In the Matter of the Determination of Need for an Environmental Impact Statement for the Mile Post 7 West Ridge Railroad Relocation, Dam Extensions, and Stream Mitigation Project, Lake County, Minnesota.

This opinion is nonprecedential except as provided by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
A24-0597

In the Matter of the Determination of Need
for an Environmental Impact Statement
for the Mile Post 7 West Ridge Railroad Relocation,
Dam Extensions, and Stream Mitigation Project,
Lake County, Minnesota.

Filed February 3, 2025
Reversed and remanded
Worke, Judge

Minnesota Department of Natural Resources

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

Keith Ellison, Attorney General, Oliver J. Larson, Assistant Attorney General, St. Paul,
Minnesota (for respondent Minnesota Department of Natural Resources)

Jonathon H. Bloomberg, Squire Patton Boggs (US) LLP, Cleveland, OH; and

Alexander M. Arensberg (pro hac vice), Squire Patton Boggs (US) LLP, Denver, CO (for
respondent Northshore Mining Company)

Considered and decided by Reyes, Presiding Judge; Worke , Judge; and Cleary,
Judge.
*

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
2
NONPRECEDENTIAL OPINION
WORKE, Judge
In this certiorari appeal, relator challenges an agency determination that a proposed
project at a taconite tailings basin does not require an environmental impact statement
(EIS). Because the determination that an EIS was not required was based on legal error
and was arbitrary and capricious, we reverse and remand to the agency for a new EIS
determination.
FACTS
The Mile Post 7 Tailings Basin is a disposal facility that receives and impounds
mine tailings generated as a byproduct of taconite pellet production.1 The facility is near
the city of Silver Ba y and is approximately 2.6 miles west and 6 25 feet above Lake
Superior. The facility is currently owned by respondent Northshore Mining Company.
The tailings basin is formed by a combination of natural elevations and embankment
dams constructed out of coarse tailings. 2 By design, construction on the basin has
proceeded incrementally for the past 40 years and is expected to continue for 40 years or
more. Fine tailings are delivered to the facility via pipeline and are pumped into the basin

1 Taconite pellets are produced by crushing taconite into a powder and using magnets to
remove the iron ore from the unwanted remaining material (tailings) for use in the steel
industry.
2 The tailings basin dams are classified as Class 1 or High Hazard dams. A Class 1 dam is
a dam where “failure, misoperation, or other occurrences or conditions would probably
result in . . . any loss of life or serious hazard, or damage to health, main hi ghways, high-
value industrial or commercial properties, major public utilities, or serious direct or indirect
economic loss to the public.” Minn. R. 6115.0340 (2023).
3
in the form of a water slurry. As the basin fills with slurry, its capacity is increased by
placing coarse tailings atop the dams to increase their height.
When the tailings basin was originally proposed, respondent Minnesota Department
of Natural Resources ( the DNR) and the Minnesota Pollution Control Agency prepared
and published an EIS (1976 EIS). A master permit to construct the facility was issued by
the DNR in 1977. The master permit approved the footprint and total tailings storage
capacity of the facility and authorized the construction of embankment dams to an elevation
of 1,315 feet above mean sea level (amsl).
Tailings deposition and incremental dam elevation increases are ongoing at the
tailings basin, but to achieve full capacity, the dams must be elevated to the 1,315 feet amsl
authorized by the master permit. In order to increase dam elevations, Northshore proposes
a project to extend the length of several dams, relocate a portion of the rail track used to
deliver coarse tailings, and divert several streams around the facility. The DNR divided
this proposed project into two components. The “Tailings Basin Features” component
includes the dam extensions and rail track relocation, and the “Stream Mitigation Sites”
includes the stream diversions.
The DNR determined that, under Environmental Quality Board (EQB) rules, the
stream diversions required an environmental assessment worksheet (EAW) which, when
required, is used to determine whether a proposed project needs an EIS.
3 See Minn. R.

3 The EQB was established by the legislature to undertake duties including the
promulgation of rules governing environmental review. See Minn. Stat. §§ 116C.03, .04,
116D.04, subd. 2a(b).
4
4410.4300, subps. 1, 26 (2023) (describing the categories of action subject to a mandatory
EAW); Minn. R. 4410.1700, subp. 3 (2023) (“The [responsible governmental unit] shall
base its decision regarding the need for an EIS on the information gathered during the EAW
process and the comments received on the EAW.”). The DNR also determined that the
stream mitigation sites and tailings basin features were “connected actions” as defined by
EQB rules. See Minn. R. 4410.0200, subp. 9c (2023) (defining “connected actions”). And
because connected actions must be treated as a single project for the purpose of determining
the need for an EIS, the scope of the EAW analyzed not only the proposed stream
diversions, but also the proposed dam extensions and rail track relocation. But the EAW
did not include review of other actions associated with the continued deposition of tailings
or increases in basin capacity.
The DNR published the EAW and accepted public comments. Based on the
contents of the EAW and the public comments it received, the DNR issued a record of
decision (ROD) declaring that the proposed project does not have the potential for
significant environmental effects, and thus, that an EIS is not required. Relator
WaterLegacy appeals, arguing that the proposed project has the potential for significant
environmental effects and that the DNR’s negative declaration on the need for an EIS is
“erroneous, unsupported by substantial evidence, and arbitrary and capricious.”
DECISION
“Our role when reviewing agency action is to determine whether the agency has
taken a hard look at the problems involved, and whether it has genuinely engaged in
reasoned decision-making.” Citizens Advocating Responsible Dev. v. Kandiyohi Cnty. Bd.
5
of Comm’rs, 713 N.W.2d 817, 832 (Minn. 2006) (CARD) (quotations omitted). We accord
substantial deference to an agency’s decision but will reverse when a decision reflects “an
error of law, the findings are arbitrary and capricious, or the findings are unsupported by
substantial evidence.” Id.; see also Minn. Stat. § 116D.04, subd. 10 (2024) (providing for
judicial review of EIS decisions under Minn. Stat. §§ 14.63-.69); Minn. Stat. § 14.69 (2024)
(setting forth standard of review).
A decision is arbitrary and capricious when:
the agency (a) relied on factors not intended by the legislature;
(b) entirely failed to consider an important aspect of the
problem; (c) offered an explanation that runs counter to the
evidence; or (d) the decision is so implausible that it could not
be explained as a difference in view or the result of the
agency’s expertise.

CARD, 713 N.W.2d at 832.

“The interpretation of statutes and rules and the application of statutes and rules to
undisputed facts are both questions of law that we review de novo.” Minnesotans for
Responsible Recreation v. Dep’t of Nat. Res. , 651 N.W.2d 533, 538 (Minn. App. 2002)
(MRR).
Environmental Law Under MEPA and EQB Rules
The Minnesota Environmental Policy Act (MEPA), Minn. Stat. §§ 116D.01-.11
(2024), requires that, when “there is potential for significant environmental effects
resulting from any major governmental action, the action must be preceded by a detailed
[EIS] prepared by the responsible governmental unit.” Minn. Stat. § 116D.04, subd. 2a(a).
EQB rules identify categories of projects for which a responsible governmental unit (RGU)
6
is required to prepare an EAW or EIS. 4 Here, the DNR determined that an EAW was
mandatory. An EAW is “ a brief document which is designed to set out the basic facts
necessary to determine whether an environmental impact statement is required for a proposed
action.” Id., subd. 1a (c). In an EAW, the RGU analyzes the environmental effects of the
project that required the preparation of the document , and the effects of any “connected
actions.” See Minn. R. 4410.1200(E) (2023); see also Minn. R. 4410.0200, subp. 9c (defining
“connected actions”); Minn. R. 4410.1700, subp. 9 (“Connected actions . . . shall be considered
a single project for purposes of the determination of need for an EIS.”).
Based on the information and public comments gathered during the EAW process, the
RGU determines whether the project “has the potential for significant environmental effects”
based on the following factors: (1) “type, extent, and reversibility of environmental
effects”; (2) “cumulative potential effects”; (3) “the extent to which the environmental
effects are subject to mitigation by ongoing public regulatory authority”; and (4) “the
extent to which environmental effects can be anticipated and controlled as a result of other
available environmental studies undertaken by public agencies or the project proposer,
including other EISs.” Minn. R. 4410.1700, subps. 3, 7 (2023).
Exempt Analysis
We begin by addressing the DNR and Northshore’s general contention that the
ongoing construction of the tailings basin is exempt from further environmental review.

4 An RGU is the “governmental unit that is responsible for preparation and review of
environmental documents.” Minn. R. 4410.0200, subp. 75 (2023).
7
The DNR states in its ROD that Minn. R. 4410.4600 (2023) (part 4600) exempts the
“features” of the tailings basin construction that were reviewed in the 1976 EIS.
Northshore goes a step further, arguing that, under part 4600, the “DNR is not required to
analyze the environmental effects associated with features that have already been
authorized and completed.” We understand the DNR and Northshore to mean that, under
EQB rules, the environmental effects of a project that have been permitted, reviewed, or
completed are exempt from consideration in environmental review under MEPA.
The DNR and Northshore misconstrue the nature of the exemptions provided by
Minn. R. 4410.4600. Pursuant to Minn. Stat. § 116D.04, subd. 2a(b), the EQB created
“categories of actions for which [EISs] and for which [EAWs] must be prepared as well as
categories of actions for which no environmental review is required.” These mandatory
and exempt categories are set forth in Minn. R. 4410.4300-.4600 (2023). Among the
exemptions under part 4600 are (1) “projects for which all governmental decisions have
been made”; (2) “projects for which a substantial portion of the project has been completed
and an EIS would not influence remaining construction”; and (3) “projects for which
environmental review has already been completed.” Minn. R. 4410.4600, subps. 2(B),
2(D), and 2(E).
We reject the interpretation of part 4600 advanced by the DNR and Northshore for
two reasons. First, the plain language of part 4600 exempts “projects” from portions of
chapter 4410, not the “effects” of projects, as the DNR and Northshore contend. See In re
Denial of Contested Case Hearing Requests , 993 N.W.2d 627, 646 (Minn. 2023) (“When
the language of a statute or regulation is unambiguous, we apply the plain language.”).
8
Moreover, part 4600 does not place a project entirely outside the purview of MEPA
or the EQB rules. Rather, part 4600 exempts a project from portions of chapter 4410 for
the purpose of determining whether that project is subject to mandatory environmental
review under MEPA’s provisions. As discussed above, MEPA authorized the EQB to
create “categories of actions” for which environmental review is and is not required, Minn.
Stat. § 116D.04, subd. 2a(b), and accordingly, the EQB promulgated Minn. R.
4410.4300-.4600. Those rules establish thresholds that trigger mandatory environmental
review if they are met or exceeded, and exempt projects from mandatory review if, for
example, a project has already undergone environmental review or the project is
substantially complete and environmental review would not influence the project’s
construction. To conclude that part 4600 exempts a project from environmental review
entirely would render other parts of chapter 4410 meaningless. Under Northshore’s
interpretation, for example, a project with a completed EIS would be exempt from Minn.
R. 4410.3000 which provides for supplementing an EIS in the event a project changes or
new circumstances arise. See Minn. R. 4410.3000, subp. 3(A) (2023).
Second, the notion that part 4600 operates to exempt the effects of a project because
the project was permitted, underwent environmental review, or has already been
completed, directly contradicts Minnesota caselaw.
In CARD, the supreme court reviewed a county’s decision not to require an EIS for
the construction of two proposed gravel pits. 713 N.W.2d at 821-23. In making its
determination, the county did not consider the environmental effects of previously
constructed gravel pits in conjunction with the potential effects of the proposed gravel pits.
9
Id. at 831. The supreme court reversed the county’s decision, concluding that when an
RGU considers the potential environmental effects of a proposed project, it must also
consider the effects of “other local projects already in existence.” Id. at 829, 838 (emphasis
added). The court stated that interpreting EQB rules in such a way that an RGU “could
simply ignore most other projects in the surrounding area of the proposed project, as if
those other projects and their environmental consequences vanished from the map for
environmental review purposes as soon as they were developed[,]” would lead to “absurd
results.” Id. at 831.
Accordingly, we reject the argument that part 4600 entirely exempts the ongoing
construction of the tailings basin, and its effects, from environmental review.
Connected Actions
Having established the limits of part 4600’s exemptions, we turn to WaterLegacy’s
argument that the DNR erred by failing to consider the proposed project and the ongoing
tailings basin project as connected actions.
Two projects are “connected actions” if (1) “one project would directly induce the
other”; (2) “one project is a prerequisite for the other and the prerequisite project is not
justified by itself”; or (3) “neither project is justified by itself.” Minn. R. 4410.0200,
subp. 9c. The EQB rules provide that “[c]onnected actions . . . shall be considered a single
project for purposes of the determination of need for an EIS.” Minn. R. 4410.1700, subp. 9
(2023).
WaterLegacy contends that the proposed project and the ongoing construction of
the tailings basin are connected actions because the proposed project is a prerequisite for
10
the tailings basin project and is justified only by Northshore’s need to increase the capacity
of the tailings basin.
There is no dispute that the proposed project is a prerequisite to the continued
construction of the tailings basin. The EAW describes the proposed project as “necessary
to allow use of the Tailings Basin at its total designed capacity.” The ROD states that the
proposed project “provides the infrastructure necessary for Northshore to utilize the
remaining increment of depositional elevation within the basin.” For its part, Northshore
confirms that the dam extensions and railroad relocation “would facilitate the use of the
Tailings Basin toward its permitted maximum capacity.”
Northshore nevertheless argues that the proposed project and the tailings basin
cannot be connected actions because the tailings basin is not a “project” for purposes of
environmental review. We disagree.
The EQB defines a “project” as “governmental action, the results of which would
cause physical manipulation of the environment, directly or indirectly.” Minn. R. 4410.0200,
subp. 65 (2023). “Governmental action” is defined as “activities including projects wholly or
partially conducted, permitted, assisted, financed, regulated, or approved by governmental
units, including the federal government.” Minn. R. 4410.0200, subp. 33 (2023). In MRR, we
said that a proposed action constitutes “a ‘project’ for purposes of [MEPA]” when it “is a
definite, site-specific, action that contemplates on-the-ground environmental changes.”
651 N.W.2d at 540.
Northshore argues that the tailings basin is not a project as defined by MEPA and
the EQB rules because it is a “previously completed permitting decision” and therefore no
11
longer “contemplates” environmental changes. Northshore’s argument implies that MEPA
and the EQB rules apply only to future actions, and that the moment a project is permitted,
it is outside the scope of environmental review. Neither contention is supported by MEPA,
the EQB rules, or Minnesota caselaw.
First, Northshore neglects to parse the EQB’s definition of a project. As we already
stated, the EQB rules define a “ project” as “governmental action, the results of which
would cause physical manipulation of the environment,” Minn. R. 4410.0200, subp. 65
(emphases added), and “governmental action” is defined by MEPA and the EQB rules as
“projects wholly or partially conducted [or] permitted . . . by governmental units,” Minn.
Stat. § 116D.04, subd. 1a(d) (emphasis added); Minn. R. 4410.0200, subp. 33 (emp hasis
added). In other words, a “project” is not defined as limited to future actions. Rather, it is
defined to include an action with future effects.
Second, Northshore’s reliance on our decision in MRR is misguided. In MRR, we
distinguished contemplated environmental changes “too broad and speculative to provide
the basis for meaningful environmental review” from those that are “definite” and “site-
specific.” 651 N.W.2d at 540. We therefore determined the point at which a plan or
proposed action becomes a project subject to environmental review, but we did not
conclude that a project ceases to be subject to MEPA the moment it is permitted. See id.
Here, the ongoing construction of the tailings basin is a project under MEPA. The
construction is “definite” and “site-specific,” see id ., and its results include direct and
indirect physical manipulations of the environment. And because there is no dispute that
the proposed project is a prerequisite to continuing the tailings basin project, the two
12
projects are “connected actions” as defined by EQB rules. Thus, we conclude that the DNR
erred by failing to consider the projects a single project in determining whether an EIS is
required.
Cumulative Potential Effects
WaterLegacy argues that the DNR’s cumulative-potential-effects analysis for the
proposed project was inadequate because it failed to properly consider the effects of the
ongoing and future construction of the tailings basin.
In determining the need for an EIS, an RGU must consider a project’s “cumulative
potential effects.” Minn. R. 4410.1700, subp. 7(B) (2023). “Cumulative potential effects”
(CPE) means:
[T]he effect on the environment that results from the incremental
effects of a project in addition to other projects in the
environmentally relevant area that might reasonably be expected
to affect the same environmental resources, including future
projects actually planned or for which a basis of expectation has
been laid[.]

Minn. R. 4410.0200, subp. 11a (2023). In essence, a CPE analysis considers whether the
effects of a proposed project, when combined with the effects of other past, existing, or planned
projects, has the potential to significantly a ffect the same natural resources within the same
“geographic and temporal scope.” CARD, 713 N.W.2d at 831-32.
The CPE analysis that the DNR conducted for the proposed project failed to
consider an important aspect of the problem. The DNR stated in its ROD that the scope of
the CPE analysis was limited to the proposed project and “reasonably foreseeable projects.”
In the EAW, the list of “[p]resent and reasonably foreseeable future projects” does not
include the ongoing construction of the original tailings basin project. The DNR explains,
13
in a footnote, that Northshore’s “ongoing tailings placement is not considered a reasonably
foreseeable future project for this EAW” because the project was previously reviewed and
permitted.
Northshore argues that the CPE analysis was proper because the EAW treated the
tailings basin construction as a “baseline condition,” and under Minn. R. 4410.0200,
subp. 11a, “[i]n analyzing the contributions of past projects to cumulative potential effects, it
is sufficient to consider the current aggregate effects of past actions.” (Emphasis added.)
Northshore insists that the DNR satisfied any requirement to consider the effects of the tailings
basin when it stated, in a second footnote, that its CPE analysis was “informed” by a prior CPE
analysis conducted by the U.S. Army Corps of Engineers.
The EAW reflects a fundamental misunderstanding of the CPE analysis. The purpose
of the CPE analysis “is to put the proposed project into context.” CARD, 713 N.W.2d at 829.
The analysis determines whether a “project, which may not individually have the potential
to cause significant environmental effects, could have a significant effect when other local
projects already in existence or planned for the future are considered. ” Id. Thus, the fact
that the original tailings basin project has undergone previous environmental review and
permitting does not obviate the need to consider its effects in a CPE analysis. Furthermore,
while we acknowledge that the ongoing nature of the original tailings basin project presents
challenges to environmental review, we cannot agree that a projec t expected to continue for
the next 40 years is not reasonably foreseeable, or that the future effects of that project should
be considered “past actions.”
14
Because the DNR failed to treat the proposed project and the tailings basin project as
connected actions and conducted an incomplete CPE analysis, the environmental review of the
proposed project was incomplete and the DNR’s negative EIS determination was therefore
arbitrary and capricious and based on an error of law. 5 We reverse and remand this matter to
the DNR to conduct a new EIS determination in accordance with this opinion.
Reversed and remanded.

5 Because we reverse and remand on these grounds, we do not reach WaterLegacy’s
additional arguments.