Minnesota Report

Yesterday, the DNR put out the following press release

DNR seeks review of Court of Appeals decision on PolyMet permits

Today the Department of Natural Resources submitted a petition to the Minnesota Supreme Court seeking review of the Minnesota Court of Appeals’ Jan. 13, 2020 decision regarding three DNR-issued permits for PolyMet’s NorthMet project.

While the Court of Appeals decision did not draw conclusions about the validity of the DNR’s scientific analysis of the project, it nevertheless reversed and remanded the permit to mine and two dam safety permits to the DNR, concluding that the DNR must hold a contested case hearing in the matter.

In implementing its regulatory responsibilities, the DNR strives for transparency, rigor and neutrality. We welcome public review of our work and the important role the courts serve in reviewing agency decisions.

After careful consideration, the DNR is seeking Supreme Court review because the Court of Appeals decision has significant implications for the state’s regulatory framework that go well beyond any individual project. More specifically, the Court’s decision fundamentally changes long-standing interpretation of state law regarding agency authority and discretion when making permit decisions, as well as interpretations of mining law. The decision has implications for future mining proposals, currently permitted iron ore mines, and a wide range of other state permit decisions.

In filing this petition, the DNR is not questioning the value of a contested case hearing when holding a hearing would aid the Commissioner in resolving a disputed issue of fact. However, in this case, we believe the DNR thoroughly considered all of the disputed factual issues, produced substantial findings documenting the basis of our conclusions, and appropriately concluded that holding a hearing would not resolve these disputes.

Key Issues for Review
After carefully reviewing the Court of Appeals decision and considering its broad implications for Minnesota’s regulatory system, the DNR identified important issues that we believe merit review by the Supreme Court, including most significantly:

  • The scope of the Commissioner’s discretion in determining whether a contested case hearing will aid in resolving material issues of fact in dispute;
  • Whether a permit to mine must contain a fixed expiration date by which a company must complete mining, as well as site reclamation and closure; and
  • How the Commissioner should determine whether an individual property owner will be affected by a mining project and thus has legal standing to petition for a contested case hearing.

The DNR’s Petition for Review to the Supreme Court will be available on the DNR’s PolyMet page later today.

Additional Background
The Court of Appeals ruling represents a significant departure from the DNR’s long-standing application of state mining law. Given the broad implications and precedential nature of the ruling, the DNR believes it is important to seek Supreme Court review of the Court of Appeals decision. Additional detail is provided below regarding key issues on which we are seeking review.

Commissioner’s Discretion
The DNR believes the Commissioner has the authority to exercise discretion in determining whether a contested case hearing would aid the Commissioner in resolving material issues of fact in dispute. The relevant law for a DNR permit to mine closely parallels language governing other agencies’ permits, where commissioners’ authority has been similarly interpreted.

In exercising this discretion, the DNR believes the Commissioner must weigh whether the agency has fully considered all comments and available evidence related to a disputed issue of fact at the time of its permit decision, and whether the factual dispute relates to a requirement under state law. The Court of Appeals decision appears to conclude that a contested case hearing must be held whenever a party disputes an issue and produces its own expert opinions, regardless of how thoroughly the DNR may have already considered those opinions, the timing of those opinions relative to the agency’s permit decision, and whether the dispute is over an issue that is above and beyond the requirements of state law.

Fixed Term of Permit to Mine
The Court of Appeals ruled that the DNR erred by not including a fixed term in the PolyMet permit to mine for the completion of mining and reclamation and closure of the site. The DNR’s permit for PolyMet included a fixed term for the cessation of mining, but retained the authority for the DNR to determine when the mine was properly reclaimed and closed, rather than terminating the permit on a defined date.  The DNR takes this approach with mining permits because it is the most protective for the environment and, we believe, reflects the intent of the state mining law. It ensures that PolyMet, and other mining companies, are accountable for compliance with permit requirements, including financial assurance, until the DNR determines they have met all of their obligations. Setting a fixed term for reclamation and closure would effectively release the permittee from its obligations to the state, whether or not it had met those obligations upon expiration. If a fixed term permit to mine expired prior to a permittee meeting all of its obligations, the DNR’s only option would be to attempt to extend the permit through an amendment, an action that the permittee could appeal.

Legal Standing of a Property Owner to Request a Contested Case Hearing
Minnesota law governing certain permit types, including mining permits, provides the DNR Commissioner with broad authority to order a contested case hearing, at their own discretion, for the general public interest. It is common for groups and individuals across the state to ask the Commissioner to use this discretion on various DNR decisions. The decision to order a discretionary contested case hearing rests solely with the Commissioner.

In the development of Minnesota’s mining laws, legislators recognized that some individual property owners should have an additional path to seek a contested case hearing, if their property “will be affected” by the mine. While state law does not define a maximum distance that a property owner may live from a mine to exercise this option, the mining law clearly states that only property owners who “will be affected” by the mine qualify. The Court of Appeals decision appears to alter the legal distinction between the general public and individual property owners, essentially interpreting “will be affected” to include any property that could be simply influenced by the mine in some way. This broad interpretation would mean that, even if a project met all applicable state environmental standards, property owners quite distant from the mine could claim they are affected and demand a contested case hearing.