Ceded land revenue in
Supreme Court’s hands

Some estimate the
lower court's ruling could cost
the state $1.2 billion

By Pat Omandam
Star-Bulletin

More than 100 people flowed into the Hawaii Supreme Court today to hear oral arguments on whether a 1996 Circuit Court decision involving ceded land revenues should stand.

Members of the state attorney general's office hope to persuade the five Hawaii justices to overturn the ruling by former Circuit Judge Daniel Heely. Heely, who has since moved to the mainland, had ruled that the Office of Hawaiian Affairs must be paid 20 percent of ceded land revenues generated from four new areas.

The four areas of revenue are: public housing rents and affordable housing proceeds, fees and charges for patient services at Hilo Hospital, revenue from off-site Duty Free Shoppers stores and investment income earnings from various special funds.

Attorneys for the state as well as the Office of Hawaiian Affairs began the hearing today by responding to the high court on why the justices should be deciding this case.

Chief Justice Ronald Moon said the state law that mandates the 20 percent share to OHA also requires the state to work with the agency to resolve unsettled issues.

"If the Legislature intended and mandates that you should settle, why are you here?" Moon said.

Attorneys for the state argued that the $130 million paid to OHA for ceded land claims from 1980 to 1991 had settled the issue and no further payments are warranted.

The 1996 ruling remains a controversial decision that some people estimate could cost the state as much as $1.2 billion.

"I don't think native Hawaiians and/or Hawaiians are seeking more than what is due within the context of the law," OHA Vice Chairwoman Haunani Apoliona said last week.

"The state's position is: OHA is not entitled to 20 percent of these four sources," Deputy Attorney General Charleen Aina said last week. Aina is arguing for a reversal of the decision, saying the issue belongs in the state Legislature and not the Judiciary.

"Should the Supreme Court agree with Judge Heely's ruling, so that they conclude that those sources are subject to the 20 percent assessment, then we would go back to trial, and it would be up to OHA to establish just what was generated from those sources and prove to the court that," she said.

State officials, along with the airlines industry, have suggested the Heely ruling would cost nearly $1.2 billion. OHA, however, has put that figure between $200 million and $500 million.

By law, OHA gets 20 percent of all revenue generated on ceded lands, former lands of the Hawaiian kingdom.

The state has paid OHA about $15 million annually for use of those lands.

The state Legislature last year temporarily set OHA's general fund revenue at $15.1 million through 1999 so a state-OHA panel could work out future payments.

Some Hawaiians believe a favorable high court ruling for OHA may have consequences at the ballot box this fall.

Voters, already mad about a slumping state economy possibly further burdened by the Heely ruling, may seek to put new faces in office.

Up for state re-election are Gov. Ben Cayetano, half the Senate, the entire House of Representatives, and five of nine seats on the now-deadlocked OHA board.

Cayetano is expected this week to name an interim trustee, who becomes the board's swing vote for leadership.

"This is an election year. Any significant decision that potentially could affect a large number of people or the resources of a large number of people will certainly gain attention," Apoliona said.

"It is a very sensitive time for those running for office," she said.

But a fear for OHA is the potential for another constitutional convention.

A backlash against the Heely ruling could prompt some to call for an end to the 18-year-old semiautonomous agency, a product of the 1978 state Constitutional Convention. Both the House and Senate have passed bills authorizing voters to determine whether a new Con Con will be held.

To alleviate such a reaction, however, former OHA trustee Kina'u Boyd Kamali'i said OHA must show how the ruling can help economic revitalization.

For instance, she said, any land settlement should include parcels OHA could use to develop agriculture, aquaculture or other economic enterprises.