State's top elected officials approve mineral leases, with reservations

A routine meeting of the state's top elected officials on Friday turned into a wider discussion about whether Minnesota should open the doors to mining for metals like copper, nickel and gold.

The state Executive Council — the governor, lieutenant governor, auditor, attorney general and secretary of state — voted 4-1 to issue 31 mineral leases in northern Minnesota, but not before some members expressed strong reservations.

State Auditor Rebecca Otto said she woke up at 3:30 a.m. thinking about it, and she struggled as she told her colleagues why she would vote "no."

"I'm thinking about the next generation. And I'm not going to cry. But, what I'm concerned about as the state auditor is saddling the next generation with a fiscal burden," Otto said.

A lease doesn't give a company permission to mine, but Otto said if it someday becomes one she doesn't want the state to have to pay for cleanup costs if the mine ends up polluting the environment. It's a scenario that has played out in other states.

"We have not done copper-sulfide mining in this state yet. Where it's been done there have been environmental impacts, damage to water quality and perhaps economies," she said.

The mineral leases are auctioned off periodically to companies interested in discovering minerals. The Minnesota Department of Natural Resources held an auction for these leases a year ago, but the Executive Council decided not to sign off on them because of a court challenge.

A group of landowners had wanted the state to study the environmental impacts of the sales. The state Court of Appeals ruled last month that the sales did not require environmental review. The landowners have asked the state Supreme Court to review the decision, but state officials decided to go ahead with a vote on approving the leases.

The 31 leases are located in Aitkin, St. Louis and Lake counties. DNR officials said it isn't yet known whether the lands contain significant mineral deposits.

Although Otto was the only "no" vote, she wasn't the only one raising concerns. Secretary of State Mark Ritchie says he's been receiving hundreds of e-mails and phone calls from landowners who are upset about the state's handling of mineral leases.

In the past, mineral leases have been approved with little controversy, and the DNR says only 2 percent of leases sold since 1966 resulted in drilling. But the prospects of copper-nickel mining — and the environmental problems that can come with it — have put more scrutiny on the leases in recent years.

Forestry consultant Matthew Tyler, one of the landowners who challenged the leases in court, said they can have a real impact.

"I have friends who have mineral leases and clients who have mineral leases under their property. It's been negatively affecting real estate values, it's been creating a chilling effect on forestry investment and it also affects potentially groundwater," he said.

Companies usually start exploring a site using sensing technology. In rare cases, they find enough there to drill a sample. It can take years of exploration before a company concludes a site could be mined.

Governor Dayton promised to work with other state officials to improve the process for auctioning mineral leases. And he asked the DNR to review the economics of the leases — and the money the state receives from actual mining — to make sure the state is getting its fair share.

But mining companies say Minnesota already has a thorough process in place for mineral leases, and they stressed that if a company decides it wants to drill holes in the ground, it must get permission from the DNR.

Frank Ongaro, executive director of industry group Mining Minnesota, said the mineral lease is just the first step in a long process.

"This executive council meeting had nothing to do with financial assurance or mining. This was simply approval of a mineral lease sale. Fortunately for all Minnesotans, we have strong financial assurance requirements in place that protect all of us as taxpayers," he said.