The Minnesota Court of Appeals has placed a stay on a key water quality permit for the controversial PolyMet copper-nickel mine proposed for northeastern Minnesota.

The appeals court in June ordered a hearing on alleged irregularities in how state regulators at the Minnesota Pollution Control Agency dealt with federal regulators at the U.S. Environmental Protection Agency over the water pollution permit.

The court said in June that there is "substantial evidence of procedural irregularities" in the way the water pollution permit for the project, which is poised to become Minnesota’s first copper-nickel mine, was issued.

Rather than delivering comments critical of the draft permit in written form to the MPCA, EPA staff instead read them over the phone. As a result, those comments were not included as part of the official administrative record.

The appeals court ordered the Ramsey County District Court to hold an evidentiary hearing as soon as is practical. An initial hearing in that case is scheduled for Wednesday.

Permit on hold

Several environmental groups, along with the Fond du Lac Band of Lake Superior Chippewa, had asked for the permit stay while the district court’s investigation is underway.

In granting the appeal Tuesday, the appeals court said it recognized the “difficulty of stopping a bureaucratic steam roller, once started.” The court said the stay would last as long as it takes the lower court to investigate the irregularities in the handling of the permit.

Paula Maccabee, attorney for WaterLegacy, one of the groups that had asked for the stay, celebrated the ruling.

“This is really important, really great news,” said Maccabee. “What it means is that the Court of Appeals is giving the environmental groups and the Fond du Lac Band the time to find out the truth about the irregular and possibly unlawful procedures that were used by state and federal agencies to approve the PolyMet water pollution permit.”

Glencore Environmental groups ask for investigation of new PolyMet owner

PolyMet issued a brief statement after Tuesday’s ruling. “We are disappointed in the court’s decision, but we remain confident that the water quality permit meets all applicable standards and will ultimately be upheld in the Court of Appeals,” said spokesperson Bruce Richardson.

The Minnesota Pollution Control Agency said in a statement Tuesday that its 479-page permit “is a result of an extensive collaborative process between the MPCA and EPA that protected Minnesota's most valuable resource — its water.”

The statement said MPCA offered “extensive opportunities” for the EPA to offer feedback on the permit, and said it “is prepared to show the court that it addressed EPA's comments throughout the permitting process, and the EPA ultimately concluded that the permit was legally enforceable."

The water quality permit in question was among the final batch of state approvals PolyMet needed to move ahead with its NorthMet copper-nickel mining project, which would be located near Babbitt and Hoyt Lakes in northeastern Minnesota. It capped a review and permitting process for the controversial development — which is set to become Minnesota's first copper-nickel mine — that has stretched well beyond a decade.

PolyMet has secured all the major state and federal permits it needs to begin building the NorthMet mine, and is now in the process of raising the funds it needs to pay for it. After years of steadily acquiring a larger stake in PolyMet Mining, Switzerland-based Glencore last month acquired more than 70 percent of its stock. The purchase helped PolyMet pay off debt and position itself to raise the estimated $1 billion it will cost to build the NorthMet mine.

Challenges continue

Copper-nickel mining poses potentially more severe environmental risks than the state's long-established iron ore mining industry, because the process used to extract the minerals from the sulfide ore can result in acid mine drainage, which can leach heavy metals and other pollutants into nearby surface and groundwater.

That’s why the project’s water quality permit, which sets limits on the pollutants that can be released into groundwater, lakes and streams, was so heavily scrutinized when the MPCA announced it had been issued in December.

Conservation and environmental groups have challenged several permits that the DNR and the MPCA issued to the project.

In one of those cases, the state appeals court ruled on Monday that the state’s mining rules governing nonferrous mining — which includes the mining of all metals but iron ore and taconite — are valid. The groups had challenged the state’s nonferrous mining rules as being too vague to enforce. But the court said the groups should direct that complaint to the state Department of Natural Resources.

Groups have also challenged the legality of a federal land exchange between PolyMet and the Superior National Forest.

Last month, more than two dozen environmental advocacy groups asked Minnesota Attorney General Keith Ellison to investigate the relationship between PolyMet and Glencore.

In the meantime, Minnesota's legislative auditor in June announced it would investigate concerns over the MPCA’s handling of the water permit. That investigation came at the request of state Rep. Rick Hansen, who chairs the Legislative Audit Commission and a House environment committee. Hansen said the allegations of inappropriate handling require "an independent, nonpartisan, third-party investigation."

The EPA’s inspector general's office is also conducting its own review of whether the agency's staff followed the Clean Water Act in reviewing the PolyMet permit.