State of UtahGARY R. HERBERT

Governor

SPENCER J. COX

Lieutenant Governor

NOV 2 1 2016

Department of Environmental Quality

Alan Matheson Executive Director

DIVISION OF WATER QUALITY Walter L. Baker, P.E.

Director

FILE CGP^

CERTIFIED MAIL(Return Receipt Requested)

Mr. David Gibby (via e-mail)Environmental Manager 238 North 2200 West Salt Lake City, Utah 84116-2921

Dear Mr. Gibby:

Subject: Warning: Letter of Violation- Unpermitted Discharges to Waters of the State, UncontrolledReleases of Contaminants and Failure to Report: Violations of the Utah Water Quality Act, 19- 5-107.

On August 30th, 2016 the Division of Water Quality (DWQ) conducted a site inspection of the US Magnesium facility as described in the attached inspection report. The report details evidence of an ongoing, unpermitted discharge of pollution to waters of the state from the US Magnesium facility. Additional information submitted to, or collected by, US EPA documents specific releases of wastewater from the US Magnesium facility; either to the Skull Valley Diversion Ditch or to the north of the plant property, which has not been reported to DWQ and for which no permit has been issued.

Required Actions

Although this letter is not a notice of violation, initial order, final agency action or order, enforcement action is under consideration. In the meantime, DWQ requests US Magnesium to respond within 30 days of receipt of this letter with proposed methods to minimize the possibility of an uncontrolled release of wastewater into the Skull Valley Diversion Ditch (SVDD). For example, possible methods might include one or more of the following:

• A written commitment to no longer use the SVDD as a means of conveyance for water from Timpie Springs and discharge to the Great Salt Lake.

• A map or maps showing the location of the SVDD along it entire length, where water from Timpie Springs is currently discharging and the location of the upper intercepting and diversion ditches relative to the US Magnesium Solar Evaporation Ponds.

• A geotechnical and or engineering analysis of the current earthen fill dams which have been placed in the SVDD. The analysis must demonstrate that the dams are sufficiently constructed to withstand the weight and or pressure from water or wastewater which may enter or be placed in the SVDD. Also, provide the rational for the construction of these dams.

DWQ-20 6-015720

195 North 1950 West • Salt Lake City, UT Mailing Address: P.O. Box 144870 • Salt Lake City, UT 84114-4870

Telephone (801) 536-4300 • Fax (801) 536-4301 • T.D.D. (801) 903-3978

www. deq. utah.gov Printed on 100% recycled paper

Mr. Gibby Page 2

• An inspection and monitoring plan (including subsurface conditions and changes that might indicate an increased risk of failure) for the embankment of Preliminary Remedial Investigation area (PRI) 5 including timely submission of inspections and immediate notification to DWQ of possible release from the containment of PRI 5.

• A contingency plan for loss of containment from PRI 5 including but not limited to increased monitoring, threshold criteria for contingency action and secondary containment of released wastes within the property of US Magnesium.

• Perform a geotechnical assessment of the integrity of the current wastewater impoundment, identify potential vulnerabilities for potential releases of wastewater, provide and implement a plan to ensure that the integrity of the pond is maintained.

US Magnesium may propose other methods. In providing these examples, the DWQ is not limiting US Magnesium’s response.

Notice of Additional Requirements for Release Reporting and Permitting of Discharges

In addition to submitting proposed control methods as described above, please take notice that:

• In accordance with Utah Code Ann.§ 19-5-114 US Magnesium must report all releases to the DWQ Director. Given the overlapping interest of the US Magnesium facility with other Environmental Quality Divisions and EPA, any reports of releases should be made to the DEQ hotline at (801) 536-4123.

• Within 180 days of receipt of this letter, please submit a permit application for a ground water discharge permit in accordance with R317-1&6. A copy of the Utah Ground Water Discharge Permit Application may be found on the DWQ website at the following location: http://www.deq.utah.gov/ProgramsServices/programs/water/groundwater/docs/2006/08Aug/finalpe rmitapp.pdf

Without prior notification and before any response is due from US Magnesium, DWQ may take formal enforcement action in the issuance of a Notice of Violation after a further review of existing information or any new information is made available to the DWQ. Nothing in this letter releases US Magnesium from any local, state or federal requirements.

Utah Code Ann.§ 19-5-115 provides that violation of the Utah Water Quality Act or a related order may be subject to a civil penalty of up to $10,000 per day of violation. Under certain circumstances of willfulness or gross negligence, violators may be fined up to $25,000 per day of violation.

Under DWQ’s Penalty Criteria for Civil Settlement Negotiations, UAC R317-1-8, US Magnesium’s good faith efforts to comply may impact potential monetary penalties. The information requested may be considered in the evaluation of the extent of your compliance with the Utah Water Quality Act under any future enforcement action. Failure to respond fully and truthfully, or to adequately justify such failure to respond, may subject US Magnesium to additional civil penalties or criminal fines.

Mr. Gibby Page 3

Thank you for your cooperation. Please contact Dan Hall at (801) 536-4356 or dhall@utah.gov if you have any questions regarding this matter.

Sincerely.

LAL:DJH:mc:ag

Enel.

cc: Michael Stork, DERR (via e-mail)Sandra K. Allen OAG (via e-mail)Brad Maulding DWMRC (via e-mail)Paul M. McConkie OAG (via e-mail)Ken Wangerud, EPA Region 8 (via e-mail) David Duster, EPA Region 8 (via e-mail)Andy Lensik (via e-mail)Andrea Madigan (via e-mail)Lindsey Ford (via e-mail)Tooele County Health Department (via e-mail)

WATER QUALITY

Inspection Report Division of Water Quality

Ground Water Protection Program

DATE OF INSPECTION: August 30, 2016

FACILITY AND LOCATION: US Magnesium LLC - See Figure 1. Site Location Map

MAILING ADDRESS: 238 North 2200 WestSalt Lake City, UT 84116-2921 Phone:(801) 532-2043

FACILITY CONTACT: David Gibby, 801-532-1522 ext 1355

TYPE OF INSPECTION: ' Facility Inspection

PARTICIPANTS: Dan Hall and Woody Campbell DWQ, Brad Mauldingand Brad Lauchnor DWMRC, Michael Stork DERR, David Duster RCRA EPA Region 8, Ken Wangerud CERCLA EPA Region 8, Alan Jones US BLM; David Gibby US Magnesium

ARRIVAL / DEPARTURE TIME: Arrived at 9:00 am; departed at 1:30 pm

WEATHER CONDITIONS: Sunny and warm

REPORT PREPARED BY: Dan Hall

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Figure 1. Site Location

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Figure 2. US Magnesium Facility

Facility Background:

US Magnesium

US Magnesium has been the subject of ongoing investigations and litigation for many years. DWQ has had intermittent involvement with the facility primarily pending the outcome of ongoing litigation and enforcement action with US EPA.

The most recent DWQ involvement was circa 2003. At that time US EPA RCRA and US Magnesium proceeded to court regarding regulatory authority over wastes generated at the magnesium plant site. DWQ awaited the outcome until contacted by EPA in approximately 2013 following completion of the RCRA litigation and placing the site under CERCLA.

US Magnesium does not have a Groundwater or UPDES permit.

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Inspection Photographs and Descriptions:

Photo 1. US Magnesium Plant

Plant entrance and smokestack.

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Photo 2. Skull Valley Diversion Ditch #1

Note: The Skull Valley Diversion Ditch (SVDD) is dry at the first stop from the plant. The canal has previously been used to divert water from Timpie Springs around the US magnesium evaporation ponds. Currently, US Magnesium now allows water from Timpie Springs into the evaporation ponds. This increases the amount of time for water in the evaporation ponds to reach sufficient concentrations to be used by the plant for the production of magnesium.

Preliminary Remedial Investigation area (PRI) 5, the current impoundment into which US Magnesium wastewater is released, can be seen on the other side of the right embankment of the SVDD. Currently this part of the plant discharge impoundment is dry however it is often full during the spring.

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Photo 3. Skull Valley Diversion Ditch #2

Looking west into SVDD: The ditch has begun to collect water from subsurface inflow, i.e. groundwater. Although no samples were taken at this time, prior analysis has shown the presence of contaminants and constituents from US Magnesium waste water and PRI 5.

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Photo 4. Skull Valley Diversion Ditch #3

East into SVDD: PR1 5 is on the left side of the embankment.

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Photo 5. PRI 5 #1

Looking north into the PRI 5: Generally in the spring the impoundment is full up to or nearly to, the embankment separating PRI 5 from the SVDD. Note the dissolution holes in the sediments of the impoundment.

Photo 6. PRI 5 Close Up of Sediment Dissolution and Channeling

The sinkholes are part of a larger dissolution process occurring at the bottom of the impoundment.

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Photo 7. PRI 5 Extreme Close-Up of Dissolution and sinkhole formation.

The photo shows the result of the highly acidic water (pH 1 or lower) released from US Magnesium as it literally dissolves away the primarily calcareous sediments in the impoundment.

Photo 8. Outside of PRI 5 Looking SSW.

Note the orange staining outside of the US Magnesium containment facility, PRI 5.

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Photo 9. Inside of PRI 5 Looking west.

Orange staining within the US Magnesium discharge impoundment, the ponded water shown appears to be within large dissolution cavities and depressions from the dissolution of sediments. Ground water at the site is very shallow, typically on the order of 10 feet below ground surface or less.

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Photo 10. Release into PRI 7.

PRI 7 is no longer actively used to hold waste water. The photo shows groundwater discharging at the surface after flowing beneath the berm separating PRI5 from PRI 7.

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Photo 11. PRI 5 Close Up of the active release of Carbon Dioxide (bubbling) as the acid wastewater from the facility titrates with the sediments in an acid-base neutralization. This is similar, if of smaller scale, to what was observed and videoed by US EPA on a separate site visit when the pond was full.

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Photo 12. PRI 5, different angle of bubbling and CO2 release. Note the rectangular piece of concrete. This photo was taken at the location where US magnesium had a large failure of the berm separating PRI 5 from PRI 7 in 2012 (DWQ-2016-015638 & 9). Additional fill including waste concrete was place into the void created when the berm failed.

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Photo 13. PRI5. Looking west across the impoundment toward the production plant. The active discharge canal from the facility can be seen on the other side of the impoundment just above the plant as it enters PRI 5. Although no bubbling was observed at this location, the bottom of the impoundment clearly shows the small scale evidence of the ongoing dissolution in addition to the typically orange (and sometimes yellow) staining.

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Photo 14. PRI 5, close up of small scale sediment dissolution in the foreground with larger dissolution holes also apparent.

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Photo 15. Close up of sediment dissolution and channeling outside of PRI 5 and containment by US Magnesium. A loss of containment from PRI 5 occurred to the north of the facility and onto adjacent BLM property earlier in 2016. The photo shows the resulting holes and dissolution which occurred as a result of this release.

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Photo 15. View of uncontrolled release from US Magnesium looking south.

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Photo 16. Evidence of release as it moved north northwest and moved onto Bureau of Land Management property.

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Photo 17. Additional dissolution features from release of wastewater from US Magnesium.

Discussion of Inspection: The inspection shows a clear evidence of ongoing discharges to waters of the state via the groundwater along with evidence of the loss of containment of existing wastes. The observed sinkholes, channeling, bubbling and dissolution features are consistent with the removal of calcalereous sediments in the impoundment as the highly acidic waters interact with the bottom and berm of the impoundment.

Violations: Failure to report release of wastewater, unpermitted discharges to waters of the state and loss of control and containment of wastes within existing containment impoundments.

SIGNATURE:

Date: 11/17/16

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