RELATING TO WATER CARRIER RATE REGULATION.

HB1906

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, [
271G,
]
269E, and 486J,
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
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:

����
"
"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
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:

����
"
[
[
]
�271G-9[
]
]
�
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
or the board
as herein provided, and any
reports filed with the commission
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 [
make
]
file
a written
complaint [
in writing to
]
with
the [
commission
]

board alleging
that
[any such rate, fare, charge, rule, regulation,
or practice, in effect or proposed to be put into effect, is or will b
e]
a
water carrier is
in violation of this section.
�
Whenever, after hearing, upon complaint or in
an investigation on its own initiative, the [
commission
]
board
[
shall
be of the opinion
]
finds
that [
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
]
a water
carrier has violated this section, the board
shall determine and prescribe
,
as appropriate,
the lawful rate, fare, or charge or the maximum or minimum [
or
maximum and minimum
] rate, fare, or charge [
thereafter
] to be
observed, or the lawful rule[
, regulation,
] or practice [
thereafter
]
to be made effective[
.
]
after the date of the determination.

����
(e)
�
In the exercise of its power to prescribe
just and reasonable rates, fares, and charges for [
the transportation of
passengers or property by
] water carriers, and to prescribe
classifications, [
regulations,
]
rules,
and practices relating

[
thereto,
]

to rates, fares, and charges,
the [
commission
]
board
shall
give due consideration, among other factors, to the effect of rates upon the
movement of traffic by [
the carrier or
]
water
carriers for which
the rates are prescribed; to the need, in the public interest, of adequate and
efficient transportation service by [
the
]
water
carriers at the
lowest cost consistent with the furnishing of the service; and to the need of
revenues sufficient to enable [
the
]
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 [
public utilities commission,
]
board,
[
and
]
print, and keep open to public inspection, tariffs showing all the rates,
fares, and charges for transportation[
, and all services in connection
therewith,
] of passengers or property.
�

The rates, fares, and charges shall be stated in [
terms of lawful
money of the
] United States[
.
]
currency.
�
The tariffs required by this section shall be
published, filed, and posted in [
such
]
the
form and manner[
,
]
and [
shall
] contain [
such
]
any
information [
as the commission
by regulations shall prescribe; and the commission
]
prescribed in rules
adopted by the board.
�
The board
may
reject any
filed
tariff [
filed with it which
]
that
is not
in consonance with this section and [
with
] the [
regulations.
]
rules.
�
Any tariff [
so
] rejected by the [
commission
]

board
shall be void and its use shall be unlawful.

����
(b)
�
No change shall be made [
in
]
to

any rate, fare, charge, or classification[
, or
]
;
any rule[
,
regulation,
] or practice affecting the rate, fare, charge, or
classification[
,
]
;
or the value of the service [t
hereunder,
]

as
specified in any effective tariff of a water carrier, except after
forty-five days' notice of the proposed change
is
filed and posted in
accordance with subsection (a); provided that changes to a fuel surcharge
approved by the [
commission
]
board
may be made after thirty days'
notice of the proposed change
is
filed and posted in accordance with
subsection (a).
�
The notice shall plainly
state the
proposed
change [
proposed to be made
] and the [
time
when
]
date upon which
it will take effect.
�
The [
commission
]
board
may in
its discretion and for good cause shown allow the change upon notice less than
that [
herein
] specified
in this section
or modify the
requirements of this section with respect to
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 [
same
]
passengers or property
are transported by
the
water
carrier have been filed and published in accordance with this
chapter.

����
(d)
�
[
Whenever
]
If
there is filed
with the [
commission
]
board
any schedule stating a new rate,
fare, or charge, for the transportation of passengers or property by a water
carrier or any rule[
, regulation,
] or practice affecting [
such
]
the

rate, fare, or charge, or the value of the service [
thereunder
], the
carrier may on its own initiative, or shall by order of the [
commission
]

board
served [
prior to
]
before
the effective date of the
schedule, concurrently file a pro forma statement of account [
which
]
that

shall be prepared [
under
]
in
the same form and [
in the same
]
manner as prescribed by the [
commission's
]
board's
uniform system
of accounts.

����
The [
commission
]

board
may upon
the
complaint of any interested person or [
upon
]

on
its own initiative at once and, if it so orders, without answer or
other formal pleading by the interested carrier [
or carriers
], but [
upon
]

with
reasonable notice, [
enter upon
]
conduct
a hearing
concerning the lawfulness of the rate, fare, or charge, or the rule[
,
regulation,
] or practice[
, and pending
]
.
�
Pending
the hearing and the
board's

decision [
thereon
]
,
the [
commission,
]
board,
by
delivering to the [
carrier or
]
affected
carriers [
affected
thereby
] a
written
statement [
in writing
] of its reasons [
therefor
],
may suspend the operation of the schedule and defer the use of the rate, fare,
or charge, or the rule[
, regulation,
] or practice.
�
From the date [
of ordering
]
the
board orders
a hearing to investigate the lawfulness of the rate, fare, or
charge, the [
commission
]
board
shall have [
up to
]
no
more than
six months to complete its investigation.
�
If the [
commission
]
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[
, regulation,
] or practice,
the carrier shall have
the
burden of proof [
shall be upon the carrier
] to show that the proposed
changed rate, fare, charge, classification, rule, [
regulation,
] or
practice, is just and reasonable.

����
(e)
�
When a rate increase application is filed,
the [
commission may
]
board,
in its discretion and after public
notice, and upon
a
showing by [
a
]
the
water carrier of
probable entitlement and financial need,
may
authorize temporary
increases in rates, fares, and charges; provided that the [
commission
]
board

shall by order require the carrier to keep
an
accurate account in detail
of all amounts received by reason of [
such
]
the
increase,
specifying by whom and [
in
]
on
whose behalf [
such
]
the

amounts are paid, and upon completion of the hearing and decision
shall
by
further order require the interested carrier to refund, with interest, to the
persons [
in
]
on
whose behalf [
such
]
the
amounts
were paid, [
such
]
the
portion of [
such
]
the
increased
rates or charges
that the board
by its decision [
shall be
] found
not justified.
�
The interest to be paid
shall be the rate of return authorized in the [
last
]
most recent
general
rate case proceedings."

����
SECTION
11
.
�
Section 271G-18, Hawaii Revised Statutes, is
amended to read as follows:

����
"
[
[
]�271G-18[
]
]
�
Accounts, records, and reports.
�
The [
public utilities
] commission
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
or the board
may deem information to
be necessary."

����
SECTION
12
.
�
Section 271G-20, Hawaii Revised Statutes, is
amended to read as follows:

����
"
[
[
]�271G-20[
]
]
�
Collection of rates and charges.
�
[
No
]
Each
water carrier shall
deliver or relinquish possession at destination of any freight transported by
it [
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
]
in accordance with the applicable
rules
[
and regulations of
]
prescribed by
the commission
or the board

[
and if so prohibited and restricted, then delivery or relinquishment shall
be made only

under such rules and regulations as the public utilities
commission may from time to time prescribe to govern
]
governing
the
settlement of [
all the
] rates and charges, including rules [
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
federal
department, bureau, or agency [
thereof
], or for
any state or political subdivision [
thereof.
]
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
[
public utilities
] commission
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.