Report Title:

Ceded Land Revenues; OHA

Description:

Makes a $15,100,000 appropriation to OHA in ceded land revenues. Creates a joint advisory committee to study alternative approaches to payment of ceded land revenues to OHA. Makes an appropriation to the department of the attorney general to provide logistical and staff support for the joint advisory committee.

HOUSE OF REPRESENTATIVES

H.B. NO.

2777

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to office of hawaiian affairs.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that by many measures, the descendants of the inhabitants of the Hawaiian islands prior to 1778, have not prospered in their native land.

There are many explanations for this condition. The central theme includes the loss of control over land and other assets. In 1893, the overthrow of Queen Liliuokalani and the sovereign Kingdom of Hawaii were orchestrated by members of the annexation club who controlled the economy and much of the private property in Hawaii.

In 1898, the annexation of the Hawaiian islands conveyed absolute title of Hawaii's crown and government lands to the United States. 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[.]"

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.

The Hawaiian Homes Commission Act, 1920, placed almost two hundred thousand acres of ceded land under the jurisdiction of the Hawaiian homes commission for lease to native Hawaiians at a nominal fee.

In 1959, statehood occurred when Congress passed the Admissions Act and ratified the State Constitution. 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. Approximately 1,400,000 acres of land were returned with the proviso that the lands granted to the State, 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.

After the State failed 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.

Several legislative enactments followed to carry out the State's obligation. In 1979, the legislature enacted chapter 10, Hawaii Revised Statutes, creating the office of Hawaiian affairs. Act 273, Session Laws of Hawaii 1980, amended chapter 10 by adding section 10-13.5, Hawaii Revised Statutes, to require that twenty per cent of all funds from the public land trust (ceded lands revenues) be expended by the office of Hawaiian affairs for, among other things, the betterment of conditions of native Hawaiians.

As time went by, the office of Hawaiian affairs became dissatisfied with the State's lack of progress in fulfilling its obligations for ceded lands and brought suit against the State. In 1987, the Hawaii supreme court ruled in Trustees of the Office of Hawaiian Affairs v. Yamasaki, 69 Haw. 154 (1987), that a legislative remedy was needed to clarify issues regarding ceded land revenues.

Consequently, the legislature enacted Act 304, Session Laws of Hawaii 1990, which added definitions of the terms "public land trust" and "revenues" to chapter 10, Hawaii Revised Statutes, and which constituted a formal recognition of the right of native Hawaiians to ceded lands revenues that resolved some of the claims of native Hawaiians against the State for lands taken from the Kingdom of Hawaii without its consent and without compensation. Act 304 made legislative findings in section 1 concerning the special trust relationship imposed upon ceded lands and amended section 10-13.5, Hawaii Revised Statutes, to provide: "Twenty per cent of all revenue derived from the public land trust shall be expended by the office [of Hawaiian affairs] for the betterment of the conditions of native Hawaiians."

Subsequently, Act 35, Session Laws of Hawaii 1993, authorized the issuance of $136,500,000 in general obligation bonds to satisfy the State's obligation to native Hawaiians for the use of ceded lands from 1981 to 1990.

In 1994, still dissatisfied with the State's fulfillment of its obligation, the office of Hawaiian affairs again instituted suit against the State for payment of its pro rata share of unspecified revenues that the State had collected from ceded lands since 1980. The circuit court ruled in October 1996 that these claims for additional revenues under Act 304 were legitimate and valid. However, the dispute continued and escalated with the State's appeal of the circuit court's decision and a report from the federal government that payment of airport revenues to the office of Hawaiian affairs violated federal law.

In response to this ongoing controversy, Act 329, Session Laws of Hawaii 1997, was enacted by the legislature to provide for a maximum payment to the office of Hawaiian affairs of $15,100,000 each year for two years from 1997 to 1999. This amount reflected the level of the previous annual payment. Act 329 also appropriated funds to conduct the ceded lands inventory and 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. The study sought to develop a resolution of the issue of whether the State had met its obligation.

On September 21, 2001, the Hawaii supreme court held that Act 304, Session Laws of Hawaii 1990, as applied to revenue derived from that portion of the Honolulu international airport that sits upon ceded lands, conflicts with federal legislation. The provisions of Act 304 were not severable, and consequently the Act could be invalidated if any of its provisions were held to be in conflict with any federal or state law, rules, or regulations. Thus, with the supreme court's 2001 decision that Act 304 conflicts with federal legislation, Act 304 was, by its own terms, effectively repealed in its entirety.

However, the fundamental obligation of the State to native Hawaiians had not been diminished. The supreme court concluded, "we would do a disservice to all the parties involved if we did not acknowledge the State's obligation to native Hawaiians is firmly established in our constitution . . . we trust that the legislature will re-examine the State's constitutional obligation to native Hawaiians and the purpose of HRS §10-13.5 and enact legislation that most effectively and responsibly meets those obligations."

As a result of the invalidation of Act 304, the governor suspended all pro-rata payment to the office of Hawaiian affairs in October 2001.

In 2003, the legislature appropriated $9,500,000 to the office of Hawaiian affairs, which represented twenty per cent of the receipts for the use of lands in the public land trust that were not transferred to the office of Hawaiian affairs, but were deposited instead into the general and certain special and revolving funds. Simultaneously, the legislature and the state administration agreed to render on-going quarterly voucher payments of the uncontested public land trust revenues, amounting to approximately $9,200,000 annually.

In July 2003, the office of Hawaiian affairs filed a lawsuit against the State claiming that if the State had timely and properly opposed the position with respect to the airport revenues, set forth in the Federal Aviation Administration's memorandum, it would have prevailed for several reasons, including the following:

(1) The fact that payments to the office of Hawaiian affairs are rent. The elimination of the office of Hawaiian affair's ability to receive its share of airport revenues would result in a subsidy to the airports and the airlines at the expense of native Hawaiians;

(2) The payments to the office from airport revenues are required by legislation that was the product of a settlement process that included the State and the airlines;

(3) The Federal Aviation Administration's decision would negate the value of ceded lands at the airports for the beneficiaries of the public land trust created by Congress, because the department of transportation would be able to use these lands indefinitely with no compensation to the native Hawaiians;

(4) Other airports make rent payments to public entities; and

(5) Allowing the office of Hawaiian affairs to receive its share of airport revenues would not created an adverse precedent.

Although the court dismissed this lawsuit, the office of Hawaiian affairs intends to appeal.

Meanwhile, although Act 304 was invalidated, a portion of chapter 10, Hawaii Revised Statutes, remains in effect, including its pre-Act 304 version of section 10-13.5, Hawaii Revised Statutes, which provides: "Twenty per cent of all funds derived from the public land trust . . . shall be expended by the office [of Hawaiian affairs], . . . for the purposes of this chapter." The difficulty lies in the fact that there is no substantive definition of nor standards to determine "funds". Thus, the court is left without any appropriate standard upon which to determine the pro rata share of unspecified revenues that the State collected from ceded land since 1980 to which the office of Hawaiian affairs is entitled.

The legislature finds that section 10-13.5, Hawaii Revised Statutes, was enacted in good faith in 1980. However, the stipulation of "twenty per cent pro rata share", without further clarification of its applicability to certain income, has generated and continues to generate endless controversy as to what constitutes income. The possibilities include fees, lease rentals, other proceeds from capital improvements including buildings and other facilities to which the office of Hawaiian affairs made no financial contribution, net or gross revenues, and income from lands under the control of other entities, who, like the office of Hawaiian affairs, are also beneficiaries of the public land trust.

The legislature finds that a "sunset" repeal and replacement of the "twenty per cent" with an annual appropriation equal to the highest payment made to the office of Hawaiian affairs represents a good faith effort to resolve this extremely contentious, emotional issue and fulfills the State's mandate of providing for the betterment of the conditions of native Hawaiians. During this period of payment stability at a higher and equitable level (without ongoing controversy), the legislature intends that a joint advisory committee shall further examine all parameters of this issue and recommend, to the extent that one exists, a better resolution.

SECTION 2. Chapter 10, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§10- Revenues from public land trust proceeds. Notwithstanding the definition of revenue contained in this chapter and the provisions of section 10-13.5, the income and proceeds from the pro rata portion of the public land trust under article XII, section 6 of the state constitution for expenditure by the office of Hawaiian affairs for the betterment of conditions of native Hawaiians shall be $15,100,000 annually; provided that this section shall be repealed on June 30, 2006."

SECTION 3. Section 10-13.5, Hawaii Revised Statutes, is amended to read as follows:

"§10-13.5 Use of public land trust proceeds. Twenty per cent of all funds derived from the public land trust, described in section 10-3, shall be expended by the office, as defined in section 10-2, for the purposes of this chapter[.]; provided that this section shall not apply from July 1, 2004 to June 30, 2006."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $15,100,000, or so much thereof as may be necessary for fiscal year 2004-2005, for payment of funds from the public land trust to be expended by the office of Hawaiian affairs for the betterment of conditions of native Hawaiians.

SECTION 5. The sum appropriated in section 4 of this Act shall be expended by the office of Hawaiian affairs for the purposes of this Act.

SECTION 6. (a) There is established a joint advisory committee within the department of the attorney general to study within the department of the attorney general and make recommendations on all outstanding and anticipated issues identified by the joint advisory committee as currently or potentially relating to the public land trust, including whether lands should be transferred to the office of Hawaiian affairs in partial or full satisfaction of any past or future obligations under article XII, section 6 of the Hawaii constitution. The study shall evaluate alternative approaches for payment of ceded land revenues, including the possibility of a global settlement of revenue payment, to the office of Hawaiian affairs and shall include the following:

(1) A recommendation for the substantive definition of and appropriate standards to determine "funds" for purposes of section 10-13.5;

(2) Consultation and collaboration with the office of the governor, office of Hawaiian affairs, appropriate state agencies, and Hawaiian communities;

(3) A review and assessment of the alternatives to settle payment to the office of Hawaiian affairs of ceded land revenues;

(4) A detailed analysis and explanation of the methodology used to determine the amount of ceded land revenues to be paid to the office of Hawaiian affairs; and

(5) Recommendations on possible legislation to assist in settlement of the amount of ceded land revenues to be paid to the office of Hawaiian affairs.

(b) The joint advisory committee shall consist of eight members, of which the president of the senate, the speaker of the house of representatives, the board of trustees of the office of Hawaiian affairs, and the governor shall each appoint two members. All members of the committee shall be appointed no later than thirty days after the effective date of this Act, and the joint advisory committee shall convene its initial meeting within thirty days after appointment of the last member. The attorney general shall provide logistical and staff support to the joint advisory committee. The committee shall conduct public hearings throughout the State to facilitate discussions and formulate recommendations on issues within the joint advisory committee's purview. The committee shall be subject to the requirements of part I of chapter 92, Hawaii Revised Statutes, only when such public hearings are being scheduled or conducted.

(c) The joint advisory committee shall:

(1) Submit a progress report to the legislature no later than twenty days prior to the convening of the regular session of 2005;

(2) Submit a final report to the legislature no later than twenty days prior to the convening regular session of 2006; and

(3) Cease to exist on June 30, 2006.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2004-2005, to provide logistical and staff support to the joint advisory committee, including the hiring of necessary staff who shall be exempt from chapters 76 and 89.

SECTION 8. The sum appropriated in section 7 of this Act shall be expended by the department of the attorney general for the purposes of this Act.

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect upon its approval; provided that sections 4, 5, 7 and 8 shall take effect on July 1, 2004.

INTRODUCED BY:

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