A Matter of Belated Justice: A Summary of Nelson v. Hawaiian Homes Commission II, 141 Hawaiʻi 411, 412, 412 P.3d 917 (2018)

By Mahina Tuteur, Post-J.D. Research and Teaching Fellow

DHHL’s Long Fight for Sufficient Funding

In 1921, the United States Congress passed the Hawaiian Homes Commission Act (“HHCA”), setting aside some 203,000 acres of the 1.8 million acres of Government and Crown Lands of the Hawaiian Kingdom, confiscated by the Republic of Hawaiʻi and transferred to the United States, for homesteading by Native Hawaiians with at least fifty percent blood quantum.  In 1959, the State of Hawaiʻi accepted responsibility for the Hawaiian Homes program as a condition of statehood, formally assuming the duties of a trustee for homestead beneficiaries.

For thirty years following statehood, the state provided no general funding and left the Department of Hawaiian Home Lands (“DHHL”) to pay its own operating costs.  This funding shortage led DHHL to lease trust lands to commercial entities, meaning less land for homesteading and longer waits for applicants.  At the 1978 Constitutional Convention, in recognition of this severe lack of funding, the Hawaiʻi Constitution was amended to make funding DHHL’s administrative and program costs mandatory.  The goal was to provide sufficient funding so that DHHL would not be forced to lease its lands to cover operating costs, and could focus on leasing to beneficiaries.  Despite this requirement, Hawaiʻi Governors and the State Legislature continuously failed to provide sufficient funding to DHHL.  In fact, the State neglected to appropriate a single dollar of general fund revenues to pay for DHHL operations and programs until 1987, pushing DHHL to prolong its reliance on the revenue generated from general leases.  Funding levels waned until 2009-13, during which no general funds were provided to DHHL.  All of this while the waiting list for homesteads increased more than eightfold in four decades.

Procedural Background

In 2007, six beneficiaries of the Hawaiian Homes trust brought action for declaratory and injunctive relief against the Hawaiian Homes Commission (“HHC”), DHHL, and the State Director of Finance (collectively “State Defendants”) for allegedly failing to provide sufficient levels of funding to DHHL in violation of Article XII, Section 1 of the Hawaiʻi State Constitution, which reads:

 The legislature shall make sufficient sums available for the following purposes: (1) development of home, agriculture, farm and ranch lots; (2) home, agriculture, aquaculture, farm and ranch loans; (3) rehabilitation projects to include, but not limited to, educational, economic, political, social and cultural processes by which the general welfare and conditions of native Hawaiians are thereby improved; (4) the administration and operating budget of the department of Hawaiian home lands; in furtherance of (1), (2), (3) and (4) herein, by appropriating the same in the manner provided by law.

Plaintiffs claimed that the Legislature was not fulfilling its constitutionally mandated responsibility to fund DHHL and also that DHHL was not fulfilling its duty by failing to secure the required funding from the Legislature.  The case made its way to the Hawaiʻi Supreme Court, which in May 2012, determined that the political question doctrine did not bar a judicial interpretation of the meaning of “sufficient sums” for DHHL’s administrative and operating expenses.  Nelson v. Hawaiian Homes Comm’n, 127 Hawaiʻi 185, 277 P.3d 279 (2012) (“Nelson I”).  Looking to the 1978 Constitutional Convention history, quoting the discussion among delegates who were trying to “pin down a numerical figure” for DHHL’s funding, the Nelson I court gleaned that the $1.3-1.6 million figure represented “sufficient sums” for administrative and operating expenses only, and that going forward, that figure could be adjusted for inflation. 

In November 2015, following a bench trial on remand, First Circuit Court Judge Jeanette Castagnetti ruled that the Legislature failed to appropriate sufficient sums to DHHL in violation of its constitutional duty to do so, and ordered the State Defendants to fulfill their kuleana by appropriating more than $28 million in general funds for DHHL’s administrative and operating budget in fiscal year 2015-16.  The State Defendants filed a motion for reconsideration, arguing that there was insufficient evidence supporting the $28 million figure and that the separation of powers doctrine prohibited the court from compelling the Legislature to appropriate any particular amount of money.  The Hawaiʻi State Legislature filed a memorandum in support, asserting that the circuit court’s ruling usurped its power to appropriate public funds and calling for the court to make clear that it was not ordering an appropriation.  Ultimately the circuit court amended its order, removing the $28 million figure, and instead simply declaring that the State Defendants did not provide sufficient sums to DHHL in violation of their constitutional trust duties.

In January 2016, the State Attorney General’s office appealed the circuit court decision, further delaying funds from flowing to DHHL and its beneficiaries.  On appeal, the State Defendants argued that the circuit court erred in (1) declining to use the 1978 baseline of $1.3 to 1.6 million, adjusted for inflation, to calculate “sufficient sums” for DHHL’s administrative and operating expenses; and (2) ordering them to fulfill their constitutional obligations under Article XII, Section 1.  

Majority Opinion

In Nelson II, published in February 2018, the 4-1 majority ruled that the circuit court erred “by engaging in a comprehensive inquiry into the amount DHHL actually needed for its administrative and operating expenses[,]” exceeding its mandate in Nelson I, 141 Hawaiʻi 411, 412, 412 P.3d 917, 918 (2018).  The majority bases this conclusion on its assertion that under Nelson I, “the only judicially discoverable and manageable standard for determining ‘sufficient sums’ for DHHL’s administrative and operating budget was established by the delegates of the 1978 constitutional convention as $1.3 to 1.6 million, adjusted for inflation.”  Id.  The court remanded back to the circuit court to “determine the current value of $1.3 to 1.6 million (in 1978 dollars), adjusted for inflation.”  Id. at 413, 412 P.3d at 919.

Dissenting Opinion

Justice Wilson wrote a lengthy dissent providing critical context and detailing the history of neglect, delay, and injustice that necessitated the 1978 constitutional mandate.  He argued that what this case is really about is “the question of what the judiciary is to do where an explicit constitutional command of the people has gone unheeded.”  Id. at 423, 412 P.3d at 929 (dissenting, Wilson, J.).  Claiming that the majority misconstrued the scope of the Nelson I holding, Justice Wilson asserted that the circuit court correctly fulfilled its duty to determine whether the constitutional mandate to provide “sufficient sums” was followed by taking a hard look at DHHL’s administrative and operating costs.  His dissenting opinion is based on two major arguments: 1) that Nelson I set a minimum floor for “sufficient sums,” not a maximum ceiling; and 2) that Nelson I linked the meaning of “sufficient sums” to minimizing or eliminating the use of Hawaiian home lands to generate income for DHHL’s administrative and operating expenses, which the majority wholly ignored.

Conclusion

In a speech advocating for passage of the HHCA almost one hundred years ago, Prince Jonah Kūhiō Kalanianaʻole, then Hawaiʻi’s delegate to Congress, cut to the core of the central issue in this case:  “Perhaps we have a legal right, certainly we have a moral right, to ask that these lands be set aside.  We are not asking that what you are to do be in the nature of a largesse or as a grant, but as a matter of justice—belated justice.”  Id. at 422, 412 P.3d at 928 (dissenting, Wilson, J.) (citing 59 Cong. Rec. 7453 (1920)).  The 1978 constitutional amendments embodied in Article XII, Section 1 translated this “moral right” into a legal right—indeed, into a constitutional obligation.  The Department of Hawaiian Home Lands is the only state agency guaranteed sufficient funding for operations in the Hawaiʻi State Constitution.  Despite this, DHHL continues to use its trust resources to pay for state salaries and expenses and to rent its precious lands out rather than provide homesteading opportunities for beneficiaries, forty years after the Constitution was amended to make DHHL funding mandatory.

Final note:  It is important to note that when the court’s decision was issued in February 2018, Governor David Ige included $25.1 million for DHHL in the FY19 Supplemental Operating Budget request, saying that “the funding is needed to fulfill the department’s mission.”