DULUTH — A planned $440 million Iron Range wood products plant must undergo further environmental study before it can be built, the Minnesota Court of Appeals ruled Monday.

The state court reversed a Cohasset, Minn., City Council decision in March to forgo an in-depth environmental impact statement (EIS) for a wood mill proposed by North Carolina-based Huber Engineered Woods, and ordered it to reconsider the project's effects on wetlands before issuing a new decision.

The Minnesota Legislature exempted Huber from having to complete a lengthier EIS typically required for projects of its size, and the City Council's decision kept that exemption intact. The decisions drew complaints from a nearby tribe, a rival mill, environmentalists and business groups. A shorter study was done instead.

The Leech Lake Band of Ojibwe filed the appeal, arguing the city should have ordered the deeper analysis. The band has said the proposed mill, a mile from its reservation border, would impact treaty rights in nearby public forests. The mill would consume about 400,000 cords of wood a year to make oriented strand board used for constructing buildings, mostly from aspen trees.

In its ruling, the court said such detailed reviews are required if proposed projects affect public wetlands. The Huber project would affect two, "which are accorded greater protection under state law," the court said.

It also noted "significant weight" to Leech Lake's comments and arguments related to the initial, shorter environmental study, because of its sovereign status and environmental expertise.

"The court decision issued today is a major victory for the Leech Lake Band of Ojibwe and serves as a powerful reminder of the importance of respecting the sovereignty and treaty rights of Indigenous nations," wrote Faron Jackson, Sr., chairman of the band, in a statement. "The proposed OSB Mill project posed a clear threat to our sacred resources, including wild rice and wildlife, while bypassing an important step in the environmental review process."

On Monday, Cohasset Mayor Andy MacDonell said he was disappointed in the court's ruling.

With the future closure of Minnesota Power's nearby Boswell Energy Center, the loss of the Huber project "would have a huge economic impact for our city," he said.

Huber has said it hopes to get the plant running by 2025 and expects to employ 150 people.

A spokeswoman for Huber said the company "is evaluating the impact of today's decision" and declined to comment on its next steps.

The amount of timber the 750,000-square-foot plant would consume would be a 14% increase from current statewide harvest levels. Huber's review found the state's forests could sustainably handle the increased logging, but opponents said the review did not focus on local timber resources. The plant also would be a major greenhouse gas emitter, which Huber said would be offset by trapping carbon in its wood products and using wood-burning furnaces.

While the court said not enough evidence was produced to show public wetlands wouldn't be eliminated or affected through wetland filling, there was enough to show the project wouldn't affect the environment through air emissions and timber harvesting.

The band is concerned about industrial runoff and the proposed destruction of two eagle's nests, said its legal director Christopher Murray, and hopes to protect the downstream wild rice-rich Blackwater Lake, and an imperiled fern — called the goblin fern — in its Chippewa National Forest old-growth habitat.

The Leech Lake band doesn't oppose the project outright, Murray said.

"They oppose the exemptions from environmental review and the attempts to avoid identifying the true environmental impact of this project in a public setting," he said.

Millions in public grants, loans and incentives have been approved for the mill, which still requires a number of state and federal permits before construction can begin.