Reserve Mining Co. v. Minnesota Pollution Control Agency

No. 05598 (Minn. Dist. Ct. January 28, 1977)

The court orders the Minnesota Department of Natural Resources (DNR) to issue mine tailing disposal permits to Reserve for the Milepost 7 site. The DNR and the Pollution Control Agency (PCA) accepted the findings of a hearing officer that Milepost 20 was the best site for such disposal. By statute, the scope of judicial review on appeal is required to be the "lawful and reasonable" rather than the "arbitrary and capricious" test, which requires a thorough, probing, in-depth review of the DNR's decision under the substantial evidence test. Under this test, the reasonableness of the permit turns on whether the agency employed the rule of reason in evaluating the environmental and economic effects of construction at Milepost 7. The hearing officer's conclusion thatt use of the Milepost 7 site would result in dam failure is not supported by the evidence. Similarly, the findings relating to air quality criteria, including total suspended particulates, fugitive dust, and amphibole fiber estimates, are based on unproven measurements and are therefore incorrect, especially in view of the PCA staff recommendation that air quality standards would not be violated by use of the Milepost 7 site. Land use considerations also dictate that Milepost 7, as an adjunct to an existing industrial facility, is preferable to Milepost 20, which would create a new industrial use. The economic threat of Reserve's closure if denied the Milepost 7 site and the substantial additional cost of using the more distant Milepost 20 site were also iandequately considered by the hearing officer. Furthermore, the feasibility of Milepost 20 as an alternative site is greatly lessened, considering that the land exchange with the federal government and other prerequisites to use may take up to six years and considering that all alternatives create some adverse environmental impact. The rejection of Milepost 7 is also unreasonable in light of Reserve's acceptance of stringent monitoring and environmental quality conditions at Milepost 7. Finally, the hearing officer's report may have been tainted by the extra-judicial activities of the federal district judge who was ultimately recused for misconduct.

[Ed. note — A companion opinion, Reserve Mining Co. v. Herbst, No. 05597, arriving at the same result under substanially equivalent reasoning, is omitted.]

Counsel are listed at 7 ELR 20051.

Odden, Chanak & Eckman, JJ.

[7 ELR 20270]

Per curiam:

Opinion

This case involves one of two separate appeals by Reserve Mining Company, Armco Steel Corporation, Republic Steel Corporation, Intervenors United Steelworkers of America AFL-CIO, and Northeastern Minnesota Development et al from the denial of the applications by Reserve for permits to construct and operate an on-land tailings disposal facility at Mile Post 7. Reserve has applied for and been denied permits by both the Commissioner of the Department of Natural Resources (DNR) and the Pollution Control Agency (PCA). The hearing officer who conducted the combined hearings below was appointed by both the DNR and the PCA. The findings, conclusions and recommendations of the hearing officer were made both in his capacity as a DNR hearing officer and as a PCA hearing officer.

Since both agencies averred that their decisions to deny the Mile Post 7 permits were based upon the hearing officer's findings and conclusions and upon the record before him, judicial review of those decisions necessarily involves a review of that record before him and the hearing officer's findings and conclusions based thereon. To this extent, judicial review of the DNR's and PCA's decisions rest upon an identical basis. However, this court, pursuant to the application of petitioners under M.S.A. § 115.05(7), determined to and did hear and consider additional evidence in its judicial review of the PCA's decision.

For the purposes of concisencess and clarity, appellants in this opinion shall be referred to as "Reserve," the Minnesota Department of Natural Resources shall be referred to as "DNR," and the Minnesota Pollution Control Agency shall be referred to as "PCA."

Reserve's appeal of both agencies' decision to deny their application for permits to Mile Post 7 reaches this court as part of a chain of legal events going back several years. Reserve's application for permits for Mile Post 7 and the agency's decisions to deny the permits is viewed in light of several years of controversy and judicial determinations.

After approximately two and a half years of controversy in federal administrative and state court proceedings over the continuation of Reserve's discharges into Lake Superior, the matter was placed before the United States District Court for the District of Minnesota in February 1972. The case was assigned to the Honorable Miles Lord, judge of that court, who assumed jurisdiction by virtue of a suit brought by the United States against Reserve at the request of the Environmental Protection Agency. The object of the suit was abatement of Reserve's discharges.

Trial in federal court began in August 1973 and proceeded for approximately nine months. During that time massive amounts of thestimony and evidence were considered by Judge Lord, much of it relating to the asbestiform nature of Reserve's discharge and the health effects of exposure to that discharge. In [7 ELR 20271] April 1974, Judge Lord ordered Reserve's discharges halted immediately. The United States Court of Appeals stayed the injunction until it could consider Reserve's appeal on the merits. Reserve Mining Company v. United States, 498 F.2d 1073 [4 ELR 20598] (8th Cir. 1974). In March 1975, the court of appeals upheld the order of the federal district court but modified the timetable for abatement. Reserve Mining Co. v. ENVIRONMENTAL PROCTECTION AGENCY, 514 F.2d 492 [5 ELR 20596]. The court of appeals ordered that Reserve must be given a reasonable time to construct tailings disposal facilities on land. It is acknowledged that the findings of the circuit court of appeals are binding upon the administrative agencies and upon this court.

The U.S. Circuit Court of Appeals deemed it appropriate to state:

Finally, this Court deems it appropriate to suggest that the national interest now calls upon Minnesota and Reserve to exercise a zeal equivalent to that displayed in this litigation to arrive at an appropriate location for an on-land disposal site for Reserve's tailings, and thus permit an important segment of the national steel industry employing several thousand people to continue in production. As we have already noted, we believe this controversy can be resolved in a manner that will purify the air and water without destroying jobs.

Id. at 540.

Minnesota, of course, in ruling upon any proposed on-land disposal site, must abide by the basic principles of due process of law.

Id. at 540.

As directed by the circuit court of appeals, Reserve on November 18, 1974, submitted applications to the PCA and to the DNR for all necessary and appropriate permits for the construction and operation of an on-land tailings disposal facility at a site designated as Mile Post 7. The permit hearings commenced on June 28, 1975. Consistent with applicable regulations, the hearings were concurrent and conducted under the authority of the DNR, PCA, and Environmental Quality Council (EQC).

On May 26, 1976, the hearing officer published findings, conclusions, and recommendations to deny Reserve's application for permits for an on-land disposal site at Mile Post 7. On June 15, 1976, the PCA voted not to accept or approve the findings, conclusions and recommendations of the hearing officer to the extent that said findings constituted a rejection of the Mile Post 7 site. Thereafter, on July 1, 1976, the Commissioner of Natural Resources accepted the decision of the hearing officer as a final determination regarding the issuance of permits for Mile Post 7 by the DNR. On July 1, 1976, the PCA reversed its decision of June 15, 1976, and voted to accept the findings, conclusions and recommendations of the hearing officer and to deny Reserve's applications for air and water permits for the Mile Post 7 facility. It is from the denial of the necessary PCA and DNR permits that Reserve et al brings these appeals.

I. Scope of Judicial Review

We are confronted by the claim of PCA that M.S. § 15.0425 establishes the applicable scope of review, as opposed to the claim of Reserve that M.S. § 115.05, subd. 7, sets the applicable standard of review. These statutes were in issue when the Supreme Court considered the petitions of PCA and DNR, and intervenors, seeking a writ of prohibition prohibiting this court from enforcing the provisions of its order entered on September 15, 1976, which authorized the parties to present additional evidence and to pursue discovery procedures. Those petitions were denied. This court was of the opinion that, at least, those aspects of M.S. § 115.05, subd. 7, were laid to rest.

Apart from the matters of additional evidence and discovery, PCA now contends that the portion of M.S. § 115.05, subd. 7, prescribing the "lawful and reasonable, and is warranted by the evidence" test has been replaced by the "arbitrary or capricious" test which is part of M.S. § 15.0425. For ease of reference, we set forth both statutes.

M.S. § 115.05, subd. 7, provides:

The appeal shall be heard and determined by the court upon the issues raised by the notice of appeal and return according to the rules relating to the trial of civil actions, so far as applicable. The court of its own motion or on application of any party may, in its own discretion, take additional evidence on any issue of fact or may try any or all such issues de novo, but no jury trial shall be had. If the court shall determine that the action of the commission appealed from is lawful and reasonable, and is warranted by the evidence in case an issue of fact is involved, the action shall be affirmed. Otherwise, the court may vacate or suspend the action appealed from in whole or in part, as the case may require, and thereupon the matter shall be remanded to the commission for future action in conformity with the decision of the court. (Emphasis added.)

M.S. § 15.0425 provides:

In any proceedings for judicial review by any court of decisions of any agency as defined in Minnesota Statutes, Sectionn 15.0411, subdivision 2 (including those agencies excluded from the definition of agency in section 15.0411, subdivision 2) the court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative finding, inferences, conclusion, or decisions are:

(a) In violation of constitutional provisions; or

(b) In excess of the statutory authority or jurisdiction of the agency; or

(d) Affected by other error of law; or

(e) Unsupported by substantial evidence in view of the entire record as submitted; or

(f) Arbitrary or capricious.

We continue to be of the opinion that M.S. § 115.05, subd. 7, as it existed prior to August 1, 1976, is applicable in this case notwithstanding the repeal of that section by Minn. Laws 1976, Chapter 76, § 8. Our basis for that conclusion has previously been set forth on pages 13-15 of our memorandum attached to our Order of October 14, 1976. We find ourselves fully in accord with arguments advanced by Reserve in its Memorandum, pages 7-25, addressed to the Supreme Court in opposition to the petitions for writ of prohibition.

That being our opinion, we next consider wheter the four cases cited by PCA compel us to reverse our position.

PCA contends that the clearest decision on point is Minneapolis Van & Whse. Co. v. St. P. Terminal Whse. Co., 288 Minn. 294, 180 N.W.2d 175 (1970), involving an appeal of a decision of the Public Service Commission under a statute containing the "lawful and reasonable" language. There the court said:

Appellant contended before the district court and here that § 15.0425 governs the scope of judicial review of the commission's decisions, including the findings of fact. We agree. . . .

Prior to the enactment of §§ 15.0424 to 15.0425 of the Administrative Procedure Act in 1963, the scope of judicial review of orders of the commission, as well as the procedural requirements for perfecting an appeal to the district court, was governed by §§ 216.24 and 216.25. . . .

[T]he enactment of § 15.0425 of the Administrative Procedure Act in 1973 . . . was unmistakably intended by the legislature to make uniform the scope of judicial review of the decisions of all administrative fact finding agencies, including those of the commission. This legislative intent is made clear by the language of § 15.0425, which specifically includes every agency defined by § 15.0411, subd. 2. . . . [T]he legislative intent [is] that the decisions of every agency defined by § 15.0411, which expressly includes "any state . . . commission," should be reviewed in accordance with the rule prescribed by § 15.0425.

As we read that case, it merely held that M.S. § 15.0425 governed the scope of judicial review of the Public Service Commission [7 ELR 20272] decision, including the findings of fact. There the question was whether under that statute it was sufficient to sustain under the "any evidence" rule or whether the "substantial evidence" rule was embodied in M.S. § 15.0425(e). Because the district court affirmed on the basis of "some evidence," there was reversal. To like effect is Quinn Distributing Co. v. Quast Transfer, Inc., 288 Minn. 442, 181 N.W.2d 696.

Though the scope of judicial review is prescribed by M.S. § 15.0425, nonetheless the "lawful and reasonable" test remains effective. In re application of Northwestern Bell Telephone Co., Minn. , 246 N.W.2d 28, involved an appeal from an order of the district court remanding the case to the Public Service Commission for further proceedings. Bell challenged the order on the ground that M.S. § 237.25 provides specifically for judicial review of commission orders in telephone rate proceedings. The statute provided that if evidence was erroneously rejected, the reviewing court could remand. No evidence was erroneously rejected; therefore, Bell argued that the reviewing court not remand as is provided by M.S. § 15.0425. The Supreme Court held that even though M.S. § 15.0425 was applicable to judicial review of thelephone rate proceedings the powers conferred in M.S. § 237.25 are cumulative rather than exclusive.

The fourth case cited by PCA is State, Dept. of Natural Resources, by Robert Herbst v. City of WhiteBear Lake, (filed Nov. 19, 1976). Although PCA relies upon that case for the proposition that M.S. § 15.0425 provides the standard, a careful reading of that decision prompts us to observe that Justice Scott stated:

The district court's review of the commissioner's (DNR) decision is restricted to the question of whether the decision is "lawful and reasonable;" or "unjust, unreasonable, or not supported by the evidence" M.S. § 105.47.

This was so notwithstanding M.S. § 15.0425 and the fact that the district court used the terms "arbitrary, capricious, unjust, unreasonable and is not supported by the evidence" in its conclusions, and the appellate court used the terms "arbitrary and capricious" in its decision.For the foregoing reasons we have no difficulty in reconciling M.S. § 15.0425 and M.S. § 115.05, subd. 7, so as to make applicable the "lawful and reasonable" standard stated in White Bear Lake, supra, which involved M.S. § 105.47 and not M.S. § 115.05, subd. 7.

As recently as January 1976, Justice Yetka in State by Pollution Control Agency v. United States Steel, Minn. , 240 N.W.2d 316, at 319, n. 4, stated, in effect, that an appeal under M.S. § 115.05, subd. 7, provides for a standard of review whereby the district court must determine whether the PCA order was "lawful and reasonable" and whether the "factual findings were warranted by the evidence."

It is further observed that even the Administrative Procedure Act preserves the parties' various rights when granted by other statutes. M.S.A. § 15.0424(1) in defining the application of judicial review of agency decisions states:

. . . but nothing in this section shall be deemed to prevent resort to other means of review, redress, belief or trial de novo provided by law now or hereafter enacted. . . .

Thus, pursuant to § 115.05(7), this court must determine whether PCA's decision is lawful and reasonable and supported by the evidence. Conversely, the decision cannot be affirmed if the decision is unlawful or unreasonable or not supported by the evidence.

There appears to be no precise statutory definition of the "lawful and reasonable" standard of review as distinguished from the "arbitrary and capricious" standard which is employed in a number of statutes such as the Administrative Procedure Act, M.S.A. § 15.0425. However, the case law reveals that the courts uniformly have given the phrase "lawful and reasonable" its customary and usual meaning. Thus, in Save Our Ten Acres v. Kreger, 472 F.2d 463, 466 [3 ELR 20041] (5th Cir. 1973), the court noted that the "reasonableness" standard of review is a "more penetrating inquiry" than the "arbitrary and capricious" or abuse of discretion standard of review. Similarly, the Eighth Circuit has expressly recognized that the "rule of reasonableness" is a different and more thorough standard of review of an agency's decision than the "arbitrary, capricious and abuse of discretion" standard under the Administrative Procedure Act. See Minnesota Public Interest Research Group v. Butz, 498 F.2d 1314, 1320 [4 ELR 20700] (8th Cir. 1974). In commenting on Butz, the court in Morgan v. United States Postal Service, 405 F. Supp. 413, 422 (W.D. Mo. 1975), noted:

Obviously, a reasonableness standard involves a much stricter scrutiny of the agency decision than an arbitrary, capricious test. (Emphasis added.)

It follows that the "reasonable and lawful" test of M.S.A. § 115.05(7) requires this court to engage in a "thorough, probing in-depth review" of the PCA's decision denying Reserve's permit applications. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S. Ct. 814, 823, 28 L. Ed. 2d 136, 153 [1 ELR 20110] (1971). Additionally, the Minnesota Supreme Court has held that, where a permit denial is involved, "fundamental fairness . . . demand[s] a stricter standard of review in the district court." Corwine v. Crow Wing County, 244 N.W.2d 482, 486 (Minn. 1976).

Whether one defines the standard under M.S. § 15.0425 or M.S. § 115.05, subd. 7, under either statute the hearing officer's findings of fact are measured by the "substantial evidence test," and his findings involving policy determinations, risk analysis, and predictions based on the frontiers of scientific knowledge must be subjected to the "thorough, probing and in-depth review" provided for by the "lawful and reasonable" statutory standard. While the court must respect the decisions of the administrative agencies, nevertheless, a searching judicial scrutiny of how and why the agency determinations were actually adopted is required by the statute.

We view thatt by the "substantial evidence" test is meant: (1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than "some evidence," (4) more than "any evidence;" and (5) evidence considered in its entirety. There are correlative rules or principles that must be recognized by a reviewing court, such as: (1) unless manifestly unjust, inferences must be accepted even though it may appear that contrary inferences would be better supported; (2) a substantial judicial deference to the fact-finding processes of the administrative agency; and (3) the burden is upon the appellant to establish that the findings of the agency are not supported by the evidence in the record, considered in its entirety.

Specifically, the legislature has declared thatt decisions of agencies such as the PCA and DNR must be "consistent with the reasonable requirements of the public health, safety, and welfare and the state's paramount concern for the protection of its air, water, land and other natural resources from pollution, impairment, or destruction," M.S.A. § 116D.04(6). (Emphasis supplied.)

The question of whether the agency's decision is reasonable turns on whether the agency gave impartial, objective, and proper consideration to the evidence presented and properly analyzed the risks and environmental impacts presented by the construction of the Mile Post 7 site. In other words, the reasonableness of the permit denials turns upon whether the agency employed the "rule of reason" in ascertaining the environmental effects and risks as well as the economic benefits associated with the construction at the Mile Post 7 site.

In testing the reasonableness of the agency decision denying the permit applications, particular emphasis must be given in this case to the hearing officer's concern with imaginary or speculative possibilities. It is well established that an environmental impact statement need not discuss "either insignificant matters,such as these without import, or remote effects, such as mere possibilities unlikely to occur as a result of the proposed activity." Environmental Defense Fund v. Corps of Engineers, 348 F. Supp. 916, 933 [2 ELR 20536] (N.D. Miss. 1972), aff'd, 492 F.2d 1123 [4 ELR 20329] (5th Cir. 1974). This is so because the adequacy and content of an environmental impact statement and an agency decision based upon that impact statement is determined by the "rule of reason." Lathan v. Brinegar, 506 F.2d 677 [4 ELR 20802] (9th [7 ELR 20273] Cir. 1974).

Applying the rule of reason, the courts have consistently refused to require that environmental impact statements discuss possible but remote and speculative consequences. This refusal has occurred despite the fact that the courts have recognized that the purpose of an enviromental impact statement is to disclose in sufficient detail to the decision makers the environmental consequences of a proposed development. In reality it is an identification process. See Calvert Cliffs' Coordinating Comm. v. AEC, 449 F.2d 1109 [1 ELR 20346] (D.C. Cir. 1971). Remote and speculative contingencies are simply not proper subjects of consideration by environmental permitting agencies. This is so because "[t]here is a point at which the probability of an occurrence may be so low as to render it almost totally unworthy of consideration." Carolina Environmental Study Group v. United States, 510 F.2d 796 [5 ELR 20181] (D.C. Cir. 1975).

Similar to the National Environmental Policy Act, the Minnesota Environmental Policy Act, M.S.A. ch. 116D, does not require the decision making agency to explore every extreme possibility which might be conjectured. Rather M.S.A. ch. 116D requires that the agencies merely consider alternatives that exist or are likely to exist. When an agency goes outside of the requirements of the Minnesota Environmental Policy Act and becomes preoccupied with remote contingencies, then the agency violates the rule of reason, and hence, its decision is unreasonable.

Perhaps the best summary of the rule of reason is contained in the legislature's declaration of environmental policy: ". . . to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations. . . ." M.S.A. § 116D.02(1).

The foregoing discussion is pertinent to judicial review of the administrative record. When, however, the district court exercises its statutory power to hear additional evidence (as we have in the instant case), our scope of review of factual findings is accordingly broadened. A recent example of this procedure occurred in Reserve Mining Company v. Minnesota Pollution Contro Agency, 294 Minn. 300, 200 N.W.2d 142, 146 [3 ELR 20170] (1972), in which the Supreme Court held:

. . . the legislature has unquestionably conferred upon the trial court the right to take additional evidence and, derivatively, to make findings with regard to that evidence. . . . Consequently, after the trial court had heard the additional evidence and made the appropriate findings, it should, under the provisions of the Water Pollution Control Act (M.S.A. § 115.05(7)), have remanded the matter to the PCA for further action in conformity with the decision of the trial court.

Thus, in respect to the hearing officer's findings (as adopted by the PCA) this court is empowered to determine whether or not those findings are reasonably supported by the evidence in the administrative hearing and in the district court hearing. If all such evidence does not reasonably support a finding, then the finding must fall and — in domino fashion — the conclusions and recomendations based upon that finding must also fall.

In its brief, pages 28-39, PCA contentds that the application of M.S. § 115.05, subd. 7, allowing "findings" by the district court on additional evidence taken, as approved by the Supreme Court in Reserve Mining Co. v. MPCA, supra, raises the issue of constitutionality. We decline to consider that issue for several reasons: (1) at no time prior to the filing of its brief did PCA raise the issue of constitutionality and for that reason Reserve did not address the issue in its brief and our order did not provide for a responsive brief; (2) the PCA is a state agency represented by the attorney general (M.S. § 8.06); and (3) it has been, at least, customary for the attorney general to defend the constitutionality of statutory enactments.

We trust that we have sufficiently identified the parameters of our scope of review of the administrative record separately and jointly with the additional court evidence. We now pass on to substantive matters.

II. Dam Safety

One of the principal reasons advanced by the hearing officer and the agencies for a denial of the Mile Post 7 permits is the possibility of a dam failure. In our opinion, their Findings of Fact and Conclusions are based not only on unsubstantial evidence but on almost no evidence at all. The safety and stability of the dams are not contested by any party, and the record of the administrative hearing is devoid of any evidence that the Mile Post 7 site would not be safe. The hearing officer ignored the "rule of reason" in arriving at his findings and conclusions on this issue.

It is well established in both Minnesota and federal law that an agency's decision must not be made upon "remote effects." In North Suburban and Sanitary District v. Water Pollution Control Commission, 281 Minn. 524, 162 N.W.2d 249, the court illustrated the unreasonableness of an agency when it prohibits legislative activity, regardless of its harmless effects and the safety factors incorporated into the project. The court held that the decision of the agency was unreasonable because it hinged upon contingencies that were "so remote and so unlikely to occur that we believe that factors which counterbalance them prevail."

Several federal cases demonstrate the unreasonable nature of the hearing officer's and agencies' determinations regarding the safety of the Mile Post 7 dam. North Anna Environmental Coalition v. U.S. Nuclear Regulatory Commission, 533 F.2d 655 [6 ELR 20330], held that the regulations do not require totally risk-free siting.

Nader v. Ray, [3]63 F. Supp. 946 [3 ELR 20801], says that "absolute certainty or 'complete,' 'entire,' or 'perfect' safety is not required." See also Citizens for Safe Power, Inc. v. Nuclear Regulatory Commission, 524 F.2d 1291 [6 ELR 20095]. In the case at hand, the standard of "absolute safey" set by the hearing officer and agencies is, per se, unreasonable.

The record is replete with statements and admissions of all of the experts, both Reserve's and the state's, to the effect that if these dams were built according to design, and all unexpected contingencies were properly met, that the dams could not fail. The agencies retained three widely-recognized geotechnical consulting firms, each conducting independent evaluations. Their experts, W. A. Wahler, Professor Leo Casagrande, and Dr. James Hamel, dam design consultants, studied the Mile Post 7 dam proposals of Reserve and concluded that the proposed dams would be safe. Two other qualified dam design consultants, including an engineer retained by the United Steelworkers of America, Intervenors, joined in that conclusion. The Steelworkers Union went to this expense over concern for the safety and welfare of their employees and families. Despite this unanimous testimony of five nationally and internationally recognized dam experts that Reserve's proposed facility at Mile Post 7 would be "safe beyond human doubt," the hearing officer imposed the burden upon Reserve to further establish absolute safety, that is, that it eliminate the remote possibility of dam failure.

And so it appears to this court that beyond any reasonable doubt, this dam will not fail. So it follows that the speculative catastrophic results from a failure could not occur. Yet, in spite of this overwhelming evidence, the hearing officer, in his memorandum of June 29, 1976, stated that "All experts agree that safe dams do fail." There is no evidentiary support for that statement. By definition, a safe dam cannot fail. If this were to be an acceptable theory, no project would be permitted, and the wheels of industry and progress would grind to a halt.

Paradoxically, the hearing officer and agencies, while they find no substantial evidence of dam failure, choose to deal at length on "effects of dam failure." The hearing officer rationalizes this inconsistent hypothesis by the repeated finding thatt consequences of dam failure at Mile Post 20 would be less as an alternative site, and that because of its location alone, Mile Post 20 is preferable. (See Conclusion 11.) This theory is based on two assumptions, both of which are untenable because not valid: (1) that Mile Post 20 is a feasible and prudent alternative, and (2) that Mile Post 20 is available. Very limited environmental impact studies of Mile Post 20 have been made. The availability from the U.S. Forest Service of Mile Post 20 is questionable. It should be [7 ELR 20274] noted that the ultimate rejection of Mile Post 7 is based consistently throughout on the assumption that Mile Post 20 is a feasible and prudent alternative. It must be concluded, therefore, that the preference of Mile Post 20 over Mile Post 7 is not based upon substantial evidence when viewed in its entirety. This issue of alternatives is discussed more fully in this Opinion in a separate section.

Finally, the health, safety, and welfare of the people would be ensured by dam construction and maintenance under the power and authority of PCA to monitor and oversee the most minute execution thereof. This would be guaranteed by the conditions of the permit to Mile Post 7 which were agreed upon between Reserve and the PCA on July 1, 1976, as set forth in detail elsewhere in this opinion. The denial of the permit on the ground of dam safety is not based upon substantial evidence, and is, therefore, unreasonable and an error of law.

III. Air Quality

Consideration of air quality requires a review of factors involved, including potential dust sources, dust mitigation, fugitive dust measures, amphibole fiber estimates, air quality comparisons, health, projections of dust emissions, and fiber counting.

The air quality impacts projected in the administrative record are all based on a computer modeling system called a "Climatological Dispersion Model (CDM)." Essentially, air quality impact analysis involves estimation of total suspended particulates (TSP) which could be emitted during the construction and operation of a taconite tailings basin at any of the sites, and the estimation of the number of amphibole fibers which could be contained in the estimated TSP. In order to obtain the full air quality impact, the estimated TSP level is added to the levels of TSP known to exist, or estimated to exist, at each of the tailings basin sites. According to the PCA, only in the case of Silver Bay and Hoyt Lakes were actual TSP measurements used in the determination of the existing air quality, while the existing air quality at the other population centers considered were based on "pure estimates." The CDM was only used to estimate the incremental increase in TSP that would occur, and thereafter various conversion factors were utilized to convert incremental increases in the TSP levels into increases in amphibole fiber counts, i.e., the number of amphibole fibers contained in the estimated level of TSP generated by the tailings basin operation. In terms of computer modeling, the consultants of both the state and Reserve used the CDM, although significant differences existed in the input by the consultants into the CDM.

Fugitive dust is the suspended particulate matter that is generated from an exposed surface of material which is acted upon either by mechanical forces or by the wind. Mechanical forces include various man-made activities such as construction, grading, and vehicle hauling. In general terms, three factors can affect or influence emission rates: (1) the size of the open or exposed area; (2) the frequency or level of the mechanical activity operating on the exposed area; and (3) mitigation measures. Insofar as the size of the open or exposed area is concerned, the key factors which influence fugitive dust emissions are the properties of the emitting surface, such as the silt content (the fraction of particles smaller than 75 microns) and the moisture content of the emitting surfaces. The lower the silt content and the higher the moisture content, the greater resistance to the development of fugitive dust conditions. These various emission factors and subfactors are input data in the computer model as are meteorological data pertaining to the predominant wind direction, wind velocity, precipitation frequency and regional climatology. As a result of these various data inputs, the computer program attempts to forecast ambient dust concentrations at preselected ground level locations, assuming a worst-case situation. Estimates are also made as to the effects on fugitive dust resulting from the application of mitigating factors.

Duluth meteorological data for the Mile Post 7 site was used since it was the only data available. Mr. Peter Gove, Executive Secretary of the PCA testified near the completion of the administrative hearing:

. . . An unequivocal prediction of what total suspended particulate levels will be with each alternative [is] not possible with existing deficiencies in background data and the qualifications placed on emission projections (HT. 17,694)

All the parties recognized that air modeling was subject to substantial margins of error.

As with prediction of TSP, the estimation of amphibole fibers was also imprecise. Mr. Gove stated:

. . . Variations in methodology of fiber counting and measuring have made it difficult to accurately determine existing and projected levels of asbestiform fibers in the ambient air.

No state or federal ambient air standard has been promulgated for amphibole fibers. Based on present data, the ambient air of the communities of Silver Bay, Babbitt, Hoyt Lakes, Hibbing, Virginia and Mountain Iron have essentially comparable levels of asbestiform fibers. Amphibole fibers have been identified and reported in ambient air samples from Duluth, St. Paul, and Marshall, Minnesota.

The ambient air in Silver Bay, based on an annual geometric mean basis, is very close to background conditions, that is, naturally existing conditions. Annual geometric mean concentrations of TSP are well below the primary standard of PCA's Minnesota Air Pollution Control Regulation (APC) 1 (75 micrograms per cubic meter) and the secondary standard of APC 1 (60 micrograms per cubic meter).

The air quality staff of PCA has concluded that primary and secondary total suspended particulate (TSP) standards and provisions of agency regulation APC-6 can be met at all sites, including Mile Post 7, during operations.

Construction activity, transporting and movement of coarse tailings, and wind action, would have the potential of generating fugitive dust with distribution outside the limits of the tailings area. Mr. Tibor Kosa, Chief of the Engineering Sectionn, Division of Air Quality, PCA, testified as follows:

Any potential problem with fugitive dust would be more of enforcement, not of thechnology, because that thechnology is available.

The PCA's air regulation APC 6 provides as follows:

(a) No person shall cause or permit the handling, use, transporting, or storage of any material in a manner which may allow avoidable amounts of particulate matter to become airborne.

(b) No person shall cause or permit a building or its appurtenances or a road, or a driveway, or an open area to be constructed, used, repaired or demolished without applying all such reasonable measures as may be required to prevent particulate matter from becoming airborne. The Director may require such reasonable measures as may be necessary to prevent particulate matter from becoming airborne, including, but not limited to, paving or frequent clearing of roads, driveways and parking lots; application of dust-free surfaces; application of water; and the planting and maintenance of vegitative groundcover.

Dust mitigation measures include (1) physical means such as water, (2) chemical binders such as Coherex which is biodegradable with no detrimental effects, and (3) vegetation. Covering of tailings with water is a most effective means of eliminating potential fugitive dust. PCA's Division of Air Quality staff was of the opinion that vegetation is the most effective long-term method of controlling and mitigating potential fugitive dust, and that vegetation can be effectively grown on tailings.

In Finding 55 the hearing officer states:

Use of water sprinkling or chemical treatment can reduce, but cannot eliminate fugitive dust. Evidence of the quantitative effectiveness of revegetation of dam slopes in reducing fugitive dust is lacking.

By this finding the hearing officer establishes as the criterion of review an absolute 100 percent mitigation factor, that is [7 ELR 20275] "eliminate" all fugitive dust. Such a standard is unreasonble. Equally unreasonable is the finding on revegetation. This finding totally ignored Reserve's success of excellent vegitative cover on its experimental revegetation plot utilizing Reserve's coarse tailings. The success was achieved in a single growing season.

Reseve, after thesting, abandoned its air elutriation, a process to remove fine particles from the coarse tailings so that the particles cannot become a source of fugitive dust. The process would not remove the fines unless the tailings were artificially dried, which fact demonstrates, that in and of itself, this moist condition would effectively prevent potential fugitive dust from the coarse tailings.

By finding in Findings 67, 68, 69, and 70, that the estimates of total expected fugitive dust emissions by both Reserve and the state were in error in that they understate the levels of emissions which he feels could reasonably be expected to occur, the hearing officer does so without an evidentiary basis. Such findings cannot stand. CDM's developed by both the State's and Reserve's consultants were conducted on a "worst-case" basis. In its judgment the PCA staff was prepared to grant air quality permits for Mile Post 7, and, as stated at the administrative hearing by Mr. Gove:

The MPCA staff concludes that subject to the conditions stated by the MPCA water quality and air quality staffs and confirmation of the feasibility, safety, and fiber reduction from placing the coarse tailings under water, that Mile Post 7 is a reasonable site for tailings deposition.

As mandated by the federal court, Reserve and PCA entered into an Air Quality Stipulation Agreement whereby discharges at the plant site would be abated. According to the testimony of Mr. Kosa, PCA Division of Air Quality, no other mining company in the world installed such efficient pollution control equipment for their pelletizing machines. As a consequence, he estimated a reduction in TSP from the processing plant from the present estimated 65.8 tons per day to less than probably two tons per day.

Findings 82 and 83 fail to consider that the referenced Reserve estimates preceded the submersion under water of the coarse tailings and the dust mitigation benefits of that modification. TSP from the plant would be reduced as stated above. The maximum TSP in Silver Bay through implementation of Mile Post 7 would be 1.2 micrograms per cubic meter on an annual average basis. There is no evidence that the 1.2 micrograms per cubic meter is equal to one-half of the "background" TSP level. The annual TSP level of Duluth, the official "background" site for northeast Minnesota, is 19 micrograms per cubic meter.

Findings 74, 75, 76, 77, 78, 79, and 80 pertain to the estimation of amphibole fiber levels. Dr. Brown of the Mayo Clinic testified in the federal proceedings that with respect to both air and water, the level of fibers is not readily susceptible of measurement; that it is reasonable to assume an error in counts of fibers at least nine times on the high side to one-ninth on the low side; that there were incredibly large errors; and that he has little confidence in the estimate of the numbers.

In 1975 the court of appeals commented as follows:

The first issue was addressed at length in our stay opinion. We noted there the great difficulties in attempted fiber counts and the uncertainties in measurement which necessarily resulted. 498 F.2d at 1079-1080. Commenting on these difficulties, Dr. Brown stated that the fiber counts of the air and water samples could establish only the presence of fibers and not any particular amount, i.e., such a count establishes only a qualitative, and not a quantitative, proposition. The district court recognized these difficulties in counting fibers and observed that "[t]he most that can be gained from the Court [ordered] air study is the very roughest approximation of fiber levels." 380 F. Supp. at 49.

The experts indicated that the counting of fibers represents a scientifically perilous undertaking, and that any particular count can only suggest that actual fiber concentration which may be present.

Reserve Mining Company v. Environmental Protection Agency, 514 F.2d 492, 511 (8th Cir. 1975).

The hearing officer's Findings 76 and 80 accepted Dr. Cook's method of estimating the number of fibers based on computation of the total fiber mass and average fiber size, reasoning that the estimates "probably more accurately reflect the actual number of fibers present, but proof is more difficult." Such an approach requires that the total fiber mass of a dust sample be known and that the mean fiber mass of the fibers comprising that mass also be known. This assumptive approach requires various assumptions, such as, that the dust is composed of an assumed amount of tailings, that the assumed amount of tailings has an assumed amount of amphibole material, that the assumed amount of amphibole material in the assumed amount of tailings has as assumed amount of fibrous particulates, and that the assumed amount of fibrous particulates in the assumed amount of amphibole material in the assumed amount of tailings has an assumed mean fiber mass. There is "some evidence" to support such findings but, in our considered judgment, it does not rise to the level of "substantial evidence."

That each step of the computation had inherent factors of over-and-under estimation was acknowledged by the state's consultants who utilized this technique in assuming a fiber conversion factor.

We note that in Finding 80 the 975,000 "fiber" figure relates to "total fibers," and includes fibers which were positively identified as non-amphibole.For that reason that 975,000 figure cannot be use to convert TSP into amphibole fibers. Dr. Cook acknowledged that the 2,900,000 figure was biased high.

Air quality comparisons bring us to Finding 109, and Conclusions 3 and 4. Estimations of TSP and amphibole fibers are for the purpose of comparing the effect of each of the alternative sites on a series of population centers.

In choosing the data developed by the state the hearing offcier concludes that TSP would be three times higher at Silver Bay if Mile Post 7 were in operation as opposed to Mile Post 20. The significance of the estimated air quality impacts must be considered. Predicted contribution of TSP to the air of Silver Bay during operations at Mile Post 7 was three micrograms per cubic meter, while the operation of Mile Post 20 would contribute that one microgram per cubic meter. The state's air quality consulant rounded off all of the estimated "Existing Air Quality" levels to the nearest five micrograms per cubic meter "[s]imply because air quality can change within any given locality over a fairly short distance." It seems obvious that when it is permissible to round-off several micrograms per cubic meter of total suspended particulates, the significance of comparable quantities of TSP is seriously questioned.

Mr. Gary Eckhardt of the PCA's Division of Air Quality testified in substance that in the area of 39 micrograms per cubic meter, the data are accurate to plus or minus 15 percent, and that at around 100 micrograms per cubic meter better accuracy would be expected. This is so, he testified, because the sampling technique for the high volume sampler appears to have a detectable limit around five micrograms per cubic meter and is affected greatly at that point by such things as humidity, barometric pressure corrections, and temperature corrections. With these factors in mind it would seem unreasonable to determine a comparison based upon a mathematical difference of two micrograms per cubic meter of potential fugitive dust, even if the validity of the data is assumed.

In the related field of fiber counts, the error factors are so large that "one might see as much as two orders of magnitude difference in reported fiber counts." (The range from 10,000 to 1,000,000 is two orders of magnitude.) At the end of the administrative hearing the PCA staff position was:

The MPCA staff cannot at this time determine the significance of the difference in ambient asbestiform fiber levels at population centers with the coarse tailings submerged at all sites.

On the health aspect the hearing officer refers to applicable air quality portions of the federal decision, 514 F.2d 492, in Findings [7 ELR 20276] 53 and 84, and bases Conclusions 1 and 2 thereon. As we view the excerpts selected, we do not believe that they are representative or that they place the health issue in an appropriate perspective.

Reserve was ordered by the federal court, 514 F.2d 492 at 538-39, as follows:

Reserve, at a minimum, must comply with APC 1 and 5. Furthermore, Reserve must use such available technology as will reduce the asbestos fiber count in the ambient air at Silver Bay below a medically significant level. According to the record in this case, controls may be deemed adequate which will reduce the fiber count to the level ordinarily found in the ambient air of a control city such as St. Paul.

The hearing officer has postulated (Finding 84) that "the projected level of fibers in the air at Silver Bay after implementation of the Mile Post 7 proposal would be at least comparable to the levels found by the federal courts to be a potential health hazard." The Eighth Circuit Court of Appeals determined the present levels of fibers in Silver Bay to be 0.0626 fibers per cubic centimeter (cc.) (62,600 fibers per meter cubed) with a 95 percent confidence interval of from 0.0350 to 0.0900 fibers (cc.) (35,000 to 90,000 fibers per meter cubed). 514 F.2d 492 at 511.

The state projections for the Mile Post 7 operations were 0.085 fibers per cc. (85,000 fibers per meter cubed) for years one to ten and from 0.097 to 0.292 fibers per cc. (97,000 to 292,000 fibers per meter cubed) during the 10 to 40-year operation period.

The projected increase from 97,000 fibers per meter cubed at year ten to 292,000 fibers per meter cubed at year 40, given in H. Exh. 274, is essentially due to the projected increase in the area of exposed coarse tailings in stockpile from zero acres after then years to 1,920 acres at 40 years. The revised design under which the coarse tailings stockpile was a source of fibers was eliminated by placing the coarse tailings under water in the basin. The design change also eliminates the projected fiber increase after the tenth year.

In Finding 84 the hearing officer failed to qualtify the amount of the projected level of fibers to which he has reference. Having in mind that the administrative record establishes that fiber estimating has inherent error factors which can render 10,000 fibers and 1,000,000 fibers to be "comparable," there is difficulty in determining the meaning of the term "at least comparable."

Further, if we assume that the present plant emissions are responsible for the 62,600 fibers per meter cubed found by the Circuit Court for Silver Bay, it follows that the 97 percent reduction of plant particulates projected by state's witness Mr. Kosa, premised upon the implementation of the Air Quality Stipulation Agreement, will also result in a similar reduction of fibers in Silver Bay from the plant. The calculation projects a reduction to less than 1,900 fibers per meter cubed from the plant emissions in Silver Bay.

The sum of the two sources, after the stipulation agreement and implementation of Mile Post 7, projects a fiber level which at a minimum is 75 percent less than present levels utilizing the state's air quality estimates and achieves this reduction without implementation of the mitigation measures developed as permit conditions by the PCA and accepted by Reserve.

It is undisputed that neither the construction nor the operation of the Mile Post 7 project, with the contemplated mitigation measures, will violate any applicable air quality regulation — including those relating solely to potential fugitive dust. Moreover, the air quality staff of the PCA concluded Mile Post 7 is a reasonable tailings site, and that the selection of that site could form the basis for the resolution of this case.

We are of the opinion that the administrative record has no substantial evidence which would reasonably warrant or justify the rejection of Reserve's Mile Post 7 permit applications on the basis of air quality, either as a single factor or combined with other factors. Such rejection is unreasonable.

Additional evidence received by this court is further supportive of our conclusions.

Dr. Chatten Cowherd testified for the state at the administrative hearing and before this court regarding emission factors of fugitive dust from vehicular traffic, coarse tailings transfer and coarse tailings in place. His testimony at the administrative hearing was relied upon by the hearing officer in Findings 58, 68, 69, 72, 81, and 109.

At trial before this court Dr. Cowherd made the following changes from his administrative hearing testimony: (a) reduced his emission rate for coarse tailings transfer from 0.1 pounds per ton 0.07 pounds per ton; (b) reduced his emission rate for coarse tailings in place from 0.4 tons per acre per year to 0.25 tons per acre per year; (c) reduced his projected TSP levels for Silver Bay from 1.75 micrograms per cubic meter to 0.63 micrograms per cubic meter, a 64 percent reduction in his original projection. We especially note that Dr. Cowherd's courtroom projection of 0.63 micrograms per cubic meter of TSP at Silver Bay is now considerably lower than his original projection of 1.0 micrograms per cubic meter of TSP for Mile Post 20, a level originally acceptable to both the hearing officer and the PCA.

It is not deemed necessary to detail the respects in which Dr. Cowherd's testimony in the administrative hearing bore upon the hearing officer's findings, except to say that the figures proferred then are now shown to be in error and overestimated the levels of the fugitive dust by at least three times.

There are some observations, however, thatt the complexity of our case would seem to justify. For instance, the relationship between tailings dust emissions and total dust emissions is an important factor in the air quality discussion. It is necessary to know the amount of total TSP which is tailings to determine a proper conversion from total TSP levels to the fiber levels which are likely to occur in the air to Silver Bay or other population centers as a result of the implementation of Mile Post 7 or other sites. During the administrative hearing Dr. Cowherd predicted that during operations at Mile Post 7 the tailings would constitute 71 percent to 91 percent of total TSP. This percentage figure included emissions from the 1,920 acre coarse tailings storage area which has since been eliminated from the Mile Post 7 design. Resrve's expert testified that 28.5 percent of the total TSP can be attributed to tailings.

Dr. Cowherd now projects a total emission rate from the Mile Post 7 basin of 1,948 to 2,018 pounds per day, as compared to his Mile Post 20 projection of 2012 to 2296 pounds per day, a level that is still higher than his Mile Post 7 projected emission rate.

Significant for related comparison are the results of Dr. Cowherd's CDM testing on an existing, conventionally designed tailings basin, operated by Erie Mining Co. The results show a projected emission rate of 32,500 pounds per day for that tailings basin.

Also significant, in site selection, is the fact that Mile Post 20 has two to three times the exposed surface area of Mile Post 7. This is significant because emission rates are directly proportional to the exposed surface area.

Through the additional evidence this court had the benefit of air sampling by Reserve during the summer of 1976. During the two-week shutdown period, the normal background level of Silver Bay air, including air emissions from the existing delta and pellet storage activities, was determined to be 21 micrograms per cubic meter. During full time summer operations the figure was 38 micrograms per cubic meter, which would indicate that Reserve's present TSP contribution to Silver Bay air is approximately 17 micrograms per cubic meter. Implementation of the Air Stipulation would result in 97 percent reduction in emissions from the plant.

As calculated through Reserve's expert, the process plant, following the completion of the Air Stipulation, will contribute only 0.5 micrograms per cubic meter TSP to the air of Silver Bay. The Mile Post 7 project will contribute approximately 0.4 micrograms per cubic meter TSP (Dr. Cowherd's projection is 0.63) to the air of Silver Bay. These figures taken together and compared with Reserves present contribution of TSP to the air of Silver Bay predict an approximate 94 percent reduction in the quantity of dust that Reserve's present production operations add to the air of residential Silver Bay. This would constitute a significant and substantial reduction in the air emissions as a result of the implementation of the Mile Post 7 project, contrary to Findings 82 [7 ELR 20277] and 83.

Further estimates show that assuming a 50 percent mitigation level, the Mile Post 7 project will contribute approximately 138 pounds per day of amphibole minerals, with a contribution of only 20 pounds per day using a 90 percent mitigation rate. Contrary to Findings 82-84, the Mile Post 7 project will not negate one-half of the benefits flowing from the implementation of the Air Stipulation, but will substantially reduce both TSP and the levels of amphibole material now present in the air of Silver Bay.

When we compare the average TSP level of 65 micrograms (per cubic meter) in St. Paul, 52 micrograms in Duluth, 45 micrograms in Virginia, 46 micrograms in Mountain Iron, 33 micrograms in Hibbing, 36 micrograms in Hoyt Lakes, 40 micrograms in Ely, 20 micrograms at Duluth's airport, with the predicted TSP in Silver Bay, upon completion of the Air Stipulation and Mile Post 7 implementation, at 22 micrograms per cubic meter, this comparison results as a favorable factor for granting permits at Mile Post 7.

Much of our court testimony was directed to expert scientific evidence by Dr. Philip Cook and Dr. Edward Peters, the former espousing the so-called reconstitution method of sample preparation and the latter preferring the direct transfer method for the purpose of fiber counting by electron microscopy. We are persuaded that there are wide differences in fiber counting techniques and that there is at the present "state of the art" no single definitive standard method of fiber counting which has been accepted by scientists engaged in the analysis of mineral fibers by electron microscopy.

Lack of a standard method for sample preparation and analysis lends great weight to the conclusion of PCA staff that present fiber counting methods cannot serve as a regulatory tool. We are left with the fact that the Division of Air Quality of PCA could recommend the issuance of a permit for Mile Post 7 with conditions agreed to by Reserve.

The United Steelworkers' Union's position is that the hearing officer's findings on the questions of dam safety and air quality are not supported by substantial evidence. We have already stated our agreement. What is said in their brief gives an added dimension to our view of the evidence on air quality:

The Union submits that the state of the art of fiber counting and the uncertain health effects associated with airborne fibers renders it impossible to state a preference for Mile Post 20 over Mile Post 7 at this time. While it may be assumed that fewer fibers will drift into Silver Bay from Mile Post 20 than from Mile Post 7, no one can ascribe, with reasonable certainty, any significance to that difference. It may ultimately be determined that the fibers are harmless, or if potentially harmful, that the number of fibers that arrive at Silver Bay from Mile Post 7 are not medically significant. Conversely, it may ultimately be determined that the number of fibers from Mile Post 20 causes a health hazard, and that the operation at that site must be terminated. As we understand the present views of the authorities as expressed in the record, either determination may be possible. Accordingly, there should be no basis in the record for the rejection of Mile Post 7 or the acceptance of Mile Post 20 on the basis of air quality. It should be noted that Reserve must bear the burdens imposed by that uncertainty, and must comply with future air quality standards when such standards are established. Permit conditions wouldrequire such compliance.

We conclude, as we did at the end of our discussion of the administrative record, that there is no substantial evidence in either the administrative record or the additional evidence before this court, or in both, which would reasonably warrant or justify the rejection of Reserve's Mile Post 7 permit applications on the basis of air quality, either as a single factor or combined with other factors.

IV. Natural Resources

It is obvious from the hearing officer's conclusions that he predicated his rejection of Mile Post 7 primarily on findings concerning dam safety and air quality, but the agencies argue that each and every finding may be a basis for rejection of Mile Post 7 and preference for Mile Post 20. We do not find it necessary to discuss each and every finding upon which the hearing officer bases his conclusion to establish the environmental superiority of Mile Post 20 over Mile Post 7. It is clear to us that such superiority, if any, is marginal at best, and not supported by substantial evidence.

We will point out, however, the absence of record support for some of the distinctions drawn and conclusions resulting therefrom.

Land use considerations should have presented a significant impediment to the selection of Mile Post 20 if credence were given to state consultant Barton-Aschman & Associates, Inc., and their land use expert, Mr. Dennis Hawker. State-retained expert Dennis Hawker testified that Mile Post 20 "goes completely contrary to the principle of consolidation of land use activities and that you are opening up a third area to mining activities;" that the "introduction of a mining activity into the (Mile Post 20) area in between Reserve's current operations of mining activity and their plant in Silver Bay is another disadvantage of the Midway alternative;" that Mile Post 20 is a "violation of the principle of consolidation of manageable land uses;" that Mile Post 20 "represents a new and different area as relates to this mining industrial use;" that Mr. Hawker would not recommend Mile Post 20 for that purpose as relates to the application of the policy of consolidation; and finally, that to the extent Mr. Hawker would discourage the introduction of mining uses into the Mile Post 7 area, it could not be considered opening up an entirely new area to mining industrial uses; and there is "no specific written state policy of either the Department of Natural Resources or the Pollution Control Agency or other state agencies which says that mining industrial uses shall not be undertaken" at Mile Post 7. Mr. Hawker did not testify that Mile Post 20 was preferable, but did testify that Mile Post 20 was inconsistent with land use principles.

The land use findings ignore the people living, working, and playing on the North Shore. Such is the effect of characterizing Mile Post 7 as a "major new industrial development" which cannot be considered the expansion of an existing land use. One of the most obvious facts in the record is that the Mile Post 7 proposal is only ancillary to an existing industrial facility. Preservation of the community of Silver Bay is certainly in accord with good land use. A consideration of the opinions of those living in the area indicates that Mile Post 7 is both acceptable and preferred by local government and private citizens. There can be no doubt that if land use is to be a site selection parameter, land use must be considered in light of the existence of the plant in Silver Bay and the peoplewho work and play there. It is significant that this is not a new industry seeking to intrude into a natural resources recreational area, but an ongoing concern of many years.

In view of the entire record, the only finding which can be justified regarding land use considerations is that the Mile Post 7 site is consistent with all applicable laws, rules and regulations, and land use policies of state and federal agencies and that Mile Post 20 is not a preferable site because it opens up a third area to industrial mining uses and is inconsistent with principles of land use consolidation. There is no substantial evidence to support the hearing officer's relevant findings and conclusions for the preferability of Mile Post 20 on the basis of land use planning.

While there may be some very insignificant differences with reference to streams, fish, animals, timber, and water quality impacts, as between the Mile Post 20 and Mile Post 7 sites, there is no substantial evidence to support the hearing officer's finding thatt the differences are "substantial." Rejection of the Mile Post 7 site based on such minor differences is unreasonable.

A review of the record and of the various environmental impact statements leaves us with the clear impression that all of the sites are indeed very similar. That point is made particularly clear in the testimony of Mr. Gove, Executive Director of the PCA, on March 11, 1976, when he stated in essence that there is no ideal site for tailings deposition, that wherever tailings are placed there will be a major impact upon the environment, and that the differences among the various sites discussed at the hearing are indeed small. He concluded that Mile Post 7 is a feasible site and [7 ELR 20278] that the environmental hazards can be minimized by the use of the best available technology.

The record shows that as far as the natural resources are concerned, none of the various factors either singly or combined with others justify or support the conclusion thatt there is a feasible and prudent alternative to Mile Post 7.

V. Economic Factors

There can be no question from the statutory law and case law that economic factors must be given at least equal consideration in making environmental decisions. §§ 116D.03(2)(c), 116D.02, subd. 1, 116D.04, subd. 6, 116D.07(2). In Aberdeen and Rockfish Railroad v. SCRAP, 409 U.S. 1207, 93 S. Ct. 1 [2 ELR 20491] (1972), Justice Berger, then sitting in the circuit court, said:

. . . Our society and its governmental instrumentalities, having been less than alert to the need of our environment for generations, have now taken protective steps. These developments, however praiseworthy, should not lead Courts to exercise equitable powers loosely or casually whenever a claim of "any environmental damage" is asserted. . . . The decisional process for Judges is one of balancing, and it is often a most difficult task.

Also in Reserve Mining v. Lord, 514 F.2d 540, the federal court stated:

. . . Minnesota and Reserve, to exercise the zeal equivalent to that displayed in the Federal litigation to arrive at an appropriate location for an on-land disposing site for Reserve's tailings and thus permit an important segment of the national steel industry, employing several thousand people, to continue in production. As we have already noted, we believe this controversy can be resolved in a manner that will purify the air and water without destroying jobs.

Two separate facets of this issue must be considered: (1) the substantial, additional cost to Reserve by going to Mile Post 20 instead of Mile Post 7, and (2) the economic impact of a shutdown of Reserve's operations upon northeast Minnesota.

It is the first problem, assuming implementation of Mile Post 20, that the governors of Minnesota and other state and federal officials and industrialists have addressed themselves to in recent months. Reserve has placed itself on record several times, through Armco and Republic, that if denied permits to go to Mile Post 7, Reserve would shut down on the grounds of economic unfeasibility. The hearing officer treats this lightly and considers it a threat only and irrelevant notwithstanding. This court feels, as do other interested parties, that this "threat" is substantial and must be considered seriously. The hearing officer does, however, in Finding 142, use the term that Reserve "may" be terminated and, in Findings 123 to 140, denigrates the probability of a shutdown. This court is not endowed with the prescience upon which to determine absolutely corporate intentions on closure. To disregard this possibility or probability constitutes a dangerous disregard of reality and, therefore, is unreasonable. There is no dispute in the record as to the economic impact on the residents of northeastern Minnesota and the economy of Minnesota if the plant shuts down. The court of appeals emphasized the magnitude of this problem, in 514 F.2d 492, at page 536, in which it stated:

As of June 30, 1970 [Reserve] had 3,367 employees. During the calendar year 1969, its total payroll was approximately $31,700,000; and it expended the sum of $27,400,000 for the purchase of supplies and paid state and local taxes amounting to $4,250,000. [Reserve's] annual production of 10,000,000 tons of taconite pellets represents approximately two-thirds of the required pellets used by Armco and Republic Steel, the sole owners of Reserve, 15% of the production of the Great Lakes [ore] and about 12% of the total production of the United States. Between four and six people are supported by each job in the mining industry, including those directly involved in the mining industry and those employed in directly and indirectly related fields.

514 F.2d 492, p. 536 (8th Cir. 1975).

Those figures may be updated by noting that Reserve's payroll for 1974 was over $46 million and for 1975 over $55 million; that it expended the sums of $50 million and $65 million respectively, in 1974 and 1975 for the purchase of materials and supplies, $37 million and $45 million of which were paid to suppliers in the State of Minnesota; that 1974 and 1975 state and local taxes were $7,775,000 and $15,942,000, respectively.

As a result of new legislation, Reserve's state tax liability for 1975 was increased to more than $15 million or approximately double the liability for 1974 and its state and local tax obligations during the next four years will be approximately $70 million or equal to all state and local taxes paid by the company during its first 20 years of operation.

Although the hearing officer has many Findings (143-155) in this regard, he makes no conclusions therefrom.

After making the foregoing findings, the hearing officer commented in his memorandum of May 26, 1976 that the consequences of thermination would be "horrendous for a great many people butthe Mile Post 7 site would be no more suitable and no more legal." Thus, having recognized the horrendous consequences of thermination, the hearing officer removed them from the balance, reasoning that an investment in one of the alternatives would be "prudent" and thus these horrendous consequences would never occur. This refusal to consider the impact on the economy in balancing with environmental impacts is directly contrary to the decision-making process used by the court of appeals and mandated under Minnesota law.

No such rule exists in the applicable statutes. The state Environmental Policy Act mandate is to "encourage productive and enjoyable harmony between man and his environment;" and to "maintain conditions under which man and nature can exist in productive harmony and fulfill the social, economic and other requirements of present and future generations of the state's people;" and to assure for all "people of the state safe, healthful, productive, aesthetically and culturally pleasing surroundings;" and to give equal consideration to environmental values and economic values. (MSA §§ 116.01, 116D.02 and 116D.03).(Emphasis added.)

The environmental policy of the state is further tempered by the provisions of MSA § 116.07(6) which require the exercise of its powers to give "due consideration to the establishment, maintenance, operation and expansion of business, commerce, trade, industry, traffic and other economic factors and other material matters affecting the feasibility and practicability of any proposed action. . . ."

In determining to give little consideration to the consequences of thermination, the hearing officer has, in effect, reverted to the original DNR/PCA position that the consequences of thermination should not be considered. (DNR/PCA H. Exh. 103.)

A statistical description of the effects of a termination of Reserve on the economy of northeastern Minnesota and the entire state in general fails to adequately describe the true impact of a Reserve shutdown. As a practical matter, a shutdown would virtually destroy the economic well-being of several thousand families. The value of homes and other property in the Silver Bay and Babbitt areas would decline drastically, thus reducing the primary asset of thousands of families. It would also be impossible for most of the residents to continue to live in their homes since most would be forced to move to distant areas to seek new employment.

Because of the nature of the work force and the ages of many of the employees, many would find it impossible to obtain suitable reemployment. Of those who might be able to find other jobs, most would be required to accept positions at lower pay levels than those which they currently enjoy. Valuable seniority rights also would be eliminated for Reserve employees.

Those persons in the 40-60 year age range would find it essentially impossible to ever recover from such an economic loss. It would be most difficult for them to properly contribute to the education of their children. In short, the economic well-being of thousands of families would be virtually destroyed. Unemployment compensation, welfare, and other government aids would be [7 ELR 20279] a poor substitute for the people affected.

Certainly, no one who is at all concerned about our natural heritage can be elated over the use of any part of our lands as a tailings disposal dump.The realities of life, however, demand that these basins be located someplace, and that choice must be made objectively, taking into consideration both the environment and the economy upon a rational balance.

We, therefore, find that the hearing officer's failure to make conclusions favorable to Mile Post 7 on this issue is unreasonable, because there is substantial evidence to compel such a conclusion.

VI. Alternatives and Implementation

M.S.A. § 116D.04(6) provides:

No state action significantly affecting the quality of the environment shall be allowed, nor shall any permit for natural resources management and development be granted, where such action or permit has caused or is likely to cause pollution, impairment, or destruction of the air, water, land or other natural resources located within the state, so long as there is a feasible and prudent alternative consistent with the reasonable requirements of the public health, safety, and welfare and the state's paramount concern for the protection of its air, water, land and other natural resources from pollution, impairment, or destruction. Economic considerations alone shall not justify such conduct. (Emphasis added.)

Since the establishment of a tailings basin at any site will necessarily result in some impairment of water, land, and other natural resources located within the site, the hearing officer was required, as is this court, to consider the feasibility and prudence of the suggested alternatives to the Mile Post 7 site. The record is rather conclusive that all alternatives except Mile Post 20 have been written off by the experts and the hearing officer. In his Findings and Conclusions, he treats Mile Post 20 as the preferred and feasible and prudent alternative.

Setting aside all considerations of dam safety, air quality, natural resources, and economic feasibility of the Mile Post 20 site, we have before us the question of implementation of that site. It seems clear to us that whether or not Mile Post 20 is a feasible and prudent alternative, in its totality, is availability is of crucial significance.

If an alternative site is not available within "the timeframe of the needs to which the underlying proposal is addressed," such an alternative is remote and speculative rather than prudent and feasible. Natural Resources Defense Council, Inc. v. Morton, 458 F.2d 827, 837-38 [2 ELR 20029] (D.C. Cir. 1972). Delay in implementing and making available an alternative precludes that alternative from being feasible and prudent. Fayetteville Chamber of Commerce v. Volpe, 515 F.2d 1021, 1026-28 [5 ELR 20379] (4th Cir. 1975).

In Finding 156, the hearing officer stated that the "time required for the alternative sites is estimated at more than four years." Dennis Hawker of Barton-Aschman and Associates, the state's consultant engaged for the purpose of preparing the state EIS and the Midway (Mile Post 20) Supplement to the EIS, testified that the procedure for acquiring land within the Superior National Forest is described in Appendix F to the EIS (DNR/PCA H. Exh. 103). The EIS outlines the nine major steps necessary to acquire federal forest land pursuant to the General Exchange Act, 16 U.S.C. § 486.86, and states, in part:

2. The average land exchange has taken four to five years.

3. Examples of actual land exchange time: Inland Steel — 5 years; Erie Mining — 7 years, and still not completed; U.S. Steel — 5 years to date with approximately two years to complete.

DNR/PCA H. Exh. 103, p. F-23.

The time required to implement the Mile Post 20 facility alone belies its "feasibility." Because of the hearing officer's "offer" of Mile Post 20 as the feasible and prudent alternative site, the court's consideration herein is largely limited to that site. Although other alternatives have been spasmodically suggested, these have received no serious consideration because of varying insurmountable difficulties with each. It should be stated, however, thatt what is true in respect to land acquisition to Mile Post 20 is also applicable to two of the other suggested sites with the following acreages of national forest land: Mile Post 20 — 6,400 acres, Snowshoe — 5,282 acres, Colvin — 7,468 acres.

The U.S. Forest Service, in its deliberations on the land exchange application, will consider feasible and prudent alternatives to the applied-for land. In fact, Reserve H. Exh. 485 indicates that, at least on June 23, 1976, the Forest Service regarded Mile Post 7 as the most acceptable site for the tailings basin. Mile Post 20 was rejected as an alternative by the draft EIS for a variety of reasons.

If the Mile Post 20 site were to be used, the discharge of tailings to Lake Superior must continue during whatever period of time is necessary to acquire the site, plus the time required to develop the necessary land acquisition and title clearing, preliminary negotiations, one year for development of engineering data information, EIS drafters' archaeological surveying, 24 month plus EIS process, delays occasioned by any administrative or judicial appeal, and 36-month turn-around construction period before the tailings could be deposited on land. It is recognized that some of these proceedings may be processed concurrently. Utilization of the Mile Post 20 site may require the continued discharge into Lake Superior for approximately six years. It is highly unlikely that the federal courts would allow such continued lengthy discharge. More importantly, even if the time to implement alone did not eliminate the Mile Post 20 site as a feasible and prudent alternative, there is no assurance that lands at Mile Post 20 would ever become available. The decisions of the Forest Service, the Secretary of Agriculture, the Congress, and, perhaps ultimately, the federal courts, are completely outside the control of the State of Minnesota.

The forced cessation of lake discharge before an on-land site is ready to accept tailings will result in the termination of Reserve's operations. Tailings produced in Reserve's taconite beneficiation process are needed for construction of the on-land disposal facility. Moreover, in the stages while coarse tailings processed will be used for dam construction, the fine tailings produced at the same time must be discharged into the lake.

Pursuant to Judge Devitt's order of July 7, 1976, and as affirmed by the Eighth Circuit Court of Appeals, Reserve must terminate its discharge into Lake Superior on July 7, 1977. The appeals court has the power to extend this deadline if the dispute between the agencies and Reserve over an on-land disposal site is resolved. It is reasonable to assume that the federal courts will not indefinitely extend the period of time that Reserve will be permitted to continue the disposal of its tailings into Lake Superior. Thus,for an alternative on-land disposal site to be "feasible and prudent," the site must be available within the relatively short time period that the federal courts may allow Reserve to continue its present operation.

PCA's and DNR's determination that Mile Post 20 is an alternative to Mile Post 7 is meaningless, because the state, although it has no duty to do so, cannot deliver the site.

The agencies rely on County of Freeborn v. Bryson, 297 Minn. 218, 210 N.W.2d 290 [4 ELR 20215], as a judicial mandate for their decisions. We understand clearly that it is the duty of the courts to support the legislative goal of protecting our environmental resources. This, of course, is to be done in harmony with the various statutory provisions which the legislature has expressly and contemporaneously embodied in its environmental enactments. M.S. §§ 116D.02, subd. 1, 116D.03(2)(c), 116D.04, subd. 6, 116D.07(2).

We are in complete accord with Bryson, supra, as it applies to the situation there involved. However, we consider it to be distinguishable for the reason that in Bryson, there was an available, feasible, and prudent alternative which would have no adverse environmental impact. In the instant case, every site considered is acknowledged by the parties and the hearing officer to have adverse environmental impacts if implemented. As we have concluded in another portion of our memorandum, there is no substantial evidence to support a conclusion thatt the environmental impact at the proposed Mile Post 7 project is substantially, or even marginally, greater than at any alternative site.

[7 ELR 20280]

In Bryson, supra, the Supreme Court makes note of Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 135 [1 ELR 20110], which involved a statutory proscription that the Secretary of Transportation shall not approve acquisition of public parkland for construction of federal aid highways unless there is no feasible and prudent alternative. The U.S. Supreme Court stated that the very existence of the statute indicated that protection of parkland was to be given "paramount importance," unless there were truly unusual or extraordinary factors present in a particular case. In the case before us, there is no statutory proscription dealing specifically with a class of land such as is involved at Mile Post 7, as compared to "public parkland" in Overton Park. Here we have land involved which is similar at all sites, and for that reason it is not necessary that we predicate our decision on the basis of "unusual or extraordinary factors." For reasons stated we find Bryson authoritative but inapplicable.

In summary, we find the time required to implement disposal at Mile Post 20, together with the extreme uncertainty as to whether the site would ever be available, conclusively establishes that the PCA's and DNR's finding thatt Mile Post 20 is a "feasible and prudent alternative" is not supported by substantial evidence and is unlawful and unreasonable.

VII. Permit Conditions

Any possible or reasonable concerns about the future of Reserve's Mile Post 7 plan were eliminated by the unequivocal acceptance by Reserve and its shareholders, Armco and Republic, on July 1, 1976, of the permit conditions demanded by the PCA board and staff. These stringent permit conditions make the following controls binding on Reserve:

(a) The permit shall be limited to a specific five-year term.

(b) Armco and Republic shall be co-permittees with Reserve Mining Company.

(c) The permittees shall assume all risks and liabilities arising from the implementation of the Mile Post 7 on-land disposal site and system.

(d) The permittees shall be required to perpetually maintain the tailings basin site to insure the integrity of the basin structures and to prevent the deposited tailings from re-entering the air and water of the state.

(e) All tailings except those used for dam and dike construction shall be placed underwater in the tailings basin during operations to the maximum extent possible with all exposed tailings to be adequately vegetated as soon as possible. Upon termination, the entire tailings basin shall be totally vegetated as soon as possible using the then best available technology.

(f) All tailings shall be disposed of in the Mile Post 7 permitted on-land tailings disposal system facility.The permittees shall be prohibited from using or allowing any other person or governmental entity to use tailings for any other purpose.

(g) The permittees shall be required to apply the best available technology to maintain air quality and to comply with all applicable laws and regulations, specifically including Minn. Reg. APC 1 and APC 6 and such other standards which now or in the future may apply to the permittees' tailings. This technology shall include specifically, but not exclusively, the use of spray water and effective and non-polluting chemical binders and other dust retardants on all exposed surfaces of tailings and upon all access and haul roads. In addition, only containerized or indoor and totally covered tailings stockpiles shall be permitted outside the disposal area.

(h) The permittees shall be required to apply the best available technology to maintain water quality and to comply with all applicable laws and regulations, specifically including Minn. Reg. WPC 14 and such other standards which now or in the future may be applied to the permittees' tailings. This technology shall include specifically, but not exclusively, the following:

(1) The tailings disposal system shall be operated as a closed system including the collection of seepage and surface runoff for return to the basin.

(2) A dual pipeline system with required controls, spill detection devices, emergency catchment basins and other protective devices.

(3) Any water discharge from the tailings or catchment basin shall be treated to the extent necessary to conform to all present and future water quality standards.

(i) The permittees shall be required to monitor the Mile Post 7 basin structures and the air and water in and adjacent to the tailings disposal area for the purpose of enabling any reaction to any potentially hazardous condition. The permittees shall establish an air and water monitoring program to be approved by the Minnesota Pollution Control Agency and shall operate this monitoring program with the capability of providing information necessary for rapid response in applying mitigating measures and procedures. Such air and water monitoring shall include, but is not limited to, the identification and counting of fibers by such methods as x-ray diffraction, electron microscopy or any other methods as the PCA may specify.

(j) Reasonable costs for monitoring and analysis beyond the routine compliance monitoring conducted by the PCA or consultants directed by the PCA shall be borne by the permittees.

(k) Dam design, construction and operations consistent with the recommendations of the Minnesota Pollution Control Agency staff and the state's consultants. The reasonable costs of such consultants shall be borne by the permittees.

The decision to reject Reserve's Mile Post 7 plan despite Reserve's agreement to these conditions is unlawful and unreasonable. We find that the above permit conditions are adequate to protect the health, welfare and safety, and all legitimate concerns of the public as a matter of law.

VIII. Admissibility of Reserve's Court Exhibits 104-163P, and Motion to Reopen by SLSA and Sierra Club

These documents were obtained by Reserve from PCA files pursuant to this court's Order to Produce dated October 14, 1976. The PCA and Intervenors, on its behalf, objected to their admissibility on the grounds of lack of relevance, or that they were cumulative and repetitive. The court has received said documents into evidence, being convinced of their relevance and non-prejudicial effect even though possibly of cumulative or repetitive nature.

We are of the opinion that the offered evidence by SLSA and Sierra Club relates to the execution and implementation of the Air Quality Stipulation Agreement. Any noncompliance therewith is a matter of future consideration between Reserve and the PCA.

IX. Due Process

1. As stated in our introduction, application for all necessary permits for Mile Post 7 were filed by Reserve with the state agencies in November 1974, and hearings on the administrative level were commenced before Hearing Officer Wayne Olson on June 28, 1975. Since the "Health Issue" was already resolved by the circuit court of appeals, it was agreed and stipulated between the parties that that issue would not be a part of the administrative proceeding since it was res adjudicata.

In the lengthy opinion of the circuit court of appeals, Reserve Mining Company v. ENVIRONMENTAL PROCTECTION AGENCY, 514 F.2d 492 [5 ELR 20596], it was held in substance that Judge Lord of the Federal District Court had abused his discretion in ordering an immediate shutdown of the plant, since the emission complained of did not create an imminent or certain risk of harm to the public but only a potential risk. (Id. at 537.) They further held that Minnesota had exclusive jurisdiction over disposal sites, but:

Minnesota, of course, in ruling upon any proposed on-land disposal site, must abide by the basic principles of the process of law.

[7 ELR 20281]

Id. at 540.

After the state administrative hearings had been in progress for approximately five months, Judge Lord held his "Educational Hearing." The recusal by the circuit court of appeals following this hearing is well documented. Reserve Mining Co. v. Hon. Miles Lord, Judge, 529 F.2d 181 [6 ELR 20432]. A few excerpts from the case place the concerns of this court in proper perspective as to what impact, if any, such hearing had on the hearing officer, agencies, their staffs, and other state officials in attendance:

In the November proceedings, Judge Lord called and examined the witnesses and interspersed testimony of his own; the trial judge announced on the record that witnesses called by Reserve could not be believed, that in every instance Reserve hid the evidence, misrepresented, delayed and frustrated the ultimate conclusions; and that he did not have "any faith" in witnesses called by Reserve.

Id. at page 182.

. . . and that Judge Lord continues to attempt to influence the state administrative process concerning the feasibility and location of the on-land disposal site. Requesting the hearing officer and members of the Minnesota PCA to attend this Court was for the precise purpose of exerting improper influence. . . .

Id. page 187.

. . . Judge Lord's statements evidence a purposeful intent to influence the state officials to reject the Mile Post 7 site. The District Court's disclaimer of present jurisdiction cannot hide the purpose manifested by what he told the state officials.

Id. page. 188.

Thus, the U.S. Court of Appeals has already determined that Judge Lord's "Educational Hearing" was held to improperly influence the state administrative process. The question arises as to what influence, if any, did these proceedings have on those who attended, who were active participants in the administrative hearing, such as the hearing officer, Director Gove, and his staff, PCA board members, and staff members of the DNR. This suggests that perhaps the hearing officer's and agencies' decisions, premised upon health issues, and the fact that the Findings and Conclusions minimize favorable reference to Reserve's experts and consultants, owes it origin to the effect of that hearing.

2. The statute governing the conduct of PCA regulatory affairs provides in part as follows:

All hearings conducted by the Pollution Control Agency pursuant to Chapters 115 and 116 shall be open to the public, and the transcripts thereof are public records. . . .

M.S.A. § 116.075, subd. 1.

In that same regard, MPCA Regulation 9 provides further guidance as to the nature of the public hearings contemplated by the statutory law:

All hearings required by statute or regulation and all hearings ordered by the agency in its discretion, other than rule-making hearings conducted pursuant to Minn. Stat. Chapter 15 and other than public informational meetings, shall be conducted with the procedure set forth in this rule. No person before this agency shall have his rights, privileges or duties determined without regard to fundamental fairness. To that end, this rule is intended to assure that all parties are provided a just and speedy public hearing. (Emphasis added.)

On June 15, 1976, the PCA board, on a vote of 5 to 4, rejected the hearing officer's Findings and Conclusions and determined to grant all necessary permits for the construction and operation of a tailings basin at Mile Post 7. In order to draft appropriate Findings and Conclusions in support of Mile Post 7, the board formed a committee of the five supporting their position (Genis Committee) and directed the PCA staff to assist. Under this court's production order, it is well documented that the PCA staff members were overwhelmingly disappointed by the board members' decision, and that they supported the hearing officer's recommendations to deny permits to Mile Post 7.

The record reveals that a series of four meetings between the staff and the Genis Committee from June 15 to July 1, 1976, were conducted, but without the benefit of either notice to the parties or the keeping of a formal record. The first of such meetings was held late in the afternoon of June 15, at which time the Committee entered into procedural and substantive discussions with the agency staff. The second of such meetings was held three days later in the officer of Mr. Gove, at which time each board member agreed to produce a factual basis for his personal reasons for rejection of the hearing officer's Findings and Conclusions. Their personal reasons were distributed to the PCA staff on June 23. The third of such meetings was held on June 29, where it was determined that time pressures and the complexity of the issues compelled the committee to recommend to the Board the adoption of the "Findings" proposed by Reserve. The final meeting was held July 1, and involved a considerable debate between staff members and the board members. Again there is no record of what was debated nor is there a transcript of the comments and ideas then being exchanged.

What is known, however, is that within a few hours after the close of the committee session, two members of the Genis Committee reversed themselves, which in effect gave the board a majority in adopting the views of the PCA staff and accepting the hearing officer's decision.

3. The hearing officer, in Finding 169, compliments the agencies on their good-faith objectivity. Reserve, however, suggests that certain court exhibits, obtained by this court's production order, reveal that the DNR staff had expressed determination, before the administrative hearing commenced, to reject Mile Post 7.Also, a close review of these produced documents reveal activities and efforts of the PCA staff to persuade the PCA board to deny the permits to Mile Post 7, and particularly a determined effort on the staff's part to change the board's June 15, 1976, decision. (Reserve's Exhibits 104 to 163.)

Upon a review of the record in its entirety (and the produced exhibits here in question), it is evident that all these extra-judicial hearings, meetings, and correspondence, convey an inference that many of those involved in the administrative proceedings engaged in activities thatt cannot be condoned as within the legislative intent to maintain fundamental fairness and objectivity in their proceedings.

The ultimate reaction of this court is that this failure corroborates our decision that the Findings of Fact, Conclusions, and Recommendations of the hearing officer, and the decisions of the agencies in denying the necessary permits to Reserve for Mile Post 7, were unreasonable and not based upon substantial evidence and thus unlawful.

X. Conclusions

1. On the basis of the record in its entirety, the Findings, Conclusions, and Recommendations of the hearing officer, and the decision of the PCA based thereon to deny permits for Reserve's proposed Mile Post 7 on-land tailings disposal facility are unlawful, unreasonable and not supported by substantial evidence.

2. Reserve is entitled to an order of this court vacating the PCA decision of July 1, 1976, denying permits applied for by Reserve for an on-land disposal facility at Mile Post 7, and directing the MPCA, upon remand, to issue the permits applied for at Mile Post 7, under such permit conditions as may be mutually agreed upon between the parties.

It is therefore ORDERED:

That the Order of the MPCA dated July 1, 1976, is hereby vacated and the matter is remanded to the MPCA for action forthwith to issue all permits applied for by Reserve for Mile Post 7, subject to such conditions as may be mutually agreed to between the parties, all in conformance with the decision of this court.

Let Judgment be entered Accordingly.