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House committee debates mine financial protections

Rep. John Persell of Bemidji concentrates on a witness talking about mining Thursday night in a Minnesota House committee hearing. In the foreground is Rep. Phil Stener of Rosemount. Pioneer Photo/ Don Davis

ST. PAUL -- Minnesota lawmakers are trying to find a balance between creating mining jobs and protecting the environment.

"I understand the importance of the mining industry and the role it plays," Rep. Kent Eken, DFL-Twin Valley, said. "It would be better to do it here where we can create jobs and hopefully do it in a more environmentally friendly way. There is this concern about financial assurances."

The debate over financial oversight necessary to protect taxpayers and the environment from a new type of mining continued Thursday night during a Minnesota House environmental committee hearing Eken led. Bills requiring mining companies, before they open mines, to put down money to clean up pollution when mines close are being considered by lawmakers.

Representatives from the Department of Natural Resources, the mining industry and environmental organizations testified for two hours discussing financial regulations surrounding nonferrous mining, which would produce copper, nickel and other minerals.

The DNR's Marty Vadis said representatives of his department have visited several mines across the United States and Canada and are confident the necessary protections already are in place.

"We believe what we have in place is adequate to permit the type of place we are talking about," he said.

PolyMet Mining Corp., one of a half-dozen companies pursuing such projects and the one closest to opening, and other industry advocates have indicated that financial protections suggested in a House bill proposed by Rep. Alice Hausman, DFL-St. Paul, are at best duplicative and at worst an attempt to stall or kill the project.

Hausman's proposal would take existing state and federal financial assurance rules and apply them specifically to nonferrous mining. Bill supporters say taxpayers must be protected from mines that have a history of polluting, closing and running without paying for the cleanup.

PolyMet CEO Joe Scipioni said investors don't want to get involved in projects that will involve "legacy costs" from future cleanup. The company has spent $25 million over four years to comply with permitting requirements.

"I think what a lot of this boils down to is risk management," he said. "How do you minimize the risk so we don't have something horrible happening 20 years after closure? ... That's a disaster for the state. That's a disaster for PolyMet and our investors."

The company expects the $602 million project at the eastern end of the Mesabi Iron Range to create $242 million in economic impact for St. Louis County. Adding regulations at this point will slow or stop the project, opponents of the additional regulations said.

"We have strong environmental standards in the state of Minnesota and the industry supports those strong and balanced regulations," said Frank Ongaro, executive director of Mining Minnesota.

Rep. Denny McNamara, R-Hastings, said the Iron Range needs projects like this as long as they are financially secure. "I want to put more pressure on you guys to make sure you don't ditch us," he told mining representatives.

Ernest Lehmann of Franconia Minerals said he believes the state's rules already are tougher than in other states.

But proponents of Hausman's bill have used the U.S. Environmental Protection Agency's draft environmental impact statement in the PolyMet situation as evidence of the need for further protection.

The EPA last month wrote to the U.S. Army Corps of Engineers regarding several shortcomings in the draft statement it found so severe "the proposed action must not proceed as proposed."

Scott Strand, executive director for the Minnesota Center for Environmental Advocacy, said history indicates that it is likely environmental problems will arise at some after closure.

He said getting enough financial assurance up front can create an incentive for mining companies to do cleanup so they get their initial investment back.

Strand suggested that the state insist on cash or cash equivalents for financial assurance, audit the mining companies' financial records annually and require mines to set up separate trust funds to pay for long-term treatment.

"The stakes are high," he said. "It is important to get this right."

Soudan, Minn-resident and retired mine worker Bob Tammen cited several bodies of water in northern Minnesota that are polluted from past mining operations.

"We're still dealing with those problems," he said.

Thursday's hearing in the House wasn't specifically related to Hausman's bill, which she said she will not pursue this year. A similar one in the Senate has been withdrawn.

Andrew Tellijohn reports for Forum Communications Co., which owns the Bemidji Pioneer.