31 / Schnitzer Steel Industries, Inc. Form 10-K 2021 In February 2019, we received a letter sent on behalf of the District Attorneys for six counties in California notifying us of a joint investigation into the alleged mishandling of hazardous materials and hazardous waste, including the commingling of nonhazardous and hazardous wastes, as well as alleged water pollution violations, at various Pick-n-Pull locations within California and requesting a meeting to discuss the alleged violations. Consistent with its commitment to compliance with environmental requirements, Pick-N-Pull has implemented additional compliance measures at all operating Pick-n-Pull locations in the state and expects to finalize a state-wide settlement of this matter that will address the concerns raised in this joint investigation. Pick-n-Pull has agreed to settle this matter for a civil penalty of $1.85 million, plus payments of $300,000 for supplemental environmental projects and $350,000 for reimbursement of investigation and enforcement costs, and to comply with injunctive terms relating to the facilities’ waste management activities. The settlement is subject to finalization and entry by a State court of a Final Stipulated Judgment. In January 2020, the USEPA issued a Notice of Violation (NOV) based on its evaluation of data requested during a June 2019 inspection at one of our facilities in Oakland, California alleging the same violation of a Bay Area Air Quality Management District (BAAQMD) air emissions rule that was the subject of a Compliance and Settlement Agreement (CSA) with BAAQMD that was executed as of September 22, 2020 and also alleging violations of Title V Major Source permitting requirements. The Company maintains that our timely filing of a Title V Major Source permit application constitutes compliance with Title V Major Source rules and that USEPA’s Title V non-compliance allegations are erroneous. The Company has conveyed that position to USEPA and has provided USEPA with documentation requested by USEPA confirming our position. The Company also has requested that the alleged BAAQMD rule violation be addressed solely through the CSAwith BAAQMD and that federal “overfiling” is unnecessary and inappropriate in the circumstances. Based on the discussions to date, we do not believe the outcome of this matter will be material to our financial position, results of operations, cash flows, or liquidity. On September 3, 2021, the Oregon Department of Environmental Quality (ODEQ) issued a Pre-Enforcement Notice (PEN) alleging that the Company’s metal shredder facility in Portland, Oregon is in violation of Title V and stating that ODEQ had referred the matter to USEPA for review and possible formal enforcement. In a response letter, we identified why Title V does not apply to the Portland facility, explained that we had submitted an application to ODEQ in December 2018 for an Air Contaminant Discharge Permit with plant site emission limits that would limit emissions to less than Title V thresholds, and requested that ODEQ withdraw the PEN. We also requested an opportunity to meet with ODEQ and USEPA regarding the permit delay and the Title V matter. On August 5, 2020, The Athletics Investment Group LLC (A’s) filed an action in the California Superior Court for the County of Alameda against the DTSC as Respondent and the Company as Real Party in Interest, seeking recission of the “f letter” pursuant to which DTSC classified treated shredder waste from the Company’s metal shredding facility in California as a “nonhazardous waste” which among other things permits its use as alternative daily cover at municipal landfills. Pursuant to determinations under section 66260.200(f) of the state hazardous waste regulations issued in 1988 and 1989 (the “f letters”), the DTSC determined that treated shredder waste from the Company’s facility does not pose a significant hazard to human health, safety, or the environment. The Superior Court on April 16, 2021 issued an order and writ of mandate commanding the DTSC within 30 days to rescind the Company’s “f letter” concluding that, under a law enacted by the legislature in 2014, the DTSC had a mandatory duty to rescind the “f letters”. The Superior Court reached this decision despite a determination by DTSC in 2018 pursuant to the 2014 statute reconfirming that treated shredder residue does not need to be managed as a hazardous waste in order to protect human health, safety, or the environment. The Company filed a notice of appeal, which notice has the effect of automatically staying the order, as well as an appeal of a subsequent order of the Superior Court granting the A’s motion to lift the stay. The stay remains in place pending the appeal of that subsequent order. The appeals are pending before the California State Court of Appeals, First Appellate District, Division Three. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
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