Posted on: Thursday, September 13, 2001

Editorial
Ceded lands issue back in Legislature

The Hawai'i Supreme Court yesterday lifted a huge cloud of uncertainty over the financial future of this state.

The court effectively reversed a jaw-dropping 1996 ruling by then-Circuit Judge Dan Heeley that the State of Hawai'i owed the Office of Hawaiian Affairs payments that — by some estimates — could have amounted to as much as a billion dollars.

The potential liability, some said then, was so great it could effectively bankrupt the state.

Yesterday's opinion will upset many who support OHA and its mission and will be seen by some as a direct insult to the state's constitutional obligation to Native Hawaiians through OHA. But it will bring a substantial level of certainty and predictability to the state's financial position and — as well — to the overall economic climate in Hawai'i.

The matter now returns to the Legislature, which must once again face the question of the state's constitutional obligations to Hawaiians.

The background of the Heeley ruling is complex. But in essence, he ruled in favor of a claim by OHA that it was entitled to 20 percent of the revenues derived from a broad variety of state functions that took place on "ceded lands." Those are former Kingdom of Hawai'i crown or government lands ceded to the United States after annexation and then back to Hawai'i upon statehood to be held in trust.

The most important state function targeted by OHA was revenue generated by Honolulu International and other airports. The big money maker, of course, was sales by concessionaires such as Duty Free. Heeley ruled that OHA was entitled to 20 percent of that income, including income produced by off-airport sales at Duty Free shops in Waikiki.

That was the bombshell.

The Supreme Court ruled, interestingly, that Heeley was correct insofar as the law stood at the time he ruled. But since then, the U.S. Congress passed the so-called "Forgiveness Act," which let the state off the hook for payments to OHA that the Federal Aviation Agency said should have been used solely for airport purposes. That same act explicitly forbade any future use of airport money to pay ceded land claims, thus mooting OHA's statutory claim, the court said.

So the cloud of fiscal uncertainty has been lifted. But the obligation to Hawaiians remains.

It is now up to the Legislature, the governor and OHA — working we hope cooperatively — to find a formula that will maintain and honor the state's obligation to the betterment of Hawaiians through OHA that is fair, predictable and beyond the reach of further lawsuits.