other material is amended to refer to the department of transportation, as appropriate.

     SECTION 16.  All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the public utilities commission, pursuant to the provisions of the Hawaii Revised Statutes, that are reenacted or made applicable to the office of real estate operations by this Act shall remain in full force and effect. Upon effective date of this Act, every reference to the public utilities commission or the chairperson of the public utilities commission therein shall be construed as a reference of the department of transportation or the director of transportation, as appropriate.

     SECTION 17.  There is appropriated out of the general revenues of the State of Hawaii the sum of $200,000 or so much thereof as may be necessary for fiscal year 2026-2027 for the transfer of functions related to the Hawaii water carrier act to the department of transportation.

     The sum appropriated shall be expended by the department of transportation for the purposes of this Act.

     SECTION 18.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 19.  This Act shall take effect on July 1, 2026.

 

INTRODUCED BY:

_____________________________

 

 

 

 

 

Report Title:

PUC; DOT; Water Carrier Act; Transfer; Appropriation

 

Description:

Transfers the jurisdiction of the Hawaii Water Carrier Act from the Public Utilities Commission to the Department of Transportation.  Makes conforming amendments.  Appropriates funds. 

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.