The owner of a controversial metal shredder on the north Minneapolis riverfront is offering to move it out of the metro area if state pollution regulators back off for three years until it can do so.

Although an attorney for the Minnesota Pollution Control Agency (MPCA) called that condition a non-starter and insisted the shredder must meet emission limits, the two sides are continuing settlement talks in a lawsuit over enforcement issues.

The offer to move represents a change of position for Northern Metal Recycling. The firm’s attorney said it wants a new site where pollution limits won’t be as strict and it can gain rail access to replace the barge shipping it lost earlier this year when the Upper St. Anthony Lock closed. The firm says it’s negotiating for a site up the Interstate 94 corridor.

The shredder was controversial from the time it was proposed in 1988 for a scrap yard just south of the Lowry Avenue Bridge. The fight over whether to allow it raged at City Hall, the Legislature and in the courts, with opponents fearing the facility would add noise and unhealthy dust to a riverfront where long-term redevelopment plans call for parks, housing and business parks.

The shredder began operating in 2009 in an enclosed building — a concession to that opposition — but MPCA fined it the following year for air-quality permit violations. Northern Metal then argued that it couldn’t meet the pollution limits it had agreed to, and succeeded in loosening them by 2012.

The state set up one air-quality monitor across the street from Northern’s 2800 Pacific St. N. yard, and when it recorded more particles than allowed under air standards, added another on the other side of the yard, which recorded added violations.

Northern Metal asked a judge in June to end the monitoring, and now is asking the court to block a proposed MPCA order to test the facility’s pollution systems and compliance with permit standards for particle emissions. Ramsey County District Judge John Guthmann hasn’t ruled while encouraging settlement talks.

One longtime river activist called the firm’s offer to move exciting. “It sounds like they see the writing on the wall,” said Mary Maguire of northeast Minneapolis, who sits on both advisory and advocacy groups for the upper river.

Northern Metal President Stephen Ettinger said moving the shredder could allow it to operate without the restrictions on hours and output that were negotiated to locate the machine along the river. But such a move would take three years, he said, and that’s why the firm wants the MPCA to allow continued operation even if the facility fails emissions tests.

The MPCA argued in court filings that it believes that the shredder is responsible for the nearby monitors recording airborne particles above levels set by air-quality standards. The shredder needs to be modified to comply with permit limits or shut down, the MPCA said in court documents.

Kathleen Winters, an MPCA staff attorney, said visual evaluations suggest the building is releasing more particles than permitted and isn’t collecting and treating all dust the shredder creates.

“We can’t let people breathe that air,” she said.

Northern Metal said its existing pollution control systems are the best available.