Day v. Apoliona: Lawsuit against OHA by native Hawaiians with high blood quantum gets resurrected by U.S. 9th Circuit Court of Appeals in August 2007. A motion to intervene was filed in November 2007 by a group of 6 plaintiffs with no Hawaiian native blood seeking to protect the rights of a million Hawaii citizens to share in the ceded lands trust.

SUMMARY: On August 7, 2007 the 9th Circuit Court of Appeals ordered Judge Susan Oki Mollway of the U.S. District Court in Honolulu to reinstate a lawsuit she previously dismissed. The 5 plaintiffs are native Hawaiians with at least 50% native blood quantum who complain that the State of Hawaii Office of Hawaiian Affairs (OHA) is improperly spending enormous amounts of money on programs for low-blood-quantum ethnic Hawaiians. Those OHA programs include lobbying for the Akaka bill, advertising for the Kau Inoa racial registry expected to be used for a membership roll for the Akaka tribe, small-business loans, etc. The plaintiffs point out that the Hawaiian Homes Commission Act of 1920 (HHCA) set aside 203,500 acres of land for Hawaiian Homelands exclusively for the benefit of native Hawaiians of 50% or higher native blood quantum. The Statehood Act of 1959, section 5(f) specified that the new State of Hawaii can use revenues from the ceded lands for any one or more of five purposes, one of which is the betterment of native Hawaiians as defined in HHCA; i.e., at least 50% native blood quantum. In 1978 a state Constitutional Convention created OHA. The Legislature subsequently provided a permanent funding source for OHA of 20% of ceded land revenues. 90% of the money OHA spends comes from current ceded land revenues, and from investment income from previously hoarded ceded land revenues (the remainder of OHA's money comes from annual appropriations of taxpayer dollars from the general fund; and plaintiffs are NOT complaining that those funds are spent to benefit low-quantum ethnic Hawaiians). Plaintiffs complain that ceded-land money should be spent for programs to benefit exclusively native Hawaiians with at least 50% blood quantum; and that the Akaka bill dilutes the moneys belonging to high-quantum native Hawaiians by creating a government that would control those assets, in which every person with a single drop of native blood has voting rights. This webpage provides the full text of the 9th Circuit Court decision, news reports and commentaries about this lawsuit, and commentary by Chief Maui Loa asserting the special rights of high-blood-quantum native Hawaiians.

On November 9, 2007 a group of 6 Hawaii citizens with no Hawaiian native blood filed a motion to intervene in this lawsuit to protect the rights of a million citizens to share in the ceded lands trust. The motion to intervene was not reported in the press until November 26. The November 26 news report is copied, followed by the full text of the November 9 motion to intervene and the accompanying opposition to State of Hawaii.

http://honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20070808/NEWS01/708080395
Honolulu Advertiser, Wednesday August 8, 2007

A group of five Native Hawaiians who want the Office of Hawaiian Affairs to spend most of its money on people with 50 percent Hawaiian blood or more will get another day in court.

A panel of the 9th U.S. Circuit Court of Appeals in San Francisco yesterday ordered U.S. District Judge Susan Oki Mollway to hear the case in her Honolulu court after she rejected it last year.

The five Native Hawaiians are suing OHA because they believe the agency has too many beneficiaries. They argue that most of OHA's $28 million annual budget should be spent on people with 50 percent Hawaiian blood or more.

The lawsuit was filed by Virgil Day, Mel Ho'omanawanui, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha, all of whom are 50 percent Hawaiian or more.

OHA officials said it would be a mistake to limit its programs to the 50 percent or more group.

"When you look at OHA's mandate ... it's a very broad mandate," said OHA administrator Clyde Namu'o. "It simply talks about bettering the conditions of Hawaiians and native Hawaiians.

"So we believe in order to satisfy our mandate, we can't simply isolate that one group and say 'Well, if we better the condition of 50 percent Hawaiians, we will have bettered the conditions of everyone else.' The reverse is actually true. If you better the condition of all Hawaiians, regardless of blood quantum, then you are in fact raising the standard of living for the 50 percent Hawaiians as well. That's our position."

Most other challenges against OHA and other Hawaiians-only programs have come from those who feel that funds should not be given to specific groups based on race. The lawsuit filed by the five men is unique in that it argues OHA has too many beneficiaries.

The three-member panel of the 9th Circuit Court reversed Mollway's decision in August 2006 to throw out the case on the grounds that prior case law could not support it. Recent U.S. Supreme Court cases have undermined prior case law that formed the basis for the Day lawsuit, Mollway said.

In their opinion, however, the appeals panel stated, "Each Native Hawaiian plaintiff ... has an individual right to have the trust terms complied with, and therefore, can sue ... for violation of that right."

Yesterday's decision by three of the 28 members of the 9th Circuit allows the case to proceed, but does not not express an opinion on the merits of the allegations.

Walter Schoettle, attorney for the five men, said in a statement that he and his clients are elated that the court affirmed that they have a right to sue in federal court.

Schoettle blasted the state, and not OHA, for challenging the standing of his clients. "However, OHA, as trustees for the native Hawaiians, should have been defending my clients' rights to sue even though they were the ones on this particular occasion being sued."

He added that "none of the other so-called native Hawaiian advocacy agencies came to the defense of the native Hawaiian beneficiary in this case. It was my clients standing alone who have prevailed in preserving this precious right."

The five men charged that OHA "expended trust funds without regard to the blood quantum contained in the definition of native Hawaiians" as spelled out in the Hawaiian Homes Commission Act of 1920.

OHA officials, however, have said their mandate is different and that they are bound not by the blood quantum requirements found in the homestead act but rather the Hawai'i Admission Act of 1959.

OHA, in a statement yesterday, said that while the appeals court reaffirmed the right of native Hawaiians to sue, it will continue to defend against the claims brought by the group.

"OHA continues to believe that there is no merit in the plaintiff's position," OHA Board Chairwoman Haunani Apoliona said. "We believe we will ultimately prevail based on the merits of this case."

State Attorney General Mark Bennett said the appeals court is wrong in believing that individuals can sue over alleged violations of the land trust law.

"At this point, we're going to look at whether or not we have the ability to seek to intervene and, on appeal, file for a suggestion for a rehearing en banc," Bennett said. "I don't know if we're able to do that."

An en banc hearing would require a larger percentage of the 9th Circuit appeals court judges to make a decision on whether to accept the decision of its three-member panel that the case should be reinstated.

The thrust of the lawsuit is the charge that the trustees have spent trust funds lobbying Congress for passage of the Akaka bill, which seeks to create a government entity that would represent all with Hawaiian blood regardless of their quantum.

Additionally, the lawsuit alleges trustees have "expended trust funds for all-expense-paid vacations and political junkets for themselves and their staff in the guise of lobbying for passage of the Akaka bill."

OHA trustees have previously stated that they have spent at least $1 million lobbying for the Akaka bill.

The lawsuit also challenged OHA's funding of the nonprofit Native Hawaiian Legal Corp. and Na Pua No'eau Education Program, saying it goes beyond what is allowed in the Hawaiian Homes Commission Act, language that was later incorporated into the state Constitution.

Under the Hawaiian Homes Commission Act, money generated by the so-called ceded lands — former Hawaiian crown and government lands — is supposed to benefit those with 50 percent blood quantum.

Currently, about 10 percent of OHA's $28.5 million in funding comes from state taxes, with the rest from ceded lands.

OHA administrator Namu'o said that there are currently no programs designed to benefit 50 percent Hawaiians specifically. In the past, the agency had a homesteader loan program that benefited homesteaders, who need to be at least 50 percent Hawaiian.

The Department of Hawaiian Home Lands and the homestead act are targeted for 50 percent Hawaiians, he said,

"Our money is not the Hawaiian Homes Commission money," Namu'o said. "The authority for our money comes from the Admission Act that established the public land trust. Obviously the money that (DHHL) gets is specifically for 50 percent Hawaiians. We don't believe that that's true with ceded lands revenue that come off the public land trust."

http://starbulletin.com/2007/08/11/editorial/editorial01.html
Honolulu Star-Bulletin, August 11, 2007, EDITORIAL

THE ISSUE
A federal appeals panel has ruled that legal Hawaiian beneficiaries of a trust managed by the Office of Hawaiian Affairs have a right to sue OHA for breach of trust.

SIX months after staving off a lawsuit by non-Hawaiians, the Office of Hawaiian Affairs faces a serious challenge by those with 50 percent or more Hawaiian blood. Federal legislation separate from Sen. Daniel Akaka's sovereignty bill might be needed to keep Hawaiian programs intact. A three-judge panel of the 9th U.S. Court of Appeals this week reinstated a lawsuit by Hawaiians asserting that OHA should not be lobbying for the Akaka Bill or assisting Hawaiians with less than 50 percent Hawaiian blood. District Judge Susan Oki Mollway had ruled a year ago that the lawsuit was not permitted under federal law.

The appeals court ruled two years ago that non-Hawaiian taxpayers had no right to challenge OHA's expenditure of federal funding or revenue from crown or public lands ceded to the state in accordance with the Admission Act and the state Constitution. That lawsuit's challenge of state money going to OHA was rejected after the U.S. Supreme Court ruled in an Ohio case last year that taxpayers cannot challenge state expenditures in court.

The Admission Act set aside 1.8 million acres of land to be held by the state as a "public trust" in support of five areas of concern, one of which is "the betterment of the conditions of native Hawaiians," as defined in the 1920 Hawaiian Homes Commission Act. That law defined native Hawaiians as descendants "of not less than one-half part of the blood of races inhabiting the Hawaiian islands previous to 1778," when Capt. James Cook first came ashore.

Legislators have interpreted that to mean that 20 percent of the state revenue from those lands should go to OHA, which now receives more than $15 million a year from the state in ceded land revenue. Its annual operating budget is $28.5 million.

The lawsuit brought by Hawaiians with at least 50 percent Hawaiian blood contended that OHA has misspent the revenue to lobby in favor of the Akaka Bill and support three social programs -- the Native Hawaiian Legal Corp., the Na Pua No'eau Education Program and Alu Like Inc., a social services program, helping Hawaiians regardless of blood quantum.

The appeals panel ruled that a Hawaiian beneficiary of the trust "has an individual right to have the trust terms complied with, and therefore can sue ... for violation of that right." It ruled that Mollway misunderstood from a ruling in another case "that there was no private right of action under the Admission Act."

The panel sent the case back to Mollway to determine whether benefits are being spread among Hawaiians who don't qualify because they are less than half-Hawaiian. If so and the panel's ruling stands, OHA may have to turn to legislation amending the Admission Act in order to continue its good work.

http://www.oha.org/pdf/kwo07/KWO0709.pdf
Ka Wai Ola O OHA [OHA monthly newspaper], September, 2007
page 6

A federal appeals court has reinstated a lawsuit brought by five native Hawaiians seeking to prohibit spending by the Office of Hawaiian Affairs on programs that benefit Hawaiians of less than 50 percent blood quantum.

On August 7, a three-judge panel of the U.S. 9th Circuit Court of Appeals reversed U.S. District Judge Susan Oki Mollway’s earlier dismissal of the lawsuit filed by Virgil E. Day, Mel Ho‘omanawanui, Josiah L. Ho‘ohuli, Patrick L. Kahawaiola‘a and former Office of Hawaiian Affairs Trustee Samuel L. Kealoha, all of whom are 50 percent Hawaiian or more.

The plaintiffs claim that OHA’s trustees violated their rights as beneficiaries of the state’s ceded lands trust by using revenues to benefit Hawaiians with less than a 50 percent blood quantum, and their suit seeks restoration of all the allegedly misspent funds to the trust. The lawsuit also challenges OHA’s expenditure of trust money on supporting the Akaka Bill, claiming that the bill, without a blood quantum requirement, would “erode the rights and privileges of the beneficiaries” of the ceded lands trust.

Furthermore, the plaintiffs claim that OHA should not be “unreasonably” accumulating trust funds by investing them, because investment does not better the conditions of the 50 percent native Hawaiians.

A year ago, Mollway dismissed their case, saying that the federal Admission Act that made Hawai‘i a state – and which lays out the intended uses of the ceded lands trust – contains no clear intent that allows individuals to sue over alleged violations of the land trust law, and that recent Supreme Court rulings had conflicted with previous case law allowing such suits.

The appeals court panel disagreed, however, writing that “we cannot agree that there is a conflict sufficient to disregard well- established precedent .... We thus reaffirm what we have already held and reaffirmed: that each Native Hawaiian plaintiff, as a beneficiary of the trust ... has an individual right to have the trust terms complied with, and therefore can sue ... for violation of that right.”

Attorney Walter Schoettle, who represents the five plaintiffs in the case and has been involved in a number of previous blood-quantum-related suits against OHA, said in a statement that his clients were elated by the appeals court’s decision.

While affirming the plaintiffs’ right to sue, the appeals panel did not take any position on the merit of their blood-quantum claim. “OHA continues to believe that there is no merit in the plaintiffs’ position,” OHA Board of Trustees Chairperson Haunani Apoliona said. “We believe we will ultimately prevail based on the merits of this case.”

State Attorney General Mark Bennett, who had filed the friend-of-the-court brief that resulted in Mollway’s earlier dismissal of the suit, said he was looking into whether it would be possible to file a further appeal of the 9th Circuit panel’s ruling. If the case is not further appealed, it will be remanded to the federal District Court in Honolulu for further litigation.

Blood quantum has long been a divisive issue within the Hawaiian community. While OHA does receive the bulk of its funds from ceded lands revenue, the agency is mandated to benefit all Hawaiians.

In 1988 and 1990, OHA tried to gauge its beneficiaries’ views on the issue by putting two separate referenda before Hawaiian voters. More than 80 percent of those who voted said they supported a single definition of Native Hawaiian – one that includes all Hawaiians, regardless of blood quantum.

http://www.oha.org/pdf/kwo07/KWO0709.pdf
Ka Wai Ola O OHA [OHA monthly newspaper], September, 2007
page 18 of the physical newspaper; page 17 of the pdf version

‘Ano‘ai käkou. Honolulu attorney Walter Schoettle must like beating a dead horse. The Day v. Apoliona lawsuit against OHA is just another chapter in his long legal battle with OHA over the Hawaiian blood quantum percentage of beneficiaries. This war in the courts goes back 20 years. For example: Price v. Akaka (1993); Price v. Hawai‘i (1991); Price v. Akaka (1991); Price v. Hawai‘i (1990); and Price v. Hawai‘i (1985). (Source: http://lp.findlaw.com/).

When I was first elected to OHA 17 years ago, Walter Schoettle was the attorney for The Hou Hawaiians (Nui Loa Price and Kamuela Price). They sued several federal and state officials, including OHA trustees. The district court denied the Hou’s motion for summary judgment and dismissed their complaint against all defendants. But that didn’t stop Schoettle.

Now Schoettle has a new strategy with Virgil Day, Mel Ho‘omanawanui, Josiah Ho‘ohuli, Patrick Kahawaiola‘a and Samuel Kealoha (all of whom are 50 percent Hawaiian or more), to revisit blood quantum again. Their lawsuit argues that OHA’s $28 million annual budget should go to those with at least 50 percent Hawaiian blood. In essence, they don’t want to “share the wealth.”

Let us not forget that blood quantum was never an issue with the Hawaiian Kingdom. It was the United States Congress who created the blood quantum percentage in the 1920 Hawaiian Homes Act. It was created to limit the number of Hawaiians who qualified for homelands, not to preserve our race. It is sad that even after 100 years, some Hawaiians don’t recognize when they are being used.

They also challenge OHA’s right to partially fund the Native Hawaiian Legal Corporation (NHLC), which provides Hawaiian families with affordable legal representation. Thousands of people who might not otherwise have been able to obtain legal advocacy have held on to valuable lands or received fair compensation for their lands. NHLC also helped others to obtain Hawaiian Homestead leases, water for taro farming and access to shoreline areas for fishing. NHLC is the only nonprofit, public interest law firm specializing in Hawaiian land and traditional rights.

Other groups that are threatened by the lawsuit include Alu Like, a nonprofit that funds kupuna programs and assists Hawaiians with job training, and Nä Pua No‘eau, a Hawaiian language and culture program established at the University of Hawai‘i at Hilo. It is important to point out that all of these programs are also funded through matching funds by the Legislature.

The lawsuit also objects to OHA’s use of trust funds to lobby the Akaka Bill in Congress. They seem to miss the point that without the Akaka Bill, we may lose all of our Hawaiian trusts and programs to lawsuits. Walter Schoettle may be misleading his clients by telling them that unless they stop OHA, they will have to share their benefits, if the Akaka bill passes, with those with less than 50 percent Hawaiian blood. I say, “What benefits?” The only thing people with 50 percent or more Hawaiian blood are entitled to now are Hawaiian Home Lands. On the other hand, all 1.4 million acres of ceded lands belong to all Hawaiians, regardless of their blood quantum. The Native Hawaiian Trust Fund is much bigger than the acreage under the control of the Department of Hawaiian Home Lands (DHHL). There is no need to be selfish. Their self-serving attitude will only end up dividing Hawaiians.

Another reason that some homesteaders listed in the lawsuit probably don’t want the Akaka Bill to pass is that they only want sovereignty on DHHL lands. How small-minded can these people be? Do they honestly believe that hundreds of thousands of Native Hawaiians are going to go along with such a terrible idea?

We all need to realize that if we fight over the entitlements we receive then we all end up losers. The only ones who end up winning are the Twigg-Smiths of the world. Virgil Day and the other 50 percent Hawaiians need to wake up and realize that they are only being used to divide us. Who wins if the Schoettles and the Burgesses succeed? Certainly not the Hawaiians.

“I appeal to you... that there be no division among you, but that you be united in the same mind and the same purpose.” I Corinthians 1:10

For more information on important Hawaiian issues, check out my website at www.rowenaakana.org.

The actual decision of the 9th Circuit Court in Day vs. Apoliona, published August 7, 2007, is available in pdf format directly from the 9th Circuit Court's website. Here's the decision (it makes interesting reading).

There are at least three basic and conflicting positions in opposition to the Hawaiian Government Reorganization bill (Akaka bill).

(1) The mainstream opposition, which has been most successful in preventing the bill from being passed for seven years, is the "Aloha For All" argument that it would be historically, legally, and morally wrong to create a racial separatist government for ethnic Hawaiians. Hawai'i should remain unified under a single sovereignty with equality for all persons regardless of race.

(2) A secessionist viewpoint is taken by supporters of re-establishing Hawai'i as an independent nation. Most supporters of this position are ethnic Hawaiians; and all supporters of this position believe that ethnic Hawaiians are entitled to racial supremacy in voting rights and property rights in a restored nation of Hawai'i under a theory of "indigenous rights." They believe Hawai'i is under a long-standing illegal military occupation by the United States.

(3) A third position is taken by some of the ethnic Hawaiians who have at least 50% native blood quantum. They point to laws enacted by both the federal government and the State of Hawai'i that already give special rights to "native Hawaiians of the blood." They say it is historically, legally, and morally wrong for the special rights established for native Hawaiians of the blood to be broadened (and diluted) to include the far larger number of "one drop" or "toenail" Hawaiians.

An open letter to President Bush by Chief Maui Loa is in this third category. Maui Loa is NOT one of the plaintiffs in the lawsuit revived by the 9th Circuit Court of Appeals. But his views are easily accessible and are essentially the same as those of the actual plaintiffs.

There are various groups of ethnic Hawaiians who have a native blood quantum of at least 50%. The "Hou Hawaiians" under Chief Maui Loa is one of those groups. They claim that the Hawaiian Homes Commission Act of 1921 already constitutes federal recognition of their special rights as comparable to an Indian tribe. That law set aside 203,500 acres of the "ceded lands" exclusively for ethnic Hawaiians of at least 50% blood quantum for long-term residential and agricultural leases. The Admissions Act (Statehood act) of 1959 included a provision in section 5(f) that revenues from the ceded lands can be used for any one or more of five purposes, with one of those purposes being "for the betterment of native Hawaiians" as defined in HHCA. The state Constitutional Convention of 1978 established the Office of Hawaiian Affairs, and legislation two years later specified that 20% of all ceded land revenues must be diverted to OHA for the benefit of native Hawaiians as defined in HHCA (i.e., 50% blood quantum). But the Hawaiian Homelands have always had a very long waiting list, with nowhere near enough resources to "put Hawaiians back on the land." Although nearly all of OHA's $400 Million is earmarked by law for the 50% Hawaiians of the blood, OHA has lost sight of that blood quantum restriction and focuses most of its attention on the larger group of one-drop Hawaiians (which, of course, includes the 50%ers).

Maui Loa's open letter to President Bush strongly opposes the Akaka bill on the grounds that it would be a theft of the lands and special rights of "native Hawaiians of the blood" by opening up those lands and resources to the larger group of "one-drop" or "toenail" Hawaiians. The full text of the letter is at

Essentially the same content was published in the nationally-circulated journal "Indian Country Today" on April 26, 2005, under the title "An Open Letter to the White House: native Hawaiian sovereignty" at:

The basic concepts in this document were published as a paid advertisement in the form of a two-page spread in the Honolulu Star-Bulletin (print edition) on April 26, 2005. A photo image of that ad can be seen at:

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20071126/NEWS23/711260328/1173/NEWS23
Honolulu Advertiser, Monday, November 26, 2007

A group of non-Hawaiians want their say in a court case against the Office of Hawaiian Affairs that asks the state agency to spend its money helping only those with 50 percent or more Native Hawaiian blood.

The irony is that the six Hawai'i residents, led by former Advertiser publisher Thurston Twigg-Smith, are on the opposite side of those bringing the lawsuit. Twigg-Smith and his associates want OHA dismantled because they feel it discriminates against non-Hawaiians such as themselves.

The case is Day v. Apoliona, which was filed in 2005 by Virgil Day, Mel Ho'omanawanui, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha, all of whom are at least 50 percent Hawaiian.

The suit argues that OHA has too many beneficiaries and that most of the agency's $28 million annual budget should be spent on people with at least 50 percent Hawaiian blood.

In August, a panel of the 9th U.S. Circuit Court of Appeals in San Francisco ordered U.S. District Judge Susan Oki Mollway to hear the case in her Honolulu court. Mollway had rejected the case last year.

The state attorney general's office filed a petition asking that a larger group of appeals court judges rehear the decision made by the three-member panel. Twigg-Smith's group opposes that request and wants Mollway to hear the case as ordered by the three-member panel.

Recently, attorney H. William Burgess requested intervenor status to counter the attorney general's request on behalf of Twigg-Smith and five others, all of whom had been involved in court cases seeking to dismantle Hawaiians-only programs.

The other five are James Kuroiwa, Patricia A. Carroll, Toby Kravet, Garry P. Smith and Earl F. Arakaki.

"As beneficiaries of Hawai'i's Ceded Land Trust ... they are among the equitable owners of the trust corpus which is the source of the money at issue in this case, i.e., the millions of dollars in ceded-land revenues the Office of Hawaiian Affairs has spent and continues to spend to lobby for the Akaka bill," Burgess wrote in his motion.

The Akaka bill could lead to federal recognition of a Native Hawaiian entity. The bill's supporters say it is necessary to stave off challenges by Burgess and others against programs and agencies that serve only Hawaiians or primarily Hawaiians.

The state attorney general's office is opposing Burgess' petition for intervention.

OHA Administrator Clyde Namu'o said he believes agency attorneys will also oppose Burgess' request. "I don't see them having any business in this lawsuit at all," Namu'o said.

Walter Schoettle, attorney for the five Hawaiians who brought the original lawsuit, did not return calls requesting comment.

http://www.khnl.com/Global/story.asp?S=7409440
KHNL TV 8, Honolulu, November 26, 2007

HONOLULU (AP) - Six non-Hawaiians are asking the courts to dismantle the Office of Hawaiian affairs. [** Note from Ken Conklin -- that characterization of this motion to intervene is totally false. Associated Press and KHNL TV clearly did not read the movants' documents, available below.**]

The group led by former Honolulu Advertiser publisher Thurston Twig-Smith are asking to intervene in a suit brought by some Native Hawaiians against OHA.

The Hawaiians are suing the state agency to spend more money helping people with more than 50% Native Hawaiian blood.

The non-Hawaiian group is on the opposite side. They say the agency discriminates against other racial and ethnic groups in the islands.

The federal appeals court has ordered U.S. District Judge Susan Mollway to hear the case in Honolulu. Mollway had thrown out the case last year.

http://www.molokaitimes.com/articles/7123161432.asp
The Molokai Times, December 3, 2007

The people of Hawaii are the beneficiaries of Hawaii’s Ceded Land Trust, but there are only one people who for the past 87 years are identified as ‘native Hawaiian’ as amended…

This long standing was reconfirmed in 1978, Hawaii Revised Statute 103: (the purpose of the Office of Hawaiian Affairs), “OHA trust funds must be used to benefit those native Hawaiians whose blood quantum is 50 percent or greater as defined by the Hawaiian Homes Commission Act of 1920.”

But after over 30 years it took Rice v Cayetano to reveal the sham behind the state creation of OHA.

Thus our dysfunctional nicompoops in Washington, D.C. and the idiot claiming to be ‘Commander in Chief’ are opposed to the Akaka bill for all the wrong reasons.

I stand with native Hawaiian leaders in the likes of Josihia Ho’ohuli , Mel Ho’omanawanui, Patrick Ka’hawaiola’a and Virgil Day. We are tired of our kupuna, being denied and ignored by this crooked system, while being shuffled from sham to sham, despite the fact that there are many in the community who have given up the fight and joined the unholy alliance of the ‘ala mihi’ American, who whine that Day v Apoliona is a frivolous lawsuit. We greatly appreciate and are forever thankful for Walter R. Schoettle in counseling us against million-dollar law firm ‘water boys’ representing OHA, while being paid from the account that belongs to ‘native Hawaiians.’

VIRGIL E. DAY; MEL HOOMANAWANUI; JOSIAH L. HOOHULI; PATRICK L. KAHAWAIOLAA; AND SAMUEL L. KEALOHA,

Plaintiffs/Appellees,

vs.

HAUNANI APOLIONA, individually and in her official capacity as Chairperson and Trustee of the Office of Hawaiian Affairs; ROWENA AKANA; DANTE CARPENTER; DONALD CATALUNA; LINDA KEAWE EHU DELA CRUZ; COLLETTE Y. PIIPII MACHADO; BOYD P. MOSSMAN; OSWALD STENDER; and JOHN D. WAIHEE IV, individually and in their official capacities as Trustees of the Office of Hawaiian Affairs; and CLAYTON HEE and CHARLES OTA, individually,

Defendants/Appellants.

))))))))))))))))))))))))))))

APP. NO. 06-16625

CIVIL NO. 05-00649 SOM BMK

Six Non-Hawaiians’ motion to Intervene

EXHIBIT “a”

PROOF OF FILING AND SERVICE

James Kuroiwa, Patricia A. Carroll, Toby Kravet, Garry P. Smith, Earl F. Arakaki and Thurston Twigg-Smith (collectively “Six Non-Hawaiians”), on their own behalf and on behalf of the over one million Hawaii citizens similarly situated, pursuant to FRAP 27 move to intervene as Plaintiffs under Fed.R.Civ.Proc. Rule 24(a) or (b).

These Six Non-Hawaiians are individual citizens of the United States and the State of Hawaii. Included among them are persons of Japanese, English, Portuguese, Irish, Scottish, Polish, Jewish, Okinawan, Dutch, French and other ancestries; but none of them have an ancestor who inhabited the Hawaiian Islands previous to 1778. They are all registered voters and long-time residents of Hawaii. The ancestors of three of them have lived in Hawaii for generations. As beneficiaries of Hawaii’s Ceded Lands Trust, also known as the “Public Land Trust” and as the “§5(f) Trust”, they are among the equitable owners of the trust fund which is the source of the money at issue in this suit, i.e., the millions of dollars of ceded lands revenues¹ the Office of Hawaiian Affairs (“OHA”) has spent and continues to spend for the Akaka bill.²

Although these non-Hawaiians do not support creation of a separate government of any shape or form for Native Hawaiians, they do wish to vote in any election in Hawaii in which important public issues are being considered or public officials are being elected. This is their right under the Fifteenth Amendment. Terry v. Adams, 345 U.S. 461, 468-469 (1953) “Clearly the [Fifteenth] Amendment includes any election in which public issues are decided or public officials selected.” To secure that right, each of these Six Non-Hawaiians has applied to register with OHA’s Kau Inoa, the registry of persons eligible to participate in the elections to create the new government contemplated by the Akaka bill³ and by “Plan B”, OHA’s alternate track at the state level “TO BUILD A NATION.”

These Six Non-Hawaiians have sought but not received from OHA assurance that they will be permitted to vote in such elections; and the Akaka bill and Kau Inoa literature specify that only Native Hawaiians will be eligible. (See Exhibit 3 to declaration attached to the Response by these Six Non-Hawaiians filed or lodged concurrently with this motion.)

The State of Hawaii has just (10/11/07) been given the unusual right to intervene, after this Court’s panel decision on appeal, to seek relief not sought until then by any party to this case. The State is now a party driving for final adjudication of this case en banc, and vows to seek certiorari if necessary, to permanently close the door of the Federal courts to beneficiaries of Hawaii’s Ceded Lands Trust. These Six no longer have the luxury of expecting a prompt remand where they can move to intervene and for preliminary relief in the trial court to stop the flow of money, mostly their money and that of others similarly situated, into the pockets of lobbyists. The House of Representatives passed the Akaka bill on October 24, 2007 by a wide margin. OHA is surely ratcheting up its lobbying. Time is running out. If the bill should become law, judicial relief will be slower and harder and even if ultimately successful, it may never be possible to put the Aloha state back together. It is almost now or never.

Rule 24 sets five criteria for intervention of right: A claimed interest in the property or transaction at issue; The possibility that disposition will impair or impede protection of that interest; Is the applicant’s interest adequately represented by the existing parties? Is the application timely? and, especially with respect to permissive intervention, whether it would unduly delay or prejudice adjudication of the rights of the original parties. The following discussion will show these criteria, at this stage in this case, fit these Six Non-Hawaiians perfectly.

Indeed they do. It is these Six Non-Hawaiians, and the million other Hawaii citizens similarly situated, who are most affected by the misapplication of the Ceded Lands Trust revenues at issue in this case; and it is they, not the present Plaintiffs, who are threatened with disenfranchisement by the Akaka bill.

Yes. If the Court, either the panel or en banc, reconsiders the panel decision, the door to the Federal court may never be reopened to the beneficiaries of Hawaii’s Ceded Lands Trust. Likewise, if the Supreme Court should grant certiorari. Even if, on reconsideration, the panel’s decision is affirmed, delay would have given OHA more time to distribute public moneys, mostly money equitably owned by other people, to purchase political power. Hawaii’s melting pot is already simmering. If the bill becomes law, bad forces will be unleashed.

Is the applicant’s interest adequately represented by the existing parties?

Sadly, the answer is no. The State, as Trustee of the Ceded Lands trust, has a fiduciary duty to use the trust corpus and income for all the beneficiaries, not just for those of the favored ancestry. The panel decision, Day v. Apoliona, 496 F.3d 1027, 1034 (9^th Cir. 2007) footnote 9 quotes Justice Breyer’s concurring opinion in Rice v. Cayetano that the lands ceded in the Admission Act are to benefit “all the people of Hawaii” not just native Hawaiians. Yet, since February 23, 2000 when the Rice decision was handed down, the State has distributed hundreds of millions of trust revenues exclusively to or for the “betterment of native Hawaiian” beneficiaries, but none of the trust revenues exclusively for the betterment of these Six Non-Hawaiians or any of the other trust beneficiaries of less than 50% or no Hawaiian ancestry. It has made and continues such biased distributions without court authorization and has consistently resisted efforts to obtain court guidance. See these Six Non-Hawaiians’ Response filed concurrently Opposing State of Hawaii’s Petition for Rehearing, pages 6 and 7 calculating the billions of dollars by which the State, as Trustee, has shortchanged the beneficiaries who lack the 50% or more of the favored ancestry.

Under the Uniform Trust Powers Act, HRS §554A-5, if the duty of the trustee and the trustee’s individual interest or the trustee’s interest as trustee of another trust, conflict in the exercise of a trust power, the power may be exercised only by court authorization. The State’s interest in being treated as owner of the ceded lands and the power and prestige that entails, conflicts with its fiduciary duty as Trustee. Its interest as Trustee for native Hawaiian beneficiaries conflicts with its duties as Trustee for Hawaii citizens of other ancestries. Yet it continues to avoid rather than seek instructions from the courts.

In Kapiolani Park Preservation Society v. City & County, 69 Haw. 569, 572 (1988), the Hawaii Supreme Court held that, where a governmental agency is the trustee of a charitable trust and

will not seek instructions of the court as to its duties, even though there is a genuine controversy as to its power to enter into a particular transaction and where the attorney general as parens patriae has actively joined in supporting the alleged breach of trust, the citizens of this State would be left without protection, or a remedy, unless we hold, as we do, that members of the public, as beneficiaries of the trust, have standing to bring the matter to the attention of the court.

The Hawaii Supreme Court later cited that ruling with approval in Pele Defense Fund v. Paty, 73 Haw. 578, 594, 837 P.2d 1247 (1992), a suit to enforce the State's compliance with the 5(f) trust provisions. In the decision by Justice Klein, he said, “Additionally, unless members of the public and native Hawaiians, as beneficiaries of the trust, have standing, the State would be free to dispose of the trust res without the citizens of the State having any recourse.’ It is understandable and commendable that Mr. Klein now as counsel for OHA, would decline to join in the State’s attempt to bar “members of the public and native Hawaiians” permanently from the Federal courts. The Attorney General, however, actively joins in and supports the alleged breach of trust and proudly declares that he has frequently testified in favor of the Akaka bill. These Six Non-Hawaiians can clearly expect no help from any existing parties.

Unlike the State, which was actively involved in this case from the beginning, these Six Non-Hawaiians have had no active role of any kind in this case. The State Attorney General’s office has represented the two former OHA trustees who were named parties. The State filed Amicus briefs even at the trial level and it was the State’s theory that carried the day in the trial court. Intervention by these Six as beneficiaries of the Ceded Lands Trust (sometimes referred to as the Public Land Trust and the “§ 5(f) Trust”) would have been out of the question for at least five of these six, because they were plaintiffs in Arakaki v. Lingle pursuing their own claims against State officials as Ceded Lands Trust beneficiaries and as state taxpayers. The last Court appearance in Arakaki v. Lingle was on April 16, 2007. Plaintiffs’ April 30, 2007 motion to amend the complaint to add a count as municipal stockholders and to continue to pursue the trust beneficiary claims, was denied without a hearing on May 1, 2007. A copy of the Hawaii District Court’s Order Denying Plaintiffs’ Motion For Leave to Amend Complaint, is attached as Exhibit A to this motion. The order provides in its last paragraph that,

This order does not foreclose Plaintiffs from filing a new case under a different civil number. Of course, any such case will be randomly assigned to a judge in this district. The court understands that Plaintiffs may seek to appeal the denial of their motion to amend their Complaint. Although Plaintiffs have a right to file such an appeal, Plaintiffs should consider whether they can receive a quicker determination of the merits of their proposed claims by filing a new case.

In this case, there was no reason for these Six Non-Hawaiians to even consider intervention at the appellate level since that is rare and rehearing is generally not successful. It was not until October 11, 2007, just 29 days ago, that the State of Hawaii was allowed to intervene. Embarking on a new civil rights lawsuit is no small undertaking.

These Six Non-Hawaiians believe their intervention will not cause any delay. The original Plaintiffs’ response to the State’s Petition for rehearing is due to be filed by mailing today. These Six, as Putative Intervenors, are mailing their response for expedited delivery today as well. As to undue prejudice, the presence of parties representing 80% of the beneficiaries of the Ceded Lands Trust, is essential to any lasting resolution of the Ceded Lands Trust issues. As the panel decision noted, the long line of cases brought by native Hawaiians has shed little light on the merits of § 5(f) claims. These Six believe that the about 200,000 acres of Hawaiian Homelands can be the key to a global settlement of all the Hawaiian issues; and a major part of that solution would be for the State to transfer the fee simple interest in their lots to the existing homesteaders at no or a discounted cost. The key to that is a court decision that firmly establishes constitutional reality in the Aloha state.

1. FILING: I hereby certify that the foregoing document was duly filed in accordance with Fed. R. App. 25(a) (2) (B) (ii) by dispatching the original and 6 copies to a third-party commercial carrier, Federal Express or other overnight delivery service or Express mail, addressed to the Clerk, United States Court of appeals, 95 Seventh Street, San Francisco, California 94103-1526 on November 9, 2007.

2. SERVICE: I hereby certify that two true and correct copies of the foregoing document were served upon the following parties via U.S. Mail postage prepaid on November 9, 2007:

Attorney for Defendants Former Trustees of the Office of Hawaiian Affairs Clayton Hee and Charles Ota

¹ See Honolulu Advertiser 11/27/07, “OHA push for Akaka bill topped $2M,” by investigative reporter Jim Dooley with spreadsheet of lobbying expenditures from 2003 to2006, Exhibit 1 to declaration attached to Putative Intervenors Six Non-Hawaiians’ Response Opposing State of Hawaii’s Motion for Rehearing.

² S. 310/ H.R. 505, Native Hawaiian Government Reorganization Act of 2007, commonly referred to as the “Akaka bill”,is now pending in Congress. On October 22, 2007 H.R. 505 passed the House of Representatives. The full text and current status of the bill is available on the Library of Congress website which may be found by Googling “Thomas.”

▪ Election of an Interim Governing Council. Only Native Hawaiians are eligible to be candidates and to vote. Sec. 7(c)(2);

▪ A referendum to determine the proposed elements of the organic governing documents. Only Native Hawaiians are eligible to vote. Sec. 7(c)(2)(B)(iii)(I);
▪ A referendum to ratify the organic governing documents prepared by the Interim Governing Council. Only Native Hawaiians are eligible to vote. Sec. 7(c)(2)(B)(iii)(IV);
▪ Election of the officers of the new government by the persons specified in the organic governing documents. Sec. 7(c)(5). It seems likely that only Native Hawaiians will be eligible to vote.

VIRGIL E. DAY; MEL HOOMANAWANUI; JOSIAH L. HOOHULI; PATRICK L. KAHAWAIOLAA; AND SAMUEL L. KEALOHA,

Plaintiffs/Appellees,

vs.

Defendants/Appellants.

))))))))))))))))))))))))))))

APP. NO. 06-16625

CIVIL NO. 05-00649 SOM BMK

PUTATIVE INTERVENORS SIX NON-HAWAIIANS’ RESPONSE OPPOSING STATE OF HAWAII’S PETITION FOR REHEARING

DECLARATION OF H. WILLIAM BURGESS; EXHIBITS A - E

CERTIFICATE OF COMPLIANCE

PROOF OF FILING AND SERVICE

James Kuroiwa, Patricia A. Carroll, Toby Kravet, Garry P. Smith, Earl F. Arakaki and Thurston Twigg-Smith (collectively “Six Non-Hawaiians”) are six individual citizens of the United States and the State of Hawaii.¹ They have concurrently filed a motion to intervene in this case.

As beneficiaries of Hawaii’s Ceded Lands Trust (also known as the “Public Land Trust” and as the “§ 5(f) Trust”), they are among the equitable owners of the trust corpus which is the source of the money at issue in this case, i.e., the millions of dollars of ceded lands revenues the Office of Hawaiian Affairs (“OHA”) has spent and continues to spend to lobby for the Akaka bill.² As Judge Canby of this Court has written, “So long as § 5(f) trust income remained in the hands of the state, as it did when transferred from the § 5(f) corpus to the OHA corpus, the § 5(f) obligations applied.”³

Also, although these Non-Hawaiians do not support creation of a separate government of any shape or form for Native Hawaiians or any other racial group, they do wish to vote in any election in Hawaii in which important public issues are being considered or public officials are being elected. This is their right under the Fifteenth Amendment. Terry v. Adams, 345 U.S. 461, 468-469 (1953) “Clearly the [Fifteenth] Amendment includes any election in which public issues are decided or public officials selected.” To secure that right, each of these Six Non-Hawaiians has applied⁴ to register with OHA’s Kau Inoa, the registry of persons eligible to participate in the elections to create the new government contemplated by the Akaka bill⁵ and by “Plan B”, OHA’s alternate track at the state level “TO BUILD A NATION.” (OHA.org and click on Ho’oulu Lahui Aloha.) These Six Non-Hawaiians have sought but not received from OHA assurance that they will be permitted to vote in such elections; and the Akaka bill and OHA’s Administrator specify that only Native Hawaiians will be eligible. (Honolulu Advertiser August 4, 2007 Exhibit C to attached declaration.)

These Six Non-Hawaiians, on their own behalf and on behalf of the over one million Hawaii citizens similarly situated, oppose the State of Hawaii’s petition for rehearing for the following reasons:

Rehearing at this stage, with no factual record, no adjudication on the merits by the trial court, and no party representing the interests of these Six Non-Hawaiians or the million other Hawaii citizens and trust beneficiaries similarly situated, would be myopic. The court would have before it only the State’s briefs claiming that it “owns” the ceded lands and needs “flexibility” to deal with them as it sees fit; and the present Plaintiffs’ briefs claiming that they alone are beneficiaries of the ceded lands revenues held by OHA. Unseen would be any brief and unheard would be any voice speaking for the trust beneficiaries who challenge the constitutionality of special benefits for both Hawaiians and native Hawaiians; and seek to enforce the Trustee’s duty of impartiality to each individual beneficiary. Likewise absent would be any party representing the million citizens who would be disenfranchised by the Akaka bill.

The Ceded Lands Trust (also known as the “Public Land Trust” and as the “§5(f) Trust”) is the largest public trust in Hawaii. It originated in 1898 with the Annexation Act⁶, was changed by Congress in 1921 by the Hawaiian Homes Commission Act⁷ and continued by the 1959 Admission Act which still restricts the State’s use of the ceded lands.⁸ For the first 20 years of statehood, from 1959 to 1978, the State of Hawaii channeled most of the ceded lands income to the Department of Education. That use of income from the about 1.2 million acres in the Ceded Lands Trust complied with the Admission Act § 5(f) because the support of the public schools is one of the five permitted purposes. It also complied with the United States Constitution and the Hawaii Bill of rights, because it benefited all of the children of Hawaii who attended public schools without regard to their race or ancestry. In 1978, Hawaii’s Constitution was amended to add Art. XII, Section 6, to establish OHA. In 1980, the Hawaii Legislature enacted Section 10-13.5 H.R.S. to provide that, “Twenty per cent of all funds derived from the public land trust … shall be expended by the Office of Hawaiian Affairs for the betterment of the conditions of native Hawaiians.”

As of June 30, 2005, the latest available on OHA’s website, OHA’s audited financial statement (a copy of page 12 is Exhibit D to the attached declaration) shows net assets of 409.6 million. $380.7 million of that is shown as from the Public Land Trust; $25.6 million from Federal Grants and $469.7 thousand from the State General Fund. The State of Hawaii as Trustee of the Public Land Trust is thus the major benefactor of OHA. The $380.7 million represents distributions of Trust funds exclusively “for the betterment of the conditions of native Hawaiians” plus earnings on those distributions. During the 27 years since 1980, the State of Hawaii has made no cash distributions from the public land trust exclusively for the betterment of these six Non-Hawaiians or any of the other million citizens who have less than 50% or no Hawaiian blood. Since “native Hawaiians” make up less than 5% of the State population, for every dollar distributed exclusively for “native Hawaiians”, the State as Trustee, required to treat every individual beneficiary impartially, should have distributed nineteen dollars exclusively to or for non-native Hawaiians. The State has therefore shortchanged non-native Hawaiians, i.e., all Hawaii residents of less than 50% or no Hawaiian ancestry, in the aggregate amount of roughly 19 times $370 million: Say $7 billion.

Not directly relevant to this suit, which only is about trust distributions to OHA, is the $181.8 million the State of Hawaii held, as of June 30, 2006 according to the State’s Comprehensive Annual Financial Report, in a fiduciary fund for the Hawaiian Home Lands Trust which is also exclusively for native Hawaiians.⁹ If that were added, the magnitude of the under-distribution to or for non-native Hawaiians would go up by another $3.45 billion.

With this track record, the State displays breathtaking Chutzpah to ask this Court en banc to do away with the most basic remedy of trust beneficiaries, judicial review, without giving notice or opportunity to be heard to 80% of the trust beneficiaries. By excluding suits by beneficiaries of Federally created trusts to remedy breaches by the trustee from Federal courts, the State would enable its agency, OHA, to continue spending millions of dollars of ceded lands revenues to lobby for the Akaka bill.

The Akaka bill proposes to sanction creation of a Native Hawaiian “tribe” or “governing entity” where none now exists; and to do so using a test virtually identical to that which Rice v. Cayetano, 528 U.S. 495, 514-516 (2000) held to be racial. It is these Six Non-Hawaiians, and the million other Hawaii citizens similarly situated, who are most affected by the misapplication of the Ceded Lands Trust revenues at issue in this case; and it is they, not the present Plaintiffs, who are threatened with disenfranchisement by the Akaka bill.

The panel decision in this case “got it right.” It cited the long line of cases in the Ninth circuit upholding the standing of beneficiaries of the trust and “the common law of trusts that is well developed in this country and speaks with a good deal of uniformity across the length and breadth of the land.”

Akaka II's reliance on trust law was not unique. Unifying most of our § 5(f) case law is the understanding that because they are designated as a “public trust,” § 5(f) funds are governed by a set of trust law principles that have procedural as well as substantive implications. Akaka I's discussion of standing, quoted earlier, drew on the funds' status as a trust. ^FN9

In footnote 9, the panel quoted Justice Breyer’s concurring opinion in Rice v. Cayetano that the lands ceded in the Admission Act are to benefit “ all the people of Hawaii,” not simply native Hawaiians. The panel made it absolutely clear that neither this Court’s prior case law nor its discussion in this case suggests that § 5(f) funds must be used for the benefit of Native Hawaiians or Hawaiians, at the expense of other beneficiaries; and that its holdings draw on common law regarding trusts like this one which have multiple beneficiaries.

Our discussions of standing, rights of action, and the scope of the § 5(f) restrictions have arisen in cases brought by Native Hawaiian individuals and groups. But neither our prior case law nor our discussion today suggests that as a matter of federal law § 5(f) funds must be used for the benefit of Native Hawaiians or Hawaiians, at the expense of other beneficiaries. For example, our holding in Akaka I that Native Hawaiians have standing to sue to enforce the § 5(f) trust draws on the common law regarding trusts that, like this one, have multiple potential beneficiaries or are defined as “public.” See Akaka I, 928 F.2d at 827 (citing Restatement 2d of the Law of Trusts, § 214(1), comment a (regarding the rights of multiple beneficiaries), and § 391 (regarding which beneficiaries may sue to enforce the terms of a public charitable trust)).

The panel wisely refrained from disposing of the case at this stage and with the skimpy present record. Rather it sent the case back to the trial court for decision in the first instance on the merits. “We leave to the district court to interpret those § 5(f) purposes to determine in the first instance not only whether Day's allegations are true, but also whether the described expenditures in fact violate § 5(f).” Id 496 F.3d at 1039. The closing paragraph ended with the admonition that,

Cases related to the OHA's expenditure of funds for Native Hawaiians have reached our court on numerous prior occasions, but we and the district court have shed little light on the merits of § 5(f) claims. See generally Arakaki v. Lingle, 477 F.3d 1048, 1052-53 (9th Cir.2007) (citing cases). Absent further foundational issues with Day's claim, today's affirmance of our existing precedent should permit much-needed elucidation of the substance of § 5(f). Id. 496 F.3d at 1039 – 1040.

The State’s Petition for Rehearing should be promptly denied; and remand to the trial court expedited. If these Six Non-Hawaiians are allowed to intervene as parties, the stage will then be set with all the key players: the State of Hawaii, Trustee; OHA, the State Agency which advocates for “Hawaiian” (one drop) and “native Hawaiian” (not less than one-half part) beneficiaries and spends trust money on lobbyists; the present Plaintiffs, Day et al, who are “native Hawaiian” (not-less than one-half part) beneficiares; and these Six Non-Hawaiians (trust beneficiaries of diverse but no Hawaiian ancestry). With these interests all represented, the trial court will finally be in a position to shed some light on the substance of §5(f). Whatever the decision at trial, it will then likely again come to this Court for the much-needed elucidation Judge Berzon mentions in the closing paragraph of the panel decision.

IN SUPPORT OF PUTATIVE INTERVENORS SIX NON-HAWAIIANS’ RESPONSE OPPOSING STATE OF HAWAII’S PETITION FOR REHEARING

1. I am an attorney admitted to practice before this Court and all the courts of the State of Hawaii, represent the Putative Intervenors Six Non-Hawaiians in this case and make this declaration based on my personal knowledge and belief.

2. The attached exhibits are each true and authentic copies of the documents described:

Exhibit A. Honolulu Advertiser 11/27/06 article, “OHA push for Akaka bill topped $2M” together with the accompanying spreadsheet.

Exhibit B. The letter I mailed on July 9, 2007 via certified mail with Kau Inoa registration forms for Patricia A. Carroll, Toby Kravet, Garry P. Smith, Earl F. Arakaki and Thurston Twigg-Smith to Hawaii Maoli and Office of Hawaiian Affairs Chair Haunani Apoliona.

Exhibit C. Honolulu Advertiser 8/04/07 article, “5 non-Hawaiians seek to join sovereignty list”.

Exhibit D. Page 12 of audited financial statement from OHA’s June 30, 2005 Annual Report downloaded from OHA’s website.

Exhibit E. Page 27 from State of Hawaii June 30, 2006 Comprehensive Annual Financial Report.

1. This Putative Intervenors Six Non-Hawaiians’ Response Opposing State of Hawaii’s Petition for Rehearing complies with the type-volume limitation of FRAP 40(b) and Circuit Rule 40-1(a) because, according to the word count of the word-processing system used to prepare it, the response contains 3,733 words, excluding the parts exempted by FRAP 32(a)(7)(B)(iii).

2. This response complies with the typeface requirements of FRAP 32(a)(5) and the type style requirements of FRAP 32(a)(6) because this response has been prepared in a proportionately spaced typeface using Microsoft Office Word 2003 in the 14 point Times New Roman type.

1. FILING: I hereby certify that the foregoing document was duly filed in accordance with Fed. R. App. 25(a) (2) (B) (ii) by dispatching the original and fifty copies to a third-party commercial carrier, Federal Express or other overnight delivery service or Express mail, addressed to the Clerk, United States Court of appeals, 95 Seventh Street, San Francisco, California 94103-1526 on November 9, 2007.

2. SERVICE: I hereby certify that two true and correct copies of the foregoing document were served upon the following parties via U.S. Mail postage prepaid on November 9, 2007:

Attorney for Defendants Former Trustees of the Office of Hawaiian Affairs Clayton Hee and Charles Ota

¹ In this response, the term “native Hawaiian” (with a small “n”) means “any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778,” the definition used in the Hawaiian Homes Commission Act “HHCA”. The term “Hawaiian” and the term “Native Hawaiian” (with a capital “N” as used in the Akaka bill) means anyone with at least one ancestor indigenous to the Hawaiian Islands. These Six Non-Hawaiians, although of diverse ancestry and some have ancestors who have lived in Hawaii for generations, have no “Hawaiian” ancestors as defined in the Akaka bill or the OHA laws.

² S. 310/H.R. 505, Native Hawaiian Government Reorganization Act of 2007, commonly referred to as the “Akaka bill.” OHA spent over $2 million on its congressional lobbying efforts for the Akaka bill between 2003 and November 2006 which does not include the $900,000 OHA spent to maintain a “Washington Bureau” since 2003. OHA’s Administrator said it was “worth it.” See OHA push for Akaka bill topped $2M, Nov. 27, 2006 by Investigative Reporter Jim Dooley, Honolulu Advertiser with itemized spreadsheet. Exhibit A to Declaration of H. William Burgess attached hereto.

⁴ The transmittal and applications of five of them are Exhibit B to the attached declaration.

▪ Election of an Interim Governing Council. Only Native Hawaiians are eligible to be candidates and to vote. Sec. 7(c)(2);

⁶ In 1898, the Republic of Hawaii ceded its public lands (about 1.8 million acres formerly called the Crown lands and Government lands) to the United States with the requirement that all revenue from or proceeds of these lands except for those used for civil, military or naval purposes of the U.S. or assigned for the use of local government "shall be used solely for the benefit of the inhabitants of the Hawaiian Islands for educational and other public purposes". Joint Resolution to Provide for Annexing the Hawaiian Islands to the United States, Resolution No. 55, known as the Newlands Resolution, approved July 7, 1898; Annexation Act, 30 Stat. 750 (1898) (reprinted in 1 Rev. L. Haw. 1955 at 13-15). The Newlands Resolution established the Ceded Lands Trust, also known as the Public Land Trust and the §5(f) Trust. Such a special trust was recognized by the Attorney General of the United States in Op. Atty. Gen. 574 (1899); State v. Zimring 58 Haw. 106, 124, 566 P.2d 725 (1977) and Yamasaki, 69 Haw. 154. 159, 737 P.2d 446, 449 (1987); see also Hawaii Attorney General Opinion July 7, 1995 (A.G. Op. 95-03) to Governor Benjamin J. Cayetano from Margery S. Bronster, Attorney General, “Section 5 [Admission Act] essentially continues the trust which was first established by the Newlands Resolution in 1898, and continued by the Organic Act in 1900. Under the Newlands Resolution, Congress served as trustee; under the Organic Act, the Territory of Hawaii served as Trustee.”

⁷ In 1921, Congress injected race into the previously race-neutral Public Land Trust. It enacted the Hawaiian Homes Commission Act, 42 Stat. 108 (1921) ("HHCA") which set aside about 200,000 acres of the ceded lands and provided for long term leases of homestead lots (99 years at one dollar per year, renewable for an additional 100 years) to "native Hawaiian" persons, defined in §201(7) as "any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778."

Congress, by enacting the HHCA and limiting its benefits to a group selected on the basis of race or ancestry, caused the United States to violate the equal protection requirement implicit in the Fifth Amendment to the U.S. Constitution and also to violate its fiduciary duty as trustee of the Ceded Lands Trust to treat beneficiaries impartially.

⁸ In 1959, as a condition of admitting the Territory of Hawaii to statehood, the United States required in §4 of the Admission Act that the new State of Hawaii, by Compact between the two governments, adopt the HHCA as part of the State’s Constitution; and that the State use all proceeds and revenues of the approximately 200,000 acres of Hawaii’s ceded lands set aside as “available lands” for the HHCA, “only in carrying out the provisions of said Act.” The Compact not only requires the State of Hawaii and its officials to continue to carry out the HHCA but it reserves to the United States that the State will not repeal the Act or change the explicitly racial qualification for the lessees or reduce benefits to native Hawaiians without its consent.

§ 5(b) of the Admission act granted title to the ceded lands including the about 200,000 acres of “available lands” set aside for the HHCA, to the new State of Hawaii, in total about 1.4 million acres. (The U.S. retained about 400,000 acres of the ceded lands for military and civil purposes and national parks.) § 5(f) of the Admission Act required that the State hold these ceded lands returned to it, and the income and proceeds therefrom,

"as a public trust" for "one or more" of five purposes ("for the support of public schools and other public educational institutions", "for the betterment of the conditions of native Hawaiians as defined in the Hawaiian Homes Commission Act" (i.e., "any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778"), "for the development of farm and home ownership", "for the making of public improvements" and "for the provision of lands for public use.").

⁹ A true copy of page 27 of the State CAFR for fiscal year ended June 30, 2006 is Exhibit E to the attached declaration.

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080427/NEWS23/804270354/1173/LOCALNEWSFRONT
Honolulu Advertiser, Sunday, April 27, 2008

A key side issue that arose during the debate over the proposed ceded land revenues settlement is the discussion about whom the Office of Hawaiian Affairs is supposed to serve.

OHA officials say they are mandated to serve all Hawaiians and that by doing so, everyone benefits. But a growing number of native Hawaiians, those having 50 percent or more Hawaiian blood, say OHA is obligated to serve only them under an original 1921 mandate that preceded the agency by 57 years.

Though the courts have found for OHA on several occasions, the issue resurfaced during debate over the ceded lands settlement between OHA and the state.

Ceded lands are the crown and government lands that once belonged to the Hawaiian government.

OHA was established in the 1978 Constitutional Convention and tasked with administering the share of ceded land revenues, also known as public land trust revenues, that, according to the Hawaiian Homes Commission Act of 1920-21 and the state Admissions Act of 1959, are supposed to go to the "betterment of conditions of native Hawaiians."

But ConCon officials went on to give OHA a broader mandate, the "betterment of conditions of Hawaiians," which has commonly been interpreted to mean anyone with any amount of Hawaiian blood.

The bulk of OHA's $400 million trust has come from the ceded land revenues and interest generated from those revenues. Today, OHA gets $15.1 million annually from the state for its share of ceded land revenues. Its other chief revenue sources are about $18 million in interest from its investments, and about $3 million in general funds from the state.

Kamaki Kanahele, chairman of the Sovereign Councils of the Hawaiian Homelands Assembly, said more, if not all, ceded land revenues should go to native Hawaiians.

A former OHA trustee and administrator, Kanahele said that in the early 1980s, the state began giving "matching" money to OHA.

"That gave OHA the flexibility to service all Hawaiians," Kanahele said. But from that point forward, he said, OHA no longer kept count of how much the 50 percent-plus Hawaiians were getting compared to everyone else.

Attorney Bill Meheula, hired by OHA to help negotiate the ceded land revenues settlement and who has done other work for the agency, said the Admissions Act and the revised Hawai'i Constitution spelled out that the money is to be used for both native Hawaiians and Hawaiians.

The Constitution says there are two beneficiaries — the native Hawaiians and Hawaiians, Meheula said. "But then it went on to say that in managing and administering any of its funds, including the incomes and proceeds from the public lands trust, it was to be used for native Hawaiians and Hawaiians, not just native Hawaiians," Meheula said.

Prior challenges against OHA's use of ceded land revenues for all Hawaiians were unsuccessful, Meheula said.

More recently, the Day v. Apoliona lawsuit challenges OHA's discretion to use ceded land revenues for non-Hawaiians. Filed by five men, all of whom are at least 50 percent Hawaiian, it was dismissed by U.S. District Judge Susan Oki Mollway only to be ordered reinstated by the 9th Circuit appeals court in August 2007. The issue is slated to be back in Mollway's court next month.

Samuel Kealoha, one of the five plaintiffs, said the 1978 ConCon "scammed" 50 percent Hawaiians of the ceded land revenues. Kealoha, 59 and a seven-eighths Hawaiians, said: "The scheme was to undermine native Hawaiians as recognized by the state of Hawai'i. When they put in 'and Hawaiians,' that was the scam. Congress did not say anything about 'and Hawaiians.'"

Ray Soon, a former chairman of the Department of Hawaiian Home Lands, said there was no mass objection by 50 percent Hawaiians when ceded land revenues were diverted to help all Hawaiians. The native Hawaiians have been more than generous, he said.

"That's 30 years of redirection of funds to another beneficiary class, without protest," Soon said. "Many of us held back our criticism because we thought it critical that all Hawaiians be working together, pulling together in the same canoe, so to speak."

Soon believes OHA and DHHL, which is mandated to providing home ownership to those with 50 percent or more Hawaiian blood, should work more cooperatively.

Leaders at both agencies agree they need to work more closely with each other, said DHHL Director Micah Kane. "How we go about it is important; we need to go about it in a respectful way," Kane said.

Mel Kalahiki, chairman of the group Living Nation of Hawaii, said Hawaiians of all blood quantums need to recall the days before OHA existed. "We had nothing, no place to go," Kalahiki said. "The money was collected and it was going to the general funds of the state." Today, he said, "look at the money OHA is putting into schools and the language, etc. It's a lot of help. "

University of Hawai'i law professor Jon Van Dyke, author of the book "Who Owns the Crown Lands of Hawai'i?" and a paid consultant for OHA on several projects, said that in 1921, conservative interests locally and in Congress inserted language into the Hawaiian Homes Act that limited the amount of Hawaiians entitled to benefit from the ceded lands.

"The sugar planters here in the Islands wanted to limit the number of people that would be eligible to be on home lands," Van Dyke said. That's how the 50 percent eligibility requirement got into the Hawaiian Homes Act. "No Hawaiians supported that," Van Dyke said.

H. William Burgess
Attorney at Law
2299-C Round Top Drive ▪ Honolulu, Hawaii 96822
Telephone: (808) 947-3234 ▪ Fax: (808) 947-5822
Email: hwburgess@hawaii.rr.com
May 5, 2008
Mark J. Bennett
Attorney General of Hawaii,
William J. Wynhoff
Deputy Attorney General and
Charleen M. Aina Via FAX and email
Deputy Attorney General,
State of Hawaii
465 King Street, Suite 300
Honolulu, Hawaii 96813

I understand the Plaintiffs in the above case challenge expenditures of funds and assets from the “§5(f) trust” for “lobbying in favor of” the Akaka bill and suppporting three social service programs for Hawaiians. As you know, I represent the plaintiffs in Kuroiwa v. Lingle, who challenge the same expenditures, among others.

The docket in Day v. Apoliona indicates the OHA Defendants have moved for summary judgment and the hearing is set for Monday, June 9, 2008 at 9:00 am. Plaintiffs’ memo in opp is due May 22. 2008 and the OHA Defendants’ reply is due on Thursday, May 29, 2008. The State of Hawaii has apparently not yet taken a position on the OHA motion.

If the OHA Defendants prevail in Day, the State will be free to continue to distribute trust funds and assets to OHA exclusively for native Hawaiian or Hawaiian beneficiaries; and OHA will be free to spend those funds for the betterment of native Hawaiians or Hawaiians at the expense of the trust estate and the other beneficiaries. According to its most recently published financial statements OHA already holds some $450 million plus extensive ceded or other public lands from past distributions of “§5(f) trust” funds and assets, and, in addition continues to receive annual distributions of $15.1 million. The State has never made any distributions of trust funds or assets to or for the pro rata share of the “§5(f) trust” for beneficiaries who happen to have no Hawaiian ancestry.

As you know, the State of Hawaii is the Trustee of the “§5(f) trust” which is for the benefit of all the people of Hawaii, not simply for native Hawaiians or Hawaiians; Its fiduciary duty to all the people of Hawaii requires that it treat beneficiaries impartially and that it not comply with trust terms that violate public policy or are illegal, such as provisions requiring or permitting invidious discrimination. Where such an illegal trust term is present the Trustee has a duty, under the cy pres doctrine to seek reformation of the terms of the trust. The Trustee has a duty to defend the trust estate from invalid claims; and where its fiduciary duties conflict with its interest as trustee of another trust, the Trustee may not exercise trust powers affected by the conflict without court authorization.

Under Hawaii Probate Rule 42(b), made applicable to attorneys practicing in the United States District Court by LR 83.3, an attorney employed by a fiduciary for a trust “shall owe a duty to notify … beneficiaries … of activities of the fiduciary actually known by the attorney to be illegal that threaten the security of the trust assets or the interests of the beneficiaries.” Under Rule 42(c) an attorney for a … trust is an officer of the court and shall assist the court in securing the efficient and effective management of the estate. The attorney has an obligation to monitor the status of the estate and to ensure that required actions … are performed timely. The attorney, after prior notice to the fiduciary, shall have an obligation to bring to the attention of the court the nonfeasance of the fiduciary.

As Professor Randall W. Roth asks in the May 2008 Honolulu magazine, “Is Something Broken?” To paraphrase the quip of Senior U.S. District Judge Sam King, in referring to the Bishop Estate trustees, I wonder if our Governor and some State attorneys, including the parens patriae himself, know how to spell the word fiduciary.

The Attorney General and Mr. Lau and Ms. Aina are so conflicted because of their years of advocacy for the interests of OHA, and native Hawaiians and Hawaiians, at the expense of the trust estate and the other beneficiaries, they should immediately withdraw as counsel or be sanctioned. If Mr. Wynhoff can oppose OHA’s motion vigorously and without reservation, he would appear to be free of conflict.

Please consider this a demand that Mr. Wynhoff or some capable attorney free of conflict, inform the Trustee State of Hawaii and its Governor and other responsible officials of their fiduciary duties to all the beneficiaries; and vigorously oppose the OHA motion. If the client refuses to allow an unconflicted attorney to do so, you should bring such nonfeasance to the attention of the court. The constitutionality of §4 of the Admission Act should be challenged by the State; as should §5(f) to the extent that it is construed or applied to permit or require the State to give native Hawaiian or Hawaiian beneficiaries any right, title or interest in the “§5(f) trust” not given equally of other beneficiaries.

Day v. Apoliona is an opportunity to fix the damage caused by the past failings of our fiduciaries in the highest positions. That can be accomplished by a capable unconflicted attorney representing the State and its officials zealously opposing the OHA motion and seeking recovery of the $450 million and public real estate now held by OHA; and seeking to enjoin further distributions of trust funds or assets to or by OHA.

Please let me know by Friday May 9, 2008 whether and, if so, how you will fulfill your fiduciary duties under Rule 42 of the Probate Rules in performing legal services in Day v. Apoliona.

** Note from website editor Ken Conklin: It would appear there is a connection between the following two news events. The OHA board has approved granting $90 Million over a period of 30 years to DHHL. Then, a day later, it was reported that Judge Mollway has published her "inclination" to rule in favor of OHA in the Day v. Apoliona lawsuit. Could it be that OHA has suddenly decided to do what it has never done before but should have been doing all along, in order to influence the judge's decision by showing that, after all, OHA is actually providing assistance to the ethnic Hawaiians with 50% blood quantum?

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080606/NEWS01/806060374/-1/BACKISSUES
Honolulu Advertiser, Friday, June 6, 2008

Hawaiian Homes to get $90M from OHA
Alliance could speed development of up to 500 lots statewide

The Office of Hawaiian Affairs said it will channel $90 million to the state Department of Hawaiian Home Lands in a historic partnership to deliver up to 500 residential lots to Native Hawaiians across the state.

The agreement, unanimously approved by OHA's board yesterday, will about double the production of lots on which Hawaiians can begin to build homes in the next 12 to 18 months.

State leaders called the arrangement a bold step between two state-funded trusts that historically haven't worked together despite having common beneficiaries.

"The Office of Hawaiian Affairs has stepped up to make a big impact ... to help the Hawaiian people," Gov. Linda Lingle said at a ceremony announcing the alliance at OHA's Kaka'ako headquarters.

OHA Chairwoman Haunani Apoliona said there has never been a financial partnership of such magnitude with DHHL in OHA's 30-year history. "It is a privilege to join with (DHHL and others) in serving our beneficiaries," she said.

A significant reduction in DHHL's available finances helped lead the two trusts to discuss working together last year. DHHL also will see its single largest source of funding — $30 million a year it receives from the Legislature as part of a 1994 land settlement — end in 2015, which has made securing new funding sources a top priority.

Under the new partnership, OHA will give DHHL $3 million a year for 30 years. That commitment will allow DHHL to borrow $41 million in the form of revenue bonds sold to private investors later this year. OHA's annual payment will pay off the bonds over 30 years.

Part of what made the deal possible was the Legislature earlier this year giving DHHL the authority to float up to $100 million in revenue bonds for development projects.

The $41 million will allow DHHL to develop infrastructure such as roads, water and sewer systems necessary to create homestead subdivisions around the state.

Also, $5 million will finance planning, design and feasibility studies for community-driven projects in 18 DHHL regions statewide.

The financial boost will help the agency whittle down the list of about 20,000 Hawaiians who have been waiting — some for decades — for a land lease.

Micah Kane, DHHL director, said OHA's infusion will make it possible for Hawaiians to build homes on 400 to 500 new lots that otherwise wouldn't have been developed by the end of 2009.

DHHL in each of the past two years has produced about 1,000 lots as part of a goal set by the Lingle administration to provide 6,000 land leases by the end of this year. But the total to date is only about 2,700, and funding constraints reduced the lot development plan this year to 500.

Developing lots that are ready for home construction has been a critical issue for the historically land-rich and cash-poor agency that in the past issued many leases for land that lacked infrastructure such as roads needed for leaseholders to build homes.

Prior to Lingle taking office in December 2002, DHHL had delivered only 5,941 lots in the 82 years since the Hawaiian Home Lands program was created in 1920 when the U.S. Congress set aside roughly 200,000 acres to be leased to anyone with 50 percent or more Hawaiian blood for $1 a year.

It wasn't until the 1990s that DHHL began to receive significant sums of state money — mainly the $30 million annual payment — for land development.

The agency's second-biggest funding source for homestead development in recent years has been revenue from leasing land for private commercial development.

DHHL receives about $12 million a year from its commercial leases, which include Hilo shopping centers Waiakea Center and Prince Kuhio Plaza. Soon, the agency expects to begin receiving rent from the developer of a planned regional mall in East Kapolei on 67 acres as part of a lease that could earn the agency more than $141 million over the first 25 years of a 65-year lease.

DHHL is exploring other revenue-producing ideas as part of a goal to become financially self-sufficient by 2013.

Lingle said DHHL's partnership with OHA comes at a critical time as state revenues become tighter in a slowing economy, and will help create construction jobs.

Kane said that every dollar DHHL spends on subdivision infrastructure leads to $4 in addition spending, largely through home construction.

OHA previously has partnered to help make home ownership available to more Hawaiians. Last year, OHA provided DHHL a $500,000 grant to support a DHHL program begun in 2004 to provides beneficiaries with homebuyer education and financial literacy training classes.

The trust also invested $500,000 in a start-up company manufacturing low-cost homes in a factory. But that firm, Quality Homes of the Pacific, ran into financial difficulty and failed in 2003 before producing more than a few homes.

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080607/NEWS01/806070334/1001/LOCALNEWSFRONT
Honolulu Advertiser, Saturday, June 7, 2008

Ruling likely to favor OHA aid to all Hawaiians
Lawsuit seeking to limit assistance to those with at least 50% native blood may be dismissed Monday

A federal judge said in a court document made public yesterday that she is "inclined" to rule in favor of the Office of Hawaiian Affairs' policy of assisting all Native Hawaiians, not just those with 50 percent or more Hawaiian blood.

U.S. District Judge Susan Oki Mollway issued a two-page "inclination" statement yesterday stating how she is inclined to rule on a motion dismissing the Day v. Apoliona lawsuit which is scheduled to be heard in her court Monday morning.

The statement is non-binding and has no effect of law and Mollway could change her mind after hearing the arguments on Monday. But the judge made it clear that with the information she has so far, "the court is inclined to grant summary judgment in favor of the OHA trustees."

The lawsuit was filed by five men each with 50 percent or more Hawaiian blood who say OHA has too many beneficiaries and that money from what's known as the Public Land Trust, which was established under the federal act that admitted Hawai'i as a state, can only be used to benefit those who have at least 50 percent Hawaiian blood.

"The court is inclined to rule that, in expending public trust funds in support of the Akaka Bill, the Native Hawaiian Legal Corporation, the Na Pua No'eau Education Program, and Alu Like, the OHA trustees are exercising their reasonable fiduciary judgment as to how to further the public trust's purposes," the judge's inclination said.

Mollway pointed out that the Admissions Act has five stated purposes for use of the money and that "the trustees have broad discretion in determining how to further the five trust purposes."

The case was originally filed in 2005 by Virgil Day, Mel Ho'omanawanui, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha. After Mollway rejected the case in 2006, a panel of the 9th U.S. Circuit Court of Appeals in San Francisco in August 2007 ordered her to hear the case.

Walter Schoettle, attorney for the Day plaintiffs, said he had not seen Mollway's statement and said he would not comment on it even if he did.

Robert Klein, an attorney hired by OHA, said he was pleased with Mollway's inclination.

"The judge got it right," Klein said. "Mr. Schoettle is going to have to do some talking when he gets to the hearing because it's very favorable to OHA as the defendants."

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080609/OPINION01/806090311/1105
Honolulu Advertiser, Monday, June 9, 2008
EDITORIAL

Cooperation is a good thing — all the more so when peace breaks out between two groups that really shouldn't be at odds in the first place.

The Office of Hawaiian Affairs announced last week its plan to assist the Department of Hawaiian Home Lands with the development of lots for Hawaiian homesteaders. OHA has allotted $90 million from its trust fund.

The pledge of a new revenue stream comes at a critical point for DHHL, which is nearing the end of the payouts from a settlement with the state, money that has helped it invest in the infrastructure to create new home lots.

Even more significantly, the commitment from OHA should be read by DHHL beneficiaries — those whose Hawaiian ancestry amounts to a blood quantum of 50 percent or greater — as a thaw in frequently frosty relations.

Homesteaders were among those who complained about a proposed deal that OHA had struck with the state over lands formerly owned by the Hawaiian kingdom. The negotiations should have included input from the homesteader class, they said.

Also, a group of five homesteaders has sued in federal court to force OHA to spend more of its money on the "50 percenters."

Judge Susan Oki Mollway has issued her inclination to side with OHA in that case. Considering the strain such a decision may cause, it's even more fortunate that an olive branch has been extended between the agencies.

They are representing the same general interests, after all, and should not be working at cross purposes. This show of aloha is a welcome one.

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080610/NEWS23/806100351/1173/LOCALNEWSFRONT
Honolulu Advertiser, June 10, 2008

Plaintiffs: OHA suit getting results
Historic partnership with DHHL wasn't a coincidence, they say

Five Native Hawaiians who want the Office of Hawaiian Affairs to change its policies so that it only funds programs and services for those with 50 percent or more Hawaiian blood say they believe they're getting their point across, regardless of the outcome of their lawsuit.

U.S. District Judge Susan Oki Mollway yesterday heard arguments from OHA attorneys as well as those representing the five men. Mollway said she will make a decision by next week on OHA's motion to have the challenge, known as Day vs. Apoliona, dismissed.

Walter Schoettle, the attorney for the five men, as well as several of the plaintiffs themselves noted that OHA last week agreed to contribute about $90 million to help the Department of Hawaiian Home Lands develop up to 500 residential lots across the state for DHHL beneficiaries, who are defined as those with 50 percent or more Hawaiian blood.

Mel Ho'omanawanui, one of the five plaintiffs, said he doesn't think the timing is a coincidence and that OHA wanted to do something for those with 50 percent blood quantum. "They had to go back to the public and show they did something," Ho'omanawanui said.

Schoettle echoed those comments during his arguments before Mollway, pointing out that it was the first time such a large amount had been earmarked for those with 50 percent or more Hawaiian blood. "I guess it's a small step, but a step in the right direction," he said.

But OHA attorney Robert Klein scoffed at the suggestion that the Day lawsuit had anything to do with the decision by OHA trustees to take part in the historic partnership with DHHL.

"It's not a reaction to the Day lawsuit," Klein said. "It's been worked on for quite some time, a collaboration with DHHL. They've had talks."

At issue in the lawsuit is the approximately $28 million received by OHA annually from what are known as public trust lands revenues. They consist of the income and proceeds collected on approximately 1.2 million acres now under the control of the state which once were crown and government lands.

Schoettle and the five men point to language in the Hawaiian Homes Commission Act and the state Admissions Act that say funds are supposed to benefit those with at least 50 percent Hawaiian blood.

How OHA has spent its money is very clear, Schoettle said. "It provides collateral benefits to those other-than-(50 percent) beneficiaries," he said.

For instance, he said, about half of the nonprofit Native Hawaiian Legal Corp.'s income comes from OHA, the rest through the state's general fund yet OHA makes no attempt to determine how much of that money is used for those with 50 percent or more Hawaiian blood. "We have to presume that some of (OHA) money is being used to provide services for clients with less than one-half part Hawaiian blood," he said.

Klein restated OHA's argument that by benefiting all Hawaiians without regard to blood quantum, the agency is providing a benefit to those with 50 percent or more. "It doesn't say in the Admissions Act you have to expend the money only for the benefit of Native Hawaiians," Klein said. "That is not the law."

Last Friday, Mollway made public a document in which she stated she is "inclined" to side with OHA and likely to dismiss the case, although she is not bound by that document.

Yesterday, Mollway gave no indication that Schoettle has been able to persuade her to do otherwise.

The laws give OHA broad discretion on how it is to meet its mandates, she said. "You are asking me to second-guess the trustees," Mollway told Schoettle. "I think you're asking too much."

Mollway said she is not inclined to insert herself or the court as a "supertrustee" to analyze and oversee OHA's individual expenditures.

The case was originally filed in 2005 by Ho'omanawanui, Virgil Day, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha. After Mollway rejected the case in 2006, a panel of the 9th U.S. Circuit Court of Appeals in San Francisco in August 2007 ordered her to hear the case.

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080622/NEWS23/806220342/1001/LOCALNEWSFRONT
Honolulu Advertiser, Sunday, June 22, 2008

OHA wins blood-quantum dispute
Lawsuit sought benefits only for those who are 50 percent Hawaiian

A federal judge has ruled in favor of the Office of Hawaiian Affairs' policy of assisting all Native Hawaiians, not just those with 50 percent or more Hawaiian blood.

U.S. District Judge Susan Oki Mollway on Friday ruled in favor of OHA trustees and dismissed a lawsuit that claimed OHA could only spend money on Hawaiians of "not less than one-half part" of Hawaiian blood.

The lawsuit was filed by five men, each with 50 percent or more Hawaiian blood, who said OHA has too many beneficiaries and that money from what's known as the Public Land Trust — established under the Hawai'i Admissions Act of 1959, which admitted Hawai'i as a state — can only be used to benefit those who have at least 50 percent Hawaiian blood.

Earlier, in documents that indicated how she would eventually rule, Mollway wrote: "OHA trustees have broad discretion" in deciding how to better the condition of native Hawaiians.

OHA maintains that its mandate is to assist all Hawaiians, regardless of blood quantum.

Walter Schoettle, attorney for the plaintiffs, yesterday said of the ruling: "It's wrong, and we're going to appeal to the 9th Circuit."

An attempt to reach Robert Klein, an attorney hired by OHA, was unsuccessful yesterday.

In a statement released yesterday, Haunani Apoliona, chairperson of the OHA Board of Trustees, said: "We are pleased with the court's decision. Trustees of the Office of Hawaiian Affairs are elected to do productive work on behalf of our beneficiaries. We remain committed to that objective."

In her 35-page decision issued Friday, Mollway offered several examples of how OHA might offer programs that benefit a wider range of Hawaiians than those who have a blood quantum of 50 percent, and asked if the plaintiffs could reasonably challenge them.

For example, she asked, what if OHA offered to pay the medical expenses for the birth of any Hawaiian child? If the mother were 25 percent Hawaiian and the father 75 percent, the child would be 50 percent. The medical treatments, she said, would benefit the child and the mother. "Would plaintiffs object to the benefits flowing to the Hawaiian mother?" the judge wrote.

The case was originally filed in 2005 by Virgil Day, Mel Ho'omanawanui, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha.

According to Mollway's ruling, the men cited four specific instances in which OHA allegedly violated federal law by using "public trust funds for purposes not limited to the betterment of the conditions of Native Hawaiians."

These instances are OHA's use of public trust funds to support the so-called Akaka bill, the Native Hawaiian Legal Corp., the Na Pua No'eau Education Program and Alu Like, a nonprofit organization that provides a variety of social programs.

But according to Mollway's ruling, OHA's funding of these efforts is "consistent with the Admission Act."

She wrote, "Nothing in ... the Admission Act prohibits the use of trust funds that, while bettering the condition of native Hawaiians, also benefits the conditions of others. Plaintiffs read (the act) in a cramped, exclusionary manner that, if accepted, could lead to ridiculous results."

Mollway had first rejected the case in 2006, but a panel of the 9th U.S. Circuit Court of Appeals in San Francisco in August 2007 ordered her to hear the case.

http://starbulletin.com/2008/06/22/news/story03.html
Honolulu Star-Bulletin, June 22, 2008

Judge backs OHA
Five Native Hawaiians want funds spent only on people of at least half Hawaiian blood

A federal judge ruled that the Office of Hawaiian Affairs can continue to spend trust funds on programs that help native Hawaiians with less than 50 percent Native Hawaiian blood.

U.S. District Judge Susan Oki Mollway ruled Friday in favor of OHA and dismissed a lawsuit filed by five native Hawaiians in 2005.

The lawsuit argued that OHA breached the public land trust by paying for programs for all Hawaiians, regardless of their blood quantum. The plaintiffs objected to OHA support for the Akaka Bill, legislation that would that would establish a federally recognized Native Hawaiian government, and Na Pua Noeau, a program for gifted and talented Native Hawaiian children. They also asked the court to stop OHA support for the Native Hawaiian Legal Corporation, a nonprofit that represents Native Hawaiians in legal disputes.

But Mollway ruled that OHA trustees have broad discretion and are "exercising their reasonable fiduciary judgment in determining how to further the purposes of the trust."

OHA Board of Trustees Chairwoman Haunani Apoliona said the agency is pleased with the court's decision. "Trustees of the Office of Hawaiian Affairs are elected to do productive work on behalf of our beneficiaries," she said. "We remain committed to that objective."

Walter R. Schoettle, the plaintiffs' lawyer, said his clients were disappointed and would appeal the decision.

This is the second time Mollway has ruled on the case. Mollway dismissed the claim in August 2006, but the 9th Circuit Court of Appeals reinstated the lawsuit and sent the case back to Hawaii.

Mollway's 35-page decision presented different scenarios that showed how OHA funding may be complicated if the decision went in the plaintiffs' favor.

In a hypothetical situation, OHA may have a program that assists Hawaiians with medical birth expenses. But what if, Mollway asked, a mother with 25-percent native blood and a father with 75-percent native blood gave birth? The child would be 50-percent Native Hawaiian. "But treatment during the pregnancy would benefit not only the native Hawaiian child, but also the Hawaiian mother," Mollway said. "Would plaintiffs object to the benefits flowing to the Hawaiian mother?" Mollway said that the "logical result" of benefiting only Hawaiians with more than 50 percent blood would be "detrimental" to Native Hawaiians.

OHA, which was created by an amendment to the Hawaii Constitution in 1978, is financed in part by revenues from ceded lands that belonged to Hawaiian royalty.

Ceded lands refer to Hawaiian monarchy land that was transferred to the federal government when the United States annexed Hawaii in 1898. The land was turned over to the state after statehood in 1959.

http://starbulletin.com/2008/06/24/editorial/editorial01.html
Honolulu Star-Bulletin, June 24, 2008
EDITORIAL

THE ISSUE
The Office of Hawaiian Affairs has won a ruling in favor of its assistance to all Hawaiians.

A federal judge's ruling that supports the Office of Hawaiian Affairs' wide distribution of benefits might be just a temporary victory if the decision is appealed, which seems likely.

Legislation to counter claims that OHA is being indiscriminate in spreading assistance to too many Hawaiians -- instead of focusing only on those with 50 percent or more Hawaiian blood -- might be necessary to keep the agency's programs whole. Though the Akaka Bill addresses Hawaiian self-determination, another measure to clarify the breadth of beneficiaries would preclude attempts to limit OHA's services to the smaller population.

U.S. District Judge Susan Oki Mollway dismissed a lawsuit filed by five men -- Virgil Day, Mel Ho'omanawanui, Josiah Ho'ohuli, Patrick Kahawaiola'a and Samuel Kealoha -- who alleged OHA had violated the federal Hawaii Admissions Act by using public land trust funds to benefit fellow Hawaiians of lesser blood quantum.

The men objected to OHA's spending to support the Akaka Bill, the Native Hawaiian Legal Corp. that represents Hawaiians in legal matters, a program for gifted and talented Hawaiian children and another to encourage social and economic self-sufficiency.

Mollway, however, ruled that the agency's trustees have broad discretion and are exercising "reasonable fiduciary judgment," recognizing that extending benefits casts a wider range for betterment of their constituents. Further, the judge said exclusionary methods could lead to "ridiculous results."

As an example, the judge said, if the 50 percent principle was applied for medical care benefits, how would they relate to a child whose father is 75 percent Hawaiian and its mother 25 percent Hawaiian? Father and child would qualify, but "would plaintiffs object to the benefits flowing to the Hawaiian mother?"

Why the plaintiffs are seeking exclusion isn't clear, but their challenge of OHA could result in dismantling of programs for Hawaiians across the board. In denying others access to benefits, they might find themselves denied, too.

http://www.staradvertiser.com/news/20100727_Less_Hawaiian_blood_OK_for_OHAs_help_court_rules.html
Honolulu Star-Advertiser, July 27, 2010

The Office of Hawaiian Affairs won a key victory yesterday when a federal appeals court said it will uphold a decision that the agency may fund programs supporting those who have less than 50 percent native Hawaiian blood.

A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco ruled that OHA's trustees may spend money for several programs that benefit all Hawaiians, regardless of their blood quantum.

The court decision says OHA did not breach its trust with spending on native Hawaiian recognition lobbying, a program for gifted and talented native Hawaiian children called Na Pua Noeau, the Native Hawaiian Legal Corp. and Alu Like, which supports efforts assisting Hawaiians' social and economic self-sufficiency.

The lawsuit was filed by five native Hawaiians who said OHA should fund programs and services only for those with 50 percent or more of Hawaiian blood.

At issue in the lawsuit was about $28 million OHA receives annually from what are known as public trust lands revenues. The money is derived from the income and proceeds collected on the use of about 1.2 million acres now under the control of the state but which were once crown and government lands.

The attorney for the five men said language in both the Hawaiian Homes Commission Act and the state Admission Act say funds are supposed to benefit those with at least 50 percent Hawaiian blood.

OHA argued that by providing benefits to all Hawaiians without regard to blood quantum, the agency is providing a benefit to those with 50 percent or more.

In her initial ruling in June 2008, U.S. District Judge Susan Oki Mollway said the law gives OHA broad discretion on how to meet its mandates. The five who brought the case then appealed that decision, leading to yesterday's decision.

The case was originally filed in 2005 by Virgil Day, Josiah Hoohuli, Mel Hoomanawanui, Patrick Kahawaiolaa and Samuel Kealoha. After Mollway rejected the case in 2006, a panel of the 9th Circuit appeals court ordered her in August 2007 to hear the case.

** Note by Ken Conklin: The actual decision by the 9th Circuit Court of Appeals is at

http://www.staradvertiser.com/editorials/20100728_A_step_forward_for_all_Hawaiians.html
Honolulu Star-Advertiser, July 28, 2010

The Office of Hawaiian Affairs has survived a serious challenge to its mission by native Hawaiians with 50 percent or more Hawaiian blood. A federal appeals court ruled this week that OHA is not constrained by the Admission Act from spending money for the benefit of all Hawaiians, regardless of blood quantum. OHA can be confident that its worthy activities can proceed undeterred.

This latest ruling is a welcome development in the long, tangled legal history of OHA and its detractors. Five years ago, a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled that non-Hawaiians could not contest on racial grounds OHA's revenue from crown or public lands ceded to the state in accordance with the Admission Act. However, two years later, a different 9th Circuit panel ruled that Hawaiians with 50 percent or more Hawaiian blood could challenge how OHA is spending the money.

Some of them did. And on Monday, yet another 9th Circuit panel ruled that OHA is not required to limit its primary beneficiaries to native Hawaiians of 50 percent or more Hawaiian blood. The decision upholds a ruling by U.S. District Judge Susan Oki Mollway, and affirms that the state enjoys broad discretion in administering the provisions of the Admission Act.

The Act, which made Hawaii a state in 1959, set aside 1.8 million acres of land to be held by the state as a "public trust" in support of "one or more" of five areas of concern: public schools, development of farm and home ownership, public improvements, the provision of land for public use and "for the betterment of the conditions of native Hawaiians," as defined in the 1920 Hawaiian Homes Commission Act. State lawmakers took that to mean that 20 percent of the state revenue from those lands should go to OHA.

And while the HHCA defined native Hawaiians as those with at least 50 percent Hawaiian blood, the judicial panel noted that the state law allows OHA to work for the benefit all Hawaiians.

"So long as trust funds are used for 'one or more' of the numerated purposes...Congress intended to leave the manner in which the trust is managed in Hawaii's sovereign control," Judge Raymond C. Fisher wrote in the panel's ruling.

OHA receives more than $15 million from the state in annual ceded lands payments. To reserve that money for the handful of 50-percent-plus native Hawaiians, at the expense of all other Hawaiians, would be spectacularly unwise.

The 50-percent-plus native Hawaiians who contested the way OHA spends its revenue, including lobbying Congress in favor of Hawaiian sovereignty, may try taking their case to the U.S. Supreme Court.

But clearly OHA's activities comply with state law, which aims to help the Hawaiians who have a legitimate stake in sovereignty—which would be all of them.