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Why the Minnesota Court of Appeals’ PolyMet decision is so significant

The court’s decision is a setback for the proposed copper-nickel mine near Hoyt Lakes, but it’s far from the only potential problem. PolyMet is facing additional litigation, including a case over a water permit that will go before a district court next week. 

Leftover structures from an old LTV Steel taconite facility
Leftover structures from an old LTV Steel taconite facility that PolyMet hopes to refurbish and reuse for the copper-nickel mine it plans to build.
MinnPost photo by Walker Orenstein

In March, PolyMet Mining announced it had all the permits it needed to build a copper-nickel mine near Hoyt Lakes. After 14 years of environmental review, the company’s biggest remaining hurdle was finding construction money for the $1 billion project — the first of its kind in Minnesota.

Now, 10 months later, PolyMet has yet to break ground on that mine, and the project is even further from opening than it was in March. Many of the company’s permits have been suspended as a sweep of lawsuits from environmental organizations and tribes make their way through Minnesota courts.

The most recent blow to the project came on Monday, when the Minnesota Court of Appeals reversed two dam safety permits and the project’s critical permit to mine, with judges ruling that criticisms of PolyMet had not been properly reviewed by a neutral administrative law judge.

And next week, state regulators will face a trial in district court over allegations they suppressed concerns from the Environmental Protection Agency about the strength of a key water permit needed for the project, and then destroyed records to cover their tracks.

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Taken together, the lawsuits have delayed PolyMet and could force changes to the project. Or, if environmental groups win out, stop the mine altogether. 

PolyMet supporters said Monday’s court ruling was a needless delay for a project that has faced lengthy environmental review. Senate Majority Leader Paul Gazelka, a Republican from Nisswa, said Iron Range jobs are “again put on hold by liberal courts and radical environmentalists.”

Paula Maccabee, attorney for the environmental nonprofit WaterLegacy, said a neutral judge would put the state’s permits through more robust review than a typical public comment process. WaterLegacy sued over the dam safety permits and permit to mine.

“What the Court of Appeals has done is let the sun shine in so that the difficult decision that Minnesota has to make about sulfide mining can be made under impartial, open scrutiny,” Maccabee said.

What the court’s decision means

If built, PolyMet plans to extract copper, nickel, platinum, cobalt and other metals at an open-pit mine in northern Minnesota for 20 years. Its majority owner is Glencore, a massive Swiss company known for mining and trading commodities around the globe.

PolyMet’s leadership promises 360 direct jobs at the mine and another 600 or so spinoff jobs. But the project has faced fierce opposition from environmental nonprofits and a tribal government who argue the mine risks polluting the St. Louis River watershed — which drains into Lake Superior — with toxic byproducts and heavy metals.

Paula Maccabee
MinnPost photo by Walker Orenstein
Paula Maccabee, shown during a Monday press conference, said a neutral judge would put the state’s permits through more robust review than a typical public comment process.
PolyMet says that can be avoided, and plans to repurpose a tailings facility at a former LTV Steel taconite mine and build a system to capture and treat water tainted by mine waste. It has also agreed to a financial assurance package that aims to keep Minnesota taxpayers from being saddled with the cost for any necessary pollution clean up. After environmental reviews, the company eventually secured 18 state and federal permits and approvals.

Still, the Fond Du Luc Band of Lake Superior Chippewa, WaterLegacy the Minnesota Center for Environmental Advocacy (MCEA) and others have challenged many of those permits in court.

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Their biggest win came on Monday, when three judges on the Court of Appeals unanimously rejected a trio of permits issued in 2018 by the state’s Department of Natural Resources. In the lawsuits, the PolyMet opponents argued the project’s tailings dam and closure plan would be unsafe; that Glencore should be named on state permits; and that the financial assurance package was insufficient.

In a written opinion for the court, Judge Edward J. Cleary did not take a side on those debates. But he said they were substantial questions that warranted what’s known as a “contested-case hearing.”

In such a hearing, an administrative law judge holds a trial-like proceeding on controversial issues and then offers an opinion on the facts. The DNR would then have to decide whether to alter, re-issue, or deny the permits.

Before the ruling, DNR had denied a contested-case hearing, saying in part it had closely examined concerns raised by the environmental groups and the Fond Du Lac Band during its own lengthy environmental review of PolyMet. But Cleary said the court found evidence of “probative, competent, conflicting evidence on material fact issues” that by law required DNR to hold what could be a new assessment of the project. Cleary went to far as to describe the DNR as seeking “unfettered discretion” to sidestep its legal duty to hold a contested-case hearing.

Kathryn Hoffman, CEO of the MCEA, said contested-case hearings typically last between six and 18 months, but can last longer in complex cases.

One such case involved Enbridge’s controversial Line 3 oil pipeline, which had two separate reviews by administrative law judges. One judge held 16 public hearings and took extensive testimony before concluding the new pipeline project should be built. (The Public Utilities Commission approved the pipeline, but ignored specific routing advice because of tribal opposition.)

In a written statement, the DNR said it was still reviewing the PolyMet order, but noted the court did not make any conclusions on the scientific work that led to the agency’s decision to grant the mining permits. “We remain confident in the solid foundation of our technical work,” the statement says.

Kathryn Hoffman, CEO of the MCEA
MinnPost photo by Walker Orenstein
Kathryn Hoffman, CEO of the MCEA, said contested-case hearings typically last between six and 18 months, but can last longer in complex cases.
In a separate statement, PolyMet said it was “exploring all of our options,” including asking for a review by the Minnesota Supreme Court. Both the company and the DNR have 30 days to appeal the decision.

“We obviously are disappointed in the court’s decision,” the PolyMet statement says. “We are confident that we can produce these high-demand metals responsibly, with Minnesota workers, and in compliance with all applicable regulations.”

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While the appeals court did not decide many of the key issues that will come before the administrative law judge, it did weigh in on two questions.

First, the court said the DNR could legally transfer a permit from LTV Steel to PolyMet tied to its tailings basin. But the court also ruled the DNR could not award PolyMet an indefinite permit. While the DNR expects mining to last 20 years and estimated closing and restoring the mine area would be completed in 2072, its permit also says it lasts until “long term maintenance and active water treatment” is no longer needed.

Cleary wrote that modeling showed active “mechanical” water treatment could be necessary for at least 200 years at the mine site, and 500 years at the plant site.

A rare trial ahead

Recapturing the DNR permits is not the only obstacle ahead for PolyMet.

Another lawsuit brought by WaterLegacy, the MCEA and the Fond Du Lac Band argues PolyMet was granted a “sham” air pollution permit for a smaller mine when the company actually intends to greatly expand the mine and evade regulations. PolyMet denies this.

And next week, a water permit granted in 2018 by the Minnesota Pollution Control Agency will be the subject of an unusual district court trial. 

Earlier this year, the EPA released written comments that showed concerns a draft of the permit, known as a National Pollutant Discharge Elimination System Permit (NPDES), would violate the Clean Water Act. But those comments were initially read over the phone to MPCA officials and did not appear in the public record that determines the agency’s decisions. Hand-written notes of the phone call were destroyed.

Still, the MPCA has said there was no cover up. Current and former staff maintain the exchange was one brief part of a lengthy collaboration between the state and federal government over the permits, and that they had already considered complaints from others during the public comment process that had raised similar questions. And in the end, the EPA did not veto the final permit.

Still, the Court of Appeals in June said WaterLegacy had raised “substantial evidence of procedural irregularities” and asked the Ramsey County District Court to look into the issue. WaterLegacy’s Maccabee said she didn’t think such a trial has ever happened in the Minnesota.

Since that order, the court ordered a forensic search of MPCA computers, and the two sides have drummed up witness lists for questioning at the hearings. One is former MPCA commissioner John Linc Stine, who declined to comment on the litigation. 

The NPDES water permit has been suspended while the court proceedings advance. In the meantime, PolyMet backers on Monday urged the mining company to persevere amid what they hope is only a delay. “We encourage PolyMet to pursue all avenues to move this project forward and will stand strong with our members and allies,” said Nancy Norr, chairwoman of the labor and business coalition Jobs for Minnesotans.

Jubilant leaders from environmental nonprofits and the Fond Du Lac Band gathered in St. Paul and Duluth on Monday to celebrate the DNR permits being reversed. “PolyMet will never operate in the state of Minnesota,” said Chris Knopf, executive director of the Friends of the Boundary Waters Wilderness.