Court of Appeals rescinds key PolyMet permit, says project must get new groundwater analysis

PolyMet Mining has been dealt another setback in its drive to build an open-pit copper and nickel mine near Hoyt Lakes.

The Minnesota Court of Appeals on Monday reversed a crucial water-pollution permit, saying the company needs to get a new analysis from the Minnesota Pollution Control Agency regarding the potential for any groundwater contamination to seep into rivers, lakes and streams.

The decision means another delay for PolyMet, which has had other key permits reversed or suspended by courts after lawsuits over whether the project will pollute the Lake Superior watershed. Copper and nickel mining carries risk of leaching heavy metals and other contaminants into water, though PolyMet contends it can meet state pollution standards with its modern mining and water treatment technology.

The ruling wasn’t a total victory for mine opponents. Three judges on the appeals court ruled in favor of PolyMet and the MPCA on several key issues, leading the agency and project leaders to claim partial victory as well.

Here’s what we know about the ruling, and what it means for the project:

What the courts reversed

The permit at issue is known as a National Pollutant Discharge Elimination System permit, and it governs the release of pollution into rivers, lakes, streams and wetlands. The MPCA handles the permit in Minnesota, though the federal government has oversight of it through the Clean Water Act.

Environmental groups — Water Legacy, the Minnesota Center for Environmental Advocacy (MCEA), Friends of the Boundary Waters Wilderness and the Center for Biological Diversity — as well as the Fond du Lac Band of Lake Superior Chippewa had challenged the permit on several grounds.

The court agreed with them on one main point. In 2020, the U.S. Supreme Court ruled in a case based in Hawaii that the Clean Water Act applies to groundwater discharges that subsequently pollute “navigable waters,” which includes streams, rivers, lakes and oceans.

Before that 2020 decision, the MPCA believed the Clean Water Act did not apply to such pollution, and didn’t take it into account when issuing the 2018 permit. The agency must now do so, the appeals court said.

The court ruled MPCA must analyze whether there would be any discharges from the PolyMet mine to groundwater that would need to be covered by a NPDES permit. The MPCA had wanted the court to complete the analysis, but the judges said Minnesota regulators were better equipped to address the technical and scientific questions needed.

PolyMet argued that such an analysis would be unnecessary because they believe there will be no groundwater discharge because the permit prohibits it, and because their facilities are designed in a way that is meant to prevent release of pollution.

But the court, citing the MPCA, wrote: “Some underground seepage — even if minimal — is expected.”

“In addition, the permit appears to contemplate discharges to groundwater through seepage because it repeatedly prohibits only “direct discharge” to “surface waters” from plant and mine features,” the court ruling says.

What the courts didn’t reverse

The appeals court sided with PolyMet and the MPCA on a large swath of other issues.

For instance, mine opponents argued the MPCA needed to use a specific type of limits on pollution to regulate discharges from the PolyMet project. These are called Water Quality Based Effluent Limits, which in the industry are known as “Q bells.”

WQBELs measure “end-of-pipe” pollution, meaning contamination at the point of discharge in a waterway. The MPCA instead used a different type of limit, which requires PolyMet to treat wastewater for sulfate, copper, arsenic, cobalt, lead, nickel and mercury to a certain standard before it is discharged. The Environmental Protection Agency balked at this type of pollution limit, arguing it may not be federally enforceable.

But the EPA eventually did not reject the permit, and the appeals court ruled the MPCA did not have to use WQBELs.

The court found the permit was in compliance with the Fond du Lac Band’s water-quality standards, and it denied a “contested case hearing” before an administrative law judge on the use of the clay sealant bentonite in its mine waste pond. 

The court also affirmed an earlier district court ruling that the MPCA did not break permitting rules or systematically try to hide evidence of their actions when issuing the NPDES permit, a decision that followed allegations that the agency attempted to suppress EPA concerns.

The court did say, however, that they were not endorsing the actions of state regulators at the MPCA, who pressured the feds to not provide public written criticisms of the PolyMet permit, in part to avoid bad press.

“In other words, the PCA’s efforts to discourage the EPA from providing written comments during the public-comment period had the purpose and effect of avoiding or minimizing 17 public criticism of the proposed permit and, in addition, avoiding the need for the PCA to publicly respond in writing to the EPA’s comments,” the appeals court wrote.

What does this mean for PolyMet?

Opponents of the project painted the decision Monday as another in a string of defeats for PolyMet, sending a permit back to regulators as the courts have done for other permits.

In April, for instance, the project’s Permit to Mine was reversed and sent back to the Department of Natural Resources by the state Supreme Court, in part to hold a contested case hearing on the use of bentonite in the tailings pond.

“Once again the courts have rejected a PolyMet permit,” said Kathryn Hoffman, CEO of the MCEA, in a written statement. “The agency obviously has more work to do to protect Minnesota’s waters and communities from the serious risks of sulfide mining. It’s time for Governor Walz to move on from PolyMet’s failed proposal and create a better and safer job creation plan for Northeastern Minnesota.”

But PolyMet described the decision as largely a victory, though. The mining company, which is owned by Switzerland’s Glencore, said the court “affirmed nearly all aspects of the water discharge permit.”

Jon Cherry, chairman, president and CEO of PolyMet, said in a statement that he is confident the groundwater analysis required by the court won’t be a major roadblock for the project. PolyMet also didn’t suggest it will appeal the decision to the state Supreme Court. “This will mean a little more process, but it gives us a clear roadmap to the reactivation of this permit,” Cherry said.

However, Chris Knopf, executive director of the Friends of the Boundary Waters Wilderness, said they had some “pointed disagreement” with the appeals court decision that his organization is considering appealing, including issues related to the alleged suppression of information by MPCA.

There is no immediate timeline for when the MPCA might finish evaluating the groundwater issue, or when the other lawsuits and regulatory decisions might be resolved. PolyMet said in January it hopes all legal challenges are resolved in 2022.

Darin Broton, a spokesman for the MPCA, said in a written statement that “for a second time, a Minnesota court has firmly decided that the MPCA’s permitting processes for the PolyMet project were rigorous and prudent.” 

“While the agency reviews the court’s directive to complete additional analysis that wasn’t required prior to the permit’s issuance, the MPCA appreciates the court’s strong decision that the extensive 479-page water permit for PolyMet is protective of Minnesota’s waters,” Broton said.