HOUSE OF REPRESENTATIVES
H.B. NO.
1906
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO WATER CARRIER RATE REGULATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the public utilities commission currently regulates rates and services for water carriers operating as common carriers under chapter 271G, Hawaii Revised Statutes. The legislature recognizes that certain interisland carriers, such as Young Brothers, face unique operational and economic challenges that differ from other utilities. The legislature further finds that establishing a specialized board focused exclusively on water carrier rates will improve transparency, fairness, and efficiency in rate-setting for these essential services.
Accordingly, the purpose of this Act is to:
(1) Establish the Hawaii water carrier rates board;
(2) Transfer rate-setting authority for water carriers from the public utilities commission to the board; and
(3) Ensure continuity and oversight in rate regulation, while maintaining public transparency.
SECTION 2. Chapter 271G, Hawaii Revised Statutes, is amended by designating sections 271G-1 through 271G-25 as part I, entitled "General Provisions".
SECTION 3. Chapter 271G, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:
"Part . HAWAII WATER CARRIER RATES BOARD
§271G-A Hawaii water carrier rates board; established. There is established within the department of commerce and consumer affairs for administrative purposes the Hawaii water carrier rates board. The board shall consist of seven members who shall be appointed by the governor for staggered terms and serve in accordance with section 26-34. The members appointed to the board shall be selected on the basis of knowledge and expertise as follows:
(1) One member with expertise in maritime economics;
(2) One member with expertise in transportation logistics;
(3) One member with expertise in regulatory economics;
(4) One member representing consumer advocacy interests;
(5) One member with expertise in small business transportation; and
(6) Two members at large with expertise in general transportation policy.
§271G-B Powers and duties. (a) The board may:
(1) Review, evaluate, and set rates, fees, and charges for water carriers;
(2) Conduct public hearings and receive evidence on rate proposals;
(3) Establish criteria for rate approval, including cost‑of-service analyses, economic impact studies, and public interest considerations; and
(4) Issue orders, rules, and policies consistent with this part.
(b) The board shall adopt rules pursuant to chapter 91 for the purposes of this part.
§271G-C Exclusive jurisdiction. The board shall have exclusive jurisdiction over the rates of water carriers under this chapter.
§271G-D Annual reporting. The board shall submit a report to the legislature no later than twenty days prior to the convening of each regular session that contains a summary of its activities during the preceding year, including:
(1) A list and summary of the rate actions taken;
(2) The number of public hearings conducted and a summary of any decisions made at each hearing;
(3) An explanation and identification of the assessed economic impacts;
(4) Any other findings and recommendations, including any proposed legislation; and
(5) In the annual report to be submitted to the legislature prior to the regular session of 2032, recommendations on whether the repeal of the Act should be rescinded or extended to continue the activities of the board beyond the repeal date.
§271G-E Hawaii water carrier rates board special fund. (a) There is established in the state treasury a Hawaii water carrier rates board special fund to be administered by the board. The proceeds of the fund shall be used by the board for all expenses incurred in the administration of part of chapter 271G; provided that the expenditures of the board shall be in accordance with legislative appropriations.
(b) All moneys appropriated to, received, and collected by the board 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 Hawaii water carrier rates board special fund.
(c) The board shall submit an update as part of its annual report submitted pursuant to section 271G-D detailing all moneys received and distributed out of the fund in the preceding year."
SECTION 4. Section 269-33, Hawaii Revised Statutes, is amended by amending subsection (a) 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, [[Struck through: 271G,]] 269E, and 486J, [Underlined: and part of chapter 271G,] 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."
SECTION 5. 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 [Underlined: the board and] the public utilities commission of the State 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 6. Section 271G-5, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:
"[Underlined: "Board" means the Hawaii water carrier rates board established under section 271G-A.]"
SECTION 7. Section 271G-8, Hawaii Revised Statutes, is amended to read as follows:
"§271G-8 Reports and decisions of commission. Whenever the public utilities commission [Underlined: or the board] inquires into the operations, operating rights, rates, safety of operations, or directs inquiry and investigation into water carrier activities regulated under this chapter, and holds public hearing thereon, it shall make a report in writing, on paper or an electronic copy, in respect thereto, that shall state its findings of fact and conclusions of law, together with its decision, order, or requirement in the premises. The provisions of chapter 91 shall apply."
SECTION 8. Section 271G-9, Hawaii Revised Statutes, is amended to read as follows:
"[[Struck through: []]§271G-9[[Struck through: ]]] Copies of schedules, tariffs, contracts, etc., kept as public records; evidence. The copies of schedules and classifications and tariffs or rates, fares, and charges, and all contracts, agreements and arrangements between water carriers filed with the public utilities commission [Underlined: or the board] as herein provided, and any reports filed with the commission [Underlined: or the board] as required under this chapter shall be preserved as public records."
SECTION 9. Section 271G-16, Hawaii Revised Statutes, is amended by amending subsections (d) and (e) to read as follows:
"(d) Any person or body politic may [[Struck through: make]] [Underlined: file a written] complaint [[Struck through: in writing to]] [Underlined: with] the [[Struck through: commission]] [Underlined: board alleging] that [Struck through: [any such rate, fare, charge, rule, regulation, or practice, in effect or proposed to be put into effect, is or will b]e] [Underlined: a water carrier is] in violation of this section. Whenever, after hearing, upon complaint or in an investigation on its own initiative, the [[Struck through: commission]] [Underlined: board] [[Struck through: shall be of the opinion]] [Underlined: finds] that [[Struck through: any individual rate, fare, or charge, demand, charged, or collected by any common carrier or carriers by water for transportation, or any rule, regulation, or practice whatsoever of the carrier or carriers affecting such rate, fare, or charge or the value of the service thereunder, is or will be unjust or unreasonable, or unjustly discriminatory or unduly preferential or unduly prejudicial, it]] [Underlined: a water carrier has violated this section, the board] shall determine and prescribe[Underlined: , as appropriate,] the lawful rate, fare, or charge or the maximum or minimum [[Struck through: or maximum and minimum]] rate, fare, or charge [[Struck through: thereafter]] to be observed, or the lawful rule[[Struck through: , regulation,]] or practice [[Struck through: thereafter]] to be made effective[[Struck through: .]] [Underlined: after the date of the determination.]
(e) In the exercise of its power to prescribe just and reasonable rates, fares, and charges for [[Struck through: the transportation of passengers or property by]] water carriers, and to prescribe classifications, [[Struck through: regulations,]] [Underlined: rules,] and practices relating[Struck through: ][[Struck through: thereto,]] [Underlined: to rates, fares, and charges,] the [[Struck through: commission]] [Underlined: board] shall give due consideration, among other factors, to the effect of rates upon the movement of traffic by [[Struck through: the carrier or]] [Underlined: water] carriers for which the rates are prescribed; to the need, in the public interest, of adequate and efficient transportation service by [[Struck through: the]] [Underlined: water] carriers at the lowest cost consistent with the furnishing of the service; and to the need of revenues sufficient to enable [[Struck through: the]] [Underlined: water] carriers, under honest, economical, and efficient management, to provide the service."
SECTION 10. Section 271G-17, Hawaii Revised Statutes, is amended to read as follows:
"§271G-17 Tariffs of water carriers. (a) Every water carrier shall file with the [[Struck through: public utilities commission,]] [Underlined: board,] [[Struck through: and]] print, and keep open to public inspection, tariffs showing all the rates, fares, and charges for transportation[[Struck through: , and all services in connection therewith,]] of passengers or property. The rates, fares, and charges shall be stated in [[Struck through: terms of lawful money of the]] United States[[Struck through: .]] [Underlined: currency.] The tariffs required by this section shall be published, filed, and posted in [[Struck through: such]] [Underlined: the] form and manner[[Struck through: ,]] and [[Struck through: shall]] contain [[Struck through: such]] [Underlined: any] information [[Struck through: as the commission by regulations shall prescribe; and the commission]] [Underlined: prescribed in rules adopted by the board. The board] may reject any [Underlined: filed] tariff [[Struck through: filed with it which]] [Underlined: that] is not in consonance with this section and [[Struck through: with]] the [[Struck through: regulations.]] [Underlined: rules.] Any tariff [[Struck through: so]] rejected by the [[Struck through: commission]] [Underlined: board] shall be void and its use shall be unlawful.
(b) No change shall be made [[Struck through: in]] [Underlined: to] any rate, fare, charge, or classification[[Struck through: , or]][Underlined: ;] any rule[[Struck through: , regulation,]] or practice affecting the rate, fare, charge, or classification[[Struck through: ,]][Underlined: ;] or the value of the service [t[Struck through: hereunder,]] [Underlined: as] specified in any effective tariff of a water carrier, except after forty-five days' notice of the proposed change [Underlined: is] filed and posted in accordance with subsection (a); provided that changes to a fuel surcharge approved by the [[Struck through: commission]] [Underlined: board] may be made after thirty days' notice of the proposed change [Underlined: is] filed and posted in accordance with subsection (a). The notice shall plainly state the [Underlined: proposed] change [[Struck through: proposed to be made]] and the [[Struck through: time when]] [Underlined: date upon which] it will take effect. The [[Struck through: commission]] [Underlined: board] may in its discretion and for good cause shown allow the change upon notice less than that [[Struck through: herein]] specified [Underlined: in this section] or modify the requirements of this section with respect to [Underlined: the] posting and filing of tariffs either in particular instances or by general order applicable to special or peculiar circumstances or conditions.
(c) No water carrier shall engage in the transportation of passengers or property unless the rates, fares, and charges upon which the [[Struck through: same]] [Underlined: passengers or property] are transported by the [Underlined: water] carrier have been filed and published in accordance with this chapter.
(d) [[Struck through: Whenever]] [Underlined: If] there is filed with the [[Struck through: commission]] [Underlined: board] any schedule stating a new rate, fare, or charge, for the transportation of passengers or property by a water carrier or any rule[[Struck through: , regulation,]] or practice affecting [[Struck through: such]] [Underlined: the] rate, fare, or charge, or the value of the service [[Struck through: thereunder]], the carrier may on its own initiative, or shall by order of the [[Struck through: commission]] [Underlined: board] served [[Struck through: prior to]] [Underlined: before] the effective date of the schedule, concurrently file a pro forma statement of account [[Struck through: which]] [Underlined: that] shall be prepared [[Struck through: under]] [Underlined: in] the same form and [[Struck through: in the same]] manner as prescribed by the [[Struck through: commission's]] [Underlined: board's] uniform system of accounts.
The [[Struck through: commission]] [Underlined: board] may upon [Underlined: the] complaint of any interested person or [[Struck through: upon]] [Underlined: on] its own initiative at once and, if it so orders, without answer or other formal pleading by the interested carrier [[Struck through: or carriers]], but [[Struck through: upon]] [Underlined: with] reasonable notice, [[Struck through: enter upon]] [Underlined: conduct] a hearing concerning the lawfulness of the rate, fare, or charge, or the rule[[Struck through: , regulation,]] or practice[[Struck through: , and pending]][Underlined: . Pending] the hearing and the [Underlined: board's] decision [[Struck through: thereon]][Underlined: ,] the [[Struck through: commission,]] [Underlined: board,] by delivering to the [[Struck through: carrier or]] [Underlined: affected] carriers [[Struck through: affected thereby]] a [Underlined: written] statement [[Struck through: in writing]] of its reasons [[Struck through: therefor]], may suspend the operation of the schedule and defer the use of the rate, fare, or charge, or the rule[[Struck through: , regulation,]] or practice. From the date [[Struck through: of ordering]] [Underlined: the board orders] a hearing to investigate the lawfulness of the rate, fare, or charge, the [[Struck through: commission]] [Underlined: board] shall have [[Struck through: up to]] [Underlined: no more than] six months to complete its investigation. If the [[Struck through: commission]] [Underlined: board] fails to issue a final order within the six-month period then the changes proposed by the carrier shall go into effect. At any hearing involving a change in a rate, fare, charge, or classification, or in a rule[[Struck through: , regulation,]] or practice, [Underlined: the carrier shall have] the burden of proof [[Struck through: shall be upon the carrier]] to show that the proposed changed rate, fare, charge, classification, rule, [[Struck through: regulation,]] or practice, is just and reasonable.
(e) When a rate increase application is filed, the [[Struck through: commission may]] [Underlined: board,] in its discretion and after public notice, and upon [Underlined: a] showing by [[Struck through: a]] [Underlined: the] water carrier of probable entitlement and financial need, [Underlined: may] authorize temporary increases in rates, fares, and charges; provided that the [[Struck through: commission]] [Underlined: board] shall by order require the carrier to keep [Underlined: an] accurate account in detail of all amounts received by reason of [[Struck through: such]] [Underlined: the] increase, specifying by whom and [[Struck through: in]] [Underlined: on] whose behalf [[Struck through: such]] [Underlined: the] amounts are paid, and upon completion of the hearing and decision [Underlined: shall] by further order require the interested carrier to refund, with interest, to the persons [[Struck through: in]] [Underlined: on] whose behalf [[Struck through: such]] [Underlined: the] amounts were paid, [[Struck through: such]] [Underlined: the] portion of [[Struck through: such]] [Underlined: the] increased rates or charges [Underlined: that the board] by its decision [[Struck through: shall be]] found not justified. The interest to be paid shall be the rate of return authorized in the [[Struck through: last]] [Underlined: most recent] general rate case proceedings."
SECTION 11. Section 271G-18, Hawaii Revised Statutes, is amended to read as follows:
"[[Struck through: []]§271G-18[[Struck through: ]]] Accounts, records, and reports. The [[Struck through: public utilities]] commission [Underlined: and the board] may require annual, periodical, or special reports from all water carriers, prescribe the manner and form in which the reports shall be made, and require from the carriers specific and full, true, and correct answers to all questions upon which the commission [Underlined: or the board] may deem information to be necessary."
SECTION 12. Section 271G-20, Hawaii Revised Statutes, is amended to read as follows:
"[[Struck through: []]§271G-20[[Struck through: ]]] Collection of rates and charges. [[Struck through: No]] [Underlined: Each] water carrier shall deliver or relinquish possession at destination of any freight transported by it [[Struck through: until all tariff rates and charges thereon have been paid if such delivery or relinquishment without payment of all such rates and charges has been prohibited or restricted by]] [Underlined: in accordance with the applicable] rules [[Struck through: and regulations of]] [Underlined: prescribed by] the commission [Underlined: or the board] [[Struck through: and if so prohibited and restricted, then delivery or relinquishment shall be made only] [Struck through: under such rules and regulations as the public utilities commission may from time to time prescribe to govern]] [Underlined: governing] the settlement of [[Struck through: all the]] rates and charges, including rules [[Struck through: and regulations]] for weekly or monthly settlement, and to prevent unjust discrimination or undue preference or prejudice; provided that this section shall not be construed to prohibit any carrier from extending credit in connection with rates and charges on freight transported for the United States, for any [Underlined: federal] department, bureau, or agency [[Struck through: thereof]], or for any state or political subdivision [[Struck through: thereof.]] [Underlined: of the United States.]"
SECTION 13. Section 271G-24, Hawaii Revised Statutes, is amended to read as follows:
"§271G-24 Appeals. From an order of the [[Struck through: public utilities]] commission [Underlined: or the board] under this chapter, an appeal shall lie, subject to chapter 602, in the manner provided for civil appeals from the circuit courts and by the rules of court; provided that the order is final, or if preliminary, is of the nature defined by section 91-14(a). The appeal, of itself, shall not stay the operation of the order appealed from, but the court may stay the same after a hearing upon a motion therefor and may impose such conditions as it may deem proper as to giving a bond and keeping the necessary accounts or otherwise to secure a restitution of the excess charges, if any, made during the pendency of the appeal, in case the order appealed from is sustained, revised, or modified in whole or in part."
SECTION 14. All rights, powers, functions, and duties of the public utilities commission related to reviewing, evaluating, and setting rates, fees, and charges for water carriers are transferred to the Hawaii water carrier rates board.
All employees who occupy civil service positions and whose functions are transferred to the Hawaii water carrier rates board by this Act shall retain their civil service status, whether permanent or temporary. Employees shall be transferred without loss of salary, seniority (except as prescribed by applicable collective bargaining agreements), retention points, prior service credit, any vacation and sick leave credits previously earned, and other rights, benefits, and privileges, in accordance with state personnel laws and this Act; provided that the employees possess the minimum qualifications and public employment requirements for the class or position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.
Any employee who, prior to this Act, is exempt from civil service and is transferred as a consequence of this Act may retain the employee's exempt status, but shall not be appointed to a civil service position as a consequence of this Act. An exempt employee who is transferred by this Act shall not suffer any loss of prior service credit, vacation or sick leave credits previously earned, or other employee benefits or privileges as a consequence of this Act; provided that the employees possess legal and public employment requirements for the position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable employment and compensation laws. The chairperson of the board may prescribe the duties and qualifications of these employees and fix their salaries without regard to chapter 76, Hawaii Revised Statutes.
SECTION 15. 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 water carrier rates board shall be transferred with the functions to which they relate.
SECTION 16. All pending water carrier rate cases and proceedings before the public utilities commission shall be transferred to the water carrier rates board for continued action without delay.
SECTION 17. All existing rate orders, schedules, and tariffs established by the public utilities commission for water carriers shall remain in effect until the water carrier rates board issues superseding orders.
SECTION 18. In codifying the new sections added by section 3 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 19. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 20. This Act shall take effect on July 1, 2026, and shall be repealed on June 30, 2032.
INTRODUCED BY:
_____________________________
Report Title:
PUC; Water Carriers; Rates and Charges; HWCRB; Establishment; Special Fund; Reports
Description:
Establishes the Hawaii Water Carrier Rates Board to review, evaluate, and set rates, fees, and charges for water carriers under chapter 271G, HRS. Transfers water carrier rate setting functions, powers, duties, records, personnel and cases from the Public Utilities Commission to the Hawaii Water Carrier Rates Board. Establishes the Hawaii Water Carrier Rates Board special fund. Requires annual reports to legislature and a sunset review in the last year. Sunsets 6/30/2032.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.