The Minnesota Court of Appeals on Monday sent air permits for PolyMet back to the Minnesota Pollution Control Agency for review and said the agency was wrong not to consider a report that says the company, which is trying to open Minnesota's first copper-nickel mine, is eyeing a much larger operation.

Environmental groups argued a report released by PolyMet in March 2018 outlines the company's plans to recover 118,000 tons of ore per day instead of 32,000 tons per day, the amount listed by the company in permit applications. The air permits, issued in December 2018, allow the company to release 250 tons of regulated pollutants per year, but opponents say the company would exceed that limit if it were to recover more ore.

The MPCA has defended the permits, saying it has the authority to monitor and stop the company from recovering more ore and emitting more pollutants than the permit allows. The state agency also said PolyMet would have to reapply for permits if it were to increase production.

"But if expansion is the current intent, the time to comply with (Prevention of Significant Deterioration) requirements is now," Judge Rodenberg wrote in an opinion Monday. "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 regulators’ argument that the synthetic-minor permit is a sham."

PolyMet is in the midst of numerous legal challenges to its other permits.

In January, the Minnesota Court of Appeals reversed PolyMet's dam safety permits and permit to mine — awarded by the DNR to the company in late 2018 — back to the DNR and said the agency must hold a contested-case hearing.

Separately, PolyMet's national pollutant discharge elimination system, or NPDES, permit, which regulates water discharged from industrial activities, remains on hold after an August order by the Minnesota Court of Appeals after it was revealed the MPCA requested the Environmental Protection Agency refrain from commenting on a PolyMet draft water permit until the public comment period ended.

In a joint news release, the Minnesota Center for Environmental Advocacy, Friends of the Boundary Waters Wilderness and Center for Biological Diversity celebrated the court's decision and pointed out that the Court of Appeals has rejected every PolyMet permit it has reviewed.

"This is another decision that says the MPCA didn't do its job," Chris Knopf said in an interview with the News Tribune on Monday morning.

Knopf called the court's decision as a "huge victory" for environmentalists.

An MPCA spokesperson said the agency was still reviewing the decision.

PolyMet said it was "disappointed" in the decision and is "evaluating all legal options."

"We believe the Minnesota Pollution Control Agency in its permit appropriately accounted for the potential effects of the NorthMet Project," the company said in a news release Monday. "We stand ready to provide the additional information the agency might need to update its decision on the air permit."

To help fund PolyMet's legal battles, Glencore, PolyMet's majority shareholder, issued PolyMet up to $30 million in unsecured convertible debentures (long-term debt issued by a company that can be converted into stock after a period).

"Funds will be used primarily to advance ongoing litigation associated with permits for the NorthMet project, continue engineering and optimization efforts and meet general administrative obligations," PolyMet said in a news release last week.

In June, Glencore took a majority of shares in PolyMet in a rights offering to clear over $240 million in debt PolyMet owed to Glencore. The move left Glencore owning almost 72% of PolyMet's common shares, up from owning 29% of shares before the rights offering.

PolyMet opponents have long raised concerns over Glencore’s labor and environmental record.

PolyMet is aiming to establish Minnesota's first copper-nickel mine with an open-pit mine, processing facility and tailings dam near Hoyt Lakes and Babbitt at the former LTV Steel Mining Co. site.

Opponents argue the project could send tainted runoff into the St. Louis River watershed and Lake Superior, while supporters say the project will provide more than 300 jobs on the Iron Range and move the area's economy away from iron ore dependence.

This story was updated at 2:16 p.m. March 23 with quotes from PolyMet and environmental groups. It was originally posted at 10:32 a.m. March 23.