OHA seeks high-court
action on ceded lands

The state is accused of wrongly
annulling its promised payments

The Office of Hawaiian Affairs wants the state Supreme Court to reinstate a lawsuit that seeks millions of dollars owed under an invalidated state law that had set up a funding formula for the agency.

Attorneys for OHA say the state breached its fiduciary duties by participating in the demise of the 1990 law that calculated OHA's share of revenues from ceded lands, or former monarchy lands.

The state contends OHA has no viable claims.

"We believe that former Gov. Ben Cayetano and former Attorney General Margery Bronster did what was in the best interest of the state of Hawaii, and the claim that because of their conduct OHA is entitled to recover hundreds and hundreds of millions of dollars from the state is frivolous," said state Attorney General Mark Bennett.

Under the state Constitution, OHA must get a percentage of the revenues from the former monarchy lands held in trust by the state government.

The legislative and executive branches reached a 1990 settlement agreement that resulted in Act 304, by which OHA would get 20 percent of ceded-lands revenues.

But the Hawaii Supreme Court invalidated Act 304 in September 2001, saying it conflicted with federal law prohibiting the state, which receives federal grant moneys, from diverting airport revenues for non-airport uses.

The state initially argued that the payments to OHA were for rent and did not violate federal laws. But in the summer of 1997, the state agreed to the language in a federal omnibus appropriations bill that said any future payments of airport revenues would be illegal under federal law, in exchange for "forgiveness" of past payments totaling $28 million. It was called the Forgiveness Act, which was passed later that year.

OHA sued the state in July 2003, saying the state should never have agreed to the Forgiveness Act because it breached both the 1990 agreement and its duties owed to OHA under the ceded-lands trust.

The fact that the statute was invalidated means OHA cannot get ceded-lands revenue under the statute, said former Associate Justice Robert Klein, one of three attorneys representing OHA.

Because the state wrongfully invalidated the statute by the actions of the state, "OHA should be able to get damages from the state based on that statute as if it existed today," he said. "But for the state's wrongful conduct, we would have that revenue source."

Deputy Attorney General Dorothy Sellers argued that the state did not have a conflict of interest when it agreed to the Forgiveness Act, because it was representing all five purposes of the trust, including the betterment of native Hawaiians. The only way OHA can sue for damages is if the state's actions violated its duty to manage and dispose of trust assets, she said.

OHA stopped getting payments after Act 304 was invalidated, and it was not until January 2003, shortly after she took office, that Gov. Linda Lingle resumed some payments on an agreement.

OHA continues to receive funding from sources other than the airport fees -- about $9 million to $10 million a year, Sellers said. "Eventually there will have to be a new law, but there isn't one, so we're paying them under an old, invalid law as best we can."