Minnesota Supreme Court hears argument that PolyMet misrepresented its intent for mine

The Minnesota Supreme Court must decide whether the company trying to build the state's first copper mine was engaged in "sham permitting" as it applied for its air pollution permit from regulators.

It's the second dispute over PolyMet Mining Corp.'s embattled $1 billion mine project that the state's highest court is considering, and both cases involve canceled permits state regulators issued to the Toronto-based mining company. The landmark copper-nickel mine would be near Hoyt Lakes, and it is a new kind of mining for Minnesota carrying greater environmental risks.

Last month, the state Supreme Court heard arguments over whether regulators erred in issuing permits for the mine without holding a special administrative hearing over significant environmental concerns. That case involves PolyMet's permit to mine and two dam safety permits, all issued by the state Department of Natural Resources. A decision is expected within a few months.

On Thursday, the court heard arguments involving the air pollution permit the Minnesota Pollution Control Agency (MPCA) issued in 2018.

The state Court of Appeals rejected that permit earlier this year, ruling that the MPCA should have more thoroughly investigated claims by environmental groups and the Fond du Lac Band of Lake Superior Chippewa that PolyMet was evading greater scrutiny as a major source of air emissions by seeking a permit for a smaller operation than it actually intends to operate. That's known as engaging in sham permitting, a term used by the U.S. Environmental Protection Agency.

The state Court of Appeals said the concerns were justified and sent the permit back to the MPCA for further work; PolyMet and the agency petitioned the state Supreme Court for review.

Emily Schilling, a lawyer for the MPCA, told the justices Thursday there's little evidence that PolyMet was intending to expand the copper mine beyond the permitted amount of 32,000 tons of ore per day, at the time of permitting. She characterized the expansion scenarios the company included in investor documents as "entirely speculative."

In one of those documents, a technical report submitted to Canadian securities authorities in 2018, the company discusses expanding the mine to 118,000 tons per day, triple the permitted size.

Jay Johnson, a lawyer for PolyMet, said the tradition, based on statute and previous legal cases, is for the courts to presume the correctness of a state agency's decision. The lower court didn't properly respect the MPCA's authority, he said, and "circumvented the presumption of correctness."

Evan Mulholland, a lawyer for the Minnesota Center for Environmental Advocacy, countered that the courts have the authority to remand when an agency's findings aren't adequate. The MPCA did not address legitimate concerns about sham permitting as required by the Clean Air Act, he said.

"At the same time that PCA was preparing the draft permit based on a 32,000 tons per day limit, PolyMet was already investigating the benefits of doubling or tripling this rate," he said. "You've got PolyMet saying one thing to PCA, and another thing to everyone else."

During questions, Justice Margaret Chutich said: "At some point the agency's process has to end."

A Supreme Court decision to uphold the lower court's decision and remand the permit back to the MPCA for further review would mean further delays for a stalled mine project deep in legal challenges on several fronts.

There is no deadline for state Supreme Court decisions, but a decision is expected within a few months.

Jennifer Bjorhus • 612-673-4683