In re Issuance of Air Emissions Permit No. 13700345-101 for Polymet Mining, Inc., A19-0115

955 N.W.2d 258

In the MATTER OF ISSUANCE OF AIR EMISSIONS PERMIT NO. 13700345-101 FOR POLYMET MINING, INC., CITY OF HOYT LAKES, ST. LOUIS COUNTY, MINNESOTA.

A19-0115

A19-0134

Supreme Court of Minnesota.

Filed: February 24, 2021

Emily C. Schilling, Holland & Hart LLP, Salt Lake City, Utah; and Adonis A. Neblett, Saint Paul, Minnesota, for appellant Minnesota Pollution Control Agency.

Monte A. Mills, Davida S. McGhee, Greene Espel PLLP, Minneapolis, Minnesota; and Kathryn A. Kusske Floyd, Jay C. Johnson, Amanda L. Crawford, Venable LLP, Washington, D.C., for appellant PolyMet Mining, Inc.

Evan J. Mulholland, Ann E. Cohen, Jay E. Eidsness, Saint Paul, Minnesota, for respondents Minnesota Center for Environmental Advocacy, Friends of the Boundary Waters Wilderness, Center for Biological Diversity, and Sierra Club.

Sean Copeland, Cloquet, Minnesota, for respondent Fond du Lac Band of Lake Superior Chippewa.

Keri N. Powell, Powell Environmental Law, LLC, Decatur, Georgia; and Vanya S. Hogen, Hogen Adams PLLC, Saint Paul, Minnesota, for amicus curiae Environmental Integrity Project.

Jeremy P. Greenhouse, The Environmental Law Group, Ltd., Mendota Heights, Minnesota; and Carroll W. McGuffey III, Troutman Pepper Hamilton Sanders LLP, Atlanta, Georgia, for amicus curiae National Mining Association.

OPINION

CHUTICH, Justice.

At issue in this case is whether appellant, the Minnesota Pollution Control Agency (the Agency), is required to investigate allegations of "sham" permitting when considering whether to initially approve the air-emissions permit of appellant PolyMet Mining, Inc. (PolyMet) for its NorthMet mine project. In particular, we consider whether the federal Clean Air Act, 42 U.S.C. §§ 7401 – 7671q, mandates that the Agency scrutinize whether PolyMet intends to expand mining operations in the near future, making it subject to the more stringent emissions limitations that apply to a "major source" instead of those that apply to a "synthetic minor source."¹

Respondents—a coalition of environmental groups led by the Minnesota Center for Environmental Advocacy and the Fond du Lac Band of Lake Superior Chippewa—filed two certiorari appeals challenging the decision of the Agency to grant an air-emissions permit to PolyMet for the proposed mine. They asserted that, before the Agency issued the synthetic minor source permit, it had failed to conduct an adequate investigation into whether PolyMet intended to operate within the limits of the permit or whether PolyMet was instead seeking a "sham" permit.

The court of appeals concluded that the Agency's factual findings were "insufficient to facilitate judicial review of the permitting decision" and remanded the matter to the Agency for further fact-finding. In re Issuance of Air Emissions Permit No. 13700345-101 for PolyMet Mining Inc. , 943 N.W.2d 399, 402 (Minn. App. 2020). Specifically, the court of appeals concluded that the Agency's short response to the written concerns of the environmental groups was not the sort of "hard look" required under the Minnesota Administrative Procedure Act, Minn. Stat. § 14.69 (2020). In re Air Emissions Permit for PolyMet Mining, Inc. , 943 N.W.2d at 408–11.

The Agency and PolyMet each petitioned for further review, asserting that the court of appeals incorrectly applied the relevant laws and improperly considered extra-record information. We granted their petitions. Because the applicable federal regulations and guidance contemplate retrospective enforcement after the applicant has obtained a synthetic minor source permit—and do not mandate prospective investigation—we reverse the decision of the court of appeals. Accordingly, we remand the matter to the court to consider the remaining issues on appeal.

FACTS

In 2005, PolyMet first proposed developing a copper-nickel-platinum mine, the first of its kind in Minnesota, approximately six miles from Babbitt. The proposed facility would include both new construction and refurbished equipment left from a previous iron ore processing facility on the site. The project proceeded through environmental review until 2015. In 2016, the Minnesota Department of Natural Resources (DNR) deemed the Final Environmental Impact Statement to be adequate.

On August 25, 2016, PolyMet submitted its draft air emissions permit application to the Agency. The application included details about the proposed facilities, projected pollutant emissions, and expected air quality impact. PolyMet applied for the permit as a synthetic minor source.

A brief review of air permitting terminology provides context to PolyMet's choice of air permit type and the core issues of this case. Under the federal Clean Air Act, a facility that emits or has the potential to emit over 250 tons per year of a regulated pollutant is a "major stationary source" (major source). 40 C.F.R. § 52.21(b)(1)(i)(a) – (b) (2020). Major sources must undergo an exacting review process before construction that includes stringent pollution control measures known as "best available control technology." 40 C.F.R. § 52.21(b)(12). A source that has the capacity to be a major source of emissions—that is, to emit over 250 tons per year of a specified pollutant—but chooses instead to adopt enforceable operational restrictions so as to reduce its actual emissions to less than that limit is a "synthetic minor source." See In re Shell Offshore, Inc. , 15 E.A.D. 536, 550 (EAB 2012).

A synthetic minor source is treated the same as a true minor source—that is, a source that does not have the capacity to emit over 250 tons per year of a regulated pollutant. 40 C.F.R. § 52.21(aa)(2)(xv) (2020). Either type of minor source undergoes a review process that is less demanding than that for a major source; neither type must use best available control technology that major sources are required to install. 40 C.F.R. § 52.21(b)(12).

What qualifies as best available control technology depends on a case-by-case analysis weighing energy, environmental, and economic impacts. Id. As a general rule, it is more expensive to retrofit pollution control measures onto existing equipment than to construct new equipment with better pollution control measures. See United States v. Cinergy Corp. , 458 F.3d 705, 709 (7th Cir. 2006) ("The Clean Air Act treats old plants more leniently than new ones because of the expense of retrofitting pollution-control equipment."). A source that first obtains a minor source permit and later, after construction of the facility, seeks modification of the permit to become a major source could therefore, depending upon the circumstances, be allowed to install less stringent pollution control technologies than if it had originally sought a major source permit. For example, if the cost of retrofitting outweighs the environmental benefits of the available pollution control measures, the facility may not be required to install the more stringent measures. See, e.g. , United States v. Ameren Mo. , 421 F. Supp. 3d 729, 808–09 (E.D. Mo. 2019).

This scenario raises the potential problem of a source improperly seeking and receiving a synthetic minor source permit and shortly thereafter actually emitting major source levels of pollution. The Environmental Protection Agency (EPA) refers to such synthetic minor source permits as "sham permits." See Terrell E. Hunt & John S. Seitz, Guidance on Limiting Potential to Emit in New Source Permitting , U.S. EPA (June 13, 1989) (EPA Guidance); see also Requirements for the Preparation, Adoption, and Submittal of Implementation Plans; Approval and Promulgation of Implementation Plans, 54 Fed. Reg. 27,274, 27,280 –81 (June 28, 1989) (codified at 40 C.F.R. pts. 51, 52).

The EPA, which ordinarily delegates to states its authority to enforce the Clean Air Act, has retained concurrent authority to enforce federal law if a facility obtained a sham permit. See Approval and Promulgation of Implementation Plans, 54 Fed. Reg. at 27,274, 27,280 –81. In determining whether a permit is a sham, the "EPA will look to objective indicia to evaluate" whether the facility "obtained a minor source permit with the purpose of obtaining, after construction, a major source permit, so as to evade preconstruction review." Id. at 27,281. Such objective indicia include whether the facility "would not be economically viable for any appreciable period of time if it were restricted to emitting at minor levels," "how a project's projected level of operation was portrayed to lending institutions," and if the facility applies for a major source and minor source permit around the same time. Id. If the EPA finds that the facility obtained a sham permit, it will consider "seeking injunctive relief, civil penalties, and criminal sanctions" dating back to "the beginning of the actual construction." Id. at 27,280.

The EPA emphasizes that these enforcement principles are not directed to sources that "accept emissions limitations in pursuit of legitimate business purposes, and who in good faith later seek a relaxation of those limitations." Id. at 27,281. But regardless, any synthetic minor source that seeks relaxed restrictions, such as increasing "hours of operation," which would then increase its emissions to the level of a major source, will undergo control technology review as though "construction had not yet commenced." 40 C.F.R. § 52.21(r)(4) (2020).

With this general background in mind, we turn to the facts here. PolyMet applied for a synthetic minor source permit, with its potential emissions capped by a key restriction limiting the amount of ore that it processes (the "throughput") to a proposed maximum of 32,000 tons per day, among other restrictions. The Agency's permit requirements includes numerous federal enforceable emission limits, as well as operational and production limits that restrict emission of regulated pollutants. The permit further includes daily, weekly, and monthly monitoring and recordkeeping requirements to help ensure that PolyMet actually remains below the...