DERR-2024-011686

US Magnesium LLC
238 North 2200 West - Salt Lake City, UT 84116-2921
801/532-2043 - 800/262-9624 - FACSIMILE 801/534-1407

September 16, 2024

Via Electronic Mail

Suzanne J. Bohan, Director
Enforcement and Compliance Assurance Division
Environmental Protection Agency Region 8
159 Wynkoop Street
Denver, CO 80202

Subject: USM Response to Notice of Noncompliance with US Magnesium LLC Consent
Decree (Case No. 2:01CV0040B), EPA Letter Dated July 18, 2024

Dear Ms. Bohan:
US Magnesium LLC (“USM”) is in receipt of the above referenced letter from the Environmental
Protection Agency Region 8 (“EPA”). This response is made in the context of settlement negotiations,
and the statements made herein shall not be admissible in any proceeding.
As you know, USM’s magnesium operations have been idled since September of 2022. This is relevant
for two important reasons. First, much of the work required by the consent decree addressed hazardous
waste being generated by magnesium production. USM is not producing magnesium and has not
produced magnesium for almost two years. Indeed, almost all of the RCRA-related provisions referenced
in your letter relate solely to magnesium production operational issues. For example, Paragraph 15 of the
CD requires USM to implement a “Filtration System … to filter CHCs from [its] wastewaters and certain
process waters.” USM is not generating any wastewaters or process waters from magnesium production,
has not done so in two years, and has no plans to do so unless and until production operations resume.
Similarly, Paragraph 17 of the CD requires the implementation of “a system for handling Anode Dust
generated in Electrolytic Cell Buildings ….” USM is not currently generating Anode Dust, has not done
so in two years, and has no plans to do so unless and until production operations resume.
Although USM hopes to resume magnesium production in the future, whether and when it will do so is
uncertain. Accordingly, absent resumption of magnesium operations, there are no wastes being
generated, and, thus, there cannot be any violations. There is certainly no present need to pursue the
operational steps referenced in EPA’s letter.
In addition to suspending magnesium operations, decreasing world prices for lithium and increased
production costs required USM to also suspend commercial lithium operations. Consequently, USM is in
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the process of redesigning and re-engineering its lithium production process. However, its ability to
resume profitable commercial lithium operations is uncertain.
EPA has for many years been aware of the precarious state of USM’s finances, and the worsening nature
of those conditions could not more graphically be demonstrated than by USM’s need to idle its operations
to stem ongoing losses. In the absence of any revenue from either magnesium or lithium operations,
USM is without resources to perform various of the consent decree projects. This is no secret to EPA, as
USM provided EPA with information reflecting its current finances in February 2024.
We hope that EPA would share the objective of bringing USM back into operation in an environmentally
responsible way consistent with the obligations of the CD. A step that would promote that objective
would be EPA’s enabling USM to access the millions of dollars held in Special Accounts 1 and 2 which
are intended to be used to complete the Response Action specified in the CD. Unfortunately, by refusing
to release funds from those accounts, EPA has deprived USM of the financial resources it needs to
accomplish this common objective and has, on the contrary, resulted in contractors being left unpaid and
unwilling to do further work. We respectfully suggest that EPA is frustrating our common objectives by
insisting that USM perform consent decree work while refusing to allow the funds earmarked for that
purpose to be used for that very purpose – especially where it is evident that USM is not otherwise able to
perform that work at this time. Indeed, the purpose of USM’s financial assurance is to assure the
availability of funds to accomplish the work that both USM and EPA want to be performed.
As noted, currently there are no magnesium production operations at the plant that would trigger
regulatory compliance obligations. If EPA believes that completion of the consent decree work is
nonetheless necessary at the present time, USM would appreciate working with EPA to develop a
mechanism under which USM could undertake that work using the funds earmarked for that purpose.
Otherwise, as USM has repeatedly advised, it hopes that its revamped lithium operations will become
operational and profitable soon. At that point, it hopes to be able to resume work on CD projects.
As always, USM is eager to engage in further discussions and work cooperatively with EPA.
USM offers the following specific responses to the items referenced in EPA’s notice.
1. As required by Paragraph 47(a)(a) and Appendix 13 of the CD, USM failed to appropriately
adjust the amount of Financial Assurance for the Closure and Post-Closure of the Retrofitted
Waste Pond by the April 8, 2024, deadline, and is therefore out of compliance.

Response: The need for additional financial assurance is predicated on their being ongoing
operations that require use of the ponds; as noted, there are no current magnesium
production operations. Moreover, USM has previously advised EPA of its lack of
funding. EPA has seen USM’s financial statements and must know that USM is not
able to provide additional Financial Assurance or secure a bond. This is not a
negotiating position, a delay tactic, or a willful refusal to meet obligations, but a simple
reality. USM hopes that the redesign of its lithium operations will be successful and
return the Company to financial health, but that will take time. USM proposes to revisit
this issue with EPA in 90 days and to periodically update EPA on USM’s progress in
improving its financial. Alternatively, USM welcomes any ideas EPA may have as to
financial assurance consistent with USM’s current lack of funds.

2. As required by Paragraph 17 and Appendix 14 of the CD, USM failed to either cease operation
of the electrolytic cells in Building 4 or retrofit with wet anode dust handling by the July 15,
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2022 deadline (pursuant to an extension granted on June 30, 2022 by the EPA), and is
therefore out of compliance.
Response: EPA’s assertion of non-compliance is incorrect. USM completed wet anode dust
system modifications to all operating electrolytic cells by July 13, 2022. Specifically,
USM completed wet anode dust system modifications to 16 (out of 30) cells in
Building 4 by July 13, 2022. This work was described in USM’s semi-annual report
submitted August 1, 2022. These 16 cells were the only cells in Building 4 that were
in use when magnesium operations were idled in September of 2022.
The CD explicitly does not require USM to complete these modifications with respect
to cells that were not and are not operating. Specifically, Paragraph 17 of the CD
provides that “USM shall cease operating the electrolytic cells in … Building 4 unless
Anode Dust generated in that building is removed by the Wet Removal Process. If
Building 4 is recommissioned and resumes operations, Anode Dust generated in that
building shall be removed by the Wet Removal Process.” That is exactly what USM
did – it ceased operating those cells with respect to which it had not made the required
modifications.
When magnesium operations are resumed, USM will either continue to operate only
those 16 cells that utilize the wet anode dust handling system, or finish retrofitting the
remaining cells to the wet system.
3. As required by Paragraph 18 and Appendices 15 and 14 of the CD (as well as the approved
Courtyard Capping and Design deliverable and its attached Construction Plan and Scope of
Work), USM has not properly addressed the grizzly vault adjacent to Building 3, on the west
side of the courtyard (as defined in paragraph 8.u. of the CD), by cracking, backfilling with
aggregate and capping to the level of the courtyard. Pursuant to Appendix 14, this work was
due to be completed by December 27, 2022. On January 23, 2023, EPA approved a USM
request for extension to July 28, 2023. However, the project remains uncompleted and USM
therefore out of compliance.
Response: USM has discussed this issue on several occasions with EPA. As described in the
above response, Building 4 has 16 electrolytic cells retrofitted to the wet system, as per
the CD. As long as only these 16 cells operate, there is no need for the grizzly
vault/sump. However, fourteen cells not yet converted remain present, although they
have not been operational. If the plant were to resume operation using the 16 wet-
handling cells, use of the grizzly vault/sump system would be required to avoid
potential anode dust plugging in the Building 3 anode dust handling system. Once all
of the Building 4 cells have been retrofitted to the wet system and placed back into
operation, the Building 3 grizzly vault will be decommissioned pursuant to the
approved Courtyard Capping Design. This work will utilize the same procedure that
was performed on the Building 2 grizzly vault.
4. As required by Paragraph 15 and Appendix 3 and 14 of the CD, USM failed to initiate
construction of the filtration system project by the June 12, 2023 deadline (pursuant to an
extension granted on January 23, 2023 by the EPA), and is therefore out of compliance.
Response: As noted, there is no violation of RCRA as the magnesium plant is not currently in
operation. Thus, the absence of a filtration system is not causing USM to violate the
CD. Idled magnesium production processes do not generate process or wastewaters
that would be required to be filtered for purposes of RCRA compliance. Therefore,
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installation of a filtration system at significant cost at a time when the plant is not
generating waste or process waters would serve no purpose at the present time and is
not necessary for purposes of compliance with the CD. Of course, prior to the restart
of magnesium operations, USM will ensure that it has a fully operational filtration
system in place
5. Further, as required by Section VII and Appendix 12 of the CD, USM is required to perform
all actions necessary to retrofit the Current Waste Pond and eliminate uncontrolled releases of
hazardous substances by implementing Appendix 12. Pursuant to Paragraph 28 and 32 of the
CD, USM is required to comply with the Ground Water Discharge Permit. However, USM
appears to have ceased implementation of the CERCLA Response Action as required and is in
danger of late performance. On May 22, 2024, USM informed the Utah Department of
Environmental Quality that scheduled construction of the Retrofitted Waste Pond would not
proceed on schedule.
Response: Though progress has stopped on Phase 2 of the Retrofitted Waste Pond (RWP), the
Phase 1 RWP project work scope was completed and embankment modifications were
made to the RWP, which increased diking to 4,218 feet above mean sea level. This is
the design basis for implementation of the Salt Cap Closure Plan, should it be
necessary. Idling of magnesium operations has resulted in a significant reduction in
waste pond liquid level, and water levels have been far below the stated action levels
specified in the Utah Division of Water Quality Groundwater Discharge Permit. Waste
pond water quality has also been altered with reduced inflows, and recent pond water
pH levels are approximately 7.5.
6. In addition, Appendix 4(A) of the CD requires that “[w]ithin sixty (60) Days of the Effective
Date of the Consent Decree, US Mag will execute the USEPA-accepted Conditional Partial
Assignment and Grant of Rights… In an Event of Default as defined in Appendix G, it is the
intent of the Parties to ensure that USEPA will have access to the necessary resources to
implement the Salt Cap Closure Plan…” Now almost three years since the Effective Date of
the CD, USM has still not executed the Conditional Partial Assignment and Grant of Rights.
Although USM has submitted a USM-executed conditional assignment, correspondence from
the State of Utah to both EPA and USM, of August 23, 2023, makes clear that the conditional
assignment-as currently drafted- would not adequately serve to ensure EPA has necessary
resources to implement the Salt Cap Closure Plan, as intended and required by the CD. As
long as both ready access to necessary resources and ability to implement the Salt Cap Closure
Plan, in an Event of Default, remains in doubt, EPA will maintain concerns as to whether the
Salt Cap Closure and Post-Closure Plan is protective of human health or the environment, as
reference in Paragraph 16(a)(2) of the CD.
Response: USM entered into the EPA-accepted Conditional Partial Assignment and Grant of
Rights provided to USM by Andrea Madigan of EPA. Following approval of that
agreement, EPA attempted to negotiate directly with the State of Utah after entry of
the CD. EPA is well aware that the State of Utah subsequently changed its position on
that agreement and is refusing to sign the agreement. This is not a violation by USM.
USM has no ability to compel the State of Utah to sign the agreement, and USM
submits that its execution of the document provided by EPA satisfies its Consent
Decree requirements. USM has been fully cooperating with EPA and has allowed EPA
to take the lead in pursuing approval from the Utah state agencies.

September 16, 2024
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In regard to the technical viability of the Salt Cap Closure and Post-Closure Plan,
nothing has been presented that demonstrates that the plan, as written, would not be
effective in protecting human health and the environment. If there are concerns
regarding brine acquisition for the plan, should a default be encountered, USM is open
to discuss other alternatives to address the issue.

USM suggests a meeting between EPA and USM to discuss potential amendment of Appendix 14
(Schedule) to align the schedule for the above-described responses to the items related to Appendix 14 to
a USM notification to EPA of its intent to restart primary magnesium production. If the parties can reach
a mutually agreeable amendment of Appendix 14, the amended Appendix should not need to be submitted
to Court for approval.
Please contact me if there are any questions regarding this response.

Sincerely,

Rob Hartman
Environmental Manager
US Magnesium LLC
[e-mail]
M: 208.241.8216

Cc (electronic only): M. Greenblum, EPA
A. Maxwell, EPA
P. Chu, USM