Supreme Court dismisses OHA ceded lands claim

By Yasmin Anwar and Kevin Dayton
Advertiser Staff Writers

In a huge blow to the Office of Hawaiian Affairs, the Hawai'i Supreme Court yesterday overturned a 1996 ruling that could have forced the state to pay OHA hundreds of millions of dollars for its use of ceded lands once controlled by the Hawaiian kingdom.

Three years after hearing arguments in the complicated case known as Office of Hawaiian Affairs v. State of Hawai'i, the high court dismissed OHA's claims.

That means the high-stakes dispute over what the state owes OHA will be kicked back to the state Legislature, which, some say, may not place a high priority on resolving the dispute.

"It's a real blow to the Hawaiian people. They must feel we stabbed them in the back again," said Sen. Colleen Hanabusa, D-21st (Kalaeloa, Makaha).

OHA trustees were disappointed by the ruling, as well as by the timing of its release, one day after the worst act of terrorism against the United States.

OHA was preparing to resume talks with the state over settling the case, but yesterday's decision essentially eliminated the trustees' leverage in the negotiations.

Talks broke off in 1999 after trustees rejected a proposed deal for a settlement of more than $250 million and ownership of revenue-producing lands.

Estimates of the debt have ranged from $300 million to $1.2 billion.

"The debt has not been paid, and the timing stinks," said OHA trustee Colette Machado, who chairs OHA's ad hoc committee on entitlements and negotiations. "We're not even getting into the recovery stage from the (terrorist attacks) and the courts are terrorizing Hawaiians again. They want to make Hawaiian issues so insignificant compared to what's at stake for all Americans."

When asked about the timing of the ruling, judiciary spokeswoman Marsha Kitagawa said: "The opinion was issued as soon as it was completed."

Deputy Attorney General Charleen Aina, who asked the high court to overturn then-Circuit Judge Daniel Heely's 1996 decision, said the ruling specifically notes that Native Hawaiians are entitled to a share of ceded land revenue under the state Constitution. With its ruling, she said the court is saying there is no way it can determine how much is owed to OHA.

"The court says basically, write a law," Aina said. "You've got an open issue here, so write a law."

1990 state law struck down

In their unanimous decision, written by Chief Justice Ronald Moon, the justices struck down a 1990 state law, known as Act 304, which set up a detailed mechanism for calculating the state's debt to OHA. They said the state law is in conflict with a federal law.

Ceded lands are more than 1.2 million acres of crown and government lands that were taken by the United States after the annexation of Hawai'i in 1898.

The lands were later turned over to the state to be held in trust for public benefits, including the betterment of Hawaiians.

But payments specifically for the betterment of Hawaiians were not made until after 1980, when the Legislature set OHA's share of revenues from the use of ceded lands at 20 percent. Before that, the money went into the state general fund, with the bulk going to the state Department of Education.

In 1983, OHA sued the state for more revenue from harbors, Hono-

lulu International Airport and other entities on ceded lands. Four years later, the Hawai'i Supreme Court refused to make a determination of how much OHA was owed and sent the dispute back to the Legislature.

In response, the Legislature enacted Act 304, which set up a mechanism to resolve OHA claims from 1981 to 1990. However a section of Act 304 stipulated that the act would be invalid if any part of it conflicted with federal law.

Act 304 resulted in a $130 million settlement in 1992, but OHA went back to court in pursuit of revenue not covered in the settlement, including back payments from Hilo Hospital cafeteria sales and patient fees, rent from the Hawai'i Housing Authority and Housing Finance and Development Corp., and even from private businesses that pay rent to the state, such as Duty Free Shoppers at the airport.

In 1996, Heely ruled that OHA's 20 percent should include all revenue that the agency said was not covered by the settlement. At the time, Gov. Ben Cayetano warned the ruling "would plunge the state into a fiscal crisis."

Money may not be available

The state appealed the decision. If the high court yesterday had upheld Heely's ruling, the case would have been sent back to Circuit Court to determine the amount.

While the case was on appeal, the Federal Aviation Administration said it would withhold federal money for Honolulu International Airport, a portion of which sits on ceded lands, unless the state recovered $28.2 million in airport revenue paid to OHA for nonairport purposes.

A year later, Congress passed the Forgiveness Act, which excused the $28.2 million, but barred the state from using airport money to pay future ceded land claims.

Senate President Robert Bunda, D-22nd (Wahiawa, Waialua, Sunset Beach), said the issue of OHA's share of ceded lands revenue will be waiting for lawmakers when they convene in January.

He said that while the high court's ruling may mean savings for the state, he is still concerned the Legislature may not find enough money to cover a new amount.

"It may not be a billion bucks, but it could mean a significant amount of dollars," Bunda said. "And that significant amount of dollars could mean that we don't have that around."

Legislature hesitant

Next year is an election year, and some lawmakers may consider the issue too hot to handle. Others may argue that it is best to wait for Hawaiians to win federal recognition in Congress, or may argue for a delay until some of the legal challenges to Native Hawaiian entitlements have been resolved.

Hanabusa said she believes the Legislature has a moral obligation to resolve the issue. But she acknowledged many of her colleagues may not agree.

"I haven't sensed an eagerness (in the Legislature) to even address this debt," she said.

Senate Hawaiian Affairs Committee Chairman Jonathan Chun, D-7th (S. Kaua'i, Ni'ihau) said: "Everyone is going to have to work hard to get a good bill through. It's going to be tough ... It can be done, but everyone is going to have to give a little."

Advertiser staff writer Lynda Arakawa contributed to this report.