S.R. NO.










WHEREAS, by many measures, the descendants of the inhabitants of the Hawaiian Islands prior to 1778, have not prospered in their native land; and

WHEREAS, there are many explanations for this condition, but the central theme includes the loss of control over land and other assets; and

WHEREAS, the overthrow of Queen Liliuokalani and the sovereign Kingdom of Hawaii in 1893 was orchestrated by members of the annexation club who controlled the economy and much of the private property in Hawaii; and

WHEREAS, the annexation of the Hawaiian islands in 1898 conveyed absolute title of Hawaii's crown and government lands to the United States; and

WHEREAS, the Joint Resolution of Annexation provided "that all revenue from or proceeds of the public lands ... shall be used for the benefit of the inhabitants of the Hawaiian islands for educational and other public purposes; and

WHEREAS, the Organic Act of 1900 established Hawaii as a territory of the United States and provided that the proceeds from the ceded lands be deposited in the treasury of the territory for such uses as are consistent with the Joint Resolution of Annexation; and

WHEREAS, the Hawaiian Homes Commission Act, 1920, placed almost 200,000 acres of ceded land under the jurisdiction of the Hawaiian Homes Commission for lease to native Hawaiians at a nominal fee; and

WHEREAS, statehood occurred when Congress passed the Admission Act and ratified our State Constitution in 1959; and

WHEREAS, the Admissions Act recognized the special status of Hawaii's public lands and reflected the intent to return these lands to the newly created State of Hawaii; and

WHEREAS, about 1.4 million acres of land were returned with the proviso that the lands granted to the State of Hawaii, together with the proceeds from the sale or other disposition of any such lands and income therefrom, shall be held by the State as a public trust for the support of five purposes, one of which is the betterment of the conditions of native Hawaiians; and

WHEREAS, after failing for nineteen years to fulfill its fiduciary responsibility to the public land trust, the 1978 Constitutional Convention implemented the State's obligation to Hawaiians and native Hawaiians by creating the Office of Hawaiian Affairs to hold title in trust to all real and personal property set aside or conveyed to it for native Hawaiians; and

WHEREAS, the Legislature in 1979, enacted chapter 10, Hawaii Revised Statutes (HRS), creating the Office of Hawaiian Affairs (OHA); and

WHEREAS, Act 273, Session Laws of Hawaii (SLH) 1980, amended chapter 10, HRS, to add a new section (section 10-13.5, HRS), to require that twenty per cent of all revenue from the public land trust (ceded lands) be expended by OHA for the betterment of conditions of native Hawaiians; and

WHEREAS, the Hawaii Supreme Court ruled in 1987 in Trustees of the Office of Hawaiian Affairs vs. Yamasaki, 69 Haw. 154, that a legislative remedy was needed to clarify issues regarding ceded land revenues; and

WHEREAS, Act 304, SLH 1990, added definitions for "public land trust" and "revenues" to chapter 10, HRS, constituting a formal recognition of a right of native Hawaiians to ceded lands proceeds that resolves some of the claims of native Hawaiians against the State for lands taken from the Kingdom of Hawaii without its consent and without compensation; and

WHEREAS, Act 304, SLH 1990, made legislative findings in section 1 concerning the special trust relationship imposed upon ceded lands; and

WHEREAS, Act 35, SLH 1993, authorized the issuance of $136.5 million in general obligation bonds to satisfy the State's obligation to native Hawaiians for the use of ceded lands between 1981 and 1990; and

WHEREAS, circuit court judge Daniel Heely ruled that OHA claims for additional revenues under Act 304, SLH 1990, were legitimate and valid; and

WHEREAS, Act 329, SLH 1997, is the most recent evidence of the State's systematic efforts to deny the rightful entitlements of the Hawaiian people by capping payments at $15.1 million for each of the two year fiscal period; and

WHEREAS, Act 329, SLH 1997, established a joint committee to study and make recommendations on all outstanding and anticipated issues identified by the joint committee as currently or potentially relating to the public land trust; and

WHEREAS, on September 21, 2001, the Hawaii Supreme Court overturned judge Heely's ruling stating although Act 304, SLH 1990, was invalid since a portion of the Act was in violation of a federal law, the fundamental obligation of the State to native Hawaiians had not been diminished; and

WHEREAS, in light of this responsibility, the State still has an obligation to accurately account for revenues derived from the public land trust so that until such time that the Legislature is able to legislate a final resolution to the matter of OHA's, and by extension, the native Hawaiian people's, share of public land trust revenues, the State will be able to accurately determine how much is owed; and

WHEREAS, therefore, the methodologies used by the various state departments in verifying the amounts of revenue from ceded lands under their respective jurisdictions should be reliable and consistent with generally accepted accounting principles; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-First Legislature of the State of Hawaii, Regular Session of 2002, that the Auditor is requested to conduct an audit of the Departments of Accounting and General Services; Business, Economic Development, and Tourism; Education; Health; Land and Natural Resources; Transportation (Airports and Harbors Divisions); the University of Hawaii; and any other agency that has ceded land leases under its jurisdiction, regarding their methodologies in verifying the amounts of ceded land revenues, with particular emphasis on the reliability and consistency of such methodologies with generally accepted accounting principles; and

BE IT FURTHER RESOLVED that the Auditor report findings and recommendations to the Legislature no later than twenty days prior to the convening of the Regular Session of 2003; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor, Comptroller, Director of Business, Economic Development, and Tourism, Superintendent of Education, Director of Health, Chairperson of the Board of Land and Natural Resources, Director of Transportation, President of the University of Hawaii, Board of Trustees of the Office of Hawaiian Affairs, and the Auditor.






Report Title:

State Agency Ceded Lands Audit