Minnesota's state environmental agencies rack up court losses on project permits

A large dairy cow operation, a leaking taconite tailings basin and the state's first copper-nickel mine.

Different projects, different owners. And four times since last summer the Minnesota Court of Appeals has rejected or suspended the environmental permits state regulators gave them.

Such decisions are rare, said Alexandra Klass, professor of environmental law at the University of Minnesota, because the courts rely on a standard in statute to defer to agencies and their decisions.

"Courts are not supposed to second-guess an agency's substantive decisions," Klass said.

Environmental groups see the rulings as evidence of a breakdown in the permitting process meant to protect the state's natural resources, wildlife and human health. That tension was on display last week as the Minnesota Pollution Control Agency (MPCA) and opponents of PolyMet's proposed copper-nickel mine argued in court over how the agency handled a water-pollution permit for that project.

"The enormity of the environmental challenges we're facing now — whether it be our water quality issues, the collapse and loss of wildlife and species and, of course, the overarching threat of the climate crisis that we have before us — I think our governmental agencies and leaders are lagging behind," said Steve Morse, head of the Minnesota Environmental Partnership, a coalition of about 30 non­profits. "They're just not being responsive and aggressive and forward-thinking as much as we need to be in today's reality."

The MPCA and the Department of Natural Resources disagreed. An MPCA spokesman noted the PolyMet permit questions stem from decision made under a previous administration. The DNR said it doesn't see a trend in the Appeals Court decisions and noted that the court, even with the extra review, "did not draw conclusions about the validity of the scientific analysis underlying the DNR's decisions."

Both agencies said they welcome the judicial review of their work.

There's another factor in the recent Appeals Court challenges, said the U's Klass. Environmental issues have a higher public profile now, she said, thanks to climate change and the election of President Donald Trump, whose administration has been relentlessly rolling back environmental protections. The increased public awareness influences the courts and has triggered greater support for environmental groups, she said.

"There's just more funding for really good lawyers to be focusing in on these cases," Klass said. "They're able to be more effective advocates."

String of reviews

The streak started last summer. In a major blow to PolyMet's proposed $1 billion copper-nickel mine for northeast Minnesota, the Court of Appeals suspended the critical water pollution permit the MPCA issued for it and directed Ramsey County District Court to investigate "alleged procedural irregularities" at the state agency.

The trial-like hearing in St. Paul last week examined whether MPCA officials cut an improper deal with the U.S. Environmental Protection Agency (EPA) to suppress its serious criticisms of PolyMet's permit and then destroyed or withheld documents to sweep their tracks.

Witness testimony concluded Wednesday. MPCA officials testified they did nothing wrong, as lawyers worked to dismantle the idea they were hiding efforts to keep deficiencies in the permit out of the public eye.

Lawyers for both sides are expected to file final documents, including closing briefs, in about a month. Chief Judge John Guthmann has 90 days after that to issue his ruling.

Whatever the outcome, once it comes, the state Court of Appeals will resume reviewing the merits of the water permit itself and whether a contested case hearing should have been held.

In October, the Appeals Court revoked another permit, this one for a mega-dairy in southeastern Minnesota, saying the MPCA failed to consider greenhouse gas emissions from the feedlot. That forced a major policy change at the state agency, which announced that greenhouse gas emissions should be disclosed for all future feedlot projects that require an environmental review.

The agency recently announced that the expanded Daley Farms dairy would emit the equivalent of approximately 32,500 tons of carbon dioxide per year, more than the annual emissions of 6,000 cars.

Then in December, the Appeals Court rejected the MPCA's water permit for Minntac's leaking 1960s-era taconite tailings basin in Mountain Iron. The MPCA had issued the updated permit last year after allowing the facility to operate for more than two decades with an expired, temporary permit. The court ruled the permit may need to be strengthened to prevent pollutants — primarily the mining ­byproduct sulfate — from leaking into nearby waters from Minntac's 13-square-mile, unlined basin.

Finally, last month the Appeals Court reversed three other permits issued to PolyMet — its permit to mine and two tailings-dam safety permits — and shipped them back to the DNR for a contested case hearing. PolyMet is based in Toronto and majority-owned by the Swiss conglomerate Glencore.

Kathryn Hoffman, CEO of the Minnesota Center for Environmental Advocacy, said she thinks the courts are stepping in because the mind-set at both agencies has been shifting for years from viewing the public as the customer to seeing those seeking permits as the customer.

"As a result, increasingly we have seen agencies trying to get to 'yes' on these permits," Hoffman said. "Courts are recognizing that. And they recognize that the laws actually require in many cases the agencies to look at the public first, to look at clean air, to look at clean water and to think of all of us as their customers, and not the corporations."

Challengers didn't win every case last year, however.

Last April, for example, the Court of Appeals sided with the DNR when a group of residents on White Bear Lake sued. The residents had accused the agency of allowing permitted municipalities to continue pumping groundwater for such uses as watering lawns even as the lake was shrinking to the point that docks didn't reach the water. The Minnesota Supreme Court has heard oral arguments in the case; a decision is pending.

Katie Crosby Lehmann, a lawyer at Ciresi Conlin representing the White Bear Lake Restoration Association in its fight with the DNR, called that Appeals Court decision an "outlier." It was a 2-3 split, with a strong dissent, she said. Crosby Lehmann applauded the court's more recent decisions, saying she is pleased they're holding regulators accountable.

"They [the regulatory agencies] are framing it as 'How do we grant the permit?' rather than 'Should we grant the permit?' " she said. "That's not the right frame of reference."

Jennifer Bjorhus • 612-673-4683