Shown verbatim: the complete text as captured from the official page posted by the Hawaii State Legislature, fetched 2026-08-29. Where this bill amends existing law, language marked for deletion in the official page appears here in brackets. This is the first conference draft. The official bill page.
THE SENATE S.B. NO. 903 THIRTY-THIRD LEGISLATURE, 2025 S.D. 2 STATE OF HAWAII H.D. 2 C.D. 1 A BILL FOR AN ACT RELATING TO HAWAIIAN AFFAIRS. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: SECTION 1. The legislature finds that Public Law 103-150, states, inter alia, that the Republic of Hawaii ceded 1,800,000 acres of crown, government, and public lands of the Kingdom of Hawaii, without the consent of or compensation to the Native Hawaiian people of Hawaii or their sovereign government, and that the indigenous Hawaiian people never directly relinquished their claims to their inherent sovereignty as a people or over their national lands to the United States. In Act 226, Session Laws of Hawaii 2022 (Act 226), which in part established the public land trust working group, the legislature stated in relevant part: "It is incumbent upon the legislature to enact legislation that upholds its trust responsibilities and duty of care to native Hawaiians to: (1) Account for all ceded lands in the public lands trust inventory; (2) Account for all income and proceeds derived from the public land trust; and (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. 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. 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: 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. 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.) 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. Article XVI, section 7, of the Hawaii State Constitution required the State to enact legislation to comply with its trust obligations. Thus, in 1979, legislation, codified as chapter 10, Hawaii Revised Statutes, set forth the purposes of OHA and described the duties of its trustees. 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. Additionally, the state land information management system does not include all lands held by all state entities. 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[.]" 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. 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. 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. 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. 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. 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. 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." In 2022, the legislature found that to uphold its constitutional trust obligation and duty to native Hawaiians, it needed to 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. Act 226 was enacted to: (1) 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; (2) Appropriate $64,000,000 to the office of Hawaiian affairs; and (3) 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. The legislature 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 Hawaii State Constitution. 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. The information system will be a geographic information system that is intended for 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. To meet these goals, each state or county agency must submit comprehensive lists of its land and encumbrance inventories. The legislature further finds that the working group established under Act 226 was assigned to: (1) Account for all ceded lands in the public land trust inventory; (2) Account for all income and proceeds from the public land trust; and (3) 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. In December 2023, the working group submitted to all state agencies that hold title to, maintain management control over, 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: (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. 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. 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 fiscal year 2015-2016. Twenty per cent of this gross amount is approximately $78,900,000. The working group found that there has been no new financial review since the 2015-2016 financial review. The 2016 financial review cost $145,404. 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. 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. 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. Act 54 appropriated up to $360,000 from a land conservation fund for the work by an outside independent consultant. The final amount for the creation of the information system and training was $340,382. 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. All state and county agencies are additionally required to submit encumbrances that they have issued over state-owned and county-owned land, regardless of whether they hold title to that land and regardless of whether they were revenue generating. This information includes all encumbrances, including leases, permits, right‑of‑entries, and easements. The goal was to have all encumbrances issued over state-owned and county-owned land represented in the information system. 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. There are some disclaimers about the information. The department of land and natural resources has encouraged all state and county departments to regularly update data in the system. Updates, however, are also based on self-reported information. The legislature believes that independent third‑party professionals need to evaluate this practice. 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. When more than fifty per cent of a parcel is ceded land, it is categorized as ceded. The working group has been unable to determine whether this method is detrimental to the calculation of the office of Hawaiian affairs' pro rata share. The legislature believes that independent third-party professionals need to evaluate this practice. The working group has also been informed that there are many parcels without tax map key numbers in the information system and therefore may not be included in the system. This situation is particularly so for submerged lands, which are generally considered public land trust lands. 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. The working group has been informed that 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). 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 report. 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. The legislature further finds that Act 304, Session Laws of Hawaii 1990, defined "revenue" for purposes of calculating the office of Hawaiian affairs' pro rata share of public land trust revenues. However, there continue to be longstanding disputes regarding the proper calculation of income and proceeds derived from the public land trust. The legislature also finds that chapter 10H, Hawaii Revised Statutes, recognizes the role of the office of Hawaiian affairs in facilitating conditions that support self-determination and nation-building for the Native Hawaiian people, as determined by Native Hawaiians themselves, without prescribing a particular form, structure, or pathway of governance. The legislature additionally finds that recent reductions in federal funding for programs that serve Native Hawaiians have increased the need for funds from the office of Hawaiian affairs' pro rata share of income and proceeds from the public land trust to ensure continuity of essential services. Therefore, the legislature determines that it is necessary to clarify revenue methodologies, support reconciliation efforts, and provide interim financial support while a comprehensive framework is developed. The legislature further finds that chapter 6K, Hawaii Revised Statutes, which established the Kahoʻolawe island reserve commission, provides a framework for the restoration, management, and eventual transfer of lands to a sovereign Native Hawaiian entity and reflects the State's recognition of Native Hawaiian self-determination and the return of land stewardship to Native Hawaiian people. Accordingly, the purpose of this Act is to: (1) Amend the membership and responsibilities of the public land trust working group established pursuant to Act 226, Session Laws of Hawaii 2022; (2) Require the public land trust working group to submit reports to the legislature, as follows: (A) By August 1, 2027, a first interim report regarding the Act 178 financial reporting and accounting; (B) By December 1, 2027, a second interim report regarding the public land trust inventory; (C) By June 1, 2028, a third interim report that includes a preliminary draft of findings and recommendations regarding Act 178 financial reporting and accounting and the public land trust inventory; and (D) By October 1, 2028, a final report that includes proposed legislation; (3) Require the office of Hawaiian affairs to submit certain findings and considerations to the legislature and provide administrative support to the working group in coordination with a third-party consultant; (4) Require the public land trust working group to evaluate and recommend a process by which the State may initiate and conduct negotiations with the office of Hawaiian affairs regarding a comprehensive public land trust reconciliation framework, to include: (A) Determining the nature of the revenues from the public land trust that constitute the pro rata share of the office of Hawaiian affairs, considering the definition of "revenue" previously enacted by section 3 of Act 304, Session Laws of Hawaii 1990; (B) Determining a methodology and formula for calculating the amounts necessary to fulfill the State's obligations relating to public land trust revenue claims from July 1, 2012; and (C) Determining the conditions under which the office of Hawaiian affairs may negotiate a master settlement with the State; and (5) Transfer, on a one-time basis, a portion of income and proceeds from the public land trust to the office of Hawaiian affairs. SECTION 2. Act 226, Session Laws of Hawaii 2022, is amended by amending section 3 to read as follows: "SECTION 3. (a) There is established a working group to: (1) Account for all ceded lands in the public land trust inventory; (2) Account for all income and proceeds from the public land trust; and (3) 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. (b) The working group shall be [comprised] composed of [six members, three of whom three shall be] the following: (1) Three members appointed by the governor [and three of whom shall be]; (2) Three members appointed by the office of Hawaiian affairs [board of trustees.]; (3) One member appointed by the president of the senate, who shall serve as an ex officio, nonvoting member; (4) One member appointed by the speaker of the house of representatives, who shall serve as an ex officio, nonvoting member; (5) One member of the senate appointed by the president of the senate, who shall serve as an ex officio, nonvoting member; (6) One member of the house of representatives appointed by the speaker of the house of representatives, who shall serve as an ex officio, nonvoting member; and (7) One non-governmental community member selected by the members appointed pursuant to paragraphs (1) through (6). All members shall meet some of the following qualifications: experience in financial accounting or auditing; experience in complex negotiations; expertise in Native Hawaiian history, governance, and legal entitlements; and demonstrated commitment to the Native Hawaiian community. The office of Hawaiian affairs shall select one of the members appointed pursuant to paragraph (2) to serve as the chairperson of the working group. (c) The working group, with the cooperation of any department or agency that uses, manages, or receives income, proceeds, or any other funds derived from the public land trust, shall prepare and submit a report of its findings and recommendations, including any proposed legislation and the amount it determines for the annual amount of the twenty per cent pro rata share of income and proceeds from the public land trust, to the legislature. (d) The working group shall oversee and be responsible for the completion of the following tasks, which shall be carried out with the support of independent third-party professionals retained to fulfill the objectives of the working group: (1) Regarding the public land trust inventory: (A) Document the current data collection and reporting processes; (B) Assess the accuracy, completeness, and reliability of land parcels in the public land trust information system; (C) Determine whether the public land trust information system complies with and fulfills the purposes of Act 54, Session Laws of Hawaii 2011; (D) Identify issues and gaps in reporting on public land trust inventory and encumbrances across federal, state, and county agencies; (E) Assess the accuracy of the reporting of parcel trust status; and (F) Recommend improvements to reporting consistency, land inventory accuracy, encumbrance reporting, and assignments of tax map key numbers to all parcels; and (2) Regarding section 5 of Act 178, Session Laws of Hawaii 2006, financial reporting and accounting: (A) Document the current processes as to how the data is being collected and reported; (B) Validate the accuracy, completeness, and reliability of the reporting of revenue data derived from the public land trust; (C) Identify issues and gaps in reporting revenues across state agencies; (D) Assess the accuracy of the reporting of parcel trust status; and (E) Recommend improvements to financial tracking and reporting consistency for all parcels. (e) The working group shall evaluate and recommend a process by which the State may initiate and conduct negotiations with the office of Hawaiian affairs regarding a comprehensive public land trust reconciliation framework, to include: (1) Determining the nature of the revenues from the public land trust that constitute the pro rata share of the office of Hawaiian affairs, considering the definition of "revenue" previously enacted by section 3 of Act 304, Session Laws of Hawaii 1990; (2) Determining a methodology and formula for calculating the amounts necessary to fulfill the State's obligations relating to public land trust revenue claims from July 1, 2012; and (3) Determining the conditions under which the office of Hawaiian affairs may negotiate a master settlement with the State. (f) In addition to the report required under subsection (c), the working group shall submit to the legislature: (1) No later than August 1, 2027, a first interim report on the progress toward the preliminary financial reporting and accounting related to Act 178, Session Laws of Hawaii 2006, required pursuant to subsection (d)(2); (2) No later than December 1, 2027, a second interim report on the progress toward the public land trust inventory required pursuant to subsection (d)(1); (3) No later than June 1, 2028, a third interim report that includes a preliminary draft of findings and recommendations regarding Act 178, Session Laws of Hawaii 2006, financial reporting and accounting and the public land trust inventory; and (4) No later than October 1, 2028, a final report that includes proposed legislation based on the findings and considerations of the third interim report submitted pursuant to paragraph (3); No later than December 31, 2028, the office of Hawaiian affairs shall submit to the legislature its findings and considerations pursuant to subsection (e). [(d)] (g) The office of Hawaiian affairs shall provide any necessary administrative support, including preparation of the [report] reports required by [subsection (c),] this Act, to the working group[.] in coordination with a third-party consultant." SECTION 3. (a) There is appropriated out of the carry‑forward trust holding account established and administered by the director of finance, pursuant to executive orders 06-06 and 22-04, the sum of $55,000,000 or so much thereof as may be necessary for fiscal year 2026-2027, to be transferred by the director of finance to the office of Hawaiian affairs as a one‑time transfer. The transferred funds shall be used by the office of Hawaiian affairs solely for Native Hawaiian programs and services with critical, short-term funding needs in the areas of education, health, economic development, and community-based initiatives. The transferred funds may not be used for planning, developing, or constructing residential or mixed-use projects or related infrastructure. The sum appropriated shall be expended by the department of budget and finance for the purposes of this section. (b) The office of Hawaiian affairs shall provide an annual report to the legislature regarding the use of the funds appropriated under subsection (a). (c) The appropriation under subsection (a) is not intended to: (1) Replace or offset the State's obligations under the public land trust; or (2) Establish precedent for determining the amount or nature of the income and proceeds from the public land trust that shall be transferred to the office of Hawaiian affairs. SECTION 4. Nothing in this Act shall be construed to alter, diminish, or affect any rights, claims, or entitlements of the office of Hawaiian affairs or the beneficiaries of the public land trust under federal law, the Hawaii State Constitution, or state law. SECTION 5. No later than fifteen days after the effective date of this Act, the president of the senate and speaker of the house of representatives shall appoint two members each to the working group established by Act 226, Session Laws of Hawaii 2022, as amended by this Act. SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 7. This Act shall take effect upon its approval; provided that section 3 shall take effect on July 1, 2026.
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