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Court of Appeals: Agency failed to give adequate reasons for issuing NorthMet permit
The Minnesota Pollution Control Agency failed to adequately explain why it issued an air permit to the proposed NorthMet mine, despite some “probative” evidence that its owners might plan to expand operations beyond what that permit allows.
That was the unanimous ruling from the Minnesota Court of Appeals Monday, which remanded the case back to the agency for “a revised decision.” But the precedential opinion stopped short of reversing the MPCA’s air-quality permit to PolyMet Mining.
Still, the opinion by Judge Lucinda E. Jesson points out that MPCA’s failure to explain its decisions could have supported an outright reversal of the permit. Instead the court chose to remand the issue back to the MPCA for further consideration and additional findings.
Darin Broton, MPCA’s communications director, said in an email that ruling requires the agency to adequately explain its decision to issue NorthMet’s air permit, which remains in place. It’s not yet known whether the agency will appeal. Writes Broton:
“While the agency is still reviewing the decision and determining its next steps, the MPCA is confident in its scrutiny of PolyMet’s emissions calculations and the strong and enforceable air permit issued to the facility.”
Environmentalists who challenged the permit in court called the ruling “a resounding loss for the PolyMet mine proposal.”
“This is a reasonable outcome for a permit that has been issued without demonstrating, through the findings, why the agency reached the conclusions that they did,” said Aaron Klemz, spokesman for Minnesota Center for Environmental Advocacy (MCEA), the lead relator in the case. “The court basically sent it back and said, once again, ‘Show us your work.’”
PolyMet also responded Monday, in an unsigned written statement:
“While disappointed in the court’s decision, we stand firmly in our belief that the Minnesota Pollution Control Agency appropriately accounted for the potential effects of the NorthMet Project and will expeditiously provide the supporting explanation requested by the court. The facts and science that prove the project can meet air quality standards are not in doubt.”
Framing the case
The opinion follows a Feb. 24 state Supreme Court ruling, which found that MPCA was not obliged under federal law to prospectively investigate whether PolyMet planned to operate NorthMet under a so-called “sham permit.”
However, in issuing its February decision, the Supreme Court remanded the case back to the Court of Appeals to address two other open questions.
- First, did a Canadian report to securities regulators—published after a public comment period on the air permit but before it was issued—undermine the MPCA’s conclusion that PolyMet “will … comply with all conditions of the permit?”
That report projected the mine’s profitability would be relatively low if it abides by the 32,000 tons per day ore output allowed under its air-emissions permit. It said that if the mine expanded to 118,000 tons a day, its rate of return—a measure of profitability—could jump from 10.3% to 23.6%.
- Second, should the MPCA have denied the permit because PolyMet “failed to disclose fully all facts relevant” to the permit or “knowingly submitted false or misleading information to the agency”?
The Court of Appeals applied a substantial-evidence test to those questions. Under that review standard, the court first must determine whether the MPCA “adequately explained how it derived its conclusion.” Second, it must review “whether that conclusion is reasonable on the basis of the record.”
The answer to both inquiries, the court found, is no.
The less-pollution solution
If PolyMet ever opens its Hoyt Lakes operation, it would become Minnesota’s first copper-nickel-platinum mine.
The federal Clean Air Act requires an air-emissions permit for the mine because its ore-processing equipment—ore crushers and conveyors, plus large-vehicle traffic—would generate air pollution.
But different permit levels generate different levels of scrutiny. Generally speaking, a mine producing more than 250 tons of air pollutants a year is considered a “major stationary source” of pollution. Once rated as a major source, a mine must undergo “an exacting permitting process” and face “stringent pollution control measures,” Jesson writes.
To avoid that level of scrutiny, even a facility capable of generating that much pollution can bypass stricter requirements by limiting operations—which, after all, generates less pollution. That is what PolyMet chose to do in applying for its air permit. It agreed to hold its ore-processing output to 32,000 tons of ore per day.
After PolyMet submitted its application, MPCA began accepting public input on the proposed permit. At that point, MCEA and several other relators questioned the accuracy of the modeling that NorthMet project planners relied on. They also disputed the sufficiency of the requested permit to control pollution at the site.
Ten days after the comment period closed, PolyMet’s parent company issued a report to securities regulators evaluating the mine’s economic prospects. That Canadian report discussed the feasibility of increasing the mine’s output beyond the permit’s limits to increase profitability.
Filing for a permit under false premises is called “sham permitting” and is illegal under the Clean Air Act. MCEA and the other relators contend that is precisely what PolyMet has in mind.
MCEA alerted the MPCA three times about the existence of the Canadian report, while also turning over other supporting documents, according to Jesson’s ruling. The environmental group also provided the agency with analysis from its own expert, who asserted “it is unlikely the [Canadian report] would have included the expanded options” if it did not intend to expand beyond permitted limits.
On Dec. 13, 2018, MCEA asked the agency to withhold its air permit and investigate whether PolyMet was engaging in sham permitting. It attached the Canadian report to that request.
In his written response to the MCEA’s investigation request, former MPCA Commissioner John Linc Stine said the Canadian report’s increased production scenarios were “speculative at best.” One day later, the agency issued the permit. Relators then filed certiorari appeals.
In March 2020, the Court of Appeals found the MPCA’s findings were insufficient for judicial review and sent the case back to the agency for additional investigation.
The Supreme Court overruled in February, but made findings on just one question. It determined that under the Clean Air Act, sham permitting can only be determined after a violation has been committed, not prospectively.
But the high court remanded the case back to the Court of Appeals on the two other issues. And on those, Jesson’s court found Monday, the MPCA still has some explaining to do.
On the question of whether the agency adequately explained how it concluded PolyMet will comply with its permits, the court’s answer is no. MPCA offered “no more than a conclusory statement on this requirement for approval of a permit,” Jesson writes.
Though her court disagreed with relators that the MPCA has “a hard-and-fast duty” to investigate an applicant’s future plans, it found the agency is required to conduct a “detailed” and “iterative” permitting process. That includes “seeking out missing information from applicants.” Writes Jesson:
“With this obligation in mind and on this record, we cannot conclude that the agency adequately explained its conclusion that PolyMet is anticipated to comply with the terms of the synthetic minor source permit.”
Likewise, there is little evidence to support the agency’s conclusion that PolyMet never failed to disclose relevant facts, and never knowingly provided false or misleading information to MPCA. Once again, Jesson writes, the agency offered nothing more the conclusory statements justifying that stance.
If anything, Jesson writes, the Canadian report offers “probative evidence” that the company would expand operations beyond the permit’s limits. She adds:
“And that report was filed and submitted to the agency before the agency issued the permit. Yet, the agency did not make any reflective findings on whether PolyMet had failed to disclose relevant facts or knowingly submitted false or misleading information. Nor did it directly address whether these new facts merited additional inquiry.“ [Emphasis in the original.]
On that record, Jesson writes, the court can’t conclude the agency adequately explained why there was no basis to deny the permit under Minnesota’s Administrative Rules.
The court also declares that, under the Minnesota Administrative Procedure Act, it could have reversed the permit. But in this case—partly out of deference to the separation of powers—the court decided the best course is to send it back to the executive branch agency for new findings.
The decision does not mean the record couldn’t have supported a reasoned decision to issue the permit, the court makes clear. But MPCA did not make such a reasoned decision here. “Accordingly,” the court ruled, “we deem remand the appropriate disposition.”
But not without a little scolding first:
“We accord an agency’s judgment calls much deference, particularly when those decisions call for expertise. Certainly, the technical permitting decisions here called for expertise. But with deference comes obligations. A central obligation—to adequately explain an agency’s decisions. That obligation drives effective appellate review. For only after receiving a reasoned decision are we able to determine whether that conclusion is supported by the record. And, correspondingly, that obligation drives public trust and understanding, particularly with regard to technical, controversial judgment calls.
“With this in mind, we conclude that the agency has not adequately explained the reasons for its conclusions on the two issues remanded by the Supreme Court for our consideration.”
The court then remanded the matter back to the agency for “a revised decision.”
Retired Court of Appeals judges Edward J. Cleary and John R. Rodenberg took part in the case, acting as senior judges. Both joined Jesson in the ruling.
Monday’s decision addressed appeals filed by the MCEA on behalf of itself, Friends of the Boundary Waters Wilderness, the Center for Biological Diversity and the Sierra Club. It also includes a consolidated appeal from the Fond du Lac Band of Lake Superior Chippewa.