NEW YORK Steelmakers with raw material operations in Minnesota and Michigan have said that new U.S. Environmental Protection Agency regulations on regional taconite facilities could cost producers millions of dollars in retrofitting and lost production.
Iron ore producers ArcelorMittal USA LLC and Cliffs Natural Resources Inc., as well as the National Mining Association (NMA), are among those pushing back against the new air pollution standards for taconite facilities, in large part due to the federal agencys entrance into an arena traditionally regulated by the states themselves.
"NMA believes that EPAs actions are contrary to the spirit of cooperative federalism embodied by the (Clean Air Act)," the NMA wrote in an EPA filing.
The EPA first proposed the new rules for taconite facilities in July 2012 and received more than 1,200 comments, according to its website. It issued a federal implementation plan (FIP) in January to set air pollution standards for six taconite facilities in Minnesota and one in Michigan in an effort to reduce nitrogen oxide and sulfur dioxide in the air.
But while environmentalists argue that stricter regulation is necessary to reduce pollutants in the region, some companies maintain that the EPAs push to regulate on a national scale is unwarranted and causes more headaches than benefits. The problem, miners and advocacy groups claim, is that the federal EPA steps on the toes of the states themselves, which had already developed their own state implementation plans (SIPs) for the facilities.
According to the NMA, although Minnesota and Michigan submitted complete SIPs to the EPA, the federal agency chose to issue its own federal rules instead, claiming the SIPs were no longer valid due to a time lapse.
And thats a problem, miners contend, claiming the federal rules dont take into account the specifics of the state industries. "With the exception of two facilities, the entire U.S. taconite industry resides in Minnesota. As such, the Minnesota Pollution Control Agency has more experience with pelletizing furnaces and the taconite industry than any other regulatory body," ArcelorMittal wrote. "Instead, EPA decided that it knew better than Minnesota how to regulate this unique regional industry, disregarded the SIP process entirely and stopped working with the state."
ArcelorMittal said that the EPAs insistence not to implement a case-by-case analysis in low nitrogen oxide burning technology standards "demonstrates that EPA does not fully understand the differences between furnaces throughout the taconite industry."
Chicago-based ArcelorMittal has estimated that retrofitting its Minorca facilitys straight-grate furnace to comply with EPA rules would cost about $12.5 million, while the estimated capital costs for a single furnace at its Hibbing facility, in which it owns a majority stake, would total some $10.7 million. Those estimated costs dont include the added cost of lost production during installation outages, expected increases in energy costs, or losses related to potential pellet quality issues following the upgrade.
Cliff also submitted a letter on the EPAs rules, with a company spokeswoman telling AMM that Cliffs continues to support the state plan.
"The EPAs federal implementation plan addressed many of our concerns about sulfur dioxide requirements, but the issues surrounding low nitrogen oxide burners remain. We have concerns about the effectiveness of the technology proposed and whether it can achieve the desired results at each individual taconite plant without significant side effects on the quality and marketability of our products," she said.
Cliffs chairman, president and chief executive office Joseph A. Carrabba told AMM last month that new environmental regulations, including those in northern Minnesota, had forced the iron ore miner to take a second look at any new U.S. investments (amm.com, March 25).
The new EPA regulations went into effect March 8, an EPA spokeswoman told AMM. However, she added that the EPA had received a request for reconsideration and a stay on the rules from the NMA, ArcelorMittal and the state of Michigan. "The EPA is evaluating these requests," she added.
The outcome of a possible reconsideration is unclear, however, so the Cliffs spokeswoman said the company would move forward with FIP compliance even if it results in additional costs.