A U.S. appeals court yesterday denied a rehearing request for a group of Hawai'i taxpayers seeking to challenge the revenues received by the Office of Hawaiian Affairs, Department of Hawaiian Home Lands and the Hawaiian Homes Commission.

That leaves alive only a small section of the lawsuit filed three years ago by 'Ewa Beach resident Earl Arakaki and about a dozen other taxpayers who challenged the constitutionality of government funding for the three entities on the basis that they benefit only residents of Hawaiian ancestry.

A three-member panel of the 9th U.S. Circuit Court of Appeals in August overturned a 2002 decision by U.S. District Judge Susan Oki Mollway and ruled that taxpayers can contest the constitutionality of taxpayer funding for OHA, which amounts to about 10 percent of its annual budget. That portion of the lawsuit was remanded back to U.S. District Court in Honolulu.

In doing so, however, the panel also affirmed Mollway's dismissal of the rest of the lawsuit pertaining to other funding for OHA and all funding for DHHL and Hawaiian Homes Commission. It was that portion of the decision for which the taxpayers sought a rehearing.

William Burgess, an attorney for the taxpayers, said he was not surprised by the rejection of his rehearing petition, noting that such requests are seldom successful.

Burgess said he will not decide whether to appeal to the U.S. Supreme Court until the portion of the lawsuit still before the District Court is decided.

"If we lose, we'll be going for a petition. But that will deal with the entire case, not just one part of it," Burgess said.

OHA has not petitioned for a rehearing on the portion of the case that went against the agency, Burgess said.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.