“An agency not only must identify the evidence on which it is relying, but also it must explain . . . how that evidence connects rationally with the agency’s choice of action,””

Minnesota Court of Appeals ruling issued March 23

REGIONAL— State regulators of PolyMet Mining’s proposed NorthMet copper-nickel mine near Hoyt Lakes continued their losing streak in the courts on Monday. This time, it was the air emissions permit that the Minnesota Pollution Control Agency issued to PolyMet back in December of 2018 that the state Court of Appeals struck down, while remanding the matter back to the MPCA for further proceedings. It was the fourth PolyMet permit struck down by the state’s appellate court in recent months.

A coalition of environmental organizations and the Fond du Lac Band challenged the permit, known as a “synthetic minor permit,” arguing that PolyMet does not intend to abide by the pollution limits it sets forth. Instead, the groups contend that the company plans a much larger operation than it originally claimed, and said the permit issued by the MPCA was “a sham.”

To support their claim, the appellants point to what’s known as a “43-101 technical report” created by an independent consultant on behalf of PolyMet in March of 2018. That report included updated financial projections which showed that PolyMet’s proposed NorthMet mine was only marginally profitable at the 32,000 tons-per-day (tpd) scale the company had proposed from early on. In that same report, PolyMet had asked the consultant to consider substantially larger mining operations, including a 59,000 tpd scenario and a 118,000 tpd alternative, which had higher returns on investment.

Environmental critics of the mine had argued since the release of that report that the company intends to build a much larger operation that would have significantly greater environmental impacts than were considered in the environmental review and subsequent permitting process.

The Court of Appeals largely agreed and indicated that the MPCA did not adequately respond to the evidence found in the technical report, which suggested the company would likely expand the mine once it became operational.

The court agreed with the appellants that the MPCA had failed to adequately consider the “substantial new information” contained in the technical report. Instead, the agency had simply dismissed the consideration that PolyMet intended to produce ore at a significantly elevated pace, which would produce additional emissions and potentially exceed the limits set in their air permit. The court also found that the MPCA’s findings of fact, which accompanied the permit, were so limited that the court could not fulfill its obligation to conduct judicial review.

“Judicial review of decisionmaking is only possible if the agency states with clarity and completeness the facts and conclusions essential to its decision so that the reviewing court can determine whether the facts support the agency’s action,” wrote the three-judge panel that decided the case. “An agency not only must identify the evidence on which it is relying, but also it must explain . . . how that evidence connects rationally with the agency’s choice of action,” the court continued.

The court found that environmental groups which were contesting the permit had raised concerns about the technical report and the possibility that PolyMet was engaged in a sham almost immediately after it was released. “Notwithstanding these documented concerns, the MPCA’s decision to grant the permit…does not address in any fashion whether PolyMet is engaged in sham permitting.”

While PolyMet would need to apply for a new and expanded air permit if it chose to expand its operations above the 32,000 tpd level, the court made note that this is typically easier once a facility is operational. “Of course, once a project is operating, expansion proposals may be viewed more favorably by regulators. If that is the true course being charted by PolyMet, then there is merit to [appellants’] argument that the synthetic-minor permit is a sham.”

Appellants reacted to their court victory in a statement issued this week.

“The Court of Appeals decision today makes it even more clear— the process that granted permits for the PolyMet mine proposal is broken,” said Kathryn Hoffman, Chief Executive Officer of the Minnesota Center for Environmental Advocacy, which was one of the lead plaintiffs in the case. “It’s clear that the permits that were issued to PolyMet did not protect human health and the environment, and it’s time for our agencies to acknowledge and address that.” 

PolyMet spokesperson Bruce Richardson, meanwhile, expressed disappointment in the ruling and said the company is considering its legal options. “We believe the Minnesota Pollution Control Agency in its permit appropriately accounted for the potential effects of the NorthMet project,” Richarson said. “We stand ready to provide the additional information the agency might need to update its decision on the air permit. We demonstrated through the extensive environmental review and permitting process that we can meet or exceed Minnesota’s strict standards for nonferrous mines. This mine will provide much needed jobs to a region of the state known for its expertise in safe mining. We are continuing to move forward.”

In addition to the four permits already rejected by the Minnesota Court of Appeals, several other permits issued under the federal Clean Water Act remain under appeal. The water pollution permit, also known as a National Pollution Discharge Elimination System (NPDES) permit, has been suspended, and hearings on this permit were held in Ramsey County District Court in February. Also, the Section 404 wetlands destruction permit issued by the Army Corps of Engineers has been appealed and is currently in federal district court.

Meanwhile, the EPA’s Office of Inspector General is investigating the EPA’s handling of PolyMet’s NPDES after agency whistleblowers revealed that professional staff at the agency were pressured not to submit written comments that were critical of the permit.

“The losses keep piling up for PolyMet and the state agencies that are supposed to protect our citizens and our environment,” said Marc Fink, a Duluth-based senior attorney with the Center for Biological Diversity, and a co-appellant in the case.