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Analysis of the Nucor Multimedia Settlement

This paper was presented at Enviromet 2001 "Environmental Issues Affecting Metals Industries"

Harry F. Klodowski, Esq.

ABSTRACT

In December 2000, USEPA and Nucor announced a settlement projected to cost almost 100 million dollars covering compliance with air, water, RCRA and TRI requirements at all Nucor facilities.

This agreement is represented to be a pattern for future multi-media settlements in the mini-mill industry and the government's attempt to raise compliance "bar" for the industry.

The presentation by a steel industry technical expert and an environmental attorney who have negotiated permits and defended enforcement actions will 1) Review the major compliance obligations; 2) Discuss state of the art in each area; and 3) Comment on the impact of the settlement on future permits, enforcement actions, and discuss some of the questions this settlement presents for the industry.

1. INTRODUCTION

The Consent Decree in U. S. v. Nucor Corporation case number 400:3945-24 in the U.S. District Court in South Carolina is a multi-media settlement agreement between the U. S. (and 3 states) and Nucor, covering penalties and corrective action for alleged violations of air, water, waste and toxic chemical reporting requirements at 8 mini-mills and 6 steel finishing plants in 7 states.

This settlement agreement states it is intended to be a pattern for future settlements, influence permitting of future mini-mills or modifications to mini-mills, and change the "state of the art" in compliance and permitting matters.

EPA's intentions raise critical questions for the industry. It is not clear that EPA and the nations largest EAF steelmaker can create a new industry standard through the threat of enforcement action to extort injunctive relief (such as CEM systems) where no regulation passed under the Notice and Comment rulemaking system requires CEMs. SMA has filed comments objecting to the Agreement as a violation of the Administrative Procedure Act and the air pollution permit system.

A "one size fits all" approach is convenient for the Agency but incorrectly assumes the mini-mill industry operates similar process equipment to produce similar products. Nucor is a big company, but except for the fact that mini-mills all use EAFs, the industry facilities differ in products (e.g., carbon vs. alloy) process stream, size, age, operational practices and other factors. A test of SNCR at Nucor's 4 year old 100 ton DC furnace at Norfolk probably has no transferability or applicability to a 30 ton 1960's vintage furnace in service at a specialty forging shop. The Agreement lets EPA and Nucor decide what technology is feasible and will be installed at Nucor plants. Extending this standard to other plants, without a transparent technical and scientific basis and without the opportunity to comment is arbitrary and capricious abuse of agency power.

The cost and impact of this settlement will be felt at many levels. For Nucor, the monetary penalty is negligible, but the monitoring, pilot plant, and retrofit control technology may exceed the 85 million dollar estimate. The industry can expect the cost and time involved in permitting a new plant or modification to increase dramatically. If EPA believes it can specify equipment, restrict operating practices, and dictate process configurations to produce monitoring data, the cost of producing steel will increase. Whether EPA attempts to extort more landmark settlements or change standards through rulemaking procedures, steel industry lawyers should be busy.

Except as noted below, most of the agreement does not increase compliance obligations when compared to what we would expect at a well run EAF shop with an effective environmental compliance staff. However, many operating EAF mills do not meet the environmental performance standards of the "best" facilities.

The Environmental Management System, and Design For Environment obligations covering the integrated environmental impact of operations are one of the remarkable parts of this settlement. This paper will first summarize the provisions of the Nucor Consent Decree, and second, comment on elements that we expect to have a future impact on technology or legal compliance obligations.

2. SUMMARY OF THE AGREEMENT

The Nucor Consent Decree as filed in court records is a 228 page document consisting of 126 double spaced pages of text of the Settlement Agreement, and 108 single spaced pages of 17 "Attachments" that provide additional detail on obligations referenced in the main body of the agreement. The document is called a "Consent Decree" because it has aspects of a settlement agreement, because it is consented to or signed by all parties, and is also a Decree or Order of the United States District Court Judge before whom the government's complaint alleging environmental violations was filed.

Of the 126 pages in the main text, the first 10 are introductory "boilerplate", and the last 50 are standard provisions (p. 75 to 126). A one page table of contents for this agreement is attached. The major subject areas are air compliance, pages 10 - 25, water matters at pages 25 to 34 and RCRA matters at 34 to 70. The Environmental Management System requirements have a single paragraph on page 71 but cover 3 Appendices to the Agreement.

3. AIR COMPLIANCE REQUIREMENTS

The air compliance section is one of the most controversial elements of this agreement. EPA claimed Nucor violated NSR/PSD construction permit rules in the original construction or later modification of the Melt Shops, and violated surface coating rules at fabrication plants. Nucor maintained it had all the necessary permits and complied with the permits.

The air compliance section includes 9 major elements:

  1. EAF Pollution Prevention Pilot Projects;
  2. EAF SNCR Pilot Project;
  3. EAF Lance Burner Project;
  4. RHF (Re Heat Furnace) RNB/EGR Pilot Project;
  5. RHF SCR Pilot;
  6. Emission limits for all sources;
  7. CEM requirements;
  8. Permit Revisions; and
  9. NSPS Operating Baselines.

A definition found on P. 7 is important for the evaluation of Pilot Control Projects required under the agreement. Economic Feasibility is presumed when an effort can reduce emissions for less than $5,000 per ton and is presumed not present where the cost per ton exceeds $10,000. The presumption can be offset by consideration of cross-media and offsite impacts and energy consumption. Pilot projects that are technically and economically feasible will be installed at all Nucor facilities according to an enforceable schedule. The test of economic feasibility currently used for BACT reviews is $6,000/ton and it is not clear how cross media and offsite impacts should be evaluated. This provision is not a great departure from current practice.

A. EAF P2 Pilot

Paragraph 10 requires Nucor to begin a pilot study of P2 measures on the EAF at Norfolk NE and another plant. The Norfolk Plant, started in 1997, has one twin shell DC arc EAF that produces long products in carbon and alloy grades. Attachment 1, page 127, identifies the P2 process modifications intended to reduce NOX emissions at the Norfolk furnace as:

  • replace carrier gas in carbon injectors
  • reduce roof ring gap
  • close slag door when possible
  • improve foamy slag practice
  • run heats with single charge

The second plant is to evaluate:

  • reduced elbow gap (reduced from what?)
  • plug gaps in water cooled panels
  • gravity feed carbon and lime
  • reduce power on time
  • improve seal on slag door

Nucor agrees to take CEM measurements of EAF gasses (not particulates) before and after the modifications. Nucor is required to submit a public report on the study by 11/15/01 for the Norfolk NE plant. If these technologies are not deemed successful, Nucor is required to evaluate other potential NOX reduction technologies.

The 10 NOX reduction efforts identified in this section are fairly well known. It is difficult to comment specifically on a new work practice without knowing what the old practice is, but these are not significant advances in state of the art. Some of these practices could have contradictory results, e.g. single charges vs. reduced power on times. Measuring the results at the baghouse may not provide meaningful data. However, consideration of this mix of fairly specific equipment requirements and operating practices in BACT/LAER permitting evaluations is far more sophisticated than is typically practiced by state review agencies and permit applicants. The reports submitted under this section may identify other modifications that are not as well known.

B. EAF SNCR Pilot

Nucor agrees to install a SNCR technology at Norfolk NE and perhaps one other plant to evaluate reduction of NOx emissions (Paragraph 14, p. 12, Attachment 2, p.131). If the technology is successful, Nucor will install it on newly constructed EAFs. The second pilot might not be required, considering the results of the first pilot. The report of this pilot project, including evaluation of other technologies and practices that may be effective, is due 1/31/02.

Conventional wisdom is that this technology cannot work on an EAF because of the dynamic variation resulting from a batch process. The large DC furnace at Norfolk is not representative of most of the EAFs installed throughout the U. S.. This pilot may not be reproducible at any other location. Perhaps Nucor believes they have collected enough data to demonstrate this technology is not feasible.

C. Lance Burner Project

A pilot project to study NOx and CO reduction associated with "replacing oxyburners with lance burners" is required at one EAF at the Plymouth UT plant. (Paragraph 18, p. 14, Attachment 3, p. 134). Plymouth has two 50 ton EAFs installed in 1981. A report is due 8/31/01. If the pilot is successful, Nucor is required to evaluate the economic and technical feasibility of installing this technology at all EAFs.

It has been suggested Lance burners, supersonic coherent injectors and foaming slag practice might reduce NOx and CO emissions. This project will be highly dependant on the physical set up and how the lance is operated, and may not be repeatable at other EAF shops. For example, various lances are used at various EAF shops. All lances are not the same so EPA could be mandating equipment based on operation of one type of lance. This would be brand specified; foamy slag practice is not used in stainless mills.

D. Re Heat Furnace Control Technology

A pilot study of Reduced NOx Burner ("RNB") and Exhaust Gas Recirculation ("EGR") technology is required at a single new furnace at Norfolk NE. (Paragraph 21, p. 15, Attachment 4, p. 136). A report is due on a schedule following construction of the furnace. Low NOx Burner, EGR technology is usually considered BACT for new construction reheat furnaces.

Nucor has agreed to install either RNB/EGR or SCR at all of its reheat furnaces. (Paragraph 25, p. 17.) This might be limited to new construction reheat furnaces. If Nucor has agreed to retrofit either RNB/EGR or SCR on existing furnaces this is a significant advance upon existing requirements, at least outside of Ozone Transport Commission states and amounts to revision of a permit during its period of validity.

E. SCR on Re Heat Furnace Pilot

Nucor will begin a pilot study of SCR on at least one new Re Heat Furnace at Darlington, S.C. and one existing Re Heat Furnace. (Paragraph 23, p.15, Attachment 5, p. 39)

SCR is currently evaluated on PSD applications for new RHFs and at least one recent permit requires this technology. This control technology is at least evaluated, if not required, under current practices. Most reheat furnaces have multiple zones, with multiple combustion controls. Conventional wisdom is that costs of retrofitting this technology is above BACT requirements when well adjusted, low NOx burners are in place.

F. CEMS and Emission Limits

Nucor is required to install gas CEMS at all melt shops under the protocol contained in Attachment 7, p. 145. There are slightly different requirements for pilot plants and other plants. The first installation is required at Norfolk NE by August 30, 2001. The CEM is required for NOx , CO, SOx, O2 and velocity and must meet the performance specifications in 40 C.F.R. 60, Appendix B. This agreement does not require CEMs for particulates or opacity, which is required for some EAFs under the NSPS. The technical feasibility of operating CEMs for EAFs has been a matter of active debate between regulators and industry. CEMs are not required on positive pressure baghouses for a number of technical reasons. Retrofitting CEMs is may be a major change to the control system. This deadline will be a challenge.

After a period of at least 90 days CEM monitoring for EAFs, and 20 days for Re Heat Furnace Pilots, Nucor is to submit proposed permit limits for all EAFs and RHFs to EPA. Upon EPA approval, Nucor will operate to meet these limits, pay penalties for violations, and submit applications for revised permits that will include these limits. (pgs. 19- 20) Unless the mill is fairly new construction covered by a PSD permit, many mills do not have emission limits for most of these pollutants.

Nucor is required to demonstrate compliance with EAF limits by CEM testing and RHF limits by parametric monitoring (Paragraph 38, p. 21). These requirements appear to be the opposite of what current practice at steel mini-mills is - it is unusual for any EAF to have CEM gas monitoring.

G. Finishing and Fabricating Operations

At paragraph 47, page 23 Nucor commits to use pollution prevention, low VOC coatings, or add on control systems to limit VOC emissions from coating lines. Nucor agrees to submit a "major stationary source" permit application for its Alabama plant and submit permit applications for the other plants. This does not appear to add any "new" obligations.

H. NSPS Compliance

Nucor agrees to comply with NSPS Subpart AA or AAA for all EAF plants (Paragraph 48, p. 24) according to a protocol provided as Attachment 8, p. 138. These requirements do not appear to create obligations beyond the current rule, which has been amended only once since 1984. However, many plants do not appear to be aware of the operational baseline requirements.

4. WATER COMPLIANCE REQUIREMENTS

The water provisions cover 9 pages and have no attachments. Given the amount of paper consumed on air and hazardous waste matters, the water compliance issues at Nucor plants appear to be less important than air or waste issues and include failure to handle EAF dust (hazardous waste K061) in a way that keeps it out of water discharges (see pages 29 - 30), failure to keep up with fairly new requirements on Best Managements Practices for Stormwater Discharges, ("BMP - SWPP") leakage from "non-contact" water systems into "contact" water discharges, biocides used in water recycle systems, and some fairly plant specific issues.

There are some procedural enforcement issues that could have a great practical impact and be regarded as rulemaking without following the rulemaking process. Nucor agrees to have BMP/SWPP requirements included in its water permits even if they are not required under existing law. (Paragraph 62, p. 29). In most steel mills, NPDES compliance sampling is typically done on "sampling days" known by the operators in advance; this agreement requires sample days be selected by random number with no more than 24 hours advance notice. (Paragraph 68, p.31)

5. RCRA PROVISIONS

Nucor agrees to follow all rules applicable to management of hazardous wastes, including K061, paint and solvent wastes (pgs. 34 - 35). It appears Nucor violated RCRA requirements on:

a. Documentation of waste determination;
b. Personnel training;
c. Contingency plans;
d. Container labeling;
e. Material stockpiles; and
f. Outdoor storage of K061.

These violations were fairly typical of mini-mills in the late 1980s and early 1990s, but it is unusual for a plant with a capable environmental staff to have repeat violations for these situations at the present time.

There are some indications that Nucor did not handle EAF dust in compliance with RCRA regulations. At page 38, good EAF material handling practices are specified in some detail, essentially to construct good material handling facilities that will keep water away from the dust, and allow containment and prompt clean up of any spills.

This agreement requires RCRA "Corrective Action" at 8 locations. There are fairly formal and rigorous procedures, covering 30 pages of agreement and 50 pages in Attachments 10, 11, 12 and 13. These requirements are beyond the "waste generator" requirements effective at most mini-mills and historically apply to abandoned hazardous waste treatment, storage or disposal facilities "TSDFs", such as abandoned dump sites. Unless Nucor had large spills of EAF dust at all of its facilities, this corrective action process would not be required at every Nucor site under existing law. In addition, this agreement gives EPA broad access to Nucor's facilities, which is typical of industry practice, as well as the unrestricted authority to interview Nucor's employees and contractors, which is beyond current legal requirements and would be vigorously resisted by many in the industry.

Nucor is required to implement an Environmental Management System and perform Compliance Audits according to specifications in Attachments 14, 15 and 16, covering 20 single spaced pages. Nucor must have an environmental management system following ISO 14012 procedures, including plans and manuals. A second, independent team of auditors is to review the EMS in about 2003, using ISO 14010 and 14001 procedures. EPA is entitled to participate in this audit. The auditors are to provide a report to Nucor and EPA. Nucor is required to perform appropriate follow up within 60 days. The second round of audits must be completed by 12/31/05. Compliance Audits are to be performed following a National Environmental Enforcement Center (NEEC) protocol (Attachment 15, p.218)

Nucor is required to submit semi-annual EMS progress reports (p. 210, 212) and collect data on environmental metrics including spills, permit exceedances, toxic releases, hazardous waste generation, recycling and water and energy usage. (P.211) Nucor is to use Design for Environment principals in evaluating any material alteration of a production unit (p.213).

6. CONCLUSION

In summary, the Nucor Consent Decree is largely a compilation of the current state of the art in agency and industry practices. Nucor agreed to install CEM at all melt shops, which is not required by current law, install control equipment probably not required by law and propose emission limits for its melt shops and Re Heat Furnaces that might not be required by current law.

There are a number of provisions, for example, in stormwater pollution prevention, RCRA Corrective Action, The Environmental Management System, Design For Environment and Compliance Audit requirements that go beyond current legal requirements and are probably far beyond the practices at the "average" mini-mill. There are historic instances where the government has negotiated similar provisions, for example, requiring compliance audits in enforcement settlements, but it is unusual to see them all in a single agreement.

The government did obtain the company's agreement to some "procedural" compliance assurance measures, for example, randomized NPDES sampling and CEM monitoring of EAF emissions, that are beyond current regulatory requirements. These "minor" measures, if applied throughout the industry, would result in some fairly significant impacts on current steel mini-mill operations.

Review of the Nucor Settlement leads to a number of questions: Is EPA circumventing the Rulemaking Process? Can EPA force other companies to install "Nucor pilot" technology? Is the "technology" the equipment or a performance standard? Has science and technology been considered? Will the costs of compliance hurt the industry's competitive position internationally? Will Nucor realize a competitive advantage? Does the new Administration want to regulate in this manner?

BIOGRAPHIES

Dennis Hixenbaugh is currently General Manager of Special Projects, Environmental Technologies Division, at Voest-Alpine Industries, Inc. He has held various engineering and management positions in the field of air pollution control since 1966. He has worked for Voest Alpine, Baumco, Pennsylvania Engineering Corporation, American Air Filter and Wheelabrator. He is a Registered Professional Engineer in Indiana, Michigan, New York and Illinois, holds a QEP Certification from the Institute of Professional Environmental Practice, and is a Member of AISE Subcomittee 39, the ISS, NSPE, and A&WMA. Dennis holds a B.S. in mechanical engineering from Purdue University.

Dennis Hixenbaugh, P.E., QEP
Voest Alpine Industries
Southpointe Industrial Park
Canonsburg, PA 15317
Phone: (724) 514-8159
E-mail

Harry F. Klodowski is the principal lawyer of his environmental law firm in Wexford, Pa. Harry has practiced environmental law in Pennsylvania and nearby states for integrated steel plants and mini-mills for over 20 years. He has advised on compliance issues, negotiated permits and resolved enforcement cases in the areas of air, water, waste and chemical regulation. He has prosecuted and defended citizen suits under environmental laws. Harry also represents a number of industries in air emission trading matters, completing more than 10 emission offset trades. Last December Harry bought 5 million dollars of ERCs to allow construction of a powerplant at the former USS Fairless Works.

Harry is Past Chair of the Western Pennsylvania Section, Air & Waste Management Association, a founding member of the Southwest Pennsylvania Ozone Action program, and is Chair of International Air & Waste Management Association's Public Information Committee. Harry received his J.D. from the State University of New York at Buffalo where he was on Law Review and did postgraduate work in environmental studies.