The ceded lands ruling:
Will it break the bank?

A state already in dire straits financially must decide
how to settle ceded-lands claims -- which some say
could reach $1.2 billion -- to native Hawaiians

By Alan Matsuoka

It seems in retrospect an act of conscience as much as a judicial determination. Judge Daniel Glen Heely was being asked by the Office of Hawaiian Affairs to order the state to give it more of the money coming from the use of ceded lands. The state, which had cut back on welfare to make ends meet, was fighting back.

As temperatures outside the Circuit Court building neared record highs, Heely generated political heat inside by granting OHA's motions. The state clearly had a contract with native Hawaiians, he declared, and would be held to it.

He cited the federal government's apology for the illegal overthrow of the Hawaiian kingdom, and invoked a state law allowing him to "contemplate and reside with the life force," and consider the aloha spirit - "the essence of relationships in which each person is important to every other person for collective existence."

"The court cannot conceive of a more appropriate situation in which to attempt to apply the concepts set forth in the Aloha Spirit law," he said, "than ruling on issues that are directly related to the betterment of the native Hawaiian people."

With those ideals, in a July oral ruling and a written order filed in October, Heely sparked the latest controversy over the ceded lands, 1.8 million acres of property in all four counties comprising about 43 percent of the islands' area. Native Hawaiians hailed the ruling as "historic," recognizing the legitimacy of their legal claims to the lands.

"I think for the first time in a long, long time, someone has spoken up for what is the truth," said OHA Trustee A. Frenchy DeSoto, one of the agency's founders.

But the ideals soon met up with reality, which to the Cayetano administration meant estimates that the cost to the state could exceed $1 billion.

And reaction to the ruling may foreshadow a larger question: What level of moral and legal duty will taxpayers have for aboriginal claims? Already, some worry that critical feelings about the OHA payments could overflow and cause a rift between the general public and native Hawaiian movement as a whole, no matter how just its cause.

"I think that's an issue that can break the movement's back, frankly," said Dan Boylan, a political analyst and history professor at the University of Hawaii-West Oahu. "There's got to be some compromises in all of this, big ones."

‘That kind of magnitude’

A dispute over the lands is nothing new. Ceded to the United States shortly after the 1893 overthrow, they have deep symbolic meaning for native Hawaiians and often have been protest sites. Makua Beach is the latest example, Kahoolawe probably the best known.

The state became trustee for 1.4 million acres in 1959, under the Admission Act that made Hawaii part of the Union. Most of the rest are national parks or used by the military. Sand Island, Volcanoes National Park and Wailua Golf Course on Kauai are all part of the inventory.

In 1978, voters approved broad constitutional amendments to create the Office of Hawaiian Affairs and fund it with a share of the money derived from the use of ceded lands. In 1980, the Legislature set the share at 20 percent. Since then, legal battles have ensued over what the percentage covers.

In the latest case, OHA sought a share of revenues from Hilo Hospital and two state affordable-housing agencies, the Hawaii Housing Authority and Housing Finance & Development Corp. Rents, cafeteria sales and patient fees (after Medicaid and Medicare deductions) would be assessed.

It also wanted to vastly expand the way the share is applied to the airport's duty-free concession, a prime source of Honolulu Airport operating funds, and asked that interest on back payments to 1981 be included.

The Attorney General's Office, among other arguments, contended the state could not be sued, and functions like hospitals are sovereign and thus exempt from assessment. Heely disagreed, saying they often are private enterprises. The government appealed to the state Supreme Court and expressed confidence it would prevail.

But budget alarms were triggered. Gov. Ben Cayetano immediately disagreed with the ruling, which at the time was estimated to cost $120 million. He rapped lawmakers for not passing an administration bill last session that would have drastically cut the OHA entitlement.

Then he huddled in San Francisco with the airlines, and on his return invited newspapers to hear an industry lawyer raise the stakes to $1.2 billion - a stunning figure for a state running on about $3 billion in general-fund operating revenues this year.

OHA accused Cayetano of scare tactics. The agency had estimated the cost at $178 million although Chairman Clayton Hee said he had an audit going into court that put the debt as high as $700 million. No one has offered a definitive bottom line, but the Budget Department says the higher numbers seem likely to prevail.

"It would be safe to say you're talking about several hundred millions of dollars," said Deputy Director Neal Miyahira. "It's that kind of magnitude."

Meanwhile, the community hospitals are even more direct about the ruling's impact. "It would break us," said Health Director Lawrence Miike. Hilo is one of only two hospitals in the 13-facility state system in the black, and its profits help support the others, he said. The system still has a yearly deficit of about $15 million, and state subsidies have been cut under a measure allowing it to run as a public corporation.

"My question is, what business can give up 20 percent of gross revenues, no matter what it is, and expect to survive in the long-term here?" Miike asked.

Budget director Earl Anzai warned in a court affidavit that the rulings have lent "uncertainty as to the soundness of the state's financial situation." And the bill is mounting: Using OHA's low estimate, he said $78,442 in interest is being added each day.

Broken promises

The Governor's Office frames the issue as differences over interpreting the OHA entitlement law. "The governor has to think about what's best for the people of the entire state, including Hawaiians," said spokesperson Kathleen Racuya-Markrich.

But others, like UH-Manoa American Studies Professor David Stannard, have a different outlook. "Now we're talking real money so all of a sudden it's not just an abstract issue," Stannard said. "It's a real dollars-and-cents issue, and it does appear that the governor is very strongly behind the push to essentially dismantle that provision."

Among other changes, Cayetano wants to specify that the law applies only to raw land, and not land with improvements. OHA Trustee Rowena Akana sees an effort to create a "smoke screen," diverting attention from the state's irresponsible spending habits and inability to make good on its obligations.

"What is the difference between the Cayetano administration and the federal government and their treatment of the American Indians?" she said. "What is the difference? Is this what American justice is all about?"

Hee charges Cayetano is trying to drive a wedge between OHA and the general public and shift part of the blame for the state's budget problems onto the agency. The chairman said he is confounded by the reaction: OHA simply went to court to make the state comply with the law, and now is being cast as the "bad guys" for having justice prevail. "It makes no sense to me," he said.

OHA has its share of critics in the native Hawaiian community. It received $210 million in payments from 1980 to 1995, and one gripe is too little goes toward direct benefits. But support for the agency in this issue seems to be broad. A State Capitol rally in April to protest the proposed changes to the entitlement law drew a spectrum of leaders. T-shirts and signs read, "Broken Promises."

The common bond is a commitment to the land itself, something that "crosses all lines," said William Meheula, president of the Native Hawaiian Bar Association. Beyond the symbolic significance, the ceded lands are the economic focus of the native Hawaiian movement, the potential land base of a sovereign body. A frequent contention is the lands were stolen and, from that perspective, the state has been getting a deal.

"Frankly, 20 percent is too cheap," said attorney Hayden Aluli, who represented the Makua defendants. "If Hawaiians had control over their resources and lands, we would be charging the state rent, OK? And that's the way it is, period."

The American way

The stronger passions are fueled by memories of the legacy of Western contact. Like other indigenous peoples, native Hawaiians saw their population eaten away by disease and their society fragmented. Some see the impacts of being alienated from the land continuing today.

"Why do we have the highest suicide rate among teen-agers?" asked UHM Hawaiian Studies professor Lilikala Kame'eleihiwa. "Why do we have the lowest life expectancy? Why are we drinking and drugging ourselves to death? Because we have no home, we have no access to land."

With the Euroshop glitter of Waikiki, such feelings can seem remote. Indeed, others struggling with the implications of Heely's ruling have reached far different conclusions. "I'm sorry for them, that they feel they're culturally condemned," said one prominent business leader. "But there's a point where we have to say, look, whatever happened before doesn't matter."

OHA has been making strong overtures for talks. The governor said he is willing to sit down, but wants to wait until a lawsuit challenging the results of the latest election is resolved.

Heely won't be here to see how things work; he and his wife, who is half Hawaiian, have since moved to New York, making this his last major ruling in the islands.

But residents will be left to wrestle with the issues he raised in the case, and with the larger question of what they ultimately feel is due the native Hawaiian people - a question some feel must be answered soon.

"The American way is to act fairly and responsibly and honorably toward our native people with regard to unresolved claims that have festered over generations," said Jon Van Dyke, a UH constitutional law professor and OHA legal adviser.

"It's been too long delayed. It's time to address it."

Heely known for
sincerity, intelligence

By Alan Matsuoka

With his wire-rimmed glasses and mild demeanor, Circuit Judge Daniel Heely hardly seemed the type to cause a stir. In fact, he was widely appreciated for his intelligence and sincerity.

"We respect Judge Heely," said Deputy Attorney General Jack Resenzweig, who is involved in the ceded-land revenues case.

"It doesn't necessarily mean we have to agree with his decision."

Heely was born in Belleville, Ill., on Jan. 25, 1945. He graduated from the University of Hawaii with a bachelor's in philosophy and earned his law degree from the University of Minnesota.

He was admitted to the Hawaii bar in 1973 and was the state Supreme Court's chief disciplinary counsel from 1978 to 1981. He has written and lectured widely on legal ethics. He was named to a District Court bench in 1982 and to the Circuit Court in 1985.

He has six children, and his wife, Patricia, is half-Hawaiian - a fact he disclosed before presiding over the ceded-lands cases.

Circuit Judge Marie Milks described Heely as a thoughtful person and careful listener. "I've never questioned his fairness," she said. His chambers, she added, reflected a strong sense of family and "Hawaiianess."

"I don't look at Dan Heely and say, oh, he's a guy who came here from the mainland," Milks said. "I look at him as truly a part of our community. There's some people who come here and they really don't have a love for the soul or spirit of the place."

Heely in October left for a federal position in Syracuse, N.Y., primarily for higher pay.

"Dan Heely is a very competent judge who cares, and I'm sad to see him go," said Judge James Burns, chief judge of the state Intermediate Court of Appeals. "The state of Hawaii should be unhappy at losing him."

Part One: Monday, Jan. 13
Part Two: Tuesday, Jan. 14
Part Three: Wednesday, Jan. 15

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