Not so many years ago, when he was still chairing the Metropolitan Council and I was scribbling editorials for the Star Tribune, Peter Bell got my attention by suggesting that maybe much of the cost and complication of environmental regulation could be displaced by insurance.
In place of large compliance bureaucracies, in government and industry alike, he thought societies could simply adopt environmental standards and penalties, then require companies to carry coverage in the form of liability policies, performance bonds and other instruments to pay their fines and repair the damage if they screwed up. [Disclosure: Bell now serves on MinnPost’s board of directors.]
The real beauty of it, he said, was that bad companies and bad ideas wouldn’t be able to find a carrier to share the risk. Thus, much environmental malfeasance could actually be prevented, not merely policed and punished after bad deeds had already been done.
Because Bell has always impressed me as a smart man and a principled conservative, I was intrigued by this notion, and we talked for a while about who would underwrite such coverage — Lloyd’s came to mind, of course — and how the risks would be assessed and premiums calculated, etc.
Then we moved on to the real subject of our meeting, long ago forgotten. But Bell’s idea has rattled around in memory ever since, waiting for me to decide whether to file it under “Brilliant” or “Blithe,” and it came instantly to mind with the release of the new environmental assessment of PolyMet Mining Inc.’s NorthMet project on Friday.
In NorthMet, which proposes to mine and process copper, nickel and other precious metals on land now within the Superior National Forest, Minnesotans may be approaching a huge and high-stakes test of something very like the insurance idea, at sites within or near the state’s most treasured boreal wilderness areas.
Plenty of regular, old-fashioned policing will apply to PolyMet’s construction, operation and closure of the mine, where ore is projected to be dug for about 20 years. And while this kind of hard-rock mining of sulfide ores is new to Minnesota regulators – and very different from taconite, gravel or frac-sand mining – the basic work of regulating dust, noise, excavation and water discharges is certainly familiar.
500 years of treatment
What distinguishes the NorthMet project is the certainty of long-term acid formation and drainage as air and water act on sulfides in the waste rock, which will have to be contained and treated at a cost estimated to run $3.5 million to $6 million a year. For the purposes of the Supplemental Draft Environmental Impact Statement (SDEIS) issued on Friday, “long-term” means 200 years at the mine site and 500 years at the processing plant.
Those stunning figures, which leaked a few weeks in advance of the DEIS release, have prompted some back and forth in media accounts as to whether they are minimums or maximums. My reading is that they are neither:
The duration of the simulations was determined based on capturing the highest predicted concentrations of the modeled NorthMet Project Proposed Action. It is uncertain how long the NorthMet Project Proposed Action would require water treatment, but it is expected to be long-term; actual treatment requirements would be based on measured, rather than modeled, NorthMet Project water quality performance, as determined through required monitoring.
In other words, nobody yet knows how long water at the mine and plant could require treatment, and nobody will know until water at the sites has been subjected to actual treatment and monitoring. But some number had to be selected for the impact assessment to go forward.
You might ask, Why don’t they just assume the water will need to be treated forever? Excellent question, for which the answer is: Minnesota law prohibits permits to mines that will require “perpetual” maintenance after closure.
You might then ask, Who is going to pay for hundreds of years of water treatment? Yes, well, the answer to that one is still blowing in the wind.
What kind of assurances?
The DEIS says regulators will seek “financial assurances” from PolyMet to pay the costs of treatment in centuries to come, but discussion of the specifics has been deferred for now. Although the U.S. Environmental Protection Agency reportedly pressed to have it addressed at the DEIS stage, the Minnesota Department of Natural Resources and its federal partners elected to kick it down the road to the permitting process, which will follow adoption of a final EIS, which will follow a 90-day public-comment period that begins next week.
Personally, I’m eager to see what kind of financial instruments are considered sure to endure some five centuries into the future.
This is probably as good a point as any at which to disclose that in 2007 and 2008, as executive director of Friends of the Boundary Waters Wilderness, I made it my top priority to spur the Friends group into action as a challenger to the PolyMet and other mining projects. Also, to urge allied organizations to join us in abandoning what had been a perplexingly relaxed posture on this issue in Minnesota’s environmentalist community.
That history has made it a little complicated for me to come back to the subject as a journalist, because I recognize that some readers simply won’t be able to accept that I can be fair- and independent-minded on these issues.
To those folks I would simply say that my views of hard-rock mining and its hazards were formed as a journalist, not as an activist – and long before I went to work at Friends – in a series of visits to mining disgraces in the Western U.S. (For one example, consider the Berkeley Pit in Butte, Mont., well worth a stop if you’re driving across the Treasure State.)
The position I advocated at Friends, and advocate now, is that Minnesota agencies ought to withhold permits from any sulfide mining operations unless they can demonstrate proven ability to operate and close down their operations without lasting environmental harm beyond the scope of their permits — and back up their promises with ironclad financial guarantees to protect taxpayers.
I know that some thought this was a disingenuous position on the Friends’ part – that in reality, we were opposed to any and all mining near our precious wilderness retreats and were simply unwilling to say so.
Speaking only for myself now, I can say that’s not the case. I could readily support a mining project that meets these tests, and I think it’s possible that PolyMet will do so – though much remains to be seen, of course.
I have toured the NorthMet sites with company officials and come away highly impressed with the technological advances that seem to be within their reach. I’m delighted to think that the old LTV/Erie plant at Hoyt Lakes could be repurposed by PolyMet, converted from countless tons of silent scrap metal into something vibrant and valuable for the Iron Range.
I’m willing to be persuaded that newer mining technologies and stronger environmental commitments could make the PolyMet project a dramatic departure from hard-rock mining’s terrible history of lasting harm in this country and others.
But that’s what mining companies always say, and I’ll admit that PolyMet’s credibility with me took another hit recently when officials tried to downplay the company’s interest in having the Hoyt Lakes plant handle ore from other future mines in the area, whether operated by PolyMet or by other companies that would do their own digging and pay PolyMet to do the processing.
When I toured the plant site in 2008, company officials described this as a key part of their business plan, and it only makes sense: Do we really want every mine to have its own processing plant?
And yet, when a PolyMet-commissioned report on the subject surfaced late last month in the Star Tribune, with predictions that the company’s metals production could double or triple beyond the scope of the NorthMet project within a couple of years, company officials said such scenarios were “not part of our discussions around here.”
I can’t imagine whom they thought they were kidding with that obvious dodge. On the other hand, the story served to underline this key reality that should be kept in mind as the PolyMet process goes forward:
The NorthMet project is only the first proposal in the regulatory queue for a sulfide-mining boom that could easily grow to a dozen projects or more, and involve active mining for many decades to come, with each mine creating a treatment problem stretching centuries into the future. And the regulatory decisions on NorthMet will set a pattern for the others.
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The Supplemental Draft Environmental Impact Statement for the NorthMet project is available here, along with related materials and information from the Minnesota DNR about the public comment process that runs from Dec. 14 through March 13.