United States Steel Corporation, Minnesota Ore Operations ...

STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY

ATTACHMENT 1

IN THE MATTER OF A REQUEST FOR A CONTESTED CASE HEARING ON AND THE PROPOSED ISSUANCE OF AIR EMISSION PERMIT NO.13700063-004 FOR UNITED STATES STEEL CORPORATION - KEETAC, KEEWATIN, MINNESOTA

FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER

FINDINGS OF FACT

The above-entitled matter came before the Minnesota Pollution Control Agency (MPCA) at a Special Citizens' Board Meeting held in St. Paul, Minnesota on September 13, 2011. After reviewing the record before it and allowing opportunity for public comment, the MPCA finds, concludes and orders as follows:

DESCRIPTION OF THE PROJECT

1. United States Steel Corporation ("U. S. Steel Corp.") owns and operates a taconite (iron ore) mine and processing plant in Keewatin, Minnesota. The facility, U. S. Steel Corporation, Minnesota Ore Operations - Keetac ("Keetac"), produces taconite pellets for use as a primary raw ingredient at iron and steel mills.

2. Iron ore mining and taconite pellet production have been on-going at the Keetac facility since 1967. The original Phase I taconite processing plant began operation in 1969. At that time, the Keetac facility included one operating taconite production line.

3. In 1977, the Phase II expansion added a second operating line. The Phase I line was idled in December 1980 under the ownership of National Steel Pellet Corporation. U. S. Steel Corp. purchased the National Steel Corporation in 2003, including the Keetac facility.

4. Currently, there is one operational pellet producing line (Phase II) with annual production of approximately 6.0 million short tons of taconite pellets per year (MTPY).

5. The project for which Air Emission Permit No. 13700063-004 is sought is the Keetac expansion project (Phase III). It includes the modification and re-activation of the original Phase I operating line. The project will expand taconite pellet production from 6.0 MTPY of taconite pellets to 9.6 MTPY. The modification also includes expansions in mining and concentrating processes to supply the re-activated indurating furnace. Current crushing operations are sufficient to supply the new indurating furnace.

6. Major activity areas at the facility include: mines and crushers, concentrating, pelletizing, pellet storage and loadout, additive receiving and handling, concentrate storage, loadout and receiving, and support activities.

7. Pollutants of concern from this facility include volatile organic compounds (VOCs), carbon monoxide (CO), nitrogen oxides (NOX), sulfur dioxide (SO2), particulate matter (PM), particulate matter less than ten microns in diameter (PM10), particulate matter less than 2.5 microns in

United States Steel Corporation, Minnesota Ore Operations ? Keetac Air Emissions Permit No. 13700063-004 Keewatin, Minnesota

Findings of Fact Conclusions of Law And Order

diameter (PM2.5), greenhouse gases (GHG) or carbon dioxide equivalent (CO2-e), and various hazardous air pollutants (HAPs), including mercury, and lead.

8. The existing facility uses various emissions controls. Fugitive PM emissions from mining and hauling operations, the tailings basin, material transfer and storage activities are controlled by operation in accordance with the Fugitive Dust Emission Control Plan that will be updated with the new units and submitted prior to startup of the expansion line. PM emissions from ore crushing and transfer operations are controlled by centrifugal collectors or wet scrubbers. PM emissions from additive material storage processing are controlled by wet scrubbers and fabric filters. PM, SO2, and mercury emissions from the Phase II, the existing pelletizing process, are controlled by wet scrubbers.

9. The Phase III Project will employ fabric filter baghouses, wet scrubbers and dry electrostatic precipitators to control particulate emissions; gas suspension/fluid bed absorbers to control sulfur dioxide emissions; natural gas and alternative renewable fuels (ARF) to reduce GHG emissions, activated carbon injection or an equivalent alternative to control mercury emissions; a low NOX burner to reduce NOX emissions; noise reduction measures and additional permit conditions to reduce air emissions.

REGULATORY CONTEXT

10. The modified Keetac facility is an air emission source that is required by State rules to have an air emission permit. For air emission sources, these rules are found in Minn. R. ch. 7007.

New Source Review/Prevention of Significant Deterioration

11. Since 1980, federal regulations under the Clean Air Act require preconstruction permits for construction of certain new sources and modifications. These federal regulations are known as the New Source Review (NSR) regulations and are found at 40 CFR 52.21.

12. The United States Environmental Protection Agency (EPA) delegated 40 CFR 52.21 to the MPCA to administer the Prevention of Significant Deterioration (PSD) portion of the NSR program for geographic areas that are in attainment with the National Ambient Air Quality Standards (NAAQS). 40 CFR 52.1234. All of Minnesota is in attainment for the NAAQS. Minnesota also incorporated the federal rules into state rule at Minn. R. 7007.3000. The MPCA has the authority to implement and enforce 40 CFR 52.21 in Minnesota, which it does through Minn. R. ch. 7007.

13. A modification at a source located in an area that is in attainment with federal NAAQS is subject to the PSD requirements of the NSR permitting program if the modification meets the federal definition of a major modification in PSD.

14. A modification is a major modification if it results in a significant increase and a significant net increase in emissions of a PSD pollutant. The significance levels are specified in 40 CFR 52.21(b)(23)(i) and 40 CFR 52.21(b)(49).

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United States Steel Corporation, Minnesota Ore Operations ? Keetac Air Emissions Permit No. 13700063-004 Keewatin, Minnesota

Findings of Fact Conclusions of Law And Order

Title V/Part 70 Operating Permits

15. In 1990, Congress amended the Clean Air Act (42 U.S.C.7401 et seq.). The amendments established, among other things, air emission operating permitting conditions. In 1992, the EPA promulgated regulations, referred to as Part 70 regulations, to implement the new federal permitting provisions, 40 CFR Part 70.

16. A source is subject to the Part 70 permitting requirements if it meets the federal definition of a major stationary source under Part 70 which, for a taconite plant, is a potential to emit 100 tons per year or more of any criteria pollutant, 10 tons per year of any hazardous air pollutant, or 25 tons per year of all hazardous air pollutants combined. The Keetac facility currently operates under a Part 70 operating permit as a major PSD source.

17. In 1993, the MPCA revised its permitting rules to incorporate the new Part 70 requirements (Minn. R. ch. 7007). A major modification under the federal PSD regulation also requires a major amendment under the federal Part 70 regulation. The MPCA issues major permit amendments under the provisions of Minn. R. ch. 7007. It is the practice of this agency to include the requirements of PSD in the Part 70 major amendment.

18. For a modification to an existing major source which would be subject to the federal PSD regulation, the permit applicant has the option, when feasible, of proposing permit limits to avoid applicability of those regulations for the proposed construction. Such permits are described as "synthetic minor" source permits since the source avoids major modification status under PSD by accepting enforceable emission limits in its permit that are lower than the major modification thresholds and lower than would be allowed for an PSD or Part 70 source. This agency has the authority to issue synthetic minor permits under Minn. R. ch. 7007.

19. U. S. Steel Corp. has elected to propose permit terms and conditions to limit its potential-to-emit for NOX from the Keetac Phase III modification to less than the major modification threshold for the PSD regulation.

APPLICABLE STANDARDS

Prevention of Significant Deterioration

20. The Keetac modification has a potential to emit total PM, PM10, PM2.5, SO2 and CO2-e in excess of the significance levels for those pollutants.

21. The MPCA finds that the Keetac modification is a major modification subject to PSD.

22. Because it is subject to PSD, U. S. Steel Corp. - Keetac was required to complete a Best Available Control Technology (BACT) analysis for new or modified units emitting the pollutants of concern; to model maximum allowable emissions to ensure protection of the Minnesota and National Ambient Air Quality Standards (MAAQS and NAAQS) for SO2, PM10, and PM2.5; and to examine the planned facility's impacts on the PSD increments for PM10 and SO2. Increment analyses were required for both the local Class II areas and the nearby Class I areas. U.S. Steel Corp. - Keetac was also required to complete an Additional Impacts Analysis. 3

United States Steel Corporation, Minnesota Ore Operations ? Keetac Air Emissions Permit No. 13700063-004 Keewatin, Minnesota

Findings of Fact Conclusions of Law And Order

23. U. S. Steel Corp. ? Keetac also modeled the maximum allowable emissions to ensure protection of the MAAQS and NAAQS for Nitrogen Dioxide (NO2) and CO.

24. The MPCA staff prepared a technical support document (TSD) that sets forth the legal and factual basis for the permit conditions. The TSD describes the BACT process for this permit, the modeling, the increment impacts and the Additional Impacts Analysis.

25. To determine the impact of the project on ambient air quality as required by the PSD regulation, the applicant conducted air dispersion modeling using EPA dispersion modeling computer programs.

26. The BACT analysis addressed each pollutant of concern, including GHG. The GHG BACT analysis generally considered process and fuel combustion GHG emissions, carbon sequestration, add-on controls and various fuel scenarios and alternatives to limestone as a pellet binder.

27. EPA requested that the MPCA include a CO2-e emission limit in addition to the proposed 114,000 ton per year (tpy) CO2 limit. The MPCA staff modified the permit to include a 186,400 tpy CO2-e emission limit. Compliance with both limits is appropriately determined by calculating from measurements of fuel, ore and limestone.

28. The MPCA hereby adopts the explanation of the PSD permitting elements from the TSD and finds that, as modified in response to EPA, each element, including the BACT analysis, was properly completed and satisfies the requirements of the PSD program.

New Source Performance Standards

29. The MPCA also has adopted standards of performance that establish emission limits and other performance requirements for specific sources of air pollutants (Minn. R. ch. 7011). If, however, modeling or monitoring shows that the standards of performance will not prevent a violation of an ambient air quality standard, an emission source will be required to meet more stringent performance standards that will protect ambient air quality.

30. The EPA has adopted standards for performance, which apply to specific types of equipment and industrial operations, generally referenced as the New Source Performance Standards (NSPS) (40 CFR Part 60). The Project as proposed is subject to the following NSPS: (1) 40 CFR pt. 60, subp. LL and (2) 40 CFR pt. 60, subp. Y.

National Emission Standards for Hazardous Air Pollutants

31. The EPA has adopted emission standards for hazardous air pollutants, generally referenced as the NESHAPS or National Emission Standards for Hazardous Air Pollutants. 40 CFR pt. 63. subp. RRRRR applies to taconite iron ore processing plants.

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United States Steel Corporation, Minnesota Ore Operations ? Keetac Air Emissions Permit No. 13700063-004 Keewatin, Minnesota

Findings of Fact Conclusions of Law And Order

MERCURY EMISSIONS

Fish Tissue Mercury Concentration Standard

32. In 2008, the MPCA promulgated a 0.2mg/kg mercury fish tissue standard in its numeric water quality standards in Minn. R. ch. 7050. In accordance with the federal Clean Water Act, the MPCA developed Minnesota's Statewide Mercury Total Maximum Daily Load (TMDL) which was approved by EPA in March, 2007. The TMDL sets a goal of 93 percent reduction in human-caused annual mercury air emissions from 1990 levels and a 24 pounds per year (lb/yr.) water discharge goal. The 93 percent reduction goal translates to a goal of 789 lb/yr. of mercury air emissions.

33. In October, 2009, the MPCA and a stakeholder group developed an Implementation Plan and a Strategy Framework to establish strategies to reach the goals articulated in the mercury TMDL. The Implementation Plan set a goal of a 75 percent reduction in mercury air emissions from the taconite industry by 2025.

34. The Implementation Plan and Strategy Framework recognized that technology does not currently exist to control mercury emissions from taconite pellet furnaces and that time is needed to identify such controls. The focus for the taconite industry in the short term is on research to identify a viable control technology or technologies for the industry.

35. The MPCA rules require that air emission permits shall include requirements needed to ensure compliance with all applicable requirements. Minn. R. 7007.0800, subp. 2. "Applicable requirement" is defined at Minn.R. 7007.0100, subp. 7 and does not include the mercury TMDL, the Implementation Plan or the Strategy Framework.

36. The MPCA finds that the Mercury TMDL, Implementation Plan and Strategy Framework establish goals and strategies, not air quality mandates or applicable requirements.

37. The proposed Air Emission Permit establishes a 75.5 lb/yr. mercury limit. The limit reflects potential mercury emissions if the only mercury control were the existing electrostatic precipitator, which is intended to control particulate matter emissions, but has the additional benefit of also controlling mercury to some extent.

38. The permit also requires U. S. Steel to install and operate either activated carbon injection (ACI) or an equivalent alternative on the Phase III line within 365 days of startup, to control mercury emissions. The MPCA expects at least 80 percent reduction in mercury emissions from ACI or its alternative. An 80 percent reduction in mercury emissions from the Phase III line translates to approximately 21 lb/yr.

39. The alternative to ACI may be identified through research that U. S. Steel Corp. has committed to undertake pursuant to a June 2011 Schedule of Compliance (SOC) between this agency and U. S. Steel Corp.

40. The SOC includes subjects other than mercury control. The mercury control requirements are identical to the mercury control requirements in an August 2010 agreement between this agency

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United States Steel Corporation, Minnesota Ore Operations ? Keetac Air Emissions Permit No. 13700063-004 Keewatin, Minnesota

Findings of Fact Conclusions of Law And Order

and U. S. Steel Corp. The parties incorporated the August 2010 agreement mercury requirements into the SOC and terminated the August 2010 agreement.

41. The SOC requires U. S. Steel Corp. to identify and trial mercury control technologies on one of its existing taconite production lines. In addition to the Keetac facility, U. S. Steel Corp. owns and operates the Minntac facility near Mountain Iron, Minnesota. The existing production lines at Minntac are available for control technology trials.

42. If the research and trials successfully identify a viable mercury technology, the SOC requires U. S. Steel Corp. to submit a permit application(s) and schedule for installation of the technology on its operating taconite indurating furnace lines at Minntac and Keetac.

43. The SOC obligates U. S. Steel Corp. to make mercury emission reductions earlier than is targeted in the mercury TMDL, Implementation Plan and Framework Strategy.

44. If the research and trials do not successfully identify a viable mercury control technology, U. S. Steel Corp. must present its work to the Mercury Emissions Reduction Research and Implementation Council, which will consider other strategies to reach the 789 lb/yr. Implementation Plan goal.

45. The MPCA staff issued guidance for new or increased sources of mercury emissions. The guidance indicates that sources of new or increased mercury emissions should secure equivalent mercury emission reductions from other Minnesota sources on a 1:1 ratio.

46. Operation of the Keetac Phase III modification will result in an increase in mercury emissions from the Keetac facility in the short term. The SOC obligates U. S. Steel Corp. to early mercury emission reductions so that overall cumulative mercury emissions will be the same or lower for the years 2008 to 2025 as they would have been without the Phase III expansion modification.

47. In addition to early emission reductions, the SOC obligates U. S. Steel Corp. to submit a contingency plan and schedule by January 1, 2016, for equivalent reductions if no mercury control technology has been identified for a long-term trial. The plan must include an evaluation of rerouting scrubber solids from the Minntac taconite process to Minntac's tailing basin. Rerouting scrubber solids is a known method of reducing mercury emissions from taconite indurating furnaces.

48. The MPCA finds that the mercury reduction requirements of the Keetac modification permit and the SOC are unique in the taconite industry at this time. To date, no other taconite producer in Minnesota has agreed to undertake measures to identify, install and operate mercury emission control technology.

49. The MPCA finds that U. S. Steel Corp.'s commitments to early and equivalent reductions in the Keetac modification permit and the SOC further the goals and strategies of the mercury TMDL, Implementation Plan and Strategy Framework. The permit and SOC obligate U. S. Steel Corp. to take specific steps to achieve reductions in mercury emissions earlier than the Implementation Plan suggests and to ensure equivalent reductions for the increase in mercury emissions from

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United States Steel Corporation, Minnesota Ore Operations ? Keetac Air Emissions Permit No. 13700063-004 Keewatin, Minnesota

Findings of Fact Conclusions of Law And Order

operation of the Phase III line. The MPCA finds that these obligations advance progress toward achievement of the goals of the mercury TMDL.

50. The MPCA further finds that the use of the SOC in tandem with the air emissions permit is appropriate. The SOC's requirements apply to both of U. S. Steel Corp.'s Minnesota facilities, Keetac and Minntac. It is desirable from both a research and implementation perspective to involve both facilities in U. S. Steel Corp.'s mercury emission reduction efforts, but it is not possible to regulate activities at the Minntac facility through the Keetac air emissions permit. The two facilities hold separate air emissions permits and there is no basis in law to join them.

PUBLIC NOTICE OF THE PERMIT

51. Minn. R. 7007.0050 to 7007.1850 apply to the issuance of air emission permits and describe the process the MPCA must follow in reviewing an application for a permit. Minn. R. 7007.0850 to 7007.0950 contain procedural requirements for public notice and comment, review by other states, and review and objection by EPA, which apply to this proposed permit. Subpart 1 of Minn. R. 7007.0850 requires the MPCA Commissioner to prepare a TSD setting forth the legal and factual basis for the proposed draft permit conditions. Subpart 2 requires the MPCA to give public notice of the preliminary determination to issue a permit, including information on how copies of relevant documents can be obtained, the activities involved in the permit action, the emission changes, the comment procedures, any scheduled meetings or hearings, and hearing request procedures. Minn. R. 7007.0900 requires the MPCA to provide notice to affected states. Minn. R. 7007.0950 specifies the procedures for EPA review.

52. On June 2, 2011, pursuant to Minn. R. 7007.0850, subp. 2, the MPCA Commissioner issued a public notice of the preliminary decision to issue the permit. The notice was published as required by MPCA's rules, and included the information required. The notice of the preliminary determination to issue the permit provided for a comment period ending July 1, 2011. In accordance with Minn. R. 7007.0850, subp. 1 and 2 (2003), a draft permit and technical support document were made available to the public.

53. An interruption of government services in Minnesota started on July 1, 2011, and lasted until July 20, 2011. Because the last day of the public notice was July 1, there were some comments that were received after July 1, 2011. These comments have been treated as timely.

54. The MPCA staff held a public information meeting for this proposed facility modification in Hibbing, Minnesota on June 16, 2011. The public information meeting was publicized and held in accordance with Minn. R. 7007.0850, subp. 2, which references Minn. R. 7001.0110, subp. 3 and with Minn. R. 7001.0120.

55. Minn. R. 7007.0950 specifies the procedures for EPA review of permits proposed for issuance by the MPCA. On June 1, 2011, the MPCA submitted the draft permit to EPA for its review. EPA submitted comments on the permit during the public comment period.

56. Copies of the draft permit were sent to North Dakota, South Dakota, Iowa, Wisconsin, Michigan and Ontario as affected states or provinces.

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