By Linda Hosek and Mike Yuen
Star-Bulletin

While state officials appeal a ruling that could force them to pay at least $170 million to the Office of Hawaiian Affairs, the interest will be adding up.

At issue is whether OHA can sue the state for monetary damages and whether it can claim 20 percent of certain revenues from land that the state holds in trust for native Hawaiians.

Circuit Judge Daniel Heely yesterday ruled that OHA has a right to sue the state for revenues from ceded lands. Heely also said OHA can claim revenues from four areas in dispute: housing sales and rentals, Hilo Hospital patient services, off-site Duty Free Shoppers and interest income.

"We're confident we will prevail," said James Duffy, OHA attorney. "In the meantime, the interest keeps mounting."

Gov. Ben Cayetano said the state will prevail on appeal.

Heely's ruling would "absolutely" plunge the state into a fiscal crisis much worse than what the isles have endured during the past two years, he said. The ruling would drain state coffers and mean deeper cuts in government services, he said.

"The ruling is significant not only in dollars," said OHA Chairman Clayton Hee.

"The judge forever took off the shroud of sovereign immunity."

Deputy Attorney General Charleen Aina said the state had acknowledged that native Hawaiians could sue the state over the trust, but not for monetary damages. Aina also said the state argued that receipts from the four areas should not be included as revenue.

The $170 million would be in addition to the $135 million the state gave OHA in 1993 as payment for ceded land revenues for the period of 1981 to 1990. OHA could still seek additional revenue claims for 1990 to the present.

OHA filed suit against the state two years ago after it was unable to resolve revenue issues in the four areas, Duffy said.

The controversy arose from a 1990 act in which the state Legislature decided that the state must pay OHA 20 percent of the revenue from 1.8 million acres of ceded lands.

In his ruling, Heely cited the so-called "apology bill," adopted by the U.S. Senate in 1993. The bill states that the federal government illegally overthrew the Hawaiian monarchy and improperly claimed 1.8 million acres.

Heely also said the state received the lands in 1959 during statehood and assumed the role of a trustee, creating a contract relationship with its beneficiaries.

He also said the beneficiaries of a public trust must have access to the courts to state their claims.

Housing revenues would come from Hawaii Housing Authority and Housing Finance and Development Corp.

He also said the state Legislature intended OHA to receive interest income. Lawmakers said interest would accrue at 6 percent from 1980 to 1982 and at 10 percent after 1982.

Heely also cited the "Aloha Spirit" act of 1986. The act states that judges can give consideration to the Aloha Spirit, which it defined in part as "mutual regard and affection," in which each person has importance to the other.

"I can't think of a more appropriate concept," he said.

Cayetano said: "This thing is only going to divide people. This is the big problem I see. . . . As far as I'm concerned, it's wrong to hold this generation of Hawaiians - and when I say Hawaiians, I mean everyone who's a part of this state, Filipinos, Japanese, Chinese, Portuguese and everybody else - responsible for the sins of a few people from many, many years ago. Hawaii wasn't just built by the Hawaiians. It was built by many different ethnic groups."

See related article Court ruling on OHA case could cost state more than $200 million, The Maui News (Associated Press), Tuesday, July 09, 1996

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