Ka Wai Ola - Office of Hawaiian Affairs, Volume 14, Number 4, 1 April 1997 — Why is Act 304 so important? [ARTICLE]

Why is Act 304 so important?

Act 304 was the 1990 Legislature's solution to court battles between OHA and the state over OHA's share of ceded land revenues. This act established a formula to calculate the ineome due to OHA for native Hawaiians from use of the ceded lands in the Public Land Trust. It also established the amoimt the state owed native Hawaiians for 15 years of uncompensated use of the ceded lands plus interest. Act 304 clarified whieh specific lands were subject to the OHA trust. It clarified that all ceded lands as described in Sections 5(c), 5(d), 5(e) of the Admissions Act were included. Additional clarification was agreed to with the inclusion of those ceded lands returned to the state by Public Law 88-233. Act 304 affirmed that the ceded submerged Iands were conveyed by Section

5(b). Act 304 clarified that "departmental jurisdiction" over these lands did not affect the applieahon of the OHA trust. Prior to Act 304, the state had asserted that onee ceded lands were no longer under the direct administrative control of the Department of Land and Natural Resources (DLNR), they were no longer subject to the OHA trust. The Act clarified that regardless of departmental jurisdiction, the trust entitlement applied. Thus, ceded lands under the administration of the departments of transportation, education, university, health, HHA, HFDC, and all others were subject to the trust. Prior to Act 304, the state had asserted that only land rents collected by DLNR continued on Page A3

What's Act 304? continued from A2 and water licen.se payments coIIected by the Department of Agriculture were subject to the trust. The Act clarified that the "gross proprietary incomes" from the identified lands were subject to the trust. "Sovereign incomes," or those monies generated by the exercise of governmental powers (for example, taxation), were not. Beyond the broad distinction between "sovereign" and "proprietary" incomes, the proprietary incomes were distinguished by whether such incomes were "aneilliary" or were inseparable from governmental services Iinked to sovereign exercise. For example, public education is a sovereign power and duty. The provision of school lunches was agreed to be an "ancilliary service" central to the mission of education. Thus, OHA does not receive trust ineome from the sale of school lunches. Resolved in a court ruling were questions about revenues from certain ceded lands. Circuit Court Judge Daniel Heely ruled 20 percent of revenues from the following operations are owed Hawaiians: • Duty Free Shoppers' (DFS) in Waikīki (Shoppers must piek up their purchases at the airport DFS location. The airport sits on ceded land.) • Hilo hospital • 67 low-ineome Hawai'i Housing Authority projects %