Report No. 26-05, Audit of the Department of Land and Natural Resources' Division of Boating and Ocean Recreation

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

In 2019, the Department of Land and Natural Resources (DLNR) told the Legislature that it needed help to ensure that vessel owners cover costs the Division of Boating and Ocean Recreation (DOBOR) was incurring to salvage grounded vessels, testifying that, since 2002, more than $2.2 million had been expended from the Boating Special Fund to address grounded, abandoned, or derelict vessels. House Bill No. 1033 (HB 1033), which DOBOR’s then-Administrator helped author, would have required all vessel owners to have insurance of not less than $500,000 that included coverage to remove and salvage a grounded vessel.

The Legislature enacted an amended version of HB 1033, limiting its application to vessels 26 feet or more in length and smaller vessels whose owner previously grounded a vessel, requiring those owners to obtain at least $100,000 in salvage insurance. Act 94, codified as Section 200-13.5, HRS, took effect on December 31, 2019.

We initiated this audit to assess DLNR’s boating program, initially intending to assess DOBOR’s management of the State’s small boat harbors. Following our audit planning, however, we developed an objective focusing on DOBOR’s vessel registration process, specifically, its policy to enforce compliance by boaters of the required insurance to cover salvage of grounded vessels. That objective was selected based on DOBOR’s concern that its primary funding source was being depleted because boaters were not paying the costs to remove their grounded vessels and the legislation that was enacted, at DLNR’s request, to address that concern. 

However, we couldn’t assess whether the insurance that DLNR said was necessary has “greatly reduced,” as the department represented it would – or has even reduced – the department’s costs to remove and salvage grounded vessels; we could not determine whether the insurance requirement has helped to ensure that vessel owners are held responsible for the costs that DOBOR incurred to remove and salvage their grounded vessels.

We conducted this audit pursuant to Article VII, Section 10 of the Hawai‘i State Constitution and Section 23-4, HRS.

Learn how:

• DOBOR did not know the amount that it had paid to remove and salvage grounded vessels, net of repayments by responsible boaters, even before seeking legislative help through HB 1033, and for that reason, DOBOR could not determine whether the insurance requirement has effectively reduced the net amount that it has paid to addressing groundings.
• It is unclear what risk DLNR wanted the Legislature’s help to address through an insurance mandate. Certain risks noted in the bill as well as DLNR’s testimony were unrelated to groundings.
• Before the end of 2022, DOBOR stopped requiring its registration staff to check for salvage insurance after vessel owners said they could not obtain the coverage.  DOBOR also no longer requires salvage insurance as a condition of a mooring permit.
• The division did little to collect from vessel owners amounts that it paid to remove and salvage grounded vessels. 

Read the full report here:
https://files.hawaii.gov/auditor/Reports/2026/26-05.pdf

Report summary:
https://files.hawaii.gov/auditor/Overviews/2026/26-05AuditorSummary.pdf

Thanks for listening.  You can find this and other reports at: auditor.hawaii.gov

Transcript

Speaker 1 0:00

Welcome to the Audible Audit, an AI-generated podcast summarizing the Hawaii Office of the Auditors Report, Audit of the Department of Land and Natural Resources Division of Boating and Ocean Recreation. While AI may slightly mispronounce some words, the content has been reviewed by the Office of the Auditor and is consistent with the information in the report. The podcast offers another means to learn about the audit and is intended for public informational and educational purposes only. Listeners are encouraged to consult the full report for detailed and authoritative information about the audit.

Speaker 2 0:40

Welcome and thanks for listening. Today we're talking about a recent audit of the Department of Land and Natural Resources Division of Boating and Ocean Recreation, often called DOBOR. This audit looks at whether a state law meant to protect public funds from the cost of grounded vessels is actually working. Joining me is an AI-generated guest familiar with this report.

Speaker 1:00

Thanks for having me. I'm glad to talk about what the Office of the Auditor found.

Speaker 2 1:05

Let's start with the big picture. Why did the legislature pass a law requiring certain boat owners to carry insurance for grounded vessels in the first place?

Speaker 1:13

The concern was financial. The Department of Land and Natural Resources told lawmakers in 2019 that DOBOR had spent more than $2.2 million since 2002 removing and salvaging grounded, abandoned, or sunken vessels. Those costs came out of the boating special fund, which is supposed to pay for things like harbor operations and maintenance. The insurance requirement was meant to shift those costs back to vessel owners, who are legally responsible for them.

Speaker 2 1:39

So the idea was if boats are insured, taxpayers and this special fund don't have to foot the bill.

Speaker 1:46

Exactly. That was the promise made to the legislature.

Speaker 2 1:49

And what did your audit find? Did it work?

Speaker 1:52

In short, no. We found that DOBOR doesn't know whether the insurance requirement reduced its costs at all, or whether it helped recover money from vessel owners. In fact, DOBOR doesn't even know how much it is paid, net of any reimbursements, to deal with grounded vessels.

Speaker 2 2:08

That's a pretty striking finding. How is it possible they don't know?

Speaker 2:12

DOBOR tracks groundings in one system and payments or debts in another, but the two aren't connected. There's no easy way for management to see how much was spent on a grounding and whether the owner ever paid that money back. To figure it out, staff would have to manually review individual accounts. Something DOBOR told us it doesn't have the capacity to do.

Speaker 2 2:32

Another theme in the report is uncertainty about what risk the law was supposed to address. Can you explain that?

Speaker 2:39

Yes. Officially, the law requires insurance to cover the removal and salvage of grounded vessels. But when we spoke with current and former DOBOR leadership, they described other concerns too, like damage at boat launch ramps or accidents involving trailered boats. The problem is that those risks aren't clearly addressed by the insurance described in the statute. In other words, there's a mismatch between the risks DOBOR says it was worried about and what the law actually requires.

Speaker 2 3:06

The audit also talks a lot about insurance not being enforced. What's going on there?

Speaker 3:11

Soon after the law took effect, DOBOR tried to require proof of insurance during vessel registration. But they later stopped enforcing that policy because they were told the required insurance, specifically salvage insurance covering removal of a grounded vessel, was either unavailable in Hawaii or prohibitively expensive for most boaters. So today, even though the law is still on the books, DOBOR generally doesn't require proof of that insurance.

Speaker 2 3:36

So the law exists, but it's essentially not being applied.

Speaker 3:40

That's right. And to make matters more confusing, enforcement hasn't even been consistent across islands. Some offices continued asking for proof of insurance while others stopped, and headquarters wasn't always aware of those differences.

Speaker 2 3:53

Let's talk about accountability. If boat owners are legally responsible for grounding costs, what does DOBOR do to collect that money?

Speaker 4:01

Very little. Typically, DOBOR sends one demand letter to the vessel owner. If that letter comes back unclaimed, there's usually no follow-up. DOBOR doesn't use a collection agency, and we were told the Attorney General's office generally won't pursue these cases. As a result, the state often absorbs the cost.

Speaker 2 4:19

And those costs can be significant.

Speaker 4:21

Yes. DOBOR staff told us a single grounding can cost anywhere from about $12,000 to $50,000. Over time, that can add up. Draining a fund meant to support boating facilities statewide. However, the operative word here is can. But remember, DOBOR doesn't know how much it's spent on removing grounded vessels and whether owners are paying back those monies. So while groundings can be expensive, whether those costs are depleting DOBOR's boating special fund is an open question.

Speaker 2 4:51

What does the audit recommend to fix these problems?

Speaker 4:54

We made several recommendations. At a high level, DOBOR needs to clearly define the risks it's trying to manage, track its actual costs and reimbursements, and take collections seriously. That includes developing clear procedures, improving data systems, and working with the Attorney General or a collection agency. And if DOBOR believes insurance is part of the solution, it needs to make sure that insurance is appropriate, available, and clearly defined before asking the legislature to mandate it.

Speaker 2 5:22

So this isn't just about boating, it's about managing public resources responsibly.

Speaker 5:26

Exactly. The boating special fund is public money. Our audit found that DOBOR's limited tracking and minimal collection efforts fall short of its responsibility to protect that fund and ensure it's used as intended.

Speaker 2 5:39

Before we wrap up, what's the main takeaway?

Speaker 5:42

The key message is that passing a law isn't enough. Agencies need to understand the problem they're trying to solve, collect reliable data, and follow through with enforcement. Without that, even well-intentioned policies won't deliver the results promised.

Speaker 2 5:56

That's a great place to end. Thanks for breaking this down and walking us through the findings.

Speaker 6:00

Thank you.

Speaker 2 6:01

And thanks to you for listening. You can find this audit and other reports from the State of Hawaii Office of the Auditor at auditor.hawaii.gov.