Audit of the Department of Land and Natural Resources’ Division of Boating and Ocean Recreation

The Division of Boating and Ocean Recreation (DOBOR) has stopped enforcing its policy of requiring evidence of the insurance that vessel owners are legally required to maintain – enacted at the division’s request – as a condition of registration; but the risks covered by the mandated insurance may not be those DOBOR wanted to address

from Hawaii State Auditor, February, 2026

Introduction

In 2019, the Department of Land and Natural Resources (DLNR) told the Legislature that it needed legislation to ensure that it could recover the costs that the department was having to pay to remove and salvage distressed vessels from the owners of those vessels.  DLNR said that, since 2002, it had expended more than $2.2 million from the Boating Special Fund to address grounded vessels, derelict vessels, and abandoned vessels.  The Boating Special Fund is DOBOR’s primary funding source, paying for the administration of the State’s vessel registration system; the operation, administration, maintenance of the State’s small boat harbors; and personnel, among other things. 

House Bill No. 1033 (Regular Session 2019) (HB 1033), which was part of the Governor’s 2019 legislative bill package, proposed to require all vessel owners operating their vessels in state waters to maintain marine insurance coverage of at least $500,000 that covered the removal and salvage of a grounded vessel.  According to DLNR, “[t]he bill would greatly reduce the resources that the Department must expend to remove a grounded or sunken vessel.”  The bill was amended during the legislative session, reducing the insurance coverage to not less than $100,000 and requiring the coverage only for vessels with a length of 26 feet or more and vessels less than 26 feet in length whose owners are the registered owner of a vessel that is or had been grounded in state waters.  Act 94 (Session Laws of Hawaii 2019), codified  as Section 200-13.5, Hawai‘i Revised Statutes (HRS), took effect on December 31, 2019. 

Our objective was to assess how effective Section 200-13.5, HRS, has been in reducing the amount the State pays to address vessels that run aground in Hawai‘i waters.  However, we could not determine whether the insurance requirement has “greatly reduced,” as DLNR represented it would – or has even reduced – the department’s costs to remove and salvage grounded vessels; we could not determine whether the requirement has helped to ensure that vessel owners are held responsible for the costs that DOBOR incurs to remove and salvage their grounded vessels. 

We discovered that DOBOR has done little to hold owners responsible for the costs that the department paid to remove and salvage their vessels, both before and after Act 94.  DOBOR’s efforts to pursue collection of the costs it incurred were – and continue to be – limited, almost non-existent, including against owners whose vessels may have been insured.  And, DOBOR does not maintain information that allows management or others to readily track repayments DOBOR receives.  DOBOR simply does not know whether it recovered from vessel owners or their insurers the costs it expended that, by law, are the owners’ responsibility; it does not know how much of the costs it paid to address grounded vessels has been – or could have been – recouped from vessel owners, either before or after the insurance became a statutory requirement in 2019. 

And, today, DOBOR believes that the removal and salvage coverage (salvage insurance) is not readily obtainable in Hawai‘i and no longer requires evidence of the required insurance coverage at vessel registration, a policy that it adopted soon after the law’s effective date. 

The risks DLNR was trying to address through the insurance requirement are unclear.  DOBOR’s testimony in support of HB 1033 as well as DOBOR’s explanation to us – by both the former and current division administrators – reflect a confusing myriad of concerns, not all of which relate to the risk of vessels grounding in state waters and, more importantly, not all of which are likely addressed by the insurance required under Section 200-13.5, HRS.    

We conclude that the insurance coverage requirement that DOBOR said was needed has done little, if anything, to protect the Boating Special Fund and ensure that it is available to support DOBOR’s operations, including harbor maintenance and improvements; Section 200-13.5, HRS, most likely has not resulted in more vessel owners paying costs that are their responsibility – and if it has, DOBOR does not know….

read … FULL REPORT

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LINK: Act 94 of 2019

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