Date: 05-29-2015

Case Style: Nunamta Aulukestal v. State of Alaska

Case Number: S-14560/14579

Judge: Winfree

Court: Supreme Court of Alaska on Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage County (Burough)

Plaintiff's Attorney: Nancy S. Wainwright, Victoria Clark, Stephen E. Cotton, Trustees for Alaska, Anchorage, for Appellants and Cross-Appellees.

Defendant's Attorney: Laura Fox, Assistant Attorney General, Anchorage, and Michael C. Geraghty,
Attorney General, Juneau, for Appellee and Cross-Appellant.

Matthew Singer and Howard S. Trickey, Jermain, Dunnagan
& Owens, P.C., Anchorage, for Intervenor-Appellee. J. P.
Tangen, Attorney at Law (P.C.), Anchorage, and Lawrence
V. Albert, Anchorage, for Amicus Curiae Alaska Miners
Association.

Description: Challenged in this case are land and water use permits allowing intensive
mineral exploration on State land. The main question we address is whether the
Department of Natural Resources (DNR) had to give public notice before issuing the
permits. Because the Alaska Constitution requires public notice when interests in land
are transferred, the answer to this question depends on whether the permits conveyed an
interest in land. After a trial, the superior court held that notice was not required because
the permits were nominally and functionally revocable and therefore did not transfer an
interest in land. We conclude that the land use permits were not functionally revocable.
Because we therefore conclude that they conveyed an interest in land and consequently
should have been preceded by public notice, we reverse the judgment of the superior
court and remand.
* Sitting by assignment made under article IV, section 11 of the Alaska
Constitution and Alaska Administrative Rule 23(a).
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II. FACTS AND PROCEEDINGSA. The Setting
The Pebble ore deposit lies north of Lake Iliamna. It consists of copper,
gold, and other minerals and covers an area of about 360 square miles. The ore deposit
sits astride the watersheds of the Kvichak and Nushagak Rivers, which flow into Bristol
Bay. Bristol Bay is home to the world’s largest wild sockeye salmon fishery. The
average annual run of this high value species during 1990-2010 was about 37.5 million
fish of which about 25.8 million were caught for commercial purposes.1 The majority
of the production of Bristol Bay sockeye comes from the Kvichak and Nushagak River
watersheds.
The waters flowing into Bristol Bay host all five species of Pacific salmon
as well as trout, char, and grayling. The sportfisheries for king salmon and rainbow trout
in the Bristol Bay watershed are world renowned. Additionally Bristol Bay salmon form
the centerpiece of the subsistence activities of the residents of this region. The area of
the ore deposit also provides important habitat for land-based wildlife, providing winter
and calving habitat for the Mulchatna caribou herd, “essential stream concentration” for
brown bears, and moose habitat.
B. Exploration Activities
The Pebble ore deposit was discovered in the late 1980s. The mineral
claims to the deposit were secured by discovery, location, and filing. They are now
owned by Pebble Limited Partnership (“PLP”). Exploration of the deposit has continued
since 1988 and has escalated over the years. Exploration has primarily been conducted
by exploratory drilling. As of 2010, when the trial in this case took place, some 1,269
1 PAUL SALOMONE ET AL., 2010BRISTOL BAY AREA ANNUAL MANAGEMENT
REPORT, 85, 100 (Apr. 2011), available at www.adfg.alaska.gov/FedAidpdfs/
FMR11-23.pdf.
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bore holes had been drilled. In addition, extensive seismic studies had been conducted
using explosives along seismic lines. PLP and its predecessors had expended over $300
million on exploration.
In the years immediately before the trial, the exploration program was
supported by helicopters. Drilling was conducted using portable rigs that were flown to
each drill site. Several sites might operate at one time. The drill rigs were placed on
wood decking or tundra mats. Between one and three sump pits were dug for the
settlement of the slurry of drilling mud and drilling waste that was discharged from the
bore hole. 2 Water for drilling was obtained from nearby sources. When drilling was
completed at each site, bore holes were generally plugged with concrete and the rigs and
drill pads were removed by helicopter. The sump holes were covered up using the
original overburden and re-seeded if necessary. Concrete plugs remained in all drill
holes, and metal casings were left in some drill holes as well. Some bore holes
containing water that might be useful for future operations were merely capped, rather
than plugged.
Since 1989 DNR has issued a series of permits for exploration activity in
the area, with the area encompassed in the permits and the number of claims increasing
over the years. 3 The permits were “Miscellaneous Land Use Permits,” abbreviated as
2 This describes best practices. There is evidence that at times PLP and its
predecessors simply allowed the discharged material to flow onto the tundra or into
tundra ponds.
3 Nunamta alleged, and DNR admitted, that no permits issued for 2000 or
2001 and that PLP’s predecessors filed Affidavits of Annual Labor, showing that they
engaged in some mining activities, for those years; Nunamta and DNR dispute the
significance of this fact.
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“MLUPs.”4
Until 2007 PLP’s predecessor mining companies took any needed water out
of nearby streams, ponds, or bore holes to support their drilling operations without a
separate water use permit.5 PLP first applied for a water use permit in late 2006 for its
2007 activities; the Department issued water use permits for five-year periods. These
permits were “Temporary Water Use Permits,” or “TWUPs.” The MLUPs and the
TWUPs were issued for specific terms, but they also provided that they were revocable
at will.
Although the exploration has been authorized incrementally, some facilities
associated with the exploration have remained in place over many years. There is a
supply depot and staging area occupying an area of about 30 meters by 300 to 350
meters. This consists of plywood sheds, wall tents, and mats for storing material,
interconnected by wooden walkways. All the buildings are capable of being
disassembled and removed by helicopter.
There is a fueling station at a lake where float planes can land and transfer
fuel to tanks. The stored fuel is used to refuel helicopters, but it is also transported to
drill sites by helicopter for use at the sites. At the fueling station there are a dock, two
helicopter landing pads, five large fuel tanks in an aluminum containment structure,
tundra mats, and a temporary shelter building. At a different location there is a separate
storage area, used primarily for storage of hoses and fuel containment structures, which
consists of several plywood sheds, wall tents, and tundra mats.
4 Permits from 1992 and 1993 are called “Exploration and Reclamation
Permits,” but we see no significant difference between these permits and those labeled
“Miscellaneous Land Use Permits.”
5 Some applications filed before 2007 included information about estimated
water usage needs.
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The workers on the exploration project are not housed there. Instead they
are flown in daily from a village some 17 miles away. As the trial court stated:
There are no roads or wheeled vehicles as it is an entirely
helicopter-supported program. There is no permanent
airstrip, no residential camp facilities, no four-wheel trails, no
sewage lagoon, no water treatment plant, no bridges and no
obstructions to any water body. All of the structures found
at Pebble are temporary and can be deconstructed and
removed by helicopter. (Citations omitted.)
C. The 2009 MLUP
The most recent MLUP as of the time of trial provides that “[e]ffective
dates of this permit shall be February 26, 2009 through December 31, 2010, unless
sooner revoked for cause. This permit is also revo[c]able at will.” It states that it is “for
activities upon State managed lands described in the Hardrock Exploration Application”
submitted by PLP.
The activities described in the application, and thus permitted by the
MLUP, included 100 diamond-core drilling bore holes that could be as deep as 7,000 feet
and have a diameter of up to 6 inches. Also permitted were 325 bore holes drilled with
mud-rotary and reverse-circulation drills into bedrock to depths of from 10 to 500 feet.
The permit also allowed shooting 34 seismic blast lines totaling a maximum
of 220,000 feet. Along the seismic lines, between 500 and 925 pounds of dynamite
could be exploded in approximately 1,100 shots. Each shot will excavate a hole from
2 to 12 feet in diameter and 2 to 3 feet deep. After the permit expires these blast holes
will still be present although they will be smoothed and revegetated.6
6 The plan states:
Each shot hole will be smoothed and rounded by hand shovel
and rake. Where possible, covering vegetation will be cut out
and removed prior to the blast and subsequently rolled back
(continued...)
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The permit also allowed activities in anticipation of the yet to be reached
mine development phase. It allowed 320 shallow soils test pits “to determine soil
horizons for construction purposes.” These pits could be approximately four feet wide,
seven feet long, and up to seven feet deep. Once the sampling process terminated, they
would be backfilled, the overburden would be put back in place, and re-seeding would
be performed if necessary.
Concerning the facilities that have spanned a number of permit periods, the
application stated that the storage camp built in 2004 continued to be used but that
certain plywood sheds were removed and replaced with a 24-foot by 60-foot
WeatherPort tent. That plus one remaining 10-foot by 20-foot wooden structure were
the only buildings at this location. At a separate location two structures had “been
erected to protect water hose[s] and keep them from freezing.” One was a 10-foot by 20­
foot metal-clad building and the other is a 15-foot by 36-foot WeatherPort tent. The
application noted that “[a]ll are temporary and will be removed when no longer needed.”
Finally, the application noted that PLP had TWUPs allowing the use of
water from streams, ponds, and previous drill holes for up to 16,200 gallons per day or
113,400 gallons per week “per rig.” PLP’s plan of operation called for up to 12 rigs to
be on site.
D. Proceedings
Nunamta Aulukestai, an association of eight Native village corporations in
the Bristol Bay region, and two individuals who reside in Nondalton, Jack Hobson and
Ricky Delkittie, Sr. (collectively “Nunamta”), appealed the issuance of the MLUP for
6
(...continued)
over the site when reclaimed. The disturbed surface will be
reseeded with native vegetation. As the program will be
helicopter supported, no ground footprint will be left other
than the blast hole.
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the Pebble project for 2009-10. The appeal was brought in March 2009, and was
directed to the DNR Commissioner. It challenged, among other things, the lack of public
notice prior to issuing the permit, DNR’s failure to address the cumulative impacts of the
proposed exploration activities, and the lack of specific information concerning both the
sources of water and the nature of the materials to be used for plugging drill holes.
When DNR denied Nunamta’s request to stay the permit, Nunamta, in July of 2009, filed
a complaint for declaratory judgment in the superior court.7 This complaint forms the
basis for the present appeal, and we will describe it below, after we describe the course
of the administrative appeal.
In the administrative appeal, in November 2009 DNR denied the appeal on
the ground Nunamta did not have standing. But DNR also stated that it had considered
all the legal and factual grounds presented by Nunamta and indicated that it would have
denied the appeal on the merits as well. DNR issued this decision without first holding
an evidentiary hearing or calling for or receiving briefing on any issues.
Nunamta appealed DNR’s decision to the superior court, challenging its
rulings on due process grounds. In October 2011 Judge Michael Spaan ruled that DNR
had violated Nunamta’s due process rights by rejecting the appeal on standing grounds
without offering Nunamta the opportunity to cure the alleged standing deficiency. But
the court also ruled that any harm from this action was cured because DNR had rendered
a decision on the merits and Nunamta had no other valid due process claims. Nunamta
appealed this ruling to this court. After the case was briefed and orally argued, we asked
for supplemental briefing as to why the appeal should not be dismissed as moot in light
7 Nunamta was joined by four individuals as plaintiffs in the declaratory
judgment action: Ricky Delkittie, Sr. of Nondalton; Violet Willson of Naknek; Victor
Fischer of Anchorage; and Bella Hammond of Lake Clark. For convenience we also
collectively refer to these plaintiffs as “Nunamta,” while recognizing that not all of the
individual parties were involved in both cases.
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of the expiration of the permit at issue and because the pertinent issues were raised or
could be raised in the declaratory judgment action. After considering the supplemental
briefing, we entered an order dismissing the administrative appeal as moot without
additional explanation.
We now turn to the proceedings in Nunamta’s declaratory judgment action.
The complaint contained six counts, each of which generally alleged that the statewide
permitting process for hardrock mines is constitutionally deficient and also specifically
alleged that the permitting process related to the Pebble exploration is deficient in the
same way. In particular:
• Count I claimed that DNR, by granting permits for exploration and
“water use without analysis or findings addressing the direct, indirect and cumulative
impacts of [mining exploration] uses on the public domain, has failed to fulfill its
fiduciary public trust duty to manage state resources for the common good.”
• Count II claimed that the issuance of exploration and water use
permits without analysis as to their effect on “reasonable concurrent users of public land,
water, fish and wildlife, cultural resources and subsistence resources” violates article
VIII, sections 1, 2, and 8 of the Alaska Constitution.
• Count III claimed that DNR violated article VIII, sections 3 and 4
of the Alaska Constitution relating to the reservation of fish, wildlife, and waters to the
people for common use subject to preferences among beneficial users, by issuing the
permits with no analysis and thus elevating mining to the highest preference without
justification.
• Count IV claimed that the exploration and water use permits issued
by DNR “are de facto disposals of interests in state land and water requiring public
notice and other safeguards of the public interest” in violation of article VIII, section 10
of the Alaska Constitution.
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• Count V alleged that DNR violated article VIII, section 13 of the
Alaska Constitution relating to the reservation of water to the people for common use by
permitting the use of significant amounts of water for “at least five years or longer” with
“no public notice or analysis of the impacts of that water use on beneficial and
concurrent uses.”
• Count VI alleged a violation of article VIII, section 17 of the Alaska
Constitution — the Uniform Application Clause — claiming upland hardrock mining
exploration permits were issued without public notice and without a public interest
review whereas offshore mining exploration permits can only be issued after notice is
given and a best interest analysis is conducted. In addition, this count challenged as
irrational the statutory and regulatory water use system that allows significant water use
labeled “temporary” without public notice or a public interest review whereas
withdrawals deemed “permanent” must be accompanied by such protections.
PLP intervened as a defendant. The State and PLP filed motions for
summary judgment on all six counts. The superior court, Judge Eric A. Aarseth
presiding, granted these motions as to Count VI relating to the Uniform Application
Clause, ruling that section 17 serves only to protect similarly situated users from unequal
application of laws and regulations, whereas Nunamta’s claim focused not on users but
particular uses of the public lands.
As to Nunamta’s other claims, the court ruled that they could not be
considered generally, but could be considered to be “as applied” challenges to the
statutes and regulations under which the exploration permits were issued. The court
collectively summarized the remaining counts as claiming “that the State should have
performed a best-interest finding before granting the permits at issue and should have
made that finding available to the public.”
The court stated:
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As the State notes, the constitution does not mention
a best-interest finding, and one is not specifically required by
the language of the various natural resource provisions.
Instead, a best-interest finding is an artifact of the State’s
consideration of constitutional policies of maximum
beneficial use, sustained yield, concurrent uses, etc. All of
these considerations, in turn, are expressions of the same
underlying constitutional policy “to encourage the settlement
of [public] land and developments of [the State’s] resources
by making them available for maximum use consistent with
the public interest.” Because these intertwined constitutional
considerations are encompassed by a single finding, the
ultimate question here is whether the State should have made
such a finding before issuing permits to the Pebble Project, or
whether (as the State alleges) it was only required to adhere
to its own statutory and regulatory limitations and
authorizations.
The court, at least provisionally, rejected the State’s argument that the
provisions of article VIII did not impose any protections independent of those
specifically imposed by the legislature:
[P]rovisions of Article VIII, in order to have any meaning at
all, must be interpreted as containing independent constraints
on State action. As noted above, however, because the main
dispute in this case is whether the State should have
considered the content of any of these constitutional
provisions before issuing the MLUPs and TWUPs, the Court
need not consider the application of these provisions on a
count by count basis. The State either needed to balance the
policy considerations entrenched in Article VIII or it did not.
The court concluded that there were material issues of fact regarding
Nunamta’s remaining claims that the State did not comply with the provisions of article
VIII, writing, “Whether these permits themselves are disposals, and whether the nature
of the land use triggers constitutional considerations requires an examination of the
underlying activities.”
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Both the State and PLP moved for reconsideration of the court’s order on
summary judgment. They argued that only questions of law were presented and that
requiring a trial would have the effect of creating an ambiguous and unworkable process
for issuing exploration permits. The superior court denied these motions and later
defined the issues for trial in an Order On Rule of Law as follows:
At trial, the court will consider:
1) Whether the permits issued for mineral exploration at
the Pebble Project are functionally irrevocable1
and amount
to a “disposal” under Art. VIII, Section 10.
2) Whether, if the permits amount to a “disposal,” the
State provided constitutionally adequate prior public notice
of the disposal under Art. VIII, Section 10, and
3) Whether the exploration permits and the associate[d]
mining exploration activity unconstitutionally impinged on
reasonable concurrent uses under Art. VIII, Section 8.
The common theme in Counts I, II, III and V in Plaintiffs’
Complaint is that permits are subject to restrictions based on
reasonable concurrent uses.2
The court will receive testimony and evidence as it
relates to the revocable nature of the permits and any actual
impact the exploration activities or permit issuance has had
on the reasonable concurrent uses or common uses of the
land and water as defined by the pertinent sections of Art.
VIII and as pled by the Plaintiffs. The court will not conduct
its own best interest finding (“BIF”) or determine whether the
State conducted a “functional equivalent” of a BIF. The
court will not need to bifurcate the trial. The court will not
entertain evidence or argument about prospective harm due
to the development or actual mining within the concerned
geographical areas.
1 The supreme court adopted a hybrid approach to
determining whether a permit is functionally irrevocable.
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Northern Alaska Environmental Center[] v. DNR, 2 P.3d
629, 638 [(Alaska 2000)]. A permit is functionally
irrevocable if the permit is not likely to be revoked because
of its magnitude or if there is long-term and harmful
environmental impact. Id. at 638-39. This test reads
consistent with the constitutional commentary on Section 10:
“[t]ransactions may vary in importance from routine to those
of substantial value.”
2 “Reasonable concurrent uses” is similarly described in
the various sections of Art. VIII as follows: Section 1 ­
“public interest;” Section 2 - “benefit of the people;”
Section 3 - “common use;” Section 4 - “preferences among
beneficial uses;” and Section 13 - “common use” and
concurrent uses.
A ten-day trial was held. The primary focus of the trial was water
contamination issues. Nunamta presented evidence that contamination had and would
continue to occur through acid rock drainage. One expert witness, Dr. Moran, described
this as “the tendency of mineralized rock that has sulfides . . . to react with air and water,
and especially bacteria, to create natural acids that then solubilize the rock and release
contaminants.” This process occurs both in bore holes and in the sumps, where it is
magnified because of the greater surface area of the pulverized drilling waste. According
to another of Nunamta’s experts, Dr. Zamzow, finely ground mineralized rock, when
exposed to wetting and drying conditions, may take up to 15 years to become acidic.
Dr. Moran agreed that plugging bore holes would minimize groundwater contamination
from them, but testified that often plugging is not complete, allowing chemical and
biological reactions to continue. In addition, Dr. Moran testified that the cement grout
in plugs degraded over decades and “then you get groundwater contamination longterm.”

According to Nunamta’s experts, the other major source of potential
contamination is the drilling mud. The most commonly used “EZ mud” contains toxic
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chemicals. A witness employed by the State Department of Environmental Conservation
testified that EZ mud components were toxic to fish in the concentrations found in the
water in bore holes but thought that by the time wastewater from a bore hole could travel
100 feet to a water body, it would be greatly diluted and thus “we qualitatively
determined that it was unlikely for the drilling additive to reach a water body at a level
that would be toxic to fish.”
The testimony presented by Nunamta concerning water contamination
addressed not only the potential for contamination. Dr. Moran testified that his review
of the data from several monitoring wells indicated “levels of metals and other anions
that if freshwater fish were exposed to them, those would be toxic.” Dr. Zamzow also
testified that the data collected by Pebble in monitoring wells indicated that drilling is
having an impact on water chemistry, although she was unable to state the degree of the
impact.
With respect to other impacts, Nunamta presented testimony that some
tundra ponds used as water sources for drilling had been temporarily dewatered and that
in the past, drilling muds had been discharged into ponds. Nunamta also presented
testimony that the frequent helicopter traffic had caused caribou, moose, and brown bear
to avoid the area. Further, a guide, Steve Morris, testified that he previously had
maintained spike camps for hunters of caribou, moose, and bear, but that the exploration
activity had rendered the area unusable, saying, “The helicopter activity in itself is
enough that you can’t bring a paying client out there, put them in a spike camp, any one
of those dozen units that I used to use. They will see more helicopters in one day than
they will big game.”
PLP also presented expert testimony on the issue of water contamination.
PLP’s expert, Dr. Stelljes, testified that he reviewed data from 37 monitoring wells and
was unable to find any chemical fingerprint indicative of acid rock drainage. It was his
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opinion that the exploration activities had not harmed water quality in the area.
Dr. Stelljes also testified that drilling mud discharged into the sumps creates an
impermeable barrier and is “entombed” between the shallow bedrock below and a “very
impermeable” tundra mat and compacted soil above, thus preventing it from migrating
into groundwater. In addition he testified that the data Dr. Zamzow relied on as
indicating contamination caused by drilling were simply “outliers,” that is, sampling
errors. PLP also presented evidence that there has been no impact on local caribou or
other wildlife as a result of its exploration activities, and that tundra ponds from which
water was taken would fully recharge in less than a year.
Following the trial the court issued detailed written findings. The court
found that the evidence presented was “insufficient for this Court to find it more likely
true than not that the exploration activities at the Pebble study area have actually caused
or will in fact cause long-term, harmful environmental impacts from acid rock drainage
or other contamination.” As to water contamination issues, the court adopted the views
advocated by PLP. The court found that Dr. Moran was a trustworthy witness but that
his testimony as to toxic concentrations of dissolved metals in monitoring wells did not
establish that the elevated levels were caused by exploration activities; the court further
discounted this testimony as conclusory, speculative, and lacking a basis in scientific
data. The court also observed that Dr. Moran “admitted . . . that fish do not live in the
groundwater” and that “Dr. Zamzow similarly admitted that fish are not swimming in
underground monitoring wells.” “Thus,” the court concluded, “elevated levels of metals
in groundwater monitoring wells is not evidence probative of impacts to aquatic
organisms.” The court also concluded that Dr. Zamzow was relying on unreliable outlier
data points in reaching her conclusion that some of the monitoring wells indicated
ongoing acid rock drainage reactions.
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The court also found “that most of the core holes drilled at the Pebble site
since 2006 have been plugged” and that “[b]ecause the holes have generally been
plugged, the likelihood of acid rock generation is substantially reduced or stopped
altogether.” With respect to acid rock drainage from the drill cuttings in the sumps, the
court found the evidence “insufficient to conclude that the sump pits are in fact
generating [acid rock drainage] contamination” and that even if they were “there is no
evidence that such contamination is actually migrating to an area in concentrations that
may cause harm to a living organism.”
With reference to the evidence that PLP had temporarily pumped dry
several tundra ponds, the court concluded that this did not necessarily mean that harm
to fish and aquatic life had occurred because there would have to be proof that PLP
“(1) extracted all the water in a pond, (2) that fish were actually present in the pond, and
(3) that the lack of water in fact harmed the fish.” The court concluded that there was
not credible evidence that all three of these things had occurred. The court further noted
that even if all the water were removed from a tundra pond containing blackfish, that
would not necessarily mean that the fish would be impacted because they can breathe air
for a period of time.
As to impacts on wildlife, the court found that the decline in the number of
caribou in the Pebble area was due to the natural migratory nature of caribou and cyclical
variations in their population, and not to any of PLP’s exploration activities. The court
also found there to be insufficient evidence that PLP’s exploration activities had caused
a permanent impact on any other wildlife in the area.
Concerning the testimony of the guide, Steve Morris, that his guided
hunting activities had been displaced by helicopter activity, the court refused to accept
this reason, finding it more likely that he no longer used this area because of a change
in state hunting regulations that prohibited non-resident hunters from taking caribou.
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Further, the court found Morris’s reasons were personal and must give way to other
interests: “[R]ather, it was a personal preference to avoid signs of civilization when
taking clients on wilderness hunting trips. . . . Mr. Morris must share the State resources
with other reasonable concurrent users . . . .”
The court concluded in general that Nunamta did not show that it was more
likely than not that exploration had caused long-term and harmful environmental impacts
in the Pebble project area, or that such harms “necessarily will occur.” The court also
concluded that PLP’s exploration and water use permits were not disposals of interests
in State lands and did not unconstitutionally impinge on reasonable concurrent uses. The
court’s final paragraph stated:
This Court finds that Plaintiffs failed to prove their
case as has been explained in this decision. The MLUP and
TWUP permits at issue in this lawsuit do not amount to a
disposal of an interest in state lands under Article VIII,
Section 10 of the Alaska Constitution. Therefore, the permits
in question did not trigger any constitutional requirement for
prior public notice or that the State conduct a best interest
finding before they issued the permits. The evidence at trial
also failed to demonstrate that the permits or the associated
mining exploration activity impinged on any reasonable
concurrent use or user under Article VIII, Section 8. Based
on the evidence provided at trial, it is more likely than not
that the permits provided for non-exclusive use of State lands
and the activities conducted on site did not cause any
significant impact or long-term harm to concurrent uses.
Given these conclusions, the relief requested by Plaintiffs is
DENIED and judgment is entered in favor of Defendant and
Intervenor.
Nunamta appealed to this court.
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III. ISSUES ON APPEAL
Nunamta has organized its arguments under four main captions as follows:
(1) “The superior court incorrectly determined that MLUPs and TWUPs
were functionally revocable and did not constitute a disposal”;
(2) “The extensive land and water uses were of sufficient magnitude to
trigger safeguards of Article VIII, sections 1, 2, 3, 4, 8, 10, 13 and 17”;
(3) “The State failed to undertake the public-interest analysis required
by Article VIII prior to issuing the MLUPs and TWUPs”; and
(4) “The superior court improperly excluded evidence of economic
impacts and cumulative impacts, and failed to make findings on Mineral Closing Order
393 and Leasehold Location Order #1.”
The State raises two points in its cross-appeal claiming:
(1) “The superior court should not have allowed Nunamta to litigate two
separate cases challenging Pebble’s permits”; and
(2) “The Court should not review specific permitting decisions or weigh
in on the general quality of DNR’s permitting and enforcement.”
IV. DISCUSSION
A. Issues Addressed
This is a case about process. Before issuing permits, did the State have a
duty under the constitution to give notice and did it have a duty to consider potential
consequences of the permitted activity? The relevant time period raised by these
questions is prospective. They are not answered by an after-the-fact inquiry in which a
private party is tasked with the burden of proving that substantial environmental damage
has occurred. The State must know how it should act before it acts. Similarly, to the
extent that the answer to these questions turns on an assessment of the environmental
impacts of permitted activities, the assessment must be made prospectively based on
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known and reasonably possible consequences. Further, if the duties to give notice and
consider potential consequences exist, they are not discharged by the apparent
harmlessness of what later takes place; and, if the duties do not exist, they are not created
by subsequent acts causing environmental harm. The duties asserted are intended to
facilitate public involvement and informed decision making, and to minimize
environmental harm and damage to conflicting users. These purposes are not served by
a retrospective examination of the nature of the permitted activity.8
The central issue as framed by the superior court was an as-applied
challenge to the constitutionality of a statute; from the trial court’s perspective, some
factual context was needed.9 But this was not an environmental tort case. We consider
the issues presented here to be primarily ones of law; the tests for functional revocability
require consideration of the future, not a detailed assessment of environmental harm to
date.10 While environmental harm resulting from past exploration activities would be
relevant to the question of whether present or future permits are not functionally
revocable, the absence of present harm would not necessarily mean that the permits are
functionally revocable. The position taken by the State and PLP at the summary
judgment level was that the dispositive issues in this case could be resolved as questions
of law. We agree, as shown by our resolution of this case, and it is to be hoped that
8 As we observed in Trustees for Alaska v. State, Department of Natural
Resources, 865 P.2d 745, 750 n.7 (Alaska 1993), a best interest determination “must take
place before the lease decision is made, not as an after-the-fact exercise.”
9 Kyle S. v. State, Dep’t of Health & Soc. Servs., Office of Children’s Servs.,
309 P.3d 1262, 1268 (Alaska 2013) (citation omitted).
10 A similar situation arose in Sullivan v. Resisting Environmental Destruction
on Indigenous Lands (REDOIL), where the superior court considered an as-applied
challenge to a constitutional question that we addressed in broader terms. 311 P.3d 625,
627, 633 (Alaska 2013).
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future cases involving process issues will be resolved on motion practice, thus avoiding
the expense of a lengthy trial.
All the permits that were challenged in this case have expired. As to them,
this case is moot. A suit challenging the lawfulness of a government-issued permit is
technically moot once the permit has expired. 11 It is not clear from the record that PLP
is conducting or intends to conduct similar exploration activities in the future. But still
pending are proceedings in which the State and PLP are seeking large awards of
attorney’s fees and costs. Since these awards depend on a prevailing party
determination, this case remains a live controversy for the purpose of determining which
party prevailed. Mootness on the merits notwithstanding, our determination that the
MLUPs were functionally irrevocable may serve as a useful precedent to DNR when it
is faced with the question of whether to give prior public notice before issuing permits
in future similar cases.
A second important question is potentially presented. As expressed by the
superior court in the concluding paragraph of its decision, did the Constitution require
DNR to “conduct a best interest finding” before issuing the permits, even if a statute or
regulation did not? The superior court answered this question in the negative, but only
because it concluded that the permits were not disposals of an interest in land. This
conclusion must be vacated based on our holding that the MLUPs were disposals of an
interest in land. The parties have briefed the impact that Sullivan v. Resisting
Environmental Destruction on Indigenous Lands (REDOIL),
12 decided by this court after
the present case was appealed, may have on this issue. In REDOIL we held that while
article VIII does not require written best interest findings, it does require some form of
11 See Alaska Cmty. Action on Toxics v. Hartig, 321 P.3d 360, 366 (Alaska
2014).
12 311 P.3d at 625.
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continuing assessment of factors relevant to the public interest during the course of a
natural resources project, particularly when a permit authorizing future activities is
contemplated.13 Given our resolution of the present case, we need not resolve whether
and how REDOIL should be applied to the issuance of permits like those involved in the
present case.
We do not address Nunamta’s other arguments for they raise issues as to
the validity of permits that have expired, and no good purpose would be served by
deciding them.
We address the issues raised in the State’s cross-appeal, for they raise a
potential procedural bar to Nunamta’s lawsuit.
All the questions reviewed in this appeal are questions of law. The standard
of review we use in deciding them is the non-deferential “independent judgment”
standard under which this court adopts “the rule of law most persuasive in light of
precedent, reason, and policy.”14
B. Cross-Appeal Issues — This Case Is Not Barred By The Doctrine Of
Failure To Exhaust Administrative Remedies Or The Rule Prohibiting
Claim Splitting.
The State argues that this appeal should be dismissed because Nunamta
should have exhausted its administrative remedies by litigating the issues presented in
this case in the administrative appeal rather than by filing a separate declaratory
judgment action. The State also argues that by pursuing both the administrative action
and the declaratory judgment action, Nunamta violated the doctrine prohibiting splitting
a cause of action.
13 Id. at 634-37.
14 J.P. v. Anchorage Sch. Dist., 260 P.3d 285, 289 (Alaska 2011) (quoting
Jacob v. State, Dep’t of Health & Soc. Servs., Office of Children’s Servs., 177 P.3d 1181,
1184 (Alaska 2008)) (internal quotations marks omitted).
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The State raised the exhaustion issue twice. In September 2009 the State
moved to dismiss on grounds that included failure to exhaust. The State noted that with
respect to the 2009 MLUP, Nunamta was pursuing a timely administrative remedy before
DNR and that Nunamta should not be allowed to short-circuit that proceeding with an
original action. Acknowledging that Nunamta had raised constitutional claims, the State
argued that the administrative remedy would be appropriate in order to supply a factual
context in which constitutional issues could be decided.
Nunamta opposed on the ground that exhaustion is not required where only
constitutional issues are raised. It also argued that exhaustion was not required because
DNR’s appeal process was dysfunctional and exhaustion would be futile given DNR’s
inaction in the administrative appeal and its evident partiality.
The superior court, Judge Craig Stowers presiding, denied the State’s
motion, ruling that forcing this case into an agency forum would probably not
“appreciably advance the issues in the case, especially in light of the fact that both the
state and the plaintiffs are arguing that these are essentially pure questions of
constitutional law in some sense or another.” The court also observed, “I don’t see that
the facts are necessarily inextricably intertwined with the constitutional law principles.”
The court also stated that in view of the full briefing on the issues, “I’m not sure why I
couldn’t rule on them as a matter of law.”
After the case was reassigned and Judge Aarseth ruled on the appellee’s
motions for summary judgment, both PLP and the State again moved to dismiss the case
on failure to exhaust grounds. As an alternative to dismissal, PLP asked for a remand
to DNR so it could conduct any needed evidentiary hearing.15 The State also asked for
15 PLP stated:
Rather than an unwieldy trial where this Court is asked
(continued...)
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an alternative to dismissal, seeking an order converting the case to an administrative
appeal. The State’s theory was that because, under the court’s order on the summary
judgment motions, the propriety of DNR’s issuance of the permits was at issue,
Nunamta’s claim was functionally an administrative appeal and it should be considered
as such. Citing Yost v. State, Division of Corps.,
16 the State argued, “When a court could
not grant the relief requested without reversing the prior agency determination, the claim
should be treated as an administrative appeal.” The trial court denied the motions in
October 2010. The court acknowledged that “an administrative record would likely
make the fact-finding process more efficient” but concluded that “the administrative
process is not necessary and would unnecessarily delay a decision in this case.”
Generally, a party who wishes to challenge action by an administrative
agency must do so using available administrative procedures before filing suit in court.17
The doctrine of exhaustion of remedies is a salutary one whose basic purpose “is to allow
15(...continued)
to make independent evaluations on a myriad of highly
technical areas, all of which are beyond the typical realm of
the judiciary, the Court should first allow for a
comprehensive agency record to be developed by the agency
that has the technical knowledge and expertise to address this
many highly convoluted issues. The option is almost
certainly a trial of much longer and larger proportions than
presently contemplated, on numerous issues for which there
are no established legal standards or other guideposts for the
Court. A better approach would be to allow the agency to
make[] its factual record, and then, if necessary, the case can
come back up to this Court on review of the governing
constitutional law.
16 234 P.3d 1264 (Alaska 2010).
17 Ben Lomond, Inc. v. Municipality of Anchorage, 761 P.2d 119, 121-22
(Alaska 1988).
-23- 7011
an administrative agency to perform functions within its special competence—to make
a factual record, to apply its expertise, and to correct its own errors so as to moot judicial
controversies.”18 But when a case raises solely constitutional issues exhaustion is
generally not required. 19 However, even then exhaustion may be ordered so that a court
will “have a factual context within which to review a case.”20 The doctrine of exhaustion
is not a strict jurisdictional rule; rather it is a rule of sound judicial administration.21
“Whether a court will require exhaustion of remedies turns on an assessment of the
benefits obtained through affording an agency an opportunity to review the particular
action in dispute.”22
When Judge Stowers denied the State’s first motion to dismiss based on
exhaustion grounds, he did so because the issues seemed to be pure questions of
constitutional law. In light of the constitutional law exception to the exhaustion doctrine,
this ruling was not an abuse of discretion.23
With respect to the second round of motions to dismiss on exhaustion
grounds, we think that the motions were properly denied, though not necessarily for the
reasons stated by the court. In our view the dispositive questions presented remained
18 Van Hyning v. Univ. of Alaska, 621 P.2d 1354, 1355-56 (Alaska 1981)
(quoting Parisi v. Davidson, 405 U.S. 34, 37 (1972)) (internal quotation marks omitted).
19 See Ben Lomond, Inc., 761 P.2d at 122.
20 Id.
21 Id. at 121 (citing State, Dep’t of Labor v. Univ. of Alaska, 664 P.2d 575,
581 (Alaska 1983)).
22 Id.
23 See Eufemio v. Kodiak Island Hosp., 827 P.2d 95, 98 (Alaska 1992)
(citation omitted) (stating that superior court has discretion to require exhaustion).
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relatively discrete questions of constitutional law that would fall under the exception for
such questions.
Further, outright dismissal for failure to exhaust would not have been
appropriate given that at the time of the second round of motions Nunamta still had an
active administrative proceeding pending. It could have been appropriate to take either
alternative course suggested by the appellees, but since Nunamta had in no sense slept
on its rights and all parties were aware of its claims, outright dismissal would have been
unwarranted.
We turn now to the State’s claim splitting argument. “The rule against
claim splitting provides that all claims arising out of a single transaction must be brought
in a single suit, and those that are not become extinguished by the judgment in the suit
in which some of the claims were brought.” 24 We conclude that this rule does not apply
here for a number of reasons.
First, DNR’s decision was based on standing grounds, although DNR
indicated that it would deny the appeal on the merits as well. The superior court ruled
that DNR erred in relying on the alleged lack of standing but that DNR’s decision could
be affirmed on the merits. That decision was appealed to this court, and we ultimately
dismissed the appeal as moot. But our decision was based on the implicit premise that
not only was the case moot because the permit in question had expired, it was also moot
because any underlying questions of importance could be determined in the present case.
Given the apparent role of the present case in the ultimate resolution of the administrative
appeal, that resolution cannot have a preclusive effect on this case.
In addition, DNR is a forum of limited jurisdiction that lacks authority to
issue declaratory relief. The rule prohibiting splitting claims does not apply to forums
Robertson v. Am. Mech., Inc., 54 P.3d 777, 780 (Alaska 2002) (citations
omitted) (internal quotation marks omitted).
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24
of limited jurisdiction that lack the authority to grant all the forms of relief a plaintiff
requests.25
Finally, the rule prohibiting claim splitting would not apply to those
appellants — Willson, Fischer, and Hammond — who were not parties to the
administrative appeal.
C. The MLUPs Were Disposals Of An Interest In Land.
We now address Nunamta’s argument that the MLUPs were disposals of
an interest in land that come within the protection of the public notice clause of article
VIII, section 10 of the Alaska Constitution. We do not discuss TWUPs at this point
because they do not lend themselves to the same analysis as MLUPs. We also focus only
on the 2009 MLUP because the details of this permit are clearly in the record and the
activities allowed under this permit appear to be representative of the activities under
MLUPs issued for the period 2002 to 2008.
Nunamta argues in general that the MLUPs were disposals of interests in
land that fall within the protection of article VIII, section 10. It argues that under either
of the tests for functional irrevocability adopted by this court in Northern Alaska
25 The Restatement (Second) of Judgments § 26(1)(c) (1982) expresses the
exception in this way:
(c) The plaintiff was unable to rely on a certain theory
of the case or to seek a certain remedy or form of relief in the
first action because of the limitations on the subject matter
jurisdiction of the courts or restrictions on their authority to
entertain multiple theories or demands for multiple remedies
or forms of relief in a single action, and the plaintiff desires
in the second action to rely on that theory or to seek that
remedy or form of relief.
-26- 7011
Environmental Center v. State, Department of Natural Resources,
26 the MLUPs are
functionally irrevocable and therefore are easements rather than licenses and thus
interests in land. The State and PLP argue in general that the MLUPs are neither
interests in land nor disposals and further that the tests for functional irrevocability are
not satisfied.
We will now summarize the relevant legal authorities.
1. Constitutional provisions
The constitutional provision most centrally involved in this case is article
VIII, section 10, the Public Notice Clause, which provides that “[n]o disposals or leases
of state lands, or interests therein, shall be made without prior public notice and other
safeguards of the public interest as may be prescribed by law.” A number of other
sections of article VIII are relied on by the parties, including section 1, Statement of
27 28 29 Policy; section 2, General Authority; section 3, Common Use; section 4, Sustained
30 31 32 33 Yield; section 8, Leases; section 11, Mineral Rights; section 13, Water Rights;
26 2 P.3d 629, 637-39 (Alaska 2000).
27 Art. VIII, §1 - Statement of Policy. It is the policy of the
State to encourage the settlement of its land and the
development of its resources by making them available for
maximum use consistent with the public interest.
28 Art. VIII, §2 - General Authority. The legislature shall
provide for the utilization, development, and conservation of
all natural resources belonging to the State, including land
and waters, for the maximum benefit of its people.
29 Art. VIII, §3 - Common Use. Wherever occurring in their
natural state, fish, wildlife, and waters are reserved to the
people for common use.
30 Art. VIII, §4 - Sustained Yield. Fish, forests, wildlife,
(continued...)
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30(...continued)
grasslands, and all other replenishable resources belonging to
the State shall be utilized, developed, and maintained on the
sustained yield principle, subject to preferences among
beneficial uses.
31 Art. VIII, §8 - Leases. The legislature may provide for the
leasing of, and the issuance of permits for exploration of, any
part of the public domain or interest therein, subject to
reasonable concurrent uses. Leases and permits shall provide,
among other conditions, for payment by the party at fault for
damage or injury arising from noncompliance with terms
governing concurrent use, and for forfeiture in the event of
breach of conditions.
32 Art. VIII, §11 - Mineral Rights. Discovery and appropriation
shall be the basis for establishing a right in those minerals
reserved to the State which, upon the date of ratification of
this constitution by the people of Alaska, were subject to
location under the federal mining laws. Prior discovery,
location, and filing, as prescribed by law, shall establish a
prior right to these minerals and also a prior right to permits,
leases, and transferable licenses for their extraction.
Continuation of these rights shall depend upon the
performance of annual labor, or the payment of fees, rents, or
royalties, or upon other requirements as may be prescribed by
law. Surface uses of land by a mineral claimant shall be
limited to those necessary for the extraction or basic
processing of the mineral deposits, or for both. Discovery and
appropriation shall initiate a right, subject to further
requirements of law, to patent of mineral lands if authorized
by the State and not prohibited by Congress. The provisions
of this section shall apply to all other minerals reserved to the
State which by law are declared subject to appropriation.
33 Art. VIII, §13 - Water Rights. All surface and subsurface
waters reserved to the people for common use, except mineral
(continued...)
-28- 7011
section 14, Access to Navigable Waters;34 and section 17, Uniform Application.35
2. Statutory and regulatory authority for MLUPs
Many uses of the public domain are allowed without a permit.36 Such uses
include not only ordinary activities such as hiking, bicycling, and travel by horse,
dogsled, or snow machine,37 but also more intrusive ones such as “brushing or cutting
a trail less than five feet wide using only hand-held tools”38 and “hard-rock mineral
prospecting or mining using light portable field equipment, including a hand-operated
33(...continued)
and medicinal waters, are subject to appropriation. Priority of
appropriation shall give prior right. Except for public water
supply, an appropriation of water shall be limited to stated
purposes and subject to preferences among beneficial uses,
concurrent or otherwise, as prescribed by law, and to the
general reservation of fish and wildlife.
34 Art. VIII, §14 - Access to Navigable Waters. Free access to
the navigable or public waters of the State, as defined by the
legislature, shall not be denied any citizen of the United
States or resident of the State, except that the legislature may
by general law regulate and limit such access for other
beneficial uses or public purposes.
35 Art. VIII, §17 - Uniform Application. Laws and regulations

governing the use or disposal of natural resources shall apply

equally to all persons similarly situated with reference to the

subject matter and purpose to be served by the law or

regulation.

36 The regulation that defines such uses is 11 Alaska Administrative
Code (AAC) 96.020 (2014).
37 11 AAC 96.020(a).
38 11 AAC 96.020(a)(2)(A).
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pick, shovel, pan, earth auger, or a backpack power drill or auger.”39 But a permit is
required for “an activity involving . . . the use of explosives and explosive devices” or
“drilling to a depth in excess of 300 feet, including exploratory drilling or stratigraphic
test wells.”40
For uses that are not generally allowed, DNR has regulatory authority to
issue permits for a specified term up to five years unless sooner revoked.41 Such permits
are MLUPs and they are authorized under Title 11, chapter 96 of the Alaska
Administrative Code.42 The stated purpose of chapter 96 “is to manage uses and
activities on state public domain land . . . in order to minimize adverse effects on the land
and its resources.”43 The regulation specifically authorizing MLUPs is 11 AAC 96.040,
which provides in relevant part:
(a) Issuance of a permit under this chapter is not a disposal
of an interest in land, and does not grant a preference right to
a lease or other disposal. The permit is revocable for cause
for violation of a permit provision or of this chapter, and is
revocable at will if the department determines that the
revocation is in the state’s interest. The permit remains in
effect for the term issued, unless revoked sooner. The
department will give 30 days’ notice before revoking a permit
at will. A revocation for cause is effective immediately.
(b) Each permit issued is subject to any provisions the
department determines necessary to assure compliance with
this chapter, to minimize conflicts with other uses, to
39 11 AAC 96.020(a)(3)(F).
40 11 AAC 96.010(a)(1)(A) and (D).
41 11 AAC 96.040(c).
42 Id.
43 11 AAC 96.005.
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minimize environmental impacts, or otherwise to be in the
interests of the state.
(c) . . . [A] permit will be granted for a specified term of up
to five years, unless revoked sooner. . . . [T]he permit may be
extended for any number of consecutive periods, each period
not to exceed one year. . . .
. . . .
(f) A permit under this chapter does not authorize the
placement of permanent improvements. Temporary
improvements authorized by a permit under this chapter must
be removed when the permit expires or is revoked, unless
otherwise specified by the department.
Three statutory sections are cited in this regulation as authority for its
promulgation: AS 38.05.020, AS 38.05.035, and AS 38.05.850. Alaska
Statute 38.05.020(b)(4) authorizes the Commissioner of the Department of Natural
Resources to “exercise the powers and do the acts necessary to carry out the provisions
and objectives of [chapter 5 of Title 38],” which establishes the Division of Lands within
the Department and specifies its functions and responsibilities.
Alaska Statute 38.05.035 defines the powers and duties of the Director of
the Division of Lands. Pertinent to this case, AS 38.05.035(e) provides:
Upon a written finding that the interests of the state
will be best served, the director may, with the consent of the
commissioner, approve contracts for the sale, lease, or other
disposal of available land, resources, property, or interests in
them. . . . The preparation and issuance of the written finding

by the director are subject to the following:

. . . .

(6) . . . however, a written finding is not required before the
approval of
. . . .
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(C) a permit or other authorization revocable by the
commissioner; [or]
. . . .
(H) a permit, right-of-way, or easement under
AS 38.05.850[.]
Alaska Statute 38.05.850 deals specifically with permits. It provides in
part:
(a) The director, without the prior approval of the
commissioner, may issue permits, rights-of-way, or
easements on state land for roads, trails, ditches, field
gathering lines or transmission and distribution pipelines not
subject to AS 38.35, telephone or electric transmission and
distribution lines, log storage, oil well drilling sites and
production facilities for the purposes of recovering minerals
from adjacent land under valid lease, and other similar uses
or improvements, or revocable, nonexclusive permits for the
personal or commercial use or removal of resources that the
director has determined to be of limited value. . . . In the
granting, suspension, or revocation of a permit or easement
of land, the director shall give preference to that use of the
land that will be of greatest economic benefit to the state and
the development of its resources.
Another statutory section, AS 38.05.945, provides for notice to be given by
DNR for certain actions. Subsection (e) of this section states that “[n]otice is not
required under this section for a permit or other authorization revocable by the
department.”
3. Mineral locations
Article VIII, section 11 of the Alaska Constitution establishes the basis for
locatable mineral rights. It provides: “Prior discovery, location, and filing, as prescribed
by law, shall establish a prior right to these minerals and also a prior right to permits,
leases, and transferable licenses for their extraction.”
-32- 7011
Holders of mining claims acquired by discovery, location, and filing do not
have an automatic right to mine their claims. To actually extract minerals, they must
acquire the necessary permits.44 Likewise, they have no automatic right to engage in
intensive exploration activities, that is, in activities that are not generally allowed to any
member of the public without a permit.45 For intensive exploration activities, a MLUP
is required.
4. Why the MLUPs are disposals of an interest in land
The Public Notice Clause of the Alaska Constitution, article VIII,
section 10, prohibits disposals of interests in state lands without prior public notice. The
central question posed by Nunamta’s appeal is whether the MLUPs are disposals of
interests in state land under the Public Notice Clause. A permit that is revocable at the
will of the grantor is generally considered a license.46 We recently stated that “[t]he grant
of an easement is a conveyance or disposal of an interest in land within the meaning of
[the Public Notice Clause], but the transfer of a license or a permit generally is not.”47
44 See Beluga Mining Co. v. State, Dep’t of Natural Res., 973 P.2d 570, 575
(Alaska 1999) (noting that company with claim “had no right to mine” but had to seek
permission to do so).
45 See 11 AAC 96.020; supra pp. 29-30.
46 N. Alaska Envtl. Ctr. v. State, Dep’t of Natural Res., 2 P.3d 629, 635 n.23
(Alaska 2000) (citations omitted).
47 SOP, Inc. v. State, Dep’t of Natural Res., Div. of Parks & Outdoor
Recreation, 310 P.3d 962, 967 (Alaska 2013) (citing Laverty v. Alaska R.R. Corp., 13
P.3d 725, 736 & n.54 (Alaska 2000)); see also JON W. BRUCE & JAMES W. ELY, JR., THE
LAW OF EASEMENTS AND LICENSES IN LAND § 11:1 (2014) (“Generally a license is not
viewed as an interest in the land.”); see also, e.g., Rau v. Collins, 891 A.2d 1175, 1184
(Md. App. 2006) (noting that license is a personal privilege rather than an interest in the
land); Wilson v. Staats, 751 S.E.2d 747, 751 (W. Va. 2013) (noting that essential
characteristic of license is that it does not create an interest in land, only a “personal and
(continued...)
-33- 7011
Nonetheless, whether a transfer may be characterized as a license is not necessarily
determinative of a contention that the Public Notice Clause applies, and we hold here,
consistent with Northern Alaska, that licenses that are functionally irrevocable under the
tests set out in that case48 are interests in land requiring prior public notice under the
Public Notice Clause. We further hold that the MLUPs in this case are functionally
irrevocable. 49 We so conclude because their revocation or non-renewal would
substantially destroy PLP’s investment of hundreds of millions of dollars and would
leave in place large-scale and long-lasting changes to the land which cannot be removed
without significant damage to it, and because the State has recognized the public
importance of allowing PLP’s exploratory activities to proceed as a necessary step in the
development of a mine.
47(...continued)
revocable privilege”). But see RESTATEMENT (FIRST) OF PROPERTY § 512 cmt. c (1944);
4 RICHARD R. POWELL, POWELL ON REAL PROPERTY § 34.25 (Michael Allan Wolf ed.,
2014) (“So long as it continues, a license derogates from the completeness of the servient
owner’s ownership, and this requires its recognition as an ‘interest in land.’ ”); 8
THOMPSON ON REAL PROPERTY, SECOND THOMAS EDITION § 64.02(b) (David A.
Thomas, ed. 1998). Cf. AS 44.88.900(14) (including licenses in “interests in land” for
Alaska Industrial Development and Export Authority).
48 N. Alaska Envtl. Ctr., 2 P.3d at 637-39.
49 We do not decide here that all MLUPs are disposals of interests in State
land; MLUPs authorize a wide variety of activities, some of which are low-impact and
temporary and are clearly not functionally irrevocable. Public notice is constitutionally
required only when a MLUP is functionally irrevocable. Cf. AS 38.05.850(c) (requiring
prior public notice of easement or right-of-way that director determines is not
functionally revocable).
-34- 7011
In Northern Alaska, we adopted from the D.C. Circuit two tests of
functional irrevocability.50 We used these tests to assess whether a right-of-way that was
revocable on its face was truly revocable and thus exempt from the best interest finding
of the Alaska Land Act.51 The first test as we described it in Northern Alaska “focuses
on the likelihood of revocation as opposed to the mere legal right to revoke.”52 We
explained that “where revocation would result in the destruction of the licensee’s
sizeable investments” a permit would not be revocable because the reserved right of
revocation is contradicted by “the reality that the permit is functionally irrevocable.”53
We described the second test as focusing “on whether, upon revocation, the licensee
could remove the installed structures, or otherwise vacate the land, without permanently
damaging or destroying the property for governmental use.” 54 We noted that in
Wilderness Society the court found that the permit failed to pass this test because a
proposed gravel work pad “could not ‘be removed without producing permanent and
deleterious changes in the underlying land.’ The court cited harmful effects with respect
to vegetation, erosion, and the permafrost.”55
Both the State and PLP argue that the Northern Alaska /Wilderness Society
analysis as to whether a permit is functionally irrevocable should not be applied to
determine whether the constitution’s Public Notice Clause has been triggered because
50 N. Alaska Envtl. Ctr., 2 P.3d at 638.
51 Id. at 637-39.
52 Id. at 638 (quoting Wilderness Soc’y v. Morton, 479 F.2d 842, 871 (D.C.
Circ. 1973) (en banc)) (internal quotation marks omitted).
53 Id.
54 Id.
55 Id. (footnote omitted) (quoting Wilderness Soc’y, 479 F.2d at 874-75).
-35- 7011
both Northern Alaska and Wilderness Society involved statutory and regulatory
requirements, not constitutional interpretation. But they offer little or nothing by way
of substantive reasons as to why the revocability analysis of those cases should not
apply.
Both the Alaska Land Act and the Public Notice Clause concern disposals
of interests in land.56 Indeed, the Alaska Land Act was meant to provide guidance as to
the type of process to be used when the State disposes of an interest in land.57 The
functional irrevocability analysis is designed to determine whether permits purporting
to be revocable at will, and thus akin to licenses, are not truly revocable, and therefore
are more like easements.58 The premise of the analysis is that the substance of an interest
rather than its form should control when considering its legal effect.59 This premise
surely applies as strongly to effects under constitutional provisions as to those under
statutes or regulations. Indeed, in Northern Alaska we decided that we should analyze
the permit there for functional irrevocability because article VIII of the Alaska
56 Compare Alaska Const. art. VIII, § 10, with AS 38.05.035(e).
57 See Alyeska Ski Corp. v. Holdsworth, 426 P.2d 1006, 1010-11 (Alaska
1967) (observing that legislature enacted the Alaska Land Act in accordance with the
Public Notice Clause).
58 See SOP, Inc. v. State, Dep’t of Natural Res., Div. of Parks & Outdoor
Recreation, 310 P.3d 962, 967-68 (Alaska 2013) (discussing difference between
easements and licenses).
59 Our cases consistently demonstrate that we look at the substance of the
interest rather than its form in considering whether the Public Notice Clause applies. For
example, in Laverty v. Alaska Railroad Corp., we decided that what the Railroad called
a “license” was in fact an easement, specifically a profit, because it permitted the removal
of gravel from the land. 13 P.3d 725, 735-36 (Alaska 2000). And in SOP, Inc., we
decided that permits for ATV use on state park lands were easements because they were
revocable only for cause and had other easement characteristics. 310 P.3d at 968-69.
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Constitution reflects the “importance of our land resources and of the concomitant
necessity for observance of legal safeguards in the disposal or leasing of state lands.”60
Article VIII “reflects the framers’ recognition” of these concerns.61 Just as they serve as
a guide to interpreting statutes and regulations, they should also guide the interpretation
of a constitutional provision.
Turning to the question of the applicability of the Wilderness Society tests
to this case, Nunamta argues that under both tests, the MLUPs are functionally
irrevocable. As to the first — the destruction of the licensee’s investment test —
Nunamta points to trial testimony by PLP’s vice-president of environment that PLP had
invested “$300-$400 million” dollars in exploration since 2002. 62 According to
Nunamta, the superior court incorrectly and inappropriately focused only on “permanent,
concrete and steel infrastructure” in examining PLP’s investment; instead Nunamta
asserts “that the size of the investment at risk is enough, in itself, to deter revocation”
because if development is stopped, PLP’s investment will have no value. Nunamta
argues that the State is also invested in the continuation of the project, pointing to the
Memorandum of Understanding (MOU) between the State and PLP, under which PLP
agreed to reimburse the State for costs associated with, among other things, the State’s
60 N. Alaska Envtl. Ctr., 2 P.3d at 638 (quoting Alyeska Ski Corp., 426 P.2d
at 1011) (internal quotation marks omitted).
61 Alyeska Ski Corp., 426 P.2d at 1011.
62 PLP contends that “Nunamta improperly looks outside the trial record” to
make these arguments. Although Nunamta discusses positions taken by the State and
PLP at earlier phases of the litigation and the evidence submitted by them to support
these positions, Nunamta also points to trial testimony and exhibits to support its
arguments.
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consideration of PLP’s requests for permits. 63 By the time of trial, the estimated costs
associated with the MOU for the fiscal years 2007 to 2011 totaled more than $2 million;
the MOU listed a number of state employees whose salaries could be paid in part by
PLP.
To further support its argument that the permits were functionally
irrevocable because of potential loss of investment, Nunamta cites arguments and
affidavits submitted by PLP and the State during the preliminary injunction phase of the
case that contended there would be significant “destruction of the licensee’s investments”
resulting even from a preliminary injunction. PLP argued at the preliminary injunction
phase that “Pebble’s ability to further this project, and to realize a return on its
investment, would be impaired by an injunction,” claiming that a preliminary injunction
“would have a ripple effect throughout the entire operation, and would cause a major loss
of jobs and economic activity in Alaska.”
PLP objects to Nunamta’s reliance on the affidavits, asserting that only
evidence presented at trial can be used in our review of the case.64 PLP specifically
63 The MOU had an initial term of only part of 2004, but it was extended
several times. The MOU appears to contemplate a continuing relationship between the
State and PLP: “Specific tasks to be addressed” by the interagency review team included
“[d]am permitting efforts for any tailings impoundments, water supply reservoirs, etc.”
and “provid[ing] a coordinated effort on the State’s part in the NEPA process.”
64 The case PLP relies on is distinguishable. In Paula E. v. State, Department
of Health & Social Services, Office of Children’s Services, we held that we would not
consider unadmitted exhibits in the trial record, including a home study, in our review
of the trial court’s factual findings. 276 P.3d 422, 430 (Alaska 2012). We expressed
concern that parties have no opportunity to respond to exhibits that are not admitted, and
we concluded that the trial court had not relied on the documents in reaching its decision
in any event. Id. (citation omitted). Here the documents in question are affidavits that
were offered by parties opposing Nunamta, cf. Alaska R. Evid. 801(d)(2) (defining as not
hearsay an admission by a party-opponent), so there is no question of the opposing
(continued...)
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refers to Nunamta’s use of the affidavit of Richard Hughes, “an employee of the Alaska
Department of Commerce, Community and Economic Development” at the time he
signed his affidavit.65 Hughes’s affidavit detailed the importance of the exploration
project and tied investment in exploration to investment in mine development; he attested
to the importance of mining to the Alaska economy. The superior court, at the State’s
request, ruled before trial that Nunamta could not present evidence about “economic
issues” at trial, including the testimony of an expert in “Natural Resource Economics”
that Nunamta had retained to address the information in Hughes’s affidavit. The superior
court narrowed the issues to be presented at trial to include “any actual impact the
exploration activities or permit issuance has had.” By removing economic information
from the trial, the superior court in effect prevented the presentation of evidence on one
of the tests of functional revocability — whether the licensee’s investment depends on
the continuing availability of the permit — and thereby took away from Nunamta any
opportunity to present this type of evidence at trial.66 Under these circumstances, we
conclude that Nunamta can properly rely on the affidavits; PLP does not argue that they
64(...continued)
parties lacking an opportunity to respond to or challenge the evidence now questioned
on appeal. In addition, PLP does not contest the authenticity or veracity of the affidavits.
We also note that the superior court specifically mentioned one of the affidavits — that
of Richard Hughes — in its oral decision denying a preliminary injunction.
65 We note there was considerable pretrial motion practice about the
possibility of Hughes being a trial witness.
66 N. Alaska Envtl. Ctr. v. State, Dep’t of Natural Res., 2 P.3d 629, 638
(Alaska 2000) (quoting Wilderness Soc’y v. Morton, 479 F.2d 842, 873 (D.C. Cir. 1973)
(en banc)).
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are inaccurate, and the affidavits and arguments from the earlier proceedings provide
context for application of the destruction of the investment test.67
The State argues that the destruction of sizable investment test only applies
where the licensee builds improvements on the property, not where the investment is in
exploration. Noting the inherently speculative nature of mineral prospecting, the State
contends that
[t]he value of the information Pebble collects depends not on
the permit it was collected under, but on the value of Pebble’s
claims, which in turn depends on a host of other factors like
ore quality, the markets, technology, and, ultimately, whether
Pebble can secure permission to mine. But the risk that the
stars will not align is Pebble’s to bear. . . .
To illustrate its point, the State quotes from a law journal article on the Pebble
exploration that states “[w]here government approval is required but not assured for a
project, any investment in that project is akin to a business gamble.”68
The superior court based its decision that “revocation would not result in
the destruction of Pebble’s investment” on the lack of “permanent infrastructure or
installments on the land.” Although the superior court acknowledged that “Pebble has
spent a significant amount of money on exploration and environmental studies,” the court
also considered that the sole purpose of these activities was “to collect intellectual
property.”69 It then found that “[e]vacuating the site upon revocation would not damage
67 See also Laverty v. Alaska R.R. Corp., 13 P.3d 725, 728 (Alaska 2000)
(noting railroad’s prior statements from legislative audit about nature of agreement).
68 Geoffrey Y. Parker et al., Pebble Mine: Fish, Minerals, and Testing the
Limits of Alaska’s “Large Mine Permitting Process,” 25 ALASKA L. REV. 1, 49-50
(2008).
69 In support of this conclusion, the superior court cited its earlier findings
about PLP’s exploration activities.
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the scientific information Pebble has gathered.”70 We found no evidence that the
scientific information has value independent of its use to develop the mine, and the
superior court cited none; in earlier pleadings PLP asserted that “[t]he primary purpose
of Pebble’s environmental baseline research is to provide the necessary information to
enable Pebble to make informed business decisions” about mine development and
engineering if development proceeded.
We agree with Nunamta that the hundreds of millions of dollars invested
in exploration by PLP, including the money PLP furnishes to the State to pay for the
permitting process, is the investment that must be considered. The potential loss of an
investment of this magnitude could deter DNR from cutting short PLP’s exploration
process by revoking or not renewing a permit. Such an act could signal the end of the
development and thus make useless the data that PLP had already gathered.
We do not agree with the State that the destruction of sizeable investments
test only applies to investment in physical improvements, as the superior court evidently
believed. A land manager could easily be reluctant to revoke a permit if doing so
rendered valueless an investment of hundreds of millions of dollars related to a necessary
step in a significant economic venture regardless of whether physical improvements were
created. The point of the test is that where large sums have been invested, the
government is effectively forced to honor the full term of the permit, because revoking
it prematurely would cause a significant loss. That is the case here.
70 The superior court’s record citation to support this statement is a reference
to page 2 of its Findings of Fact and Conclusions of Law; that page only names some of
the parties to the action. In its written closing argument in the superior court PLP relied
on testimony of two of its witnesses to assert that intellectual property was created;
neither witness testified that the information would have any value independent of the
project. In the transcript portion cited by PLP, one witness testified about the lack of
permanent, above-ground structures at the drilling sites; the other testified that mapping
wetlands was done “for the environmental baseline document.”
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Nunamta also argues that the perceived public importance of the
exploration would deter revocation. Relying on the MOU Nunamta asserts that some 58
State employees have been assigned to work on the project and that PLP will reimburse
the State at least in part for their work. Under the MOU an estimated two million dollars
in billings were budgeted for reimbursement over five years. Additionally, according to
Hughes’s affidavit, in excess of 610 jobs would be lost if PLP’s exploration efforts were
shut down. Nunamta also cites Hughes’s testimony as demonstrating that the State’s
perception is that the suspension of the exploration permits would harm the entire mining
industry in Alaska.
To discount Nunamta’s public importance argument the State contends that
“[t]o the extent that Pebble is important to the public, it is the mineral deposits
themselves and the potential mine that are important, not the exploration authorized by
the MLUPs.” But the mineral deposits and potential mine can never be developed
without the continuing, extensive exploration authorized by the MLUPs. The scope and
number of the claims have expanded considerably since PLP and its predecessors began
exploratory drilling under the MLUPs.
We agree with Nunamta that the perceived public importance of the
exploration also would deter DNR from cutting short the exploration process. According
to Hughes’s affidavit, such an act would result in the loss of employment of many
hundreds of people. In addition, according to Hughes, it would send a negative message
to the mining industry that Alaska’s regulatory climate is unsettled and that Alaska has
“seemingly capricious regulations.” This message would “deter companies looking for
new projects,” “definitely impact exploration investment,” and harm “the mining
industry in Alaska, and the Alaskan economy generally.”
The perceived public importance of permitting the exploration of the Pebble
ore deposit is underscored by a letter from the Governor of Alaska to the
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U.S. Environmental Protection Agency urging the agency not to invoke a procedure that
could effectively prohibit development of the Pebble mine “prematurely,” that is, without
allowing the mine to advance to the development permitting phase. In the letter the
Governor states: “There has been tremendous investment in the area based on the
potential for mineral development. We cannot fathom the liability and legal challenges
that could accompany an unprecedented, after-the-fact determination by the federal
government that mineral development from these State lands is no longer viable.”71
We conclude that the first Wilderness Society test has been satisfied. It is
easy to see how a state land manager could feel tremendous pressure not to revoke or
refuse to renew a MLUP thereby imposing a loss of hundreds of millions of dollars in
exploration funds and hundreds of jobs as well as risking the loss of the State’s
credibility as a location for future mining projects. Based on the record, there was a
“negligible likelihood” that a MLUP would be revoked.72
With respect to the second Wilderness Society test, Nunamta starts with the
language of Northern Alaska describing this test: “[T]he court focuses on whether, upon
revocation, the licensee could remove the installed structures, or otherwise vacate the
land, without permanently damaging or destroying the property for governmental use.”73
Nunamta argues that the remnant bore holes and their plugs are concrete and steel
71 Letter of September 21, 2010 from Governor Sean Parnell to The
Honorable Lisa P. Jackson, Administrator, U.S. Environmental Protection Agency. The
Governor also notes that 70 percent of area residents are Alaska Native and 17 percent
fall below the poverty level, and requests that the EPA “take into account that a
. . . decision to preclude mining in this economically depressed region would abruptly
and conclusively deny area residents any opportunity to avail themselves of the benefits
they might seek from responsible mining.”
72 See N. Alaska Envtl. Ctr. v. State, Dep’t of Natural Res., 2 P.3d 629, 639
(Alaska 2000) (holding that permit had “negligible likelihood of revocation”).
73 Id. at 638.
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structures that cannot be removed without producing permanent harm. Nunamta also
points to the “enormous quantity of waste materials” that PLP is “as a practical matter,
allowed to store in perpetuity on State lands.” These materials include the cuttings from
the bore hole drillings and “hundreds of thousands of pounds of drilling muds generated
in the drilling process.” Nunamta claims that “there is no way to return the land to its
previously undisturbed condition upon revocation.” Nunamta argues that if PLP had
applied for permission to operate a landfill to bury “this quantity of concrete, steel, mud,
cuttings and debris on state land” Article VIII would clearly demand “more than the
closed-door issuance of a ‘temporary’ permit.”
By contrast, the State characterizes the second Wilderness Society test as
the “government use test.” The State argues that this test is satisfied as long as “the
structures which the licensee proposes to erect are capable of being removed,” and “upon
revocation the land may be left in suitable condition for Government use.”74 The State
disagrees with Nunamta that the plugs and casings left underground in the drill holes are
structures under this test, arguing that they do not affect the character of the land or leave
it unsuitable for any use. The State also notes that the plugs and casings protect against
environmental damage and views the second test as requiring “dramatic and longstanding
intentional transformation of the landscape,” arguing that no such
transformation was contemplated by the permits here involved.
We agree with Nunamta that the bore holes plugged with concrete and
encased by steel are installed structures for the purposes of the second Wilderness Society
test. These columns will remain in the land. They are not in a practical sense capable
of being removed, and it is undisputed that removing them would increase the potential
for environmental harm. In our view the buried sumps containing drilling mud and other
The State quotes Wilderness Society v. Morton, 479 F.2d 842, 872 (D.C.
Cir. 1973) (en banc), for this premise.
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74
drilling wastes should also be considered under the second test. The waste disposal
sumps are not structures, but they are lasting alterations to the land. The landfill analogy
used by Nunamta seems apt, for the sumps, like landfills, are used to dispose of
potentially toxic material. The sumps of course could be dug up and the waste material
removed, but only at great cost. The record does not reflect whether this would create
additional environmental risks, but it seems clear that this will never occur.
The State’s characterization of the second test as “the government use test”
is flawed. The State focuses only on the final part of the test and ignores the question of
whether installed structures can be removed.75 In the expression of this test, the question
of suitability for government use is not reached unless the proposed structures are
capable of being removed. The Wilderness Society court found that the second test was
best represented by the Attorney General’s opinion concerning a proposal to grant a
revocable permit to a railroad to lay tracks across a military reservation. This opinion
stated, as quoted in Wilderness Society:
If the permit is revocable at will by its terms, and if the
structures which the licensee proposes to erect are capable of
being removed in case of revocation, and if upon revocation
the land may be left in suitable condition for government use,
the fact that the licensee expects that the United States may
not soon find it to its interest to revoke the license has no real
[ ] bearing on the legal situation. 76
Thus, under the test, where the structures are not capable of being removed, the question
of suitability for government use does not arise.
75 The superior court likewise did not consider removal of the materials used
to plug the boreholes. In its findings, it said that “everything at the site, except for the
bore hole drill casings and the material used to plug the holes, can be removed within a
matter of weeks.”
76 Wilderness Soc’y, 479 F.2d at 872 (emphasis added).
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This reading of the test thus emphasizes the importance of the continuing
physical presence on the land of the structures constructed by the licensee. But it would
be overly literal to suggest that where the structures cannot, or will not, be removed, their
impact, or lack of impact, is irrelevant. In Northern Alaska we stated that the second
Wilderness Society test required an analysis of “the long-term and harmful character of
the environmental impact” resulting from the licensee’s activities.77 In applying this test
in Northern Alaska we noted that the project there presented “the likelihood of
irreversible ecological changes.”78 But we also used terms that encompassed less certain
potential harms. We cited research that indicated that “vegetative clearing may result in
the permanent thermal degradation of the sensitive Tanana Flats permafrost.”79 And in
our conclusion, we referred to “potential long-term environmental damage”80 as
supporting our finding of functional irrevocability.
On the record of the present case it cannot be said that PLP’s exploration
activities will likely cause irreversible ecological changes.81 However, there is the
potential for environmental damage primarily through pollution of groundwater by the
toxic waste that has been disposed of on the land and by acid rock drainage. In our view,
this potential plus the continuing physical presence of the hundreds of concrete and steel
77 N. Alaska Envtl. Ctr., 2 P.3d at 638.
78 Id. at 639.
79 Id. (emphasis added).
80 Id. (emphasis added).
81 See supra pp. 15-17.
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encased bore holes suffice to justify a conclusion that the second Wilderness Society test
also points toward functional irrevocability.82
We conclude that the MLUPs are not functionally revocable in light of the
investment in prior exploration activities that would be lost if they were revoked, and the
strong reasons the State has for not pretermitting the Pebble exploration process. We
also believe that the concrete plugs and steel casings in the bore holes represent a lasting
occupancy of state lands that is inconsistent with the concept of revocability. Further,
the hundreds of sumps containing toxic waste and chemically reactive material represent
a continuing potential source of environmental harm that is also inconsistent with the
concept of revocability.
D. The TWUPs Are Not Disposals Of An Interest In Land.
In the case of TWUPs, DNR did not issue just one permit for a given
exploratory period. Rather, it issued PLP nine TWUPs in January 2007, and two
additional TWUPs in May 2009. Most of the TWUPs each covered five separate water
sources. Overall the nine 2007 TWUPs permitted taking water from 21 stream sources,
82 The two Wilderness Society tests are independent, and as used in that case,
either would suffice to show functional irrevocability. In Northern Alaska we held that
revocability should be assessed “under a hybrid approach” using both tests as factors for
analysis. But we did not state that both tests must be satisfied for functional
irrevocability to be found. Logically that should not be necessary. While the tests will
often be complementary, a compelling case for functional irrevocability may be made
when only one test is satisfied. For example, to draw on a case relied on by Wilderness
Society, a chapel built on government land under a revocable permit could be removed
without environmental damage but the loss of the licensee’s investment would deter
revocation to such an extent that the permit should be considered functionally
irrevocable. In such a case, as the Attorney General stated in the West Point Chapel case
on which Wilderness Society relied: “[T]he government would find itself embarrassed
either to endure a perpetuity of right in the license or exercise an invidious power.”
Wilderness Soc’y, 479 F.2d at 871 (quoting Erection of Catholic Chapel at West Point,
21 Op. Att’y Gen. 537 (1897)).
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18 pond sources, and five bore holes. Each TWUP covered a five-year period. The
revocation clause in each TWUP provided: “Pursuant to 11 AAC 93.210(b), authorized
temporary water use is subject to amendment, modification, or revocation by the
Department of Natural Resources if the Department of Natural Resources determines
that amendment, modification or revocation is necessary to supply water to lawful
appropriators of record or to protect the public interest.” Because this language is
similar to the “at will” clause in the regulations governing MLUPs, we assume that this
language qualifies as an at will revocation clause.83 The TWUPs are specifically
ancillary to the exploration project; they specify that the water will be used in support of
exploration drilling operations.
Any particular TWUP could be revoked for a number of reasons that would
not threaten PLP’s overall exploration program. Thus a land manager would not
inevitably feel pressured not to revoke a TWUP by the possibility of imposing an
enormous financial loss on PLP or by the possibility of causing the loss of hundreds of
jobs or threatening the State’s credibility with potential mining investors. Further, unlike
in the case of MLUPs, there are no permanent structures or other features left in or on
the land with respect to the water use permits. For these reasons, we conclude that the
TWUPs do not meet the Wilderness Society tests for functional irrevocability.
V. CONCLUSION
We have held that the judgment should be reversed because the MLUPs are
disposals of an interest in land requiring prior public notice. On remand, therefore, the
superior court should enter a declaratory judgment reflecting this view. We leave to the
superior court the question of whether any other action is appropriate.
83 See 11 AAC 96.040(a) (2014), set out supra p. 30.
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The judgment of the superior court is REVERSED and this case is
REMANDED for entry of a declaratory judgment in accordance with this opinion and
for such further action as may be appropriate.
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WINFREE, Justice, concurring.
I agree with the court’s conclusion that the facially short-term and
revocable land use permits issued by the State of Alaska, Department of Natural
Resources (DNR) to Pebble Limited Partnership (Pebble) are disposals of land requiring
public notice under article VIII, section 10 of the Alaska Constitution. But reaching that
conclusion by analyzing whether facially short-term and revocable permits are,
functionally, long term and irrevocable seems ill-founded and far more complicated than
necessary.1 This analysis seems likely to lead to extensive litigation over mineral
exploration permits, as was the case here, despite the court’s suggestion that the analysis
generally should be amenable to summary resolution. It is difficult to see how an asapplied
challenge to the constitutionality of the State’s issuance of a mineral exploration
permit can be resolved in summary fashion.
A simpler analysis can be accomplished without relying on the permit’s
facial or functional temporal quality or revocability, or on the necessarily arbitrary
1 The court relies on the functional irrevocability tests adopted in Northern
Alaska Environmental Center v. State, Department of Natural Resources; in that case we
concluded a statutory best interest finding was required because the permit at issue was
functionally irrevocable. 2 P.3d 629, 637-39 (Alaska 2000). When adopting the tests
in Northern Alaska we relied on a federal case, Wilderness Society v. Morton, where the
D.C. Circuit concluded that a special land use permit issued in relation to Trans-Alaska
Pipeline construction was long term and functionally irrevocable. 479 F.2d 842, 870-75
(D.C. Cir. 1973). In Northern Alaska, noting the “broad constitutional mandate to
protect the public interest in dispositions of state land” and applying rules of statutory
interpretation, we were able to determine that a permit was a disposal of an interest in
land before addressing functional irrevocability. 2 P.3d at 634-37 (construing interest
in land to include permits and licenses and construing disposals to include “property
interests of limited duration”). We adopted and applied the functional irrevocability tests
only because we were faced with the assertion that the permit qualified for an exception
to the best interest finding required under the Alaska Land Act. Id. at 637-39; see
AS 38.05.035(e)(6)(C) (exempting “a permit or other authorization revocable by the
commissioner” from written best interest finding requirement).
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conclusion that a particular mining project has become such an unstoppable financial
engine it likely would overcome the will of State employees charged with determining
whether issuing or revoking a permit is in the State’s best interest. This analysis relies
on a mineral exploration permit’s appurtenance to an existing mining claim, a property
interest acquired from the State through article VIII, section 11 of the Alaska
Constitution:
Discovery and appropriation shall be the basis for
establishing a right in those minerals reserved to the
State . . . . Prior discovery, location, and filing, as prescribed
by law, shall establish a prior right to these minerals and also
a prior right to permits, leases, and transferable licenses for
their extraction. Continuation of these rights shall depend
upon the performance of annual labor, or the payment of fees,
rents, or royalties, or upon other requirements as may be
prescribed by law. Surface uses of land by a mineral
claimant shall be limited to those necessary for the extraction
or basic processing of the mineral deposits, or for both.
Alaska Statute 38.05.195(a) further explains that “[r]ights to deposits of
minerals . . . in or on state land that is open to claim staking may be acquired by
discovery, location, and recording . . . . The locator has the exclusive right of possession
and extraction of the minerals . . . lying within the boundaries of the claim.”2
The locator
also has the right to “use the surface of the location only to the extent necessary for the
prospecting for, extraction of, or basic processing of mineral deposits.”3 A mining claim
is a property interest in State land, although it does not include an absolute right to
2 See also Welcome v. Jennings, 780 P.2d 1039, 1042 (Alaska 1989) (“A
person acquires the exclusive right to possess and extract minerals on state land by
discovery, location, and recording.”); id. (“Possession of a mining claim is evidenced by
satisfying statutory requirements regarding location and performance of annual
assessment work.”).
3 11 Alaska Administrative Code (AAC) 86.145(a)(1) (2014).
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explore for or mine minerals; a claim is contingent on DNR’s “permission to mine.”4 But
a mining claim holder has the right to use the claim’s surface estate5
and may preclude
concurrent use of that surface estate, subject to DNR’s authority to issue the concurrent
user a land use permit or other written authorization.6 A mining claim owner must,
however, perform annual labor,7 pay annual rent, 8 and obtain a permit before engaging
in intensive mineral exploration.9
A mining claim owner’s permit application must include a detailed “map
at a sufficient scale showing the general location of all activities and routes of travel of
4 See Beluga Mining Co. v. State, Dep’t of Natural Res., 973 P.2d 570, 575­
76 (Alaska 1999) (explaining company “had property rights in its claims, but it had no
right to mine; its mining ‘rights’ were prospective and contingent”).
5 See Gold Dust Mines, Inc. v. Little Squaw Gold Mining Co., 299 P.3d 148,
165 (Alaska 2012) (“Under Alaska law, a person who acquires mining rights to located
claims also has rights to make use of the corresponding surface estate . . . .”).
6 See 11 AAC 96.010(a)(3) (“On state land, a permit or other written
authorization is required for . . . an activity on land subject to a mineral or land estate
property interest by a person other than the holder of a property interest . . . if the parties
cannot agree on what constitutes reasonable concurrent use.”); cf. Shope v. Sims, 658
P.2d 1336, 1339 (Alaska 1983) (stating possessor of mining claim has equitable claim
for quiet title and may have legal claim for ejectment “against anyone who enters on it”).
7 See AS 38.05.210(a) (“Labor shall be performed or improvements made
annually on or for the benefit or development of each mining claim, leasehold location,
and mining lease on state land except that, where adjacent claims, leasehold locations,
or mining leases are held in common, the expenditure may be made on any one claim,
leasehold location, or mining lease.”).
8 See AS 38.05.211(a) (“The holder of each mining claim, leasehold location,
prospecting site, and mining lease, . . . shall pay, in advance, rental for the right to
continue to hold the mining claim, leasehold location, prospecting site, and mining lease
. . . .”).
9 See 11 AAC 96.010, .020.
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all equipment” as well as “a description of the proposed activity, any associated
structures, and the type of equipment that will be used.”10 If DNR issues a permit it “is
revocable for cause for a violation of a permit provision . . . and is revocable at will if
[DNR] determines that revocation is in the state’s interest.”11 A claim owner, among
others, has the right to appeal DNR’s decision to issue, deny, or revoke a permit.12
We have not had much occasion to consider the tension between (1) a
mining claim holder’s mineral property rights and associated right to use the surface
estate, and (2) the State’s regulatory restrictions on the mining claim holder’s ability to
use the surface estate for exploration and development.13 I am not suggesting that a
10 11 AAC 96.030(a).
11 11 AAC 96.040(a). It is not clear to me that we have considered the
meaning of “at will” outside the employment context. See, e.g., Pitka v. Interior Reg’l
Hous. Auth., 54 P.3d 785, 789 (Alaska 2002) (“At-will employees may be terminated for
any reason that does not violate the implied covenant of good faith and fair dealing. . . .
Breach of the implied covenant may be either subjective or objective. . . . Disparate
employee treatment, terminations on unconstitutional grounds, and firings that violate
public policy are examples of actions that may violate the objective aspect of the implied
covenant.” (footnotes omitted)). Black’s Law Dictionary defines “at will” as “Subject
to one’s discretion; as one wishes or chooses; esp. (of a legal relationship), able to be
terminated . . . by either party without cause[.]” BLACK’S LAW DICTIONARY 149 (9th ed.
2009).
12 See 11 AAC 96.110 (“An eligible person affected by a decision issued
under this chapter may appeal that decision in accordance with 11 AAC .02.”). Neither
the relevant statutes nor regulations expressly set out the State’s required considerations
when issuing a mineral exploration permit. But if a permit may be revoked “at will”
when DNR determines it is in the State’s best interest, then presumably a permit will be
issued only if DNR determines it is in the State’s best interest.
13 Cf. Beluga Mining Co. v. State, Dep’t of Natural Res., 973 P.2d 570, 574­
76 (Alaska 1999) (holding that injunction delaying claim holder’s ability to receive
permits was not a taking because the company had no right to mine; rather, claim
(continued...)
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mining claim holder has a property interest in an exploration permit or that DNR must
issue an exploration permit in every situation, but it does seem to me that if: (1) a mining
claim holder has a constitutionally created property interest that can be explored and
developed only by using the State’s land surface; (2) the mining claim holder has a
preferential right to reasonable use of the State’s land surface; (3) the mining claim
holder requests a permit for intensive use of the land surface to explore and develop its
mineral property; and (4) DNR determines that it is in the State’s best interest to allow
intensive use of the State’s land surface for this purpose in an appropriate manner, then
the permit for the surface land use is effectively a disposal of a State land interest
requiring public notice under the Alaska Constitution.14
13(...continued)
holder’s property interest was in the underlying claims).
14 Intensive use of State land surface for mineral exploration and development
exceeds use allowed without a permit. See 11 AAC 96.020 (enumerating low-intensity
uses, including prospecting and mining without heavy machinery, allowed on State land
without permit); Alyeska Ski Corp. v. Holdsworth, 426 P.2d 1006, 1011 (Alaska 1967)
(explaining that article VIII, section 10 of the Alaska Constitution “reflects the framers’
recognition of the importance of our land resources and of the concomitant necessity for
observance of legal safeguards in the disposal or leasing of state lands”). But under
virtually any standard, the permit here allowed intensive use of State land surface
through drilling and removal of core samples, seismic explosions, and waste disposal (in
drill casings, enclosed drilling waste, and separate waste pits).
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Outcome: We have held that the judgment should be reversed because the MLUPs are
disposals of an interest in land requiring prior public notice. On remand, therefore, the
superior court should enter a declaratory judgment reflecting this view. We leave to the
superior court the question of whether any other action is appropriate.

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