By BRUCE DUNFORD
The Associated Press

HONOLULU -- The Office of Hawaiian Affairs is entitled to 20 percent of the gross revenues from most state-owned lands, a Circuit Court judge ruled Monday.

It's a ruling that could cost the state more than $200 million, although Gov. Ben Cayetano said the state will appeal and expects to prevail.

It would be on top of the $135 million the state paid OHA in 1993 as its share of ceded land revenues for the period of 1981 to 1990 and doesn't address additional revenue claims OHA might make for the period of 1990 to the present, according to Attorney General Margery Bronster.

Cayetano criticized the state Senate for not having the ``courage'' in an election year to remedy the problem as he had requested during this year's legislative session, saying it now threatens to divide the community.

``That's very satisfying. It's very important. It's very significant,'' said OHA Chairman Clayton Hee. ``What this means for us is that revenues which by law are entitlements to Native Hawaiians must now be accounted for by the state, and they must now be paid for the betterment of conditions of Native Hawaiians.''

Cayetano said he's willing to attempt to negotiate a settlement with OHA's trustees, but said feuding among the trustees themselves has stalled that effort.

The ruling by Judge Daniel Heely supports OHA's claim that it receive 20 percent of the gross revenues from ceded lands, including landing fees and off-site duty free concessions at the Honolulu Airport, rents from public housing projects and patient payments at Hilo Hospital.

It advances the OHA lawsuit to trial to determine just how much OHA should be paid.

Bronster said the state likely will request that its appeal of Heely's ruling go directly to the state Supreme Court without waiting for the case to go to trial.

One key issue ignored by Heely was the state's contention that the state never waived its sovereign immunity, which protects it from such damage claims, Bronster said.

Cayetano said he tried to get this year's Legislature to amend the ``ambiguous'' 1990 law under which OHA brought its suit. But while the House agreed with the bill to clarify OHA's revenue entitlement, the Senate balked because of opposition from a few key senators, he said.

``The House took action and the Senate didn't show any courage, in my opinion,'' Cayetano said. He blamed that on election-year politics.

The governor said he is concerned about the ruling and the case, saying if OHA prevails, it could divide the community against Hawaiians.

``As far as I'm concerned, it's wrong to hold this generation of Hawaiians -- when I say Hawaiians I mean everyone who is part of this state, I mean Filipinos, Japanese, Chinese, Portuguese and everyone else -- for the responsibility of the sins of a few people many, many years ago,'' Cayetano said.

``What we have here today is the product of all those races working together and this issue I think can be very, very divisive because if we're forced to pay, we'll either have to raise taxes or cut services. We're not in a position to raise taxes.''

The governor said OHA is claiming revenues that are generated from improvements on the land for which OHA made no contribution.

``The law as it stands today puts the state in a severe disadvantage,'' Cayetano said. ``Can anyone imagine having to pay 20 percent of the proceeds right off the top before expenses to a party which did not contribute anything in terms of the investment and cost of construction? It's a very, very unfair situation to be in.''

``Judge Heely seems to have ruled more from his heart than from his head,'' the governor said.

The state is already barred by federal law from using airport landing fees and concessions to pay OHA because such funds are restricted to airport uses, he said.

The 1990 law which said OHA was entitled to a share of all ceded land revenues includes a provision that invalidates the entire law, should any part of it conflict with federal law, Cayetano noted.

That would revert the issue to the original 1981 law which has already been ruled by the state Supreme Court to be unenforceable, he said.

OHA, which was established by a state constitutional amendment in 1978 to serve the needs of all Hawaiians and part-Hawaiians, can only use its share of ceded land revenues to benefit Hawaiians of 50 percent or more blood quantum.

Ceded lands make up about 95 percent of all state-owned lands and are the public lands and crown lands that were ceded from the Republic of Hawaii at the time of U.S. annexation to the Territory of Hawaii and then to the state of Hawaii in 1959.

See related article OHA, state square off over $170 million, Honolulu Star-Bulletin, July 9, 1996

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