Ka Wai Ola - Office of Hawaiian Affairs, Volume 7, Number 3, 1 March 1990 Edition 02 — STEP TO FULL ENTITLEMENT [ARTICLE+ILLUSTRATION]

STEP TO FULL ENTITLEMENT

lands and lost sovereignty are the basis for yet-unan-swered Native Hawaiian claims against the national government . The Disputes Over the OHA Trust As enacted by the Legislature, the native Hawaiian tmst required that 20 percent of all the ineome from the 5(b) and (e) lands would be transferred to OHA for the betterment of the conditions of native Hawaiians. As we quickly leamed, what seemed simple was not. First, neither the state nor the federal govemment had maintained land records whieh identified and segregated properties retumed to the state by their Section 5 designation. A three-year effort by the Department of Land and Natural Resources resulted in a public lands inventory whieh identified the properties under their jurisdiction by Section 5 categories. Other lands whieh had been acquired by the state outside the provisions of the Admission Act were also catalogued and assigned a code. Lands outside the jurisdiction of DLNR, however, were more difficult to inventory. The "X" lands for example now identify former privately-owned properties acquired for public purposes by the state through condemnation or purchase. An example of this type of land is the former Damon Tract property whieh was condemned and used for the construction of the Honolulu Intemational Airport. These lands were outside the defined OHA corpus of 5(b) and (e) lands — but was there an implied-trust connection created by the inseparability of airport activities conducted on the abutting 5(b) lands used for the airport runways? MOLOKAI

Further complicating the issue of airport revenues, the Department of Transportation contended that it has prior bond and funding constraints whieh were superior to the OHA tmst. Moreover, DOT asserted that even if there were a native Hawaiian tmst obligation, it would only apply to "net" and not "gross" departmental proceeds. Another difficulty was inherent in the designated "Z" lands. In what many considered a virtual amendment to Section 5(e) of the Statehood Act, Public Law 88-233 was passed by Congress in 1964. By the terms of this law, the retum of surplus federal lands to the state continued, regardless of the previous five-year deadline imposed in 5(e). However, because this federal statutory history was not explicitly recognized in the OHA trust description, there was disagreement regarding the inclusion of "Z" lands and their ineome in the OHA tmst. Frustrated by the struggle to win either clarification or eomplianee with the trust, OHA sued the state, selecting the Department of Transportation as the focus of litigation because of the size and scale of its operations on public lands. As stated earlier, the state Supreme Court ruled in 1987 that the issues surrounding the OHA trust were political and could not be redressed in court. Reacting to the OHA suit, the state Legislature did authorize a final legislative auditor's report to address and inventory land categories within DOT. This same report also contained recommendations for resolution whieh only complicated an already complex subject. From the experience of those 10 years, however, we have isolated and are now addressing the main areas of dispute or questions clouding the tmst. Clarification of the Chapter 10 Entitlement The answers to those questions form the heart and substance of our report and the proposed settlement. Onee enacted by the state Legislature, this resolution will establish a clear and enforceable tmst entitlement

for our native Hawaiian beneficiaries of 50 percent or more blood quantum. With the concurrence and support of Govemor John Waihee and the executive branch, eompanion House and Senate bills clarifying the Chapter 10 tmst entitlement are now before the state Legislature for ratification. These clarifications are best understood as answers to questions regarding the current entitlement. First: • Whieh lands, under what state departmental jurisdictions, are to be identified as the source of trust ineome? We have agreed that the ineome from all 5(b), (e), and "Z" lands — with the sole exception of the Hawaiian Homes tmst lands — were and are subject to the native Hawaiian tmst regardless of departmental jurisdiction. Thus, these lands — whether administered by the Department of Land and Natural Resources, T ransportation, Agriculture, the University of Hawai'i, or any other department of the State — are subject to the 20 percent of ineome entitlement. Second, in response to the question: • What kind or kinds of ineome from these lands are subject to the 20-percent pro rata share of the trust? Revenues from the 5(b), (e) and "Z" lands were and are segregated in two categories — sovereign or proprietary incomes. Sovereign revenues are those whieh the state generated as an exercise of govemmental or sovereign power -these monies are not subject to the OHA trust. Among the revenues included in this sovereign category are personal and corporate ineome taxes, fines collected for violations of state law, and federal grants ") or subsidies received by the state for public programs.

Proprietary ineome — those funds whieh are generated from the use or disposition of the identified £ public lands — is subject to the OHA tmst. Among the p revenues included in this proprietary category are \ rents, leases and licenses for the use of 5(b), (e) and "Z" lands, minerals and runway landing fees. As another example, as now defined, OHA will receive 20 percent of the rents paid for faculty housing at the Manoa campus, but not 20-percent of student tuitions. Method of Payment • Now that those questions are answered, how will the clarified entitlement be honored? We have agreed to address this question both retroactively and prospectively. In response to the "past due" OHA entitlement, we will be guided by the following process: 1. The identification of lands will be based on the current DLNR inventory of public lands and the ehain of title inventory conducted for lands under the jurisdiction of the Department of Transportation and eontained in the Legislative Auditor's Report of 1986; 2. The retroactive applieahon of the clarified entitlement will — subject to audit and verification of sovereign or proprietary revenue source — be calculated from the effective date of the 20-percent formula on June 16, 1980, to June 30, 1991; 3. The Department of Budget and Finance will be responsible for preparing and presenting actual year-

by-year incomes for this period to determine the full amount due; and 4. The allowed statutory limit of interest — 6 percent through June 30, 1982 and 10 percent for the years thereafter — will be paid and compounded annually on the actual amounts due. The f inal computation of amount due is expected to be completed and available forpublic review during this legislative session. The computation of this "past due" or retroactive clarification of the native Hawaiian tmst, however, will not mean that the eheek will be in the mail on July lst. Rather, we have agreed to and are seeking legislative authorization to negotiate a settlement package whose dollar value may be reflected by a selection of or combination of land and money. What must be clearly stated and understood is that the legal basis for, and this clarification of, the OHA tmst describes a percentage of ineome. Especially as it affects the retroactive resolve, the law only asserts a beneficiary interest in ineome from specified land. The Hawaiian claims for land and federal recognition ean only be addressed by the national government. Those claims are a debt of national honor whieh cannot and should not be borne solely by the citizens of Hawai'i, but by all the people of the United States. Our "Blueprint" or operation Ea outlines the overwhelming legal and moral basis for this national obligation and the return of lands as an entitlement. As a method of payment, however, the exchange of dollar value for land value has been agreed to by the govemor and your committee. To allow for the fullest expression of this potential draw-down on land as a means of payment, we have further agreed to leave the submittal of actual cash due until after land selections are completed. This process will be submitted to the 1991 Legislature. However, in recognition of the immediate impact of the entitlement clarification when enacted, the bills now before the Legislature alsp contain an appropriations section for $7.2 million to meet the expected increase over current OHA tmst ineome. Another $500,000 request for the Office of State Planning and other state departments charged with the responsibility for assessing and assuring payment is included in the bill.

The agreement between the Office of Hawaiian Affairs and the state ofHawai'i for native Hawaiian entitlements through OHA is the first step toward complete settlement ofall entitlement claims. Still to eome are agreements on entitlements for all Hawaiians, and Hawaiian Home Lands past-dueen-titlements. Also pending is action to obtain federal restitution for the overthrow of the Hawaiian Kingdom in 1893, and the return of and compensation for former crown, public and government lands taken fay the federal government at annexation in 1898.