Thousands of native hawaiians and local supporters wearing red shirts carry large Hawaii state flags overflowed Kalakaua Avenue as they marched along side Waikiki Beach in Honolulu, Hawaii, Sept. 6, 2004. Hawaiian clubs, trusts, agencies and schools, marshal over 5,000 to protest threats to native Hawaiian entitlements and land trusts as well as U.S. military expansion on the islands. For the second year in a row, trustees and representatives from alii trusts, state and civic organizations, and native and non-Hawaiian supporters joined together in a march for "Ku I Ka Pono," or "justice for Hawaiians." (REUTERS/Lucy Pemoni)

President Barack Obama’s administration has quietly suggested it is willing to create a two-tier race-based legal system in Hawaii, where one set of taxes, spending and law enforcement will govern one race, and the second set of laws will govern every other race.

The diversity proposal is portrayed as an effort to create a separate in-state government for people who are “native Hawaiians.”

If Obama succeeds, “what’s to prevent creating similar [self-governing racial] groups out of say, Cajuns, or Orthodox Jews or Amish?” said Gail Heriot, a commissioner on the U.S. Commission on Civil Rights.

“If you can do that with groups that are already part of the mainstream, you can balkanize the country,” said Heriot, who is a law professor at the University of San Diego.

But the proposed measure to increase legal diversity is illegal because the president doesn’t have the power to grant one group of Americans the status of a separate government, she said.

“There is no constitutional basis for conferring such status, and Congress has repeatedly refused to confer this status,” said Carissa Mulder, a spokeswoman for two members of the federal Commission on Civil Rights.

“This seems to be yet another case of the Obama administration ignoring the law to achieve its policy objectives,” she added.

The move was announced Friday before Memorial Day as White House officials and congressional Democrats stepped up predictions that the president will try to bypass congressional opposition to his progressive policy preferences.

Last week, for example, Democratic Senate leader Harry Reid suggested the president would reduce enforcement of federal immigration law because the House has not agreed to double the current inflow of almost two million immigrants and guest workers per year.

The proposed new legal regime for Hawaii is sketched in a federal document released Friday, dubbed an Advanced Notice of Proposed Rulemaking.

“The Secretary of the Interior is considering whether to propose an administrative rule that would facilitate the reestablishment of a government-to-government relationship with the Native Hawaiian community,” said the document.

The goal, it claimed, is “to more effectively implement the special political and trust relationship that Congress has established between that [Hawaiian] community and the United States.”

The move is likely intended to protect lucrative financial set-asides for Americans who are also part of the Hawaiian racial group, said Heriot.

These set-aside, which include cheap loans, are being threatened by the Supreme Court’s move to curb racial divisions and imposed racial diversity. In 2000, for example, the court’s Rice vs. Cayetano decision allowed non-Hawaiians to participate in the election of trustees for the state’s wealthy Office of Hawaiian Affairs.

The office holds a large tract of land in Hawaii under a legal trust, which generates revenue that is distributed to racial Hawaiians.

The 7,300 square kilometers of land were granted as a trust to the native Hawaiians in 1920 instead of creating a new tribal reservation that would have segregated Hawaiians from America’s mainstream government, economy and society. The transfer was solidified in 1959 when Hawaiians voted to become a state in the union, and in 1978 by the creation of the office to oversee use of the trust.

The land was awarded as trust, not a reservation, because Hawaiians were full citizens, said Heriot. “They’re part of the mainstream,” she said.

The Cayetano decision shows the court doesn’t want to encourage further moves toward tribal and racial separatism by granting more power to the race-based groups, such as the Office of Hawaiian affairs, she said.

“Once they made that decision, it’s pretty clear that whole [office] is in jeopardy,” over the long run, said Heriot.

In response, Hawaiian groups lobbied Congress to pass the Akaka bill, named after Sen. Daniel Akaka, a native Hawaiian senator.

The bill would have imposing variety on Hawaiians’ shared government, via the creation of a tribal government for Hawaiians.

That bill would have converted Hawaiians’ status from normal Americans into to subgroup similar to American Indians. Many Indians live on reservations governed by tribal governments since they were overrun during the European settlement of north America. The Akaka bill would also have transferred the Hawaiian land to the new tribe, allowing it to be used to generate wealth via gambling and other businesses for racial Hawaiians, she said.

But the Akaka bill has failed to gain any traction since 2010, prompting advocates to try this new regulatory end-run around Congress, said Heriot.

Heriot and three other members of the civil rights commission opposed the Akaka bill.