When Gov. Tim Pawlenty announced his support for creation of Lake Vermilion State Park near Soudan, Minn., he said the owner of the 2,500 acres of spectacular, cliff-strewn shoreline, U.S. Steel Corp., would give the state one year to close a deal. 
 
That was July 17 of last year. Now, 14 months later and after the Minnesota Legislature responded to the governor's stated deadline, the Department of Natural Resources (DNR) and the company can't agree on a price and have stopped talking.
 
"We're not making any progress, and in fact we're going backwards," said Assistant DNR Commissioner Bob Meier, who's a point person for the Republican governor's project, which was approved in the deal-cutting waning days of the 2008 Legislature.

"I knew this would happen," said Rep. Tom Rukavina, DFL-Virginia.  "This park was crammed down our throats by the governor and metro legislators, and now U.S. Steel is teaching them a lesson in how steel companies negotiate; they've been doing it to us for a hundred years."
 
No reason for further meetings
It doesn't mean the deal won't get done or the park won't become a reality, Meier emphasized. But it clearly is on hold, and the two sides see no reason for further meetings. 
 
As is so often the case, the problem is money. U.S. Steel says the land is worth at least $20 million, but appraisals by the state and St. Louis County have come in at about half that (Meier wouldn't confirm the state's number, but the county values the land at $13.8 million). 
 
The problem is also legal inflexibility: In approving park-acquisition funds, Meier said the Legislature directed that the state could not pay more than 12 percent over of the appraised value. 
 
"If you use the county's appraisal, that means we can't go over $15.5 million," Meier said.  And that, he indicated, is not acceptable to U.S. Steel. 
 
Deal at state's price could create controversy in company
The Timberjay newspaper of Ely and Cook reported that State Sen. Tom Bakk, DFL-Cook, said U.S. Steel could not accept the state's best offer because it could create controversy within the company. 
 
Also, the Timberjay reports, U.S. Steel is in a permitting process for a planned $350 million mine expansion at its Keewatin Taconite facility and the company wants to avoid any appearance of an interest conflict. 
 
Bakk was quoted in the newspaper as saying that the company probably won't return to the park issue until after the permits are obtained, possibly late in 2009. 
 
When U.S. Steel and the state started talking about the park last year, the company was eyeing the land for home sites. Meier said there's no evidence that the company's development plans are moving ahead. 
 
Pawlenty's plans for the park are ambitious. He sees it as rivaling the best parks in the system — a park that, fully developed by the state, would lure 300,000 visitors annually and pump $8.5 million annually into the local economy. 
 
Little willingness to spend big
But that would take a lot of money, and so far the Legislature has shown scant willingness to spend big on one park when so many other parks in the system have degraded as a result of  funding cuts (even though parks and trails spending increased in 2008, critics say that under Pawlenty's watch the state's parks budget has been slashed by 38 percent). 
 
St. Louis County Board Chair Mike Forsman of Ely is dubious about whether the park will ever be developed. 
 
Echoing a concern expressed by Rukavina, Forsman fears that Pawlenty is merely acquiescing to Lake Vermilion residents who would like the park land to be purchased and left alone as de facto wilderness with few visitors. 
 
Costs to develop the park will be very high, Forsman has said, due to the exposed bedrock that will make things like putting in sewer and water and other infrastructure very difficult and costly.