New hurdle for Pebble: Lawsuit charges Alaska’s exploration permits are unconstitutional

Vancouver – The Pebble deposit in southwest Alaska is one of the largest undeveloped ore bodies in the world, home to 72 billion lbs. copper, 94 million oz. gold, and 4.8 billion lbs. molybdenum. But from the start the project has faced serious opposition from environmentalists concerned a mine at Pebble would result in irreparable damage to a sensitive ecosystem that includes a major sockeye salmon spawning ground.

Northern Dynasty Minerals (NDM-T) and Anglo American (AAL-L, AAUK-Q), who are 50-50 partners on the project, have always maintained that the mine permitting process will determine whether it is environmentally feasible to build a mine at Pebble.

But now Pebble’s opponents are attacking that very process. Trustees for Alaska, a non-profit law firm, has filed a civil suit asserting that Alaska’s Department of Natural Resources (DNR) “repeatedly violated the Alaska constitution in granting permits for Pebble mine exploration.” Their case hinges on Article 8 of the state’s constitution, which the plaintiffs argue requires the DNR to give public notice regarding natural resource activities and then make a reasoned determination as to whether the activities are in the public good. The plaintiffs say the DNR has failed in that entirely.

“The defendant in this case is the state of Alaska’s Department of Natural Resources and the legal basis for this lawsuit is the Alaska constitution,” says Steve Cotton, a Trustees lawyer. “Alaska is the only state in the nation with an article in the constitution devoted entirely to natural resources. We allege that the state has violated multiple provisions of Article 8…by issuing, year after year, various permits to allow exploration at the Pebble site.”

The lawsuit asserts that the DNR failed to consider the public’s interest in sustaining the region’s wildlife and subsistence resources, which have already been negatively affected by exploration activities, including water use. The plaintiffs, Alaska Natives and residents of the area, are asking the court to issue a preliminary injunction halting all exploration until the case is resolved.

“Exploration permits like those for Pebble are handed out behind closed doors,” says Cotton. “No public notice, no chance for the public to express their views, no analysis of the public interest. That is no way to safeguard public resources. The Alaska constitution demands more.”

Dick Mylius, director of mining, land, and water for the DNR, says the exploration permitting process was derived from another part of the state constitution, which sets out that claim staking gives an individual the right to explore for minerals within that claim.

“Claim staking – that’s where people get the right to go out there,” Mylius says. “It’s driven by the applicants, not the state. And that process doesn’t include advanced public notice because most state land is open to staking.”

Cotton and the plaintiffs say that perspective treats exploration activity “as though it’s some guy out there with a mule, a pick axe, and a shovel turning over rocks to look for a nugget,” whereas advanced-stage exploration today actually means industrial scale activity. And when it comes to activity on that level, the public has a right to know in advance and to be heard on whether it makes sense.

Mylius says that while state law does not require public notice or consultation to issue an exploration permit, his department has recently started posting all exploration permits issued on its website, including those for Pebble, in an attempt to increase public knowledge. The plaintiffs in the case were ready for that argument and countered by saying that “the majority of residents” in the area don’t have internet access, which makes that effort insufficient.

As for the specifics of the case, the plaintiffs argue that the permitting process violates Article 8 in six ways. The first and most general violation is the DNR’s failure to fulfill is fiduciary public trust duty to manage state resources for the common good by granting permits for hardrock exploration and temporary water use without analyzing the impacts of those used on the public domain.

Second, the suit argues the DNR violates three sections of Article 8 by administering exploration and water use permits without assessing the impacts of those activities on reasonable concurrent uses of the land and water. Third, the plaintiffs claim the DNR fails to reserve lands and waters for common use and to ensure the sustenance of renewable resources.

The fourth violation stems from Article 8’s requirements for public notice when natural resource activities are contemplated; the plaintiffs say permits are almost always issued without any public notice at all. Fifth, the suit argues that the DNR has created an “irrational statutory and regulatory scheme for administering Temporary Water Use permits that arbitrarily categorize uses of significant amounts of water as ‘temporary’ even though those water sources may be used for five years or even indefinitely.” The result, the suit claims, is that the DNR is allowing water usage without studying its impacts on navigation, fisheries, subsistence users, and wildlife.

And the sixth and final allegation in the suit is that, because the regulatory framework for hardrock mineral exploration is different and arguably less stringent than those for exploration in other areas, the permitting scheme violates the requirement for uniform application of the laws of the state. The plaintiffs say hardrock mineral exploration is permitted without public notice or a public interest review, even though both of those are required for offshore exploration activities.

For his part, Northern Dynasty’s president and CEO, Ron Thiessen, says the permitting process is sufficient and, on top of that, the Pebble partners have gone beyond the basic requirements to ensure public involvement.

“We’ve overcomplied with the requirements,” says Thiessen. “And while I’m not sure there’s much in terms of public input [regarding exploration permits], in terms of Pebble there’s certainly been a great deal of public scrutiny. Whenever we file an application for anything or permits are issued [those who oppose the project] go through a great deal of effort to attempt to discredit the DNR, the process.

“That’s because our position, and the position of the vast majority of Alaskans, is that the Pebble issue is something that should be handled by the process, the system, and so what they’re trying to do it denigrate the process and the system.”

The permitting process for Pebble has been overcompliant from the DNR’s perspective as well, according to Mylius.

“For the Pebble project we’ve actually gone beyond what statutes and regulations require,” he says. “We’re sending people into the field to see how they’re doing in terms of requirements, monitoring more closely than usual. And we have not seen the kind of impacts that some folks in the lawsuit allege are occurring. We’ve seen no impact on water quality and no significant impacts to wildlife. In fact, the operation is kind of exemplary in terms of trying to minimize impact because they’ve done all their access by helicopter instead of building roads.”

As is often the case in disputes such as this one, Mylius’ argument in favour of helicopter access stands in contrast to the plaintiffs’ arguments against it. The plaintiffs say three to four helicopters making hundreds of flights each season have already damaged the ecosystem and are skewing the environmental baseline.

“The DNR reports say time and again ‘No wildlife observed’ or “Beaver lodge but no beaver,'”, says Cotton. “After hundreds of helicopter flights it isn’t too surprising that there’s less wildlife than one might expect.”

The plaintiffs’ other key concern is the issuance of Temporary Water Use permits. These permits allow companies, like the Pebble partners, to draw water from streams and lakes for use in drilling and camp operations. The plaintiffs argue these permits allow “significant” water withdrawals without “any studies, without even knowing if there are fish in those streams or ponds.”

Mylius countered that argument swiftly: “We do have hydrologists look at the impact and we have Fish and Game look at them,” he says. “If it’s a fish stream they may need a permit from Fish and Game as well – we do coordinate our efforts to make sure we don’t have a significant impact on fish or wildlife.”

Moreover, Mylius says the Trustees of Alaska already took the DNR to court over the issuance of Temporary Water Use permits and the court ruled the permits do not require public notice or consultation.

The final allegation in the suit – that different regulations for exploration in different areas violates the requirement for uniform application of the law – guides the plaintiff’s larger vision. In that bigger picture, the DNR lawsuit is an effort to force the state to enact a new regulatory framework for on-shore mineral exploration. The plaintiffs say that what they want is a set of laws for hardrock exploration that are as stringent as those that apply to other areas, such as tidewater or deep water activities.

“If you wanted to explore for minerals on tidelands there is a rigorous procedure that would require, before you got an exploration permit, that you do all the things we’re talking about: give public notice, have the state conduct a rigorous assessment, and so on,” says Cotton. “But move onto dry land and it vanishes. That in and of itself is one example of a constitutional violation – all natural resources deserve equal protection. To solve this issue would require the state to step up to the plate and remedy this massive hole in the law.”

That grander vision is made clear through the plaintiffs’ final request: a declaratory judgement that the State of Alaska, though the DNR, has violated Article 8 of the Alaska constitution in administering and managing state lands and waters for hardrock mining exploration. Such a declaration would essentially invalidate the state’s mineral exploration regulatory framework.

The plaintiffs are not the only ones with a view to the bigger picture – Thiessen had a comment regarding the role of mining in people’s lives as well.

“The disconnection people have between how they live their lives and mining is just unbelievable. I like to tell people: go down, stand on the street corner, and look around. Ninety percent of what’s now above the ground used to be below the ground.”

The plaintiffs in the case are Nunamta Aulukestai, an organization representing eight Native village corporations; Jackie Hobson, president of the Nondalton Tribal Council; Ricky Delkittie and Violet Willson, residents of Nondalton; Bella Hammond, a former First Lady of Alaska; and Victor Fischer, a former Alaska legislator.

On news of the lawsuit, which Northern Dynasty did not report publicly, the company’s share price lost 33¢ to close at $7.35, but it regained much of that loss the next day. Northern Dynasty has a 52-week trading range of $1.92 to $9.60 and has 93 million shares outstanding.