A19-0118 A19-0124 A20-1271 A20-1380 A20-1385

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-0112
A19-0118
A19-0124
A20-1271
A20-1380
A20-1385

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.

Filed January 24, 2022
Affirmed in part, reversed in part, and remanded
Johnson, Judge

Minnesota Pollution Control Agency

Paula G. Maccabee, Just Change Law Offi ces, St. Paul, Minnesota (for relator
WaterLegacy)

Elise L. Larson, Ann E. Cohen, Jay Eids ness, Minnesota Center for Environmental
Advocacy, St. Paul, Minnesota; and

Evan A. Nelson, Margo S. Brownell, William Z. Pentelovitch, Maslon L.L.P.,
Minneapolis, Minnesota (for relators Minneso ta Center for Envi ronmental Advocacy,
Center for Biological Diversity, and Friends of the Boundary Waters Wilderness)

Sean Copeland, Fond du Lac Band of Lake Superior Chippewa, Cloquet, Minnesota; and

Matthew L. Murdock ( pro hac vice ), Sonosky, Chambers, Sachse, Endreson & Perry,
L.L.P., Washington, D.C. (for relator Fond du Lac Band of Lake Superior Chippewa)

Monte A. Mills, Aaron P. Knoll, Davida S. McGhee, Greene Espel P.L.L.P., Minneapolis,
Minnesota; and

Jay C. Johnson (pro hac vice), Venable L.L.P., Washington, D.C. (for respondent Poly Met
Mining, Inc.)

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Richard E. Schwartz (pro hac vice), Holland & Hart L.L.P., Washington, D.C.; and

Bryson C. Smith (pro hac vice), Holland & Hart L.L.P., Jackson, Wyoming; and

Sarah M. Koniewicz, Holland & Hart L.L.P., Boulder, Colorado; and

Kenya C. Bodden, Thompson Coe, Cousins & Irons, L.L.P., St. Paul, Minnesota; and

Adonis A. Neblett, Minnesota Pollution Control Agency, St. Paul, Minnesota (for
respondent Minnesota Pollution Control Agency)

Byron E. Starns, Joshua K. Poertner, Stinson L.L.P., Minneapolis, Minnesota (for amicus
curiae MiningMinnesota)

Considered and decided by Johnson, Presid ing Judge; Jesson, Judge; and Slieter,
Judge.
NONPRECEDENTIAL OPINION
JOHNSON, Judge
Poly Met Mining, Inc., inte nds to build and operate a new mine in St. Louis County
for the purpose of extracting nickel, copper, and platinum-group elements. Poly Met
applied to the Minnesota Pollution Control Agency (PCA) for a permit that would allow it
to discharge water from the mi ne’s facilities. The PCA gr anted the permit, subject to
numerous conditions.
In this matter, several non-profit organiza tions and one tribal band challenge the
PCA’s decision to issue the permit as well as various decisions related to the permit, such
as decisions to not impose more restrictive conditions on Poly Met and to deny a contested-
case hearing. We conclude that the PCA e rred by not properly considering whether the
federal Clean Water Act applies to any future discharges from Poly Met’s facility to
groundwater. But we conclude that there is no reversible error with respect to all other
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issues that have been raised by the parties. Therefore, we affirm in part, reverse in part,
and remand to the PCA for a de termination as to whether any discharges by Poly Met to
groundwater are governed by the Clean Water Act.
FACTS
Poly Met is in the process of planning a new mine known as the NorthMet project.
The project includes a mine site, which now is a relativel y undisturbed parcel of land
approximately six miles south of the city of Babbitt. The project al so includes a former
taconite-processing plant, where mined ore will be processed, which is approximately six
miles north of the city of Hoyt Lakes. And the project includes infrastructure updates to a
transportation corridor that will connect the mine site and the plant site.
The NorthMet project is designed such that wastewater from mining and processing
operations will be collected and treated by a wastewater-treatment system at the plant site
and then routed to a flotation-tailings basin, which will be built on top of a former taconite-
tailings basin. Water that seeps from the ta ilings basin will be captured, treated, and
discharged to the headwater wetlands of three creeks: Unnamed Creek, Trimble Creek, and
Second Creek. Those three creeks flow to the Embarrass River and the Partridge River,
both of which flow to the St. Louis River, which flows into Lake Superior.
Because it will require numerous federal a nd state permits, the NorthMet project
was the subject of environmental review by the federal and state go vernments. A final
environmental-impact statement (FEIS) for the project was jointly prepared by the United
States Army Corps of Engineers, the United States Forest Service, and the Minnesota
Department of Natural Resources (DNR), with assistance from the PCA. The United States
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Environmental Protection Agency (EPA) par ticipated as a cooperating agency and
submitted comments on a draft of the FEIS. In March 2016, the DNR determined that the
FEIS was adequate. No appeal was taken from that decision. Poly Met thereafter
proceeded to seek the permits necessary to complete the NorthMet project.
In July 2016, Poly Met submitted an application to the PCA for a National Pollutant
Discharge Elimination System and State Di sposal System (NPDES /SDS) permit for the
NorthMet project. Poly Met submitted update s to its application in November 2016 and
October 2017. In mid-January 2018, the PC A provided a pre-public -notice version of a
draft permit to the EPA and to interested Indian tribes. Two weeks later, the PCA provided
public notice of a draft permit and allowed members of the public to submit comments
until March 16, 2018. Duri ng the public-comment peri od, the PCA received 686
submissions and four petitions fo r a contested-case hearing. On December 20, 2018, the
PCA issued a written decision in which it denied the petitions for a contested-case hearing
and authorized issuance of an NPDES/SDS permit for the NorthMet project.
In January 2019, three petitions for writs of certiorari were filed with this court to
challenge the PCA’s issuance of the NPDES/SDS permit. In case number A19-0112, the
petition was jointly filed by the Minnesota Center for Environmental Advocacy, the Center
for Biological Diversity, and the Friends of the Boundary Waters Wilderness (whom we
shall collectively identify hereinafter as MCEA). In case number A19-0118, the petition
was filed by WaterLegacy. And in case nu mber A19-0124, the petition was filed by the
Fond du Lac Band of Lake Supe rior Chippewa. In January 2 019, this court consolidated
the three certiorari appeals.
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In May 2019, WaterLegacy filed a motion in this court for a transfer to district court
for an inquiry into certain alleged procedural irregularities. In June 2019, this court granted
the motion and transferred the matter, for limited purposes, to the Ramsey County District
Court. The district court issued an order in September 2020. All of the relators filed notices
of appeal to challenge the district court’s order, and the PCA filed a notice of related appeal.
In November 2020, this court consolidated the three direct appeals with the three
certiorari appeals. The parties thereafter filed their respective appellate briefs, and the court
heard oral arguments in October 2021.
DECISION
We begin by identifying the laws that pr ovide the basic framework of our analysis.
The federal Clean Water Act (CWA) proh ibits the discharge of any pollutant
without a permit. See 33 U.S.C. §§ 1311, 1342 (2018). The discharge of a pollutant occurs
if there is “any addition of a ny pollutant to navigable waters from any point source.”
33 U.S.C. § 1362(12) (2018). A point source is defined by statute to mean “any
discernible, confined and di screte conveyance . . . from wh ich pollutants are or may be
discharged.” Id., § 1362(14). The CWA has long been un derstood to apply to “virtually
all surface waters in the country.” International Paper Co. v. Ouellette, 479 U.S. 481, 486
(1987). The United States Supreme Court recently clarified that the CWA also applies to
discharges of pollutants from a point source to groundwater, if the discharge “is the
functional equivalent of a direct discharge” to navigable waters. County of Maui v. Hawaii
Wildlife Fund, 140 S. Ct. 1462, 1476 (2020).
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An NPDES permit is one type of permit that may be issued under the CWA. See 33
U.S.C. § 1342. The CWA auth orizes the issuance of NP DES permits by states with
approved NPDES permit programs. 33 U.S.C. § 1342(b). Minnesota is such a state. See
39 Fed. Reg. 26061 (July 16, 1974). But the EPA retains an oversight role. See 33 U.S.C.
§ 1342(b). Unless the EPA has waived the re quirement, a state must transmit to the EPA
copies of all NPDES permit applications and must provide the EPA with notice of actions
relating to such applications, including notice of proposed final permits. Id., § 1342(d)(1).
The EPA may object to a proposed permit. Id., § 1342(d)(2). If th e reasons for the
objection are not resolved, the EPA may assume responsibility for issuing the permit. Id.,
§ 1342(d)(4). The EPA also retains authority to enforce state-issued NPDES permits. Id.,
§ 1342(i).
The PCA is the state agen cy charged with administ ering the state’s NPDES
permitting program in Minnesota. Minn. St at. § 115.03, subd. 5 (2020). The PCA’s
administration of the program is governed by the CWA; the state Water Pollution Control
Act, Minn. Stat. §§ 115.01-.09 (2020); appli cable federal and state regulations; and a
Memorandum of Agreement (MOA) with the EPA. The EPA and the PCA entered into
the MOA in 1974, when the EPA approved Minnesota’s NPDES permitting program. The
MOA has subsequently been amended, most recently in 2000.
The PCA also is charged with administ ering the state disposal system (SDS)
permitting program under state law. See Minn. Stat. §§ 115.03, subd. 1(e), .07, subd. 1. If
a project requires both an NPDES and an SDS permit, the issuance of an NPDES permit
satisfies the requirements for both permits. Minn. R. 7001.1010 (2019). But the PCA also
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issues combined NPDES/SDS pe rmits if it determines that some but not all of the
discharges from a project will be governed by the CWA. See In re Reissuance of
NPDES/SDS Permit to U.S. Steel Corp ., 937 N.W.2d 770, 778 (Minn. App. 2019)
(describing PCA’s decision to regulate seep age from tailings basin to groundwater under
SDS portion of permit) ( U.S. Steel I ), rev’d in part on other grounds , 954 N.W.2d 572
(Minn. 2021). The PCA issued a combined NPDES/SDS permit for the NorthMet project.
This court’s review of the PCA’s issuan ce of an NPDES/SDS permit is governed
by the Minnesota Administrative Procedur e Act, Minn. Stat. §§ 14.001-.69 (2020)
(MAPA). See Minn. Stat. § 115.05, subd. 11. Unde r MAPA, our review is based on the
administrative agency’s record, “except that in cases of alleged irregularities in procedure,
not shown in the record,” this court may transfer the case to a district court with instructions
“to take testimony and to hear and determine the alleged irregularities in procedure.” Minn.
Stat. § 14.68. In conducting our judicial review of an agency decision, we
may affirm the decision of the agency or remand the case for
further proceedings; or [we] may reverse or modify the
decision if the substantial right s of the petitioners may have
been prejudiced because the administrative finding, inferences,
conclusion, or decisions are:

(a) in violation of c onstitutional provisions; or

(b) in excess of the statutor y authority or jurisdiction
of the agency; or

(c) made upon unlawful procedure; or

(d) affected by other error of law; or

(e) unsupported by substan tial evidence in view of
the entire record as submitted; or
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(f) arbitrary or capricious.

Minn. Stat. § 14.69. We give “substantial de ference” to agency decisions, which enjoy a
presumption of correctness. In re Minn. Power’s Petition for Approval of EnergyForward
Res. Package , 958 N.W.2d 339, 344 (Minn. 2021) ( EnergyForward); see also In re
NorthMet Project Permit to Mine Application , 959 N.W.2d 731, 749 (Minn. 2021)
(NorthMet). A relator challenging an agency decision bears the burden of demonstrating
that the decision violates one or more of the provisions of section 14.69. EnergyForward,
958 N.W.2d at 344.
In this case, relators do not argue that the PCA’s deci sion violates a constitutional
provision. But relators argue that this c ourt should grant appellate relief under the other
five paragraphs of section 14.69. We begin with relato rs’ arguments that the PCA’s
decision violated paragraph (c).
I. Lawfulness of Procedures
All relators argue that the PCA made its decision to issue the permit based on
“unlawful procedure.” Minn. Stat. § 14.69(c). Specifically, all relators argue that the PCA
followed irregular and unlawful procedures by pursuing and entering into an agreement by
which the EPA would not submit written comments during the public-comment period and
by failing to preserve documents in violation of the Offici al Records Act, Minn. Stat.
§ 15.17 (2020); Minn. R. 70 00.0750, subp. 4(D) (2019); th e PCA’s Records and Data
Management Manual; and common-law principles. WaterLegacy and the Band also argue
that the PCA followed irregular and unlawf ul procedures by processing Poly Met’s
9
application after the PCA received the EPA’ s deficiency letter. WaterLegacy further
argues that the PCA followed irregular and unl awful procedures by violating its duty of
candor in permit-related documents.
A. Background
Relators’ unlawful-procedure argument is based on facts that were determined after
certiorari petitions were filed in this court. As stated above, Wa terLegacy moved for a
transfer to district court for an inquiry in to certain alleged procedural irregularities.
Specifically, WaterLegacy alleged in its motion that “MPCA’s Commissioner and political
leaders at the United States Environmental Protection Agency (EPA) developed a plan to
keep EPA criticism of the NorthMet permit out of the public record and the record for
judicial review.” The MCEA supported the motion, and the Band joined in it.
In June 2019, this court granted WaterL egacy’s motion and transferred the matter
to the Ramsey County District Court “for the limited purpose of an evidentiary hearing and
determination of the alleged irregularities in procedure.” In January 2020, the district court
conducted an evidentiary hearing over seven days. In September 2020, the district court
issued a 104-page order with 272 paragraphs of findings of fact a nd 92 paragraphs of
conclusions of law.
The district court’s findings of facts may be summarized as follows:
At the PCA’s request, the EPA was invol ved in the development of the NPDES
permit for the NorthMet project at an earl y stage. The PCA and the EPA had frequent
telephone conferences, which resulted in si gnificantly more interaction between the
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agencies than is typical. The PCA sought the EPA’s feedback to avoid later objections by
the EPA to the issuance of a permit.
On November 3, 2016, approximately four months after Poly Met first applied for
the NPDES permit, the EPA sent the PCA a letter, which advised the PCA of certain
deficiencies and stated that the MOA prev ented the PCA from processing the application
until the EPA sent a letter indicating that the deficiencies had been resolved. The PCA
never received such a letter, but the EPA did not thereafter question the PCA’s compliance
with the MOA as the PCA moved forward with processing the application.
During a March 5, 2018 conference call, Kevin Pierard, chief of the NPDES
permitting program for Region 5 of the EPA (w hich includes Minnesota), told PCA staff
that the EPA intended to submit written comments on the NorthMet application during the
public-comment period. The PCA’s mining-sector manager questioned whether there was
any “wiggle room” in that appr oach and whether it would be “c leaner to raise the issues
later in the process.” Pierard expressed a preference for a comment letter.
The mining-sector manager informed the PCA’s assistant commissioner for water
policy that the EPA intended to submit written comments during the public-comment
period. The assistant commissioner made a number of telephone calls to EPA staff to
“procure an agreement from the EPA to forego sending written comments during the public
notice period.” The assistan t commissioner also discu ssed the matter with the PCA
commissioner, John Linc Stine, who in turn discussed it with EPA Regional Administrator
Cathy Stepp and her chief of staff.
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During a March 12, 2018 conference call, Commissioner Stine suggested that the
EPA not comment in writing until after the PC A had revised the dr aft permit based on
comments received during the public-comment period. Later that day, Commissioner Stine
sent an e-mail message to Stepp and her chief of staff to thank them for the prior discussion.
Stine copied the assistant commissioner and asked her to follow up with the regional
administrator’s chief of staff “regarding the Region 5—PCA agreement [Stine] mentioned
on [the] call.” Stine’s e-mail message was not preserved by the PCA or included in the
administrative record. Wate rLegacy obtained it from the EPA though public-records
requests.
On March 13, 2018, the assistant commi ssioner sent an e-mail message to the
regional administrator’s chief of staff re questing that EPA not submit written comments
during the public-comment period. The as sistant commissioner also expressed a
willingness to allow EPA a subsequent review period longer than the 15 days allowed by
the MOA. The assistant commissioner testifie d that she deleted this e-mail message, and
the e-mail message is not in the administrati ve record. WaterLegacy obtained it from the
EPA through public-records requests.
On March 16, 2018, the regional administ rator’s chief of staff sent an e-mail
message to the assistant commissioner describing an agreement by which the PCA would,
after responding to public comments, develop a pre-proposed permit and give the EPA up
to 45 days to review it a nd provide written comments to th e PCA while still retaining its
right under the MOA to object to a final proposed permit. The e-mail message from the
regional administrator’s chief of staff is in the administrative record, but it does not reflect
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the PCA’s underlying request that the EPA not submit written comments during the public-
comment period.
Also on March 16, 2018, Pierard called PCA’s mining-sector manager to schedule
a conference call to “walk through what the comment letter would have said had it been
sent.” On April 5, 2018, PCA staff and EPA staff had a conference call during which
Pierard read from a draft comment letter th at the EPA had prepared but did not send
pursuant to the agreement betw een the regional administrato r’s chief of staff and the
assistant commissioner. A PCA permit writer who had taken notes in previous PCA-EPA
conference calls started taking notes during this call but stopped because she was unable
to keep up and discarded the notes she had begun taking. A PCA attorney took notes during
the call and typed them up after the meeting. No notes of the April 5, 2018 conference call
were included in the administrative record. Relators ob tained the PCA a ttorney’s notes
through a motion to compel discovery during the district court proceedings.
Neither Stine nor other PCA witnesses could recall a previous instance in which the
PCA had asked the EPA to not submit written comments during the public-comment period
or in which the EPA had read written comments to the PCA over the telephone.
In its conclusions of law, the district court considered ten alleged procedural
irregularities and concluded that three are procedural irregul arities: (1) the failure to
preserve Commissioner Stine’s March 12, 2018 e-mail message to EPA officials and the
assistant commissioner’s March 13, 2018 e-mail message to the regional administrator’s
chief of staff; (2) the failure to institute a litigation hold at least as early as the filing of the
certiorari appeals; and (3) the failure to preserve the permit writer’s notes of the April 5,
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2018 telephone conference for in clusion in the administrative record. The district court
determined that other conduct by the PCA did not constitute pro cedural irregularities,
including the PCA’s efforts to persuade th e EPA not to submit written comments during
the public-comment period, the agreement to provide an additional 45 days for review of
the pre-proposed permit in exchange for EPA’s refraining from commenting, and the
failure to disclose the PCA a ttorney’s notes of the April 5, 2018 telephone conference
during which the EPA comments were read.
B. Arguments for Reversal of District Court
Relators and the PCA challenge certain part s of the district court’s lengthy order.
They do not challenge the district court’s findings of historical fact— i.e., findings that
describe the interactions between the PCA and the EPA. Rather, they focus their
challenges on several of the district court’s conclusions of law. Relators contend that the
district court erred by concludi ng that it was not a procedural irregularity for the PCA to
seek EPA’s agreement not to submit written comments during the public-comment period.
The PCA contends that the district court erred by determining that its failures to implement
a litigation hold and preserve documents constituted procedural irregularities.
After a transfer pursuant to sec tion 14.68, this court applies a de novo standard of
review to a district court’s legal conclusions. In re Hutchinson , 440 N.W.2d 171, 175
(Minn. App. 1989), rev. denied (Minn. Aug. 9, 1989). In this case, however, we need not
determine whether the district court erred by concluding that some of the EPA’s procedures
were “irregular” and that others were not. No particular legal consequence necessarily
flows from such a characterization. The court of appeals is authorized by statute to grant
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appellate relief to relators only fo r a reason specified in the MAPA. See Minn. Stat.
§ 14.69. Relators’ arguments implicate the third statutory basis for appellate relief:
“unlawful procedure.” Id., (c) (emphasis added). We may not reverse on the ground that
an EPA decision was made upon an irregular procedure that is not unlawful.
Consequently, if we were to conclude that the district court erred by mischaracterizing a
procedure as irregular or not irregular, any such error would be inconsequential and, thus,
a harmless error. See Minn. R. Civ. P. 61.
The district court faithfully and ably conducted its proceedings in the manner
requested by this court’s transfer order a nd made detailed factual findings that have
facilitated our certiorari review. We are grat eful to the district court for its diligent
development of a factual record, a function that appellate courts do not perform. Therefore,
the district court’s order is affirmed.
C. Arguments for Reversal of PCA
Based on both the administrative record and the district court’s findings of fact, we
proceed to address relators’ arguments th at the PCA made a decision “upon unlawful
procedure.” See Minn. Stat. § 14.69(c). If relators are correct that the PCA made its
decision upon an unlawful proce dure, they may be entitled to ju dicial relief, but only if
they can demonstrate that their “substan tial rights . . . have been prejudiced.” See Minn.
Stat. § 14.69; see also First Nat’l Bank v. Department of Commerce , 245 N.W.2d 861,
863-64 (Minn. 1976); E.N. v. Special Sch. Dist. No. 1 , 603 N.W.2d 344, 349-50 (Minn.
App. 1999); Northern Messenger, Inc. v. Airport Couriers, Inc. , 359 N.W.2d 302, 305
(Minn. App. 1984).
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Relators contend that they were prejud iced by the alleged unlawful procedures
because earlier disclosure of the EPA’s concer ns would have aided relators’ efforts to
oppose the NorthMet project by, for example, obtaining documents through public-records
requests and relying on a complete administrative record for judicial review.
We need not determine whether the cha llenged procedures are unlawful because
relators have not demonstrated that the proc edures prejudiced their substantial rights.
Assuming without deciding that the challenged procedures are unlawful, those procedures
did not impede relators’ ability to submit co mments on the permit . Indeed, the MCEA,
WaterLegacy, and the Band each submitted comments to which the PCA provided
responses in connection with issuing the permit. In addition, the record indicates that, even
if the EPA had submitted comments during the public-comment period, it would have done
so near the end of the period. In that event, relators would not have had access to the EPA’s
comments when preparing their own comments or their petitions for a contested-case
hearing. Furthermore, the EPA actually communicated its comments to the PCA through
numerous meetings, conference calls, and wr itten correspondence. The EPA’s concerns
are reflected in the administrative record and the record created in the district court. Many
of the EPA’s concerns are reiterated in relators ’ briefs and are considered in this opinion,
but we have concluded that those concerns do not warrant relief on the merits. See infra
part III. Thus, we conclude that the PCA’s allegedly unlawful procedures did not prejudice
relators’ substantial rights.
We note that the Band asserts a different theory concerning the same underlying
facts: that the PCA’s decision is arbitrary and capricious. See Minn. Stat. § 14.69(f). In
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support of this theory, the Band cites In re Review of 2005 A nnual Automatic Adjustment
of Charges for All Elec. & Gas Utilities , 768 N.W.2d 112, 120 (Minn. 2009) ( 2005
Charges), for the proposition that an agency “mus t generally conform to its prior norms
and decisions or, to the extent that it departs from its prior norms and decisions, the agency
must set forth a reasoned analysis for the depa rture that is not arbitrary and capricious.”
The supreme court’s holding in that case rela ted to an agency’s substantive decision, not
the procedures by which the agency reached that decision. See 2005 Charges, 768 N.W.2d
at 119 (discussing whether agency “failed to follow the principles set out in its prior
variance cases”). In addition, the Band’s arb itrary-and-capricious argument fails for the
same reason as the relator’s unlawful-proc edure arguments: because any departure from
norms did not prejudice the Band’s substantial rights.
Our conclusion on this issue should not be misconstrued as an endorsement of the
challenged procedures. The district court’s key finding bears repeating:
The evidence submitted at the hearing demonstrates that
the MPCA did not want the EP A to submit a comment letter
during the public comment peri od. The MPCA knew that 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 ab out the permit were from the
comments and responses. The MPCA had other legitimate
reasons for seeking an EPA de lay in submitting comments.
However, the MPCA’s primary mo tivation was its belief that
there would be less negative press about the NorthMet Project
if EPA comments were delayed until after public comments
and verbally expressed EPA con cerns were incorporated into
the draft permit.

In other words, the PCA’s efforts to discourage the EPA from providing written comments
during the public-comment period had the purp ose and effect of avoiding or minimizing
17
public criticism of the proposed permit and, in addition, avoiding the need for the PCA to
publicly respond in writing to the EPA’s comments. See 40 C.F.R. § 124.17 (2021)
(requiring agency to respond to public comments); Minn. R. 7001.1070, subp. 3 (2019)
(same). The procedures employed by the PCA in this matter are cont rary to some of the
purposes of MAPA: “to increase public accountability of administrative agencies” and “to
increase public access to gov ernmental information.” See Minn. Stat. § 14.001(2), (4)
(2020). But we need not de termine whether the challenged procedures are unlawful
because it is sufficient to de termine that the challenged procedures di d not prejudice
relators’ substantial rights.
II. Groundwater
Relators argue that, for two reasons, th e permit issued to Poly Met does not
sufficiently protect the groundwater (as opposed to surface waters) surrounding the
NorthMet facility.
A. Applicability of Clean Water Act
First, all relators argue that the PCA erred by not regulating discharges to
groundwater under the NPDES portion of the permit, which is governed by the CWA.
“The Clean Water Act forbids the ‘addition’ of any pollutant from a ‘point source’
to ‘navigable waters’ without the appropriate permit . . . .” Maui, 140 S. Ct. at 1468. The
term “navigable waters” is defined within the CWA to mean “the waters of the United
States, including the territorial seas,” 33 U.S.C. § 1362(7), a nd is understood to include
“navigable streams, rivers, the ocean, or coastal waters,” Maui, 140 S. Ct. at 1469. When
the PCA was considering Poly Met’s applica tion, there was uncertainty in the caselaw
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concerning “whether the CWA applies to discharges conveyed by groundwater to
navigable waters.” U.S. Steel I, 937 N.W.2d at 778 (citing federal appellate opinions from
the Fourth, Sixth, Seventh, and Ninth Circuits). Before 2020, the PCA interpreted the
CWA to not apply to such discharges. See id. (considering permit issued by PCA in
November 2018). It appears that the PCA took the same position with respect to the permit
in this case.
In April 2020, the United States Supreme Court held that the CWA applies, and an
NPDES permit is required, if “there is a direct discharge from a point source into navigable
waters or when there is the functional equivalent of a direct discharge.” Maui, 140 S. Ct.
at 1476. The Court identified a non-exhaustiv e list of factors that may be relevant to
determining whether a discharge to groundwater is the functional equivalent of a discharge
directly to navigable waters:
(1) transit time, (2) distance tr aveled, (3) the nature of the
material through which the polluta nt travels, (4) the extent to
which the pollutant is diluted or chemically changed as it
travels, (5) the amount of po llutant entering the navigable
waters relative to the amount of the pollutant that leaves the
point source, (6) the manner by or area in which the pollutant
enters the navigable waters, (7) the degree to which the
pollution (at that point) has ma intained its specific identity.

Id. at 1476-77.
In February 2021, the Minnesota Supreme Court issued an opin ion in response to
an argument that is si milar to relators’ argu ment in this case. In re Reissuance of
NPDES/SDS Permit to U.S. Steel Corp., 954 N.W.2d 572 (Minn. 2021) (U.S. Steel II). The
supreme court concluded that , in light of the recent Maui opinion, the PCA “erred by
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interpreting the CWA as not governing discharges from a point source into groundwater.”
Id. at 574 n.1. As a remedy for that error, the supreme court remanded that case to the PCA
with instructions “to complete a functional equivalence analysis un der the standards set
forth in [Maui].” Id. at 583.
Relators and the PCA agr ee that a functional-equi valence analysis under Maui is
necessary to determine whether discharges from the NorthMet project to groundwater
require an NPDES permit. But they disagree concerning the appropriate disposition of this
issue on appeal. Relators urge this court to reverse and remand to the PCA with instructions
for the PCA to perform a functional-equivalence analysis. In contrast, the PCA urges this
court to perform the functional-equivalence analysis in the firs t instance. The PCA
contends that this case is different from the U.S. Steel II case on the ground that the record
in this case is “sufficient fo r this court to independently conduct a functional equivalent
analysis.” We believe that the issue is not so straightforward. The factors identified by the
United States Supreme Court in evitably require consideration of technical and scientific
concepts, which the PCA is much better equipped to u nderstand and apply, and a
functional-equivalence analysis may require policy decisions that are more appropriate for
an administrative agency. See Maui, 140 S. Ct. at 1476-77. Ac cordingly, we decline to
conduct a functional-equivalence analysis in the first instance.
Poly Met contends that a functional-eq uivalence analysis is unnecessary on the
ground that Maui does not apply. Poly Met asserts th at there will be no discharges to
groundwater because the permit prohibits any such discharge and because its facilities are
designed to prevent such discharges. But the agency record i ndicates that some
20
underground seepage—even if minimal—is expe cted. In addition, the permit appears to
contemplate discharges to groundwater throug h seepage because it repeatedly prohibits
only “direct discharge” to “surface waters” from plant and mine features. Poly Met
contends further that, if unde rground seepage occurs, it would not be a discharge from a
“point source,” as that term is defined by th e CWA. The term “point source” is broadly
defined to mean “any discernible, confined and discrete conveyanc e, including but not
limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling
stock, concentrated animal feeding operation, or vessel or other floating craft, from which
pollutants are or may be discharged.” 33 U.S.C. § 1362(14). The determination of whether
the source of any underground seepage is a “point source” requires an evaluation that
depends, to an extent, on the PCA’s expertise. Accordingly, we decline to make that type
of technical, fact-intensive determination in the first instance.
Thus, the PCA erred by not considering whether any discharges to groundwater
from the NorthMet project will be the functiona l equivalent of a discharge to navigable
waters and, thus, whether the CWA applies to those discharges. See U.S. Steel II , 954
N.W.2d at 574 n.1. Therefor e, we reverse and remand to th e PCA with instructions to
conduct the functional-equivalence analysis required by Maui.
B. Compliance with Minnesota Rules
MCEA argues that the PCA erred by issui ng a permit that does not comply with a
state rule governing groundwater.
This argument is based on the design of the seepage-capture systems that Poly Met
intends to build around one of the waste rock stockpiles (the Category 1 stockpile) and the
21
flotation-tailings basin. The seepage-capture systems will collect water seeping from these
features via surface and shallow groundwater flow and route the collected water to the
wastewater-treatment system. The seepage- capture systems will in clude cut-off walls
keyed to bedrock. The systems are designed to lower the water table inside the walls to
ensure that seepage is collected and routed.
MCEA argues that this design will result in discharges to groundwater in violation
of the following rule:
Subpart 1. Prohibition against discharge into
saturated zone. No sewage, industrial waste, or other wastes
shall be discharged directly into the zone of saturation by such
means as injection wells or other devices used for the purpose
of injecting materials into the zone of saturation , except that
the discharge of cooling water under existing permits of the
agency may be continued, subject to review of the permit by
the agency for conformance with subpart 3.

Subp. 2. Prohibition agains t discharge into
unsaturated zone. No sewage, industrial waste, other waste,
or other pollutants shall be allo wed to be discharged to the
unsaturated zone or deposite d in such place, manner, or
quantity that the effluent or residue therefrom, upon reaching
the water table, may actually or poten tially preclude or limit
the use of the underground wa ters 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.

Minn. R. 7060.0600 (2019) (emphasis added).
MCEA first contends that the NorthMet seepage-capture systems will violate
subpart 1 by directing pollutants to the saturated zone for collection. In response, the PCA
contends that subpart 1 is not implicated b ecause the NorthMet project will not discharge
22
pollutants using injection wells or similar prohibited devices. Injection wells—which are
allowed in some states but not in Minnesota—are used fo r the purpose of permanently
disposing of effluent. See, e.g., Maui, 140 S. Ct. at 1469 (describing injection wells used
by County of Maui to dispose of sewage from surrounding area ). We conclude that the
PCA reasonably interpreted its own rule to not apply to the NorthMet seepage-capture
systems, which are unlike an injection well. See In re Cities of Annandale & Maple Lake
NPDES/SDS Permit, 731 N.W.2d 502, 516 (Minn. 2007) ( Annandale) (explaining that
courts should generally defer to agency ’s reasonable interpretation of ambiguous
regulation).
MCEA also contends that the NorthMet seepage-ca pture systems will violate
subpart 2 on the ground that it categorically prohibits discharges into an unsaturated zone.
In response, the PCA contends that subpart 2 is not implicated because the operation of the
seepage-capture systems will not “preclude or limit the use of groundwater as a potable
water supply” or “pollute the underground waters.” Again, we conclude that the PCA has
reasonably interpreted its own rule. The determination of whether a discharge is prohibited
because it will “preclude or lim it the use of groundwater as a potable water supply” or
“pollute the underground waters” requires the PCA’s expertise and is entitled to deference
from this court.
Thus, the PCA did not err by issuing a permit in violation of Minn. R. 7060.0600.
23
III. Challenges to Conditions of Permit
Relators argue that the PCA erred by issu ing a permit that, they assert, is not
sufficiently protective of state and tribal water-quality standards.
A. Water-Quality-Based Effluent Limits
Relators’ primary argument is that the PCA erred by issuing a permit that does not
include water-quality-based effluent limits (WQBELs).
All NPDES permits must co ntain conditions that consist of technology-based
effluent limits (TBELs). 40 C.F.R. § 122.44(a)(1) (2021). TBELs “represent the minimum
level of control that must be imposed in a permit.” 40 C.F.R. § 125.3(a) (2021). TBELs
are established by the EPA and apply on a nationwide basis. See 33 U.S.C.
§ 1311(b)(1)(A); PUD No. 1 of Jefferson Cnty. v. Washington Dep’t of Ecology, 511 U.S.
700, 704 (1994). In addition, an NPDES permit must include more stringent conditions—
WQBELs—for any pollutants that the permit issuer determines “are or may be discharged
at a level which will cause, have the reasonable potential to cause, or contribute to an
excursion above any State water quality st andard, including State narrative criteria for
water quality.” 40 C.F.R. § 122.44(d)(1)(i) (emphasis added). Accordingly, to determine
whether WQBELs are required, it may be necessary for an administrative agency to
perform a reasonable-potential analysis. 40 C.F.R. § 122.44(d)(1)(i)-(ii).
In this case, the PCA performed a reasona ble-potential analysis and concluded that
the NorthMet project “as designed does not have reasonable potential to cause or contribute
to any violations of any applicable water quality standard s in waters of the state.” The
PCA based that determination on Poly Met’s plan to treat the wastewater to reduce sulfate
24
to 10 mg/L, which the PCA de termined would preclude any reasonable potential for the
discharge to cause or contribute to a violation of the state’s wild-rice rule, see Minn. R.
7050.0224, supb. 2 (2019), and also would limit the rate of other pollutants as necessary to
comply with water-quality standards. The PCA also determined that Poly Met’s plans to
capture and treat wastewater from the flota tion-tailings basin and other mine features
actually will improve the conditi on of receiving and downstream waters as compared to
current conditions. Based on its determination that the NorthMet project will not cause or
contribute to a violation of water-quality st andards, the PCA did not include WQBELs in
the permit, which would have set end-of-pipe limits on discharge. See 40 C.F.R.
§ 122.45(a) (2021) (requiring that permit’s effl uent limits be set at point of outfall or
discharge unless infeasible). But the PCA did impo se conditions consisting of internal
“operating limits” to ensure that Poly Met adheres to certai n numerical standards before
discharging treated wastewater . Specifically, the internal operating limits require the
NorthMet facility to treat wastewater so that, before it is discharged, it meets a limit of 10
mg/L for sulfate as well as limits for copper (9.3 µg/L), arsenic (53 µg/L), cobalt (5.0 µg/L),
lead (3.2 µg/L), nickel (52 µg/L), and mercury (1.3 ng/L).
Relators contend—on various grounds—th at the PCA was required to include
WQBELs in the NorthMet permit. All of the grounds for relators’ contentions are premised
on 40 C.F.R. § 122.44(d)(1). But relators do not explain why the regulation unambiguously
compels the PCA to include WQBELs in the NorthMet permit. Section 122.44(d)(1)(i) is
facially clear in its command: WQBELs ar e required when the PCA determines that
discharges have the “reasonable potential” to cause or contribute to an exceedance of
25
water-quality standards. And section 122.44(d)(1)(ii) identifies certain factors that must
be taken into account in determining the existence or non-existence of reasonable potential.
But the regulations do not prov ide further guidance on how an agency should determine
whether discharges will cause or contribute to a violation of water quality standards. See
Annandale, 731 N.W.2d at 517.
In the absence of clear guida nce, the supreme court and this court repeatedly have
recognized that the federal regulations at issue are ambiguous in their application and that
courts must defer to the PCA’s reasonable in terpretations of the ambiguous regulations.
See In re Alexandria La ke Area Sanitary Dist. , 763 N.W.2d 303, 312-16 (Minn. 2009)
(Alexandria); Annandale, 731 N.W.2d at 517-524; Minnesota Ctr. for Env’t Advocacy v.
City of Winsted, 890 N.W.2d 153, 158-160 (Minn. App. 2017) ( Winsted); In re Decision
on the Approval of 401 Water Quality Certification, 822 N.W.2d 676, 687-88 (Minn. App.
2012) ( 401 Water Quality Certification ). In Annandale, the supreme court discussed
similar “cause or contribute” language in 40 C. F.R. § 122.4(i) (2006) and stated that the
meaning of the regulation “is not a clear-cut i ssue where we can just give effect to an
unambiguously expressed intent and therefor e substitute our judgment for that of the
MPCA.” Id. at 522. The supreme cour t recognized that “the broad nature of the phrase
‘cause or contribute to the violation of wa ter quality standards’ leaves leeway for the
MPCA to make a range of policy judgments based on the MPCA’s scientific and technical
knowledge.” Id. at 524. Accordingly, the supr eme court determined that the PCA
reasonably interpreted 40 C.F.R. § 122.4(i) to allow consideration of expected offsets from
other existing point sources in determining whether a new source would cause or contribute
26
to a violation of water quality standards. Id. In Alexandria, the supreme court applied
Annandale and deferred to the PCA’s interpretation of cause-or-contribute language in 40
C.F.R. § 122.44(d)(1)(vi)(A). 763 N.W.2d at 312-14.
This court twice has applied Annandale by deferring to the PCA’s interpretation of
40 C.F.R. § 122.44(d)(1)—the regulatio n at issue in this appeal. In 401 Water Quality
Certification, we considered an argument that numeric WQBELs were required in a general
NPDES permit for ballast-water discharge. 822 N.W.2d at 687-88. We acknowledged the
requirement of section 122.44(d)(1) for WQBELs “as necessary to meet state water-quality
standards,” but we explained that nothing in that regulation “requires numeric WQBELs,
either in all situations or in the ci rcumstances present in this case.” Id. at 687. We
concluded that “the conflicting positions taken by relators and the MPCA can and should
be resolved by judicial deference to the MPCA’s decision to not impose numeric
WQBELs.” Id. at 688.
Similarly, in Winsted, we addressed an argument that the PCA violated 40 C.F.R.
§ 122.44(d)(1)(i)-(iii) by not de termining whether there wa s a reasonable potential for
discharges from a wastewater-treatment plant to cause or contribute to exceedances of
water-quality standards in certain river reac hes. 890 N.W.2d at 15 7-58. We reasoned,
“Although the language of the regulations at issue plainly requires the MPCA to conduct a
reasonable-potential analysis and include effl uent limits under some circumstances, the
language does not address the data on which the reasonable-potential analysis must be
based.” Id. at 158. The PCA had interpreted the regulations “as not requiring the agency
to assume a water body violates eutrophica tion water quality standards if insufficient
27
information is available to make this determination.” Id. at 159. We concluded that, under
the Annandale standard, the PCA’s interpretati on was “reasonable and entitled to
deference.” Id.
In this case, as in previous cases, the applicable federal regulation is ambiguous in
its application, and the PCA’s interpretation of the regulation is entitled to our deference.
The PCA interprets section 122.44(d)(1) to not require WQBELs for the NorthMet project
on the ground that Poly Met plan s to treat the project’s wast ewater to meet water-quality
standards before it is discharged to surface waters. Relators object to the PCA’s use of pre-
discharge operating limits, rather than en d-of-pipe WQBELs, to ensure Poly Met’s
adherence to promised water-treatment standards. But relators cite no authority requiring
the PCA to adopt WQBELs if it has determined that a facility has no reasonable potential
to cause or contribute to an exceedance of water-quality standards. The PCA’s reasonable-
potential analysis is based on its scientific e xpertise and policy judgments, which, as in
prior cases, are entitled to our deference.
Relators also contend that the PCA erred on the ground that its reasonable-potential
analysis violates the requirements of the Great Lakes Initia tive (GLI), which are set forth
in Minn. R. 7052.0005-.0380 (2019), 1 in two ways. The GLI rules apply in this case

1 The EPA began the GLI “in cooperation with the Great Lakes States to establish a
consistent level of environmental protection for the Great Lakes ecosystem, particularly in
the area of State water quality standards and the [NPDES] programs.” 60 Fed. Reg. 15366,
15368 (Mar. 23, 1995). In March 1995, th e EPA published its Final Water Quality
Guidance for the Great Lakes Sy stem in response to Congre ssional direction to “publish
proposed and final water quality guidanc e on minimum water quality standards,
antidegradation policies, and implementation procedures for the Great Lakes System.” Id.
at 15366. That guidance is now contained in 40 C.F.R. Part 132 (2021) and requires Great
28
because the receiving waters of the proposed No rthMet project discharges are within the
Lake Superior Basin. See Minn. R. 7052.0005 (defining scope of rules).
Relators first contend that the PCA erred by not using GLI procedures in conducting
its reasonable-potential analysis under Minn. R. 7052.0220, subp. 1. That analysis applies
if “facility-specific effluent monitoring data are available.” Minn. R. 7052.0220, subp. 1;
see also 40 C.F.R. Part 132 Appx. F., Procedur e 5 (including same language). The PCA
did not apply the GLI-specific reasonable-potential analysis because the NorthMet project
is not yet built, so no monitoring data is yet available. The PCA did not err in this regard.
Relators MCEA and WaterLegacy also contend that the PCA erred by not imposing
a WQBEL for mercury to ensure compliance with Minn. R. 7052.0220, supb. 7. If a GLI
pollutant standard (such as the mercury standard) is exceeded in a body of water, the PCA
must include a WQBEL for that pollutant in the permit of “e ach facility that discharges
detectable levels of such GLI pollutant to that water .” Minn. R. 7052.0220, supb. 7
(emphasis added). The PCA did not include a mercury WQBEL in the permit because the
mercury standard is not exceede d in any of the waters to wh ich discharges will be made:
the headwater wetlands of Unnamed Creek, Trimble Creek, and Second Creek. The PCA
also did not err in this regard.

Lakes states to adopt requirements for waters of the Great Lakes System that are consistent
with its provisions. See 40 C.F.R. § 132.4. Minnesota adopted regulations to comply with
the guidance in 1998. 22 Minn. Reg. 1461, 1466 (Mar. 2, 1998). Also, in connection with
the GLI, Minnesota and Region 5 of the EPA amended the MOA to en sure that chapter
7052 would be implemented in a manner consistent with the federal guidance.
29
MCEA contends further that, even if WQ BELs are not required by federal law, they
are required by state law. MCEA bases this argument on a statutory provision that broadly
defines the PCA’s “power and duties.” See Minn. Stat. § 115.03, subd. 1. That provision
either authorizes or requires the PCA to impos e “more stringent limitations . . . whenever
the agency determines that discharges of pollutants from such point source or sources, with
the application of effluent limitations requir ed to comply with any standard of best
available technology, would interfere with th e attainment or maintenance of the water
quality classification in a specific portio n of the waters of the state.” Id., subd. 1(e)(8).
MCEA interprets this provision to mean that, “if TBELs alone are insufficient to attain or
maintain water-quality standards, Minnesota law requires the Permit to include WQBELs
necessary to protect the standard, without further analysis.” We discern no such mandate.
Assuming without deciding that the MCEA has correctly interpreted the statute, the statute
has not been violated becaus e the NorthMet permit includes “more stringent limitations”
than the federal TBELs in the form of internal operating limits . Relators assert that the
operating limits are unenforceable under federal law, but they have not explained why the
internal operating limits cannot satisfy this provision of state law.
Thus, the PCA did not err by issuing a permit that does not include water-quality-
based effluent limits.
B. Construction-Related Impacts
The Band argues that the PC A erred by issuing a permit that violates 40 C.F.R.
§ 122.4(i) (2021), which provides that “[n]o permit may be issued” to a new facility “if the
30
discharge from its constructi on or operation will cause or co ntribute to the violation of
water quality standards.”
The Band relies on the EPA’s draft comment letter, which cited section 122.4(i) in
questioning the PCA’s intention to regulate construction stormwat er under one of the
state’s general NPDES permits. But the EPA did not suggest that an NPDES permit for
operation of the NorthMet project was prohib ited by section 122.4(i); rather, the EPA
suggested that construction stormwater discharges should be governed by a separate permit
rather than the state’s general stormwater permit, if there would be reasonable potential for
those discharges to cause or contribute to an exceedance of water-quality standards. The
PCA maintained its plan to pe rmit construction stormwater discharges under the general
permit and explained that the general permit “requires best management practices that will
have the effect of reducing mercury in stormwater.” The PCA explained further that “the
discharge will not cause or cont ribute to a violation of water quality standards” and that
“the prohibition in 40 C.F.R. § 122.4(i) does not apply.” The PCA’s analysis in this regard
was based on its expertise, to which we defer.
Thus, the PCA did not err by granting th e NPDES permit for operation of the
NorthMet project without issuing a separate construction stormwater permit for the project.
C. Compliance with Tribal Water-Quality Standards
The Band also argues that , for two reasons, the PCA erred by issuing a permit that
violates 40 C.F.R. § 122.4(d), wh ich prohibits the issuance of a permit if “the imposition
of conditions cannot ensure compliance with the applicable water quality requirements of
all affected States.” The Ba nd is recognized as a state for purposes of the CWA and has
31
adopted its own water-quality standards. See 33 U.S.C. § 1377(e) (2018); 40 C.F.R.
§ 122.2 (2021).
The Band first contends that the PCA did not make a required finding that the permit
would ensure compliance with the Band’s water-quality standards. We discern no
requirement in section 122.4(d) that a permit -issuing agency must make a finding that a
permit will ensure compliance w ith water-quality standards. Instead, the requirement is
that the permit not issue if water-quality standards cannot be met. Nonetheless, the record
includes the PCA’s determination that “the Project as designed doe s not have reasonable
potential to cause or contribute to any violations of any applicable water quality standards
in waters of the state.” (Emphasis added.) The PCA’s reference to “any applicable water
quality standards” must be understood to include the Band’s water-quality standards. See
33 U.S.C. § 1377(e); 40 C.F.R. § 122.2. We note that the absence of a more specific
statement in the record may be attributable to the absence of a comment on this issue by
the Band during the public-comment period. We also note the Band’s reliance on its own
study, which was submitted during earlier e nvironmental-review proceedings, for its
assertion that “[s]ulfate concentrations from Poly Met’s discharges would not drop below
10 mg/L until at least 105 miles downstream of the nearest upstream discharge.” But that
assertion is obsolete; Poly Met later committed to treating discharged water to sulfate levels
of 10 mg/L. Although Minnesota’s wild-rice rule applies only seasonally, the operating
limit in the NPDES perm it for the NorthMet project impos es a 10-mg/L limit on a year-
round basis. Thus, there is no basis for a conclusion that Poly Met’s discharges will violate
the Band’s sulfate water-quality standard, and the record reflects that the Band’s numeric
32
water-quality standards for other pollutants generally are consistent with the state’s
standard.
The Band also contends, more specifica lly, that the permit will not ensure
compliance with the Band’s water-quality standa rd for mercury, which is 0.77 ng/L. But
the record reflects an express determination in the FEIS that th e NorthMet permit will
comply with the Band’s water-quality standard s because discharges from the project will
not alter the quality of waters within the Band’s reserva tion boundaries. The FEIS
specifically “analyzes compliance with [the Band’s] mercury standard” and concludes:
Overall, the NorthMet Project Proposed Action is predicted to
increase mercury loadings in the Embarrass River. Mercury
loadings in the Partridge River would decrease. The net effect
of these changes would be an overall reduction in mercury
loadings to the downstream St . Louis River upstream of the
Fond du Lac Reservation boundary. Therefore, the NorthMet
Project Proposed Action woul d not add to any potential
exceedance of the Fond du Lac mercury water quality standard
of 0.77 ng/L within the Reservation.

The FEIS is consistent with an anti-degradation analysis prepared by Poly Met’s
consultant, which was approved by the PCA.
The Band contends further, in its reply brief, that 40 C.F.R. § 122.4(d) requires
something more than what the anti-degradation analysis supplies: a determination that the
mercury level in surface waters within its reservation will be less than the Band’s 0.77 ng/L
water-quality standard for mercury when the discharge from the NorthMet project reaches
tribal waters. In effect, the Band contends that, if a downstream water already is impaired
with a particular pollutant, no amount of that pollutant may be added upstream. The United
States Supreme Court has re jected that theory. In Arkansas v. Oklahoma , 503 U.S. 91
33
(1992), the State of Oklahoma argued that discharges pe rmitted under an EPA-issued
permit for a point source in Arkansas would cause degradation of Oklahoma waters in
violation of its water-quality standards. Id. at 95. The United States Court of Appeals for
the Tenth Circuit had held that “where a prop osed source would discharge effluents that
would contribute to conditions currently constituting a violation of applicable water quality
standards, such [a] proposed source may not be permitted.” Id. at 98 (alteration in original).
The Supreme Court reversed, holding that nothing in the CWA supported the Tenth
Circuit’s view that the CWA “prohibit[s] any discharge of effluent that would reach waters
already in violation of existing water quality standards.” Id. at 107. The Court approved
of the EPA’s determination that Oklahoma’s no-degradation rule would be violated only if
“the discharge effected an ‘actually detectable or measurable’ change in water quality.” Id.
at 110-11. In Annandale, our supreme court relied on Arkansas in holding that 40 C.F.R.
§ 122.4(i) may not be applied to “in essence impose[] a comp lete ban on new facilities.”
731 N.W.2d at 519. In this case, the an alysis provided by the FEIS and Poly Met’s
consultant tracks the appro ach that was approved in Arkansas and Annandale, which
provides that downstream water-quality standa rds are not violated if there will be no
adverse change to the quality of downstream waters with respect to the particular pollutant.
Thus, the PCA did not err by issuing a permit that does not ensure compliance with
the Band’s water-quality standards.
IV. Contested-Case Hearing
The MCEA argues that the PCA erred by denying its petition for a contested-case
hearing.
34
The commissioner of the PCA must hold a contested-case hearing if three
requirements are satisfied:
A. there is a material i ssue of fact in dispute
concerning the matter pending before the . . . commissioner;

B. the . . . commissioner has the jurisdiction to
make a determination on the disp uted material issue of fact;
and

C. there is a reasonable basis underlying the
disputed material issue of fact or facts such that the holding of
a contested case hearing woul d allow the introduction of
information that would aid the . . . commissioner in resolving
the disputed facts in making a final decision on the matter.

Minn. R. 7000.1900 (2019). The petitioner bears the burden of demonstrating that all three
requirements are satisfied. NorthMet, 959 N.W.2d at 745. This court reviews a decision
to deny a contested-case hearing according to the criteria in section 14.69. Id. at 749.
In NorthMet, the supreme court addressed the DNR’s denial of a contested-case
hearing in relation to the permit to mine for the NorthMet project. Id. at 743. The supreme
court did so pursuant to Minn. Stat. § 94.483 (2020), which is nearly identical to the PCA’s
standard in Minn. R. 7000.1900. Id. at 745. The supreme court explained: “We will defer
to the legislative judgment to allow the commissioner to decide, based on the
commissioner’s findings, whether to hold a contested case hearing.” Id. at 747. The
supreme court concluded that substantial evidence supported the DNR’s decision to deny
a contested-case hearing on all but one issue: whether the proposed bentonite amendment
to the NorthMet tailings basin will be a practical and workable reclamation technique under
Minn. Stat. § 93.481, subd. 2 (2020). Id. at 750-56. On that is sue, the supreme court
35
concluded that the record lacked evidence to support the DNR’s “conclusory statements”
about bentonite’s effectiveness and that the contested-case pe titions “presented a bevy of
evidence, including statements made by the DNR’s own expe rts and external consultants
that contradicted the DNR’s findings on effectiveness.” Id. at 753.
The MCEA first contends that the supreme court’s NorthMet opinion compels a
determination that the PCA must hold a cont ested-case hearing on the same issue for
purposes of the NPDES/SDS permit in this case. In response , the PCA contends that the
issues regarding the effectiveness of bentonite “have no relevance to [the] NPDES permit.”
The supreme court explained in NorthMet that the bentonite amendment is a critical
element of Poly Met’s plan to ultimately close the tailings basin in compliance with the
DNR’s reactive mine-waste rule. Id. at 754. The relators in NorthMet argued that, after
closure, the bentonite amen dment would not prevent wate r and oxygen from infiltrating
the tailings basin and reacting with the taili ngs, as required by the DNR’s reactive mine-
waste rule. Id.; see also Minn. R. 6132.2200 (2019). Bentonite does not play the same
critical role in relation to the NPDES permit. The bentonite amendment is not a condition
of the NPDES/SDS permit and receives only passi ng reference in the permit. The permit
to mine will govern the entire life of the NorthMet project, including closure and
reclamation. See NorthMet, 959 N.W.2d at 757 (citing Minn. Stat. § 93.481, subd. 3(a)
(2020)). In contrast, the NPDES permit is onl y a five-year permit, and Poly Met will not
seek to close the NorthMet project within that five-year period. 33 U.S.C. § 1342(b)(1)(B).
Thus, the supreme court’s NorthMet opinion does not require the PCA to hold a contested-
case hearing on the bentonite amendment for purposes of the NPDES permit.
36
The MCEA also contends that the PCA erred by relying on the FEIS when it denied
its petition for a contested-case hearing. Th e MCEA correctly asserts that environmental
review is a process distinct from (and a pred icate to) the permitting process. But it does
not necessarily follow that an agency may not rely on information and opinions developed
during the environmental-revi ew process during the permitting process. Indeed, the
purpose of an EIS is to inform agency decision-making: “To ensure its use in the decision-
making process, the environmental impact statement must be prepared as early as practical
in the formulation of an action.” Minn. Stat. § 116D.04, subd. 2a (2020). As the supreme
court explained in NorthMet, “The environmental review process precedes the permit
application process because it is intended to inform the subsequent permitting and approval
processes and, thus, the DNR uses that pr ocess and the FEIS as ‘guides’ during the
permitting process.” 959 N.W.2d at 742 (quoting Minn. R. 44 10.0300, subp. 3 (2019)).
Our review of the PCA’s decision to deny a contested-case hear ing in this case
appropriately focuses on the question whether the information on which the PCA relied—
information in the FEIS or el sewhere in the record—provides substantial evidence for its
determination that there is not “a substantial basis underlying” a fact dispute such that a
contested-case hearing would aid the commissioner in reaching a decision. See NorthMet,
959 N.W.2d at 749.
The MCEA has identified three factual is sues on which it asserts a contested-case
hearing was warranted: the accura cy of the characterization of waste rock to be removed
from mine pits and the modeling of impacts to groundwater from that waste rock; the
accuracy of projections of wastewater quan tity and quality to be discharged from the
37
project; and the efficacy of a liner to be used under a stockpile for certain waste rock (the
Category 2/3 stockpile liner). Each of these issues receiv ed significant study during
environmental review and is addressed in the FEIS. The MCEA submitted reports during
environmental review from experts it had retained to challenge the modeling and analysis.
The DNR reviewed and ultimately rejected th e opinions of MCEA’s experts. The PCA
then relied on the modeling and analysis co mpleted during environmental review in
drafting the NPDES permit for the NorthMet project. In commenting on the draft NPDES
permit, the MCEA submitted new reports from its experts, again challenging the modeling
and analysis. The PCA reviewed the new repor ts and concluded that they contained no
information that had not been addressed during environmental review. The PCA noted that
it had worked with the DNR on the issues and agreed with the DNR’s conclusions. Because
the issues had already been evaluated, the PCA determined that there was not a reasonable
basis underlying these factual disputes and that a contested-case hearing would not aid the
commissioner in reaching a decision.
The PCA’s decision to deny a contested-case hearing on the three issues identified
by the MCEA is supported by substantial evidence and is not arbitrary or capricious. With
respect to each of the three issues, the PCA has explained why it relied on the analysis and
modeling developed during environmental revi ew over that of the MCEA’s experts, and
those explanations are reasonabl e in light of the agency record. Sp ecifically, the PCA
explains that it concurred with the extensive waste-rock characterization completed during
environmental review, that the groundwater modeling conducted by MCEA’s expert relied
on assumptions that the DNR concluded (and the PCA concurred) were not justified by
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available data, and that permit conditions ad equately address conc erns regarding the
efficacy of the Category 2/3 lin er. These explanations are supported by record evidence,
including the FEIS.
The MCEA nonetheless contends that a c ontested-case hearing is required on the
ground that the earlier reports of its experts are not in the administrative record for purposes
of the NPDES permit because, although they were submitte d to the DNR in connection
with comments on the draft EI S, they were not submitted to the PCA in connection with
comments on the draf t NPDES permit. See Minn. R. Civ. App. P. 110.01, 115.04. The
MCEA asserts that, without those reports, the record lacks substantial evidence to support
the PCA’s determination that the new expert reports contained no new information. In
support of this assertion, the MCEA cites NorthMet’s discussion of the DNR’s bentonite
findings. See NorthMet, 959 N.W.2d at 753-54. But in NorthMet, the record included
documents from the DNR’s own staff and cons ultants questioning the effectiveness of
bentonite as a reclamation technique, the DNR’ s findings regarding the effectiveness of
bentonite were based on conclusory statements in the FEIS, and “the single study on which
nearly all of the DNR’s findings of effectiveness rely [was] not in the record.” Id. In this
case, however, the PCA relies on professionally developed modeling and analysis that is
in the record. Furthermore, the MCEA does not explain what, if any, information was
presented in its new expert reports that had not been addressed during environmental
review. Accordingly, the MCEA has not dem onstrated that the ab sence in the agency
record of its experts’ earlier reports necessitates a contested-case hearing.
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Although there were factual issues rega rding the NPDES permit, the supreme court
made clear in NorthMet that the “mere existence of fact ual disputes” is insufficient to
require a contested-case hearing. Id. at 746. Rather, an administrative agency has
discretion to determine whether, with respect to particular factual issues, a contested-case
hearing would aid in the ag ency’s decision-making. Id. at 747. That determination must
be affirmed if it is supported by substantial evidence, i.e., if the agency has explained the
reason for its decision and the explanation is reasonable in light of the agency record. Id.
at 749. That standard has been satisfied here.
Thus, the PCA did not err by denying th e MCEA’s petition for a contested-case
hearing.
In sum: We affirm the district court’ s order. The PCA’s decision to issue the
NPDES/SDS permit for the NorthMet project wa s not made upon an unlawful procedure
that prejudiced the relators’ substantial ri ghts. The permit comp lies with Minn. R.
7060.0600. The PCA did not err by issuing a permit that does not include WQBELs or
without issuing a separate construction stormwater permit. The permit ensures compliance
with the Band’s water-quality standards. And the PCA did not err by denying the MCEA’s
petition for a contested-case hearing. But the PCA erred by not co nsidering whether any
discharges to groundwater will be the functi onal equivalent of a discharge to navigable
waters and, thus, whether the CWA applies to those discharges. Therefore, we reverse and
remand to the PCA with instructions to conduct the functional-equivalence analysis
required by Maui.
Affirmed in part, reversed in part, and remanded.