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Appeals court overturns key PolyMet permits

Orders contested case hearing

Marshall Helmberger
Posted 1/12/20


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Appeals court overturns key PolyMet permits

Orders contested case hearing


REGIONAL— In a major setback for PolyMet Mining and its planned NorthMet copper-nickel project near Hoyt Lakes, the Minnesota Court of Appeals, on Monday, reversed three key permits for the proposed mine and ordered a contested case hearing before an administrative law judge.
The decision effectively rescinds PolyMet’s permit to mine and two dam safety permits, which the Department of Natural Resources issued to the company in late 2018, and sets in motion a process that will provide critics of the proposal an opportunity to challenge underlying information that the DNR relied upon in issuing the permits in question. The administrative review process and possible further appeals stemming from it could potentially delay development of the project for at least one to two years, and it raises considerable uncertainty about the future of the proposed mine.
The decision also raises serious questions about the DNR’s decision-making process and undermines the arguments of mine supporters that state agencies are adequately vetting mine proposals. Documents cited by the court, for example, highlight how the agency’s own consultants predicted that the tailings basin dam, as approved by the DNR, would eventually fail and cause downstream impacts.
The decision is a major victory for a long list of environmental organizations, including Water Legacy and the Minnesota Center for Environmental Advocacy, and the Fond du Lac Band, which have argued for years that the DNR’s decision-making on the PolyMet project has been flawed.
The court did affirm a decision by the DNR to transfer an existing tailings basin permit, originally issued to LTV, to PolyMet. That decision had been challenged by the Fond du Lac Band. The decision does not impact PolyMet’s water discharge (NPDES) permit, which was issued in late 2018 by the Minnesota Pollution Control Agency. That permit is the subject of separate legal proceedings and both state and federal investigations into the alleged suppression of concerns about the permit by experts from the federal Environmental Protection Agency.

The court’s reasoning
The decision, written by Chief Judge Edward J. Cleary, found that the DNR had erred when it determined in November of 2018 that it did not need to conduct a contested case hearing on a number of issues that critics of the project had raised. While mere criticism of a decision is typically insufficient to require an agency to hold a contested case hearing, the court in this instance found that environmental opponents of the permits had presented sufficient factual basis and expert opinion to conclude that a contested case hearing on several issues was mandatory under state law.
Indeed, the judges cited concerns and objections raised by the DNR’s own consultants about provisions within the dam safety permit, including the use of “upstream construction,” which is widely known to be among the least stable types of tailings dam, as well as the proposed wet closure of the tailings basin and the use of bentonite clay as a kind of seal on the tailings.
“Most notably, one DNR consultant stated: ‘The bentonite seal is a Hail Mary type of concept in my opinion. I believe it will exacerbate erosion and slope failure and will eventually fail,’” noted the judges. The consultants further stated: “The methods and assumptions used to place the bentonite to control the infiltration and tailings saturation are unsubstantiated, and wishful thinking. We do not believe it will function as intended, because of the unproven application methods.”
In addition, the court cited concerns expressed by the DNR’s own experts about the proposed “wet closure” of the tailings basin, which leaves standing water on top of the basin. DNR consultants had advised that the plan would require perpetual and costly maintenance and would pose a significant risk of water contamination. As the court noted: “The DNR’s senior dam engineer ‘favor[ed] dry closure,’ and expressed concern that ‘the proposed wet cap will significantly increase the potential for a dam failure, and will result in costly monitoring and maintenance over the life of the project,’ wrote the judges. The consultant had further stated: “I envision that PolyMet’s reclamation plan could work for a while, but I don’t see how it will function forever without falling apart unless it is continuously maintained; which is a major leap of faith… I believe it will eventually fail and release the sulfates.”
The court also found fault with the DNR’s handling of the financial assurance portion of PolyMet’s permit to mine, noting that environmental opponents had provided substantial expert opinion raising doubts about the viability of the assurance package and, in particular, allowing PolyMet to hold off on substantial cash funding of a trust fund for mine closure until nearly ten years into operation. A number of financial experts, including former state auditor and Gov. Arne Carlson, cited concerns that the timeline for financing the trust fund would likely impact project economics and increase the odds that PolyMet would cease operations after ten years, in hopes of avoiding the cost of funding the trust.
The court also found sufficient evidence to believe that the DNR should have considered Glencore as an additional permittee, and a contested case hearing is likely to explore that issue in depth, particularly given the fact that Glencore now owns nearly 72 percent of PolyMet’s stock. At the time the DNR issued the permit to mine, Glencore was still a minority owner, although it has been the project’s primary financial backer for years.
While courts are required to show deference to well-founded agency decisions, the judges in this case determined that the DNR’s decision-making was flawed. “The DNR’s decision to deny a contested-case hearing in relation to the NorthMet project was based on errors of law and unsupported by substantial evidence,” concluded the judges.
At the same time, the court determined that the DNR had erred when it failed to set a term of expiration on the permit to mine. “The plain language of the statute expressly requires a “term,” which is commonly understood as a fixed period of time,” noted the court.

Reaction mixed
Environmental opponents of the proposed mine were elated with this week’s ruling. “This is an enormous victory for the people of Minnesota and the rule of law,” said Water Legacy attorney Paula Maccabee. “By ordering a contested case hearing, the court has dragged the PolyMet permitting process into the light. PolyMet’s toxic threats to water, human health, downstream communities, and taxpayers will finally get the scrutiny they deserve.”
Chris Knopf, of Friends of the Boundary Waters, suggested the DNR had let Minnesotans down by approving permits that did not meet the requirements of state law. “The DNR did not protect the taxpayers from being stuck with the long-term costs of this mine and failed to come clean on the role of Glencore,” said Knopf. “The DNR did not do its job, and the court made the right call.”
Mine supporters, like the group Jobs for Minnesotans, viewed it differently. “We are deeply disappointed by today’s decision from the Minnesota Court of Appeals, which creates uncertainties for the PolyMet NorthMet project and consequently hundreds of jobs for northeast Minnesota,” wrote the group in a release. “While litigation is now an expected part of the regulatory review process and this ruling is a setback, we are confident that PolyMet will bring a safe and responsible copper-nickel mining industry to our state while also protecting the environment. We encourage PolyMet to pursue all avenues to move this project forward and will stand strong with our members and allies – leaders in businesses, labor organizations and communities across the state – who believe this project is right for Minnesota.”
Eighth District Congressman Pete Stauber also expressed his disappointment, which he said will “needlessly delay” a project that he said will bring decades of prosperity to northeast Minnesota. “I applaud the Minnesota DNR for issuing permits based on sound science. It is unfortunate that the Minnesota Court of Appeals overruled these experts at our state agencies. I remain hopeful this misguided decision will be reversed, so that Minnesota’s hardworking union members can begin construction on the PolyMet mine…”
In a statement issued in the wake of the ruling, the DNR noted that it was “carefully reviewing” the court’s decision, noting that it has implications not only for PolyMet but for the role of contested case hearings in the state’s permitting framework more broadly.  “Notably, the Court’s opinion does not draw conclusions about the validity of the scientific analyses underlying the DNR’s decisions.  We remain confident in the solid foundation of our technical work.”
The DNR has 30 days to appeal the decision.


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