DULUTH -- The Minnesota Supreme Court ordered state regulators to set a lifespan on the tailings basin for PolyMet, which is hoping to build Minnesota's first copper-nickel mine, and hold a new hearing on the effectiveness of the dam's liner. The decision upheld a lower court's decision to reverse the permit to mine for PolyMet.

The court also said regulators were right in denying additional hearings on a batch of other issues, reversing part of the lower court's ruling.

In a 48-page decision released Wednesday, Justice Natalie Hudson said the Minnesota Department of Natural Resources erred in not setting a fixed term, or lifespan, for the project's proposed basin, which would hold the tailings — the fine pieces of waste rock left over after the rock is crushed and stripped of marketable metals like copper, nickel, cobalt and other metals. Environmentalists fear sulfide within the tailings will react with oxygen, form acid and then seep into the environment.

A term — in years — must be set by the DNR for the time it takes for the company to finish mining and reclamation or restoration work on the basin, Hudson wrote.

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The decision also said the DNR must hold a contested-case hearing, which puts the issue in front of an administrative law judge to examine additional evidence and testimony, on whether a bentonite liner in the basin would effectively prevent oxygen from contacting the tailings and creating acid, the type of pollution environmentalists fear most with copper-nickel mining.

Hudson wrote that while DNR claimed bentonite "has been tested" and "will be effective," its descriptions and "conclusory statements" did not actually include scientific analysis.

"There is no analysis of the scientific basis for the DNR’s assumptions," Hudson wrote. "Further, the single study on which nearly all the DNR’s findings of effectiveness rely is not in the record."

Environmental groups and opposed to PolyMet called the decision a "win."

"The decision underscores the Minnesota Department of Natural Resources’ (DNR) failure to scrutinize what would be the first sulfide mining operation in the state, and signals an important change in how mining permits will be viewed by the courts in the future," the Fond du Lac Band of Lake Superior Chippewa, Minnesota Center for Environmental Advocacy, Friends of the Boundary Water Wilderness, Center of Biological Diversity and WaterLegacy said in a joint news release Wednesday.

However, the court reversed much of a 2018 Minnesota Court of Appeals decision and said the DNR had the discretion to deny contested-case hearings on the project's use of upstream dam construction; financial assurances; whether Swiss mining giant Glencore, which took a majority stake in PolyMet after it received its permits, should be named on the permits; and alternatives to the "wet closure" tailings storage method.

Additionally, the Supreme Court said the Court of Appeals was wrong when it reversed the project's dam safety permits over issues in the permit to mine.

PolyMet, which also considers Wednesday's decision a "win," said the decision only results in further review for "one specific, narrow issue."

"The court’s unanimous decision affirmed the Minnesota Department of Natural Resources’ discretion to deny contested case hearings and, importantly, affirmed its decision to deny contested case hearings on every issue raised by project opponents, save one: the effectiveness of bentonite clay capping for eventual closure of the tailings basin," the company said in a news release.

The DNR said it would "carefully review and implement the Court’s instructions" on setting a term and holding a contested case hearing on bentonite.

"We appreciate and respect the Court’s careful evaluation of issues related to the DNR’s first application of Minnesota’s non-ferrous mining statute and rules … The Court found ample evidence in the permit records to support the DNR’s decisions on the critical issues of dam safety and tailings basin closure," the DNR said.

PolyMet has proposed an open-pit copper-nickel mine, processing plant and tailings basin near Hoyt Lakes and Babbitt. A number of its other permits remain on hold amid numerous legal challenges to the project.