Mining News: News Nuggets: Supreme Court reminds us of St. Paul

A MLUP might be functionally irrevocable, giving you an interest in state land, if you spend enough money or you plug a borehole

J. P. Tangen

Special to Mining News

“For now we see through a glass, darkly….” I Corinthians 13:12

On May 29, 2015 the Alaska Supreme Court handed down two opinions relating to the Pebble Project: The first reversed the Superior Court’s holding in Nunamta Aulukesti, et al, v. State, et al, regarding the revocability of Miscellaneous Land Use Permits, or MLUPs, and the second reversed the lower court’s award of costs and attorney’s fees against the plaintiffs in the Nunamta case.

If obfuscation is integral to the stereotype of the legal profession, certainly the Nunamta and its sister decision ring true to that precept. In the simplest terms, the court held that MLUPs can, under some circumstances, convey an interest in state land. Where that insight becomes blurry, however, is in knowing in advance when that will occur. The court’s opinion relied heavily upon two earlier decisions, Northern Alaska Environmental Center v. State, (2 P.3d 629 (Alaska 2000)) (which also gave no real clue as to when to expect “functional irrevocability” to engage in the permitting process) and SOP, Inc. v. State, (310 P.3d 962 (Alaska 2013)), where the court differentiated between a “license,” defined as a permit that is revocable at the will of a grantor and an easement, which is a disposal of state land requiring public notice under Article VIII, section10 of the Alaska Constitution.

Being careful not to hold “that all MLUPs are disposals of interests in state land” the court made it clear that “[p]ublic notice is constitutionally required only when a MLUP is functionally irrevocable.”

The court then proceeded to tell us that there are two tests for functional irrevocability. The first test arises when a threshold investment has been made. In the case of the Pebble Project, it appears that the threshold amount might be $300 million. The court observes that “[t]he 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” issued under 11 AAC 96.040 after a determination that the revocation is in the state’s interest.

According to the court, “where large sums have been invested, the government is effectively forced to honor the full term of the permit….” This insight should give comfort to future investors in Alaska who will surely prefer to have the security of their investments established before spending the money as opposed to afterward, as the regulation now suggests.

The second test, which is somewhat more complicated, relates to whether plugging boreholes and burying non-toxic drilling waste, as required by permit stipulations, renders the issuance of a MLUP a conveyance. Presumably, there is a quantitative aspect to this test as well; but nothing can be gleaned from the opinion. Clearly, if buried drilling mud or borehole plugs are “lasting alterations to the land,” then the ashes from any fire, the field disposal of any human waste or the exhaling of carbon dioxide when working around a drill rig could qualify.

Of course, because MLUPs are integral to mineral exploration on state land, miners (as well as anyone else doing anything requiring a permit) will probably have to be aware of the Nunamta decision. The State is undoubtedly going to have to redo the regulations to at least clarify where the de minimis limit is, assuming there is one. Notably, public notice is not necessarily the equivalent of “public interest” determination; however, for public notice to be effective, the permitting timeline will be extended and the demands on the Department of Natural Resources will increase, all at a somewhat inconvenient time in our state’s history.

The second decision handed down by the court on May 29 related to the award of costs and attorney’s fees in the Nunamta case. In the first decision, the court recited that “[a]ll the permits that were challenged in this case have expired. As to them, this case is moot…. [b]ut 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.”

The court then declared Nunamta and the other plaintiffs below were the prevailing party and remanded the application to the Superior Court, which had previously found the case frivolous, for determining what they are entitled to recover under the Supreme Court’s decision.

Despite the efforts of the state Legislature to circumscribe the ability of purportedly public interest claimants to escape liability for their litigious predilections, it appears that the state may be obliged to fund the war chest of the environmentalists once again, the budgetary shortfall notwithstanding.

Some versions of the Bible translate the Greek word “agape” as used in Saint Paul’s first epistle to the Corinthians to mean something between “charity” and “love;” however, whether the Supreme Court loves environmentalists or is simply charitable to them, I confess, I still see through the glass only darkly.