Editor’s note: This story has been changed to add additional information and to correct the year of CCC’s lawsuit against DNR.

The Alaska Department of Natural Resources awarded the Chuitna Citizens Coalition, a private group based on the west side of Cook Inlet near the watershed of the Chuitna River, one of the three water-rights reservations it requested for the Chuitna tributary Middle Creek.

With the reservation, DNR has legally mandated a minimum flow in the lower 1.4 miles of Middle Creek, but has denied Chuitna Citizen’s Coalition two other applications for similar reservations on upper parts of Middle Creek. Those portions of the creek are subject to pending reservations from the Delaware-based PacRim Coal, which plans to build a surface-mine in the area currently occupied by Middle Creek’s headwaters. The decision, signed by DNR Chief of Water Resources Dave Schade on Tuesday, was published Wednesday.

For the unreserved upper portions of the creek, some of which lie within the proposed mine site and will be completely dewatered, DNR ruled that PacRim Coal’s intended use was incompatible with the Coalition’s reservation, which was requested to preserve the in-stream value of the water for fish habitat.

PacRim’s pending reservation applications for Middle Creek contain plans to divert water from the upper reaches of Middle Creek and restore it upstream of the area reserved by the Coalition, thereby maintaining the required flow.

According to the decision, based on information provided by the coalition and the objections of PacRim and others, it was determined that granting the requested reservations within the mine-site boundaries “likely would preclude the mine project from moving forward.”

“At the least, there is a perception by industry that granting a reservation of water within the mine site will be seen as pre-judging the competing project, which may result in financial consequences that are fatal to the project,” the decision states. “While there is some amount of speculation in these conclusions, this is a consequence of performing the analysis without full or more complete information because the permitting review process has not been completed.”

The decision determined that it is in the public interest to allow the permitting review process for the mine project to be completed and to not approve the other two reservations at this time.

Alaska is one of the few states to grant water-reservations to private organizations, but prior to the Coalition decision it had never done so. Water rights reservations are more usually granted to other state agencies. Brant Goodrum, director of DNR’s Division of Mining, Land, and Water, said that 131 reservations had been granted since the water-reservation program began in 1987, and estimated that around 120 of these were given to Alaska Department of Fish and Game. 11 applications submitted groups or individuals were not granted or remained unprocessed. 

Valerie Brown, legal director of Trustees for Alaska, the law firm representing Chuitna Citizens Coalition, said the Coalition’s application was the first private application to adjudicated due to a lawsuit the group brought against DNR in 2013, alleging that its applications were not being given due process. The three applications were originally submitted in 2009.

In previous Clarion interviews, Schade said he delayed work on the Coalition’s application because he wanted to process it alongside other water-use applications in the same area, including those by PacRim Coal and another pending reservation by Alaska Fish and Game on the Chuitna River itself. The court ruled in October 2013 that DNR was not giving the Coalition’s application due process, and the decision-making would have to begin within 30 days of the order.

“It (the Coalition’s reservation) doesn’t set any legally-binding precedent that affects DNR’s decision process for other applications, but it sets a precedent for DNR to adjudicate these kinds of water-rights and make a decision on them,” Brown said.

However, in practical terms, Brown said that maintaining the reserved flow in the lower part of the stream would not achieve the Coalition’s conservation goal.

“The mine is going to be so devastating to the watershed that talking about the amount of water that is entering below the mine is probably not going to matter,” Brown said.

It was the precedent set by the reservation that PacRim Coal objected to in an unsigned statement, in which it wrote “We… believe that agencies, not private individuals, should be the proper entities to hold reservations of a public resource” and that it was concerned with “potential regulatory implications” of the decision.

The Alaska Mental Health Trust Authority, owner of the land within the proposed mine area, was also a vocal opponent of the reservation. According to the decision document, the Trust has alleged its royalties from the mine project could be worth between $100 million and $300 million.

The decision document states that “any person affected by this decision” will be able to appeal it within the next 20 days.

Associated Press material was used in this report.

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.