HB 2386: PUC; Water Carriers; Tariffs; Automatic Adjustment Mechanism; Rate Adjustments; Rules

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 a new section to be appropriately designated and to read as follows:

     "§271G-     Automatic adjustment mechanisms; rules.  (a)  The commission may establish automatic adjustment mechanisms for water carriers subject to this chapter to address inflation, regulatory lag, and other economic factors.  The commission shall initiate a proceeding for the adoption of rules pursuant to chapter 91 to establish the framework, guidelines, and conditions for any automatic adjustment mechanism prior to the approval of any application by a water carrier.

     (b)  The rules adopted pursuant to subsection (a) shall include:

     (1)  Strict financial and operational due diligence requirements that a water carrier must meet prior to the approval of any automatic adjustment mechanism;

     (2)  A maximum allowable percentage for any annual rate increase implemented through the automatic adjustment mechanism;

     (3)  A maximum duration or time period for which the automatic adjustment mechanism may be applied before the water carrier is required to submit a general rate case application;

     (4)  A requirement that the water carrier demonstrate the complete and transparent accounting separation of regulated intrastate shipping functions from all unregulated functions and parent company operations;

     (5)  A requirement that the commission evaluate the water carrier's long-term commitment to the State, which shall include an assessment of workforce stability, retention of Hawaii-based personnel, and sustained investment in local operations;

     (6)  A prohibition on the issuance of dividend payments or other financial distributions to a parent company or shareholders during the years in which the automatic adjustment mechanism is applied;

     (7)  A mandatory two-year cooling-off period immediately following the effective date of any rate increase approved by the commission through a general rate case, during which the water carrier shall be prohibited from using the automatic adjustment mechanism;

     (8)  Specific performance metrics regarding service reliability, on-time delivery, and cargo handling efficiency that the water carrier must maintain;

     (9)  Mandatory community outreach and public engagement requirements, ensuring that the water carrier provides regular updates to consumers and stakeholders on the neighbor islands regarding operational performance, financial health, and any anticipated rate adjustments;

    (10)  A prohibition on the issuance of bonuses or increases in compensation packages to executive officers of the water carrier during the years in which the automatic adjustment mechanism is applied;

    (11)  Strict biosecurity compliance requirements, stipulating that any water carrier found to be non‑compliant with the department of agriculture and biosecurity rules or other applicable state biosecurity laws shall be prohibited from docking or discharging cargo at any state harbor until full compliance is verified;

    (12)  Annual reporting requirements for compliance with any conditions established; and

    (13)  Procedures for corrective actions if the water carrier is not in compliance.

     (c)  Notwithstanding any other law to the contrary, the rules adopted under this section shall be presented to, and subject to the approval of, the governor.  If the governor approves the rules, the governor shall sign the rules, and the rules shall be adopted as provided in section 91-3.  If the governor does not approve the rules, the governor may return the rules to the commission with the governor's reasons for disapproval.  The governor shall have twenty-one days to consider the rules after the rules are presented to the governor, and if the rules are neither signed nor returned by the governor within that time, the rules shall be adopted as if the governor had signed them.  If the rules are returned to the commission, the commission may start anew the rule-making process set forth in subsection (a).

     (d)  Any request by a water carrier to establish an automatic adjustment mechanism shall be submitted as a forty‑five-day tariff transmittal filing or as part of a general rate case application, subject to the rules adopted pursuant to subsection (a).

     (e)  Customers eligible for preferential agricultural rates under section 269-26.5 shall be exempt from any automatic adjustment mechanism authorized by this section."

     SECTION 2.  Section 271G-5, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Automatic adjustment mechanism" means any rate adjustment mechanism that allows a water carrier to change rates between rate cases."

     SECTION 3.  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, 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.  The tariffs required by this section shall be published, filed, and posted in [such] the form and manner, and shall contain [such] information [as the] prescribed by the commission by [regulations shall prescribe; and the] rules.  The commission may reject any 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 shall be void and its use shall be unlawful.

     (b)  No change shall be made in 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 thereunder, specified in any effective tariff of a water carrier, except after forty-five days' notice of the proposed change filed and posted in accordance with subsection (a); provided that changes to [a fuel] an automatic adjustment mechanism surcharge approved by the commission may be made after thirty days' notice of the proposed change filed and posted in accordance with subsection (a).  The notice shall plainly state the change proposed to be made and the time when it will take effect.  The commission 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 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 are transported by the water carrier have been filed and published in accordance with this chapter.

     (d)  Whenever there is filed with the commission 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 water carrier may on its own initiative, or shall by order of the commission served [prior to] before the effective date of the schedule, concurrently file a pro forma statement of account [which] that shall be prepared under the same form and in the same manner as prescribed by the commission's uniform system of accounts.

     The commission may, upon complaint of any interested person or upon its own initiative at once and, if it so orders, without answer or other formal pleading by the interested water carrier or water carriers, but upon reasonable notice, enter upon a hearing concerning the lawfulness of the rate, fare, or charge[,] or the rule, regulation, or practice, and pending the hearing and the decision [thereon] by the commission, by delivering to the affected water carrier or water carriers [affected thereby] a 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 a hearing to investigate the lawfulness of the rate, fare, or charge, the commission shall have up to six months to complete its investigation.  If the commission fails to issue a final order within the six-month period then the changes proposed by the water 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 burden of proof shall be upon the water 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 in its discretion and after public notice, and upon showing by a water carrier of probable entitlement and financial need, authorize temporary increases in rates, fares, and charges; provided that the commission shall by order require the water carrier to keep accurate account in detail of all amounts received by reason of [such] the increase, specifying by whom and in whose behalf [such] the amounts are paid, and upon completion of the hearing and decision by further order require the interested carrier to refund, with interest, to the persons in whose behalf [such] the amounts were paid, [such] the portion of [such] the increased rates or charges by its decision shall be found not justified.  The interest to be paid shall be the rate of return authorized in the last general rate case proceedings.

     (f)  Notwithstanding subsections (a) through (e), any request to establish an automatic adjustment mechanism made by a water carrier shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (g)  Notwithstanding any provision of this chapter or any law, decision, order, or rule to the contrary, the commission, upon the application of a water carrier, may waive or exempt a water carrier from any or all requirements of this chapter or any applicable decision, order, rule, or other law upon a determination or demonstration that any requirement or requirements should not be applied to water carriers or are otherwise unjust, unreasonable, or not in the public interest."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2026, and shall be repealed on July 1, 2032; provided that section 271G‑17, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act.

Report Title:

PUC; Water Carriers; Tariffs; Automatic Adjustment Mechanism; Rate Adjustments; Rules

Description:

Authorizes the Public Utilities Commission to establish automatic adjustment mechanisms by rules that include specified criteria.  Grants Governor veto-authority over the rules.  Authorizes the Public Utilities Commission to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act.  Repeals 7/1/2032.  (SD2)

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

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 a new section to be appropriately designated and to read as follows:

     "§271G-     Automatic adjustment mechanisms; water carrier inflationary cost index automatic adjustment mechanism.  (a)  The commission may establish automatic adjustment mechanisms for water carriers subject to this chapter to address inflation, regulatory lag, and other economic factors.  These mechanisms may be initiated and established by the commission or upon application by a water carrier.  As provided in section 271G‑17(f), these mechanisms shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (b)  After July 1, 2026, the commission may establish a water carrier inflationary cost index automatic adjustment mechanism for each water carrier of property.  The mechanism shall:

     (1)  Reflect the applicable annual percentage change in the increase of wharfage rates set by the department of transportation, harbors division, pursuant to applicable administrative rules;

     (2)  Be applied on an annual basis in accordance with subsection (c); and

     (3)  Be no more than       per cent per year.

     (c)  Beginning on July 1, 2026, the mechanism shall be applied at an ongoing, repeating three-year cycle, as follows:

     (1)  In the first and second years of the three-year cycle, the water carrier inflationary cost index automatic adjustment mechanism shall be applied annually; and

     (2)  For the third year of the three-year cycle, regardless of whether the water carrier is seeking any rate changes for the transportation of property, the water carrier shall submit an application with the rates, fares, or charges for the transportation of property that the water carrier proposes to be effective in the third year of the three-year cycle.  The application shall be subject to the review and process requirements for a standard rate increase application under section 271G-17(d) and (e).

     (d)  Customers eligible for preferential agricultural water rates under section 269-26.5 shall be exempt from any automatic adjustment mechanism authorized by this section."

     SECTION 2.  Section 271G-5, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Automatic adjustment mechanism" means any rate adjustment mechanism that allows a water carrier to change rates between rate cases."

     SECTION 3.  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, 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.  The tariffs required by this section shall be published, filed, and posted in [such] the form and manner, and shall contain [such] information [as the] prescribed by the commission by [regulations shall prescribe; and the] rules.  The commission may reject any 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 shall be void and its use shall be unlawful.

     (b)  No change shall be made in 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 thereunder, specified in any effective tariff of a water carrier, except after forty-five days' notice of the proposed change filed and posted in accordance with subsection (a); provided that changes to [a fuel] an automatic adjustment mechanism surcharge approved by the commission may be made after thirty days' notice of the proposed change filed and posted in accordance with subsection (a).  The notice shall plainly state the change proposed to be made and the time when it will take effect.  The commission 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 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 are transported by the water carrier have been filed and published in accordance with this chapter.

     (d)  Whenever there is filed with the commission 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 water carrier may on its own initiative, or shall by order of the commission served [prior to] before the effective date of the schedule, concurrently file a pro forma statement of account [which] that shall be prepared under the same form and in the same manner as prescribed by the commission's uniform system of accounts.

     The commission may, upon complaint of any interested person or upon its own initiative at once and, if it so orders, without answer or other formal pleading by the interested water carrier or water carriers, but upon reasonable notice, enter upon a hearing concerning the lawfulness of the rate, fare, or charge[,] or the rule, regulation, or practice, and pending the hearing and the decision [thereon] by the commission, by delivering to the affected water carrier or water carriers [affected thereby] a 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 a hearing to investigate the lawfulness of the rate, fare, or charge, the commission shall have up to six months to complete its investigation.  If the commission fails to issue a final order within the six-month period then the changes proposed by the water 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 burden of proof shall be upon the water 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 in its discretion and after public notice, and upon showing by a water carrier of probable entitlement and financial need, authorize temporary increases in rates, fares, and charges; provided that the commission shall by order require the water carrier to keep accurate account in detail of all amounts received by reason of [such] the increase, specifying by whom and in whose behalf [such] the amounts are paid, and upon completion of the hearing and decision by further order require the interested carrier to refund, with interest, to the persons in whose behalf [such] the amounts were paid, [such] the portion of [such] the increased rates or charges by its decision shall be found not justified.  The interest to be paid shall be the rate of return authorized in the last general rate case proceedings.

     (f)  Notwithstanding subsections (a) through (e), any request to establish an automatic adjustment mechanism made by a water carrier shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (g)  Notwithstanding any provision of this chapter or any law, decision, order, or rule to the contrary, the commission, upon the application of a water carrier, may waive or exempt a water carrier from any or all requirements of this chapter or any applicable decision, order, rule, or other law upon a determination or demonstration that any requirement or requirements should not be applied to water carriers or are otherwise unjust, unreasonable, or not in the public interest."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 3000, and shall be repealed on July 1, 2033; provided that section 271G‑17, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act.

Report Title:

PUC; Water Carriers; Tariffs; Water Carrier Inflationary Cost Index; Automatic Adjustment Mechanism; Rate Adjustments

Description:

Authorizes the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier.  Authorizes the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism.  Authorizes the Public Utilities Commission to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act.  Repeals 7/1/2033.  Effective 7/1/3000.  (SD1)

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

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 a new section to be appropriately designated and to read as follows:

     "§271G-     Automatic adjustment mechanisms; water carrier inflationary cost index automatic adjustment mechanism.  (a)  The commission may establish automatic adjustment mechanisms for water carriers subject to this chapter to address inflation, regulatory lag, and other economic factors.  These mechanisms may be initiated and established by the commission or upon application by a water carrier.  As provided in section 271G-17(f), these mechanisms shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (b)  By July 1, 2026, the commission shall establish a water carrier inflationary cost index automatic adjustment mechanism for each water carrier of property.  The mechanism shall:

     (1)  Reflect the applicable annual percentage change in the increase of wharfage rates set by the department of transportation, harbors division, pursuant to applicable administrative rules;

     (2)  Be applied on an annual basis in accordance with subsection (c); and

     (3)  Be no more than five per cent per year.

     (c)  Beginning on July 1, 2026, the mechanism shall be applied at an ongoing, repeating three-year cycle, as follows:

     (1)  In the first and second years of the three-year cycle, the water carrier inflationary cost index automatic adjustment mechanism shall be applied annually; and

     (2)  For the third year of the three-year cycle, regardless of whether the water carrier is seeking any rate changes for the transportation of property, the water carrier shall submit an application with the rates, fares, or charges for the transportation of property that the water carrier proposes to be effective in the third year of the three-year cycle.  The application shall be subject to the review and process requirements for a standard rate increase application under section 271G-17(d) and (e)."

     SECTION 2.  Section 271G-5, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Automatic adjustment mechanism" means any rate adjustment mechanism that allows a water carrier to change rates between rate cases."

     SECTION 3.  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, 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.  The tariffs required by this section shall be published, filed, and posted in [such] the form and manner, and shall contain [such] information [as the] prescribed by the commission by [regulations shall prescribe; and the] rules.  The commission may reject any 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 shall be void and its use shall be unlawful.

     (b)  No change shall be made in 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 thereunder, specified in any effective tariff of a water carrier, except after forty-five days' notice of the proposed change filed and posted in accordance with subsection (a); provided that changes to [a fuel] an automatic adjustment mechanism surcharge approved by the commission may be made after thirty days' notice of the proposed change filed and posted in accordance with subsection (a).  The notice shall plainly state the change proposed to be made and the time when it will take effect.  The commission 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 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 are transported by the water carrier have been filed and published in accordance with this chapter.

     (d)  Whenever there is filed with the commission 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 water carrier may on its own initiative, or shall by order of the commission served [prior to] before the effective date of the schedule, concurrently file a pro forma statement of account [which] that shall be prepared under the same form and in the same manner as prescribed by the commission's uniform system of accounts.

     The commission may, upon complaint of any interested person or upon its own initiative at once and, if it so orders, without answer or other formal pleading by the interested water carrier or water carriers, but upon reasonable notice, enter upon a hearing concerning the lawfulness of the rate, fare, or charge[,] or the rule, regulation, or practice, and pending the hearing and the decision [thereon] by the commission, by delivering to the affected water carrier or water carriers [affected thereby] a 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 a hearing to investigate the lawfulness of the rate, fare, or charge, the commission shall have up to six months to complete its investigation.  If the commission fails to issue a final order within the six-month period then the changes proposed by the water 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 burden of proof shall be upon the water 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 in its discretion and after public notice, and upon showing by a water carrier of probable entitlement and financial need, authorize temporary increases in rates, fares, and charges; provided that the commission shall by order require the water carrier to keep accurate account in detail of all amounts received by reason of [such] the increase, specifying by whom and in whose behalf [such] the amounts are paid, and upon completion of the hearing and decision by further order require the interested carrier to refund, with interest, to the persons in whose behalf [such] the amounts were paid, [such] the portion of [such] the increased rates or charges by its decision shall be found not justified.  The interest to be paid shall be the rate of return authorized in the last general rate case proceedings.

     (f)  Notwithstanding subsections (a) through (e), any request to establish an automatic adjustment mechanism made by a water carrier shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (g)  Notwithstanding any provision of this chapter or any law, decision, order, or rule to the contrary, the commission, upon the application of a water carrier, may waive or exempt a water carrier from any or all requirements of this chapter or any applicable decision, order, rule, or other law upon a determination or demonstration that any requirement or requirements should not be applied to water carriers or are otherwise unjust, unreasonable, or not in the public interest."

     SECTION 4.  (a)  No later than July 1, 2026, the public utilities commission shall appoint a special overseer to monitor the financial and operational performance of any water carrier of property that:

     (1)  Has received a general rate increase of twenty per cent or more within the preceding three fiscal years; or

     (2)  Is the sole provider of regulated water carrier services to any port in the State.

     (b)  The special overseer shall be an independent third party with expertise in maritime logistics, utility finance, or corporate restructuring, and shall be selected through a competitive procurement process.  The term of the appointment shall be no less than twenty-four months, with the public utilities commission having the option to extend the term as necessary to ensure the water carrier's long-term financial stability.

     (c)  The special overseer shall have the following powers and duties:

     (1)  Examine all financial and business records, accounts, and internal reports of the water carrier;

     (2)  Attend all meetings of the water carrier's board of directors as a non-voting observer;

     (3)  Monitor the water carrier's compliance with any business stabilization plans or performance standards mandated by the public utilities commission;

     (4)  Verify the accuracy of all monthly and quarterly performance reports submitted by the water carrier to the public utilities commission; and

     (5)  Provide quarterly reports to the public utilities commission and legislature regarding the water carrier's financial health and operational efficiency.

     (d)  The costs and expenses associated with the special overseer shall be borne by the water carrier and shall be considered a non-recoverable expense.  The public utilities commission shall prohibit the water carrier from recovering any portion of these costs through its rate base, general rate increases, or any specific surcharges imposed upon customers.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000.

Report Title:

PUC; Water Carriers; Tariffs; Water Carrier Inflationary Cost Index; Automatic Adjustment Mechanism; Rate Adjustments; Special Overseer

Description:

Authorizes the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier.  Requires the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism.  Authorizes the Public Utilities Commission to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act.  By 7/1/2026, requires the Public Utilities Commission to appoint a special overseer.  Effective 7/1/3000.  (HD2)

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

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 a new section to be appropriately designated and to read as follows:

     "§271G-     Automatic adjustment mechanisms; water carrier inflationary cost index automatic adjustment mechanism.  (a)  The commission may establish automatic adjustment mechanisms for water carriers subject to this chapter to address inflation, regulatory lag, and other economic factors.  These mechanisms may be initiated and established by the commission or upon application by a water carrier.  As provided in section 271G-17(f), these mechanisms shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (b)  By July 1, 2026, the commission shall establish a water carrier inflationary cost index automatic adjustment mechanism for each water carrier of property.  The mechanism shall:

     (1)  Reflect the applicable annual percentage change in the increase of wharfage rates set by the department of transportation, harbors division, pursuant to applicable administrative rules;

     (2)  Be applied on an annual basis in accordance with subsection (c); and

     (3)  Be no more than five per cent per year.

     (c)  Beginning on July 1, 2026, the mechanism shall be applied at an ongoing, repealing three-year cycle, as follows:

     (1)  In the first and second years of the three-year cycle, the water carrier inflationary cost index automatic adjustment mechanism shall be applied annually; and

     (2)  For the third year of the three-year cycle, regardless of whether the water carrier is seeking any rate changes for the transportation of property, the water carrier shall submit an application with the rates, fares, or charges for the transportation of property that the water carrier proposes to be effective in the third year of the three-year cycle.  The application shall be subject to the review and process requirements for a standard rate increase application under subsections 271G-17(d) and (e)."

     SECTION 2.  Section 271G-5, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Automatic adjustment mechanism" means any rate adjustment mechanism that allows a water carrier to change rates between rate cases."

     SECTION 3.  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, 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.  The tariffs required by this section shall be published, filed, and posted in [such] the form and manner, and shall contain [such] information as the commission by [regulations] rules shall prescribe[; and the]. The commission may reject any 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 shall be void and its use shall be unlawful.

     (b)  No change shall be made in 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 thereunder, specified in any effective tariff of a water carrier, except after forty-five days' notice of the proposed change filed and posted in accordance with subsection (a); provided that changes to [a fuel] an automatic adjustment mechanism surcharge approved by the commission may be made after thirty days' notice of the proposed change filed and posted in accordance with subsection (a).  The notice shall plainly state the change proposed to be made and the time when it will take effect.  The commission 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 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 are transported by the carrier have been filed and published in accordance with this chapter.

     (d)  Whenever there is filed with the commission 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 served [prior to] before the effective date of the schedule, concurrently file a pro forma statement of account [which] that shall be prepared under the same form and in the same manner as prescribed by the commission's uniform system of accounts.

     The commission may, upon complaint of any interested person or upon its own initiative at once and, if it so orders, without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, enter upon a hearing concerning the lawfulness of the rate, fare, or charge[,] or the rule, regulation, or practice, and pending the hearing and the decision [thereon] by the commission, by delivering to the carrier or carriers affected thereby a 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 a hearing to investigate the lawfulness of the rate, fare, or charge, the commission shall have up to six months to complete its investigation.  If the commission 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 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 in its discretion and after public notice, and upon showing by a water carrier of probable entitlement and financial need, authorize temporary increases in rates, fares, and charges; provided that the commission shall by order require the carrier to keep accurate account in detail of all amounts received by reason of [such] the increase, specifying by whom and in whose behalf [such] the amounts are paid, and upon completion of the hearing and decision by further order require the interested carrier to refund, with interest, to the persons in whose behalf [such] the amounts were paid, [such] the portion of [such] the increased rates or charges by its decision shall be found not justified.  The interest to be paid shall be the rate of return authorized in the last general rate case proceedings.

     (f)  Notwithstanding subsections (a) through (e), any request to establish an automatic adjustment mechanism made by a water carrier shall be submitted as a forty-five-day tariff transmittal filing or as part of a rate case application.

     (g)  Notwithstanding any provision of this chapter or any law, decision, order, or rule to the contrary, the commission, upon the application of a water carrier, may waive or exempt a water carrier from any or all requirements of this chapter or any applicable decision, order, rule, or other law upon a determination or demonstration that any requirement or requirements should not be applied to water carriers or are otherwise unjust, unreasonable, or not in the public interest."     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 3000.

Report Title:

PUC; Water Carriers; Tariffs; Water Carrier Inflationary Cost Index; Automatic Adjustment Mechanism; Rate Adjustments

Description:

Authorizes the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier.  Requires the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism. Authorizes the Public Utilities Commission to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act.  Effective 7/1/3000.  (HD1)

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

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 a new section to be appropriately designated and to read as follows:

     "§271G-     Automatic adjustment mechanisms; water carrier inflationary cost index automatic adjustment mechanism.  (a)  The commission may establish automatic adjustment mechanisms for water carriers subject to this chapter to address inflation, regulatory lag, and other economic factors.  These mechanisms may be initiated and established by the commission or upon application by a water carrier.  As provided in section 271G-17(f), these mechanisms shall be submitted as a forty-five-day tariff transmittal filing or as part of a general rate case application.

     (b)  By July 1, 2026, the commission shall establish a water carrier inflationary cost index automatic adjustment mechanism for each water carrier of property.  The mechanism shall:

     (1)  Reflect the applicable annual percentage change in the increase of wharfage rates set by the department of transportation, harbors division, pursuant to applicable administrative rules;

     (2)  Be applied on an annual basis in accordance with subsection (c); and

     (3)  Be no more than five per cent per year.

     (c)  Beginning on July 1, 2026, the mechanism shall be applied at an ongoing, repealing three-year cycle, as follows:

     (1)  In the first and second years of the three-year cycle, the water carrier inflationary cost index automatic adjustment mechanism shall be applied annually; and

     (2)  For the third year of the three-year cycle, regardless of whether the water carrier is seeking any rate changes for the transportation of property, the water carrier shall submit an application with the rates, fares, or charges for the transportation of property that the water carrier proposes to be effective in the third year of the three-year cycle.  The application shall be subject to the review and process requirements for a standard rate increase application under subsections 271G-17(d) and (e)."

     SECTION 2.  Section 271G-5, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Automatic adjustment mechanism" means any rate adjustment mechanism that allows a water carrier to change rates between rate cases."

     SECTION 3.  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, 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.  The tariffs required by this section shall be published, filed, and posted in [such] the form and manner, and shall contain [such] information as the commission by [regulations] rules shall prescribe[; and the]. The commission may reject any 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 shall be void and its use shall be unlawful.

     (b)  No change shall be made in 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 thereunder, specified in any effective tariff of a water carrier, except after forty-five days' notice of the proposed change filed and posted in accordance with subsection (a); provided that changes to [a fuel] an automatic adjustment mechanism surcharge approved by the commission may be made after thirty days' notice of the proposed change filed and posted in accordance with subsection (a).  The notice shall plainly state the change proposed to be made and the time when it will take effect.  The commission 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 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 are transported by the carrier have been filed and published in accordance with this chapter.

     (d)  Whenever there is filed with the commission 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 served [prior to] before the effective date of the schedule, concurrently file a pro forma statement of account [which] that shall be prepared under the same form and in the same manner as prescribed by the commission's uniform system of accounts.

     The commission may upon complaint of any interested person or upon its own initiative at once and, if it so orders, without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, enter upon a hearing concerning the lawfulness of the rate, fare, or charge, or the rule, regulation, or practice, and pending the hearing and the decision thereon the commission, by delivering to the carrier or carriers affected thereby a 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 a hearing to investigate the lawfulness of the rate, fare, or charge, the commission shall have up to six months to complete its investigation.  If the commission 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 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 in its discretion and after public notice, and upon showing by a water carrier of probable entitlement and financial need, authorize temporary increases in rates, fares, and charges; provided that the commission shall by order require the carrier to keep accurate account in detail of all amounts received by reason of [such] the increase, specifying by whom and in whose behalf [such] the amounts are paid, and upon completion of the hearing and decision by further order require the interested carrier to refund, with interest, to the persons in whose behalf [such] the amounts were paid, [such] the portion of [such] the increased rates or charges by its decision shall be found not justified.  The interest to be paid shall be the rate of return authorized in the last general rate case proceedings.

     (f)  Notwithstanding subsections (a) through (e), any request to establish an automatic adjustment mechanism made by a water carrier shall be submitted as a forty-five-day tariff transmittal filing or as part of a rate case application.

     (g)  Notwithstanding any provision of this chapter or any law, decision, order, or rule to the contrary, the commission, upon the application of a water carrier, may waive or exempt a water carrier from any or all requirements of this chapter or any applicable decision, order, rule, or other law upon a determination or demonstration that any requirement or requirements should not be applied to water carriers or are otherwise unjust, unreasonable, or not in the public interest."     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

PUC; Water Carriers; Tariffs; Water Carrier Inflationary Cost Index; Automatic Adjustment Mechanism; Rate Adjustments

Description:

Authorizes the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier.  Requires the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism. Authorizes the Public Utilities Commissions to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act.

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

STAND. COM. REP. NO.  1056-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 2386

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 2386, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO WATER CARRIERS,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Authorize the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier;

     (2)  Require the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism; and

     (3)  Authorize the Public Utilities Commission to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Law.

     Your Committee received testimony in support of this measure from the Department of Transportation; Matson Navigation Company, Inc.; Young Brothers, LLC; Hawaiʻi Harbors Users Group; DSR Logistics; The Maritime Group; and numerous individuals.  Your Committee received testimony in opposition to this measure from ABC Stores; Hawaiʻi Island Chamber of Commerce; AARP Hawaiʻi; Grassroot Institute of Hawaii; Japanese Chamber of Commerce & Industry of Hawaiʻi; Hawaiʻi Farmers Union; Hawaii Food Industry Association; and Maui Chamber of Commerce.  Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs; Public Utilities Commission; Local Food Coalition; and Hawaiʻi Farm Bureau.

     Your Committee finds that water carriers engage in the transportation of persons or property by water and play a crucial role in sustaining each island's economy and community by, among other things, moving essential goods between islands.

     Your Committee further finds that water carriers are not immune from existing inflationary pressures.  While cargo volumes for these carriers have stagnated, the costs of operation have increased, leading to an ongoing struggle to establish and maintain financial sustainability.  This is further exacerbated by the regulatory lag to address increasing costs.  This measure authorizes the Public Utilities Commission to develop a mechanism that will flexibly address the increasing costs of these much-needed carriers.

     Your Committee has amended this measure by:

     (1)  Requiring the Public Utilities Commission to appoint a special overseer no later than July 1, 2026; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2386, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2386, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

STAND. COM. REP. NO.  432-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 2386

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Transportation, to which was referred H.B. No. 2386 entitled:

"A BILL FOR AN ACT RELATING TO WATER CARRIERS,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Authorize the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier;

     (2)  Require the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism; and

     (3)  Authorize the Public Utilities Commission to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act.

     Your Committee received testimony in support of this measure from Matson Navigation Company, Inc.; The Maritime Group; Hawaiʻi Harbors Users Group; Young Brothers, LLC; and numerous individuals.  Your Committee received testimony in opposition to this measure from the Hawaii Food Industry Association; Maui Brewing Co.; Lanikai Brewing Company LLC; Japanese Chamber of Commerce & Industry of Hawaii; and Hawaiʻi Farmers Union United.  Your Committee received comments on this measure from the Department of Transportation; Department of Commerce and Consumer Affairs; Public Utilities Commission; and Hawaiʻi Farm Bureau.

     Your Committee finds that water carriers play a vital role in Hawaii's economy by transporting goods essential to residents and businesses across the State.  However, water carriers are subject to rising operational costs, including increases in wharfage rates and other inflationary pressures, while existing regulatory processes may create delays in timely rate adjustments.  This regulatory lag can hinder carriers' ability to recover costs in a predictable manner, potentially affecting service reliability and financial stability.  By authorizing the Public Utilities Commission to establish automatic adjustment mechanisms, this measure promotes greater rate stability and regulatory efficiency.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Transportation that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2386, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2386, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Transportation,