Hawaii Debates Wealth of Ceded Lands

Haunani Apoliona sees the “hustling and bustling” DFS-Hawaii store in Waikiki, where tourists from Japan buy duty-free goods to take home, and wonders why native Hawaiians aren’t benefiting from those sales.

That is a key issue in a long-standing dispute between the state and native Hawaiians. The agency Apoliona heads is charged with distributing benefits to Hawaiians.

But more than 20 years after a state law promised funds to help native Hawaiians, the Office of Hawaiian Affairs is still fighting for the money in a dispute that stretches from the overthrow of Queen Liliuokalani on Jan. 17, 1893, to rulings in Congress and the courts, with no end in sight.

The issue is revenues from ceded lands.

Ceded lands are crown or public lands that were ceded to the new Republic of Hawaii after the overthrow of the monarchy, then to the Territory of Hawaii after U.S. annexation of the islands in 1898, and finally to the new state of Hawaii in 1959. They make up about 1.4 million acres, or 95% of state-owned lands.

“We’re not being greedy, but just asking for what we are statutorily entitled to,” said Apoliona, OHA chairwoman.

In this island state of 1.2 million people, only the estimated 240,000 descendants from the original island people can call themselves Hawaiians. Everyone else is a “Hawaii resident,” even if they were born here.

The 1959 statehood act provided that lands granted to the state be held in trust for public education, health, housing, farming and conservation, and betterment of Hawaiians.

A 1980 state law provided that each of the five areas would get 20% of the “funds derived from the public land trust.” The portion for Hawaiians goes to OHA, created by a 1978 constitutional amendment as a public trust with a mandate to better the conditions of Hawaiians. The office, established in 1980, was to be funded with the share of revenues from ceded lands.

That, however, is where agreement ends. The state and OHA failed to agree on a definition of what money was covered, and OHA sued.

In 1993, the state, as partial settlement, gave OHA $135 million, which formed the basis of the OHA trust fund, said Ernest Kimoto, an OHA staff attorney. That amount covered what the state should have paid between 1980 and 1991, according to Apoliona.

The state and OHA also signed a memorandum listing four areas of disagreement -- community hospitals, duty-free shops, public housing and interest.

In 1997, the Federal Aviation Administration entered the dispute. Although one-third of Honolulu International Airport sits on ceded lands, the FAA said federal airport money would be withheld unless the state recovered $28.2 million in airport revenues paid to OHA. Federal law requires that landing fees and related revenues go back into airport maintenance and construction, Kimoto said.

Congress decided in 1998 that OHA could keep the $28.2 million, but prohibited further use of airport funds to pay claims related to ceded lands. The Hawaii Supreme Court ruled that in imposing that condition, Congress had in effect invalidated the state’s plan for paying OHA.

Former Gov. Ben Cayetano said the ruling effectively reversed another court ruling that allowed OHA to sue to recover ceded land revenue from hospitals, duty-free shops, public housing and interest. He ordered state departments to withhold payments.

While that issue remains unresolved, OHA requested payment of $10.3 million in undisputed payments when Gov. Linda Lingle took office Dec. 2. That sum has grown to $12.3 million, say Kimoto and Apoliona.

Lingle has pledged to make back payments, but said she first wants the state attorney general to work out a way to continue the payments without the chance of a court challenge.

“We must make absolutely sure that we do not inadvertently drive a wedge between Hawaiian and non-Hawaiian communities,” Lingle said.

Apoliona said she hopes that the quarterly payments will resume. But Cayetano has said it is the OHA that has blocked resolution, through greed.

Cayetano in 1999 offered OHA $251 million and 360,000 acres of ceded lands to settle the issue, former OHA Chairman Clayton Hee said. However, Cayetano insisted that it be a final settlement that would relieve the state of future OHA claims. The OHA board refused.

“If OHA had settled, it wouldn’t be in the position it is in now,” said Hee, who was chairman at the time. “I don’t expect there will be another opportunity for a quarter-billion dollars and land the size of Kauai.”

Cayetano said OHA trustees went to great lengths to argue for a larger settlement.

Circuit Judge Sabrina McKenna ruled Dec. 5 that the state has the legal authority and sovereign immunity to sell ceded lands. OHA has appealed that ruling.