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What the legislative auditor will — and won’t — investigate about a key PolyMet permit

While the auditor’s findings could spark legislative action, the office is “not reviewing whether PolyMet should occur or not.” 

Legislative Auditor Jim Nobles
Legislative Auditor Jim Nobles said the investigation is focused on “transparency and openness and the degree to which the people at the Pollution Control Agency adequately documented their decision-making process” and interactions with the EPA.
MinnPost photo by Erin Hinrichs

The Environmental Protection Agency and the Minnesota courts are investigating allegations that state regulators hid flaws with a crucial water permit won by Minnesota’s first copper-nickel mine.

In response to the controversy over PolyMet, state lawmakers have also opted to investigate. And to do so, they’re using a favorite tool to make sense of divisive issues: the Office of the Legislative Auditor.

State Rep. Rick Hansen, a South St. Paul DFLer who chairs the Legislative Audit Commission, asked auditor Jim Nobles in late June to scrutinize whether the Minnesota Pollution Control Agency broke from policy or law when it approved PolyMet’s permit in 2018.

The step is noteworthy for a Legislature that includes many PolyMet supporters from both political parties. Yet for now, key political leaders, including Gov. Tim Walz, are only questioning the MPCA’s regulatory process, not its final product. Environmental advocates, on the other hand, have used the investigations to bolster a legal challenge to PolyMet that argues the $1 billion project near Hoyt Lakes could pollute the St. Louis River Watershed and Lake Superior.

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Current and former MPCA staff say they followed state rules and maintain standards in the permit are rigorous. 

While Hansen said Tuesday the auditor’s findings could spark legislative action, the office is “not reviewing whether PolyMet should occur or not.” 

How we got here

There are two intertwining debates over the water permit, known as a National Pollutant Discharge Elimination System Permit, which was issued to PolyMet in December of 2018, shortly before Walz took office.

The first issue is whether the MPCA hid comments on the permit made by the EPA. The feds recently disclosed a set of written comments outlining criticisms they had with the water permit. But they were initially read over the phone in April 2018 to MPCA staff, who urged the EPA to avoid submitting them during a public comment period. Some staffers destroyed hand-written notes of the meeting, which was not made public.

State Rep. Rick Hansen
MinnPost photo by Walker Orenstein
State Rep. Rick Hansen
The MPCA says PolyMet opponents are misconstruing one small part of a yearslong back-and-forth with the EPA. Declarations to the Minnesota Court of Appeals say the comments read over the phone had been raised before by the EPA and raised again by others during the public comment period. 

Former Assistant Commissioner Shannon Lotthammer said in a court statement that they asked the EPA to keep comments out of the public period simply because they were working on a draft of the permit they planned to change. Later EPA feedback would be more useful, she said. 

“I am not aware of any MPCA discussions of a strategy to keep EPA’s written comments permanently out of the administrative record,” Lotthammer said. “The only goal I am aware of was that those comments come at a time that would make the permit-development process more efficient.”

The second issue, which WaterLegacy and other environmental advocacy groups have argued, is whether the EPA comments highlight big flaws with the permit. Federal regulators said they worried the MPCA’s permit would allow water pollution from the mine and violate the Clean Water Act. While the permit does require PolyMet to treat the water and has a form of water quality limits, the EPA said it believed the regulations could not be enforced by the federal government, or potentially the MPCA. It could also block lawsuits against PolyMet if there is pollution, the EPA said.

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State officials say some of the comments were addressed and they disagreed with the EPA about others. The MPCA maintains its permit is tough and enforceable. The MPCA is also quick to note the EPA has not rejected the permit that was eventually issued. 

But the EPA’s inspector general launched an audit of the situation in mid-June. Then, last month, the Court of Appeals also sent WaterLegacy’s case to Ramsey County District Court to sort out what had happened.

The MPCA permit is just one of many PolyMet has won over a 14-year review by state and federal regulators. The project also received a Permit to Mine in 2018 from the state Department and Natural Resources, for instance.

A state audit

One day before the Court of Appeals order, Hansen asked for the legislative auditor to step in. The DFLer, who also chairs the House Environment and Natural Resources Finance Division, faced pressure by some, including the Star Tribune’s Editorial Board, to hold public hearings on the water permit.

But Hansen said he believes the auditor “will be more thorough and nonpartisan and can probably reach more facts over a period of time than a hearing.” After a report is done, Hansen said the audit commission, which is run by DFLers and Republicans from the House and Senate, can hold hearings on it.

“I felt the better method for inquiry was the legislative auditor,” he said. “Rather than a public hearing, the auditors and staff can look through the documents judiciously and report back to the Legislature in terms of what they find.”

So what exactly is the auditor looking at?

Nobles, who heads the office, said the investigation is focused on “transparency and openness and the degree to which the people at the Pollution Control Agency adequately documented their decision-making process” and interactions with the EPA.

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“We will not attempt to get into the substance of the environmental reviews and whether or not the project is sound financially, or environmentally appropriate,” Nobles said.

For starters, Nobles said he’s asked for “a lot of emails” at the MPCA to see if they “reveal some sort of attempt to keep the EPA from providing a written document to the state.” Then he said they expect to call in MPCA staff for interviews.

While the auditor’s office has subpoena power, Nobles said there are limitations. For instance, he won’t have jurisdiction over the federal government and EPA staff. Plus, much of the same ground will be covered by the district court, Nobles said. That court will eventually weigh in on the rigor of the MPCA permits.

Paula Maccabee
Paula Maccabee
Still, Nobles said he thinks the investigation is useful. The audit can serve to translate complex court proceedings for legislators and the public, he said.

Paula Maccabee, attorney for WaterLegacy, said the auditor can use whistleblower protections to coax testimony and also look at what reforms could be helpful at the MPCA. The auditor has a track record of inspiring legal change. Its report on child care fraud earlier this year sparked a multifaceted response from the Legislature.

While the legislative audit commission is run by both parties, efforts to reach GOP Sen. Mark Koran, the vice chair, were unsuccessful this week.

Walz told reporters last week that he’s supporting the audit, even though he doesn’t doubt the strength of the permits and said he has “full faith” in the MPCA. “The public has to have trust and belief in a system to make sure those checks and balances are there and that’s why I do support open, robust look to make sure this process was working the way it’s supposed to,” the governor said.