In the latest in a barrage of challenges to mining projects in Minnesota, an environmental group is opposing the expansion of U.S. Steel’s Minntac taconite mine on the grounds that the state cannot approve the expansion if the facility has outstanding permit violations.

The Duluth News Tribune reported that the Minnesota Pollution Control Agency issued a “draft certification” letter for the Minntac project expansion saying there is “reasonable assurance that the activity will be conducted in a manner that will not violate applicable water quality standards provided that USS complies with all the conditions described below.”

The letter was expected to be sent to the U.S. Army Corps of Engineers in early January as the state’s official approval of Minntac’s plan to drain wetlands at the site.

But the group Water Legacy countered that the federal Clean Water Act, as well as Minnesota state rules, prohibit the state or federal government from approving projects if there will be any increase in emissions that already are in violation.

Water Legacy contends that Minntac’s discharges of several pollutants — including mercury, sulfate and water hardness — already exceed Minnesota water quality standards, said Paula Maccabee, attorney for the group Water Legacy.

U.S. Steel is planning to expand the Minntac Mine in Mountain Iron by 483 acres to access more taconite iron ore and extend the life of the sprawling facility by 16 years. The Minntac operation, the largest taconite plant in the U.S., employs 1,400 people.

“Minnesota rules say you can’t approve a permit if there is either an ongoing exceedince or unresolved compliance issues. In the case of Minntac, both of those are true,” Maccabee said. “Minntac has been in violation of the state sulfate standard since 1987. … This is a textbook case of what Section 401 of the Clean Water Act is intended to prevent. You can’t approve expansions until old problems have been fixed.”

Water Legacy has asked for a hearing on the issue in front of the PCA’s governing board in St. Paul. That decision is up to PCA Commissioner John Linc Stine.

Catherine Neuschler, supervisor of the PCA’s rules unit, said the PCA issued the draft letter of certification after dealing with issues specific to the proposed wetlands loss and the Army Corps permit — not necessarily every aspect of Minntac operations. Minntac may have compliance issues with its tailings basin and discharge, but they are not related to the mine expansion’s wetlands issue covered by the Corps permit, Neuschler said.

“We tried to raise issues that dealt with the 404 wetlands situation that the Corps is permitting here. We chose to focus on improvements we could make in that area,” she said, adding that issues regarding water quality are better dealt with in the National Pollutant Discharge Elimination System permit process, not wetlands rules.

Minntac currently is working to resolve its compliance issues, Neuschler said, and the state is expected to reach a new discharge permit with the company by 2015.

The DNR earlier this year determined a full-fledged environmental impact statement was not necessary for the expansion because the “extension would not include any increase in the rate of production or annual volume” of taconite.

The expansion would result in about a 5 percent increase in the size of the mine pits on adjacent land leased by the company. The project will destroy about 67 acres of wetland and alter 3,200 feet of Parkville Creek, according to the PCA. The company is planning to mitigate the wetland loss by buying credits at a wetland bank in Aitkin County.