Minnesota Court of Appeals puts PolyMet water permit on hold

In a move described as highly unusual, the Minnesota Court of Appeals has put a hold on a crucial state permit for PolyMet Mining's proposed copper-nickel mine on the Iron Range, pending an investigation of "irregularities" during the permitting process.

Staying the permit is in the public interest, Chief Judge Edward Cleary wrote, because "a substantial issue has been raised as to the regularity of the MPCA's proceedings in granting the permit."

The ruling, issued Tuesday, is the latest twist in a decadelong regulatory gantlet for PolyMet, whose plans for the mine have triggered passionate statewide debate over job creation vs. environmental risks.

PolyMet received its final state permits in late 2018, including a key water quality permit from the Minnesota Pollution Control Agency (MPCA).

The water quality permit has generated escalating legal questions after a group of environmental advocacy organziations charged that Minnesota regulators had mishandled it in negotiations with their counterparts at the U.S. Environmental Protection Agency. The EPA's Inspector General has since opened an investigation, as has Minnesota Legislative Auditor Jim Nobles.

Among the irregularities Cleary noted: the MPCA sought to keep the EPA's written comments on the permit out of the public record, and those written comments were instead read over the telephone.

A legal review of the permit's handling has been moved to Ramsey County District Court in St. Paul, where a hearing is set for Wednesday.

The hold was requested by several environmental groups and the Fond du Lac Band of Lake Superior Chippewa, whose land lies downstream from PolyMet's proposed open pit mine near Babbitt, and the processing operation near Hoyt Lakes.

Paula Maccabee, lawyer with the Minnesota nonprofit WaterLegacy, said the stay will allow for a better investigation into the handling of the MPCA permit and "the time to get to the whole truth."

Maccabee called the stay of an approved environmental permit "highly unusual." She said she's aware of a few instances where courts in Minnesota have stayed a decision by an agency or a court, but she's unaware of one staying an approved permit.

Kathryn Hoffman, chief executive of the Minnesota Center for Environmental Advocacy, another petitioner in the case, agreed it was unusual. She applauded the decision.

"The court has recognized the substantial evidence that [the MPCA] actively worked to conceal significant concerns by EPA scientists, who highlighted critical questions about PolyMet's potential to pollute Minnesota's waters," she said.

The MPCA issued a statement saying the water quality permit process was thorough.

"PolyMet's 479-page … permit is a result of an extensive collaborative process between the MPCA and EPA that protected Minnesota's most valuable resource — its water," spokesman Darin Broton said in the statement. "The MPCA gave the EPA extensive opportunities to provide feedback and comments on the permit, including 60 days for a formal review. MPCA is prepared to show the court that it addressed EPA's comments throughout the permitting process, and the EPA ultimately concluded that the permit was legally enforceable."

The hold on the permit may be just a temporary setback for Toronto-based PolyMet, which is now owned by Swiss-based mining conglomerate Glencore. The order says the permit will be stayed "at least through the pendency of the district court proceedings."

In a statement, PolyMet spokesman Bruce Richardson said: "We are disappointed in the court's decision, but we remain confident that the water quality permit meets all applicable standards and will ultimately be upheld."

The mine would be the first copper-nickel mine in Minnesota, which has attracted global interest for its large untapped deposits. PolyMet estimates the mine will create 360 full-time jobs and provide a long-sought boost to the Iron Range. Supporters say Minnesota can have hard rock mining while protecting its lakes and forests.

"It's good-paying jobs that are family-sustaining," said Ely Mayor Chuck Novak. "They buy food in our grocery stores, shop at our hardware stores."

Novak called the investigation into PolyMet's water permit "hogwash."

Nancy Norr, chairwoman of Jobs for Minnesotans, which supports copper mining in Minnesota, said she hopes the review moves quickly.

"This project, we are still confident, is going to demonstrate that the process was thorough, that the review was very diligent by our state agency," Norr said.

The water quality permit was one of more than 20 that PolyMet had to secure. The permit governs the pollutants, such as mercury, arsenic and lead, that PolyMet can discharge into surrounding waters. The discharge would drain into the St. Louis River and Lake Superior.

Questions about the water permit arose last year when WaterLegacy's Maccabee made several public-records requests to the EPA and the MPCA. The MPCA documents she received included many staff e-mails and handwritten notes indicating that EPA scientists were concerned that it lacked specific numerical pollution limits, that it might not be enforceable and that downstream communities such as the Fond du Lac band would not be protected from mercury.

Maccabee said she complained to an EPA lawyer about not getting all the documents she requested, and the lawyer advised her to ask for the EPA's formal written comments. When Maccabee did not get those, she sued in federal court and the comments were finally provided. The documents, many of which were also obtained by the Star Tribune, showed that lengthy, serious criticisms of PolyMet's permit were read over the telephone, after the close of the public comment period on the permit.

Other documents, including an e-mail from the MPCA asking the EPA to hold its comments until after the public comment period, and an EPA memo documenting the EPA's struggle with the permit, were later leaked.

Jennifer Bjorhus • 612-673-4683