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State legal costs mounting for PolyMet project

DNR, MPCA seek extra $7 million for next biennium

Marshall Helmberger
Posted 4/4/17

REGIONAL— Two state agencies are preparing for a battle royal in the Minnesota courts assuming they agree to issue permits for PolyMet Mining’s proposed copper-nickel mine sometime next year— …

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State legal costs mounting for PolyMet project

DNR, MPCA seek extra $7 million for next biennium


REGIONAL— Two state agencies are preparing for a battle royal in the Minnesota courts assuming they agree to issue permits for PolyMet Mining’s proposed copper-nickel mine sometime next year— and the cost to taxpayers is already mounting.

The Department of Natural Resources and the Pollution Control Agency are asking the Legislature for an extra $6.977 million this year to help pay attorneys fees and related legal costs they are incurring as agency staff work to process a myriad of permit applications, including the all-important Permit to Mine. This year’s request would be on top of the $4.4 million that the Legislature allocated towards PolyMet-related legal costs last year.

Those costs, which include outside legal counsel, staff and in-house counsel, and records management are rising even though any prospective lawsuits may be months, or even a year or more away. But agency officials believe they face the prospect of litigation regardless of their permitting decisions, either from environmentalists opposed to the mine or, potentially, from PolyMet, if agencies and the company are unable to come to terms over issues like mitigation or financial assurance.

DNR Assistant Commissioner Barb Naramore said agency staff hope to issue their preliminary decision on the Permit to Mine application by late summer, although she noted that the timeline is subject to change. “This would be followed by a public comment period,” she said. “After consideration of public comments we will then make a final decision on whether or not to issue a Permit to Mine.”

Naramore says there’s no guarantee that the latest funding request, even if approved by the Legislature, will be the last one that the agencies will need to submit for legal work related to PolyMet. DNR officials noted in their submission to lawmakers last month that attorneys fees, both for outside counsel and for lawyers from the Attorney General’s office, expert witness fees, court costs, and defense preparation, could mount quickly if lawsuits are eventually filed.

DNR officials note that the supplemental funding sought this year is not all for PolyMet. Of the $6.977 million, a total of $4.5 million is earmarked for the DNR’s legal costs over the next two years. Of that, as much as three-quarters may be needed for PolyMet-related work. The agency does face other litigation over unrelated projects, such as ongoing legal fights related to the Fargo-Moorhead Diversion Project, White Bear Lake, 3M and Essar Steel, and those estimated costs are included in the DNR request.

Naramore said an exact breakdown isn’t possible. “Given the uncertainty regarding the amount and timing of legal needs associated with these different matters, our FY18-19 request is intentionally designed to provide DNR with the flexibility to allocate resources in a timely and efficient way as the various matters unfold and we get better clarity on the timing and nature of the legal needs associated with each,” Naramore said.

PCA officials, however, indicate that all the extra funding they are requesting is related to PolyMet. That includes the $1.166 million supplied by the Legislature last year (which was part of the $4.4 million allocation) as well as $2.48 million, which is the PCA’s share of this year’s funding request.

Most of those dollars are earmarked for an outside legal team that the DNR hired in late 2015. The lawyers, at the time, worked for the Washington D.C.-based law firm Crowell & Moring, a firm well known for its legal defense of the mining industry. As of February, the DNR and the PCA had paid the company a total of $688,000, although about $250,000 of that was charged back to PolyMet.

The state won’t be paying any more to Crowell & Moring since the attorneys involved have since transferred to a Denver-based law firm, known as Holland & Hart. The DNR’s current three-year contract with the new firm encumbers $2.2 million, and includes the work of five separate lawyers, including John Martin, Jon Katchen, Sarah Bordelon, Dessa Reimer, and Rich Schwartz. The PCA’s contract with the legal team totals $1.145 million, according to agency spokesperson Coriahna Rude-Young.

While the costs are high, state officials say it is necessary spending to ensure that the state can defend itself if and when the time comes. “PolyMet’s NorthMet Project has had more public interest than most permitting matters, and the state has an interest in ensuring its decisions are legally defensible,” said Rude-Young. Naramore said DNR officials believe litigation is “quite likely,” and added: “Which decisions are challenged, by whom, and in what forum will be influenced by a variety of factors.”

State officials defend the high legal costs, arguing that it comes with the territory with a complex permitting process like a new mine. “Our outside legal counsel is providing legal advice to help DNR ensure we are following all required procedures and that all final agency decisions are supported in law and are defensible if they are challenged administratively or in court.”

If the cases do wind up in court, the outside attorneys will handle the state’s legal defense, according to Naramore.

The experience of the U.S. Forest Service suggests that state officials may be justified in believing that lawsuits are likely. The federal agency issued its final decision in January on a proposed land exchange that clears another potential legal hurdle for PolyMet’s project, and as of last week, more than half a dozen environmental groups had filed four separate lawsuits in federal court against that decision.

On the other hand, no environmental organization has challenged, thus far, the DNR’s decision to declare the PolyMet EIS as adequate. “I think they were expecting a challenge over that,” said Rep. Rob Ecklund, DFL-International Falls, who sits on the House committee that heard the DNR’s request. That’s actually helped to keep the legal costs a bit more contained that some in the agency had initially feared, according to Ecklund.

That’s slim comfort to Don Arnosti, a long-time environmental lobbyist at the Capitol, who was sitting in on a recent committee hearing when DNR Assistant Commissioner Bob Meier outlined the agency’s funding request to lawmakers. Arnosti was dismayed, and sees the dollars spent on outside lawyers as a poor investment. “Why isn’t the Attorney General’s office making this request?” he asked. “Why not hire more good attorneys in that office that can truly serve the people of the state?”

Arnosti suggests that the millions spent on high-priced outside legal counsel over the past two years could have been used to hire dozens of people on the Iron Range to undertake clean-up of legacy pollution from the mining industry. “These could have been good-paying jobs with benefits for people in places like Babbitt, who could have worked to clean up Dunka,” he said, referring to the former iron ore mine that exposed sulfide-based rock and has been leaching metals and other pollutants for decades.


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Steve Jacobson

Seven million is small potatoes! Let the fees run as high as they need to run. Why? Because the amount of taxes that they (Polymet) will pay and the workers will pay will far exceed those costs once the mine is up and running. If the enviromentalists are upset with the high legal costs with this project there is one sure way of keeping the price down and we all know what that is!

Friday, April 7, 2017