PUBLIC PARTICIPATION DOCUMENTS For

STATE OF MICHIGAN Rick Snyder, Governor DEPARTMENT OF ENVIRONMENTAL QUALITY AIR QUALITY DIVISION CONSTITUTION HALL 525 WEST ALLEGAN STREET P.O. BOX 30260 LANSING, MICHIGAN 48909-7760 www.michigan.gov/air PUBLIC PARTICIPATION DOCUMENTS For Gerdau MACSTEEL, Inc. Monroe, Michigan PERMIT APPLICATION NUMBER 102-12 November 26, 2012

Gerdau MACSTEEL, Inc. Page 1 Purpose and Summary FACT SHEET November 26, 2012 The Michigan Department of Environmental Quality (MDEQ), Air Quality Division (AQD), is proposing to act on Permit to Install (PTI) application No. 102-12 for Gerdau MACSTEEL, Inc. The permit application is for proposed modifications to the existing electric arc furnace (EAF) and for the installation and operation of new equipment including, ladle metallurgy station (LMF), new twin tank vacuum degassers (VTD), a new continuous caster, a new slidegate heater, a new cooling tower, and a new walking beam billet reheat furnace. The proposed project is subject to permitting requirements of the Department s Rules for Air Pollution Control and state and federal Prevention of Significant Deterioration (PSD) regulations. Prior to acting on this application, the AQD is holding a public comment period and a public hearing, if requested in writing, to allow all interested parties the opportunity to comment on the proposed PTI. All relevant information received during the comment period and hearing if held, will be considered by the decision maker prior to taking final action on the application. Background Information The Gerdau MACSTEEL, Inc. Monroe Mill (Gerdau) is owned and operated by Gerdau MACSTEEL, Inc. and is located in the City of Monroe, Monroe County, Michigan. The property is bounded by Front Street to the north; the DTE Monroe Power Plant Cooling Water Channel to the east; Plum Creek and Jack s Landscaping to the south; and Borchert Park Drive and the Port of Monroe to the west. Gerdau is an existing facility that processes steel scrap in an existing EAF to make various grades of specialty steel for its clients and currently operates under Renewable Operating Permit No. MI-ROP-B7061-2009. Gerdau also operates a ladle metallurgy station with vacuum degassing, a continuous caster, a reheat furnace, and other ancillary equipment. Proposed Facility and Present Air Quality Gerdau has proposed to modify the existing EAF, install a new LMF, VTD, a new continuous caster, a new cooling tower for the caster process water, a new slide gate heater, a new billet reheat furnace, modify the yard with an updated fugitive dust plan, and update the emission factors and calculations for the existing dust silo and Flinn furnace. The existing billet reheat furnace, the existing hotwell, and existing boiler will be removed as part of this proposed project. The EAF, LMF, and VTD are part of the group Melt Shop and are referenced as such within this document. Gerdau has proposed to increase the liquid steel output of the furnace to 130 tons per hour and 1,000,000 tons per year and has proposed to operate a total of 8,200 hours per year. The modifications to the existing EAF include the addition of oxy-fuel burners which is also termed chemical energy. The burners add additional heat to the furnace which allows faster melting times. The applicant has proposed to utilize direct-shell evacuation control (DEC), and a canopy hood that is used during all operation at the EAF. The emissions from the EAF are collected through the canopy hood, combined with the emissions from the LMF and VTD, are then cooled in the duct and controlled by two baghouses which operate in parallel.

Gerdau MACSTEEL, Inc. Page 2 The new LMF will be installed at the location of the existing ladle metallurgy and vacuum degassing station. The proposed operations at the LMF include arc reheating, alloy addition, powder injection and stirring. The ladle is covered and under vacuum during the operations at the LMF. The emissions generated by the LMF are collected through a fully sealed hood and the emissions are routed to the parallel baghouses. The ladle is covered as the metal is transferred from the LMF to the VTD. The new VTD will have the capacity to hold two ladles, but will only have the capability to degas one ladle at a time and is under a constant vacuum during the degassing process. The emissions generated by the VTD are collected through a fully sealed hood and the emissions are routed to the parallel baghouses. The ladle is not covered during the transfer from the VTD to the caster. The new slidegate heater is used at the caster to preheat the submerged entry nozzle (SEN) prior to it being inserted into the caster mold. Molten metal is added after the SEN is in place. During the operation of the new caster the molten steel is gravity fed from the ladle to the tundish, which then flows into the enclosed caster strands. The caster also has a cooling system. The water used for caster cooling operations is cooled in the caster cooling tower and later reused. Monroe County is an attainment area for all criteria pollutants, except for particulate matter less than 2.5 microns in diameter (PM2.5) for which the area is in non-attainment. Pollutant Emissions The facility is an existing major Prevention of Significant Deterioration (PSD) source, which means that the emissions from the facility are greater than the PSD thresholds of 100 tons per year for one or more criteria pollutants. The threshold for Gerdau is 100 tpy because it is one of the 28 listed source categories in the PSD rules. The potential to emit for the proposed project is over the significant increase emission rate for particulate matter less than 10 microns in diameter (PM10), nitrogen oxides (NO x ), carbon monoxide (CO), sulfur dioxide (SO 2 ), volatile organic compounds (VOC), and Greenhouse Gases (GHG) as Carbon Dioxide Equivalent (CO 2 e). The proposed project will be a major modification to an existing major stationary source, and, therefore, subject to the PSD Regulations in Part 18 of the Michigan Air Pollution Control Rules and 40 CFR 52.21. The following table provides the estimated net emissions increase for each criteria pollutant: EMISSION SUMMARY Pollutant Estimated Emissions (tpy) PM 24.3 PM10 32.4 PM2.5 33.6 SO 2 69.7 CO 708 NO x 69.7 VOCs 41.0 Lead 0.28

Gerdau MACSTEEL, Inc. Page 3 Key Permit Review Issues Pollutant Estimated Emissions (tpy) GHG as CO 2 e 169,737 Sulfuric Acid Mist 6.68 Staff evaluated the proposed project to identify all state rules and federal regulations which are, or may be, applicable. The tables in Appendix 1 summarize these rules and regulations. Prevention of Significant Deterioration (PSD) Regulations Based on the potential emissions, the proposed project is subject to PSD review for PM10, NO x, CO, SO 2, VOC, and GHG as CO 2 e. Review under the PSD regulations requires Best Available Control Technology (BACT), a source impact analysis, an air quality impact analysis, and an additional impact analysis for each regulated air pollutant for which the project will result in significant emissions. The PSD major source threshold is 250 tpy for each of the criteria pollutants unless the source is one of 28 source categories listed in the PSD regulations, then the PSD major source threshold is 100 tpy. Once a source is major for a single criteria pollutant, a modification to the source is major for other criteria pollutants and subject to PSD review at the emission rate defined to be a significant emissions increase. If a modification is subject to PSD for a regulated pollutant other than greenhouse gases (GHGs), then the GHG emissions from the modification are also subject to PSD if they are greater than 75,000 tpy of CO2 equivalents (CO 2 e). The following table summarizes the proposed changes of each regulated pollutant. Table B. Total Facility Emission Increases and PSD Significant Emission Limits Pollutant Total Emission PSD Significant Increase (tpy) Emission Rate (tpy) Subject to PSD? PM 24.3 25 No PM10 32.4 15 Yes SO 2 69.7 40 Yes CO 708 100 Yes NO X 69.7 40 Yes VOC 41.0 40 Yes Lead 0.28 0.6 No Sulfuric Acid Mist 6.68 7 No GHG as CO 2 e 169,373 75,000 Yes The following is a summary of the BACT determinations for each emission unit or group of emission units that were subject to PSD BACT review. For more detailed information see Appendix 2.

Gerdau MACSTEEL, Inc. Page 4 BACT for PM10 The following is the proposed PM10 BACT for each of the modified or new emission units in the Melt Shop PM10 BACT has been determined to be 0.1 lb/ton liquid steel output emission limit with the use of direct evacuation control (DEC), a canopy hood, a baghouse and ladle covers. Continuous Caster PM10 BACT has been determined to be work practice standards, including equipping the Caster with a permanent ladle cover, tapping ladles from the bottom, use of an enclosed tundish and the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. Walking Beam Billet Reheat Furnace PM10 BACT has been determined to be the use of pipeline quality natural gas as a fuel, along with good combustion practices to minimize fuel usage. Slidegate heater PM10 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. Cooling Tower PM10 BACT has been determined to be an emission limit of 0.0005% drift loss and the use of a drift eliminator. Fugitive Emissions from Vehicle Traffic The following measures will be employed to reduce the amount of fugitive emissions from the o The Billet Yard and South Road, which are both currently unpaved, will be paved. These are both high traffic areas and the paving will result in the largest reduction in fugitive dust. o The frequency of dust suppressant addition to the unpaved roadways will be increased from once per month to twice per month. o Posted speed limits throughout the site, on both paved and unpaved surfaces, will be reduced from 15 MPH to 12 MPH. These reduced speed limits will be enforced. o The frequency of water flushing of paved surfaces will increase from once per day to twice per day. o These changes will be incorporated into Gerdau s existing fugitive dust control plan for the site. BACT for SO 2 The following is the proposed SO 2 BACT for each of the modified or new emission units in the Melt Shop SO 2 BACT was determined to be 0.2 lb/ton steel for the Melt Shop operations. Continuous Caster SO 2 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches. Walking Beam Billet Reheat Furnace SO 2 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the walking beam billet reheat furnace. Slidegate Heater SO 2 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the slidegate heater.

Gerdau MACSTEEL, Inc. Page 5 BACT for CO The following is the proposed CO BACT for each of the modified or new emission units in the Melt Shop CO BACT has been determined to be 2 lb/ton steel for the Melt Shop emission control system with DEC and a CO reaction chamber. Continuous Caster CO BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. Walking Beam Billet Reheat Furnace CO BACT has been determined to be the use of pipeline quality natural gas as a fuel for the walking beam billet reheat furnace, along with good combustion practices and an emission limit of 84 lb/mmscf. Slidegate Heater CO BACT has been determined to be the use of pipeline quality natural gas as a fuel for the slidegate heater, along with good combustion practices. BACT for NO x The following is the proposed NO x BACT for each of the modified or new emission units in the Melt Shop NO x BACT has been determined to be an emission limit of 0.2 lb/ton liquid steel output using real time process optimization (RTPO) and natural gas fired oxy-fuel burners. Continuous Caster NO x BACT has been determined to be the use of oxy-fuel torches, the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. Walking Billet Reheat Furnace NO x BACT has been determined to be an emission limit of 0.07 lb/mmbtu with the use of Ultra Low NO x burners and the firing of pipeline quality natural gas. Slidegate Heater NO x BACT has been determined to be the use of pipeline quality natural gas as a fuel for the slidegate heater, along with good combustion practices. BACT for VOC The following is the proposed VOC BACT for each of the modified or new emission units in the Melt Shop VOC BACT was determined to be the implementation of a scrap management plan, DEC with VOC reaction chamber and an emission limit of 0.13 lb/ton liquid steel output. Continuous Caster VOC BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. Walking Beam Billet Reheat Furnace VOC BACT has been determined to be the use of pipeline quality natural gas as a fuel for the walking beam billet reheat furnace, along with good combustion practices and an emission limit of 5.5 lb/mmscf. Slidegate Heater VOC BACT has been determined to be the use of pipeline quality natural gas as a fuel for the slidegate heater, along with good combustion practices.

Gerdau MACSTEEL, Inc. Page 6 BACT for GHG as CO 2 e The following is the proposed GHG BACT for each of the modified or new emission units in the Melt Shop GHG BACT was determined to be energy efficiency and an emission limit of 0.16 lb/ton of liquid steel output. The energy efficiency measures that Gerdau has proposed to implement for the EAF are Real Time Process Optimization (RTPO) control, adjustable speed drives, foamy slag process, oxy-fuel burners in the EAF, post combustion of the flue gas, engineered refractories, CO monitoring and exhaust fan variable speeds, and eccentric bottom tapping. As part of the energy efficiency measures the applicant is also required to submit an Energy Efficiency Management Plan for the Melt Shop. Continuous Caster GHG BACT was determined to be energy efficiency for the caster. The energy efficiency measures proposed are efficient caster ladle/tundish heating and near net shape casting. As part of the energy efficiency measures the applicant is also required to submit an Energy Efficiency Management Plan for the caster. Walking Beam Billet Reheat Furnace GHG BACT was determined to be energy efficiency for the reheat furnace and an emission limit of 119 lb/mmbtu. As part of the energy efficiency measures the applicant is also required to submit an Energy Efficiency Management Plan for the reheat furnace. Slidegate Heater GHG BACT was determined to be energy efficiency for the slidegate heater. As part of the energy efficiency measures the applicant is also required to submit an Energy Efficiency Management Plan for the slidegate heater. Visible Emissions Though visible emissions are not a regulated pollutant under the PSD regulations, they are an indicator of particulate emissions and therefore are subject to BACT review. The following visible emission limits were proposed as BACT for the project: Melt Shop 3% opacity on a six minute average for the baghouse stack and 6% opacity on a 6-minute average from building openings is BACT for visible emissions. Walking Beam Billet Reheat Furnace 20% opacity on a 6-minute average during startup and 5% opacity on a 6-minute average during all operation, other than start-up. Fugitive Emissions from Roads and Packaging 5% opacity for the fugitive emissions on the roads and in the packaging areas of the facility. Building Fugitives 6% opacity on a 6-minute average for the fugitive emissions from the fugitive emission sources in the building. Minor/Major Modification Determination for Nonattainment Pollutants The facility is located in Monroe County which is currently nonattainment for PM2.5. The facility is not an existing Prevention of Significant Deterioration (PSD) major stationary source for PM2.5. The potential to emit from Gerdau for PM2.5 is currently less than 100 tpy and will be 88 tpy after the modifications from this project; therefore the facility is not subject to non-attainment new source review. Federal NSPS Regulations New Source Performance Standards (NSPS) were established under Title 40 of the Code of Federal Regulations (40 CFR) Part 60. The electric arc furnace is subject to the NSPS for Steel Plants: Electric Arc Furnaces and Argon-Oxygen Decarburization Vessels 40 CFR Part 60 Subpart AAa. The NSPS has

Gerdau MACSTEEL, Inc. Page 7 visible emission limits, requires recordkeeping and monitoring of visible emissions, and also requires recordkeeping of melting rates for the EAF. Federal NESHAP Regulations National Emission Standards for Hazardous Air Pollutants (NEHAP) were established under 40 CFR Part 61 or Part 63. The electric arc furnace is subject to the NESHAP for Area Sources: Electric Arc Furnace Steel Making, 40 CFR Part 63 Subpart YYYYY. There are particulate emission limits and visible emission limits associated with the electric arc furnace per the NESHAP. The NESHAP also requires a scrap management plan to minimize chlorinated plastics, Pb, and free organic liquids charged to the EAF. Prohibition on charging metallic scrap that contains scrap from motor vehicle bodies, engine blocks, oil filters, oily turnings, machine shop borings, transformers, or capacitors containing PCBs, lead-containing components, chlorinated plastics, or free organic liquids to the EAF. For motor vehicle scrap a management plan is required or the use of an approved supplier with a mercury switch removal program. Rule 224 T-BACT Analysis Rule 336.1224 applies to any proposed, new, or modified process or process equipment for which a permit to install application is required and which emits a TAC. A TAC is defined in the Michigan rules as: Any air contaminant for which there is no National Ambient Air Quality Standard (NAAQS) and which is or may become harmful to public health or the environment when present in the outdoor atmosphere in sufficient quantities and duration. Rule 336.1224 requires that emissions of TACs not exceed the maximum allowable emission rate that results from the application of T-BACT. The new and modified emission units at Gerdau are subject to PSD BACT for both PM and VOC emissions. Per to Rule 336.1224(2)(c), the T-BACT requirements of Rule 224 do not apply to the following: An emission unit or units which only emits toxic air contaminants that are particulates or VOCs and which is in compliance with BACT or LAER requirements for particulates and VOCs. All new and modified emission units proposed for Gerdau only emit TACs which are either particulates or VOC and are subject to PSD BACT for those air contaminants and therefore compliance with PSD BACT exempts the project from the requirement for T-BACT. Additionally, the EAF operation is subject to the area source NESHAP regulation for EAF Steelmaking Facilities, 40 CFR Part 63, Subpart YYYYY. Per the requirements of Subpart YYYYY, Gerdau is required to control HAP emissions from the EAF through limitations on the scrap charged to the furnace. As stated in Rule 336.1224(2)(a) T-BACT requirements do not apply to the following: An emission unit or units for which standards have been promulgated under section 112(d) of the clean air act or for which an a control technology determination has been made under section 112(g) or 112(j) of the clean air act which controls similar volatile organic compounds and particulate compounds. Rule 225 Toxics Analysis The MDEQ Rules for Air Pollution Control require the ambient air concentration of toxic air contaminants (TACs) be compared against health-based

Gerdau MACSTEEL, Inc. Page 8 screening levels. AQD staff reviewed Gerdau s air quality modeling and evaluation of TAC impacts. The review found that all TACs show impacts less than the established healthbased screening levels and will comply with the requirements of Rule 225. There are permit emission limits of manganese and mercury for the Melt Shop. All other TAC impacts were less than 75% of the applicable screening levels, and therefore no permit emission limits were established. See Appendix 3 for a listing of each individual TAC and the predicted ambient impact. Rule 702 VOC Emissions This rule requires an evaluation of the following four items to determine what will result in the lowest maximum allowable emission rate of VOCs: a. BACT or a limit listed by the department on its own initiative b. New Source Performance Standards (NSPS) c. VOC emission rate specified in another permit d. VOC emission rate specified in the Part 6 rules for existing sources An evaluation of these four items determined that a VOC BACT limit (702(a)) analysis would dictate the lowest maximum allowable emission rate of VOC from the modified and new emissions units. The projected net emission increase for VOC exceeds the 40 tpy PSD significance threshold and, as a result, is subject to review under Michigan s PSD Rules in Part 18. A PSD BACT demonstration for VOC was provided by the applicant. Compliance with the PSD BACT requirement for VOC emissions from all new and modified emissions units also demonstrates compliance with the requirement for VOC BACT pursuant to Rule 336.1702(a). Criteria Pollutants Modeling Analysis Computer dispersion modeling was performed to predict the impacts of air emissions from PM10, NO x, CO, and SO 2. Emissions from the proposed facility were evaluated against the Significant Impact Level (SIL) for each air contaminant. The dispersion modeling showed that the impacts of PM10, NO x, CO, and SO 2, were below their respective SILs and no additional modeling was required. There are no modeling standards for VOC and GHG, and therefore they were not modeled. PM2.5 was not modeled because Monroe County is currently designated non-attainment for PM2.5. Table D Preliminary Modeling Impacts Pollutant Averaging Time PSD Significant Predicted Additional Level (µg/m 3 ) Impact (µg/m 3 ) Modeling? PM10 Annual 1 0.096 No PM10 24-hr 5 3.40 No SO 2 Annual 1 0.031 No SO 2 24-hr 5 1.80 No SO 2 3-hr 25 5.16 No SO 2 1-hr 7.9 6.08 No CO 8-hr 500 27.32 No CO 1-hr 2,000 45.49 No NO 2 Annual 1 0.86 No NO 2 1-hr 7.6 6.46 No Additional Impact Analysis An additional impact analysis is required for new major sources pursuant to 40 CFR Part 52.21(o) and Michigan Rule 336.2815. This analysis is necessary to evaluate the impacts from the proposed project for soils, vegetation, visibility

Gerdau MACSTEEL, Inc. Page 9 and growth. As the proposed project will be a major modification to an existing major stationary source for PM10, NO x, CO, SO 2, VOC, and GHG, the proposed project is required to address the potential impacts to visibility, soils and vegetation (of economic value), wildlife, and the impacts as a result of general commercial, residential, and industrial growth associated with the project. Soils, Vegetation, and Wildlife To evaluate the impacts on soils and vegetation, Gerdau compared the predicted air quality impacts from the project against screening concentrations developed by the USEPA. Gerdau completed an analysis and has shown that the impacts from the project are below the respective screening concentrations: Pollutant Averaging Period Sensitive Screening Projected Impact Concentration (ug/m 3 ) (ug/m 3 ) NO x Annual 94 0.0 SO 2 Annual 18 0.012 3-hour 786 5.14 1-hour 917 5.18 Visibility A visibility analysis commonly includes an assessment of the visual quality of the area and a review of proposed sources of emissions to consider the possibility of visual impairment. Based on guidance, assessments for visibility impacts are required only for Class I areas. The nearest Class I area is the Seney National Wildlife Refuge, which is located approximately 500 kilometers north of Gerdau. The source is sufficiently far away that no impairment to visibility in the Class I area would occur. Growth The growth analysis is a projection of the commercial, residential, industrial, and other growth that will occur in the area due to the construction and operation of the proposed source. No general residential or commercial growth is expected due to the construction and operation of the proposed equipment. There will be approximately 100 to 200 workers on site for the project which is expected to last 18 months. Once the proposed project is complete Gerdau plans to employ 25 additional permanent staff. Therefore the project does not appreciably affect air quality on the basis of additional growth. Mercury Emissions Emissions of mercury were also evaluated from the proposed project. Gerdau has accepted a mercury emission limit of 0.033 pounds per hour and 287 pounds per year for the Melt Shop. The facility will also be stack testing the baghouse stacks every year for 5 years and then every 5 years thereafter to verify compliance with the mercury emission limit. Gerdau will also be sampling the baghouse dust and analyzing that for mercury as well. The proposed emissions of mercury were reviewed by AQD and the impacts were found to be acceptable. Key Aspects of Draft Permit Conditions Emission Limits (By Pollutant) Electric Arc Furnace The draft permit contains emission limits for PM and visible emissions for the electric arc furnace. The electric arc furnace particulate emissions are controlled by a baghouse. Caster Cooling Tower The draft permit contains emission limits for PM and PM10 for the caster cooling tower. The emissions from the caster cooling tower are controlled by a drift eliminator.

Gerdau MACSTEEL, Inc. Page 10 Walking Beam Billet Reheat Furnace The draft permit contains emission limits for visible emissions, NO x, CO, VOC, and GHG as CO 2 e for the reheat furnace. Flinn furnace The draft permit contains a NO x emission limit for the Flinn furnace. Dust Silo The draft permit contains a PM emission limit for the dust silo. Roads and Packaging The draft permit contains visible emission limits for the roads and packaging areas. The emissions are controlled by the use of a fugitive dust plan which provides procedures for fugitive dust control. Melt Shop For Melt Shop (which includes the electric arc furnace, LMF, and VTD) the draft permit contains visible emission, PM, PM10, PM2.5, CO, NO x, SO 2, VOC, Lead, GHG as CO 2 e, manganese, and mercury emission limits. The Melt Shop emissions are controlled by DEC with post combustion control for CO and VOC, as well as a baghouse. Building Fugitives The draft permit contains visible emission limits for the fugitive emissions from the shop building. Usage Limits The draft permit includes limits on the steel output for the facility on an hourly, daily, and annual liquid steel output basis. The draft permit also includes a natural gas usage limit and associated recordkeeping. Process/Operational Restrictions The draft permit includes limits on the hours of operation of equipment at the facility and associated recordkeeping. Federal Regulations The electric arc furnace is subject to the NSPS for Steel Plants: Electric Arc Furnaces and Argon-Oxygen Decarburization Vessels 40 CFR Part 60 Subpart AAa. The NSPS has visible emission limits, requires recordkeeping and monitoring of visible emissions, and also requires recordkeeping of melting rates for the EAF. There are also reporting and initial testing requirements under this regulation. The electric arc furnace is subject to the NESHAP for Area Sources: Electric Arc Furnace Steel Making, 40 CFR Part 63 Subpart YYYYY. There are particulate emission limits and visible emission limits associated with the electric arc furnace. The NESHAP also requires a scrap management plan to minimize chlorinated plastics, Pb, and free organic liquids charged to the EAF. Prohibition on charging metallic scrap that contains scrap from motor vehicle bodies, engine blocks, oil filters, oily turnings, machine shop borings, transformers, or capacitors containing PCBs, lead-containing components, chlorinated plastics, or free organic liquids to the EAF. For motor vehicle scrap a management plan is required or the use of an approved supplier with a mercury switch removal program. There are also testing and reporting requirements under this regulation. Emission Control Device Requirements The draft permit includes emission control device requirements. The proposed equipment will be required to control the following: PM, PM10, PM2.5 by baghouse control for the Melt Shop. CO by DEC and CO combustion chamber at the electric arc furnace. VOC by VOC combustion chamber at the electric arc furnace. Testing & Monitoring Requirements The draft permit includes the following requirements for the

Gerdau MACSTEEL, Inc. Page 11 Verify the capture efficiency of the canopy hood for the electric arc furnace. Verify the natural gas usage rate at the caster. Verify the NO x and CO emission rates through performance testing at the Walking Beam Billet Reheat Furnace Verify visible emissions, PM, PM10, PM2.5, NO x, VOC, CO 2 e, manganese, and mercury emission rates through performance testing for the Melt Shop. Install Continuous Emission Rate Monitoring Systems (CERMS) for CO and SO 2 at each Melt Shop baghouse stack. Install Continuous Opacity Monitoring Systems (COMS) at each Melt Shop baghouse stack. Conclusion Based on the analyses conducted to date, staff concludes that the proposed project would comply with all applicable state and federal air quality requirements. Staff also concludes that this project, as proposed, would not violate the federal National Ambient Air Quality Standards or the state and federal PSD increments. Based on these conclusions, staff has developed draft permit terms and conditions which would ensure that the proposed facility design and operation are enforceable and that sufficient monitoring, recordkeeping, and reporting would be performed by the applicant to determine compliance with these terms and conditions. If the permit application is deemed approvable, the delegated decision maker may determine a need for additional or revised conditions to address issues raised during the public participation process. If you would like additional information about this proposal, please contact Ms. Annette Switzer, AQD, at 517-335-3376.

Gerdau MACSTEEL, Inc. Page 12 State Rule R 336.1201 R 336.1205 R 336.1224 R 336.1225 to R 336.1232 R 336.1279 to R 336.1290 R 336.1301 R 336.1331 R 336.1370 R 336.1401 and R 336.1402 R 336.1601 to R 336.1651 R 336.1702 R 336.1801 R 336.1901 R 336.1910 Appendix 1 STATE AIR REGULATIONS Description of State Air Regulations Requires an Air Use Permit for new or modified equipment that emits, or could emit, an air pollutant or contaminant. However, there are other rules that allow smaller emission sources to be installed without a permit (see Rules 336.1279 through 336.1290 below). Rule 336.1201 also states that the Department can add conditions to a permit to assure the air laws are met. Outlines the permit conditions that are required by the federal Prevention of Significant Deterioration (PSD) Regulations and/or Section 112 of the Clean Air Act. Also, the same types of conditions are added to their permit when a plant is limiting their air emissions to legally avoid these federal requirements. (See the Federal Regulations table for more details on PSD.) New or modified equipment that emits toxic air contaminants must use the Best Available Control Technology for Toxics (T-BACT). The T-BACT review determines what control technology must be applied to the equipment. A T-BACT review considers energy needs, environmental and economic impacts, and other costs. T-BACT may include a change in the raw materials used, the design of the process, or add-on air pollution control equipment. This rule also includes a list of instances where other regulations apply and T-BACT is not required. The ambient air concentration of each toxic air contaminant emitted from the project must not exceed health-based screening levels. Initial Risk Screening Levels (IRSL) apply to cancer-causing effects of air contaminants and Initial Threshold Screening Levels (ITSL) apply to non-cancer effects of air contaminants. These screening levels, designed to protect public health and the environment, are developed by Air Quality Division toxicologists following methods in the rules and U.S. EPA risk assessment guidance. These rules list equipment to processes that have very low emissions and do not need to get an Air Use permit. However, these sources must meet all requirements identified in the specific rule and other rules that apply. Limits how air emissions are allowed to look at the end of a stack. The color and intensity of the color of the emissions is called opacity. The particulate emission limits for certain sources are listed. These limits apply to both new and existing equipment. Material collected by air pollution control equipment, such as dust, must be disposed of in a manner, which does not cause more air emissions. Limit the sulfur dioxide emissions from power plants and other fuel burning equipment. Volatile organic compounds (VOCs) are a group of chemicals found in such things as paint solvents, degreasing materials, and gasoline. VOCs contribute to the formation of smog. The rules set VOC limits or work practice standards for existing equipment. The limits are based upon Reasonably Available Control Technology (RACT). RACT is required for all equipment listed in Rules 336.1601 through 336.1651. New equipment that emits VOCs is required to install the Best Available Control Technology (BACT). The technology is reviewed on a case-by-case basis. The VOC limits and/or work practice standards set for a particular piece of new equipment cannot be less restrictive than the Reasonably Available Control Technology limits for existing equipment outlined in Rules 336.1601 through 336.1651. Nitrogen oxide emission limits for larger boilers and stationary internal combustion engines are listed. Prohibits the emission of an air contaminant in quantities that cause injurious effects to human health and welfare, or prevent the comfortable enjoyment of life and property. As an example, a violation may be cited if excessive amounts of odor emissions were found to be preventing residents from enjoying outdoor activities. Air pollution control equipment must be installed, maintained, and operated properly.

Gerdau MACSTEEL, Inc. Page 13 State Rule R 336.1911 R 336.1912 R 336.2001 to R 336.2060 R 336.2801 to R 336.2804 Prevention of Significant Deterioration (PSD) Regulations Best Available Control Technology (BACT) R 336.2901 to R 336.2903 and R 336.2908 STATE AIR REGULATIONS Description of State Air Regulations When requested by the Department, a facility must develop and submit a malfunction abatement plan (MAP). This plan is to prevent, detect, and correct malfunctions and equipment failures. A facility is required to notify the Department if a condition arises which causes emissions that exceed the allowable emission rate in a rule and/or permit. Allow the Department to request that a facility test its emissions and to approve the protocol used for these tests. The PSD rules allow the installation and operation of large, new sources and the modification of existing large sources in areas that are meeting the National Ambient Air Quality Standards (NAAQS). The regulations define what is considered a large or significant source, or modification. In order to assure that the area will continue to meet the NAAQS, the permit applicant must demonstrate that it is installing the BACT. By law, BACT must consider the economic, environmental, and energy impacts of each installation on a case-by-case basis. As a result, BACT can be different for similar facilities. In its permit application, the applicant identifies all air pollution control options available, the feasibility of these options, the effectiveness of each option, and why the option proposed represents BACT. As part of its evaluation, the Air Quality Division verifies the applicant s determination and reviews BACT determinations made for similar facilities in Michigan and throughout the nation. Applies to new major stationary sources and major modifications as defined in R 336.2901. These rules contain the permitting requirements for sources located in nonattainment areas that have the potential to emit large amounts of air pollutants. To help the area meet the NAAQS, the applicant must install equipment that achieves the Lowest Achievable Emission Rate (LAER). LAER is the lowest emission rate required by a federal rule, state rule, or by a previously issued construction permit. The applicant must also provide emission offsets, which means the applicant must remove more pollutants from the air than the proposed equipment will emit. This can be done by reducing emissions at other existing facilities. As part of its evaluation, the AQD verifies that no other similar equipment throughout the nation is required to meet a lower emission rate and verifies that proposed emission offsets are permanent and enforceable. Citation Section 109 of the Clean Air Act National Ambient Air Quality Standards (NAAQS) FEDERAL AIR REGULATIONS Description of Federal Air Regulations or Requirements The United States Environmental Protection Agency has set maximum permissible levels for seven pollutants. These NAAQS are designed to protect the public health of everyone, including the most susceptible individuals, children, the elderly, and those with chronic respiratory ailments. The seven pollutants, called the criteria pollutants, are carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter less than 10 microns (PM10), particulate matter less than 2.5 microns (PM2.5), and sulfur dioxide. Portions of Michigan are currently non-attainment for either ozone or PM2.5. Further, in Michigan, State Rules 336.1225 to 336.1232 are used to ensure the public health is protected from other compounds.

Gerdau MACSTEEL, Inc. Page 14 Citation 40 CFR 52.21 Prevention of Significant Deterioration (PSD) Regulations Best Available Control Technology (BACT) 40 CFR 60 New Source Performance Standards (NSPS) 40 CFR 63 National Emissions Standards for Hazardous Air Pollutants (NESHAP) Section 112 of the Clean Air Act Maximum Achievable Control Technology (MACT) Section 112g FEDERAL AIR REGULATIONS Description of Federal Air Regulations or Requirements The PSD regulations allow the installation and operation of large, new sources and the modification of existing large sources in areas that are meeting the NAAQS. The regulations define what is considered a large or significant source, or modification. In order to assure that the area will continue to meet the NAAQS, the permit applicant must demonstrate that it is installing BACT. By law, BACT must consider the economic, environmental, and energy impacts of each installation on a case-by-case basis. As a result, BACT can be different for similar facilities. In its permit application, the applicant identifies all air pollution control options available, the feasibility of these options, the effectiveness of each option, and why the option proposed represents BACT. As part of its evaluation, the Air Quality Division verifies the applicant s determination and reviews BACT determinations made for similar facilities in Michigan and throughout the nation. The United States Environmental Protection Agency has set national standards for specific sources of pollutants. These New Source Performance Standards (NSPS) apply to new or modified equipment in a particular industrial category. These NSPS set emission limits or work practice standards for over 60 categories of sources. The United States Environmental Protection Agency has set national standards for specific sources of pollutants. The National Emissions Standards for Hazardous Air Pollutants (NESHAP) (a.k.a. Maximum Achievable Control Technology (MACT) standards) apply to new or modified equipment in a particular industrial category. These NESHAPs set emission limits or work practice standards for over 100 categories of sources. In the Clean Air Act, Congress listed 189 compounds as Hazardous Air Pollutants (HAPS). For facilities which emit, or could emit, HAPS above a certain level, one of the following two requirements must be met: 1) The United States Environmental Protection Agency has established standards for specific types of sources. These Maximum Achievable Control Technology (MACT) standards are based upon the best-demonstrated control technology or practices found in similar sources. 2) For sources where a MACT standard has not been established, the level of control technology required is determined on a case-by-case basis. Notes: An Air Use Permit, sometimes called a Permit to Install, provides permission to emit air contaminants up to certain specified levels. These levels are set by state and federal law, and are set to protect health and welfare. By staying within the levels set by the permit, a facility is operating lawfully, and public health and air quality are protected. The Air Quality Division does not have the authority to regulate noise, local zoning, property values, offsite truck traffic, or lighting. These tables list the most frequently applied state and federal regulations. Not all regulations listed may be applicable in each case. Please refer to the draft permit conditions provided to determine which regulations apply.

Gerdau MACSTEEL, Inc. Page 15 BACT for PM10 Appendix 2 BACT ANALYSIS The following is the proposed PM10 BACT for each of the modified or new emission units in the Melt Shop PM10 BACT has been determined to be 0.1 lb/ton liquid steel output emission limit with the use of direct evacuation control (DEC), a canopy hood, a baghouse and ladle covers. The RACT/BACT/LAER Clearinghouse (RBLC) was reviewed and it was found that the proposed limit was consistent with the BACT emission limits in the RBLC for other Melt Shop operations. The proposed BACT limit includes consideration for LMF, VTD, and the storage and handling of lime and alloys. Gerdau will also update its Fugitive Dust Control Plan to reduce the fugitive dust created by maintenance activities and other miscellaneous material handling activities within this area. Other control devices that were evaluated for the Melt Shop includes Electrostatic Precipitators (ESPs) (including Wet ESPs [WESPs]), High-Energy Scrubbers, and Mechanical Collectors. The baghouse was the option with the best control efficiency and therefore the other options were not selected. Continuous Caster PM10 BACT has been determined to be work practice standards, including equipping the Caster with a permanent ladle cover, tapping ladles from the bottom, use of an enclosed tundish and the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. The RBLC did not contain PM10 BACT emission limitations for the caster. The applicant also evaluated the potential to install a hood to collect the particulate emissions from the cutting of the billets on the caster line. Due to the configuration of the caster equipment and the use of overhead cranes and equipment at the facility, a hood over the torches or a larger hood located high above the process, were both considered technically infeasible. Walking Beam Billet Reheat Furnace PM10 BACT has been determined to be the use of pipeline quality natural gas as a fuel, along with good combustion practices to minimize fuel usage. The applicant also evaluated the use of a fabric filter, ESP and wet scrubber to control the emissions of PM10 from the walking beam billet reheat furnace. Based on an economic analysis it was not cost effective to control the emissions from the walking beam billet reheat furnace. Slidegate heater PM10 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. The RBLC did not contain PM10 BACT emission limitations for the slidegate heater. Cooling Tower PM10 BACT has been determined to be an emission limit of 0.0005% drift loss and the use of a drift eliminator. The applicant did not evaluate any other control devices for the cooling as BACT for PM10. A drift eliminator is a part of the cooling tower design for the purpose of reducing drift from the operation of the cooling tower. There is no known control device that would provide better control for the PM10 emissions from a cooling tower, and therefore the use of a drift eliminator is BACT. Fugitive Emissions from Vehicle Traffic The following measures will be employed to reduce the amount of fugitive emissions from the o The Billet Yard and South Road, which are both currently unpaved, will be paved. These are both high traffic areas and the paving will result in the largest reduction in fugitive dust. o The frequency of dust suppressant addition to the unpaved roadways will be increased from once per month to twice per month. o Posted speed limits throughout the site, on both paved and unpaved surfaces, will be reduced from 15 MPH to 12 MPH. These reduced speed limits will be enforced.

Gerdau MACSTEEL, Inc. Page 16 o o BACT for SO 2 The frequency of water flushing of paved surfaces will increase from once per day to twice per day. These changes will be incorporated into Gerdau s existing fugitive dust control plan for the site. The following is the proposed SO 2 BACT for each of the modified or new emission unit in the Melt Shop SO 2 BACT was determined to be 0.2 lb/ton steel for the Melt Shop operations. This proposed emission limit is an increase from the previous emission limit for the EAF. This emission limit was increased because the BACT limit also accounts for emissions from the LMF and the VTD. There were lower BACT emission limits in the RBLC and the following was provided by Gerdau as an explanation why the lower limits could not be met: o ID GA-0142 for Osceola Steel in Georgia - The steel produced at Osceola is not bar destined for machining applications, while the Gerdau products are. Steels destined for machining operations require more sulfur in the process to ensure that the product possesses the proper machining qualities. The product mix at Osceola allowed the facility to accept a lower SO 2 emission limitation, than Gerdau can accept. o ID OH-0315 for New Steel International, Inc., Haverhill the permit contained a SO 2 emission limitation of 0.10 lb/ton. Based on a telephone discussion between Gerdau and Ohio EPA District Staff, the New Steel International, Inc. Haverhill facility addressed under RBLC OH-0315 has not been built; therefore, the 0.10 lb SO 2 /ton steel emission limit established for the facility has not been demonstrated in practice. The applicant also evaluated charge substitution, which was found to be technically infeasible because the facility would not be able to meet customer requirements and also evaluated flue gas desulfurization, which was found to be technically infeasible due to the low concentration of SO 2. Continuous Caster SO 2 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches. The applicant did not evaluate any other control devices for the continuous caster as BACT for SO 2. The emissions of SO 2 generated from the combustion of pipe-line quality natural gas are the lowest compared to other available combustion fuels for the caster. The emissions generated from combustion of SO 2 in the continuous caster are 0.01 tpy; therefore the use of pipeline quality natural gas sufficiently limits emissions. Walking Beam Billet Reheat Furnace SO 2 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the walking beam billet reheat furnace. The applicant did not evaluate any other control devices for the reheat furnace as BACT for SO 2. The emissions of SO 2 generated from the combustion of pipe-line quality natural gas are the lowest compared to other available combustion fuels for the reheat furnace. The emission generated from combustion of SO 2 in the continuous caster are 0.49 tpy, therefore the use of pipeline quality natural gas sufficiently limits emissions. Slidegate Heater SO 2 BACT has been determined to be the use of pipeline quality natural gas as a fuel for the slidegate heater. The applicant did not evaluate any other control devices for the slidegate heater as BACT for SO 2. The emissions of SO 2 generated from the combustion of pipe-line quality natural gas are the lowest compared to other available combustion fuels for the slidegate heater. The emission generated from combustion of SO 2 in the continuous caster are 1.0E-3 tpy, therefore the use of pipeline quality natural gas sufficiently limits emissions.

Gerdau MACSTEEL, Inc. Page 17 BACT for CO The following is the proposed CO BACT for each of the modified or new emission units in the Melt Shop CO BACT has been determined to be 2 lb/ton steel for the Melt Shop emission control system with DEC and a CO reaction chamber. The applicant also evaluated a Flare, a CO Oxidation Catalysts, and Thermal/Catalytic Incineration. The emissions that would be generated from heating the exhaust stream to the temperature required to operate the control devices was shown to have an adverse environmental impact. The emissions from raising the temperature would cause projected emission increases greater than 250 tpy of NO x and greater than 200,000 tpy of GHG as CO 2 e. The proposed BACT emission limit is consistent with a number of other facilities with entries in the RBLC which also use DEC systems with a CO reaction chamber. There was a RBLC entry that was lower than the proposed CO BACT limit and they were addressed by Gerdau as follows: ID OH-0022 for Timken Co. CO emissions were limited to 0.9 lb/ton steel. Based on available data, it is unclear whether this emission limitation applied to the entire Melt Shop or to a single component of the Melt Shop. It is also unclear which of the Timken facilities in Ohio this permit addressed. Given the age and lack of descriptive data concerning this entry in the RBLC, it is unlikely that the 1981 entry is representative of BACT for a process similar to that proposed by Gerdau. Continuous Caster CO BACT has been determined to be the use of pipeline quality natural gas as a fuel for the caster cutting torches, along with good combustion practices. The applicant did not evaluate any other control devices for the continuous caster as BACT for CO. The use of pipe-line quality natural gas and good combustion practices sufficiently limits the CO emissions from the torch cutting operations without the need for a numeric BACT limit. Additionally, the CO emission rate for the cutting torches is 1.52 tpy and AP-42 emission factors for natural gas combustion were used to estimate emissions. Walking Beam Billet Reheat Furnace CO BACT has been determined to be the use of pipeline quality natural gas as a fuel for the walking beam billet reheat furnace, along with good combustion practices and an emission limit of 84 lb/mmscf. The applicant also evaluated thermal incineration and CO oxidation catalysts. During the evaluation both control devices were found to be economically infeasible for the reheat furnace. The cost analysis showed the following: Regenerative Thermal Oxidation - $14,200 per ton of CO controlled, Recuperative Thermal Oxidation - $31,300 per ton of CO controlled, and Oxidation Catalyst - $21,800 per ton of CO controlled. Slidegate Heater CO BACT has been determined to be the use of pipeline quality natural gas as a fuel for the slidegate heater, along with good combustion practices. The applicant did not evaluate any other control devices for the slidegate heater as BACT for CO. The use of pipe-line quality natural gas and good combustion practices sufficiently limits the CO emissions from the slidegate heater operations without the need for a numeric BACT limit. Additionally, the CO emission rate for the slidegate heater is 0.15 tpy and AP-42 emission factors for natural gas combustion were used to estimate emissions. BACT for NO x The following is the proposed NO x BACT for each of the modified or new emission units in the Melt Shop NO x BACT has been determined to be an emission limit of 0.2 lb/ton liquid steel output using real time process optimization (RTPO) and natural gas fired oxy-fuel burners. The applicant also evaluated the use of flue gas recirculation (FGR), selective catalytic reduction (SCR), non-selective catalytic reduction (NSCR), and selective non-catalytic reduction (SNCR). The applicant demonstrated that NSCR was not technically feasible. The