The Alaska Supreme Court’s recent decision in Nunamta Alukestai v. Pebble Limited Partnership, No. 7011 (Alaska filed May 29, 2015)significantly alters the permitting process for projects within the jurisdiction of the Department of Natural Resources (DNR). The Court concluded that exploratory permits issued to the Pebble Limited Partnership (PLP) in support of its exploration activities for the Pebble mine prospect actually transferred interests in state land.  As such, the Court decided DNR should have provided an opportunity for public notice and comment before issuing the permits in order to comply with the Alaska Constitution’s requirements for the conveyance of state lands.

The Court concluded public notice and comment is required for those permits that: (1) are not likely to be revoked; or (2) will lead to a large/permanent impact on the land. Going forward, each permit issued by DNR will need to be evaluated on a case-by-case basis using these factors.

In this case, the Court held that the permits transferred interests in state lands in light of both factors. The court found the relationship between the state and PLP was strong evidence that the permits were not likely to be revoked. The Court also found that the activity on the land – mostly exploratory drilling, and the staging associated with it – had sufficient impact to be considered permanent. The Court reached this conclusion even though most of the drill holes had been plugged with concrete and disturbed areas were re-seeded. In addition, the facilities used for staging operations were temporary structures and helicopters were primarily used for access to drill sites to avoid having to develop roads or other infrastructure. Notwithstanding these mitigating factors and the permits being revocable on their face, the Court held notice and comment was required.

In light of the imprecise and low bar set by the Court in this decision, resource developers should assess their potential impact on the land carefully when considering the time and resources they will need to complete permitting for exploration activities. Resource developers should also be on the lookout for additional guidance from DNR in the form of memorandums or perhaps even new procedural regulations to account for the Court’s ruling in this case.

In a related case released the same day concerning fee awards issues from the Nunamta case discussed above, Alaska Conservation Fund v. Pebble Limited Partnership, No. 7012 (Alaska filed May 29, 2015), the Court explained what it means to have a “sufficient economic incentive” for purposes of the statutory fee-shifting provisions for lawsuits involving constitutional claims. In cases concerning constitutional claims, a party successfully bringing a constitutional claim can obtain full attorneys’ fees, as opposed to the partial fees allowed under Alaska R. Civ. P. 82, but only if the prevailing party lacks a “sufficient economic incentive” to bring the claim. Conversely, a party bringing a constitutional claim that loses will not be liable for the prevailing party’s fees so long as the constitutional claimant’s case was not frivolous and they did not have a “sufficient economic incentive” to bring suit.

Thus, whether the plaintiffs lacked a “sufficient economic incentive” in Nunamta was a live issue notwithstanding that their successful appeal made them the prevailing parties. This was because the Nunamta plaintiffs could qualify for full fees if they lacked such an incentive. The Court concluded the Nunamta plaintiffs’ primary interest was in protecting public involvement in the state’s permitting process and that possible indirect economic benefits they might realize was not enough to give them a “sufficient economic incentive” to have brought their claims. Defendants facing constitutional claims should appreciate that the Alaska Conservation Fund will make it both harder to obtain fees from a losing plaintiff and more likely that a successful plaintiff will obtain full fees. The stakes in litigation involving constitutional claims will be that much higher and litigation decisions in this context will require careful consideration by defendants and their counsel.