ST. PAUL, Minn. (AP) — The state of Minnesota and U.S. Steel have reached a deal that permits the company to expand production at one Iron Range plant while capturing polluted wastewater at another, state officials said Friday.

Minnesota Pollution Control Agency officials tell Minnesota Public Radio News ( ) that the deal protects the environment without interfering with economic development on the Iron Range.

However, environmentalists and Indian tribes oppose the agreement in part because they don't believe the pollution-reducing technology and techniques called for in the deal will work.

The deal is similar to a contract and is called a schedule of compliance. It specifies certain actions the company will take at its huge Minntac plant near Mountain Iron and at the smaller Keetac plant to the west.

Ann Foss, manager of the MPCA's industrial division, said she was happy U.S. Steel decided to take a comprehensive approach that covered both air and water pollution issues.

"It's better for the environment and probably for them from a cost perspective to look at it holistically," Foss said.

U.S. Steel managers said in a statement that the deal demonstrates the company's commitment to environmental stewardship and will make its taconite plants leaders on pollution control.

Each plant has its own issues. The Keewatin plant has a problem with air-born mercury while Minntac puts out excessive sulfates in its wastewater. The MPCA wants to reduce both substances in the environment.

The deal will allow the planned expansion of the Keetac plant to go forward. It is expected to create 500 temporary construction jobs and 75 permanent jobs.

The increased production could also send about 54 pounds of mercury into the air every year, so the deal calls for U.S. Steel to install dry scrubbers and other technology on the Keetac smoke stacks to capture it.

Members of environmental groups and Minnesota's Indian tribes are skeptical, arguing there's no proof the scrubbers will work.

Kathryn Hoffman, an attorney for the Minnesota Center for Environmental Advocacy, said the U.S. Steel deal doesn't comply with the state's overall plan to reduce mercury, which requires any new source to compensate for the added mercury with reductions elsewhere.

"Simply testing technology and hoping it will work is not an offset," Hoffman said. "An offset is an immediate reduction in the amount of mercury that's discharged or emitted, and that's the step that they should be taking."

MPCA officials said they're confident the scrubber technology will work, and if it does it could adopted to most of the taconite plans on the Iron Range. Taconite plans are the second-largest source of mercury in Minnesota after coal-fired power plants.

The agreement between the state and the company also calls for U.S. Steel to address sulfate discharge at the Minntac plant — which has exceeded its permit for years — by building a collection system to prevent sulfate-heavy wastewater from reaching nearby rivers.

Minnesota Indian tribes worry that when sulfates and mercury mingle in a waterway, more of the mercury winds up in fish. Tribal biologists also believe that sulfate pollution is to blame for the decline of wild-rice beds.

Nancy Schuldt, water protection coordinator for the Fond du Lac Band of Lake Superior Chippewa, questioned whether the MCPA had the political will to make sure U.S. Steel's new collection system works.