Report Title:

Public Lands Resolution Task Force; Established


Establishes the Public Lands Resolution Task Force to work with the Office of Hawaii Affairs to seek a resolution of the issues related to the ceded land revenue entitlements of OHA and other related matters. Provides for legislative, executive, federal, and public representation on the task force. (SD1)


H.B. NO.



H.D. 1


S.D. 1




relating to the public land trust.



SECTION 1. Until January 1893, a constitutional monarchy governed Hawaii as an independent and sovereign indigenous nation, when a committee of non-native residents with the assistance of the United States minister to Hawai`i and the threat of the American armed forces illegally overthrew the duly appointed government of the Kingdom of Hawai`i and established the Republic of Hawai`i. Five years later, in 1898, Hawai`i was annexed to the United States.

The annexed Republic of Hawaii not only surrendered its sovereignty, but also "ceded and transferred to the United States the absolute fee and ownership of all public, government, or crown lands belonging to the government of the Hawaiian Islands together with every right and appurtenance thereunto appertaining." The governing authority in Hawaii following annexation was vested in a territorial government until statehood in 1959.

With statehood came the State's obligation to accept from the United States title to certain lands formerly owned by the government and monarch of the Kingdom of Hawai`i, with the congressional mandate that these certain lands be held as a public land trust for five designated purposes (ceded lands or the public land trust). Section 5(f) of the Admission Act of March 18, 1959, Pub. L. No. 86-3, 5, 73 Stat. 4 (1959), provided that these certain land, together with the proceeds from the sale or other disposition of any such lands and the income therefrom, shall be held by said State as a public trust for:

(1) The support of the public schools and other public educational institutions;

(2) The betterment of the conditions of native Hawaiians, as defined in the Hawaiian Homes Commission Act, 1920, as amended;

(3) The development of farm and home ownership on as widespread a basis as possible;

(4) The making of public improvements; and

(5) The provision of lands for public use.

The Admission Act also mandated that the lands, proceeds, and income shall be managed and disposed of for one or more of the foregoing purposes in such manner as the constitution and laws of the State may provide, and their use for any other object shall constitute a breach of trust for which suit may be brought by the United States.

In the absence of more specific guiding mandates, public education became the primary beneficiary of the trust. In 1978, however, the State held a constitutional convention, at which time the State's trust obligation to Hawaiians was clarified in the following articles of the State Constitution:

(1) Article XII, section 4, relating to the public trust, reads as follows:

"The lands granted to the State of Hawaii by Section 5(b) of the Admission Act and pursuant to article XVI, Section 7, of the State Constitution, excluding therefrom lands defined as "available lands" by Section 203 of the Hawaiian Homes Commission Act, 1920, as amended, shall be held by the State as a public trust for native Hawaiians and the general public;" and

(2) Article XVI, section 7, relating to compliance with trust, reads as follows:

"Any trust provisions which the Congress shall impose, upon the admission of this State, in respect of the lands patented to the State by the United States or the proceeds and income therefrom, shall be complied with by appropriate legislation. Such legislation shall not diminish or limit the benefits of native Hawaiians under Section 4 of Article XII."

The constitutional convention also established the office of Hawaiian affairs (OHA), providing that OHA shall hold title to all the real and personal property now or hereafter set aside or conveyed to it in trust for native Hawaiians and Hawaiians. In 1980, the legislature amended chapter 10, Hawaii Revised Statutes (HRS), by adding section 10-13.5, which provided that "[t]wenty per cent of all funds derived from the public land trust...shall be expended by OHA for the purposes of this chapter."

In 1987 in The Trustees of Office of Hawaiian Affairs v. Yamasaki, 69 Haw. 154 (1987), OHA brought suit against the State seeking a declaration that OHA was entitled to twenty per cent of the income from certain lands held in trust by the State by virtue of state legislation implementing provisions of the Admission Act. However, the court dismissed the case, holding that the case involved a nonjusticiable political question. Essentially, the court held that it was unable to determine the parameters of section 10-13.5, HRS, because the section provided no judicially discoverable and manageable standards for resolving the dispute.

Since Yamasaki, extensive negotiations between the State and OHA have ensued to resolve the issue. The legislature passed numerous measures to demonstrate its good faith attempt to recognize the State's trust obligation while the issues relating to the ceded land revenue issues remain unresolved. Act 304, Session Laws of Hawaii (SLH) 1990, not only appropriated $7,200,000 to be expended by OHA for the betterment of the conditions of native Hawaiians, but also attempted to address and resolve major points of contention between the State and OHA. Act 304 defined and clarified "public land trust" lands, and "revenues" that excluded income derived from the exercise of the State's sovereign functions and powers, including:

(1) Taxes;

(2) Regulatory or licensing fees;

(3) Fines, penalties, or levies;

(4) Registration fees;

(5) Moneys received by any public educational institution, including the University of Hawaii;

(6) Interagency and intra-agency administrative fees or

(7) Moneys derived from or provided in support of penal institutions and programs;

(8) Grants, carry-overs, and pass-throughs;

(9) Federal moneys, including federal-aid, grants, subsidies, and contracts;

(10) Moneys collected from the sale or dissemination of government publications; and

(11) Department of defense proceeds on state-improved lands.

In addition, Act 35, SLH 1993, authorized $136,500,000 in general obligation bonds for payments to OHA to settle the unpaid ceded land revenues from June 16, 1980, to June 30, 1991.

The ceded lands issue was again judicially revisited in Office of Hawaiian Affairs v. State of Hawaii, No. 20281, September 12, 2001, involving the application of section 10-13.5, HRS, and the definition of "revenue" in section 10-2, HRS, which were both amended by Act 304. In 1994, OHA sought its pro rata share of revenues received by the State from Waikiki Duty Free receipts, Hilo Hospital patient services receipts, Hawaii Housing Authority, and the Housing Finance and Development Corporation for projects situated on ceded lands, and interest earned on withheld revenues. The Hawaii Supreme Court held that Act 304, as applied to revenue derived from the Honolulu International Airport, conflicted with federal legislation, and by its own terms, Act 304 is effectively repealed. In the absence of Act 304, the Hawaii Supreme Court concluded:

(1) That there was, and still remains, a lack of judicially discoverable or manageable standards adequate to permit a judicial determination of whether OHA was entitled to the specific revenues in its claim, and recommended legislative clarification to fulfill the state's constitutional trust obligation to native Hawaiians;

(2) "Given our disposition of this case, and the context of its complexity, we would do a disservice to all parties involved if we did not acknowledge that the State's obligation to native Hawaiians is firmly established in our constitution. How the state satisfies that constitutional obligation requires policy decisions that are primarily within the authority and expertise of the legislative branch. As such, it is incumbent upon the legislature to enact legislation that gives effect to the right of native Hawaiians to benefit from the ceded lands trust"; and

(3) "[A]s we continue to struggle with giving effect to that enactment, 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."

The legislature acknowledges that the State's obligation to the descendants of the indigenous Hawaiian people is firmly established in the State Constitution and it is their right to benefit from the public land trust.

The legislature recognizes that there is broad acknowledgement among all the people of Hawaii that the State should effect a lasting reconciliation with the Hawaiian people which:

(1) Gives proper acknowledgement to past events;

(2) Reaffirms the State's special trust relationship with the Hawaiian people; and

(3) Moves the State towards the resolution of those issues.

The legislature accepts the responsibility and is committed to enact legislation that most effectively and responsibly meets the State's constitutional obligation to give the Hawaiian people the right to benefit from the ceded lands trust. This commitment is clearly demonstrated in the current action to

enact emergency legislation which will authorize back-payment for the 2002-2003 fiscal year and consenting to ongoing, interim payments through vouchers, consistent with previous practice, until a permanent resolution can be effected.

While there is a compelling need to vigorously proceed towards permanent resolution of this long-standing, complex, and often controversial issue, the legislature finds that with back and interim payments in place, a resolution need not and should not be rendered in this legislative session, even if the perfect answer was in hand. Particularly true in this situation, the legislature finds that the process of arriving at a solution is more important than the solution itself. It is imperative that the Hawaiian people be given the opportunity to participate in this discussion and to the extent possible, contribute meaningfully towards the ultimate decision.

Therefore, the legislature, with sole authority to enact laws and with the responsibility as mandated constitutionally, statutorily, and by the state supreme court to resolve this matter, shall reach out into the Hawaiian communities on all islands to explain and invite participation on the breadth of this issue, including a historical perspective, provisions of the Admission Act, the State Constitution, and applicable statutes, enacted legislation, payments rendered, litigation, the results of such actions, current factors being addressed, and the options for consideration towards permanent resolution by way of community forums.

SECTION 2. There is established a legislative task force to be known as the public lands resolution task force. The task force shall be administratively attached to the office of the auditor. The task force shall consist of three representatives appointed by the speaker of the house of representatives, three senators appointed by the president of the senate, one representative of the governor's office, and one representative of an appropriate federal agency to be selected by Hawaii's congressional delegation; provided that the task force may enlist other members, including representatives of entities, who have an interest and expertise in native Hawaiian issues. The office of Hawaiian affairs, constitutionally and statutorily, designated as the official representative of the Hawaiian people, shall serve formally as an equal partner with the task force in conducting community forums.

SECTION 3. (a) The task force and the office of Hawaiian affairs shall collaborate to determine presentation content and means of delivery at community forums. The task force and office of Hawaiian affairs will assume responsibility for travel and accommodation expenses for their respective representatives.

(b) Records of the task force shall be subject to chapter 92F.

SECTION 4. The task force and office of Hawaiian affairs shall address and resolve the matter of just payment with special focus on:

(1) The rationale in enacting section 10-13.5, HRS, which has and continues to foster questions of fairness with respect to twenty per cent payment on revenues largely from capital improvements to which OHA made no contribution. Fairness would appear to dictate an amendment to section 10-13.5, Hawaii Revised Statutes;

(2) The need to update the ceded lands inventory or its applicability in determining a resolution, given the accuracy of land valuation figures, as well as lease rents based at times on overall economic incentives rather than actual land value and percentage of gross receipts; and the prohibitive costs, not so much for updating the inventory but for the appraisals and the time required to do so. Absolute requirement for and reliance on the inventory could mean a delay in resolution for many, many years;

(3) In the absence of a useable ceded lands inventory, the standards or criteria to determine payment value;

(4) Exempting from payment, ceded land used for "sovereign" purposes, e.g., public schools, including the University of Hawaii, state hospitals, and public rental housing projects;

(5) A one-time settlement of lands and money, or both, with federal government participation, together with an examination of the federal government's responsibilities; and

(6) Any other matter deemed relevant by the task force and office of Hawaiian affairs.

The legislature finds that the office of Hawaiian affairs is immeasurably advancing its cause through increased professionalism in the overall conduct of its business and the meaningful educational, health, and other programs which will result in the betterment of the Hawaiian people.

SECTION 5. The ceded lands resolution task force in partnership with the office of Hawaiian affairs shall submit its findings and recommendations to the legislature prior to twenty days before the convening of the regular session of 2004. The task force upon submission of its findings and recommendations shall cease to exist.

SECTION 6. This Act shall take effect upon approval.