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In re Reissuance of an NPDES/SDS Permit to United States Steel Corp.

Court of Appeals of Minnesota

December 9, 2019

In the matter of the Reissuance of an NPDES/SDS Permit to United States Steel Corporation (U.S. Steel) for its Minntac facility and response to Contested Case Hearing requests filed by U.S. Steel and the Minnesota Center for Environmental Advocacy ("MCEA") And In the matter of the Application for Variance from Water Quality Standards in the proposed NPDES/SDS permit, MPCA's Preliminary Determination to Deny the Variance Request and U.S. Steel's Contested Case Hearing request on the Variance denial.

          Minnesota Pollution Control Agency

          William P. Hefner, Jeremy P. Greenhouse, The Environmental Law Group, Ltd., Mendota Heights, Minnesota (for relator/respondent United States Steel Corporation)

          Paula Goodman Maccabee, Just Change Law Offices, St. Paul, Minnesota (for relator/respondent WaterLegacy)

          Sara K. Van Norman, Van Norman Law, PLLC, Minneapolis, Minnesota; and Sean Copeland, General Counsel, Seth J. Bichler, Staff Attorney, FDL Band Legal Department, Cloquet, Minnesota (for relator/respondent Fond du Lac Band of Lake Superior Chippewa)

          Keith Ellison, Attorney General, Stacey W. Person, Assistant Attorney General, St. Paul, Minnesota (for respondent Minnesota Pollution Control Agency)

          Carolyn L. McIntosh (pro hac vice), Squire Patton Boggs (US) LLP, Denver, Colorado; and Dara D. Mann, Squire Patton Boggs (US) LLP, Atlanta, Georgia (for amicus curiae Iron Mining Association of Minnesota)

          Kevin Reuther, St. Paul, Minnesota (for amicus curiae Minnesota Center for Environmental Advocacy)

          Jeffrey K. Holth, Joseph F. Halloran, Mark A. Anderson, Michael L. Murphy, Barbara Cole, The Jacobson Law Group, St. Paul, Minnesota (for amici curiae the Grand Portage Band of Lake Superior Chippewa, the Bois Forte Band of Chippewa, the Bad River Band of the Lake Superior Tribe of Chippewa, the Mille Lacs Band of Ojibwe, the Lac Courte Oreilles Band of Lake Superior Chippewa Indians, the Lac du Flambeau Band of Lake Superior Chippewa Indians, the Lac Vieux Desert Band of Lake Superior Chippewa Indians, and the 1854 Treaty Authority); and Jason Kekek Stark, Hayward, Wisconsin (for amicus curiae the Lac Courte Oreilles Band of Lake Superior Chippewa Indians); and Andrew Adams III, HOGAN ADAMS PLLC, St. Paul, Minnesota (for amicus curiae the Lac du Flambeau Band of Lake Superior Chippewa Indians)

          Considered and decided by Cochran, Presiding Judge; Connolly, Judge; and Johnson, Judge.


         1. We accord deference to the conclusion of the Minnesota Pollution Control Agency (MPCA) that the federal Clean Water Act (CWA) does not govern discharges of pollutants to groundwater because the relevant statutory language is ambiguous and because (a) the MPCA is responsible for administering and enforcing the CWA, (b) the subject matter of the statute falls within the MPCA's areas of expertise, and (c) the MPCA's interpretation is reasonable under the circumstances of this case.

         2. Under the plain language of the administrative rules comprising the state's water-quality standards, the standards for class 1 waters provided in Minn. R. 7050.0221 (2017) do not apply to groundwater because groundwater has not been classified as a class 1 water.


          COCHRAN, JUDGE

         These consolidated certiorari appeals are taken from a November 30, 2018 decision by respondent Minnesota Pollution Control Agency (MPCA) reissuing a National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) permit to United States Steel Corporation (U.S. Steel). The permit governs discharges of pollutants to surface waters and groundwater from a tailings basin at U.S. Steel's Minntac ore processing operation.

         U.S. Steel challenges the groundwater conditions of the permit and the MPCA's denial of its requests for a permit-related contested-case hearing and a variance from groundwater-quality standards. WaterLegacy and Fond du Lac Band of Lake Superior Chippewa (the band) argue that the MPCA erred in interpreting the federal Clean Water Act (CWA) and that the permit is not sufficiently protective of area surface waters.

         We accord deference to the MPCA's reasonable interpretation of ambiguous provisions of the CWA and conclude that the MPCA did not err in determining that the act does not govern discharges of pollutants to groundwater. But we conclude that the MPCA erred in interpreting the state administrative rules governing water-quality standards by applying the class 1 water-quality standards to groundwater in determining permit conditions. We further conclude that the MPCA's determination that water-quality-based effluent limits are not required for surface discharges under the CWA is unsupported by substantial evidence. Accordingly, we reverse the decision issuing the permit and remand for further proceedings consistent with this decision.


         The Minntac Tailings Basin

         U.S. Steel operates the Minntac ore processing facility in the city of Mountain Iron in St. Louis County. The facility includes an unlined tailings basin, which has been in operation since approximately 1967. The basin was built on the Laurentian Divide and the headwaters of two rivers: the Dark River, which flows to the west, and the Sand River, which flows to the east. The basin covers approximately 8, 700 acres (13.6 square miles). The basin is surrounded by a perimeter dike, made of tailings, that runs along the northern, eastern, and western sides of the basin over a length of 9.1 miles. The southern side of the basin is an existing bedrock high, meaning that the natural ground is higher than the tailings basin.

         In addition to tailings, the basin receives wastewater and runoff from the Minntac facility. Water from the basin is recycled for use in taconite processing and returned to the basin, which has caused increasing levels of pollutants in the basin. Water from the basin seeps into area groundwater and surface waters, and has caused exceedances of water-quality standards in area surface waters. Of particular concern and at the heart of this appeal are the sulfate levels in area waters.

         Permitting History

         The first NPDES/SDS permit for the basin was issued by the MPCA in 1987.[1] The permit authorized discharges to groundwater, the Dark River, and the Sand River to Little Sandy Lake and Sandy Lake. The permit recognized two of the largest seepage points from the basin as outfall 020 on the west toe of the basin and outfall 030 on the east toe. The locations of these outfalls are now the locations of surface-discharge-monitoring stations SD001 and SD002, respectively. The 1987 permit included some effluent limits- restrictions on the amount of particular pollutants that may be discharged-but required only monitoring and study requirements for sulfate. The 1987 permit expired by its terms on July 31, 1992, but the tailings basin continued operations under the 1987 permit, pursuant to Minn. R. 7001.0160 (2017), until a new permit was issued in 2018.

         In August 2000, the MPCA issued a letter of warning to U.S. Steel, expressing its "concern[] about the existing high sulfate concentrations in the drainage from the Minntac tailings basin" and noting that "[s]ulfate has been identified as a pollutant of concern at the tailings basin since at least 1987." The letter alleged an exceedance, in area surface waters, of the 10 milligram per liter (mg/L) sulfate limit in Minn. R. 7050.0224, subp. 2 (2017), which is known as the wild rice rule. The MPCA acknowledged that U.S. Steel had requested the MPCA to reevaluate the sulfate limit, but explained that if U.S. Steel wanted immediate relief, it would need to seek a variance. In April 2001, U.S. Steel submitted an application for a variance from certain water-quality standards, including the wild rice rule.

         Thereafter, the MPCA and U.S. Steel entered into a series of schedules of compliance that variously required U.S. Steel to study the sulfate issue and pursue technologies to reduce the sulfate discharged from the basin. U.S. Steel studied and rejected, with the MPCA's approval, a number of technologies before deciding to pursue a seep-collection-and-return technology. Pursuant to a 2007 schedule of compliance and a 2010 amendment to the 1987 permit, U.S. Steel constructed a seep-collection-and-return system (SCRS) on the Sand River side of the basin. The SCRS is designed to capture seepage and return it to the basin. The SCRS spans approximately 1¾ miles and consists of catch basins at 13 identified seepage locations, sheet-pile cut-off walls downgradient of each catch basin, underground piping, and two pump stations.

         In June 2011, U.S. Steel and the MPCA executed the final schedule of compliance under the 1987 permit. The 2011 schedule of compliance required U.S. Steel to monitor seepage on the Dark River side of the basin; to study and report on the feasibility of a Dark River SCRS; and, if determined feasible, to build a Dark River SCRS.

         In February 2013, U.S. Steel and the MPCA executed an amendment to the 2011 schedule of compliance. The 2013 amendment added alleged violations of groundwater-quality standards, citing Minn. R. 7060.0400 (2017) and 7050.0221 as setting a 250 mg/L sulfate limit for groundwater. The 2013 amendment required U.S. Steel to submit a groundwater-sulfate-reduction plan.

         In December 2014, the MPCA issued a pre-public-notice draft of a reissued permit for the Minntac facility. After receiving comments from U.S. Steel, WaterLegacy, the band, and other noticed entities, and after modifying the draft permit, the MPCA noticed the draft permit for public comment in November 2016. In December 2016, U.S. Steel submitted an application for a variance from certain water-quality standards, and a request for a contested-case hearing on the permit.[2] On November 30, 2018, the MPCA released its decision reissuing the permit (hereinafter the permit or 2018 permit) and denying U.S. Steel's requests for a variance and a permit-related contested-case hearing.

         The 2018 Permit

         The 2018 permit distinguishes between "surface seepage," which "emerges either from the side of the basin dam, or within the vicinity of the toe of the dam, that creates surface flow or ponded features that would not exist in the absence of the tailings basin," and "deep seepage," which "enters the underlying surficial aquifer throughout the area of the basin and does not discharge[] to the ground surface adjacent to its source." Surface seepage is regulated under the federal NPDES portion of the permit, and deep seepage is regulated under the state SDS portion of the permit.

         The NPDES portion of the permit authorizes discharges to the Dark River and unnamed wetland tributaries, to the Timber Creek and unnamed wetland tributaries, and to unnamed wetlands north of the basin. The permit does not authorize discharges to the east, based on the MPCA's finding that the Sand River SCRS has eliminated surface discharges on the east side of the basin. Discharges to the Dark River are authorized subject to a schedule of compliance requiring U.S. Steel, within 18 months of permit issuance, to build and put into operation the Dark River SCRS to eliminate discharges on the west side of the basin.

         The SDS portion of the permit includes groundwater conditions derived from a 250 mg/L sulfate standard for class 1 waters, based on the MPCA's position that all groundwater in the state is class 1 water subject to the standards of Minn. R. 7050.0221. Based on the class 1 sulfate standard, the permit requires that U.S. Steel reduce the sulfate level in groundwater at the property boundary to 250 mg/L by December 31, 2025, and the in-basin sulfate level to 357 mg/L by December 1, 2028. The permit also includes interim study and reporting requirements in relation to reducing sulfate in the basin, and requires U.S. Steel to begin construction on a selected ...

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