Two of Alaska's oldest and most revered political figures are among a group that four years ago sued the state over the public's right to know in advance about Pebble mine exploration work -- and lost.
Now former First Lady Bella Hammond, Alaska constitutional delegate Vic Fischer and their co-plaintiffs face the prospect of almost $1 million in lawyer fees and costs that the state and Pebble Ltd. Partnership say they are owed.
As Pebble tries to pry open their personal finances, they are fighting back.
"People have a right to speak out when there's bad stuff going on," Hammond, the 80-year-old widow of former Gov. Jay Hammond, said last week from her homestead across Lake Clark from Port Alsworth, maybe 20 miles from the Pebble gold and copper prospect. "This is my home and always will be. I think I have the right to protest."
The push for legal fees may be an effort to intimidate others, Fischer, 89, said. Fischer is a former Democratic state senator and an author of the Alaska Constitution.
"It was a public interest lawsuit and my presumption was that the issue of fees would never even come up," he said. "I was actually appalled. So far as I am concerned, this whole effort is to try and stymie any kind of public-interest litigation."
Fischer said he had no grudge against Pebble, but disagreed with the state for failing to assess whether the Pebble project was in the public interest before granting exploration permits.
Both Pebble and the state say they are just doing what the law allows in trying to recover money on a time-intensive and expensive case they won. The state Legislature a decade ago made it much more difficult for those who lose public-interest suits to avoid being saddled with the other side's legal bills.
Pebble attorney Matt Singer contended the plaintiffs' lawyers, the public interest environmental firm Trustees for Alaska, used heavy tactics.
"When I reference scorched earth, I mean that it shouldn't require more than a million dollars of state funds or company funds to resolve a dispute about temporary use permits, and that very few entities could afford to do business in this state if they faced this level of legal acrimony just to conduct exploration," Singer said in an email response to questions from the Daily News.
In considering whether the Trustees' clients should pay, Superior Court Judge Eric Aarseth wrote in a June 2012 order: "The plaintiffs' claims were not frivolous. . . . The plaintiffs had a good faith basis, in the evidence they were able to marshal, to bring the constitutional claims."
Nancy Wainwright, lead attorney for Trustees for Alaska on the case, noted that Pebble wasn't sued, but rather jumped in on its own. "(The case) was intensely litigated on all sides," she said.
The case will go before the state Supreme Court in December. The court has agreed to hear an appeal of Judge Aarseth's decision allowing the state to continue issuing temporary water and land use permits with no notice or analysis of public good. It's also going to consider whether the state and Pebble can examine the finances of those on the losing side.
DNR ON TRIAL
The lawsuit was brought in July 2009 by four individuals and a group that now numbers 10 Bristol Bay-area tribal entities and their sister village corporations known as Nunamta Aulukestai -- Yup'ik for "caretakers of the land."
Besides Fischer and Hammond, the individual co-plaintiffs are Rick Delkittie, a subsistence hunter and fisherman from Nondalton who once worked on the Pebble project helping to restore the land, and Violet Willson of Naknek, who had the first commercial set-net site in the Naknek River, dating back to 1954. The Native groups that comprise Nunamta are from Ekwok, Koliganek, New Stuyahok, Clarks Point, Aleknagik, Togiak, Manakotak, Levelock, Dillingham and Twin Hills.
The group sued the state Department of Natural Resources, arguing that it was in effect disposing of state lands without public notice or any finding that it was managing the land for the common good, which they said violated the state constitution. The group sought a requirement that the state do an analysis and alert the public before issuing temporary land use and water permits.
"They said, 'If you got involved, it would be helping the cause to stop the Pebble project.' So I did that," Hammond said.
Pebble joined the state in defending the permit system. They said the permits were only for temporary exploration work and could be revoked whenever the state wanted. At any rate, the land was being reclaimed after the work, the state and Pebble contended. The suit was an attempt to stop the mine until the state rewrote its mine-permitting system, Pebble says.
The suit is one of many in the fight over whether to develop Pebble, which could be North America's biggest open pit mine. The prospect straddles the headwaters of two rivers that sustain Bristol Bay's famed salmon, including the largest wild sockeye runs in the world.
"It seemed like we would be destroying something that is of great value to many, many people if that mine went through," Hammond said. Yet the exploration work happened without people being notified, she said.
The trial before Aarseth took 10 days in December 2010. He heard from 30 witnesses, including paid experts on both sides. Hammond testified about the importance of the fisheries. Former state Senate President Rick Halford, a Republican, a pilot who has guided hunting trips near the Pebble study area and a Pebble opponent, testified about wildlife. Fischer had wanted to testify on constitutional issues, but Aarseth didn't allow it.
Among the state's and Pebble's witnesses were current and former Department of Natural Resources managers who oversee Pebble's permits. Pebble's predecessor had been exploring for 12 years when in January 2007 DNR finally required it to secure temporary water use permits. But even after that, Pebble was drawing water from some sources without permits, Aarseth found.
WIN FOR STATE, PEBBLE
Nine months after the trial, the judge issued a 154-page ruling for the state and Pebble.
While the plaintiffs contended that the land is permanently altered by discharge of drilling muds and bore holes packed with cement, the judge found that Pebble's activities were designed for minimal disruption and the land could be restored to the way it was.
"It is realistic to conclude that Pebble could cease operations, remove all equipment and structures from the site and completely vacate the area in a matter of a few weeks," Aarseth wrote.
The state didn't dispose of its lands in granting the temporary permits, the judge found.
"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," he concluded in September 2011.
In December 2011, both Pebble and the state filed motions to collect attorney fees from the losing side.
Under a state court rule, winners generally can collect 30 percent of their legal fees, except in public interest cases that meet the strict terms of the 2003 state law. The state calculated its legal fees at $1.4 million, which includes the costs of six lawyers who invested 6,419 hours in the case as well as paralegals who put in 1,893 hours, it said in a court filing. The state is seeking $483,579 in legal fees plus reimbursement of $66,485 in costs.
Pebble says its attorney fees amounted to $945,143 and were high in part because the plaintiffs sought every piece of paper related to the Pebble project, even those concerning future development plans. Pebble is seeking $283,543 plus costs of $104,454.
HIT TO PUBLIC INTEREST
A decade ago, then-Gov. Frank Murkowski asked the Legislature to end the special status of public interest litigants to sue with no risk. They didn't owe the other side if they lost and they could recover 100 percent of their fees if they won.
"This is of particular concern in the area of resource development where well-financed groups have sought to use litigation to impede the state's efforts to proceed with the orderly development of its resources," Murkowski wrote to the Legislature Feb. 28, 2003.
The Legislature passed what Murkowski sought, split largely along party lines -- Republicans supporting, Democrats opposing.
That 2003 "loser pays" law has been challenged and upheld by the Supreme Court. To escape the other side's legal bills, the case must concern constitutional rights and can't be frivolous. On top of that, the plaintiff can't have an "economic incentive" to bring the case, even if there were broader constitutional questions.
Aarseth ruled in 2012 that the Bristol Bay group met the first two tests, but there were questions about economic incentive.
Both Pebble and the state contend the plaintiffs had economic incentives to bring the case and that it was being bankrolled by environmental activists.
"There are indications that one billionaire Gordon Moore, the retired co-founder of Intel Corp., has given at least $10.3 million in grants from the Gordon and Betty Moore Foundation since 2003 to Pebble opposition groups," a senior assistant attorney general, John Treptow, wrote in a motion seeking legal fees.
The plaintiffs dispute any economic incentive. There's no financial gain in forcing the state to provide public notice, Trustees attorney Wainwright said.
'NONE OF THEIR BUSINESS'
The Pebble Partnership in particular has tried to dig into the finances of all the plaintiffs. It has asked the judge to force Hammond, Fischer and the others to reveal what real estate they own, their bank statements, investment account records, tax returns and W-2s. It also wants the names of everyone who helped pay for the lawsuit and "all sources of funding" for the Native group, Nunamta.
"They wanted my tax returns from so many years back," Hammond said. "It was just kind of an insult."
"As a matter of principle, it's none of their business," Fischer said.
The plaintiffs are also arguing "substantial hardship" if they are forced to pay.
If someone else were bankrolling the suit, that outfit could cover the other side's legal bill, Pebble contends. And if they are pleading hardship, they need to prove it by disclosing their finances, Pebble says.
Aarseth ruled that Pebble could go after the financial information, but with restrictions. For instance, individuals who gave less than $5,000 in one year would be identified only by number, he ruled.
The quest for financial information is on hold while the main case and questions about economic incentives, hardship and third-party funders are aired before the Supreme Court.
The controversy has dragged in the Alaska Conservation Foundation, a grant maker. The foundation was served a subpoena from Pebble demanding its donor lists, said executive director Ann Rothe. But the organization won't turn them over. In an interview, she said the foundation provided money to Trustees for Alaska for the lawsuit as well as to Nunamta, and has received money from the Moore Foundation for projects in Bristol Bay and Southeast Alaska. They aren't providing any information to Pebble.
"As a non-profit foundation, if we allowed this to go forward it would have a really chilling effect on any foundation (that) wanted to support organizations that bring public-interest litigation," she said.
The group is asking the Supreme Court to keep its donor lists confidential. Alaska Legal Services, the American Civil Liberties Union of Alaska, and the Council on Foundations have filed briefs in support.
The various challenges over legal fees and the permit case are set for hearing on Dec. 17.
If the Supreme Court ruled for the plaintiffs, the table could turn and Trustees for Alaska could then seek to recover its fees and costs.
Reach Lisa Demer at ldemer@adn.com or 257-4390.
By LISA DEMER