RELATING TO WATER.

HB2434

HOUSE OF REPRESENTATIVES

H.B. NO.

2434

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to Water
.

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

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SECTION 1.
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The legislature finds that water resources
are held by the State in trust for the benefit of present and future
generations pursuant to article XI, section 7, of the Hawaii State
Constitution.
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The legislature further
finds that counties and their subdivisions bear primary responsibility for
providing water for public health, safety, and welfare.
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The legislature also finds that prioritizing
state-to-county disposition of water for public purposes strengthens
accountability and transparency, promotes long-term reliability and pricing
stability, and advances the public trust.

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The
legislature additionally finds that the State and its agencies have an
affirmative and continuing duty to ensure that water licenses do not impair
public trust purposes.

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Therefore,
the purpose of this Act is to establish a framework that:

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(1)
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Gives counties or their subdivisions priority
to obtain intergovernmental agreements related to the disposition of water
resources for public purposes; and

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(2)
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Applies a rebuttable presumption and
functional control analysis for non-county and non-subdivision applicants with
certain ownership or management structures, ensuring protection of public trust
uses.

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SECTION
2.
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Chapter 171, Hawaii Revised Statutes,
is amended by adding a new part to be appropriately designated and to read as
follows:

"
Part .
�
water licenses

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171-A
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Definitions.
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As used in this part:

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"County"
includes the city and county of Honolulu, county of Hawaii, county of Kauai,
and county of Maui.

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"Functional
characteristics of ownership or management structures" include any one or
combination of the following:

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(1)
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Layered ownership or control that obscures
ultimate decision-making authority;

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(2)
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Governance or financial structures
prioritizing short-term returns over long-term stewardship;

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(3)
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Financial arrangements that limit reinvestment
in infrastructure, system maintenance, or watershed protection; or

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(4)
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Disclosure practices limiting public
accountability or regulatory oversight.

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"Meaningful
community participation" means community participation sufficient to
ensure that input from residents of the watershed or watersheds from which the
water is drawn is incorporated into water management decisions affecting public
trust uses; provided that this participation shall include documented
opportunities for public comment and regular public meetings, where input is
solicited, recorded, and considered by the decision-making authority.

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"Meaningful
governance oversight" means the authority and ability of the State, a county,
or a subdivision to monitor, influence, and enforce decisions regarding water
use to ensure compliance with public trust purposes, including access to
information, review and approval of management decisions, enforcement of
conditions, and incorporation of community input.

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"Public
trust uses" means the following purposes recognized under the Hawaii State
Constitution:

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(1)
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Native Hawaiian traditional and customary
practices;

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(2)
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Maintenance of waters in their natural state;

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(3)
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Domestic water use; and

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(4)
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Present and future needs of the Hawaiian homes
commission.

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"Subdivision"
means any agency, board, authority, commission, or department operating under
county administration that manages water resources or infrastructure.

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"Water
license" means any license, permit, or authorization issued by the State
to divert, withdraw, or use water.

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171-B
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County or subdivision priority; right of
first refusal.
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(a)
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Prior to considering any water license
application, the department shall notify the county and its applicable
subdivisions in which the water source is located and offer the county an
opportunity to enter into an intergovernmental agreement.

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(b)
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To exercise its priority and right of first
refusal, the county or subdivision shall respond to the department within
ninety days.

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(c)
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If a county or subdivision submits a timely response
that meets the requirements of subsection (b), the department shall:

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(1)
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Give priority to the county and presume that
the proposed use serves the public interest, subject to compliance with the
public trust doctrine and applicable law; and

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(2)
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Make every effort to work with the county or subdivision
to meet the requirements necessary to enter into an intergovernmental agreement
for the disposition of water or water infrastructure.

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(d)
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The department shall not approve an
application for the disposition of water or water infrastructure that is not
submitted by a county or subdivision unless the department makes written
findings that:

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(1)
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The county or subdivision declined or failed
to submit a response; or

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(2)
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An intergovernmental agreement with the county
or subdivision would be inconsistent with the public trust doctrine.

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171-C
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Rebuttable presumption and functional control
review for non-county and non-subdivision applicants.
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(a)
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This
section shall apply only after the department has complied with section 171-B
and has determined that no intergovernmental agreement with a county or
subdivision will be approved.

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(b)
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Any applicant that is not a county or
subdivision shall be presumed to propose a use inconsistent with the public
trust if its ownership, financing, management, or operational structure
exhibits one or more of the functional characteristics of ownership or
management structures.

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(c)
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An applicant may rebut the presumption under
subsection (b) and shall meet the following criteria for the department to
determine that the action is in the best interest of the State, is a reasonable
and beneficial use, and meets the public trust doctrine:

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(1)
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Ensure transparency and public accountability,
including disclosure of beneficial ownership and material financial
arrangements;

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(2)
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Provide enforceable and adequately funded
commitments for infrastructure maintenance, repair, climate resilience, and
watershed protection;

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(3)
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Protect and not impair public trust uses;

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(4)
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Align financial incentives and operational
decision-making with long-term stewardship and equitable public benefit; and

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(5)
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Provide a management structure that includes
meaningful community participation and meaningful government oversight.

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(e)
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Any determination by the department under
this section shall be supported by written findings of fact and conclusions of
law and be made publicly available.

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(f)
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Any water license issued to an applicant
other than a county or subdivision shall have a term not exceeding five years.
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One extension of the term, not to exceed five
years, may be granted by the department only if the applicant demonstrates
compliance with all conditions imposed under this part, including ongoing
protection of public trust uses.

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Upon the expiration
of the water license, the county or subdivision shall have a right of first
refusal, to be exercised within ninety days, pursuant to this part.

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171-D
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Conditions; rules.
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Pursuant to rules adopted under chapter 91, the
department may prescribe conditions it deems necessary on any applicant to
ensure that the public trust doctrine and public trust uses of water are fully
protected and remain unimpaired."

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SECTION 3.
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In codifying the new sections added by
section 2 of this Act, the revisor of statutes shall substitute appropriate
section numbers for the letters used in designating the new sections in this
Act.

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SECTION 4.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Water
Licenses; Department of Land and Natural Resources; Counties and Subdivisions

Description:

Establishes
a framework that provides counties or their subdivisions priority and the right
of first refusal to obtain intergovernmental agreements related to the
disposition of water resources for public purposes.
�
Establishes criteria to be applied when determining
that the issuance of a state water license is in the best interest of the
State.

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