06/05/2009 Farming and Wetlands vs. State Mining Rights -- Who Wins in Hawaii?

As is normal with most conservation easements, the federal government’s Farm and Ranchland Protection Program (“FRPP”) and Wetland Reserve Program (“WRP”) require subordination of the landowner’s mineral rights. This creates a problem in Hawaii where the state purports to own all the mineral rights.
The landowner cannot agree to subordinate the minerals where someone (in this case the state) holds the rights. The administrator for the FRPP and WRP programs, the Natural Resources Conservation Service (“NRCS”), tried to remedy this problem by working with the Hawaii Department of Land and Natural Resources (“DLNR”), which is in charge of managing the state’s minerals. In August 2008, NRCS and DLNR entered into a memorandum of understanding to set up a process whereby DLNR would determine, on a case-by-case basis, whether it would subordinate mineral rights for a proposed conservation project (review MOU). (Interestingly, the MOU’s provisions imply that the state was not willing to conclude that every FRPP or WRP project would be more beneficial to the public compared to maintaining the state’s prospective rights to extract minerals from the property.) If you found this interesting and want to mine for more information, check out Hawaii Revised Statutes (“HRS”) section 182-2, entitled “Mineral rights reserved to the State.” Also take a look at HRS 182-1, which defines “minerals” — note that geothermal resources are considered a “mineral” for purposes of HRS 182, but not “sand, rock, gravel, and other materials suitable for use and used in general construction.” Also keep in mind that a typical donation of a conservation easement (not involving a FRPP or WRP project) involves different minerals issues which will be discussed in a future entry. But while we’re on the subject, you should be aware that because of HRS 182, most conservation easement donations in Hawaii will require a “minerals remoteness opinion” issued by a geologist. This is unfortunate because it costs land owners more money to complete their easements in Hawaii. A possible fix for this would be an amendment to Hawaii’s conservation easement law, HRS 198, providing that the state relinquishes its minerals rights where lands are, and remain, encumbered by a conservation easement conveyed in accordance with HRS 198.