Case Summary: Settlement Agreement Resolves RCRA Violations and Requires Response Actions under Superfund

On June 30, 2021, the U.S. District Court for District of Utah approved a settlement agreement between the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) with U.S. Magnesium (USM) to resolve violations under the Resource Conservation and Recovery Act (RCRA) and require cleanup work under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), commonly referred to as Superfund, at its facility in Rowley, Utah. The company committed to process changes at the facility to treat its waste streams in order to remove dioxins, furans, hexachlorobenzene and polychlorinated biphenyls (PCBs). This will reduce environmental impacts from its operations and ensure greater protection for its workers. The company will also spend at least $37 million to clean up hazardous waste under the terms of the settlement.

On this page:

• Information about U.S. Magnesium
• Information about the Rowley Facility
• Background Information on Bankruptcy Proceedings
• Overview of the Settlement Agreement
• Contact Information

Information about U.S. Magnesium

The Magnesium Corporation of America (“MagCorp”) was incorporated in 1993 and wholly owned by Renco Metals, Inc. (“Renco Metals”), a holding company with no independent operations of its own. Renco Metals was wholly owned by the Renco Group, Inc. (“Group”), another holding company, owned in turn by the Ira Leon Rennert Revocable Trusts (“Trusts”). Ira Rennert established the Trusts for the benefit of himself and members of his family. Rennert is the sole director of Renco Metals and the Chief Executive Officer of Group and Renco Metals.

In 2002, USM was formed after MagCorp’s bankruptcy, through an asset sale supervised and approved by the Bankruptcy Court in the United States District Court for the Southern District of New York.

Information about the Rowley Facility

The USM facility is the only producer of magnesium metal in the United States, and one of the largest magnesium metal producers in the world. The facility includes a sewage pond, a solid waste landfill, and waste piles for smut, barium sulfate and gypsum that are mixed with other hazardous constituents. Facility operations and waste disposal practices contaminated soil, air, surface water and groundwater. Although the area surrounding the facility is sparsely populated, investigations indicate uncontrolled waste on the property threatens the health of workers and the environment.

RCRA hazardous wastes from the production of magnesium were mixed, stored, and disposed of with wastes excluded from RCRA regulation known as “Bevill wastes.” The resulting wastes were not properly characterized and were illegally discharged into an extensive network of earthen, open air ditches which conveyed other facility wastes away from process areas into an active 400 acre waste impoundment. EPA asserted that USM failed to properly identify RCRA hazardous wastes as those wastes are not Bevill excluded. USM violated sections 3004 and 3005 of RCRA, 42 U.S.C. §§ 6924-25, and the applicable regulations in 40 C.F.R. Parts 260-270.

Background Information on Bankruptcy Proceedings

In 2001, MagCorp and Renco Metals filed petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. In June 2002, over the objection of the United States, the Bankruptcy Court approved MagCorp’s request to sell the Rowley facility and substantially all of its other assets to USM, a Utah limited liability corporation newly-created by the Parent Entities for the purpose of retaining ownership of the facility. The Chapter 7 trustee was appointed to, in part, oversee the asset sales as a part of MagCorp’s bankruptcy and distribute the proceeds to creditors.

In 2003, the same Chapter 7 trustee brought an action against MagCorp’s parent entities and others alleging, among other things, fraudulent conveyance, breach of fiduciary duty, payment of unlawful dividends, and corporate waste and mismanagement. The case was tried before a jury in February 2015 and the jury returned a verdict in favor of the trustee and a judgment in the amount of $214,697,948.44 in favor of the MagCorp bankruptcy estate. The judgment was affirmed in 2017 on appeal to the Second Circuit. Certiorari was denied by the United States Supreme Court in October 2017.

In 2018, the United States and EPA entered into a bankruptcy settlement with MagCorp and Renco Metals bankruptcy trustee and other stakeholders resolving the distribution of the assets of the estates. EPA recovered over $23 million for CERCLA response cost claims.

Overview of the Settlement Agreement

Along with the operational and process changes USM will make, the company will clean up contaminated soils, tanks, and sumps, decommission systems that are no longer in use, and construct a treatment/filtration plant to treat all of the wastewater before disposal. This work will significantly reduce the levels of chlorinated hydrocarbons in the ponds, which will be beneficial to birds and other animals. Under the Superfund provisions of the agreement, USM will construct a barrier wall around the active waste impoundment to prevent uncontrolled releases in the surrounding environment, which include adjacent Bureau of Land Management (BLM) land and the Great Salt Lake. After cleanup work is completed, USM will assure the facility’s timely closure.

The settlement includes financial assurance from USM, both for the ultimate closure of any new waste management units and for the ponds and other disposal units receiving commingled wastes. USM prepared a cost estimate that covered the cost of closure and post-closure. Financial assurance will cover the final closure plan and post-closure plan and retrofitted waste pond closure and post-closure. After manufacturing operations at the facility are concluded, USM will maintain the financial assurance for closure and post-closure of the retrofitted waste pond after EPA selects a cleanup plan for the facility and the Agency and USM reach agreement under a new settlement. EPA will also enter into an environmental covenant and a conditional mineral assignment pursuant to Utah law that will preserve the government’s ability to extract water and access to salt and mineral rights for the salt cap remedy in the event of a default.

USM paid a civil penalty of $250,000.

Contact Information

For more information contact:

Max Greenblum
Senior Assistant Regional Counsel
Office of Regional Counsel
U.S. EPA Region 8
greenblum.max@epa.gov

Annette Maxwell
Physical Scientist
Enforcement and Compliance Assurance Division
U.S. EPA Region 8
(303) 312-6068
Maxwell.annette@epa.gov

1595 Wynkoop Street
Denver, Colorado 80202
(303) 312-6108