A group of five Native Hawaiians who want the Office of Hawaiian Affairs to spend most of its money on people with 50 percent Hawaiian blood or more will get another day in court.

A panel of the 9th U.S. Circuit Court of Appeals in San Francisco yesterday ordered U.S. District Judge Susan Oki Mollway to hear the case in her Honolulu court after she rejected it last year.

The five Native Hawaiians are suing OHA because they believe the agency has too many beneficiaries. They argue that most of OHA's $28 million annual budget should be spent on people with 50 percent Hawaiian blood or more.

The lawsuit was filed by Virgil Day, Mel Ho'omanawanui, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha, all of whom are 50 percent Hawaiian or more.

OHA officials said it would be a mistake to limit its programs to the 50 percent or more group.

"When you look at OHA's mandate ... it's a very broad mandate," said OHA administrator Clyde Namu'o. "It simply talks about bettering the conditions of Hawaiians and native Hawaiians.

"So we believe in order to satisfy our mandate, we can't simply isolate that one group and say 'Well, if we better the condition of 50 percent Hawaiians, we will have bettered the conditions of everyone else.' The reverse is actually true. If you better the condition of all Hawaiians, regardless of blood quantum, then you are in fact raising the standard of living for the 50 percent Hawaiians as well. That's our position."

Most other challenges against OHA and other Hawaiians-only programs have come from those who feel that funds should not be given to specific groups based on race. The lawsuit filed by the five men is unique in that it argues OHA has too many beneficiaries.

NO OPINION ON MERITS

The three-member panel of the 9th Circuit Court reversed Mollway's decision in August 2006 to throw out the case on the grounds that prior case law could not support it. Recent U.S. Supreme Court cases have undermined prior case law that formed the basis for the Day lawsuit, Mollway said.

In their opinion, however, the appeals panel stated, "Each Native Hawaiian plaintiff ... has an individual right to have the trust terms complied with, and therefore, can sue ... for violation of that right."

Yesterday's decision by three of the 28 members of the 9th Circuit allows the case to proceed, but does not not express an opinion on the merits of the allegations.

Walter Schoettle, attorney for the five men, said in a statement that he and his clients are elated that the court affirmed that they have a right to sue in federal court.

Schoettle blasted the state, and not OHA, for challenging the standing of his clients. "However, OHA, as trustees for the native Hawaiians, should have been defending my clients' rights to sue even though they were the ones on this particular occasion being sued."

He added that "none of the other so-called native Hawaiian advocacy agencies came to the defense of the native Hawaiian beneficiary in this case. It was my clients standing alone who have prevailed in preserving this precious right."

The five men charged that OHA "expended trust funds without regard to the blood quantum contained in the definition of native Hawaiians" as spelled out in the Hawaiian Homes Commission Act of 1920.

OHA WILL FIGHT

OHA officials, however, have said their mandate is different and that they are bound not by the blood quantum requirements found in the homestead act but rather the Hawai'i Admission Act of 1959.

OHA, in a statement yesterday, said that while the appeals court reaffirmed the right of native Hawaiians to sue, it will continue to defend against the claims brought by the group.

"OHA continues to believe that there is no merit in the plaintiff's position," OHA Board Chairwoman Haunani Apoliona said. "We believe we will ultimately prevail based on the merits of this case."

State Attorney General Mark Bennett said the appeals court is wrong in believing that individuals can sue over alleged violations of the land trust law.

"At this point, we're going to look at whether or not we have the ability to seek to intervene and, on appeal, file for a suggestion for a rehearing en banc," Bennett said. "I don't know if we're able to do that."

An en banc hearing would require a larger percentage of the 9th Circuit appeals court judges to make a decision on whether to accept the decision of its three-member panel that the case should be reinstated.

The thrust of the lawsuit is the charge that the trustees have spent trust funds lobbying Congress for passage of the Akaka bill, which seeks to create a government entity that would represent all with Hawaiian blood regardless of their quantum.

Additionally, the lawsuit alleges trustees have "expended trust funds for all-expense-paid vacations and political junkets for themselves and their staff in the guise of lobbying for passage of the Akaka bill."

OHA trustees have previously stated that they have spent at least $1 million lobbying for the Akaka bill.

FUNDING CHALLENGED

The lawsuit also challenged OHA's funding of the nonprofit Native Hawaiian Legal Corp. and Na Pua No'eau Education Program, saying it goes beyond what is allowed in the Hawaiian Homes Commission Act, language that was later incorporated into the state Constitution.

Under the Hawaiian Homes Commission Act, money generated by the so-called ceded lands — former Hawaiian crown and government lands — is supposed to benefit those with 50 percent blood quantum.

Currently, about 10 percent of OHA's $28.5 million in funding comes from state taxes, with the rest from ceded lands.

OHA administrator Namu'o said that there are currently no programs designed to benefit 50 percent Hawaiians specifically. In the past, the agency had a homesteader loan program that benefited homesteaders, who need to be at least 50 percent Hawaiian.

The Department of Hawaiian Home Lands and the homestead act are targeted for 50 percent Hawaiians, he said,

"Our money is not the Hawaiian Homes Commission money," Namu'o said. "The authority for our money comes from the Admission Act that established the public land trust. Obviously the money that (DHHL) gets is specifically for 50 percent Hawaiians. We don't believe that that's true with ceded lands revenue that come off the public land trust."

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.