HB 1638

HOUSE OF REPRESENTATIVES
H.B. NO.
1638
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
relating
to property damages.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION 1.� Section 663-8.8, Hawaii Revised Statutes, is
amended to read as follows:
���� "[[[]]�663-8.8[[]� Limitation on aggregate liability;]] Covered
catastrophic wildfires; limitations on claims of damage to property;
electric utilities.� (a)� For claims alleging the loss of or damage to
real or personal property from a covered catastrophic wildfire, damages shall
be limited to the actual damages suffered by the claimant.� Punitive damages shall be prohibited.
���� [[(a)]]
(b)� The aggregate liability of an
electric utility, including its affiliates, collectively, for qualifying damages
arising from a covered catastrophic wildfire shall not exceed [[the least of
the maximum payable amount authorized by the rules, adopted pursuant to section
269-27.9, for either the set period of time in which the covered catastrophic
wildfire began or per event, as determined by the commission, or for the
remainder of the maximum payable amount to the extent that the electric utility
has already paid qualifying damages for the same time period or event.]] $1,000,000,000
per occurrence.� Claims for damages to
insured property in excess of the coverage limit shall not be subject to the
limitation under this subsection.
���� [[(b)]] (c)� An electric utility that seeks to assert the
limitation on aggregate liability set forth in subsection [[(a)]] (b)
shall:
���� (1)� Have a wildfire
mitigation plan[[, as defined in section 269-27.9,]] that is approved by
the public utilities commission and shall have sought and received a
determination from the public utilities commission that the wildfire
mitigation plan is being implemented on the timeline approved by the public
utilities commission; and
���� (2)� Be in full
compliance with any conditions and reporting requirements established by the
public utilities commission by rule [[pursuant to subsection 269-27.9(c).]]
to ensure compliance with the wildfire mitigation plan.
���� [[(c)]] (d)� All civil actions arising out of a
catastrophic wildfire shall be brought in the circuit in which the catastrophic
wildfire occurred.� The court shall adopt
procedures to equitably apply the limit set forth in subsection [[(a)]]
(b) to all applicable filed civil claims, and notwithstanding any
law to the contrary, joint and several liability shall not apply to qualifying damages,
even as to any amount of qualifying damages in excess of the aggregate
liability of an electric utility; provided that [[in]]:
���� (1)� Notwithstanding anything in section 663-10
or any other applicable statute, actions for claims for qualifying damages
shall be filed by the insurer as a subrogation claim, unless the insurer
expressly waives its authority to file the claim or the contract with the
policyholder does not authorize the insurer to file such claims.� If an insurer files a claim under this
paragraph, the policyholder shall file all claims with respect to the insured
property with the insurer and shall be barred from filing a separate claim against
the electric utility, except a plaintiff may file a claim against the electric
utility for damages to the insured property in excess of the coverage limit in
the policy. �Nothing in this paragraph
shall prohibit a person from filing an action for claims for actual damages
under subsection (a) not covered by an insurance policy, which shall not be
subject to the limitation under subsection (b);
���� (2)� In any action to recover from a person
or an entity in connection with a covered catastrophic wildfire, the person or
entity may claim, in defense, apportionment of fault to any other person,
entity, electric utility, or electric cooperative, even as to those who are not
a party to the action[[.]]; and
���� (3)� Notwithstanding section 657-7, all actions
for claims for qualifying damages shall be filed within one year after the
covered catastrophic wildfire and not after.
The exceptions to the abolition of joint and several
liability set forth in section 663-10.9 shall not apply to any suit, claim,
arbitration, or other civil action arising out of a covered catastrophic
wildfire.� All settlements or judgments
for claims for qualifying damages shall be subject to approval by the
court.� The court shall not approve any
settlement or judgment that would cause the aggregate liability of an electric
[[utilities]] utility to exceed the aggregate liability limit [[prescribed
by the commission if the utility is entitled to invoke the limitation]]
under subsection [[(a).]] (b).�
No liability allocable to the electric utility that is not payable
because of the aggregate liability limit shall be shifted, in any manner, to
any other alleged tortfeasor or obligor.
���� [[(d)]] (e)� A court may consolidate cases arising from a
covered catastrophic wildfire.� Any
circuit court that is not the consolidating court shall transfer any civil case
to facilitate the consolidation.
���� [[(e)� No later than twenty days prior to the
convening of each regular session, the commission shall study and submit a
report to the legislature that includes:]
���� [(1)]� [An assessment
of whether the factors considered pursuant to section 269-27.9(b) adequately
balance the solvency interests of electric utilities with the compensation owed
in the previous year to catastrophic wildfire victims, or whether additional
factors should be considered; and]
���� [(2)]� [Any other
findings and recommendations, including any necessary proposed legislation.]]
���� (f)�
The director of Hawaii emergency management shall determine whether a
wildfire is a covered catastrophic wildfire and shall certify that a wildfire
is a covered catastrophic wildfire no later than      days
after extinguishment of the wildfire.�
The director's determination shall be final and not subject to appeal.
���� [[(f)]] (g)� For the purposes of this section:
���� "Catastrophic wildfire"
means a wildfire occurring in the State on or after the effective date of this
Act that substantially damages or destroys more than [[five]]:
���� (1)� Five
hundred commercial structures or residential structures [[designed for
habitation]]; or[[, for]]
���� (2)� For an
electric cooperative, [[a wildfire that substantially damages or destroys
more than]] fifty commercial structures or residential structures [[designed
for habitation]].
���� "Covered catastrophic
wildfire" means a catastrophic wildfire that may have been caused, or
whose severity may have been increased, by an electric utility's facilities or
actions.
���� [["Electric utility" means a
public utility that exists for the furnishing of electrical power, including an
electric cooperative.]]
���� "Electric cooperative" [[is]]
means an electric utility that [[has the same meaning as in]] meets
the definition of electric cooperative under section 269-31(c).
���� "Electric utility" means a
public utility that exists for the furnishing of electrical power, including an
electric cooperative.
���� "Public utility" has the
same meaning as in section 269‑1.
���� "Qualifying damages" means
economic damages arising out of the loss of or damage to real or personal
property, covered by a property insurance policy, from a covered
catastrophic wildfire[[.]], but does not exceed the coverage limit
established within the property insurance policy for that real or personal
property.� "Qualifying damages"
does not include claims for physical bodily harm or emotional harm.
���� "Wildfire
mitigation plan" means the plan that each electric utility shall file with
the public utilities commission, that shall be periodically updated at a
frequency determined by the public utilities commission, and that sets forth
the electric utility's practices to protect public safety and reduce risk to
customers from wildfires and to promote the resilience of the electric system
to wildfire damage, pursuant to requirements established by the public
utilities commission."
���� SECTION 2.� Section 663-10,
Hawaii Revised Statutes, is amended to read as follows:
���� "�663-10�
Collateral sources; protection for liens and rights of subrogation.� (a)� In
any civil action in tort, the court, before any judgment or stipulation to
dismiss the action is approved, shall determine the validity of any claim of a
lien against the amount of the judgment or settlement by any person who files
timely notice of the claim to the court or to the parties in the action.� The judgment entered, or the order subsequent
to settlement, shall include a statement of the amounts, if any, due and owing
to any person determined by the court to be a holder of a valid lien and to be
paid to the lienholder out of the amount of the corresponding special damages
recovered by the judgment or settlement.�
In determining the payment due the lienholder, the court shall deduct
from the payment a reasonable sum for the costs and fees incurred by the party
who brought the civil action in tort.� As
used in this section, lien means a lien arising out of a claim for payments
made or indemnified from collateral sources, including health insurance or
benefits, for costs and expenses arising out of the injury which is the subject
of the civil action in tort.� If there is
a settlement before suit is filed or there is no civil action pending, then any
party may petition a court of competent jurisdiction for a determination of the
validity and amount of any claim of a lien.
���� (b)� Where an entity licensed under chapter 432 or
432D possesses a lien or potential lien under this section:
���� (1)� The person whose settlement or judgment is
subject to the lien or potential lien shall submit timely notice of a
third-party claim, third-party recovery of damages, and related information to
allow the lienholder or potential lienholder to determine the extent of
reimbursement required.� A refusal to
submit timely notice shall constitute a waiver by that person of section
431:13-103(a)(10).� An entity shall be
entitled to reimbursement of any benefits erroneously paid due to untimely
notice of a third-party claim;
���� (2)� A reimbursement dispute shall be subject to
binding arbitration in lieu of court proceedings if the party receiving
recovery and the lienholder agree to submit the dispute to binding arbitration,
and the process used shall be as agreed to by the parties in their binding
arbitration agreement; and
���� (3)� In any proceeding under this section to
determine the validity and amount of reimbursement, the court or arbitrator
shall allow a lienholder or person claiming a lien sufficient time and
opportunity for discovery and investigation.
���� For
purposes of this subsection:
���� "Third-party
claim" means any tort claim for monetary recovery or damages that the
individual has against any person, entity, or insurer, other than the entity
licensed under chapter 432 or 432D.
���� "Timely
notice of a third-party claim" means a reasonable time after any written
claim or demand for damages, settlement recovery, or insurance proceeds is made
by or on behalf of the person.
���� (c)� Nothing in this section shall limit the right
of a lienholder that is a property and casualty insurer to pursue a separate
subrogation claim against an alleged tortfeasor, including an electric utility
in the case of a catastrophic wildfire under section 663-8.8."
���� SECTION 3.� Section 269-27.9,
Hawaii Revised Statutes, is repealed.
���� ["[[][�269-27.9]� Determination of limitation on liability.][� (a)�
The commission shall initiate a proceeding for the adoption of rules
pursuant to chapter 91 to establish the maximum amount each electric utility
may pay to resolve claims arising from any covered catastrophic wildfires, as
defined in section 663-   , for set periods of time established
by rules in accordance with this section.�
The commission shall have sole discretion to establish the maximum
payable amounts and applicable periods of time.�
The rules adopted by the commission under this section shall have the
force and effect of law.]
���� [(b)� The commission shall adopt rules as soon as
is practicable.� The rules shall
authorize the maximum payable amount each electric utility may pay to resolve
qualifying damages arising from any covered catastrophic wildfires, as those
terms are defined in section 663-   , that occur within a set
period of time, or per event, as determined by the commission, without harming
ratepayers or materially impacting each electric utility's ability to provide
adequate and safe service consistent with the public interest.� In adopting rules to establish the maximum
payable amount, the commission shall consider, at a minimum:]
���� [(1)]� [Whether the
maximum payable amount shall be delineated by the qualifying damages arising
from covered catastrophic wildfires that occur:]
��������� [(A)]� [Within
a set period of time that is determined by the commission; or]
��������� [(B)]� [Per
event;]
���� [(2)]� [Different
approaches to establishing the maximum payable amount, such as a flat dollar
limit for the set period of time, or per event; one based upon a percentage of
the electric utility's market capitalization or rate base; or hybrid
approaches, including examining frameworks adopted or considered in other
wildfire-prone states and their effectiveness;]
���� [(3)]� [Impacts on the
electric utility's credit ratings, borrowing costs, and customer's electricity
rates, and how the establishment of the maximum payable amount will help to
achieve intended outcomes of improving the utility's credit rating and lowering
costs passed on to customers;]
���� [(4)]� [Impacts of the
maximum payable amount upon the insurance market in the State;]
���� [(5)]� [Impacts of the
maximum payable amount on the indemnity, contribution, and subrogation rights
of any person or entity;]
���� [(6)]� [Impacts on the
liability exposure of other hypothetical future co-defendants with respect to
claims arising from a catastrophic wildfire;]
���� [(7)]� [Impacts on
potential future plaintiffs who could be negatively impacted by the
establishment of the maximum payable amount;]
���� [(8)]� [The
affordability of electric utility service and the potential impacts on
customer's electricity rates by the establishment of the maximum payable
amount;]
���� [(9)]� [Requirements to
maintain or improve the quality of service to the electric utility's customers;]
��� [(10)]� [Requirements to
improve the management of the electric utility doing business in the State;]
��� [(11)]� [Requirements to
meet state policy goals for clean energy and climate;]
��� [(12)]� [Requirements to
implement wildfire mitigation plans and improve safety;]
��� [(13)]� [Requirements to
improve interconnection costs and timeliness; and]
��� [(14)]� [The restriction or
reduction of c][ompensation packages and bonuses to officers and
employees of the electric utility.]
���� [(c)� The rules adopted pursuant to this section
shall also include:]
���� [(1)]� [Conditions to
ensure that the establishment of the maximum payable amount is consistent with
the public interest;]
���� [(2)]� [Annual
reporting requirements for compliance with any conditions established; and]
���� [(3)]� [Procedures for
corrective actions if the electric utility is not in compliance.]
[Rules required to be adopted under this section
shall be adopted in a single rulemaking proceeding.� Upon request by the commission, the electric
utility or any state or county agency shall provide any information that is
relevant to the rulemaking proceedings under this section.]
���� [(d)� 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 (b).]
���� [(e)� On or before the last day of the preceding
set period of time established by the commission with respect to each electric
utility, the commission shall adopt rules pursuant to subsection (b) and (c)
for the next subsequent proposed period of time.]
���� [(f)� Notwithstanding any other law to the
contrary, the supreme court shall have original jurisdiction over any petition
to obtain a judicial determination as to the validity of the rules adopted
under this section.� The petition shall
be filed with the clerk of the supreme court within thirty days of the filing
of the rules with the lieutenant governor pursuant to section 91-4(b).� After an action is filed pursuant to this
paragraph, the supreme court shall give priority to the action over all other
civil or administrative appeals or matters and shall render a final judgment
and opinion as expeditiously as possible.�
No action challenging the validity of the rules may be brought except as
provided in this subsection.]
���� [In all collateral proceedings,
including any civil action to recover damages for a covered catastrophic
wildfire, the maximum payable amounts established by the rules shall be
conclusive and not subject to judicial review.�
Nothing in this section or rules adopted under this section shall be
construed to create any property interest or entitlement of any kind in the
electric utility, and no claim by any party, whether sounding in law or equity,
or under article I, section 20, of the Hawaii State Constitution, may be
brought against the commission, its commissioners, officials, and employees, or
the State relating to rulemaking under this section.]
���� [(g)�
For purposes of this section:]
���� ["Electric
utility" includes an electric cooperative, as defined in section 269‑27.8(b).]
���� ["Wildfire
mitigation plan" means the plan that each electric utility shall file with
the commission, and which shall be periodically updated at a frequency
determined by the commission, that sets forth the utility's practices to
protect public safety and reduce risk to customers from wildfires and to
promote the resilience of the electric system to wildfire damage, pursuant to
requirements established by the commission.]"]
���� 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.
INTRODUCED BY:
_____________________________
Report Title:
Covered
Catastrophic Wildfires; Actual Damages; Aggregate Liability Limit; Electric
Utilities; Economic Damages; Statute of Limitation; Right to Subrogation
Description:
Limits
claims alleging property damage from covered catastrophic wildfires to actual
damages.� Amends the aggregate liability
limit for qualifying damages from covered catastrophic wildfires to be
$1,000,000,000, rather than administratively established by the Public
Utilities Commission, and makes the limit applicable only to property covered
by a property insurance policy up to the coverage limit.� Requires the Director of Emergency Management
to determine whether a wildfire is a covered catastrophic wildfire.� Specifies that claims subject to the limit
must be filed within one year of the covered catastrophic wildfire.� Clarifies that a property and casualty
insurer's rights to subrogation are not limited in the context of an insured's
recovery by judgment or settlement of a third-party tort claim.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.