State signs off on PolyMet environmental review

Minnesota officials approved a decadelong environmental review of the first copper-nickel mine proposed for the Iron Range, a major turning point in the state's most contentious environmental fight in a generation.

Next comes what is likely to be an equally heated battle over how — or if — taxpayers can be protected from the environmental risks to the St. Louis River watershed as regulators tackle a pivotal phase of the $650 million open-pit mining project.

"The real decisionmaking process begins now," Gov. Mark Dayton said Thursday. "I remain genuinely undecided."

Tom Landwehr, commissioner of the Minnesota Department of Natural Resources (DNR), announced Thursday that the 3,500-page environmental impact statement for the proposed mine near Hoyt Lakes adequately reflects the risks and the protections the mine will require. "We are confident this document has thoroughly examined the important environmental topics and has addressed them," he said.

But there is still a long way to go for PolyMet Mining Corp.'s NorthMet project, one that could ultimately result in lengthy court battles.

Two federal agencies must still complete their regulatory processes, as well. In late spring the U.S. Forest Service is expected to make its final decision on exchanging its land, where the mine would be located, with land that PolyMet will buy to replace it. The U.S. Army Corps of Engineers, which regulates wetlands mitigation, is expected to take longer.

And in February, a federal judge ordered the Environmental Protection Agency to fulfill a 30-year-old obligation to create rules for financial protections for mines that would pre-empt Minnesota's law. They are due out at the end of this year and must be finalized by 2017.

Still, the state's announcement is a significant milestone in a project that's been underway since 2006.

For Toronto-based PolyMet, the successful environmental review is proof to shareholders that the company has taken a major step toward a project they hope will be profitable.

"This is a historic event for Minnesota, the Iron Range, and for PolyMet, clearing the path for permit applications required for construction," stated Jon Cherry, president and CEO. The announcement "demonstrates and confirms that the NorthMet Project can be built and operated in accordance with state and federal regulations."

The project has carried strong political overtones, as DFLers from the struggling Iron Range have pushed hard for the venture on the old LTV steel mine site, which closed more than a decade ago. "I think they covered every base, and I think this is going to move forward soon," said Sen. David Tomassoni, DFL-Chisholm. "We've gotten over a major hurdle."

The release of the report ends the state's largest, most expensive and longest environmental review. Now, state officials will try to negotiate complex financial protections for a project that promises 350 or more new jobs, but one that carries enormous environmental risk.

When exposed to air and water, the ore can produce an acid that leaches heavy metals and other pollutants from rock that could drain into nearby streams, the St. Louis River and Lake Superior. There is also a chance that decades from now when the mine closes, some water could drain north to the nearly pristine watershed that holds the Boundary Waters Canoe Area Wilderness.

Such hard rock mines have left a tarnished environmental legacy across the country, polluting 10,000 miles of rivers and streams, according to the Environmental Protection Agency. Between 1998 and 2007, the federal government spent at least $2.6 billion to clean up pollution from hard-rock mines.

PolyMet and state officials have said the project will use modern mining techniques to prevent such disasters. But American Indian tribes and environmental groups have said they are not enough and that the calculations to predict future contamination are flawed.

"No operation of this type has operated and closed without polluting nearby lakes, rivers, and streams," said Steve Morse, executive director of the Minnesota Environmental Partnership. What he called inaccurate assumptions in the environmental review "are putting all Minnesotans at risk and threaten the environment and public health."

Now those conflicts will continue to play out as officials establish detailed environmental requirements for the 23 permits it needs to mine.

The state has already appointed a committee of experts to advise it in hiring an outside firm that will help devise a financial strategy for financial protections.

"We have to make sure that … we're not left holding the price tag," Dayton said.

PolyMet, meanwhile, is developing a new business plan for the mine that will include a proposal for financial assurance.

By law, the financial protections must be bankruptcy-proof, and the money must be sufficient to cover the cost of closing the mine. The environmental review states the mine will operate for 20 years and then need a reverse osmosis treatment plant for water indefinitely — perhaps for hundreds of years.

PolyMet estimates that closing the mine will cost $200 million, and long-term water treatment and other maintenance would cost up to $6 million per year. Environmental groups have said that based on the estimated costs, the company needs to provide $300 to $400 million now to protect future generations of taxpayers.

josephine.marcotty@startribune.com