Minnesota Court of Appeals Rejects No-EIS Decision for Cohasset Engineered Wood Facility

Originally published in the April 2023 issue of Bench & Bar of Minnesota Environmental Law Update, Minnesota State Bar Association.

On February 6, 2023, the Minnesota Court of Appeals, in an opinion written by Judge Jesson, reversed the City of Cohasset’s determination that an environmental impact statement (EIS) was not required for Huber Engineered Woods LLC’s proposed oriented-strand-board manufacturing facility (“Proposed Project”), to be built west of Cohasset. In re City of Cohasset's Decision on Need for an Env't Impact Statement for Proposed Frontier Project, 985 N.W.2d 370 (Minn. Ct. App. 2023).

Various environmental impacts were associated with construction of the Proposed Project, including the filling or excavating of 26 wetlands (two or which were “public water wetlands,” Minn. Stat. § 103G.005, subd. 15a), stormwater impacts from increased impervious surfaces, timber harvesting, and the emission of nitrogen oxides and sulfur dioxide among other air pollutants. After preparing an environmental assessment worksheet (EAW), the city—the “responsible governmental unit” under the Minnesota Environmental Policy Act (MEPA), Minn. Stat. ch. 116D— determined the Proposed Project did not require preparation of an EIS for two reasons: (1) it did not fall into one of MEPA’s mandatory EIS categories, and (2) it did not have the potential to cause significant environmental effects. The Leech Lake Band of Ojibwe (the “Band”) appealed the city’s decision to the Minnesota Court of Appeals.

1. Mandatory EIS Categories. Under Minn. R. 4410.4400, subp. 20, preparation of an EIS is mandatory when a project “will eliminate a public water or public waters wetland.” “Public waters wetlands” are defined as “all types 3, 4, and 5 wetlands ... not included within the definition of public waters, that are ten or more acres in size in unincorporated areas or 2-1/2 or more acres in incorporated areas.” Minn. Stat. § 103G.005, subd. 15a. The Proposed Project did not trigger a mandatory EIS under subpart 20, the city determined, because although the Project would permanently fill part of each impacted public waters wetland, neither wetland would be completely filled and thus not “eliminated.”

The court rejected the City’s interpretation of “eliminated” in subpart 20 as referring to the complete filling or excavating of a public waters wetland. Rather, the court held, even when a public waters wetland is not completely filled or excavated, it still is “eliminated” if the remaining portion of the wetland no longer possesses either of its two qualifying characteristics under section 103G.005, subd. 15a, i.e., it no longer qualifies as a type 3, 4, or 5 wetland, or it no longer encompasses more than 10 acres in an unincorporated area or 2-1/2 acres in an incorporated area. The city argued the record showed the remaining parts of the two public waters wetlands would still meet these qualifications and thus not be “eliminated” under the court’s interpretation. However, the court agreed with the Band that the administrative record contained nothing more than conclusory statements that the wetlands would be unaffected, which fell short of the substantial-evidence standard. Accordingly, the court reversed the city’s decision not to require an EIS and remanded the case to the city to revisit its EIS decision consistently with the court’s holding.

2. Potential for Significant Environmental Effects. The court also evaluated the Band’s alternative argument that even if the Proposed Project did not fall into a mandatory EIS category under MEPA, an EIS was still required because the Project had “the potential for significant environmental effects.” Minn. Stat. § 116.04, subd. 2a. The court first held the administrative record lacked substantial evidence supporting the city’s position that the Proposed Project would not cause significant environmental effects through wetlands removal. For example, the court held the city failed to properly investigate potential stormwater impacts from the Proposed Project on the nearby Blackwater wild-rice bed, concerns that were raised not only by the Band but also by the Minnesota Pollution Control Agency (MPCA) and the Minnesota Department of Natural Resources. This provided an additional basis, the court determined, for remanding the matter to the city for a revised decision on the need for an EIS.

The court did determine that substantial record evidence supported the city’s determination the Proposed Project did not have the potential for significant environmental effects from air emissions and timber harvesting. For example, air emissions from the Project would be mitigated by the ongoing regulatory authority of the MPCA’s Clean Air Act permitting programs, Minn. R. 4410.1700, subp. 7(C). And the court cited record evidence that sufficient policies and practices were in place to address the potential effects timber harvesting could have on other resources such as wildlife habitat, water quality, aesthetics, soil erosion, historic/cultural resources, rare, and endangered, or threatened species.

Judge Kevin Johnson concurred in part and dissented in part.