Steel mill could get tax break despite pollution violations

25 May 2016

A Dearborn steel manufacturer could receive a $50-million to $60-million tax break over 20 years under legislation  under consideration in the state House of Representatives. But some lawmakers, citing ongoing violations of state air pollution regulations at the factory, think the company should clean up its act before any further tax breaks come its way.

House bills 5557 and 5558 would extend tax credits to AK Steel for its Dearborn steel plant, credits that were previously provided to the factory's former owner, Severstal Steel — one of the state's worst air pollution violators, according to Michigan Department of Environmental Quality and U.S. Environmental Protection Agency records. AK Steel completed acquisition of the factory from Severstal in September 2014.

State Reps. Jeff Farrington and Robert Kosowski, respective sponsors of the two bills, said AK Steel has been doing a much better job of environmental compliance than its predecessor. They note that in 2013, under Severstal, the Dearborn facility had nearly 24,000 "air permit deviations;" and that last year, under a full year of AK Steel control of the plant, that number had been reduced to 17 air permit deviations for the entire year.

"We're keeping 1,800 people employed," said Farrington, R-Utica. "I say thank you for the jobs, and thank you for cleaning up the environment."

Added Kosowski, D-Westland, "That's a 99.98% turnaround from '13. That's pretty good. That tells me they are willing to work to be good corporate citizens."

DEQ Air Quality Division Chief Lynn Fiedler, however, said her agency could not confirm those figures. "Those are not our numbers, so I cannot say if they are accurate or not. I don’t know where they came from," she said.

The number of air quality complaints related to AK Steel increased from 14 complaints in 2014 to 21 last year, according to Fiedler. The company was found in violation of air quality regulations as recently as last November, for failing to monitor for sulfur dioxide emissions at one of the plant's blast furnaces for "an extended period." And the neighborhoods near the steel plant are considered out-of-compliance with federal air regulations for sulfur dioxide, a health-harming pollutant.

As part of a settlement agreement for past air quality violations, AK Steel is required to monitor smokestack opacity — basically, the thickness of the smoke leaving its stacks — as a gauge of particulate matter pollution. The company reported 23 events of excessive opacity in the fourth quarter of last year.

A group of House members, including Democrats George Darany of Dearborn and Stephanie Chang of Detroit, and Republican Martin Howrylak of Troy, introduced a floor amendment to the bills requiring any recipient of a tax credit to have no notices of violations or unresolved enforcement cases with any state or federal agency within the immediately preceding year. The amendment would further require any company seeking a tax credit transfer, whose activities are subject to 30 or more air pollution permits from the DEQ, to work with community members "to conduct an annual assessment to determine the need for additional off-site air quality monitors, and for additional air pollution control equipment to reduce emissions of sulfur dioxide and fine particulate matter."

The amendment was defeated in the House Tax Policy Committee. The bills have not yet come up for a floor vote in the full House. Chang said she is urging her colleagues not to approve the bills without requiring full environmental compliance.

"I think we need to be doing more, not less, to make sure people have clean air to breathe," she said. "May is Air Quality Awareness Month, as well as Asthma Awareness Month. I just think it's ironic that we're talking about giving a tax credit to this company without making them comply with air quality regulations."

Christopher Bzdok, an attorney representing area residents who sued the DEQ over its approval of permits allowing Severstal to increase its air pollution emissions in 2014, said the average person's reaction to the idea of requiring compliance with air pollution regulations before giving a company an eight-figure tax break "would be, 'That's not the law already?'"

"They are still having problems," he said. "They are still operating under this sham permit that allows them to increase their emissions without putting in any new equipment, because they claim they are grandfathered.

"They're a business. They're not going to spend the money unless somebody makes them. And it's cheaper to pay an army of attorneys and lobbyists than it is to install better pollution controls."

City of Detroit Health officer Dr. Abdul El-Sayed, in a May 16 letter to House members, supported the amendment requiring environmental compliance before tax credit transfers. He noted that juvenile asthma hospitalization rates in Detroit are nearly threefold higher than elsewhere in Michigan, and that city residents suffer higher rates of lung cancer, cardiac disease and stroke, "all pollution-related diseases."

"AK is an important employer in the area, and these credits are justified — yet environmental violations must also be addressed," El-Sayed stated. "Amendments to these bills requiring AK Steel to meet its responsibilities to Detroiters' lungs are a must."

Said Farrington: "There are some environmental groups trying to make hay out of it, and it's ridiculous."

AK Steel spokeswoman Lisa Jester said the company's $690-million acquisition of the Severstal Dearborn plant included a contract between the state and Severstal in which the state agreed that these business tax credits were transferable to the next owners of the facility.

"We are simply asking the state to deliver on its promise under that contract," she said.

Jester said the November violation for sulfur dioxide monitoring has been resolved with the fixing of the faulty monitor.

"In fact, the unit ran 353 days last year and measured those emissions, which were less than half of the permissible limit," she said.

The company also invested $29 million to expand an existing line to produce new steels to meet the needs of automotive customers, Jester said.

"This tax credit, as permitted under our contract, is important to help us manage our business, and continue to support local innovation, jobs and the economy of southeastern Michigan," she said.

A floor vote on the bills was not scheduled at the start of the week, Farrington said, as the state continues to wrangle with issues such as Detroit Public Schools funding.

But "if they (the bills) see a floor vote, it will pass," he said of the tax breaks.


Source :