The U.S. Supreme Court has rejected a taxpayer lawsuit challenging the use of state general funds for the Office of Hawaiian Affairs.

In its ruling, the high court indicated on Monday that the payment of taxes alone isn't enough to provide a group of Hawai'i residents with the legal standing needed to challenge the OHA funding.

Attorney General Mark Bennett and OHA officials yesterday said they were pleased with the high court's actions.

"We always felt state taxpayer standing was not a viable doctrine, so we're gratified that our legal strategy has been vindicated by the Supreme Court ruling," Bennett said.

The lawsuit is the last pending challenge to the constitutionality of government funding for OHA.

The high court's actions provide some relief to OHA and other government programs for Native Hawaiians that came increasingly under fire following the U.S. Supreme Court's 2000 decision in a case known as Rice v. Cayetano, in which the court ruled unconstitutional OHA's requirement that voters for its trustees must have Hawaiian blood.

In the wake of that landmark decision, former police officer Earl Arakaki and more than a dozen other residents filed a lawsuit challenging government funding for OHA and the Department of Hawaiian Home Lands.

BACK TO 9TH CIRCUIT

After Monday's ruling, H. William Burgess, a lawyer for the taxpayer group, said other challenges may be filed later by someone denied benefits because they don't have Hawaiian blood.

Bennett and OHA administrator Clyde Namu'o said the state and OHA will contest those challenges.

"We believe that the Office of Hawaiian Affairs is constitutional and we would vigorously defend any future lawsuit challenging either the Office of Hawaiian Affairs, the Department of Hawaiian Home Lands or any other program that benefits Native Hawaiians," Bennett said.

As part of the ruling, the Supreme Court set aside an appeals court decision that had allowed part of the suit to go forward. It also granted the state's request to overturn the appeals court decision and ordered the 9th U.S. Circuit Court of Appeals to consider the case in view of a Supreme Court decision last month that ruled that Ohio tax-payers don't have legal standing to sue the state of Ohio over tax breaks for DaimlerChrysler.

The court on Monday also rejected a request by the lawyer for the taxpayers seeking to have the entire lawsuit reinstated.

DOES OHIO CASE APPLY?

Namu'o, who estimated OHA has spent about $395,000 in legal costs in defending itself in the case, said the organization would also vigorously oppose any future lawsuits.

Burgess said he was disappointed by the high court's rulings, but said he still believes the appeals court will allow its decision to stand. He said the Ohio decision does not apply to his case.

The suit was dismissed by U.S. District Judge Susan Oki Mollway, but a part of the case dealing with state general funds to OHA was reinstated by the appeals court in August. OHA estimated at the time that it received $2.8 million, or about 10 percent of its annual operating budget, from state general funds.

Last month, the high court issued a 9-0 ruling that essentially halted efforts by a group of taxpayers in Toledo, Ohio, who were challenging nearly $300 million in tax breaks for DaimlerChrysler AG's $1.2 billion Jeep assembly plant.

At the time, Bennett and Robert Klein, OHA's lawyer, said the decision signaled an end of what had become known as the Arakaki lawsuit.

Burgess yesterday disagreed with the assessment that the high court's actions end the case. He said the Ohio ruling doesn't apply because in the Arakaki case, the taxpayers are treated differently and excluded from certain benefits because of their ancestry.

But Bennett said the Ohio ruling eliminated the basis of the taxpayer standing in the Arakaki case.

"I believe all that's left is the housekeeping order from the 9th Circuit (dismissing the Arakaki case)," Bennett said.

ROBERTS OPTED OUT

The U.S. Supreme Court Web site reported the high court's actions Monday.

The brief orders said, without explanation, that Chief Justice John Roberts Jr. did not participate in the decisions.

Before he was appointed chief justice last year, Roberts was a private lawyer who was hired by the state to defend OHA's Hawaiians-only voting restriction in the Rice v. Cayetano case.

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com.