STAND. COM. REP. NO.  245

 

Honolulu, Hawaii

                , 2009

 

RE:   H.B. No. 1163

 

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

 

Sir:

 

     Your Committee on Transportation, to which was referred H.B. No. 1163 entitled:

 

"A BILL FOR AN ACT RELATING TO HARBORS,"

 

begs leave to report as follows:

 

     The purpose of this bill is to protect the State from costly lawsuits filed by certain users of the State's commercial harbors by allowing the Department of Transportation (DOT) to adopt rules that would require certain private persons engaged in commercial activities that use or occupy the State's commercial harbors to defend, indemnify, and hold harmless the State, and any of its agencies, officers, and employees, against all claims that arise from the private person's use or occupation of the facility.

 

     DOT testified in support of the bill.  The Hawaii Harbors Users Group (HHUG) submitted comments and concerns.

 

     Business and commercial use occurs at Hawaii's harbors statewide.  During the normal course of business, individuals may be injured or property damaged, sometimes as a result of the inappropriate actions or negligence of a business, employees or individuals associated with a business, or individuals associated with a particular commercial activity occurring at a state harbor.  While claims are filed against the businesses or individuals who acted negligently, claims have also been filed against the State as the landowner.

 

     In an attempt to address this type of situation, DOT, to the extent possible, has imposed a duty on tenants and permittees to defend, indemnify, and hold harmless the State through provisions in lease agreements or revocable permits.  However, there are some commercial activities and some permittees operating commercial activities at state harbor facilities that do not have, nor are required to have, because of the transient nature of their operation, lease agreements or revocable permits with DOT.  To address these businesses and commercial activities, DOT promulgated Chapter 19-20.1, Hawaii Administrative Rules, to impose duties on these permittees and commercial activities to defend, indemnify, and hold the State harmless.  Yet, these rules have been called into question by the Hawaii Supreme Court in William Haole v. State of Hawaii, 111 Haw. 144 (2006), where the court concluded that DOT's governing statutes did not explicitly or implicitly authorize DOT to promulgate rules to allow DOT to impose a duty to defend or indemnify the State upon private parties using state harbors.

 

     Your Committee finds that this measure will address the need to provide DOT with explicit authority to impose the duty to defend, indemnify, and hold the State harmless on users of state commercial harbor facilities and thus reduce costly lawsuits against the State.

 

     Your Committee also notes that discussions have taken place with regard to a possible amendment to this measure that would provide for a more equitable application of liability depending upon the degree of responsibility attributable to a party to the incident.  Your Committee understands that DOT and HHUG will be working together to provide language for consideration by the Committee on Judiciary.

 

     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. 1163 and recommends that it pass Second Reading and be referred to the Committee on Judiciary.

 

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

 

 

 

 

____________________________

JOSEPH M. SOUKI, Chair