RELATING TO THE PUBLIC LAND TRUST WORKING GROUP.

SB1600

THE SENATE

S.B. NO.

1600

THIRTY-THIRD LEGISLATURE, 2025

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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The
legislature finds that in Act 226, Session Laws of Hawaii 2022, (Act 226),
establishing the public lands trust working group (PLTWG), the legislature
found the following:

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"[I]t must set
right and fulfill its trust responsibilities to native Hawaiians, consistent
with governmental action across America to address injustices against
Indigenous Peoples.
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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)
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Account
for all ceded lands in the public lands trust inventory;

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

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(3)
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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).
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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.
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Twenty per cent of this gross amount is
approximately $78,900,000.

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The legislature finds
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 ago."

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The legislature further finds that Act 54,
Session Laws of Hawaii 2011, (Act 54) mandates 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
(PLTIS) to satisfy the requirements of Act 54.
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The PLTIS is a GIS-based system that aims to be a complete inventory of
all state- 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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In order to meet these goals, each state and
county agency must submit comprehensive lists of their land and encumbrance
inventories.

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The legislature further finds that Act 226
assigned the PLTWG specific statutory responsibilities as follows:

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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 PLTWG requested in
writing to all state agencies that hold title to, maintain management control
of, or otherwise use ceded lands, to provide information, data, documents, and
maps to ensure that the agency completely and accurately identified and
reported to the department of land and natural resources the following:

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(1)
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All
ceded lands parcels for the purpose of an inventory; and

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(2)
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All
income and proceeds collected or received from the public land trust.

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The legislature further finds that the
PLTWG has been informed that the last financial review by an outside
independent accounting firm of the pro rata share of income and proceeds from
the public land trust due annually to the office of Hawaiian affairs was the
fiscal year 2015-2016 financial review initiated by the office of Hawaiian
affairs.
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At that 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 PLTWG found that there has not been a new
financial review since fiscal year 2015-2016.
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The 2016 financial review cost $145,404.

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The PLTWG has been further informed that
current annual reporting by state agencies to the department of land and
natural resources is self-reported and is not audited nor reviewed for accuracy
by the department of land and natural resources.
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This annual reporting is for the purpose of
the preparation of the annual accounting of all receipts from lands described
in section 5(f) of the Admission Act, pursuant to Act 178, Session Laws of
Hawaii 2006 (Act 178 report).

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

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The implementation of the PLTIS informed
all state and county agencies that hold title to land that they must submit
their entire land inventory, regardless of the public land trust status,
whether or not there are any encumbrances on the land, and whether or not
revenue is being generated on the land.
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The goal was to have all state- and county-owned land represented in the
PLTIS.
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All state and county agencies
must submit encumbrances that they have issued over state- and county-owned
land, regardless if they hold title to that land or not.
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This includes all encumbrances, including but
not limited to leases, permits, right-of-entries, and easements issued over
state- and county-owned land represented in the PLTIS, regardless of whether
they generate revenue.

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Like the reporting to the department of
land and natural resources on public land trust revenues, the PLTIS 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 departments and counties to regularly update data in
the system.
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Updates are also based on
self-reporting.
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Independent third-party
professionals are needed to evaluate this practice.

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The PLTWG has been informed that state
agencies use a "rule of thumb" to determine whether a parcel is
ceded.
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When the parcel is more than
fifty per cent ceded land, it is categorized as ceded.
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The PLTWG cannot determine whether this
disadvantages the calculation of the office of Hawaiian affairs' pro rata
share.
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Therefore independent third-party
professionals are needed to evaluate this practice.

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The PLTWG has also been informed that there
are many parcels without tax map key numbers in the PLTIS, including submerged
lands, which are generally considered public trust lands.
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Independent third-party professionals are
needed to evaluate how to include these parcels so that the PLTIS contains the
complete and accurate inventory.

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The PLTWG has been informed that the lands
under federal jurisdiction are not included in the PLTIS 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 its annual Act 178 report.

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To the knowledge of the PLTWG, there has
been no third‑party independent audit, review, or evaluation of the
completeness and accuracy of the PLTIS 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 PLTIS with the data in the Act 178
report.

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The PLTWG has determined after research
that the services of a third-party independent consultant, or consultants, with
the necessary financial, accounting, and land inventory expertise will be
appropriate to address the concerns that have been raised regarding the
completeness and accuracy of the PLTIS to complete its objectives under Act
226.

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Based on the amounts expended by the office
of Hawaiian affairs' 2016 financial review and the creation and launch of the
PLTIS, which was $495,786, the PLTWG has estimated that approximately
$1,000,000 is required for the retention of third‑party independent
professionals.

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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 $1,000,000 or so much thereof as may be necessary for fiscal year
2025-2026 and the same sum or so much thereof as may be necessary for fiscal
year 2026-2027 for the hiring of necessary staff, purchasing of equipment, and
retention of professional services which are unique.
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Accordingly, purchases made with funds
appropriated by this Act shall be exempt from chapter 103D, Hawaii Revised
Statutes.

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The sums

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, 2025.

INTRODUCED BY:

_____________________________

Report Title:

OHA;
Public Land Trust Information System; Public Land Trust Working Group;
Appropriations

Description:

Appropriates
funds to the Office of Hawaiian Affairs to hire necessary staff, purchase
equipment, and retain 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.