As part of negotiations to finalize Minnesota’s two-year budget before a government shutdown deadline of July 1, top political leaders announced a deal Monday to bring a new timber product mill to the city of Cohasset in Itasca County.
State lawmakers from the region pushed hard to draw the $440 million project — and the 150 jobs Huber Engineered Woods LLC says it will create at its manufacturing site. The Iron Range Resources and Rehabilitation Board also on Monday approved a $15.6 million forgivable loan for construction using taxes on mining collected by the group.
[image_credit]REUTERS/Eric Miller[/image_credit][image_caption]Gov. Tim Walz[/image_caption]
While supporters of North Carolina-based HEW say the carve-out won’t create significant environmental risk, the last-minute exception has rankled some environmentalists. “It’s really surprising to watch our electeds jump into a significant proposal and exempt this from environmental standards right away,” said Evan Mulholland, senior staff attorney at the Minnesota Center for Environmental Advocacy. “From our perspective it’s an example of how broken this budget is.”
Incentives for jobs
If the plant is built, HEW will build what’s called “oriented strand board” (OSB) at the facility, which is a type of engineered wood used as construction material for roofs, walls and subfloors. The company has five other manufacturing plants in Georgia, Maine, Tennessee, Oklahoma and Virginia.
The new Minnesota site would be on land currently owned by Minnesota Power, the Duluth-based utility, and near a large coal plant the company plans to fully retire by 2035 called the Boswell Energy Center.
Itasca County Officials have long worried about the loss of jobs and taxes from closure of Boswell, and Mark Phillips, Commissioner of the IRRRB, said the HEW mill would help ease the pain. “Probably about 25 percent of the jobs and the tax base could be replaced by this one company,” he said Monday.
[image_credit]MinnPost photo by Tom Olmscheid[/image_credit][image_caption]Senate Majority Leader Paul Gazelka[/image_caption]
The deal was something of a surprise at the Capitol. It hasn’t been part of negotiations on the budget during legislative sessions this year. Lawmakers are working to wrap up the two-year state budget before July 1, when any government areas not funded will need to shut down.
Walz said the company expects the project to create 300 to 400 construction jobs and lawmakers said they believe the plant will result in up to 400 spinoff jobs in the timber and trucking industries. HEW says median hourly wage at the plant will be $31 an hour.
Along with the $15.6 million loan from the IRRRB, Jen Gates, a spokeswoman for the Department of Employment and Economic Development, said the state is considering a $20 million loan from the Minnesota 21st Century Fund, which invests in industries like manufacturing in northeast Minnesota. A bill authored by Sen. Tom Bakk, an independent from Cook, would provide other incentives, up to $28.5 million over 10 years starting in the 2025 fiscal year for producing strand board.
HEW also said in a news release their project was contingent on “financial assistance” from Cohasset, Itasca County and Minnesota Power.
“We are pleased and excited to bring this new investment and set of employment opportunities to Itasca County and the surrounding areas,” said HEW President Brian Carlson in the prepared statement.
Project could be exempt from some environmental review
Phillips said Minnesota was competing with other states, and one way to draw the company in was to make environmental review “more timely.” An environmental bill negotiated between the Republican-led Senate and the DFL-majority House says the plant won’t have to complete an extensive Environmental Impact Statement required for projects of its size. Such a statement analyzes potential for significant environmental issues and ways they could be mitigated.
The company will still have to complete an Environmental Assessment Worksheet, which is a shorter document with basic facts about the project, as well as any environmental permitting required as a result of the review.
Phillips said the mandatory EIS would take about a year, which would be too long of a timeline for the company. The shorter EAW process would still take about six months, and regulators could still decide later to require an EIS if they saw a significant environmental reason to need one, Phillips said.
A spokesman for the Minnesota Pollution Control Agency said he believes that is true, but declined to comment on the potential exemption from permitting.
[image_credit]MinnPost file photo by Briana Bierschbach[/image_credit][image_caption]Senator Tom Bakk[/image_caption]
Bakk and Phillips also compared the package of benefits to an effort to bring a wood-siding plant to Hoyt Lakes in 2016. The IRRRB approved $36 million in incentives at the time for the estimated $440 million Louisiana Pacific project that promised to employ 250 workers and create more than 500 indirect jobs. Lawmakers approved tens of millions in subsidies on top of that.
Ultimately, the plant was never built.
Mulholland, the MCEA attorney, said his organization is not inherently opposed to the Huber project and generally wants to promote economic development in areas like Cohasset that are transitioning away from fossil fuel plants.
But Mulholland said carving out an exemption for HEW, particularly with no public input, is a mistake. “You have a company coming into Minnesota looking at our environmental laws, and telling everyone, telling Minnesota Power, telling the Legislature, we’ll come in as long as you get rid of this one law for us,” Mulholland said. “And that just doesn’t sit right with us.”
Mulholland said there’s an established way of determining when an environmental impact statement is needed, and state regulators had already decided a project of this size should undergo the process. There’s also a way to change those requirements with more transparency if lawmakers and the public decide they should be altered, he said.
But Mulholland said the public knows almost nothing about the specifics of the project, such as what condition the land is in, what the process will be to manufacture strand board and other factors. An environmental impact statement would look in greater detail at socioeconomic impacts of a plant, potential air emissions and other issues like stormwater discharge. The impact statement also allows for greater public input in a way the assessment does not, Mulholland said.
Even if regulators can require an EIS later on, in practice they rarely do, Mulholland said. Such exemptions also lead to other companies asking for carve-outs from environmental law.
“I just wish that we had had an opportunity to have a regular legislative hearing about this where we could learn more about it, where and why they needed the exemption,” Mulholland said. “And not have it, what is it a handful of days before the potential government shutdown where it has to be passed or else government shuts down. That’s not the right way to make laws. You miss out on a lot of public awareness, public involvement in the process and public acceptance of the outcome.”
[image_credit]MinnPost photo by Peter Callaghan[/image_credit][image_caption]House Speaker Melissa Hortman[/image_caption]
“The governor and Iron Range legislators are really supportive of OSB, and this is a common thing in a Legislature where we try to achieve balance,” Hortman said. “Something’s done for one region is counterbalanced with something we do for another region.”
Last-minute negotiations
Top lawmakers still touted the plan Monday as a boost to a region in need of jobs.
Hortman described the environmental exception to MinnPost as “streamlining of review” that is in the realm of normal incentives when competing for large developments in a state. She said her understanding is the state isn’t agreeing to say “you can come here and pollute.”
“They take a look at how long does it take to get a permit in Minnesota versus North Dakota or whatever,” she said.
Phillips, from the IRRRB, said he believes environmental groups should support the push to build the HEW mill in an area closing down a coal plant. Bakk said more logging could eventually reduce risk for wildfires and said the state needs to partner with companies to create natural resource jobs in northeast Minnesota, where the economy relies in part on industries like logging and mining. Paper mills have been shutting down across the region for decades, he said.
“Very few opportunities come along where someone is looking to build a new plant,” Bakk said.
State government reporter Peter Callaghan contributed to this report.
Well, hopefully the promise of jobs and all this enticement of this project does not transfer to the Minnesota Pollution Control Administration turning a blind eye to pollution caused by this project. Creating OSB is a chemical intensive process.
That said, all these incentives, forgivable loans, tax breaks etc begs the question, who owns this project, the company or the citizens of Minnesota? Why too does this article say “median” income @ $31/hr when the average income would appear much lower, likely? And I wonder too, since small business in America employs a lot more people than bigger business, why is there so much courting of projects like this, but next to nothing available to start a small business and no forgiveness on taxes or regulation of any kind? Just a few questions that come to mind.
Otherwise I hope it proves a boon to Itaska County.
Terrible, terrible idea. Shows the lack of environmental concern among the DFL leadership. (Which Hortman has demonstrated before.)
Well, you have a choice. Turn the jobs away, or provide a quicker path to construction. If we can’t provide incentives and an expeditious path, it will be built somewhere else.
More welfare for rural residents. There seems to be no end to the subsidizes hard-working Democrats in the metro have to pay to lazy Republicans.
Go buy a farm then, you be home crying in a day
There’s where the real subsidies are. Serious freeloaders.
If welfare is bad for urban folks, why is it OK for farmers?
I can’t wait to hear the answer, I just love the way small gubmint conservatives twist themselves into knots over their favored forms of welfare.
If Walz says it’s good, it’s gotta be good.
He’s the Omniscient One and has emergency powers.
Ahh, good old Socialism. But as far as Republicans are concerned that word is only relevant when assistance is given to the needy and the unemployed. When businesses come with their hand out the legislators fall all over themselves coming up with novel ways to grease the palm of the begging businesses, foreign or National. Tax breaks, tax increment financing, tax forgiveness, free utilities, free land, elimination of environmental guidelines, et. al. by local counties, cities, and the state are commonplace, and expected. Ain’t this a great country for the haves ?
How true this is!
Is that a median hourly wage of $31/hr or does that amount include all of their benefits as well? I’m guessing the latter. Paying non-union workers wages of $17 or 18/hr with crappy medical and 401K benefits is not going to revitalize the region. Our lawmakers should have mandated that this public ‘investment’ include a unionized workforce.
These types of welfare should include a labor peace provision, requiring the business to stay neutral in any organizing drive.
When you hear “forgivable loan” and IRRRB, get ready to be hosed. The 31$ an hour is for pay, benefits are additional. Cohasset lost its coal plant and the area needs jobs badly. Since the disastrous NAFTA in 90’s, timber jobs have gone away (Canada thrived), this gives the area a much needed boost. As far as the state of Minnesota paying for jobs, look no further than the jobs program of highway construction in the Twin Cities. Every road is torn up and every penny of pay is from tax payers, all across the state. That dwarfs the pennies doled out for the HEW project. Not in favor of any money going into a Government/private venture. It is a perfect storm for crony capitalism, starring folks voted in to serve us…..
On the one hand, the Cohasset area needs quality jobs. On the other hand, the state bankrolls a minimum of $15 million, and agrees to ignore necessary environmental regulation in exchange for no real guarantees from HEW.
My gut is that this is a bad deal on balance, but not catastrophically bad as the twin metals or line 3 “replacement”, and I understand from the article it is part of legislative horse trading to get a budget deal. I guess Meh is my feeling at this point.
This is not like sulfide mining: The production of OSB is a long tenured industry in Minnesota. Or at least it used to be before plants in Cook, Bemidji and Grand Rapids were closed.
All fine and dandy to ride the high horse of capitalistic purity as all these plants go elsewhere, with elsewhere often being Wisconsin.
And for Joe, not to worry on NAFTA anymore, Trump made it a fabulous, unbelievable, nobody thought it possible winner for the USA.
Sorry Edward, after 20 years of NAFTA it will take more than one administration to undo the damage to our country. Bringing back a logging operation like HEW would be a start.
“That dwarfs the pennies doled out for the HEW project. Not in favor of any money going into a Government/private venture.”
So, you were against it before you were for it?
Don’t like tax dollars being mingled with private businesses, never have. I wish there wasn’t any of it going on but that is not the case. As far as HEW project, it is an attempt to bring back logging up here on the Range, after NFATA destroyed the industry. Compared to MinnDot this is a drop in the bucket for tax dollars going to jobs program. Unfortunately for tax payers the horse is out of the barn and out of the county as far as mixing public/private money.
You realize he was kidding, right? NAFTA got a couple of minor tweaks, but its still there. Its funny to hear Trump talk about it because he has absolutely no idea what NAFTA even does or how trade works generally.
Given the closure of various OSB mills in MN, I’m wondering what is so fundamentally different about this that makes it viable. Gullibility and wishful thinking only go so far….
You know, this is why people end up voting third party or not at all.
I understand Democrats are in the middle of Republican sh#t show right now, but their response to this deal is just so disappointing. To begin with… they’re waving environmental review and risking an environmental catastrophe in exchange for what? A “study” of a possible land bridge over 94 in St. Paul? Seriously? Sure, a land bridge there, and another one in MPLS between 3rd and Lyndale would be a great idea, an idea I myself came up with independently a few years ago, but your going to scrap the environment just to STUDY the idea? You think THAT’S a fair trade? Bushwa! Those projects won’t see the light of day for at least a decade if that… you NEED that study THIS year. You’re willing to drop a potentially toxic manufacturing plant in the middle of ecologically sensitive region for what- now?
Even more disappointing is Hortman’s claim that they’re just comparing our attempts to attract business with those of surrounding States. MN isn’t some other State… it’s Minnesota. We have unique geographical and environmental characteristics not shared by any other State. This is not a difficult observation to make yet it’s one that Democrats are willing to ignore? SD has no BWCA, or Lake Superior water shed, but your comparing our environmental review in a such an area with theirs?
At a time when a lot of people think protecting the environment is of paramount importance, and more and more are joining their ranks every year… Democrats are willing to jeopardize that environment for what? And then they’ll complain about irresponsible voters when lose elections.
I predict that this will never happen. I mean, they state might blow some money on this, but I doubt anything every gets produced.
Waiving environmental review (Mn Environmental Protection Act – MEPA) is irksome and undermines the rule of law, but substantively isn’t overly important. Opponents now and then can use MERA to delay a project long enough that it fails, but otherwise it’s just procedural hoop-jumping that doesn’t affect a project’s outcome unless the project proponent is quite incompetent. If the project has identifiable flaws, the companion Mn Environmental Rights Act (MERA) has actual substantive force to change or stop a project. I see nothing suggesting that the legislature is contemplating an exemption from MERA.
The legislature ought to create an independent public counsel’s office within the AG, whose role would be to review public business location/expansion subsidies for enforceability (not policy), to correct enforceability flaws before the deals are signed, and to enforce the public interest in those deals when the terms aren’t met.
Second sentence should be MEPA not MERA.