Thousands of Minnesotans have packed recent public meetings on the controversial PolyMet copper-nickel mine proposed in northeastern Minnesota. But a recent legislative hearing that tackled one of the thorniest questions in the debate — how to ensure that the company pays for reclamation, restoration and pollution control — drew just a small fraction of those crowds.
That's a shame, because the state got some great advice on setting what's known as "financial assurance,'' the funds PolyMet would have to put aside not just for cleanup after closure but to treat water pollution that could last for several centuries.
"Hire sharks," said recently retired financial executive Ron Sternal of St. Louis Park, who volunteered to testify at the Feb. 11 hearing. Reached this week, Sternal, the former managing director and head of institutional sales for Nuveen Investments, repeated that advice.
PolyMet will hire sharp, aggressive lawyers who do nothing but negotiate deals like this all day long to ensure the best possible terms for its bottom line. If the state doesn't do the same, Sternal said, it's "going to get skinned."
Just to be clear, the taxpayers would get stuck paying the bills if PolyMet or other mining companies pursuing similar projects in the state's Arrowhead region do not adequately shoulder their obligations.
That point can't be made often enough. How much it could cost taxpayers if state regulators do a poor job negotiating the PolyMet financial assurance is still uncertain. But the amount of time needed for water treatment — centuries, potentially — suggests it would be a sobering tab. "The state's environmental review of the project predicts that it will cost $200 million to close the mine, and $3.5 million to $6 million annually to treat the water,'' according to a Feb. 9 Star Tribune story.
Given the high stakes and the state's inexperience setting financial assurance for a mine like PolyMet, it's important to have public scrutiny of this critical process. It's also good to spotlight this issue so that regulators, legislators and the public are informed as other companies vie to mine the region's rich deposits of copper, nickel and other metals vital for electronics and green-energy technology.
The transparency will go a long way toward reassuring a state that has significant uncertainty about this new type of mining. Star Tribune Minnesota Poll results released Friday revealed that one-third of Minnesotans are unsure whether the PolyMet project should be approved.
That's why the criticism aimed at the hearing was wrongheaded. DFL Rep. Jean Wagenius, chairwoman of the House committee holding it, was in the midst of her opening statement when she was asked by a Republican legislator to justify the need for the hearing. Other critics contended that state regulators and mining officials shouldn't be bothered with questions about financial assurance at this point. Some even contended that the hearing seemed like an "assassination attempt" on the project.
In reality, the hearing was necessary due diligence to prevent undue burdens from being placed on taxpayers. Any legislator claiming to be a fiscal conservative should have been lauding the process, not challenging it.
Tom Bloomfield, a Colorado attorney and nationally known expert on financial assurance negotiations, also said during an interview this week that the legislative scrutiny was appropriate and that transparency is essential. He wasn't at the hearing, but he ought to be at a future one.
The hearing admirably went beyond the usual debate about whether stronger financial assurance laws are needed in Minnesota. The issue is how these laws are applied. In exploring that, there were legitimate questions about whether regulators are factoring in costs for emergencies, such as the recent episode of tainted drinking water in West Virginia.
More hearings are needed so that these questions are answered and Minnesotans like Sternal have an opportunity to share their expertise. "Remember, mining companies are not angels; they are not here to help us,'' Sternal said. "They will fight to keep every liability off their books and cash in their accounts.''