In re Reissuance of an NPDES/SDS Permit to U.S. Steel Corp., A18-2094

• Decision Date: 10 February 2021
• Docket Number: A18-2095,A18-2094,A18-2163,A18-2159
• Citation: 954 N.W.2d 572
• Parties: 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") 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.
• Court: Minnesota Supreme Court

954 N.W.2d 572

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") 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.

A18-2094

A18-2095

A18-2159

A18-2163

Supreme Court of Minnesota.

Filed: February 10, 2021

Keith Ellison, Attorney General, Stacey W. Person, Assistant Attorney General, Saint Paul, Minnesota, for appellant Minnesota Pollution Control Agency.

Paula G. Maccabee, Just Change Law Offices, Saint Paul, Minnesota, for appellant WaterLegacy.

Sara K. Van Norman, Van Norman Law, PLLC, Minneapolis, Minnesota; and Sean Copeland, Fond du Lac Band Legal Department, Cloquet, Minnesota, for appellant Fond du Lac Band of Lake Superior Chippewa.

Jeremy Greenhouse, Kenneth Podpeskar, The Environmental Law Group, Ltd., Mendota Heights, Minnesota, for respondent United States Steel Corporation.

Jeffrey K. Holth, Joseph F. Halloran, Michael L. Murphy, Barbara Cole, The Jacobson Law Group, Saint Paul, Minnesota, for amici curiae Grand Portage Band of Lake Superior Chippewa, Lac du Flambeau Band of Lake Superior Chippewa Indians, and 1854 Treaty Authority.

Joy R. Anderson, Saint Paul, Minnesota, for amicus curiae Minnesota Center for Environmental Advocacy.

OPINION

THISSEN, Justice.

In this case, we must determine whether groundwater is a Class 1 water under Minnesota law and therefore subject to the secondary drinking water standards, including a sulfate standard of 250 milligrams per liter (mg/L), promulgated by the United States Environmental Protection Agency (EPA).¹

Appellant Minnesota Pollution Control Agency (MPCA) issued a National Pollutant Discharge Elimination System/State Disposal System permit (the 2018 Permit) to respondent United States Steel Corporation (U.S. Steel) in 2018. The 2018 Permit governs U.S. Steel's Minntac Tailings Basin Area in Mountain Iron and sets a groundwater sulfate limit of 250 mg/L at the facility's boundary, which U.S. Steel must meet by 2025.

U.S. Steel argues that the MPCA did not have authority to impose the 250 mg/L sulfate standard in the 2018 Permit because the EPA's secondary drinking water standards apply only to bodies of water classified as "Class 1 waters" and groundwater is not classified as Class 1. In response, the MPCA and appellants WaterLegacy and Fond du Lac Band of Lake Superior Chippewa argue that groundwater is a Class 1 water to which the secondary drinking water standards apply.

We conclude that groundwater is a Class 1 water under Minnesota law. Accordingly, we hold that the MPCA correctly exercised its authority by applying the Class 1 secondary drinking water standards to the 2018 Permit. We therefore reverse the decision of the court of appeals on this issue and remand the case to the court of appeals for further proceedings.

FACTS

U.S. Steel processes taconite at its Minntac Taconite Facility in St. Louis County. Taconite is a raw form of iron ore that U.S. Steel refines to produce high-grade iron ore pellets later used to make steel. During the refining process, 70 to 72 percent of ore mined becomes waste, known as "tailings."

Tailings are stored in a tailings basin, which is not lined. The taconite mining and refining process produces a significant amount of wastewater, most of which goes directly into the tailings basin.² This wastewater contains various chemical constituents, including sulfate. Because the basin is unlined, some of the stored wastewater leaks into the surrounding surface waters and groundwater. For example, in 2018, U.S. Steel estimated that approximately 2,000 gallons per minute of wastewater seeped from the tailings basin directly into local groundwater.

The MPCA first issued a National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) permit covering the Minntac Tailings Basin Area facility (the Facility) in 1987 (the 1987 Permit). The 1987 Permit expired in 1992, but U.S. Steel continued to operate the Facility until 2018 pursuant to Minn. R. 7001.0160 (2019), which, subject to exceptions not at issue here, allows a permit holder to continue its permitted activity until the MPCA takes final action on the holder's application for reissuance of the permit. When issuing the 1987 Permit, the MPCA expressed concern about the discharge of sulfate from the tailings basin into surrounding waters and imposed a permit condition "requiring U.S. Steel to develop a plan to study the sources of sulfate" in the tailings basin. Over the years of the Facility's operation, the MPCA has continued to express concern that sulfate concentrations in the tailings basin and surrounding waters have been increasing substantially.

In 2000, the MPCA issued a warning letter to U.S. Steel, highlighting elevated levels of sulfate in the waters surrounding the Facility. U.S. Steel and the MPCA subsequently entered into a series of compliance schedules over the next decade designed to reduce sulfate levels in local groundwater. However, sulfate levels have continued to increase since then, despite U.S. Steel's 2010 installation of a "Seep Collection and Return System" on one side of the tailings basin designed to capture and return wastewater seepage. As of 2018, U.S. Steel reported groundwater sulfate levels ranging between 585 mg/L and 928 mg/L at various collection points surrounding the Facility.

Following a notice and comment period that began in December 2014, the MPCA issued the 2018 Permit. The 2018 Permit requires U.S. Steel to meet a sulfate limit of 250 mg/L in groundwater at the Facility's boundary by 2025. It also requires U.S. Steel to reduce sulfate levels in the tailings basin itself to 357 mg/L by 2028. The 250 mg/L sulfate standard applied by the MPCA is set out in secondary drinking water standards promulgated by the EPA, see 40 C.F.R. § 143 (2020), which are incorporated by reference into Minnesota law, see Minn. R. 7050.0220 – .0221 (2019).

U.S. Steel challenged certain groundwater pollutant limits imposed by the 2018 Permit in the court of appeals.³ The court of appeals held that the Class 1 secondary drinking water standards do not apply to groundwater because the relevant regulations "unambiguously do not classify groundwater" as a Class 1 water. In re Reissuance of NPDES/SDS Permit to U.S. Steel Corp. , 937 N.W.2d 770, 785 (Minn. App. 2019). We granted review.

ANALYSIS

The issuance of the 2018 Permit is a contested agency decision. In reviewing such decisions, we may "affirm the decision of the agency or remand the case for further proceedings; or [we] may reverse or modify the decision" if made "in excess of the statutory authority or jurisdiction of the agency." Minn. Stat. § 14.69 (2020).

Whether the MPCA had the authority to impose a 250mg/L sulfate standard in the 2018 Permit turns on the interpretation of chapter 115 of the Minnesota Statutes and chapters 7050 and 7060 of the Minnesota Rules. The interpretation of statutes and administrative regulations presents a question of law which we review de novo. Cocchiarella v. Driggs , 884 N.W.2d 621, 624 (Minn. 2016) ; J.D. Donovan, Inc. v. Minn. Dep't of Transp. , 878 N.W.2d 1, 5 (Minn. 2016).

When interpreting statutes and regulations, we apply our familiar rules. When the language is plain and unambiguous, we follow that plain language. Vill. Lofts at St. Anthony Falls Ass'n v. Hous. Partners III-Lofts, LLC , 937 N.W.2d 430, 435 (Minn. 2020). But if the language of a statute is subject to more than one reasonable interpretation, we "may resort to the canons of statutory construction to determine its meaning." 500, LLC v. City of Minneapolis , 837 N.W.2d 287, 290 (Minn. 2013).

"Like statutes, administrative regulations are governed by general rules of construction." White Bear Lake Care Ctr., Inc. v. Minn. Dep't of Pub. Welfare , 319 N.W.2d 7, 8 (Minn. 1982). "[W]hen the language of the regulation is clear and capable of understanding," we do not defer to an agency's interpretation and may substitute our own judgment for that of the agency. In re Cities of Annandale & Maple Lake NPDES/SDS Permit Issuance ( Annandale ), 731 N.W.2d 502, 515 (Minn. 2007). However, "when the relevant language of the regulation" is ambiguous, we will defer to the agency's interpretation and "will generally uphold that interpretation if it is reasonable." Id. When ambiguity exists, we consider several factors to determine whether the agency's interpretation is reasonable, including the nature of the regulation at issue and the agency's expertise and judgment in relation to the subject matter of the regulation. See In re Alexandria Lake Area Sanitary Dist. NPDES/SDS Permit No. MN0040738 ( Alexandria ), 763 N.W.2d 303, 312–13 (Minn. 2009).

A.

As an initial matter, we provide some background on the relevant regulatory framework. The Clean Water Act (CWA) aims to "restore and maintain ... the integrity of the Nation's waters." 33 U.S.C. § 1251(a). Although a federal law, the CWA recognizes the "primary responsibilities and rights of States to prevent, reduce, and eliminate pollution." 33 U.S.C. § 1251(b). Accordingly, under the Minnesota Water Pollution Control Act, Minn. Stat. §§ 115.01 –.09 (2020), the MPCA has the authority to "administer and enforce all laws relating to the pollution of any waters of the state," including the authority to issue permits requiring compliance with the CWA. Minn. Stat. § 115.03, subd. 1(a), (e).

The CWA prohibits "the discharge of any pollutant" without a permit. 33 U.S.C. § 1311(a). The relevant permitting scheme for the Facility is the National Pollutant Discharge Elimination System (NPDES) program, which provides for the issuance of permits allowing holders to discharge pollutants if ...