Hawai'i's governor would need to obtain approval from two-thirds of each house of the Legislature before selling any state lands, under a bill agreed to by House and Senate leaders in conference committee yesterday.

Senate Bill 1677 is designed to resolve a longstanding dispute between the Office of Hawaiian Affairs and the state administration over the sale of ceded lands.

OHA and other Native Hawaiian interests want to bar the state from selling ceded lands — 1.2 million acres that were under the control of the Hawaiian government at the time of the 1893 overthrow — until claims by Native Hawaiians to those lands are resolved. Those lands were subsequently transferred to the state with the 1959 Admission Act.

The Lingle administration, as did the Cayetano administration before it, said it has no plans to sell any ceded lands but argued that barring the state from being able to do so hinders its ability to function.

At the center of the dispute is a 1994 lawsuit filed by OHA and four individual Native Hawaiians that has gone all the way to the U.S. Supreme Court. The Hawai'i Supreme Court sided with OHA and imposed a moratorium in a Jan. 31, 2008, ruling. But on March 31 this year, the U.S. Supreme Court ruled that the Hawai'i court erred in relying on the Apology Resolution of 1993 as the legal basis for the moratorium and remanded the case back to the Hawai'i court.

While Attorney General Mark Bennett has disagreed with attorneys for OHA and the four individuals over what the Hawai'i court is to do next, both sides have stated they would prefer the case be dropped if a compromise can be reached at the Legislature.

OHA Administrator Clyde Namu'o said in a prepared statement: "Based on the passage of the bill we are hopeful that a settlement in the ceded lands matter can be reached."

Bennett yesterday declined comment.

Sen. Clayton Hee, D-23rd (Kane'ohe, Kahuku), and Rep. Mele Carroll, D-13th (E. Maui, Moloka'i, Lana'i), who chair the Hawaiian Affairs committees in their respective houses, said they expect the plan to be approved by the Senate and House next week.

Carroll said she would have preferred a full moratorium.

In a related matter, House and Senate members continued to work on House Bill 995, which would allow OHA and the state to settle the issue of how much the agency should receive as its share of the revenues generated from the use of ceded lands. OHA has been receiving $15.1 million annually in recent years.

Hee has been pushing for language that would allow OHA the option to accept either a settlement to resolve revenues from past years only, or a broader package for both past and future revenues.

The past-revenue settlement would allow OHA to accept a $200 million cash-and-land package with the properties to be selected from a wide-ranging "menu" in the bill. OHA would still receive $15.1 million annually until the future revenues issue is resolved.

The broader package option would allow OHA to accept $251 million in cash and 20 percent of the 1.2 million acres to be determined in negotiations between OHA and the administration.

Carroll said she is "close" to supporting Hee's plan.

Namu'o, meanwhile, said a majority of the trustees "agrees with the concept that it's probably worth exploring." Attorney William Meheula has been asked to help come up with language that the trustees can agree on, he said.

Parties stressed that any settlement is not being viewed as a "global settlement" or one that would address claims made by OHA or other Native Hawaiian interests stemming from the 1893 overthrow.