In the Matter of the Denial of Contested Case Hearing Requests and Issuance of National Pollutant Discharge Elimination System / State Disposal System Permit No. MN0071013 for the Proposed NorthMet Project St. Louis County Hoyt Lakes and Babbitt Minnesota.
A19-0112
A19-0118
A19-0124
A20-1271
A20-1380
A20-1385
STATE OF MINNESOTA IN SUPREME COURT
August 2, 2023
Anderson, J. Concurring, McKeig, Hudson, Chutich, Thissen, Moore, III, JJ.
Court of Appeals. Filed: August 2, 2023 Office of Appellate Courts
William Z. Pentelovitch, Margo S. Brownell, Evan A. Nelson, Maslon LLP, Minneapolis, Minnesota, for appellants Minnesota Center for Environmental Advocacy, Center for Biological Diversity, and Friends of the Boundary Waters Wilderness.
Paula Goodman Maccabee, Just Change Law Offices, Saint Paul, Minnesota, for appellant WaterLegacy.
Sean Copeland, Tribal Attorney, Fond du Lac Band of Lake Superior Chippewa, Cloquet, Minnesota; and
Matthew L. Murdock, Sonosky, Chambers, Sachse, Endreson & Perry, LLP, Washington, D.C., for appellant Fond du Lac Band of Lake Superior Chippewa.
Adonis A. Neblett, Minnesota Pollution Control Agency, Saint Paul, Minnesota; and
Kenya C. Bodden, Thompson Coe, Saint Paul, Minnesota, for respondent Minnesota Pollution Control Agency.
Monte A. Mills, Aaron P. Knoll, Greene Espel PLLP, Minneapolis, Minnesota; and
Kathryn Kusske Floyd, Jay C. Johnson, Venable LLP, Washington, D.C., for respondent Poly Met Mining, Inc.
David Schultz, Mehmet K. Konar-Steenberg, Saint Paul, Minnesota, for amici curiae Administrative Law Professors.
Adam W. Hansen, Apollo Law LLC, Minneapolis, Minnesota, for amicus curiae The American Federation of Government Employees Local 704.
Byron E. Starns, Claire M. Williams, Joshua K. Poertner, Stinson LLP, Minneapolis, Minnesota, for amici curiae MiningMinnesota and Minnesota State Building and Construction Trades Council.
Karuna Ojanen, Ojanen Law Office, Rochester, Minnesota, for amicus curiae Minnesota Well Owners Organization.
Hudson B. Kingston, Kevin H. Bell, Silver Spring, Maryland, for amicus curiae Public Employees for Environmental Responsibility.
Mahesha P. Subbaraman, Subbaraman PLLC, Minneapolis, Minnesota, for amici curiae Public Record Media and The Minnesota Coalition on Government Information.
S Y L L A B U S
- Because the decision of the Minnesota Pollution Control Agency (MPCA) to issue a National Pollutant Discharge Elimination System/State Disposal System permit was arbitrary and capricious due to the presence of several danger signals suggesting the agency
did not adequately consider whether the NorthMet project has the reasonable potential to cause or contribute to an exceedance of water quality standards within the Lake Superior watershed, and because appellants may have been prejudiced by the arbitrary and capricious permitting process, we remand to the MPCA to remedy the procedural irregularities and resulting deficiencies in the administrative record. - Because the National Pollutant Discharge Elimination System/State Disposal System permit does not comply with
Minn. R. 7060.0600 , subp. 2 (2021), which prohibits the discharge of industrial waste to the groundwater “unsaturated zone,” we remand the permit to the MPCA for consideration of whether a variance underMinn. R. 7060.0900 (2021) is appropriate for the pollution of unsaturated groundwater within a containment system for the NorthMet project; we affirm, however, that the prohibition inMinn. R. 7060.0600 , subp. 1 (2021), on injecting polluted water directly to the groundwater saturated zone for long-term storage, does not apply.
Affirmed in part, reversed in part, and remanded to the Minnesota Pollution Control Agency.
O P I N I O N
ANDERSON, Justice.
Respondent Poly Met Mining, Inc. (PolyMet)1 proposes to develop a mine and processing plant to extract copper, nickel, and precious metals from the NorthMet Deposit
Appellants are environmental groups and a tribal band that filed three separate certiorari appeals in the court of appeals opposing the permit: (1) Minnesota Center for Environmental Advocacy, Center for Biological Diversity, and Friends of the Boundary Waters Wilderness (collectively, MCEA); (2) WaterLegacy; and (3) Fond du Lac Band of Lake Superior Chippewa (the Band).
Appellants challenged the decision of the MPCA to issue the permit as well as various decisions related to the permit, including decisions to not impose more restrictive conditions on the NorthMet project. While the certiorari petitions were pending, the court of appeals granted the motion of WaterLegacy to transfer this matter to Ramsey County
After consolidating all six appeals, the court of appeals affirmed in part and reversed in part the decision of the MPCA. In re Denial of Contested Case Hearing Requests & Issuance of NPDES/SDS Permit No. MN0071013, Nos. A19-0112, A19-0118, A19-0124, A20-1271, A20-1380, A20-1385, 2022 WL 200338, at *1 (Minn. App. Jan. 24, 2022), rev. granted (Minn. Apr. 19, 2022). The court of appeals concluded that the MPCA “erred by not properly considering whether the federal Clean Water Act applies to any future discharges from Poly Met’s facility to groundwater.” Id. But the court of appeals concluded that “there is no reversible error” with respect to the other issues that appellants raised. Id. The court of appeals remanded to the MPCA “for a determination as to whether any discharges by Poly Met to groundwater are governed by the Clean Water Act.” Id.
Nеither PolyMet nor the MPCA petitioned our court for review of the court of appeals’ remand order; only the MCEA, WaterLegacy, and the Band petitioned this court for review on other issues. We granted their petitions for further review, which raise three primary issues: (1) whether the permit must be reversed or remanded because the
FACTS
The NorthMet Project.
These appeals involve the water quality permits needed for PolyMet’s NorthMet project—the first copper-nickel mine in Minnesota. The proposed project includes a mine
These appeals involve the plans of PolyMet for the collection and treatment of wastewater. The mine and plant sites are upstream from the Band’s reservation and Lake Superior. Water from the project will be treated at the onsite wastewater treatment system. At the highest planned volume, the wastewater treatment system will discharge nearly 4 million gallons of wastewater daily into wetlands that flow to the Embarrass and Partridge Rivers. These rivers flow into the St. Louis River, which the MPCA has identified as an impaired water due to “mercury in fish tissue” and “mercury in the water column.” The St. Louis River ultimately flows into Lake Superior.
The NorthMet project has been the subject of extensive environmental review by numerous federal and state agencies since review began in 2005. As we explained in a prior appeal involving different permits, the project “brings with it potential environmental impacts unique to this type of mining.” In re NorthMet Project Permit to Mine Application, 959 N.W.2d 731, 738 (Minn. 2021). “In particular, the mine waste generated by extracting and processing sulfide ore has the potential to release acid rock drainage, which occurs if either the sulfide ore or waste rock is exposed to oxygen or water.” Id. If this exposure takes place, “the sulfide ore and waste rock would release toxic metals and sulfate that could seep into nearby surface waters and groundwaters.” Id.
Contaminated water from the project, including the mine, the plant, the permanent stockpile, and the tailings basin will be treated at the wastewater treatment system. The permit allows PolyMet to discharge water from the wastewater treatment system to surface waters, subject to technology-basеd effluent limits and internal operating limits.
Legal Framework.
Federal and state law require PolyMet to obtain certain permits before construction and operation of the NorthMet project. The CWA prohibits the discharge of pollutants from a point source to the waters of the United States without a National Pollutant Discharge Elimination System (NPDES) permit.
To implement its own NPDES permit program, a state enters into a Memorandum of Agreement with the EPA.
A state implementing the NPDES permit program must comply with the CWA as well as “state statutory and regulatory standards.” In re Reissuance of an NPDES/SDS Permit to U.S. Steel Corp., 954 N.W.2d 572, 576 (Minn. 2021). Along with the NPDES program, the MPCA is tasked with administering the state disposal system (SDS) permit program under state law. See
During the transfer proceedings for this dispute, the district court found that the typical permit application review process begins with the MPCA reviewing an application for completeness and submitting copies of the application to the EPA for its own review for completeness. After the MPCA determines the application is complete, the MPCA establishes a permitting team to produce a draft permit that is then published for a 30-day comment period.
In addition to the required procedure for review, federal law also mandates many substantive requirements for NPDES permits. As relevant here, the CWA requires that an NPDES permit include water quality-based effluent limitations (WQBELs) under certain circumstances.
WQBELs are required if the discharge of a facility has the “reasonable potential” to cause or contribute to an exceedance of a state water quality standard.
use procedures which account for existing controls on point and nonpoint sources of pollution, the variability of the pollutant or pollutant parameter in the effluent, the sensitivity of the species to toxicity testing (when evaluating whole effluent toxicity), and where appropriate, the dilution of the effluent in the receiving water.
PolyMet applied to the MPCA for an NPDES/SDS permit for the NorthMet project in 2016. At one point during the permitting process, the MPCA asked the federal co-regulator, the EPA, to refrain from submitting written comments during the public comment period and instead to comment during a later period reserved exclusively for EPA comments. The MPCA knew that any written comments submitted by the EPA during the public comment period would become part of the administrative record and require the MPCA to describe and respond in writing to the EPA comments. After some dispute between the MPCA and the EPA over the proposed process, the EPA agreed to the delayed, exclusive, comment period. But the EPA never submitted written comments to the MPCA, either during the extended period or otherwise. And the MPCA issued the permit without making a record of its request that the EPA delay comment.
The MPCA also issued the permit without making a complete record of the substance of the discussions that took place during in-person meetings and phone conversations with the EPA. As discussed in greater detail below, the MPCA and the EPA had numerous conversations about the NorthMet permit, including at least one conversation in which the EPA identified concerns with the draft permit and the conclusion by the MCPA that the facility did not have the “reasonable potential” to cause or contribute to a violation of water quality standards such that WQBELs would be required.
The MPCA ultimately determined that the anticipated discharges from the NorthMet facility do not have the “reasonable potential” to cause or contribute to any violations of any applicable water quality standards in waters of the state; thus, the MPCA
The MPCA included the statutorily required technology-based effluent limitations (TBELs) in the final permit. Unlike the site-specific and facility-specific WQBELs that the MPCA did not include, TBELs “aim to prevent pollution by requiring a minimum level of effluent quality that is attainable using demonstrated technologies for reducing discharges of pollutants or pollution into the waters of the United States.” Office of Wastewater Management, U.S. Env’t Prot. Agency, NPDES Permit Writers’ Manual 5-1 (Sept. 2010). TBELs are generally a numeric effluent limit based on the possible level of treatment given the available treatment technologies and cost-benefit analysis, “developed independently of the potential impact of a discharge on the receiving water.”
The MPCA issued the final NPDES/SDS permit—which included TBELs, but not WQBELs—to PolyMet on December 20, 2018. After the permit was issued, appellants filed separate petitions for a writ of certiorari to the court of appeals, challenging the permitting decision of the MPCA.
While the certiorari petitions were pending, WaterLegacy asked the court of appeals to transfer the matter to the district court “to tаke testimony and to hear and determine the alleged irregularities in procedure” under
Under the Minnesota Administrative Procedure Act, judicial review is confined to the administrative record “except that in cases of alleged irregularities in procedure, not shown in the record,” the court may transfer the case to the district court for fact finding.
The district court conducted a thorough reviеw of the alleged procedural irregularities related to the MPCA’s issuance of the permit. The district court allowed limited discovery, held a 7-day evidentiary hearing, and issued findings of fact, conclusions of law, and final determinations. At the same time, the court described the proceedings as limited to “a very narrow issue.” The court determined at the outset that “any substantive determinations by the MPCA” as well as “the procedural and substantive actions of the federal EPA” were beyond the scope of the hearing. As the court explained to the parties at the hearing, “[t]he interface between the EPA and the MPCA must always be presented in the context of the duties and obligations of the MPCA.” The district court ultimately issued an order that was more than 100 pages in length, including 272 paragraphs of findings of fact and 92 paragraphs of conclusions of law. The district court’s factual findings are central to this appeal, and those findings—as well as testimony underlying the same—is summarized next.
As the district court noted, the MPCA and the EPA have collaborated on many NPDES permits, but the district court found that the MPCA did not follow the typical process here in issuing a permit to PolyMet. The agencies engaged in extensive consultations about the NorthMet project, including frequent phone conferences. The court found that the frequent phone conferences “resulted in significantly more interaction between the EPA and the MPCA than with the usual NPDES permit.” The MPCA, however, did not make a thorough record of the communications between the agencies, and the EPA never submitted written comments on the permit.
During a telephone call in March 2018, Kevin Pierard, the NPDES branch chief for the EPA region including Minnesota (Region 5), advised Jeff Udd, the manager of the MPCA Mining Sector, that the EPA was planning to submit written comments on the draft permit during the public comment period, which ended March 16. Udd asked if there was any “wiggle room,” apparently wondering if the EPA could avoid submitting written comments during the public comment period. The district court found that the MPCA sought “to procure an agreement from the EPA to forego sending written comments” during the public comment period.
For the next few days, MPCA and EPA officials discussed the issue of EPA written comments on the draft permit. During one phone call, MPCA Assistant Commissioner Shannon Lotthammer said that she was concerned that written comments from the EPA would “confuse the public” and “create a good deal of press.” But NPDES branch chief Pierard testified that it was customary for the EPA to comment in writing on a draft permit
The agencies ultimately agreed that the EPA would not submit written comments during the public comment period; however, after the public comment period had ended, the EPA would have 45 days to comment on a “pre-proposed permit” before the MPCA submitted a final permit. The administrative record does not include any documentation of the communications between the MPCA and the EPA regarding their request that the EPA delay written comments on the permit.2
EPA Draft Comment Letter.
Notwithstanding the agreement between the agencies to delay the EPA public comment, NPDES branch chief Pierard felt strongly that it was important for the MPCA to understand the EPA’s concerns during the public comment period and he continued to draft written comments. It struck him as odd that the Minnesota water director “would suggest that it was somehow inappropriate for [the EPA] to comment during the public comment period.” As the district court found in paragraph 134 of its order, the MPCA Commissioner and Assistant Commissioner Lotthammer were unaware of any prior requests by the MPCA that the EPA not comment on a public draft NPDES permit.
According to the findings of the district court, the EPA generally provides comments in writing to promote clear communication and to make the comments part of the public record. For a complex project like the NorthMet project, the EPA prefers to submit comments early to allow the state agency to address significant issues before the public comment period begins. That process is informal. Then the EPA typically uses the public comment period to do a formal review as contemplated by the Memorandum of Agreement. The EPA prefers to comment on draft NPDES permits in writing for clarity and to put comments in the public record to document the role of the EPA in the NPDES permitting process.
The administrative record does not contain any record of the draft EPA comment letter. WaterLegacy discovered the comment letter as a result of filing federal FOIA requests after the MPCA issued the permit.3
The parties do not dispute that the draft EPA comment letter is part of the judicial record here because the district court received the letter into evidence at the evidentiary hearing. The comment letter noted several inadequacies in the draft permit, including concerns that the lack of WQBELs would not ensure compliance with the applicable water quality requirements of Minnesota or of all affected states, the reasonable potential analysis did not follow federal statistical requirements, the internal operating limits that the MPCA proposed may not be effective or enforceable, and the permit would not adequately protect downstream waters, including the water quality standards of a downstream tribe. The comment letter also included citations to relevant parts of the CWA and federal regulations. In short, the comment letter reflected the EPA’s concerns that the draft permit was not stringent enough to comply with the CWA and the related federal requirements and regulations.
Issuing the Permit.
Despite the agreement between the agencies about delaying the EPA’s written comments on the permit, the EPA never submitted written comments on the pre-proposed permit. Instead, the agencies continued to discuss the permit orally. They discussed the permit nine times, including at two in-person meetings, between the beginning of the public comment period on January 31, 2018, and the date that MPCA issued the permit. Even
After the MPCA sent the final proposed permit to the EPA, the EPA notified the MPCA that it would not object to the permit and that the MPCA should make its final decision. The MPCA issued the permit for the NorthMet project on December 20, 2018. The final permit did not include WQBELs. The MPCA issued a press release related to the permit that stated: “The EPA had no comments during the period allotted.”
The administrative record contains very little documentation of the feedback or concerns of the EPA regarding the permit, even though the agencies talked by phone approximately every other week during the 3-year permitting process. Despite the extensive communications between the agencies, in its briefing to our court, the MPCA has cited fewer than 30 pages of the administrative record—an administrative record that totals over 320,000 pages—to support its assertion that the concerns raised by the EPA “are reflected in the administrative record.”
District Court Conclusions of Law.
Following the evidentiary hearing, in addition to its extensive factual findings, the district court also made conclusions of law. The court concluded that “the MPCA did not want the EPA to submit a comment letter during the public comment period.” As explained by the court, “[t]he MPCA knew it was required to respond to all written EPA comments, its responses would be public, and the public would find out what the EPA’s specific concerns about the permit were from the comments and responses.” (Footnote omitted.) Although the MPCA had “legitimate reasons for seeking an EPA delay in submitting
The district court, based on its definition of “procedural irregularities not shown in the record” as used in
Court of Appeals Decision.
The environmental groups and the Band, and the MPCA, all appealed the district court’s order. The court of appeals consolidated all the pending appeals: the original writ petitions challenging the permit and the notices of appeal from the district court’s order.
The court of appeals rejected the challenges to the district court’s conclusions of law on irregularities in procedure (the district court’s factual findings were unchallenged). In re Denial of Contested Case Hearing Requests, 2022 WL 200338, at *5–7. The court of appeals concluded that determining whether the district court properly characterized a procedure as irregular or not under
With respect to the arguments made by MCEA, WaterLegacy, and the Band for appellate relief, the court of appeals similarly concluded that it was unnecessary for it to determine whether the permitting process was unlawful or arbitrary or capricious because,
The court of appeals reversed and remanded to the MPCA on one issue, however, concluding that the MPCA erred by not properly considering whether the CWA applies to any discharges from the NorthMet project to groundwater. Id. at *8–9. Neither PolyMet nor the MPCA petitioned for review of that remand determination, and thus, that conclusion is not at issue here.4 Id. at *17.
ANALYSIS
The judicial review provisions of the
the court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative finding, inferences, conclusion, or decisions are:
(a) in violation of constitutional provisions; or
(b) in excess of the statutory authority or jurisdiction of the agency; or
(c) made upon unlawful procedure; or
(d) affected by other error of law; or
(e) unsupported by substantial evidence in view of the entire record as submitted; or
(f) arbitrary or capricious.
Appellants ask us to reverse the MPCA permit decision on both procedural and substantive grounds. Their procedural arguments focus on the communications between
To the extent our resolution of any of these issues “turns on the meaning of words in a statute or regulation,” we review the agency decision de novo. In re NorthMet Project Permit to Mine Application, 959 N.W.2d 731, 757 (Minn. 2021) (quoting St. Otto’s Home v. Minn. Dep’t of Human Servs., 437 N.W.2d 35, 39–40 (Minn. 1989)). When the language of a statute or regulation is unambiguous, we apply the plain language. In re Reissuance of an NPDES/SDS Permit to U.S. Steel Corp., 954 N.W.2d 572, 576 (Minn. 2021). But when the language is ambiguous, we may, but are not required to, defer to the agency’s reasonable interpretation of the statute or regulation. Id. We decide deference “on a case-by-case basis” and “only after thoroughly considering multiple factors.” In re Cities of Annandale & Maple Lake NPDES/SDS Permit Issuance for the Discharge of Treated Wastewater, 731 N.W.2d 502, 525 (Minn. 2007). These factors include but are not limited to “the nature of the regulation at issue and the agency’s expertise and judgment in relation to the subject matter of the regulation.” U.S. Steel Corp., 954 N.W.2d at 576.
I.
This appeal centers on appellants’ claims of unlawful and irregular procedures in the MPCA’s consideration of PolyMet’s permit application, which they further claim rendered the MPCA’s permit decision arbitrary or capricious. We begin by addressing appellants’ arguments that the MPCA permit decision was “arbitrary or capricious” under
A.
Appellants procedural arguments against the permit’s issuance focus on the interactions between the MPCA and the EPA as well as novel procedural decisions the MPCA made during the permitting process. Because this record was developed before the district court, we start by addressing the district court’s order and the relationship between that court’s determinations as to “irregularities in procedure” under
When the case was transferred to the district court for an evidentiary hearing, the district court took a narrow view of the term “irregularities in procedure” under the Administrative Procedure Act.
The court of appeals, for its part, declined to “determine whether the district court erred by concluding that some of the EPA’s procedures were ‘irregular’ and that others were not.” In re Denial of Contested Case Hearing Requests, 2022 WL 200338, at *6. The court of appeals reasoned that its grounds for granting appellate relief did not rest on
We believe that the approach taken by the court of appeals was too constrained. Even if an irregular procedure of an agency does not rise to the level of an unlawful procedure under
We also conclude that the district court’s interpretation of “irregularities in procedure” under
We therefore hold that the term “irregularities in procedure” under
Here, although we hold that the district court’s view of procedural irregularities under
B.
Appellants argue that procedural irregularities in the permitting process are danger signals that show the MPCA permit decision was arbitrary and capricious. These claimed procedural irregularities include (1) the agreement the MPCA made to delay EPA comments on the draft permit during the public comment process; (2) the failure of the MPCA to document in the administrative record either its request or the EPA’s concerns about the draft permit; (3) the lack of explanation in the administrativе record regarding if or how the MPCA resolved the EPA’s concerns; and (4) the general deficiencies in the administrative record regarding communications between the MPCA and the EPA. For the reasons we discuss below, we conclude that the combination of danger signals in the permitting process renders the permit decision arbitrary and capricious under
Agreement Regarding EPA’s Written Comments on Draft Permit.
The first claimed danger signal we consider is the unusual agreement that the MPCA reached to delay the EPA’s written comments on the draft permit. Evidence in the record shows that the MPCA request was atypical. MPCA officials were unaware of any other time that the MPCA had made such a request. And NPDES branch chief Pierard could not recall another state program making such a request. He thought it was odd that the
The district court found that the MPCA request was “based primarily on the intense public interest in the project and the potential impact of public criticism depending on the contents of an EPA written comment letter.” According to the district court, although the MPCA did have “legitimate reasons for seeking an EPA delay in submitting comments,” the MPCA’s “prime motivation” was a “belief that there would be less negative press about the NorthMet Project.”
The motivation of the MPCA—to avoid public awareness and scrutiny of the EPA’s concerns because of the intense public interest in the NorthMet project—is contrary to the express “purposes of the Administrative Procedure Act” to increase transparency and “public access to governmental information.”
The second claimed danger signal we consider is the failure of the MPCA to document its request that the EPA delay submitting written comments on the draft permit or the EPA concerns regarding the draft permit. The MPCA deleted evidence of its request to the EPA, and the administrative record does not explain the reasoning for the request.
We know now, due to the record developed before the district court, that the EPA prepared a draft comment letter on the preliminary permit but did not send it to the MPCA. Instead, the EPA conveyed the substance of the draft comment letter orally to the MPCA during a phone conference in April 2018. According to the letter, the EPA believed that the draft permit was inadequate to ensure consistency with the CWA and insufficient to ensure compliance with state and tribal water quality standards. The letter highlighted the following key concerns:
- Water Quality-Based Effluent Limitations (WQBELs). The EPA stated that the draft permit “does not include WQBELs for key parameters and appears to authorize discharges” that would exceed Minnesota’s “water quality standards for mercury, copper, arsenic, cadmium, and zinc.” The EPA also noted that the “technology based effluent limitations” in the draft permit “are up to a thousand times greater than applicable water quality standards.”
- Protection of Downstream Waters. The EPA expressed concern that the draft permit and “supporting materials do not include sufficient information to explain how downstream water will be protected,” specifically noting that “a downstream tribe” had notified the EPA that “the project is likely to contribute to exceedances of its downstream [water quality standards], including for mercury.”
Permit Enforceability. The EPA stated that the draft permit contains “operating limits” that “may not be enforceable by EPA, citizens, and potentially MPCA and, thus, may be ineffective at protecting water quality under the Clean Water Act.”
The letter advised the MPCA that these concerns “must be addressed to ensure that the permit will achieve compliance with all applicable requirements of the CWA, including water quality requirements of Minnesota.” The EPA also offered a solution, explaining that many оf these concerns “could be resolved,” at least in part, if the MPCA established WQBELs for the authorized discharges.
The administrative record does not include documentation of the concerns that the EPA expressed during the April 2018 phone conference. According to the district court, the MPCA “knew” that if the EPA submitted written comments during the public comment period, “the comments would become part of the administrative record” and “the public would find out” about “the EPA’s specific concerns about the permit.”
It is undisputed that the MPCA failed to make a record of the oral comments the EPA made during the April 2018 phone conference and thus acted directly contrary to the purpose of the Administrative Procedure Act “to increase public accountability of administrative agencies.”
We therefore conclude that the failure of the MPCA to document the request that the EPA delay commenting on the draft permit in the administrative record, along with the ultimate failure to document the substantive concerns of the EPA, are irregularities in procedure that constitute a danger signal of arbitrary and capricious decision-making. See Citizens Advocating Responsible Dev., 713 N.W.2d at 832 (“[A]n agency ruling is arbitrary and capricious if the agency . . . entirely failed to consider an important aspect of the problem.”); see also Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985) (concluding that it is proper to remand to the agency “if the agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it”); cf. In re Review оf 2005 Ann. Automatic Adjustment of Charges for All Elec. & Gas Utils., 768 N.W.2d at 125 (Anderson, J., dissenting) (concluding failure to explain departures in norms and providing a reasoned analysis for the departures constituted arbitrary and capricious actions); Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48 (1983) (reaffirming the principle “that an agency must cogently explain why it has exercised its discretion in a given manner”).
The third claimed danger signal we consider is the failure by the MPCA to document its response to the EPA concerns. As noted, the EPA expressed concerns in the draft comment letter regarding the consistency of the permit with the CWA and compliance with state and tribal water quality standards. The administrative record does not explain if or how the MPCA revised the permit in response to the concerns expressed by the EPA. We do know, however, that the final permit does not include WQBELs as the EPA had recommended. The MPCA explains that it did not have an obligation to respond in the administrative record to the concerns of the EPA because the EPA did not submit comments in writing during the public comment period. See
The failure of the MPCA to document its response to the concerns raised by the EPA is an additional irregularity in procedure that constitutes a danger signal of arbitrary and capricious decision-making. See Citizens Advocating Responsible Dev., 713 N.W.2d at 832 (stating that an agency decision is arbitrary and capricious if the agency “entirely failed to consider an important aspect of the problem”); see generally Dep’t of Com. v. New York, 588 U.S. ___, 139 S. Ct. 2551, 2575–76 (2019) (“The reasoned explanation
General Lack of Documentation.
The final claimed danger signal we consider is the general lack of documentation of communications between the MPCA and EPA. The district court found that “the EPA and thе MPCA had frequent phone conferences,” that “resulted in significantly more interaction between the EPA and the MPCA than with the usual NPDES permit.” We agree with the MPCA that “there is nothing unusual or nefarious” about the agencies having frequent phone conferences. The MPCA, however, points to less than 30 pages in the 320,000-page administrative record to support its assertion that the “concerns raised by EPA” during these phone conferences are “reflected in the administrative record.”9 All we have before us are isolated, scattered references to the EPA as well as the conclusory statement in the permit decision that the MPCA had “adequately considered” the EPA’s comments, without identifying which EPA comments the MPCA considered or any changes the MPCA made in response to the EPA comments. Notably, if the EPA comments in writing, federal regulations require the MPCA to “specify which provisions,
The district court found that the MPCA “understood that written communications, including emails, between EPA and MPCA could constitute official records.” And although the district court concluded that there was “no overarching effort by the MPCA to keep evidence out of the administrative record,” we have an extensive administrative record that does not explain, and indeed barely recognizes, significant EPA concerns and disagreements with the MPCA involving an important, complex permitting decision. The conduct of the MPCA here includes both a failure to create records and the failure to preserve records that were created.
Providing “oversight of powers and duties delegated to administrative agencies” is one of the principal purposes of the Administrative Procedure Act.
Based on this combination of danger signals, we conclude that the MPCA did not take a “hard look” at the salient problems and did not genuinely engage in reasoned decision-making. Reserve Mining, 256 N.W.2d at 825. The MPCA failed to make a record of or explain the basis for its request that the EPA not provide written comments on the draft permit during the public comment period, the MPCA failed to document significant concerns expressed by the EPA, the MPCA failed to explain its response to the concerns expressed by the EPA, and the MPCA generally failed to document its communications with the EPA. The motivation of the MPCA to avoid public scrutiny, as found by the district court, is not only contrary to the purposes of the
Under these circumstances, the procedural irregularities in the permitting process suggest that the MPCA exercised “its will and not its judgment,” Markwardt v. State, Water Res. Bd., 254 N.W.2d 371, 374 (Minn. 1977), and we therefore hold that the permit decision was arbitrary and capricious. We express no opinion on whether any one of the danger signals, standing alone, would be sufficient to conclude that the permit decision was arbitrary or capricious. We have stressed that “the public has a right to be informed of all actions and deliberations made in connection with activities” that affect the public interest, and the public’s knowledge of the bases for government decisions lies “at the heart of a democratic government.” Prior Lake Am., 642 N.W.2d at 741. Making a complete
C.
Having concluded that the MPCA permit decision was arbitrary and capricious, we next consider the issue of prejudice. We may reverse or modify an arbitrary or capricious agency decision “if the substantial rights of the petitioners may have been prejudiced” by the decision.
We also disagree with the court of appeals’ conclusions regarding the nature and scope of the prejudice. The court of appeals focused upon whether the MCEA’s, WaterLegacy’s, and the Band’s “ability to submit comments on the permit” was impeded. In re Denial of Contested Case Hearing Requests, 2022 WL 200338, at *6. But more fundamentally, judicial relief is available if arbitrary or capricious agency action may have led to a different substantive outcome by the agency than would have otherwise been
Many of appellants’ key substantive challenges to the permit were on items of concern raised by the EPA and apparent conflict with the MCPA. This includes appellants’ arguments that the MPCA permit decision is inconsistent with the CWA’s requirement for WQBELs, is insufficient to meet state and tribal water quality standards, and does not comply with the requirements of the Great Lakes Initiative.
Appellants’ primary arguments relate to the reasonable potential analysis conducted by the MPCA and the need for WQBELs. Federal law “provides that if a proposed discharge to a waterbody will cause or has the reasonable potential to cause or contribute to the violation of water quality standards, the agency must establish an effluent limit for the pollutant.” In re Alexandria Lake Area Sanitary Dist. NPDES/SDS Permit No. MN0040738, 763 N.W.2d 303, 308 (Minn. 2009) (emphasis added) (citing
The MPCA argues that its reasonable potential analysis was “highly technical” and “must be shown great deference.” In prior decisions involving the review of NPDES/SDS permits, after concluding that the MPCA’s analysis was reasonable, we have deferred to the technical expertise and scientific judgment of the MPCA. See Alexandria, 763 N.W.2d at 313, 316; In re Cities of Annandale & Maple Lake NPDES/SDS Permit Issuance for the Discharge of Treated Wastewatеr, 731 N.W.2d 502, 515–16 (Minn. 2007). But in those decisions, there was no evidence that the EPA disagreed with the MPCA’s analysis.
Notwithstanding the EPA draft comment letter, which reflected significant reservations about the sufficiency of conditions in the draft permit, the MPCA asks us to infer that the EPA ultimately agreed that the conditions in the final permit were sufficient to ensure consistency with the CWA and compliance with state and tribal water quality standards. The MPCA emphasizes that the agreement with the EPA was simply an agreement to delay written comments on the draft permit—not an agreement that prevented the EPA from submitting written comments altogether. The MPCA also stresses that the EPA did not object to the final permit. When the MPCA issued the final permit, it stated that it had “adequately considered the previously submitted EPA comments,” announcing that the permit “complies with [CWA] requirements identified by EPA.”
The administrative record does suggest that the MPCA considered some of the EPA’s concerns in issuing the final permit. But as we explained above, the administrative record does not adequately document either the substance of federal agency concerns or
We stress that the views of the EPA represent the views of a co-regulator with unquestioned technical expertise and oversight authority regarding the implementation of the CWA. See, e.g., BP Exploration & Oil, Inc. (93-3310) v. U.S. EPA, 66 F.3d 784, 795 (6th Cir. 1995) (noting the deference owed to the EPA, “especially concerning scientific and technical data,” in a dispute involving effluent limitations promulgated by the EPA under the CWA);
Moreover, given the EPA draft comment and how this permitting decision unfolded, we cannot infer from the later absence of written comment from the EPA, or the absence оf an objection by the EPA to the final permit, that the EPA determined that the permit complies with federal law. See, e.g., District of Columbia v. Schramm, 631 F.2d 854, 860 (D.C. Cir. 1980) (explaining that the EPA “retains a veto over the issuance of state permits, but it may also waive responsibility for objecting to noncomplying state permits and even waive notice of the NPDES applications”); see also Fond du Lac Band of Lake Superior Chippewa v. Wheeler, 519 F. Supp. 3d 549, 559 (D. Minn. 2021) (“There is no dispute that
In evaluating the opinions of the federal and state agencies on substantive concerns about the permit, we address two documents suggesting a possible conflict between the agencies. Appellants ask us to take judicial notice of two documents that are not part of the administrative or judicial record—a 2021 report issued by the Office of Inspector General of the EPA (OIG report) and a 2022 EPA comment on the U.S. Army Corps of Engineers Section 404 Dredge and Fill Permit for the NorthMet project (2022 EPA comment). Off. of Inspector Gen., U.S. Env’t Prot. Agency, Improved Review Processes Could Advance EPA Regions 3 and 5 Oversight of State-Issued National Pollution Discharge Elimination System Permits 24 (Apr. 21, 2021); U.S. Env’t Prot. Agency Region 5, Clean Water Act Section 401(a)(2) Evaluation and Recommendations
It is apparent from the EPA draft comment letter that the EPA disagreed with the MPCA about the reasonable potential analysis and the need for WQBELs—the primary substantive issue in this appeal. The draft comment letter recommended that the permit include WQBELs, explaining that “in the absence of WQBELs, there is no assurance that the discharge will meet applicable water quality standards.” But the final permit does not include WQBELs. The MPCA explained in its brief to our court that the MPCA appropriately determined that “there is no reasonable potential for discharges to cause or contribute to exceedances of water quality standards,” citing “both the mandatory treatment process and the associated Operating Limits.” According to the MPCA, the wastewater treatment system of the NorthMet project will use “the proven technologies of mechanical filtration and two kinds of membrane treatment.” But the EPA draft comment letter described the treatment technologies as “new” and stressed that the data in the application materials were merely “estimates based on assumptions and modeling outputs.” The EPA also recommended including WQBELs in the permit because of concerns that the operating limits “may not be enforceable.”
In addition, the EPA expressed concerns in the draft comment letter about compliance with downstream water quality standards. The Band’s reservation is
In light of these apparent conflicts between the MPCA and the EPA on several key issues, we simply do not have an adequate administrative record to resolve the substantive claims of appellants regarding the MPCA permit decision, including the reasonable potential analysis under the CWA and the need for WQBELs, compliance with downstream water quality standards, and the requirements of the Great Lakes Initiative.14 Without a
complete administrative record that includes a reasoned explanation of the MPCA’s decision-making, we cannot meaningfully review the MPCA permit decision. There is evidence that the MPCA and the EPA had competing scientific judgments on majоr issues like the need for WQBELs. Consequently, the inferences that the MPCA asks us to make here go beyond the deference that courts owe to an agency’s expertise, and we decline to draw those inferences here. We hold that deference to the MPCA’s analysis is not warranted under these circumstances.
Because the arbitrary or capricious decision-making by the MPCA directly frustrates our ability to resolve the substantive claims about the permit decision on the administrative record the MPCA made, we conclude that appellants may have been prejudiced by the arbitrary and capricious permit decision under
The district court concluded that “[t]he MPCA and its legal counsel knew for years that a legal battle was on the horizon in connection with the NorthMet project.” Nonetheless, the MPCA did not adequately document the concerns of the EPA—the federal agency with oversight authority over the NPDES permit—and the administrative record offers little insight into how the MPCA responded to the concerns of the EPA. According to the district court, “the MPCA made decisions motivated by how the public might react.” We are aware of the concerns of the EPA now only because of public records requests and the subsequent litigation. “To expect an agency to consider all of the relevant evidence and demonstrate the ability to cogently explain its reasoning is not, as some might claim, an undue burden. It is merely a prudent safeguard against administrative abuse.” In re Application of Minn. Power for Auth. to Increase Rates, 838 N.W.2d 747, 767 (Minn. 2013) (Anderson, J., dissenting).
In sum, we have an obligation to intervene when “a combination of danger signals” suggests that “the agency has not taken a hard look at the salient problems and has not genuinely engaged in reasoned decision-making.” In re Reichmann Land & Cattle, LLP, 867 N.W.2d 502, 512 (Minn. 2015) (internal quotation marks omitted) (quoting Reserve Mining, 256 N.W.2d at 825). This statement is particularly true here, given the recognition of the MPCA of the “complex and unprecedented environmental and human health questions” at stake in Minnesota’s first copper-nickel mine, and the inability for us to assess the appellants’ substantive claims based on the limited administrative record the MPCA made as it related to the EPA. It is axiomatic that a petitioner’s substantial rights may have been prejudiced by arbitrary or capricious decision-making when that arbitrary or capricious conduct is the very thing frustrating the ability to engage in meaningful review of the substantive challenges to the permit and the agency may have reached a different substantive outcome without the arbitrary or capricious agency action.
D.
Having determined that the MPCA permit decision was arbitrary and capricious and that appellants have made a sufficient showing of prejudice under
(remanding to agency for failure to make a proper record); see also Reserve Mining Co. v. Minn. Pollution Control Agency, 267 N.W.2d 720, 723 (Minn. 1978) (explaining that when an agency acts arbitrarily or capriciously, a court has the duty “to remand the matter to the agency to correct its own errors and fashion amended permits within the broad principles prescribed by the reviewing court”).
We therefore reverse the court of appeals’ decision on these issues and remand to the MPCA to remedy the deficiencies in the administrative record. Appellants ask us to remand to the MPCA to reopen the entire public comment period. But appellants have not demonstrated that their own ability to comment was affected by the deficiencies in the administrative record regarding the EPA. Appellants submitted extensive comments during the public comment period, and the MPCA addressed their comments. Thus, we dеcline to remand to the MPCA to reopen the entire public comment period.
Instead, our remand is narrowly tailored to remedying the procedural irregularities and resulting deficiencies in the administrative record, which prevent us from resolving the substantive issues that appellants have raised on appeal. These procedural irregularities and deficiencies relate almost exclusively to the EPA. Accordingly, we remand to the MPCA for the limited purpose of giving the EPA an opportunity to provide written comments on the final permit and for the MPCA to respond to any comments submitted by the EPA. We also direct the MPCA to amend the permit if necessary to ensure consistency with the CWA and any need for WQBELs, compliance with state and tribal water quality
II.
We now move from surface water issues to groundwater issues. The MCEA argues that the MPCA erred by issuing a permit that does not comply with a Minnesota administrative rule that regulates the discharge of industrial waste to groundwater,
Two parts of the facility are implicated by the groundwater rules challenges. First, the permanent stockpile will store Category 1 waste—the waste with the lowest potential for pollution. PolyMet submitted the below image, which models the effect of the Category 1 Waste Rock storage site and containment system on groundwater, as part of its “Rock and Overburden Management Plan.”
The permanent stockpile of Category 1 waste rock will sit over a containment system: cutoff walls will surround the 526-acre pile, and a drainage collection system will collect groundwater within the system. The cutoff wall will be attached to the bedrock to limit the amount of water that escapes the system without going through the wastewater treatment system. To reduce or avoid leaching through the cutoff walls, the containment system will include “drawdown” technology to maintain an inward gradient so that potential leaching through the containment system would bring additional water into the system, rather than out of the system. Wastewater collected in this containment system will be sent to a wastewater treatment system (WWTS).
Second, a separate floatation tailings basin will store tailings, which is a waste product from ore processing. PolyMet submitted the below model for the floatation tailings basin (or FTB), which shows its groundwater containment system.
The tailings from the NorthMet project will be mixed with water and pumped as a slurry into an existing taconite tailings basin. The floatation tailings basin will also be used to dispose of seepage from the containment system, treated mine water, water from mining features, and other contaminated water. The existing tailings basin is unlined and is already a source of groundwater and surface water pollution in the area. The basin will remain unlined after construction of the containment system. The tailings basin will cover approximately 1,370 acres and will be surrounded by a cutoff wall like the permanent stockpile. As with the permanent stockpile, a drainage system will collect water within the containment system and convey it to the wastewater treatment system. And because the new containment system will surround existing waste, the system will reduce current pollution outside of the system.
When the MPCA considered groundwater pollution from the project, it did not consider pollution to the groundwater inside the two containment systems under the permanent stockpile and tailings basin.
Groundwater “constitutes a natural resource of immeasurable value which must be protected as nearly as possible in its natural condition.”
A.
The MCEA argues that the permit does not comply with
No sewage, industrial waste, other waste, or other pollutants shall be allowed to be discharged to the unsaturated zone or deposited in such place, manner, or quantity that the effluent or residue therefrom, upon reaching the water table, may actually or potentially preclude or limit the use of the underground waters as a potable water supply, nor shall any such discharge or deposit be allowed which may pollute the underground waters. All such possible sources of pollutants shall be monitored at the discharger’s expense as directed by the agency.
The MCEA argues that the rule doеs not allow any industrial waste to enter the unsaturated zone if the discharge might ultimately pollute the underground waters. The
The core of the disagreement here concerns whether the water within the containment systems is part of “the underground waters” that may not be polluted under
In deferring to the MPCA, the court of appeals declined to interpret the meaning of underground water in the context of
We conclude that the prohibition on a “discharge or deposit” that “may pollute the underground waters” under
groundwater within the containment systems will be polluted, we therefore conclude that the permit does not comply with
The surrounding regulations support the broad prohibition on the discharge of pollutants to the underground waters under
Subpart 7 of
Although we conclude that the current permit does not comply with
the agеncy finds that by reason of exceptional circumstances the strict enforcement of any provision of these standards would cause undue hardship, that disposal of the sewage, industrial waste, or other waste is necessary for the public health, safety, or welfare, or that strict conformity with the standards would be unreasonable, impractical, or not feasible under the circumstances.
B.
The MCEA also argues that the permit does not comply with
In its permit application, PolyMet explained that the water table inside the containment systems will be drawn down. By drawing down the water table, PolyMet aims to maintain an inward gradient, so that any potential leeching through the barrier would be into the containment systems rather than out of the containment systems. Once water and the pollutants within the containment systems reach the bedrock or cutoff wall, they will travel via a passive system: a perforated drainpipe near the bottom of the trench that is filled with granular drainage material. According to the groundwater modeling of one expert, the drawdown will “influence[]” the rate at which pollution travels from the surface to the saturated zone, but the system does not push or pull water down.
We conclude that the drawdown function of the containment systems is not a device “for the purpose of injecting materials into the zone of saturation.”
CONCLUSION
For the foregoing reasons, we affirm in part the decision of the court of appeals, reverse that decision in part, and remand to the MPCA for further proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded to the Minnesota Pollution Control Agency.
CONCURRENCE
McKEIG, Justice (concurring).
I agree with the outcome and the legal analysis by the majority and join the court’s opinion in full. I write separately to emphasize the importance of the Fond du Lac Band’s water quality standards, and to highlight the serious disservice that the Minnesota Pollution Control Agency (MPCA) and the Environmental Protection Agency (EPA) did to the Band. The Band’s interests were an afterthought here—discounted by those with the responsibility and power to ensure compliance with the Band’s standards. Although the court’s opinion effectively protects the Band’s interest in clean water by remanding the permit for further consideration, I write separately to emphasize the seriousness of the MPCA’s failure to create a record.
The Band signed several treaties with the United States government, the last of which was signed in 1854. See Mille Lacs Band of Chippewa Indians v. Minnesota, 124 F.3d 904, 918 (8th Cir. 1997) (discussing 1854 treaty). The 1854 treaty created reservations for the Band in exchange for title to land historically occupied by the Anishinaabe people (also known as the Ojibwa or Chippewa people). Id. at 918–19. This treaty explicitly preserved the Band’s usufructuary rights—“[t]he privilege of hunting, fishing, and gathering the wild rice, upon the lands, the rivers and the lakes included in the territory ceded . . . .”—which were originally reserved in earlier treaties. Treaty with the Chippewa, July 29, 1837, 7 Stat. 536, Art. 5; Mille Lacs Band, 124 F.3d at 919 (“[T]he evidence is overwhelming that neither party intended the 1854 Treaty to disturb usufructuary rights.”).
More than 20 years ago, the Band set its own water quality standards so that members of the Band could safely exercise their treaty rights and preserve cultural traditions. Given the Band’s treaty rights, TAS status under the Clean Water Act, and the Band’s role as a “sovereign nation[] with at least some stewardship responsibility over the precise natural resources implicated by” this permit, the MPCA was obligated to treat the Band’s environmental standards “with appropriate solicitude.” Cf. Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers, 985 F.3d 1032, 1043–44 (D.C. Cir. 2021)
If the MPCA approved a permit that violates the Band’s water quality standards—which seems possible given the inadequate record before us—then the MPCA failed to treat the Band with appropriate solicitude under the law and approved a permit that threatens the Band’s cultural traditions. For the more than 4,000 members of the Fond du Lac Band, natural resource rights are more than just a property right, they are a way of life. See United States v. Winans, 198 U.S. 371, 381 (1905) (“The right to resort to the fishing . . . was a part of larger rights possessed by the Indians, . . . which were not much less necessary to the existence of the Indians than the atmosphere they breathed.”). Band members rely on their right to hunt, fish, and gather natural resources on the reservation and in the ceded territory for subsistence, cultural, and religious purposes. The Band’s reservation lies just 70 miles downstream of the proposed mine, and discharges from the mine will flow directly to the reservation and ceded territory, threatening natural resources that the Band’s members depend on.
While I agree with the outcome from the court and join the court’s opinion in full, I write separately to emphasize the defective administrative proceeding employed by the MPCA. The EPA raised more than mere concerns with the MPCA’s draft permit; the EPA identified specific inadequacies that, if left in the final permit, failed to protect the Band’s standards. But the MPCA and the EPA reached an arrangement that ultimately kept any record of these inadequacies secret. The MPCA and the EPA sought to avoid public
The court effectively protects the Band’s interest in clean water by remanding the permit for further consideration. I write separately to emphasize the seriousness of the MPCA’s failure to create a record. By failing to make a record of how the agencies resolved the inadequacies that the EPA identified in the draft permit, the MPCA continued this country’s centuries-long history of threatening tribal resources with political disregard of tribal rights.
HUDSON, Justice (concurring).
I join in the majority and in the concurrence of Justice McKeig.
CHUTICH, Justice (concurring).
I join in the majority and in the concurrence of Justice McKeig.
THISSEN, Justice (concurring).
I join in the majority and in the concurrence of Justice McKeig.
MOORE, III, Justice (concurring).
I join in the majority and in the concurrence of Justice McKeig.
Notes
the achievement of more stringent limitations than otherwise imposed by effluent limitations in order to meet any applicable water quality standard by establishing new effluent limitations, . . . including alternative effluent control strategies for any point source or group of point sources to insure the integrity of water quality classifications, whenever the agency determines that discharges
of pollutants from such point source or sources, with the application of effluent limitations required to comply with any standard of best available technology, would interfere with the attainment or maintenance of the water quality classification in a specific portion of the waters of the state.