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.
In announcing the deal, a news release from Gov. Tim Walz said the cash and the project is still contingent on “certain legislative initiatives,” such as a $20 million loan and potentially tens of millions in other financial incentives. One of those legislative initiatives is also a break on environmental permitting intended to jumpstart the project.
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.
Walz called it “one of the first big things we’ve seen in decades” for the timber industry in the area, and Senate Majority Leader Paul Gazelka, R-East Gull Lake, said the mill will be “really important for the Range.”
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.
Phillips said the company, which didn’t respond to a request for comment, wasn’t trying to sidestep environmental review altogether. The plant itself doesn’t pose major environmental questions, Phillips said. Bakk said the state has granted a similar exemption under then-Gov. Tim Pawlenty for an iron nugget plant to circumvent full environmental review.
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.”
House Speaker Melissa Hortman, DFL-Brooklyn Park, said the project was included in the budget deal in exchange for money to research building a land bridge over Interstate 94 in St. Paul’s Rondo neighborhood. Gazelka said the budget deal has maybe “20 things that are linked” together in intertwining agreements.
“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.”
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.