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Court maintains permit stays

Judges express concern about Glencore, financial assurance in oral arguments

Marshall Helmberger
Posted 10/30/19

REGIONAL— A court-ordered stay on two key permits for PolyMet Mining’s proposed NorthMet copper-nickel mine near Hoyt Lakes, will continue, at least until sometime in early 2020. Chief Judge …

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Court maintains permit stays

Judges express concern about Glencore, financial assurance in oral arguments

Posted

REGIONAL— A court-ordered stay on two key permits for PolyMet Mining’s proposed NorthMet copper-nickel mine near Hoyt Lakes, will continue, at least until sometime in early 2020. Chief Judge Edward J. Cleary issued that order on Oct. 24, which means that DNR-issued permits, including PolyMet’s dam safety permit and permit to mine, will remain suspended until the court rules on ongoing litigation over those permits. That decision is expected sometime in late January.

A coalition of environmental groups and the Fond du Lac Band challenged the DNR’s decision to issue those permits along with its decision not to conduct a contested case hearing that would have allowed mine opponents to challenge, before an administrative law judge, some of the conclusions the DNR reached regarding the permits

“Based on the record and the arguments of the parties, we conclude that is appropriate to continue the stay through this court’s disposition of the appeals,” wrote Judge Cleary in his order.

Lawyers for the environmental groups, the Fond du Lac Band, the DNR, and PolyMet offered oral arguments before a three-judge panel of the Court of Appeals, which included Cleary, on Oct. 23. The court had issued a stay back in September pending the Oct. 23 hearing. In a nine-page order issued on Sept. 18, Cleary had written: “The DNR shall be prepared to advise the court on the status of post-permit developments, including its evaluation of the Brumadinho dam failure and its consideration of whether Glencore will be added as a co-permittee.”

The continuation of the stay suggests that the judges may have been less than satisfied with the DNR’s answers on those questions, and the judges’ skepticism came through at times during the questioning.

Chief Judge Edward Cleary repeatedly questioned attorneys for both the DNR and PolyMet about the role of Glencore in the project, the appropriateness of the DNR’s financial assurance plan, and whether the agency developed sufficient detail in the permit to mine to ensure that the operation meets water quality standards.

“Has Glencore agreed to be a co-permittee?” asked Cleary of DNR attorney Jon Katchen.

Katchen’s answer was non-committal, telling the judges that the DNR has “an ongoing process” to determine what role, if any, Glencore will play in the proposed mining operation.

Glencore currently owns about three-quarters of outstanding PolyMet stock, which gives it the ability to control PolyMet’s board of directors.

Cleary also questioned the financial assurance scheme that both the DNR and PolyMet developed, particularly during arguments from PolyMet attorney Jay Johnson, suggesting that the plan was too dependent on surety bonds and letters of credit, rather than cash, in the early years of operation. “It looks like a backloading situation that looks like copper mining addresses shareholders’ desires rather than the citizens’ of the state of Minnesota,” said Cleary. “The price of copper goes up and down. Environmental problems occur. It seems that the trust fund should be front-loaded rather than backloaded and that the DNR perhaps didn’t follow their own consultant’s recommendation.”

Katchin, who called the DNR’s review of the project “unprecedented” in scale and scope argued that the project had undergone extensive review and that it meets all legal requirements and offers enough protections to safeguard taxpayers and the environment.

But Ann Cohen, an attorney for the Minnesota Center for Environmental Advocacy, said the permit fails to specify how important elements of the project will be undertaken, and how mine closure will eventually be done. “Many of the plans and designs are not complete,” said Cohen. “The DNR’s position can be summed up as, ‘Trust us,’” said Cohen. “The Legislature has made one thing perfectly clear. In four separate statutory provisions, the DNR is not allowed to permit a mine except on the basis of an existing technique… the concept is clear: do not permit on the basis of hope.”

Water Legacy attorney Paula Maccabee argued that many of the concerns raised by the court could best be addressed through a contested case process, during which an administrative law judge would assess the mountains of information and expert testimony assembled by all the parties and issue findings of fact.

The Court of Appeals, back in August, had also placed a stay on PolyMet’s water discharge permit over allegations that officials with the Minnesota Pollution Control Agency pressured top administrators in the Region 5 office of the Environmental Protection Agency to withhold written comments raising concerns about the permit’s compliance with the Clean Water Act. Litigation over those allegations and the discharge permit is continuing.

Impact on the project

PolyMet’s lawyer told the judges that the company is continuing to seek financing for its project and that Glencore, at least at this time, is not considering financing mine development. It appears, however, that investor interest in the project continues to be lackluster. PolyMet’s stock price has plumbed new lows in recent trading, with a share price hovering around 30 cents.

PolyMet spokesperson Bruce Richardson said the continued uncertainty over the fate of several of its permits is not helping. “As we told the court, the stay makes it more of a challenge to secure financing,” said Richardson. “And, of course, the longer it takes to secure financing, the longer hundreds of Minnesota workers will have to wait to build and operate the mine.  Even so, we continue to work on the financing piece despite the stay. We recognize that the Court of Appeals will make a decision within 90 days and we remain confident that the MNDNR met every legal requirement for issuing the permits.”

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