Opinion ID: 2582211
Heading Depth: 2
Heading Rank: 4

Heading: oha i

Text: Based on the State's refusal to appropriate funds for several matters regarding revenue which OHA [had] asserted [was] due, OHA initiated the action in OHA I on January 14, 1994, alleging that the State had failed to pay OHA its full share of revenues that the State had collected from ceded lands since June 16, 1980. Id. OHA sought an accounting, restitution or damages, prejudgment interest, attorneys' fees and costs, and such other relief as the court deemed just and proper. Id. The State moved to dismiss the case on the following grounds: (1) lack of justiciability; (2) sovereign immunity; (3) statute of limitations; and (4) waiver/estoppel. Id. The circuit court orally denied the State's motion to dismiss and ruled that OHA was entitled to revenues from each of the eleven enumerated sources. Id. Thereafter, the State filed its notice of appeal on November 22, 1996. Id.
During the pendency of the appeal in OHA I, an issue arose between the Federal Aviation Administration (FAA) and the State of Hawai`i regarding the State's use of airport revenues to fulfill its obligations as trustee of the ceded lands. The FAA viewed such use of airport revenues as contrary to the policies and conditions of grants provided under the Airport Improvement Program (AIP) created under the Airport and Airway Improvement Act of 1982, Pub.L. No. 97-248, § 511(a)(12), 96 Stat. 676, (1982) (codified, as subsequently amended, at 49 U.S.C. § 47107(b)(1)), which requires airport revenues to be spent for airport purposes only in order to promote the self-sufficiency of airports. Under the AIP, [a]s originally enacted in 1982, the revenue retention assurance [under 49 U.S.C. § 47107(b)] required airport owners to use all revenue generated by the airport for the capital or operating costs of the airport, the local airport system, or other local facilities which are owned or operated by the owner or operator of the airport and directly related to the actual transportation of passengers or property. The plain purpose of section [49 U.S.C. § 47107(b)] was to prevent an airport owner or operator who receives Federal assistance from using airport revenues for expenditures unrelated to the airport. Policies and Procedures Concerning the Use of Airport Revenues, 61 Fed.Reg. 7134 (Feb. 26, 1996) (ellipses omitted). The rationale for the revenue retention requirement is that the Federal AIP Program can underwrite only about 20% to 30% of the total capital development needed by airports. To ensure the maximum effectiveness of the AIP program, airports should also spend all of the money they generate to operate and develop the airport. A federal grant should not furnish an opportunity for an airport to use federal funds to replace other airport generated funds, and then use the latter for general governmental purposes, resulting in no net capital improvements for the federal grant dollars expended. Id. (citing H.R.Rep. No. 103-240, 103d Cong., 1st Sess. 14 (1993)). In 1995, the United States Department of Transportation (USDOT) conducted an audit of the State's administration of its AIP grants after a request by the Regional Audit Manager (RAM) for an opinion as to whether the Hawai`i Department of Transportation (HDOT) was required by State statute to pay airport revenues to OHA considering the federal AIP grant conditions. OHA I, 96 Hawai`i at 396, 31 P.3d at 909. The grant conditions in 49 U.S.C. § 47107(b)(1) directed that revenues generated by a public airport . . . be expended for the capital or operating costs of  (A) the airport; (B) the local airport system; or (C) other local facilities which are owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property. 49 U.S.C. § 47107(b)(1). Congress further specified that the use of airport revenues for general economic development, marketing, and promotional activities unrelated to airports or airport systems was prohibited under the Authorization Act of 1994. 49 U.S.C. § 47107( l )(2)(B) (quotation marks omitted). In a 1996 report, the USDOT Inspector General [hereinafter, the IG Report] concluded that the State's payments to OHA between 1992 and 1995 in the amount of $28.2 million were a diversion of airport revenue in violation of [the FAA Authorization Act of 1994] because OHA provided no services for the $28.2 million. OHA I, 96 Hawai`i at 396, 31 P.3d at 909 (citing FAA Report No. R9-FA-6-05, Airport Improvement Program Grants Provided to the Hawai`i Department of Transportation, at 11 (Sept. 19, 1996)). The IG Report recommended that the FAA withhold payments on current grants and approval of further grants if the State does not recover the $28.2 million in airport revenues paid to OHA for nonairport purposes. Id. (citation, brackets, colon, and internal quotation marks omitted). In response to the IG report, the State attorney general opined that we view the subject payment of $28.2 million in airport special fund moneys to OHA pursuant to Act 304 as an operating cost of the State's airports within the meaning of 49 U.S.C. § 47107(b)(1). In addition, then-Governor Benjamin Cayetano addressed the members of the State Senate, noting that: It is a serious enough matter that the use of the airport revenue fund to make the OHA payments may violate federal law and grant assurances. However, language found in section 16 of Act 304, Session Laws of Hawai`i 1990 [(quoted infra note 7)], appears to compound drastically the problem. That language may, by operation of law, repeal [ inter alia, HRS § 10-13.5], and turn them back into the ineffective and confusing state they were in when the Supreme Court decided [ Yamasaki. ] . . . . To be sure, the Inspector General's findings probably will not be a final determination on this matter. For one thing, we expect that the State will be afforded an opportunity to defend its use of airport funds. Nevertheless, I consider the situation serious at this time to share with you my concerns about the use of airport funds to make payments to OHA and to alert you to the cloud that section 16 of Act 304 appears to place over chapter 10, HRS. In early 1997, the State began to deposit airport-related payments owed to OHA in an escrow account pending resolution of the IG Report. On April 25, 1997, the FAA issued a memorandum [hereinafter, the FAA Memorandum], stating its concurrence with the IG Report's conclusion and recommendation. On July 22, 1997, U.S. Senate Report 105-55 regarding the Department of Transportation and Related Agencies Appropriations Bill stated: Federal aviation law . . . prohibits the diversion of airport revenues for non-airport purposes. Recently, the Department of Transportation Inspector General identified $30,000,000 in past payments to the [OHA] as illegal diversions of airport revenues. The FAA agreed with the [IG Report]. However, it is unclear whether a Federal court would agree with the [Inspector General] and the FAA[,] should their determination be challenged. Given the fact that the State of Hawaii owns the lands in trust for the betterment of native Hawaiians, it is conceivable that a reviewing court could find that the payments of airport revenues were in the nature of rent, which is [a] permissible use of airport revenue. To put the issue to rest, the general provision provides that the State of Hawaii is forgiven any obligation to repay past amounts diverted for trust purposes, in return for a clear congressional statement prohibiting any future diversions. (Emphasis added.) On August 19, 1997, the State attorney general authored a newspaper article, in which she stated that the State would not challenge the FAA's position that the use of airport revenues to pay OHA was improper. On June 30, 1997, the Hawai`i Legislature enacted Act 329, relating to the public land trust, in response to the continued controversy regarding the proper definition of revenue under HRS § 10-13.5.1997 Haw. Sess. L. Act 329, § 1 at 956. Because of the concerns about the effect of the circuit court's ruling and recognizing the potential invalidity of section 16 of Act 304, see infra note 7, a new section was added to HRS chapter 10 via Act 329, which provided: Notwithstanding the definition of revenue contained in this chapter and the provisions of section 10-13.5, and notwithstanding any claimed invalidity of Act 304, Session Laws of Hawai`i 1990, the income and proceeds from the pro rata portion of the public land trust under article XII, section 6 of the state constitution for expenditure by the office of Hawaiian affairs for the betterment of the conditions of native Hawaiians for each of fiscal year 1997-1998 and fiscal year 1998-1999 shall be $15,100,000. HRS § 10-13.3 (Supp.2005); see also 1997 Haw. Sess. L. Act 329, § 2 at 958. These interim monies were intended to ensure that adequate income and proceeds from a pro rata portion of the public trust continue to be available to [OHA] . . . while the contemplated process to address issues relating to the public trust is underway. 1997 Haw. Sess. L. Act 329, § 1 at 958. In 1998, Congress enacted the Department of Transportation and Related Agencies Appropriations Act, Pub.L. No. 105-66, § 340, 111 Stat. 1425 (1998) [hereinafter, the Forgiveness Act], which states in pertinent part: (7) [C]ontrary to the prohibition against diverted airport revenues from airport purposes under Section 47107 of title 49, United States Code, certain payments from airport revenues may have been made for the betterment of Native Hawaiians, or Alaskan natives based upon the claims related to lands ceded to the United States [.] . . . . (b) TERMINATION OF REPAYMENT RESPONSIBILITY.  Notwithstanding the provisions of 47107 of title 49, United States Code, or any other provision of law, monies paid for claims related to ceded lands and diverted from airport revenues and received prior to April 1, 1996, by any entity for the betterment of Native Americans, Native Hawaiians, or Alaska Natives, shall not be subject to repayment. (c) PROHIBITION ON FURTHER DIVERSION.  There shall be no further payment of airport revenues for claims related to ceded lands, [ [6] ] whether characterized as operating expenses, rent, or otherwise, and whether related to claims for periods of time prior to or after the date of the enactment of this Act. (d) CLARIFICATION[.]  Nothing in this Act shall be construed to affect any existing Federal statutes, enactments, or trust obligations created thereunder, or any statute of the several States that define the obligations of such States to Native Americans, Native Hawaiians or Alaska natives in connection with ceded lands, except to make clear that airport revenues may not be used to satisfy such obligations. OHA I, 96 Hawai`i at 396-97, 31 P.3d at 909 (citing the Forgiveness Act § 340) (emphases, brackets, and ellipses in original). The following year, in 1999, the legislature submitted Senate Bill No. 1635 for approval by Governor Cayetano. Senate Bill No. 1635 carried the same purpose of facilitating resolution of public land trust issues as Act 329, which had provided interim payments to OHA only through fiscal year 1998-1999. The bill provided a $16,060,000 appropriation for fiscal year 1999-2000. However, the OHA trustees requested that Governor Cayetano veto the bill, preferring to leave the matters in controversy for this court to decide in OHA I. Governor's Message, Statement of Objections to Senate Bill No. 1635, in 1999 Senate Journal, at 803. During the time between the sunset of Act 329 (at the end of fiscal year 1998-99) and the resolution of OHA I (in September 2001), the disposition of OHA's pro rata portion of ceded lands revenues under Act 304 resumed, except for the airport revenue payments prohibited by the Forgiveness Act. During the interim period, the legislature made no appropriations to OHA for the airport system's use.
This court in OHA I acknowledged that Congress does not have the power to instruct this state on how to expend its own funds, although Congress does have the authority to condition the use of federal funds.  96 Hawai`i at 397, 31 P.3d at 910 (emphases added). Assuming that the Forgiveness Act represented a valid condition on the receipt of federal airport funds, this court held that Act 304, as applied to the airport revenue sought in this case, conflicts with the provisions of the Forgiveness Act. As such, by its own terms, Act 304 is invalid. [7] Id. at 399, 31 P.3d at 912. This court went on to hold that, inasmuch as the invalidity of Act 304 reinstates the immediately preceding version of HRS § . . . 10-13.5, which then places this court precisely where it was at the time Yamasaki was decided[,] id. at 400, 31 P.3d at 913, this court is again left with no judicially manageable standards by which to discern what specific funds OHA is entitled to receive under chapter 10, without making `an initial policy determination . . . of a kind normally reserved for nonjudicial discretion.' [8] Id. at 401, 31 P.3d at 914 (citation omitted) (ellipsis in original). Accordingly, this court dismiss[ed the] case for lack of justiciability. Id. at 401, 31 P.3d at 914.