IRON RANGE — In a major blow to PolyMet on Monday, the Minnesota Court of Appeals rejected two critical permits for the state’s first-ever copper-nickel mine, ordering a contested case hearing that will determine the project’s future.

The ruling simultaneously outraged supporters of the NorthMet mine and galvanized environmental groups that have opposed it through a series of legal challenges. Monday’s decision was easily the biggest victory for those opponents, led by the Minnesota Center for Environmental Advocacy, and presents what supporters described as the worst-case scenario for PolyMet.

A contested case hearing is similar to a trial, held before an administrative law judge, that would include testimony, evidence and cross examination. The judge would issue a recommendation to the Minnesota Department of Natural Resources, which holds the ultimate decision on the permits, and is expected to take 12-18 months.

PolyMet and the DNR have 30 days to appeal the ruling to the Minnesota Supreme Court. In a statement, the company said it was reviewing “all of our options.”

“We’re obviously disappointed in the court’s decision,” PolyMet said in a statement. “The administrative record for the NorthMet Project is built on a comprehensive process of scientific study, analysis and public review and comment established in state law, which we participated in for 15 years. We and the regulatory agencies have strictly followed that process.”

Three appellate judges unanimously ruled that the DNR erred when it declined to order a contested case hearing in 2018 to gather more information on the potential environmental impacts from the mine. The court also said the agency erred when it issued PolyMet's permit to mine without imposing a fixed term on that permit. So the court sent the dispute back to the DNR with orders to conduct the potentially lengthy hearing, during which an administrative law judge would take testimony and sort out conflicting evidence.

DNR officials said they were reviewing the decision.

“Notably, the court’s opinion does not draw conclusions about the validity of the scientific analyses underlying the DNR’s decisions,” the agency said in a statement. “We remain confident in the solid foundation of our technical work.”

A long-running battle

At issue are PolyMet’s permit to mine and its dam safety permits. The Minnesota Court of Appeals suspended those permits in September 2019 because it wanted more information on how the DNR was responding to two major developments since it approved the permits the previous year. Swiss-based commodities giant Glencore took a majority stake in the project. And there was a disastrous failure at an iron mine in Brazil of a tailings basin dam that had some similarities with PolyMet's planned dam.

Opponents of the project urged the appeals court at a hearing last October to cancel the two permits and order further proceedings to determine whether the mine's environmental and financial safeguards were adequate. They argued that the court would be unable to enforce the terms of the permits as written by the DNR.

But attorneys for both the state agency and PolyMet argued that the project had undergone thorough public reviews that met all the legal requirements, and the permits contain plenty of safeguards to protect the environment and taxpayers.

The appeals court said in its Monday decision that the fact the DNR might have considered evidence during its environmental review, and permitting proceedings did not relieve the agency of the need to conduct a contested case hearing. The court did not address most of the opponents' other arguments since it found that the agency committed legal errors that required reversing its decision to grant the permits.

The appeals court noted the opponents' concerns about the potential for acid mine drainage, the safety of the design for the mine's waste pond and the effectiveness of plans for controlling contamination seepage from it, and whether the permits contain sufficient financial safeguards to cover long-term cleanup costs.

The case is one of several challenges pending before the courts in the long-running battle over the project.

Next week, a Ramsey County judge is scheduled to open what’s expected to be a five- to 10-day, fact-finding hearing on alleged irregularities in how the Minnesota Pollution Control Agency handled the water permit for the project. MPCA officials allegedly tried improperly to suppress the federal Environmental Protection Agency’s concerns over the permit and keep them out of the public record.

The judge will later present his findings to the Court of Appeals, which will consider his report when it decides on a separate challenge by environmental and tribal attorneys to the water permit. The plaintiffs in that case include the Fond du Lac Band of Lake Superior Chippewa, whose reservation is 70 miles downstream from the planned site.

Iron Range legislator “extremely disappointed” in ruling

Reactions to the ruling on Monday were swift and polarized.

Environmental groups celebrated the decision for not only stopping the project in its tracks, but giving them a second chance to curtail its construction, which was supposed to begin in 2020.

“What the Court of Appeals did was so monumental,” said Paula Maccabee, an attorney for WaterLegacy, one of the groups that challenged the permits. She spoke at a live streamed press conference in St. Paul on Monday afternoon. “What the Court of Appeals did was let the sun shine in, so that difficult decisions Minnesota has to make about sulfide mining can be made under impartial open scrutiny.”

In the same press conference, MCEA CEO Kathryn Hoffman said, “This is a chance to go back and do it right, and to make better decisions in the future.”

Among PolyMet supporters, the mood was far less jovial Monday.

Republican Senate Majority Leader Paul Gazelka railed against “radical environmentalists” and “liberal courts” on his Twitter account minutes after the court’s ruling was made public. On the Iron Range, the same sentiment prevailed with DFL House 6B Rep. Dave Lislegard, who represents the district PolyMet is trying to operate in.

“I’m extremely disappointed in today’s court ruling,” Lislegard said in a statement. “Even if PolyMet and the agencies pursue the contested case hearing, the opponents will never be satisfied. In this ruling, the Minnesota Court of Appeals seems to be overreaching and minimizing the work of the dedicated agency professionals who have spent over 14 years following the process relying on science and facts.”

Both Lislegard and Jobs for Minnesotans, a pro-industry group made up of community, business and labor leaders, called on PolyMet and its supporters to remain in the fight up to the Minnesota Supreme Court.

“We encourage PolyMet to pursue all avenues to move this project forward and will stand strong with our members and allies – leaders in businesses, labor organizations and communities across the state – who believe this project is right for Minnesota,” Jobs for Minnesotans representatives said in a statement. “We ask supporters to remain resilient and to work collectively to advocate for responsible industries.”

The Associated Press contributed to this report.

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