Eric Olson, right, gathered his tools as contractor Robert Radotich used a backhoe to dig areas so the soil stratification can be observed, which will help them engineer and design the infiltration pods for the PolyMet copper-nickel mine in Hoyt Lakes, Minn. The Minnesota Court of Appeals is deciding whether to grant requests by opponents of the proposed PolyMet copper-nickel mine to cancel two of its most important permits and order further proceedings. (Star Tribune/The Minnesota Star Tribune)

The Fond du Lac Band of Lake Superior Chippewa and a herd of environmental groups squared off against PolyMet Mining and state regulators in the Minnesota Court of Appeals on Wednesday in their bid to reverse the company's central permit to mine.

The appeals argued Wednesday are at the core of the groups' effort to stop a copper-nickel mine they see as posing profound environmental risks for northern Minnesota. PolyMet Mining insists it can safely operate a mine that will also generate much-needed jobs.

PolyMet's $1 billion project is the first nonferrous mine ever permitted in Minnesota. Though the project was fully permitted at the start of the year, the state Court of Appeals has since suspended four of PolyMet's permits amid controversies over regulation of the project.

(The Minnesota Star Tribune)

Three of the suspended permits — the permit to mine with its financial assurance package, and two dam safety permits — were issued by the state Department of Natural Resources (DNR). Wednesday's oral arguments at the Minnesota Court of Appeals involved those permits and whether the DNR erred in issuing them.

The state Court of Appeals has 90 days to file its decision.

The temporary holds on the DNR permits extended to Wednesday's hearing, but the panel of judges gave no indication whether those holds will be extended or lifted.

A fourth PolyMet permit — regulating water pollution from the mine — remains on hold. The water permit, issued by the Minnesota Pollution Control Agency (MPCA), will be the subject of a future Ramsey County District Court hearing into alleged irregularities in how the MPCA handled it.

At the appellate court Wednesday, the DNR was clearly in the hot seat. Chief Judge Edward Cleary drilled into whether the name of Swiss mining conglomerate Glencore, which now has a 72% ownership stake in Toronto-based PolyMet Mining, will be added to the permits DNR issued, and he questioned the adequacy of PolyMet's financial assurances to foot the bills for expensive environmental cleanups.

Cleary described that insurance package as "a backloading operation" that required too little cash from PolyMet up front, although a DNR lawyer characterized the insurance package as "extremely robust."

When asked if Glencore's name would be added to the permits, Jonathan Katchen, a lawyer for the DNR from Denver-based Holland & Hart, answered that it was an "ongoing process."

"We've asked for additional information," Katchen said.

The three groups appealing the DNR's decisions argued that the agency erred in issuing the permits and should have allowed a hearing before an administrative law judge to vet the objections.

Vanessa Ray-Hodge, a lawyer for the Fond du Lac tribe, told the judges that the DNR violated state administrative rules when it issued the permits, which she said lacked complete engineering designs for operating, maintaining and closing the huge tailings dam that will hold the waste slurry.

Though its reservation is 70 miles downstream on the St. Louis River, the Fond du Lac tribe has serious concerns about a breach of the dam. The mine and its tailings basin are both located within ceded territory where the tribe holds rights for fishing, hunting and gathering.

Mine tailings dams are notoriously leaky. Those built with the so-called upstream design — which steps up and inward, something like the base layers of a pyramid — have a history of failures. Shortly after the PolyMet project was permitted, the Feijão tailings dam in Brumadinho, Brazil, collapsed, killing hundreds of people and prompting Brazil to ban that type of dam.

Ann Cohen, a lawyer with the Minnesota Center for Environmental Advocacy, said that the DNR illegally approved the plan for closing the mine and tailings basin when PolyMet is finished mining. State rules say tailings basins must be drained within three years and reintegrated to the natural watershed. But the permits set no deadlines, she said, and allow the company to maintain a pond of waste contained by a 250-foot tall tailings dam built out of mine waste.

"There's nothing in the permit that says we won't have a tailings pond for 900 years," Cohen told the judges.

Jay Johnson, a lawyer for PolyMet, countered that the permit to mine does indicate a closure timeline. On page 2, he said, it says the mining and reclamation activities "will be completed approximately in the year 2072."

Paula Maccabee, a lawyer for WaterLegacy, argued that both state statute and state rules require the DNR to hold a contested case hearing when there are serious objections to a project.

Katchen, the DNR lawyer, said he thinks the DNR has the right to deny a contested case hearing if it would not help the DNR commissioner resolve disputed facts.

The DNR worked hard on the 14-year permitting process for the mine, Katchen told the judges, and had "world leading experts" review the tailings dam.

"An extreme amount of time and resources were devoted to this project," Katchen said.

When asked pointedly by one of the judges if the DNR commissioner approved more than three years for draining and reintegrating the tailings dam back into the watershed, Katchen said "yes." He could not offer a specific time frame for that process.

"It's as long as it takes," Katchen said.

Jennifer Bjorhus • 612-673-4683