Federal judge rules against Wishbone Hill mine prospect

A federal judge has dealt a blow to an Alaska mining operator hoping to extract coal from the Wishbone Hill prospect near Palmer, ordering a federal agency to revisit a 2014 decision that allowed Usibelli to hold onto its 25-year-old permit though development had not occurred in a timely manner.

State officials said the next step is an administrative process by the Office of Surface Mining and Reclamation and Enforcement that could determine the validity of the permit. Conservation groups involved in the lawsuit said the next logical step will be a cessation order stopping the project because the company has no valid permit.

"The Office of Surface Mining will have to issue a cessation unless the state finds new evidence that mining happened within the proper time frame," said Katie Strong, staff attorney at Trustees for Alaska, which represented conservation groups in the case.  "But the state and Usibelli said no mining started until June 2010, so there aren't circumstances here that will cause the permits to still be valid."

The project, located about 8 miles from Palmer and 5 miles from Sutton, was initially permitted in 1991. Two other mining companies held the original permits before they were transferred to Usibelli in 1997.

Usibelli, longtime operator of a coal mine near Healy, built a road to the Wishbone Hill mine site in 2010.

U.S. District Court Judge Sharon Gleason ruled Thursday that federal law is clear. Mining operations should have begun within three years after the permit was issued, unless the permit was extended, she said The permit has not been extended since 1996.

State officials said they are reviewing the decision and considering the next options.


Cori Mills, an assistant attorney general, said Gleason did not invalidate the permit, but decided how federal law should be interpreted and sent the case back to U.S. Office of Surface Mining for a determination.

"The decision was not, in itself, a ruling on the validity of the Wishbone Hill permits," Mills said in an emailed statement. "Instead the Court has remanded the matter to the federal agency for further proceedings where that question and others may be resolved. We are continuing to review the decision and appropriate next steps."

The Chickaloon tribal government and Castle Mountain Coalition, a conservation group for the Matanuska River watershed, were the lead plaintiffs in the case, brought in March 2015 against the federal agency.

The groups were joined by other plaintiffs — Cook Inletkeeper, Alaska Center for the Environment, Alaska Community Action on Toxics and the Sierra Club. The state and Usibelli joined the federal agency as intervening defendants.

Usibelli is considering its legal options, said Lorali Simon, vice president of external affairs for Usibelli.

"The state and federal government have both told us we have a valid permit, so to be in this position now, where we have operated under what we assumed to be a valid permit since 1997, it certainly is a blow to us," Simon said.

Residents in a Palmer neighborhood who had feared mining activity would pollute their air with coal dust, lower property values and increase noise and traffic are pleased with the decision, said Kirby Spangler, president of Castle Mountain Coalition.

Spangler, who lives about a mile from the proposed mining area, said the decision will help stop a project already suffering from the worldwide drop in coal demand.

"We were claiming victory before but this is a few more nails in the coffin for Wishbone Hill," he said.

The state, which has had jurisdiction over its coal program since 1983, adopted statutes no less stringent than federal law, said Russell Kirkham, head of the state's coal program.

The state had regularly renewed the permits, and considered a renewal to be an "implicit extension," he said.

"The judge said we were incorrect on that, so we're still trying to figure out our next steps," he said.

Strong, the attorney at Trustees for Alaska, said Congress created the three-year termination provision to prevent coal operators from holding leases without developing them, and to make sure standards to protect the environment and communities were up to date.

Though the judge's ruling is only binding in Alaska, it could have nationwide implications, she said.

"As coal mining prices drop around the world, we're seeing more mines get permits and not develop because the projects aren't supported by the market," Strong said. "So this means those mining companies can't get their permits to sit on them for years or decades."

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or