The NorthMet mine proposed for northeast Minnesota suffered a major setback as federal regulators this week revoked the mine's wetland permit, saying the project as designed would be too damaging to water quality.

In particular, the U.S. Army Corps of Engineers said in its decision that the mine plan, originally proposed by the company PolyMet, would violate water standards set by the downstream Fond du Lac Band of Lake Superior Chippewa.

The band sets stricter mercury limits than what's allowed by the state of Minnesota, in part because of members' reliance on fish, and it challenged the mine's original permit.

The permit would have allowed the project to damage 928 acres of wetlands, according to a Corps memo on its decision to pull the permission. Fond du Lac argued that destruction would serve to send more pollution downstream, and its argument was supported by the U.S. Environmental Protection Agency.

Fond du Lac Chairman Kevin Dupuis Sr. wrote in a statement that the decision reaffirmed a treaty struck between the band and the U.S. government in 1854, promising rights to hunt, fish and gather on ceded lands.

"Despite these solemn promises by the United States, our Reservation and our Ceded Territory lands have been under attack from pollution for decades," Dupuis wrote. "Today's decision protects the rights and resources promised to us under the Treaty."

Bruce Richardson, a spokesman for NewRange Copper Nickel, a partnership that includes PolyMet and is now behind the NorthMet proposal, said in an emailed statement that the Corps' decision was a "reversal of thoroughly reviewed water quality data that has been collected and assessed over the last decade."

The company is "reviewing all of our options," he added.

PolyMet is majority-owned by the Swiss mining giant Glencore.

Several environmental groups that have fought hard-rock mining projects in Minnesota hailed the decision, which sends the project back to square one for one of its most significant permit issues.

Chris Knopf, executive director of Friends of the Boundary Waters, said the original permit failed to recognize Fond du Lac's rights as a sovereign government, the same way other permitting decisions have to weigh differences in state policies.

"Law and science prevailed here," Knopf said.

But Julie Lucas, executive director of the pro-industry group MiningMinnesota, wrote in a statement that the decision was "shocking" and would hold back the state from providing minerals needed for clean energy technologies.

The NorthMet mine proposes to extract copper, nickel and other platinum group metals and process them at the former LTV taconite plant in Hoyt Lakes. NewRange recently started salvaging material at the plant, though three other permits required to begin mining are still in legal limbo.

The loss of its wetland destruction permit will be significant because it means the project may have to be broadly redesigned to avoid the wetlands, said Kevin Reuther, chief legal officer of the Minnesota Center for Environmental Advocacy (MCEA).

"This is a sea change for PolyMet," Reuther said. "They're going to have to go back to the drawing board."

MCEA had levied its own challenge to the same permit which is now moot, Reuther said.

NewRange also has the option to appeal the Corps' decision in federal court.

The decision to pull a key permit was lambasted by elected officials from northeastern Minnesota. State Rep. Dave Lislegard, DFL-Aurora, wrote in a statement that he was "stunned and furious" and that the Corps had "ignored nearly two decades of positive movement by Polymet — jumping through every single hoop — to earn approval for the project based on science and the law."

Republican U.S. Rep. Pete Stauber wrote that the decision was an "assault on northern Minnesota" and that it "highlights the need for serious permitting reform to limit frivolous lawsuits and modernize the Clean Water Act permitting process."

Paula Maccabee, an attorney with the group WaterLegacy, said the decision rests on protections given to states and tribal governments in the Clean Water Act. Fond du Lac had to sue in federal court before the Corps would reconsider the original permit it issued.

"There's a reason why the law has that provision, and it's to protect us from federal government indifference," Maccabee said.

She added that no other state or tribe has sued before to enforce this part of the law — making the Corps' final decision an important precedent.

Correction: Earlier versions of this story misspelled the name of Kevin Reuther.