RELATING TO THE PUBLIC LAND TRUST WORKING GROUP.

HB1917

HOUSE OF REPRESENTATIVES

H.B. NO.

1917

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO THE PUBLIC LAND TRUST WORKING GROUP
.

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

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SECTION
1.
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In Act 226, Session Laws of Hawaii
2022 (Act 226), which established the public land trust working group, the
legislature stated in relevant part:

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It is incumbent upon the legislature to
enact legislation that upholds its trust responsibilities and duty of care to
native Hawaiians to:

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(1)

Account
for all ceded lands in the public lands trust inventory;

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(2)

Account
for all income and proceeds derived from the public land trust; and

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(3)

Transfer
the full twenty per cent pro rata share of income and proceeds from the public
land trust annually to the office of Hawaiian affairs (OHA) for the betterment
of the conditions of native Hawaiians.

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The genesis and source of the State's
public land trust responsibility to native Hawaiians are the historical events
that led to the illegal overthrow of the Kingdom of Hawaii; the transfer of
approximately 1,800,000 acres of crown, government, and public lands to the
United States under the 1898 Joint Resolution of Annexation without the consent
of and without compensation to the native Hawaiian people or their sovereign
government; the admission of Hawaii as a state of the Union in 1959, with the
explicit trust responsibility and requirement in section 5(f) of the 1959 Admission
Act that one of the five purposes of the public land trust is that the income
and proceeds from the public land trust are to be used "for the betterment
of the conditions of native Hawaiians"; and the 1978 Constitutional
Convention's recognition that native Hawaiians are one of the beneficiaries of
the public land trust and the creation of OHA to manage and administer the
specific allocation of "all income and proceeds from that pro rata portion
of the [public land] trust . . . for native Hawaiians" (Article XII,
section 6, of the Hawaii State Constitution).
�

The United States and the courts have consistently affirmed the trust
nature of the government and crown lands, including large tracts of ceded lands
used for military or other purposes under federal control.

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In 1959, as a condition of its admission
into the Union, the State of Hawaii agreed to hold certain lands granted to the
State by the United States in a public trust for five purposes delineated in
section 5(f) of the Admission Act, which provides in relevant part:

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The
lands granted to the State of Hawaii by subsection (b) of this section and
public lands retained by the United States under subsections (c) and (d) and
later conveyed to the State under subsection (e), 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 [(1)] for the support of the
public schools and other public educational institutions, [(2)]
for the
betterment of the conditions of native Hawaiians, as defined in the Hawaiian
Homes Commission Act, 1920, as amended
, [(3)] for the development of farm
and home ownership on as widespread a basis as possible [(4)] for the making of
public improvements, and [(5)] for the provision of lands for public use.
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Such 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 said 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.

(
Emphasis added
.)

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In 1978, the people of Hawaii affirmed the
State's trust obligation to native Hawaiians by ratifying constitutional
amendments from the Constitutional Convention, including article XII, sections
4, 5, and 6, of the Hawaii State Constitution, which established OHA and
charged it with managing income and proceeds from the public land trust for the
benefit of native Hawaiians.
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Article XVI,
section 7, of the Hawaii State Constitution required the State to enact
legislation to comply with its trust obligations.
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Thus, in 1979, legislation, codified as
chapter 10, Hawaii Revised Statutes, set forth the purposes of OHA and
described the duties of its trustees.

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In September 1981, an initial land
inventory by the department of land and natural resources listed approximately
1,271,652 acres, falling woefully short of its duty to provide a complete
inventory of the public land trust lands.
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Additionally, the state land information management system does not
include all lands held by all state entities.

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Act 273, Session Laws of Hawaii 1980,
enacted section 10-13.5, Hawaii Revised Statutes, to implement OHA's pro rata
share and required that OHA receive "[t]wenty per cent of all funds
derived from the public land trust[.]"
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This legislative directive addressing the constitutional mandate has led
to a series of lawsuits and legislative enactments concerning OHA's
constitutional pro rata share of the public land trust.
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The State and OHA have labored to resolve the
political question of the statutory pro rata share of income and proceeds
derived from the public land trust, and payment to OHA.

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Act 178, Session Laws of Hawaii 2006,
affirmed the State's trust obligation to native Hawaiians by requiring that the
department of land and natural resources provide an annual accounting of
revenue‑generating public trust lands and the amounts derived from those
lands to the legislature.
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The measure
also set a fixed amount of $15,100,000 from the pro rata share of the public
land trust income and proceeds due to OHA for the betterment of the conditions
of native Hawaiians until further action is taken by the legislature for this
purpose.

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Act 15, Session Laws of Hawaii 2012, (Act
15) was enacted to address past-due amounts, which accumulated during the
period between November 7, 1978, up to and including June 30, 2012, of income
and proceeds from the public land trust owed to OHA by implementing an
agreement between the State and OHA for the State to convey certain lands in
Kakaako, Oahu, to OHA valued at approximately $200,000,000.
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Act 15 did not, however, address the State's
constitutional obligations relating to OHA's twenty per cent pro rata share of
the income and proceeds from the public land trust generated after June 30,
2012.
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Notably, a 2015-2016 financial
review initiated by OHA found that the minimum amount of total gross receipts
from sources that OHA has historically claimed was approximately $394,322,163
in the fiscal year 2015-2016.
�
Twenty per
cent of this gross amount is approximately $78,900,000.

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In 2022, the legislature found that to
uphold its constitutional trust obligation and duty to native Hawaiians, it
must enact another legislative measure in light of the information, data, and
facts provided to the legislature by state agencies since the enactment of Act 178,
Session Laws of Hawaii 2006, more than a decade earlier.

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Act 226 was enacted to:

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(1)
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Increase the office of Hawaiian affairs'
interim annual share of the income and proceeds of the public land trust
beginning in fiscal year 2022-2023 from $15,100,000 to $21,500,000;

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(2)
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Appropriate $64,000,000 to the office of
Hawaiian affairs; and

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(3)
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Establish a public land trust working group
(working group) to determine the pro rata share of income and proceeds from the
public land trust due annually to the office of Hawaiian affairs after June 30,
2022.

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Conference
Committee Report No. 250-22 filed with Senate Bill No. 2021, S.D. 1, H.D. 2,
C.D. 1, which would later be enacted as Act 226, further found that "the
past-due sum owed to the Office of Hawaiian Affairs for any and all
underpayments of the pro-rata portion of the income and proceeds of the Public
Land Trust for the period from July 1, 2012, to June 30, 2022, is $64,000,000,
and that this sum is intended to represent the cumulative impact of an
inflation adjustment for that period."

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The
legislature finds that Act 15 and Act 226 addressed past-due amounts of income
and proceeds from the public land trust owed to the office of Hawaiian affairs that
accumulated during the period between November 7, 1978, up to and including
June 30, 2022.

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The
legislature finds that Act 54, Session Laws of Hawaii 2011 (Act 54), mandated
the establishment of a comprehensive information system to inventory and
maintain information about the lands of the public land trust as described in
section 5(f) of the Admission Act and article XII, section 4 of the state
constitution.
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The department of land and
natural resources worked with a consultant to develop a public land trust
information system (information system) to satisfy the requirements of Act
54.
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The information system will be a
geographic information system that is intended to provide a complete inventory
of all state-owned and county-owned lands, as well as a complete inventory of
encumbrances issued by state and county agencies over these lands.
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To meet these goals, each state or county
agency must submit comprehensive lists of its land and encumbrance inventories.

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The
legislature further finds that the working group established under Act 226 was
assigned to:

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(1)
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Account for all ceded lands in the public land
trust inventory;

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(2)
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Account for all income and proceeds from the
public land trust; and

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(3)
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Subsequently determine the twenty per cent pro
rata share of income and proceeds from the public land trust due annually to
the office of Hawaiian affairs for the betterment of the conditions of Native
Hawaiians.

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In
December 2023, the working group submitted to all state agencies that hold
title to, maintain management control of, or otherwise use ceded lands, a
written request to provide information, data, documents, and maps to ensure
that those agencies have completely and accurately identified and reported to
the department of land and natural resources:
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(1) all ceded land parcels for the purpose of an inventory; and (2) all
income and proceeds collected or received from the public land trust.

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The
working group has been informed that the last financial review by an outside
independent accounting firm of the pro rata share was the fiscal year 2015-2016
financial review initiated by the office of Hawaiian affairs.
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At the time, the financial review identified
total gross receipts from historically claimed public land trust revenue
sources in the minimum amount of approximately $394,322,163 in the fiscal year
2015-2016.
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Twenty per cent of this gross
amount is approximately $78,900,000.
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The
working group found that there has been no new financial review since the
2015-2016 financial review.
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The 2016
financial review cost $145,404.

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The
legislature notes that Act 178, Session Laws of Hawaii 2006 (Act 178), requires
the department of land and natural resources, with the cooperation of the
department of budget and finance and any other state department or agency that
uses or manages public lands, to provide an accounting of all receipts from
lands described in section 5(f) of the Admission Act for the prior fiscal
year.
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The working group has been
informed that state agencies' self-reported information for the purposes of
these reports is not audited or reviewed for accuracy by the department of land
and natural resources.

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The
working group has been informed that work began on the process to procure a
consultant for the information system after the enactment of Act 54 and that
the development of the information system began in 2012 and the information
system was launched in October 2018.
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Act
54 appropriated up to $360,000 from a land conservation fund for the work by an
outside independent consultant.
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The
final amount for the creation of the information system and training was
$340,382.

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As part of
the implementation of the information system, all state and county agencies
that hold title to land are required to submit their entire land inventory,
regardless of the public land trust status, regardless of whether there are any
encumbrances on the land, and regardless of whether revenue is being generated
on the land.
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All state and county
agencies are additionally required to submit encumbrances that they have issued
over state-owned and county-owned land, regardless if they hold title to that
land or not and regardless if they were revenue generating.
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This includes all encumbrances, including
leases, permits, right‑of‑entries, and easements.
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The goal was to have all encumbrances issued
over state-owned and county‑owned land represented in the information
system.

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As with
the reporting to the department of land and natural resources on public land
trust revenues, the information system is also based on self-reporting by state
agencies and the counties.
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There are
some disclaimers about the information.
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The department of land and natural resources has encouraged all state
and county departments to regularly update data in the system.
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Updates, however, are also based on
self-reported information.
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The
legislature believes that independent third‑party professionals need to
evaluate this practice.

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The
working group has been informed that when a parcel consists of both ceded and
nonceded lands, the state agencies use a "rule of thumb" to determine
whether a parcel is ceded or not.
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When
more than fifty per cent of a parcel is ceded land, it is categorized as
ceded.
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The working group has been unable
to determine whether this is detrimental to the calculation of the office of
Hawaiian affairs' pro rata share.
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The
legislature believes that independent third-party professionals need to
evaluate this practice.

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The
working group has been informed that there are many parcels without tax map key
numbers in the information system and therefore these parcels may not be
included in the system.
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This is
particularly so for submerged lands, which are generally considered public land
trust lands.
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The legislature believes
that independent third-party professionals need to evaluate how to include
these parcels so that the information system contains the complete and accurate
inventory.

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The
working group has been informed that the lands under federal jurisdiction are
not included in the information system and that the counties do not report any
of the revenue from the public land trust to the department of land and natural
resources for the purposes of the annual accounting required pursuant to Act
178 (Act 178 report).

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To the
knowledge of the working group, there has been no third-party independent
audit, review, or evaluation of the thoroughness and accuracy of the
information system or the current reporting by agencies for the purpose of
preparing the annual Act 178 report, nor has there been any analysis or
comparison of the data in the information system with the data in the Act 178
reports.

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The
working group has conducted research and has determined that the services of
one or more third-party independent consultants with the necessary financial,
accounting, and land inventory expertise will be appropriate to address the
concerns that have been raised regarding the thoroughness and accuracy of the
information system, to ensure that the working group completes its objectives
under Act 226.

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Based on
the amounts expended for the office of Hawaiian affairs' 2016 financial review
and the creation and launch of the information system, which cost $495,786, the
working group has estimated that approximately $1,000,000 is needed for the
retention of third-party independent professionals.

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Accordingly,
the purpose of this Act is to appropriate moneys to the office of Hawaiian
affairs to hire necessary staff and purchase equipment and professional
services on behalf of the public land trust working group.

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SECTION
2.
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There is appropriated out of the
general revenues of the State of Hawaii the sum of $
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or so much thereof as may be
necessary for fiscal year 2026-2027 to hire necessary staff and purchase
equipment and professional services on behalf of the public land trust working
group; provided that in obtaining services by uniquely qualified persons, the
office of Hawaiian affairs shall be exempt from chapter 103D, Hawaii Revised
Statutes.

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The sum
appropriated shall be expended by the office of Hawaiian affairs for the
purposes of this Act.

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SECTION 3.
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This Act shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

Public
Land Trust Working Group; OHA; Public Land Trust; Appropriation

Description:

Appropriates
moneys to the Office of Hawaiian Affairs to facilitate the hiring of necessary
staff and the purchase of equipment and professional services on behalf of the
public land trust working group.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.