Millions of dollars could be at stake in an emerging dispute over who owns the mineral rights to Hawaiian home lands that are being considered for the development of geothermal energy.

While the state contends that it owns the rights, a committee under the Department of Hawaiian Home Lands submitted a report last week pushing for legislative action “which acknowledges the Department of Hawaiian Home Land’s inalienable rights to the minerals.”

Whoever controls the rights – either the state or Native Hawaiian beneficiaries of DHHL – gets the money through royalty payments. The state contends it holds the rights to all minerals on all lands — no matter who owns them. But opponents say some Hawaiian home lands conveyed prior to statehood are covered by federal law, which would give the mineral rights to the landowner. It’s one of the most complicated issues facing the state and at least one lawsuit has been filed over the matter.

“At the end of the day, the dispute is going to be settled in the courts,” said Robbie Lea Kapiolani Cabral, a senior adviser to Innovations Development Group, a local company hoping to develop geothermal energy in Hawaii. While she said that it was her understanding that the mineral rights are assets of the state, if it was determined that DHHL controlled the rights it would be great for Native Hawaiians.

“If it does turn out to be their resource, I think it would be a fabulous resource for them to have,” she said.

DHHL is responsible for approximately 200,000 acres of land that was set aside by the federal government as a land trust for Native Hawaiian homesteads, in accordance with the 1921 Hawaiian Homes Commission Act. Responsibility for administering the trust rested with a federal agency until Hawaii statehood in 1959, when the state Department of Hawaiian Home Lands assumed the role.

The land is to forever benefit Native Hawaiians, where they may live, farm and engage in commercial or industrial activities.

A final decision about submitting legislation relating to mineral rights has not been made, Crystal Kua, a spokeswoman for the Department of Hawaiian Home Lands, told Civil Beat.

While the development of Hawaii’s extensive geothermal resources has been at a near standstill for two decades, mainly because of opposition by Native Hawaiians concerned about disturbing sacred areas, there has been a shift in sentiment recently. Local groups, including Native Hawaiians who had been against the development, are now encouraging the state to tap the resource. The renewable energy source could provide greater energy security and cost stability for the state, which relies on imported fossil fuels for 90 percent of its energy needs.

And it could bring millions of dollars to the owner of the resource. A company operating a geothermal project on the Big Island has paid more than $12 million in royalties to the state this past decade.

Hawaiian Electric Co. also recently asked for input from potential developers, landowners and the local community about geothermal development. The Department of Hawaiian Home Lands expressed interest, and geothermal companies have been angling for development opportunities.

The push for geothermal energy has raised the issue of control over mineral rights on Hawaiian home lands.

A Geothermal Renaissance

Protests by Native Hawaiian activists curtailed the development of geothermal energy on the Big Island in the 1970s and 1980s. Cultural objections were raised about drilling into volcanoes like Kilauea and Maunaloa, and the projects were considered harmful to Madame Pele, the fire goddess. Safety concerns followed two explosions and intensified opposition.

But local sentiment has changed as opponents have recognized there may be a way to develop projects that benefit local communities in a culturally sensitive way. Former opponents, such as well-known Native Hawaiian leader Mililani Trask, who led past protests, are now pushing for the development of the resource.

Puna Geothermal Venture, the sole geothermal developer in the state, hopes to expand its operations on the Big Island, and is also exploring the viability of tapping into the resource on Ulupalakua Ranch on Maui. The project is on land owned by the Lyman Estate but the state is getting the royalty money because it owns the mineral rights.

The company, which is owned by Ormat Technologies, based in Reno, Nevada, pays annual royalties to the state. From 2001 to 2009, payments totaled $12.5 million, according to a recent report to the Legislature. Thirty percent is distributed to the County of Hawaii and 20 percent to the Office of Hawaiian Affairs.

Puna Geothermal Venture currently produces about 30 megawatts of geothermal energy, or 20 percent of the Big Island’s energy needs, and is awaiting state approval of a contract to add another 8 megawatts.

Innovations Development Group, a local company led by Native Hawaiians, and advised by Trask, is developing 50 megawatts of geothermal energy on Native Maori land in New Zealand. Touting what the group calls a native-to-native business model, the company says it can develop Hawaii’s resources in a culturally sensitive manner.

Other companies include Moku Power, which has a new technology its hoping to develop, and Avalor Energy Corporation, which has teamed with the University of Hawaii and Lawrence Berkeley National Laboratory to explore geothermal resources in Hawaii under a $980,000 grant.

Pele’s Royalties

While ownership of mineral rights has been the subject of legal action on the mainland, where contracts entered into a century ago did not anticipate lucrative resources that might lay below the earth’s surface, it’s a relatively new issue in Hawaii, according to Guy Kaulukukui, deputy of the Department of Land and Natural Resources.

“The state does not have many minerals and the issue with regard to DHHL developing mineral resources has not been raised as far as I know,” wrote Kaulukukui by email. “The rights were not transferred to DHHL because the state had reserved that right on all state land, of which DHHL (in effect) is a subdivision.”

But local attorneys say state ownership could be a subject of dispute.

“The Hawaii state government has a history of ignoring bits in the law that they find inconvenient,” said Carl Christensen, who served as senior counsel to the U.S. Senate Committee on Indian Affairs and was an attorney with the Native Hawaiian Legal Corporation.

In the absence of any proof as to state ownership of DHHL’s mineral rights, he said he remained “totally unconvinced” about such an assertion.

“Any pre-Statehood conveyances to DHHL under the authority of Congress and the Hawaiian Homes Commission Act would be governed by federal law, not the law of the Territory,” he said by email. “And the general rule in federal law is that a conveyance of public land by grant or patent does carry with it the mineral rights unless they are specifically reserved to the government.”

“I know of no policy reason why Congress should have wanted to cripple DHHL by giving it more limited rights in its lands than that granted by it to other grantees, so I think the state is engaging in a case of serious wishful thinking,” he said.

Christensen said the state needs to cite specific legal authority to DHHL lands.

Kaulukukui said that DLNR was operating under the opinion of the attorney general’s office on the matter.

Josh Wisch, special assistant to Attorney General David Louie, told Civil Beat that it’s his agency’s position that the federal government gave the land to the state.

“The state does have title to those lands and has ownership of mineral rights,” Wisch said.

He said the office was taking a closer look into who has “control over those mineral rights or who would be able to administer them.”

Rights to geothermal resources are further complicated because the resource could spread for miles underground, crossing property lines, according to Kenneth Kupchak, a Honolulu attorney who has worked on geothermal issues for decades.

“It’s a tough discussion to solve in isolation without looking at the whole resource,” said Kupchak. “Assuming someone brings this legislation at this time, everyone’s discussion points are going to come up and it’s going to be quite complex.”

DISCUSSION: *Do you think that the Department of Hawaiian Home Lands owns the mineral rights to its lands? Join the conversation.

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