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April 29, 1999 Amicus Brief filed in OHA vs. State Ceded Lands Lawsuit



(c) Copyright 1999 - 2002 Kenneth R. Conklin, Ph.D. All rights reserved


INTRODUCTORY EXPLANATION FOR WEBSITE READERS

OHA v. State is sometimes referred to as the "ceded lands" case. It is a story of greed and political correctness run amuck which has brought Hawaii to the brink of economic disaster. Here are the events which led up to the filing of the amicus brief.

In 1990 the State of Hawai'i Legislature, in Act 304, defined "revenues," and mandated that the State of Hawai'i Department of Budget and Finance (B&F) negotiate with the State of Hawai'i Office of Hawaiian Affairs (OHA), to determine the amounts payable to OHA for use of the ceded lands for the years 1980 through 1991.

In 1993, after extensive discussions, OHA and the State jointly supported a proposal which was submitted to the legislature for payment of about $130 million, including interest, for the years 1980 through 1991. State officials, including the Director of the Department of Budget and Finance, testified that such amount would "settle" or constitute "paying the full amount" of OHA's claims to revenues from the ceded lands for 1980-1991. OHA did nothing to dispel this understanding but rather confirmed it. The Legislature, by Act 35, then authorized and appropriated the amount in general obligation bond funds to be paid to OHA for this purpose.

In April 1993, after Act 35 was enacted, OHA and an official from the Office of State Planning ("OSP") signed a Memorandum which stated in part "OSP and OHA recognize and agree that the amount specified in Section 1 hereof does not include several matters regarding revenues which OHA has asserted is due to OHA and which OSP has not accepted and agreed to." The official from the Office of State Planning who signed the memorandum was Harold Masumoto, known as then Governor John Waihee's "deal maker". He had no apparent legal authority to change the terms of the settlement which had been agreed to by the Department of Budget and Finance and OHA and submitted to and acted upon by the Legislature.

In June 1993 the $130 million was paid to OHA for its share of the ceded lands revenues for 1980 through 1991.

In January 1994 OHA commenced a lawsuit, OHA v. State of Hawaii, seeking payment of additional amounts going back to 1980 arising from receipts of the Waikiki duty-free shop, public housing, the Hilo Hospital and investment earnings on unpaid "revenue". In its answer to OHA's complaint, the State did not raise as a defense that the OHA laws are unconstitutional.

In October 1996, Circuit Court Judge Daniel G. Heely granted OHA's motion for partial summary judgment, ruling that OHA is entitled to a 20% share of each of the items in question. The State appealed, both sides filed briefs, oral arguments were held and the Hawaii Supreme Court deferred ruling until 1999 while the State and OHA discussed settlement.

Media accounts estimate that, if Judge Heely's decision is affirmed, between $300 million and $1.2 billion may be payable to OHA for the period 1980 through 1991 in addition to the $130 million already paid to settle OHA's claims for that period.

Earl Anzai, then State of Hawaii Director of Budget and Finance, signed an affidavit in OHA v. State on October 24, 1996 about the effect of Judge Heely's rulings on the State's fiscal condition. He said, among other things, questions and requests for additional information about the rulings have come from two nationally recognized securities agencies, Moody's and Standard & Poor's.

In paragraph 5 of his affidavit, Mr. Anzai said: "All of this gives me reason to believe that ratings presently assigned to outstanding general obligation and revenue bonds could be reviewed and downgraded. Ratings for pending and future offerings could also be lower, and pending and future offerings may need to be sold at higher rates of interest, irrespective of market conditions."

In 1998 Moody's downgraded Hawaii's general obligation debt rating from Aa3 to A1, a rating that placed Hawaii near the bottom of Moody's state ratings nationwide. See Honolulu Advertiser, front page Sunday January 3, 1999.

In April 1999 OHA broke off talks with the State. According to media reports, OHA had demanded $304 million plus full ownership of thousands of acres of revenue producing lands. The State reportedly had offered $251 million.

On April 29, 1999 Jack and Donna Scaff and Sandra and Bill Burgess moved to intervene as parties in OHA v. State and to file a brief asserting that the OHA laws are invalid under the Constitution of the United States. The Hawaii Supreme Court denied their motion to intervene but permitted them to file an amicus (friend of the court) brief. Their amicus brief, less the table of contents, table of authorities and addenda, follows.

Please note that this amicus brief was filed in 1999, and was severely limited in length by a rule of the Court. However, on February 23, 2000 the U.S. Supreme Court handed down its decision in Rice v. Cayetano. The Rice decision included strong language and clear legal principles that made it possible to greatly strengthen some of the arguments offered in this amicus brief. Accordingly, Bill Burgess produced a new package of legal documents and filed them with the Hawai'i Supreme Court.

On March 28, 2000 a multi-racial group of 23 citizens of Hawaii MOVED TO INTERVENE in OHA v. State in the Hawaii Supreme Court. Their MEMO IN SUPPORT charges the State Attorney General has a conflict of interest because he represents the interests of OHA in the Rice case. Their PROPOSED BRIEF challenges the validity of OHA itself based on the RICE DECISION.

This motion to intervene as a party to the ceded lands case was eventually denied without comment. But the arguments presented in the motion, memo, and brief probably helped the Justices think more clearly about the issues, and might have helped them reach their DECISION TO RULE AGAINST OHA AND DISMISS THE CASE ON NOVEMBER 12, 2001.


What follows here is the original amicus brief from 1999.


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NO. 20281

IN THE SUPREME COURT OF THE STATE OF HAWAII

OFFICE OF HAWAIIAN AFFAIRS and THE BOARD OF TRUSTEES OF THE OFFICE OF HAWAIIAN AFFAIRS, Plaintiffs-Appellees,
vs.
STATE OF HAWAI'I Defendant-Appellant, and JOHN DOES 1-10, et al, Defendants.

BRIEF OF AMICI CURIAE JACK H. SCAFF, DONNA MALIA SCAFF, SANDRA P. BURGESS AND H. WILLIAM BURGESS IN SUPPORT OF DEFENDANT-APPELLANT STATE OF HAWAII
Filed May 27, 1999


H. WILLIAM BURGESS #833
Attorney for Amici Curiae

INTRODUCTION

Governments that award benefits or impose detriments based on race or ancestry or "blood" have produced some of the darkest chapters in history: the holocaust, slavery and, right now in eastern Europe, ethnic cleansing.

The amici curiae presenting this brief are long time residents and taxpaying citizens of the State of Hawaii and of the United States and are beneficiaries of the public land trust established in 1898 "solely for the benefit of the inhabitants of the Hawaiian Islands for educational and other public purposes." 30 Stat. 750 (1898); Atty. Gen. Op. 7/17/95 fn.1, Addendum 6..

Donna Malia Scaff is of 33% Chinese, 25% Okinawan, 25% German and 17% Hawaiian ancestry. Sandra P. Burgess is of 50% Chinese, 25% Filipino and 25% Hawaiian ancestry. The two male amici are of Caucasian ancestry. Decl. Movants filed 5/14/99.

Although these amicis' past, present and future tax burden has already been increased because of previous ceded lands payments to OHA (such as the $130 million general obligation bond to pay OHA, Act. 35, S.L.H 1993) and will be further increased if additional payments are awarded in this case, the laws supporting OHA's claims deny to these amici, solely because of their race or ancestry or "blood", any part of or benefit from those payments. §§10-2 and 13.5 HRS.

The ceded lands were not "stolen" from the Hawaiian people or taken from them without compensation. Under the Kingdom of Hawaii and every government of Hawaii since then, the "ceded lands" were, and still are, public lands to be held for the benefit of all Hawaii's citizens without regard to race.

QUESTION PRESENTED

Whether the laws on which Plaintiffs-Appellees rely for their claims in this case are valid under the Constitution of the United States?

ARGUMENT

All government programs with racial classifications are subject to strict scrutiny

"[A]ll racial classifications, imposed by whatever federal, state, or local government actor, must be analyzed by a reviewing court under strict scrutiny." Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227 (1995); accord City of Richmond v. J.A. Croson Co., 488 U.S. 469, 496 - 97 (1989); Shaw v. Reno, 509 U.S. 630, 644 (1993). "In other words, such classifications are constitutional only if they are narrowly tailored measures that further compelling governmental interests." Adarand, 515 U.S. at 227.

Justice Scalia, in his concurring opinion in Adarand, said,

Individuals who have been wronged by unlawful racial discrimination should be made whole; but under our Constitution there can be no such thing as either a creditor or a debtor race. That concept is alien to the Constitution's focus upon the individual, see Amdt. 14, 1 ("[N]or shall any State ... deny to any person" the equal protection of the laws), and its rejection of dispositions based on race, see Amdt. 15, 1 (prohibiting abridgment of the right to vote "on account of race") or based on blood, see Art. III, 3 ("[N]o Attainder of Treason shall work Corruption of Blood"); Art. I, 9 ("No Title of Nobility shall be granted by the United States"). (Emphasis added.)

To pursue the concept of racial entitlement - even for the most admirable and benign of purposes - is to reinforce and preserve for future mischief the way of thinking that produced race slavery, race privilege and race hatred. In the eyes of government, we are just one race here. It is American.

The classifications singling out "native Hawaiians" are explicitly racial and therefore presumptively invalid.

The Hawaiian Homes Commission Act ("HHCA") defines "native Hawaiian" as "any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778".

Presidents Reagan and Bush have each officially termed this definition "racial". See signing statements for amendments to HHCA in Addendum 5. §10-2 Haw. Rev. Stat. defines "native Hawaiian" as,

any descendant of not less than one-half part of the races inhabiting the Hawaiian Islands previous to 1778, as defined by the Hawaiian Homes Commission Act, 1920, as amended; provided that the term identically refers to the descendants of such blood quantum of such aboriginal peoples which exercised sovereignty and subsisted in the Hawaiian Islands in 1778 and thereafter continued to reside in Hawaii.
These two, almost identical, definitions are expressly based on racial criteria and are presumed to be invalid unless they survive strict scrutiny.
"‘[a]ny preference based on racial or ethnic criteria must necessarily receive a most searching examination," Wygant v. Jackson Board of Ed., 476 U.S. 267, 273 (1986). "A racial classification, regardless of purported motivation, is presumptively invalid and can be upheld only upon an extraordinary justification. Personnel Adm'r of Mass v. Feeney, 442 U.S. 256, 272 (1979).
(The term "OHA laws" as used in this brief means: (1) Admission Act, §4 and the words, "for the betterment of native Hawaiians as defined in the Hawaiian Homes Commission Act" in §5(f); (2) Articles XII and XVI of the State Constitution; (3) Chapter 10 of the Hawaii Revised Statutes; and any other provisions in Hawaii's laws which support OHA's claims or single out "native Hawaiians" for treatment different from that given other citizens of Hawaii.)

To pass strict scrutiny and justify OHA's race-based preferences, the State must show the OHA laws are narrowly tailored to further a compelling State interest

The only compelling interest that the U.S. Supreme Court has found sufficient to justify race-based laws is the need to remedy present discrimination or the present effects of past discrimination. Adarand, 515 U.S. at 227; Croson, 488 U.S. at 496-97.

The State has not shown, because it cannot show, it has a compelling State interest in adopting the OHA laws as part of its constitutional and statutory law

Nothing in the record or in the related case of Rice v. Cayetano, (where the constitutionality of the OHA voting restrictions was raised) demonstrates present discrimination or present effects of past discrimination so as to justify the OHA laws. Nor did the local U.S. District Court, 963 F.Supp. 1547 or the Ninth Circuit Court, 146 F.3d 1075, in Rice v. Cayetano purport to rest their decisions on that ground. This glaring absence is sufficient, in itself, to demonstrate that the OHA laws cannot survive strict scrutiny.

But there is another reason the State cannot have a compelling interest in preferring native Hawaiians over other citizens in the distribution of ceded lands income. The State holds the ceded lands as trustee of the public land trust established in 1898 "solely for the benefit of the inhabitants of the Hawaiian Islands for educational and other public purposes." Atty. Gen. Op. 7/17/95, fn. 1, Addendum 6.

"[T]he conduct of the government as trustee is measured by the same strict standards applicable to private trustees" and "a trustee must deal impartially when there is more than one beneficiary." Pele Defense Fund v. Paty, 73 Haw. 578, 603, 837 P.2d 1247, 1263 (1992) citing Restatement of Trusts, Second §183.

"In other words, it is the duty of the trustee to treat all beneficiaries equally." 76 AmJur2d, Trusts §389 Loyalty to plural beneficiaries and plural trusts.

Establishing racial distinctions is not "impartial" or "equal" treatment. Thus, the State's fiduciary duty as trustee prohibits it from permanently giving to a small group of beneficiaries (perhaps 20,000 to 50,000 people who make up less than 5% of the population - see http://aloha4all.org ) 20% of the revenues (particularly when the OHA laws, as worded, interpreted and applied by the State and the lower court, apparently give OHA an amount that exceeds the entire net income of the trust, in addition to the benefits reserved exclusively for "native Hawaiians" in the 200,000 acres under the HHCA.)

By adopting and enforcing the OHA laws, the State violates its fiduciary duty, owed to over 1 million of its citizens, and flunks "strict scrutiny".

§5(f) and other "strings" Congress attached to Hawaii's admission to the Union cannot provide a compelling interest because they violate the equal footing doctrine and are themselves unconstitutional

All states, old and new, stand on an equal footing, that is they have equality of constitutional right and power, each competent to exercise the sovereignty not delegated to the United States by the Constitution itself. Escanaba Co. v. Chicago, 107 U.S. 678, 689 (1883); Utah Div. of State Lands v. United States, 482 U.S. 193 (1987), accord Amici Curiae Brief by attorneys general including Corinne K.A. Watanabe, then A.G. of Hawaii. Addendum 4.

A State's equality of constitutional right and power may not be hampered by any Congressional enactment even if accepted upon admission. Pollard's Lessee v. Hagen, 44 U.S. (3 How.) 212 (1845). In Coyle v. Smith, 221 U.S. 559 (1911) the court invalidated a restriction on the change of location of the State capital, which Congress had imposed as a condition for the admission of Oklahoma.

"As to matters strictly of State cognizance the legislative power of the State is complete, unhampered by any congressional enactments even if accepted upon the admission of the State, for each State is admitted on an "equal footing" with the others." In re Island Airlines, 44 Haw. 634, 642, 361 P.2d 390 (1961).
The first sentence of the Admission Act includes the statement that "the State of Hawaii is declared admitted into the Union on an equal footing with the other States in all respects whatever". Addendum 2. Nevertheless Congress attached strings. §4 of the Admission Act required that,
As a compact with the United States ... the Hawaiian Homes Commission Act, 1920, as amended, ("HHCA") shall be adopted as a provision of the Constitution of said State... subject to amendment or repeal only with the consent of the United States, and in no other manner ... and that all proceeds and income from the "available lands", as defined by said Act, shall be used only in carrying out the provisions of said Act.
(The "available lands" are the approximately 200,000 acres of the ceded lands which Congress, by the HHCA in 1921, set aside for long term leases of homestead lots at $1 per year to "native Hawaiians".) §5(f) of the Admission Act also required that "for the betterment of the conditions of native Hawaiians, as defined in the [HHCA]" be added to the purposes of the public lands trust. §5(f) was cited at the 1978 Constitutional Convention as the justification for adding to the State Constitution the new Article XII Section 4. See SCR 59, I Proceedings of Con. Con. 1978 642 & 643, Addendem 3.

This new section recites the trust corpus of Section 5(b) and names the two principal beneficiaries established in Section 5 (f) of the Admission Act – those native Hawaiians as defined by the Hawaiian Homes Commission Act, 1920, as amended, and the general public .... Section 5(f) of the Admission Act created a trust of these public lands separate and apart from the lands defined as "available lands," by Section 203 of the Hawaiian Homes Commission Act, 1920, as amended.
This change to Hawaii's Constitution caused a radical change in the public land trust. Prior to 1978 the income from the public land trust had gone by and large to the Department of Education where it benefitted public school children of all races, including the approximately 25% of the students who are of some Hawaiian ancestry. Now, it appears that none goes to public education and, instead, an amount exceeding all of the net income of the public land trust goes to OHA.

These "strings" restrict the State's power to determine for itself, like other states do, the best use of its own public lands and the best allocation of their income and proceeds. The Constitution does not delegate that power to the federal government. These are matters strictly of State cognizance so that Hawaii is "unhampered by any congressional enactments even if accepted upon the admission of the State." In re: Island Airlines, supra.

Furthermore, the United States was also a trustee under the public land trust. Att'y Gen. Op. July 17, 1995, fn 1, Add. 6. Nothing "compelled" the federal government, in transferring those lands back to Hawaii in 1959, to require the State to give preference to native Hawaiians. The opposite is true. The United States' fiduciary duty compelled it to administer the trust impartially and forbade it from permanently favoring one small racial group among the beneficiaries. Restatement of Trusts, Second §183; Pele Defense Fund v. Paty, 837 P.2d at 1263 (1992). Thus, the "strings" attached by Congress to Hawaii's admission fail both "equal footing" and "strict scrutiny" and give no justification for Hawaii's discriminatory laws.

Even if some compelling governmental interest existed, the State cannot show the OHA laws are narrowly tailored

Racial classifications are not narrowly tailored unless the government has previously "carefully examined and rejected race-neutral alternatives" to attain the same end, Croson, 488 U.S. at 507 and the program is "appropriately limited such that" it "will not last longer than the discriminatory effects it is designed to eliminate". Adarand, 515 U.S. at 236.

Nothing in the record here or, apparently in Rice v. Cayetano, indicates that race-neutral alternatives or limitations on the duration of or method of calculating payments to OHA were considered.

To the contrary, for OHA the sky apparently is the limit. The preferential treatment of native Hawaiians is not limited in duration and could continue in perpetuity, long after the discriminatory effects, if there were any, had ceased to exist. The preference is not limited in proportion to population, and thus native Hawaiians, who make up less than 5% of the State population, are entitled to 20% of the revenues. It is not limited based on need, and thus middle class or wealthy native Hawaiians benefit while needy persons of other ethnic groups do not. The payments to OHA are not limited to a share of net income, and thus the State can, and apparently does, pay OHA 20% of gross revenues, leaving the share of the rest of the beneficiaries responsible for all the expenses. They are not limited so as to exclude income from improvements paid for by taxpayers generally, and thus OHA receives 20% of income that did not flow from the unimproved ceded lands but was created only because of major capital expenditures. Nor do the calculations of OHA's share exclude income from governmental grants of exclusive rights, and thus OHA takes 20% of the amount DFS pays to the State in return for having the exclusive right to deliver duty free goods to the airport, which amount is far in excess of the rental value of the small part of the ceded lands at the airport occupied by DFS.

As a result of this broad, not narrow, tailoring, OHA now, on behalf of less than 5% of the population, apparently receives 20% of the gross revenues which far exceeds the entire net income -- and none is left for the other beneficiaries who are saddled with extra taxes years into the future to repay State bonds issued to finance capital improvements to the ceded lands and to fund payments directly to OHA.

Nor do "native Hawaiians" have any "special" or "political" relationship, comparable to that of Indian tribes, which would exempt the OHA laws from strict scrutiny analysis.

In Morton v. Mancari, 417 U.S. 535 (1974), the court held that a "special relationship" exists between the United States and formally recognized Indian tribes by virtue of the Indian Commerce and Treaty clauses. Accordingly, it concluded that a congressionally mandated hiring preference for tribal members employed by the Bureau of Indian Affairs (BIA) was a political rather than a racial preference and was subject only to rational basis review.

The court carefully distinguished between "Indian tribes" as a political classification and "Indians" as a racial classification, making clear that the "special relationship" is limited to the former and that preference based on being an Indian would be subject to the same exacting scrutiny as any other racial classification. Thus, the BIA hiring preference at issue in Mancari was subject to rational basis review only because it applied "to Indians not as a discrete racial group, but rather, as members of quasi-sovereign tribal entities." 417 U.S. at 554. BIA's hiring preference was "not directed towards a ‘racial' group consisting of ‘Indians'; instead, it applie[d] only to members of ‘federally recognized' tribes." Id. at 553, n.24. The court emphasized that the requirement of tribal membership "operates to exclude many individuals who are racially to be classified as ‘Indians' and, as a result, "the preference is political rather than racial in nature." Id.

Subsequent cases confirm that the existence of a formally recognized tribal government is the defining characteristic of this "special relationship". See, e.g. United States v. Mazurie, 419 U.S. 544, 557 (1975); Fischer v. District Court, 424 U.S. 382, 390 (1976); United States v. Antelope, 430 U.S. 641, 645, 646 (1977); Washington v. Confederated Bands & Tribes of Yakima Indian Nation, 439 U.S. 463, 500-01 (1979). Benjamin, Equal Protection and the Special Relationship: The Case of Native Hawaiians, 106 Yale Law Journal, No. 3, page 537 (Dec 1996).

Both Adarand and Croson involved programs that included Native Americans (defined racially, without reference to tribal affiliation) among the enumerated beneficiaries. See Adarand, 515 U.S. at 205 (program benefitting "‘Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and other minorities."') (emphasis added, citations omitted); Croson 488 U.S. 478 (program benefitting "‘Blacks, Spanish-speaking, Orientals, Indians, Eskimos, or Aleuts"') (emphasis added; citation omitted). In both cases, the court treated the legislative classifications (including those involving Indians) as purely racial in nature, and applied strict scrutiny to all of them.

Hawaiians are not members of an "Indian tribe". In his brief in opposition to the petition for certiorari in Rice v. Cayetano, the Governor admits at page 18, "The tribal concept simply has no place in the context of Hawaiian history." Addendum 7. The Governor's statement is well supported by history.

The Kingdom of Hawaii was itself established in part due to aid given to Kamehameha by dozens of "westerners" whom Kamehameha rewarded by making them high-ranking chiefs and advisors in his government. Kuykendall, The Hawaiian Kingdom 1778-1854, 1938, Ch III. Succeeding monarchs gave naturalized subjects all the rights, privileges and immunities of natives, (Constitution of 1852, Arts. 14 & 78; Civil Code of 1858 §§432 & 433) and Haoles increasingly occupied positions of influence and political power. By the mid-1850s the chiefs were finished as a ruling class, although the kingship itself, translated by Haole ministers into a "civilized" monarchy of European persuasion, managed to survive. By 1893, when the monarchy was overthrown, Hawaii had already long been a multi-ethnic oligarchy presiding over a heterogeneous population. Native Hawaiian Data Book: Tables 1.1, 1.d and 1.e; Sahlins, 1 Anahulu, The Anthropology of History in the Kingdom of Hawaii, 1992, Ch. 5.

CONCLUSION

The judgment below should be reversed. Judgment should be entered in favor of the State declaring the OHA laws invalid under the Constitution of the United States.

DATED: Honolulu, Hawaii, May 27, 1999

DONNA MALIA SCAFF, JACK H. SCAFF, SANDRA PUANANI BURGESS AND H. WILLIAM BURGESS
Amici Curiae


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(c) Copyright 1999 - 2002 Kenneth R. Conklin, Ph.D. All rights reserved


Email: ken_conklin@yahoo.com