In re Hibbing Taconite Mine & Stockpile Progression

Citation888 N.W.2d 336
Decision Date05 December 2016
Docket NumberNo. A16–0363.,A16–0363.
Parties In the Matter of HIBBING TACONITE MINE AND STOCKPILE PROGRESSION and Williams Creek Project Specific Wetland Mitigation.
CourtMinnesota Court of Appeals

Gerald W. Von Korff, John C. Kolb, Rinke Noonan, St. Cloud, MN, for relator Lake of the Woods County.

Lori Swanson, Attorney General, Max Kieley, Assistant Attorney General, St. Paul, MN, for respondent Department of Natural Resources.

Susan K. Wiens, William P. Hefner, The Environmental Law Group, Ltd., Minneapolis, MN, for respondent Cliffs Natural Resources Inc.

Considered and decided by REILLY, Presiding Judge; HALBROOKS, Judge; and JOHNSON, Judge.

OPINION

REILLY, Judge.

In this certiorari appeal, relator county challenges a final order affirming respondent administrative agency's approval of respondent mine operator's wetland replacement plan. We affirm in part, reverse in part, and remand.

FACTS

In January 2014, respondent Cliffs Natural Resources Inc. (Cliffs) submitted to respondent Minnesota Department of Natural Resources (DNR) an application for approval of a wetland replacement plan (the plan or the Cliffs's plan) proposing the restoration of about 432 acres of wetlands at a specified site in Lake of the Woods County (the LOW site). The plan stated that the LOW site was projected to produce approximately 443.34 wetland credits, 14.29 of which were designated for mitigation of wetland impacts of mine progression and stockpile development at Cliffs's mining operation, Hibbing Taconite, and the balance of which were "to be held for future use" to mitigate wetland impacts of any of Cliffs's mining operations' "potential future" activities requiring a permit to mine (PTM). The plan was entitled "Project–Specific Wetland Replacement Plan Hibbing Taconite Mine and Stockpile Progression Project" and was submitted by Cliffs to DNR pursuant to its authority to approve wetland-replacement actions in connection with activities requiring a PTM. See Minn.Stat. § 103G.222, subd. 1(a) (2014) ; Minn. R. 8420.0200, subp. 1.D, .0930, subp. 1 (2015).

Relator Lake of the Woods County (the county) and others submitted to DNR comments opposing Cliffs's plan based on "numerous technical issues and its inconsistency with the Wetland Conservation Act." The county also asserted that the plan, despite its title, was not a wetland replacement plan subject solely to DNR approval, but rather a wetland banking plan subject to specific regulatory requirements and oversight by the Minnesota Board of Water and Soil Resources (BWSR).See Minn.Stat. § 103G.2242, subd. 9 (2014) ; Minn. R. 8420.0700 –.0820 (2015).

DNR issued a notice of decision approving the plan as a replacement plan and directing that "any person aggrieved by this decision may appeal the decision in the manner provided for a contested case hearing." The county both petitioned DNR for contested-case proceedings and submitted an appeal to BWSR, asserting that the proper avenue of review was the appeal to BWSR. BWSR held the county's appeal in abeyance, and DNR ordered contested-case proceedings before the Minnesota Office of Administrative Hearings (OAH) to adjudicate three issues:

1. Was the Commissioner's approval of [the Cliffs's plan] issued in conjunction with a valid [PTM] and an approved mining reclamation plan pursuant to the requirements of Minn.Stat. § 103G.222, subd. 1 (2012)?
2. If there are surplus wetland mitigation credits developed by Cliffs [under its plan], can they be used to mitigate mining-related wetland impacts at Cliffs' mining operations ... pursuant to Minn. R. 8420.0930, subp. 4A (2013) without being deposited in a state wetland bank?
3. Did the Commissioner have cause to approve [the Cliffs's plan] pursuant to Minn.Stat. § 103G.222, subd. 1 (2012) and Minn. R. 8420.0930 (2013)?

Cliffs successfully petitioned to intervene and brought a motion to dismiss the contested-case proceedings for lack of jurisdiction or, alternatively, to limit the proceedings to review on the administrative record. Both the county and DNR opposed Cliffs's motion to dismiss or to limit the proceedings, and the administrative-law judge (the ALJ) denied the motion.

DNR moved for partial summary disposition, which Cliffs supported and the county opposed. The ALJ issued an order recommending summary disposition in favor of DNR on Issues 1 and 2, and the parties entered into a settlement agreement resolving Issue 3. The ALJ issued an order recommending dismissal of the contested-case proceedings, in light of the partial summary-disposition recommendation and the parties' settlement agreement.

After receiving written arguments, the commissioner of natural resources (the commissioner) issued a final order adopting with modification the ALJ's order denying Cliffs's motion to dismiss the contested-case proceedings for lack of jurisdiction and recommending summary disposition in favor of DNR on Issues 1 and 2; adopting without modification the ALJ's order recommending dismissal of the contested-case proceedings; and affirming DNR's notice of decision approving the plan as modified by the settlement agreement. The final order includes a conclusion that "excess wetland credits from [wetland restoration at] the [LOW] site [may] be used to replace future mining-related [wetland] impacts from mining operations under a [PTM] that is held by [Cliffs]."

The county appeals, arguing that DNR lacked jurisdiction to initiate contested-case proceedings and exceeded its authority in approving the plan.

ISSUES

I. Did the county waive or forfeit the issues raised on appeal?

II. Did DNR exceed its statutory authority in approving Cliffs's plan?

ANALYSIS

This appeal requires us to examine the nature and extent of DNR's authority under the Minnesota Wetland Conservation Act (WCA), Minn.Stat. §§ 103G.221 –.2375 (2014), which was adopted by the legislature in 1991 for the purpose of preserving and restoring Minnesota wetlands. See Minn.Stat. § 103A.201 (2014) ; Drum v. Minn. Bd. of Water & Soil Res., 574 N.W.2d 71, 73 (Minn.App.1998). WCA requires that "[w]etlands must not be drained or filled, wholly or partially, unless replaced by actions that provide at least equal public value under a replacement plan." Minn.Stat. § 103G.222, subd. 1(a). WCA is primarily administered by BWSR in cooperation with soil and water conservation districts and other local government units (LGUs). Drum, 574 N.W.2d at 73–74 ; Minn.Stat. § 103G.005, subd. 10e (2014) (defining local government unit). Generally speaking, to engage in activities potentially impacting wetlands, one must apply to the responsible LGU for no-loss or exemption determinations or for approval of a replacement plan. See Minn.Stat. § 103G.2242, subds. 1(a), 1(b), 4. The decisions of LGUs, including a replacement-plan decision, may be appealed to BWSR. Id., subd. 9.

In an exception to the general LGU–BWSR procedure, WCA authorizes DNR to approve replacement plans for wetland impacts resulting from activities requiring a PTM under Minnesota Statutes section 93.481 (2014). Minn.Stat. § 103G.222, subd. 1(a). As to wetland impacts resulting from activities requiring a PTM, wetland replacement must take place under a mining reclamation plan approved by the commissioner. Id. "Mining reclamation plans shall apply the same principles and standards for replacing wetlands that are applicable to mitigation plans approved as provided in section 103G.2242." Id. DNR's approval of wetland replacement under a mining reclamation plan is subject to review through a contested-case proceeding. See Minn.Stat. § 93.50 (2014) (providing for review under chapter 14).

Pursuant to its authority under WCA, BWSR promulgated rules in 1993 establishing a state wetland banking system. See Minn.Stat. § 103G.2242, subd. 1(a) ; Minn. R. 8420.0700 –.0820. The state wetland bank is "a system of identifying wetlands restored or created for replacement credit and providing for, facilitating, and tracking the exchange of wetland banking credits for projects that require replacement plans or wetland mitigation required by other local, state, or federal authorities." Minn. R. 8420.0111, subp. 67 (2015). Deposits into the state wetland bank are accomplished through an application to the responsible LGU. Minn. R. 8420.0705, .0725. A banking plan application must be reviewed by a technical evaluation panel (TEP), which may recommend certain changes or additions before LGU approval. Minn. R. 8420.0705, subp. 3. LGU's banking-plan decisions may be appealed to BWSR. Minn. R. 8420.0905 (2015).

The expressed "purpose of the state wetland banking system is to provide a market-based structure that allows for replacement of unavoidable impacts with preestablished replacement wetlands." Minn. R. 8420.0700. The system may also be used by an applicant seeking to preserve wetland credits solely for its own future use. See Minn.Stat. § 103G.2242, subd. 14(b) (permitting lower fees for "single-user or other dedicated wetland banking accounts"). In 2011, the legislature passed amendments to WCA addressing the use of the wetland bank in connection with activities requiring a PTM. The amendments designate DNR as the LGU "for wetland banking projects established solely for replacing wetland impacts under a [PTM]" and cap the amount of fees that may be assessed for such a banking project. 2011 Minn. Laws ch. 107 §§ 63, 73, at 477, 485, codified at Minn.Stat. §§ 103G.005, subd. 10e(4), .2242, subd. 14(c) (2014).

Under BWSR regulations, whether approved by an LGU or DNR, wetland replacement must be completed in advance of or concurrent with the actual wetland impact. Minn. R. 8420.0522, subp. 8.A (2015). Replacement is in advance if it is accomplished by (1) withdrawal of wetland bank credits before the impact, or by (2) project-specific replacement that has reached certain construction milestones. Id., subp. 8.B (2015). The regulations also allow for combined banking and project-specific replacement through submission of both a banking plan and a...

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