The state agency charged with safeguarding Hawaii’s historic and archeological treasures is in such disarray that the federal government is threatening to revoke its certification and funding.

That could in turn hold up billions of dollars in state projects, including the Honolulu rail project, government officials say.

The National Park Service last week sent a warning letter to the head of Hawaii’s Historic Preservation Division saying that the division isn’t doing enough to address major operational problems that federal officials identified more than a year ago. As a result, the division risks losing its federal certification and one-quarter of its budget.

“We remain concerned that, irrespective of any other factors, without sufficient staffing and adequate retention programs, the (Historic Preservation Division) will not be able to satisfy the corrective actions to create a sustainable statewide historic preservation program within the schedule established for the (corrective action plan),” wrote Stephanie Toothman, an associate director for the National Park Service.

The division has struggled for years to fulfill its duties. It currently has a backlog of more than 400 permits and reports. Vital staff positions are unfilled. The division has been slow to digitize its records and has come under criticism in the past for its poor handling of Native Hawaiian remains.

In 2010, federal officials stepped in and slapped the department with a “corrective action plan” requiring the division to fix problems by 2012.

Jon Smith, an assistant director at the National Park Service, said Hawaii is the first state to ever be issued a corrective action plan, and the only state to be at risk of losing its certification.

But Smith said he hoped that the actions by the federal agency wouldn’t be seen as something that was punitive or “terribly negative.” He said he was optimistic that the state would meet the mandates.

“There is so much that is positive coming out of this,” he said. “There are very good and very, very dedicated staff at the (Hawaii) office.”

The state even hired a private contractor to come in and shore up the division. But progress has been inadequate, according to federal officials.

In its letter, the National Park Service says that it has already begun discussions with an advisory panel to develop a backup plan for reviewing state projects that require federal approvals if the Hawaii Historic Preservation Division loses its certification.

A Dysfunctional Department

One of the most salient problems for the division, which falls under the Department of Land and Natural Resources, has been staffing.

Currently, one-third of positions in the division are vacant — or seven out of 20 jobs. Finding archeologists, and retaining them, has been particularly difficult.

Pua Aiu, who took over as administrator for the division four years ago, said that the turnover rate had gotten better.

“There was almost a 100 percent turnover rate after I came in,” she said. “But we’ve retained employees since then.”

She said that finding qualified applicants is difficult because there’s a small pool of qualified people in Hawaii. The state also requires that applicants have two years of experience working in Hawaii, which makes it harder to hire than on the mainland, she said.

“There are good reasons why people who work in Hawaii need to have Hawaii experience, especially for the lead positions,” she said.

But the problems extend far beyond staffing. The National Park Service compiled a long list of problems, including the fact that the division’s use of technology is woefully inadequate. The division isn’t keeping the public informed or consulting with Native Hawaiians on historic properties proposed for the National Register — as required by law.

At the same time, federal officials noted the division has made progress in several program areas.

The National Park Service says it has spent years trying to help the division including sending officials to Hawaii to help with training and plan implementation. But Toothman expressed frustration at the response.

“During the past five years the NPS has provided considerable technical and financial assistance to Hawaii to correct the operational problems of the (Historic Preservation Division),” she wrote. “While some progress has been achieved, we have observed that the SHPD leadership has not fully embraced this assistance, which we believe has hampered progress is meeting the (corrective action plan.)”

Aiu said that the department was preparing an official statement in response to the letter.

State Turned to Private Sector for Help

In June, the DLNR awarded a contract to a private consulting firm for $180,000 to address federal officials’ concerns and fix the division.

Solutions Pacific was tasked with addressing everything in the corrective action plan except for the staffing problem. But in some cases, the National Park Service found the company behind schedule in completing certain tasks, such as developing surveying standards.

Ray Soon, principal of Solutions Pacific, did not return a call for comment.

But even Solutions Pacific hasn’t been able to turn the division around fast enough. There’s the backlog of more than 400 permits and reports. Paperwork that’s supposed to be processed in 30 days is instead taking several months, said Guy Kaulukukui, deputy director of DLNR.

“Currently the system is 100 percent manual,” he said. “A request for a permit report is handled multiple times and there is no standard format, so it takes a lot more time to read through this to see what (federal) triggers are activated. We’re trying to standardize that process with forms to speed up the process.”

Despite federal officials’ concerns, Kaulukukui said that he was confident in the job being done by Solutions Pacific and believed that the state would meet the National Park Service’s requirements.

Smith, of the National Park Service, also said that he thought it was a good idea to contract the job out to a private company.

If the Historic Preservation Division does lose its certification and federal funding, Kaulukukui said it could cause substantial delays in the permitting and approval process for state projects that require a federal review, particularly when it comes to those of the Department of Transportation. A non-state agency would have to be formed to take over the duties.

But even then, scraping together a new entity is likely to cause major delays, according to both state and federal officials.

“With the time it would take to transition to a new process, there could be a considerable hold-up,” Kaulukukui said.

He mentioned Honolulu’s $5.2 billion rail project as one such project that is receiving federal funding. Because of the project’s potential impacts on Native Hawaiian burials, it requires significant review by the Historic Preservation Division. What impact this latest controversy over the division’s certification will have on the project remains to be seen.

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