The Human Rights Commission wants the Crown and iwi to co-manage the marine and coastal area.
Its top two representatives, Rosslyn Noonan and Joris de Bres, presented the organisation's submission to the Maori Affairs select committee which held its second day of hearings in Auckland last week.
As a starting point, the commission said, Maori owned all of New Zealand in some form before colonial contact.
Its submission argued Maori ownership of the wet sand out to the 12-mile limit was extinguished except in the case where Customary Marine Title - a limited form of ownership which can't be onsold - is proven.
But the qualifying tests groups had to pass were unduly harsh, as applicants had to prove uninterrupted use of the relevant area since 1840.
The tests failed to take into account historical circumstances such as confiscation, decisions of the Maori Land Court and individualisation of title.
Either the tests should be revised to explicitly recognise the impact of Crown alienation or they should be removed so the courts had greater scope for developing their own.
It recommended the bill be amended to include co-governance - the Waikato River Authority was an example - to better recognise treaty partnership and provide a basis for a just and more durable solution.
"But for limited involvement in the conservation processes ... the Crown retains administrative control of the area. In our view, ownership, use and access rights could be managed at local level as a partnership between iwi and hapu and the Crown."