Ka Wai Ola - Office of Hawaiian Affairs, Volume 20, Number 1, 1 Ianuali 2003 — OHA sends demand letter to Governor Lingle for immediate restoration of ceded lands revenue [ARTICLE+ILLUSTRATION]

OHA sends demand letter to Governor Lingle for immediate restoration of ceded lands revenue

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December 6, 2002 The Honorable Linda Lingle Governor, State of Hawai'i State Capitol 415 South Beretania Street, 5th Floor Honolulu, Hawai'i 96813 Re: Past Due Payments for Use of Ceded Lands Aloha Governor Lingle: On November 1, 2002, this office sent thenGovernor Cayetano a demand that the State immediately remit the sum of $10.3 million as payment for revenues received by the State from the public land trust during the period from July 1, 2001 through September 30, 2002. That demand was based upon payments historically made by the State to the Office of Hawaiian Affairs ("OHA") irrespective of the existence of Act 304, 1990 Session Laws ("Act 304"). As you are aware, Mr. Cayetano rejected OHA s demand, contending that payments to OHA for its pro rata share of revenues from the public land trust is dependent upon action by the Legislature. Mr. Cayetano*s response was consistent with his initial reaction upon learning of the Supreme Court s September 12, 2001 decision in OHA vs. State of Hawai'i. On September 23, 2001, the Honolulu Star- ... . . th..

Bulletin, interviewing Mr. Cayetano concerning the effect of the Court's opinion, quoted him as saying that Act 304 "has no meaning now." According to the Honolulu Star-Bulletin article, he said, "We're [the State] going to be using that money, and we're going to use it now." We believe that Mr. Cayetano's response to our and his reaction to the Court's decision does not comport with the State's trust obligation with respect to revenues from the public land trust. That obligation, of cōurse, is owed in part to the beneficiaries of OHA's mandate - the Hawaiian people. But the State's obligation is far larger than just to benefit native Hawaiians. The Admission Act, whieh created the public land trust, transferred the lands whieh eomprise the pubUc land trust into the care of the State as trustee for five designated purposes. Not one thing - neither an act of Congress nor the State legislature nor any court decision - has done anything to diminish or detract from that overarching obUgation offered to and voluntarily accepted by the State"of Hawai'i. Not only has the State abrogated its responsibility to native HawaUans by refusing to permit the transfer of a Pro rata share of pubUc land trust revenues into the trust fund administered by OHA, it has also refused to aeeoum for the balance of those revenues to aU the voters and citizens of the State. Instead, the State has apparently pennitted aU of these trust revenues to flow into the general fund of the State without regard to its duty as the revenues' trustee, an act manifestly ineonsistent with the State's role as guardian of those funds and in disregard of the most fundamental of trust principles - the prohibition against self-dealing by the trustee. The decision of the Supreme Court in OHA vs. State of Hawaii reinforced rather than diminished the obUgation of the State to OHA. In concluding its opinion, the Court stated: Given our disposition of this case, and the context of its complexity, we would do a disservice to aU parties involved if we did not acknowledge that the State's obUgation to native Hawauans is firmly estabUshed in our constitution. How the State satisfies that constitutional obUgation requires poUcy decisions that are primarily within the authority and expertise of the legislative branch. As such, it is incumbent upon the leg-

islature to enact legislation that gives effect to the right of native Hawaiians to benefit from the ceded lands tnist. Although this court cannot and wiU not judicially legislate a means to give effect to the constitutional rights of native Hawaiians, we will not hesitate to declare unconstitutional those enactments that do not comport with the mandates of the constitution. [Citations omitted] It is apparent from this language that the Court, whUe recognizing the The difficulty its interpretation of Act 304 would create, intended to signal unequivocaUy to the State that its solemn trust obUgation to OHA and its beneficiaries remains intact. Nothing Ui the Court's decision negates the governor's authority nor dimimshes the State s obUgation to remit to OHA its pro rata share of revenues derived from the pubUc land trust. Contrary to Mr. Cayetano's assertion that legislation is requfred, section 37-40, HawaU Revised Stamtes, provides that with respect to trust funds, State agencies may make expenditures for trust purposes without an appropriation or aUotment. It further provides that no trust funds estabUshed by law needs to be reappropriated annuaUy. The special status of the revenues derived from the pubUc land trust is clear. Further, the Court's recognition of that obUgation is not unique. It is virtuaUy undisputed that the Admission Act makes the State the trustee and steward of the revenues generated by the pubUc land trust. In an opinion by the Attorney General to then-Governor Cayetano, the Attorney _ . . . , . f * nihiio tViP» mav

General advised Mr. Cayetano that the State aUenate ceded lands, the proceeds of any such aUenation, whether measured in money or land, must be treated as trust property and safeguarded by the State accordingly. A.G. Opinion No. 95-03, July 17, 1995. SimUarly, in an address to the Pearl City Neighborhood Board on September 27, 2001, Representative Noboru Yonamine reported on the Supreme Court s invaUda tion of Act 304 and acknowledged that the State has the obUgation to pay OHA for the State's "use of the ceded lands." Pearl City Neighborhood Board No. 21, Minutes of Regular Meeting, September 27, 2001. Perhaps most significant is the analysis of the legislature's own staff. On July 29, 2002, the Legislative Reference Bureau ("LRB") pubUshed LRB Notes No. 02-03. In that release, the LRB summanzed the legislature's view of the history behind the issue of revenues from the pubUc land trust. In discussing the effect of the Supreme Court's decision in OHA vs. State of Hawaii and its invaUdation of Act 304, the LRB wrote: Q7: Did the court ruUng invaUdating Act 304 extinguish the State's need to give part of the ceded land revenues to native Hawaiians? A7: No. The court did not invaUdate the State's obUgation to native Hawaiians. The court merely found a conflict between state and federal law and appUed Act 304's own standards to void that Act. The court specifically acknowledged that the State's obUgation to native Hawauans is firmly estabUshed in our constitution. The court emphaticaUy stated that it would not hesitate to declare unconstitutional any subsequent state legislation that does not comport with the constitutional mandates that gives native Hawauans the right to benefit from the ceded lands trust. [Bold in original; itaUcs suppUed] The State*s obUgation to OHA's beneficiaries is simple and clear; and since July 1, 2001 has been disregarded by the State despite the acknowledgment of that obUgation by the judiciary and the legislature. OHA's demand for the immediate remittance of $10.3 milUon represents only that portion of the revenues from the pubUc land trust that the State bas admitted, by its past practice and conduct, that it owed t0 OHA's beneficiaries. Because the fuU extent of the pubUc land trust and the revenues derived from it have not been determined, it remains OHA's position that

this sum represents merely a portion of the pro rata share of the pubUc land trust revenues whieh should have been transferred to OHA during the period from July 1, 2001 through September 30, 2002. The obUgation of the State is founded in the 1898 Newlands Resolution [the "Annexation Resolution"], reaffirmed in the Organic Act of 1900 and squarely placed in the hands of the State in 1959 through the Admission Act. The State's trusteeship over the pubUc trust and the revenues derived ffom them, as weU as the estabUshment of OHA's beneficiaries as among those who are intended specificaUy to benefit from the pubUc land trust, were affirmatively accepted by the State through its constitution and through the enactment of chapter 10, HawaU Revised Statutes, as amended. So, wlūle the amount may be subject to dispute, the existence and non-fulfillment of the State s obUgation is not subject to dispute. OHA's demand is based upon sums historicaUy paid by the State into the trust fund administered by OHA. The method used by the State to calculate those historieal payments have never been disclosed. Therefore, the only data upon whieh OHA ean base its demand are the historical payments themselves. If those sums do not accurately reflect OHA's pro rata share of the revenues generated from the pubUc lands trust during the period in question, we urge the State to provide us with sufficient information to clarify what the appropriate amount should be. As we advised your predecessor, satisfaction of this

demand would only constitute a partial settlement of the dispute OHA has with the State's accounting for the trust assets. WhUe OHA remains open to continued discussion and the possibffity of a negotiated resolution of aU outstanding disputes, it remains concerned by the State's disregard of to its trust obUgations. OHA remains resolute in its determination to ensure that the State properly exercises its trust responsibiUties and to hold the State accountable for aU of the revenues generated by the pubUc land trust, past, present and in the future. During the November 1, 2002 Gubernatorial Candidates' Forum sponsored by OHA, you pubUcly reacted to our demand letter to then-Governor Cayetano by stating that you would direct the immediate transfer of funds to OHA's trust fund as a faster alternative to a partial resolution of OHA's claims. We look forward to this. We look forward to the immediate payment of $10.3 miUion, whieh represents the undisputed amounts due for the period July 1, 2001 through September 30, 2002. We are requesting that OHA's pro rata share of revenues from the pubUc lands trust henceforth be made on a quarteriy basis. This request does not represent a reUnquishment of OHA's rights to pursue the disputed amounts of its pro rata share of revenues from the pubUc lands trust. On behalf of OHA and its beneficiaries, I extend our sincere aloha and our hope that your administration wiU carry out your pubUc commitment to resolving the issue of revenues from the pubUc land trust as weU as Hawauan governance issues. l^nknln o nill

Haunani ApoUona Chairperson, Board of Trustees Office of Hawaiian Affairs ee: Board of Trustees ®