The United States District Court for the District of Minnesota issued a decision on June 2, 2014, in a matter involving a water quality variance for an iron nugget production facility in Hoyt Lakes, Minnesota, owned by Mesabi Nugget Delaware, LLC.  WaterLegacy Advocacy v. U.S. E.P.A., — F.R.D. —, 2014 WL 2462852 (D. Minn. 2014). In 2012, MPCA approved granting a water quality variance to Mesabi Nugget as part of its renewed NPDES permit for Mesabi Nugget’s Large Scale Demonstration Plant in Hoyt Lakes, Minnesota, which processes wastewater from Mesabi Nugget’s commercial scale iron nugget production facility. The variance addressed discharges into Second Creek of the Partridge River Basin (St. Louis County Minnesota) and applied to Minnesota water quality standards for the Class 3C Industrial Water Supply use, hardness criteria, and Class 4A Agricultural Irrigation use, bicarbonate, total dissolved solids, and specific conductance. It was effective until August 2021.

Mesabi Nugget is a joint venture between Steel Dynamics (81 percent) and Kobe Steel  (19 percent). Kobe Steel has developed and licensed the technology for production of the nuggets. Mesabi Nugget produces iron nuggets principally as feedstock for EAF steelmaking in mini mills. (Source: www.steeldynamics.com)

Mesabi Nugget is a joint venture between Steel Dynamics and Kobe Steel. Kobe Steel has developed and licensed the technology for production of the nuggets. Mesabi Nugget produces iron nuggets principally as feedstock for EAF steelmaking in mini mills. (Source: http://www.steeldynamics.com)

As it is required to do under the Clean Water Act, MPCA forwarded the variance for EPA’s review and on December 27, 2012, EPA approved the variance. Following an unsuccessful challenge to the variance before the federal Environmental Appeals Board—the Board concluded it had no jurisdiction to review EPA’s decision on the variance—plaintiffs WaterLegacy and the Minnesota Center for Environmental Advocacy appealed EPA’s approval of the variance to the District of Minnesota federal court. Subsequently, EPA, having decided it should reverse its decision to approve the variance, moved the court to vacate its approval of the variance and remand the matter. Mesabi Nugget moved to intervene and asked the Court to remand the case but without vacating EPA’s approval of the variance. The Court allowed Mesabi Nugget to intervene. It also agreed that the variance approval should not be vacated on remand—since Mesabi Nugget was not currently discharging, vacating the variance decision would have no practical effect.

On July 2, 2014, EPA issued its Notice of Action on Remand, withdrawing its prior approval of the Mesabi Nugget variance. In a legal memorandum attached to the Notice, EPA outlined the reasons for its disapproval.  In sum, EPA concluded that MPCA had not fully justified the 9-year duration of the variance. Although MPCA had demonstrated that Mesabi Nugget could not reasonably comply immediately with the water quality standards at issue, it had not demonstrated that Mesabi could not come into compliance in a shorter period than 9 years. EPA did leave the door open for MPCA to justify the original variance duration—for example, by developing and providing to EPA the methods, analyses, scientific rationale and other information demonstrating the appropriateness of the variance under 40 C.F.R. part 131. In this case, MPCA would need to provide the public with notice and an opportunity to comment on any new variance before submitting it to EPA.

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