The Alaska Supreme Court has reversed one of its own earlier decisions and slashed more than $50 million from what would have been a windfall for a group of out-of-state fishermen.

It may save the state that amount immediately, and possibly much more in the future, state officials say.

The Alaska Supreme Court’s ruling, announced Friday, essentially admits the court’s earlier decision awarding the amount in interest for overpaid commercial fishing license fees was in error.

The court’s reversing itself is “very rare,” and is a testament to the high caliber of the state’s judiciary, said Dan Sullivan, commissioner of the Department of Natural Resources and a former Alaska Attorney General.

Juneau attorney Loren Domke, representing the fishermen, declined comment Friday, saying he hadn’t finished reviewing the case.

The long-running Carlson case stems from a lawsuit brought by out-of-state fishermen against the Commercial Fisheries Entry Commission, claiming it discriminated against them by charging them more for licenses than it did Alaskans.

Fisherman Donald Carlson was the lead plaintiff in the 1984 class-action lawsuit that wound up representing more than 4,000 overcharged fishermen, represented by Domke.

Early on he won a judgment of $12 million when the courts said it was not appropriate in this case to charge those from out of state more than Alaskans.

Between 1984 and 2002 nonresident commercial fishers paid three times for licenses and permits as did Alaskans, though the state was on judicial notice this practice was illegal. The original suit against the higher license fees was filed in 1982.

In the third of what would be five trips to the Alaska Supreme Court, the interest rate on the $12 million in damages was set at a punitive 11.5 percent, compounded quarterly. That swelled the total size of the judgment to more than $82 million dollars, including damages, court fees, attorney’s fees and interest.

The state balked at paying that, further contested the case, and Friday the Alaska Supreme Court announced it had taken the unusual step of reversing itself.

The interest rate it had originally used was the amount used to penalize those who had underpaid taxes. The decision in the third Carlson case to reach the Supreme Court to use that high interest rate for the overpaid permit fees was in error, the court said Friday.

“This error produced a manifestly unjust result which requires us to take the extraordinary step of reversing our previous holding,” the decision said.

The case was remanded back to a lower court with instructions to use the standard prejudgment interest rate, reducing the award by $50 million.

Sullivan called that a “very significant victory” for the state, not only for this case but possible future cases.

“It’s a big deal going forward,” said Sullivan, who praised the Department of Law attorneys who worked on the case.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.