AK appears unlikely to avoid civil penaltiesBy
Thomas Gnau, Journal Business Writer
Ohio government is ready to resolve a lawsuit against AK
Steel Corp. before the case goes to trial - but not without a
"civil penalty," said Frank Reed, chief of Attorney General
Betty Montgomery's environmental section.
But AK Vice President of Public Affairs Alan McCoy said the
state has settled enforcement cases without civil penalties,
although he called that the "exception rather than the rule."
Still, AK holds that it has done nothing to deserve fines.
McCoy said his company has the "best environmental compliance
record in the country among integrated steel producers by a
wide, wide margin."
Yet, said Reed on Friday, "A civil penalty is a part of
every one of these cases."
Meanwhile, U.S. District Judge Herman J. Weber released in
writing this week his order denying the Middletown steelmaker
a temporary restraining order against an Ohio Environmental
Protection Agency order. The order, issued in October, tells
AK to submit a plan to control what the agency says are dust
emissions from Middletown Works.
Representing state and federal environmental protection
agencies, Ohio government is an intervening plaintiff in the
U.S. Department of Justice's lawsuit against AK, alleging
violations of the Clean Air, Clean Water and Resource Recovery
and Conservation acts. AK has aggressively defended itself
since the suit was filed in June 2000.
Reed said civil penalties, or fines, are necessary in cases
when his office thinks companies save money by stalling on
compliance with the law.
"Otherwise, companies will get the impression this (a
lawsuit) is a cost of doing business," he said.
The lawsuit deals with complaints against AK that date back
to March 1991, Reed said. Not extracting a fine from a company
on successful resolution of the case "would be almost unheard
of," said Eric Hardgrove, a Montgomery spokesman.
"We're not looking to put anybody out of business,"
AK went public in 1994. Its predecessor company was a
partnership between Armco and Kawasaki Steel Corp. formed in
1989. AK's leaders have said since March that fines and
compliance costs could force them to reconsider making steel
Installing new "maximum achievable (pollution) control
technology" on Middletown Works' blast furnace and basic
oxygen furnace will cost about $80 million, McCoy said. AK
will have to shut down its 1950s-era blast furnace to install
the controls - a difficult engineering feat, he said. And one
that means a couple of months of lost production.
"And then you throw in this idea of civil penalties," McCoy
The technology could be required in two years, he said.
FEDERAL ATTORNEYS sought to take the lead in the lawsuit,
but not because they doubted Ohio's diligence, Reed said. He
said state and federal agencies are partners "through and
Said McCoy, "We've done nothing to deserve the duplicative
efforts of state and federal agencies."
Robert Darnell, an attorney with the Department of
Justice's Environmental and Natural Resources Division,
A Dec. 19 hearing in U.S. District Judge Herman J. Weber's
court is set to hear motions by the Sierra Club and the
National Resources Defense Council to join the suit as
intervening plaintiffs. Beyond that, Reed said, what's next is
He said his office resolves 40 to 50 cases before trial
each year. "A couple," he said, go to trial. If the lawsuit
against AK goes to trial, there would be no jury, he said.
"We're prepared to go to trial, if necessary," he said.
McCoy said AK is, as well.
"We've done nothing to deserve civil penalties," he said.