From: Beth Havlik To: Aagenes, Jason D. Cc: Paul Taylor ; Erik Boleman ; Beth Havlik ; George Pruchnofski Subject: RE: Comments on UTAC scrubber cost estimate Date: Tuesday, July 24, 2007 7:17:11 PM

Jason, I bellieve we have developed some good substantiation based in EPA Guidance that lost production costs are legitimate costs to include in a BACT analysis. We're working on the other points, and hope to provide a more complete response sometime tomorrow. For now, we wanted to update you on our points regarding lost production.

Cost of Lost Production MPCA has cited unsubstantiated EPA guidance that indicates that lost production should not be included in a BACT analysis. The OAQPS Control Cost Manual has been the most commonly referenced BACT guidance and been in use for the past 25 years. Chapter 2 of the Manual is dedicated to the concepts and methodology for estimating the cost of installing air pollution controls. Several pages are dedicated to the cost considerations if a retrofit is required. According to the Manual, “The net revenue (i.e., gross revenue minus the direct costs of generating it) lost during this unanticipated shutdown period is a bonafide retrofit expense.” [USEPA, OAQPS, EPA Air Pollution Control Cost Manual, Sixth Edition, EPA/452/B-02--001, January 2002. Page 2-30.]

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-----Original Message----- From: Aagenes, Jason D. [ mailto:JDAagenes@cleveland-cliffs.com ] Sent: Monday, July 23, 2007 02:49 PM Central Standard Time To: Beth Havlik Cc: Paul Taylor; Erik Boleman; George Pruchnofski Subject: FW: Comments on UTAC scrubber cost estimate

Beth,
Have you had a chance to review Anne Jackson's comments below? (The first section after each bullet is my question, the following paragraph is her response.) I'm especially troubled by the comments that MPCA will not include lost production time and that particulate removal is sufficient water treatment for blowdown water. I've included my original email comments to Mary Jean and a copy of the STS report.

Thanks, Jason

-----Original Message----- From: Aagenes, Jason D. Sent: Friday, July 13, 2007 12:32 PM To: 'Beth Havlik'; 'George Pruchnofski' Subject: FW: Comments on UTAC scrubber cost estimate

Please review and comment.

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-----Original Message-----

From: Jackson, Anne [ mailto:Anne.Jackson@state.mn.us ]
Sent: Friday, July 13, 2007 12:21 PM Eastern Standard Time

To: Aagenes, Jason D.Cc: Fenske, Mary Jean
Subject: Comments on UTAC scrubber cost estimate

Jason, Mary Jean asked me to finish up the cost estimate for this project. I am in the process of doing that, but thought I should try to answer your questions directly. I don't see a "natural" place to address these questions in the cost writeup documentation, so I'm replying in this email.

These are the comments Mary Jean passed on to me and Hal Taylor:

1) Since the proposed project is a major modification to the process and building, significant process downtime would be anticipated. Please include the economic cost of lost production on Line 2 during construction.

In the conduct of BACT analyses, EPA guidance directs BACT preparers to not include lost production time in the development of capital cost estimates for retrofit projects. Because we are preparing and comparing pollution control alternatives in the same manner as a BACT analysis, lost production costs will not be included in this estimate.

2) Verify that complete water treatment costs for removal of fluorides, sulfates, etc. are included (capital, O&M) for blowdown water. I'm concerned that, over time, untreated blowdown water reporting to the tailings basin would significantly deteriorate our process water quality.

I spoke to John Engesser about the need for additional blowdown water treatment. John reports that as long as the water in the scrubber recirculation system is treated with lime, it will be removing sulfates and fluorides which will be landfilled with the solids and not represent a tailing pond water problem. Chlorides will continue to build, but would take several decades to reach levels of concern (and still be below drinking water standards).No additional units are included in the cost estimate for water treatment.

3) Verify that proper sized process air fans are included in the design as well as increased electrical demand. A critical component of maintaining production is ensuring that sufficient air remains available to the grate/kiln. With an increased pressure drop expected for this type of scrubber, the process air fans and motors may need to be upgraded.

The cost proposal includes two new ID fans and motors, and are assumed to be properly sized. Power use is included in the annual costs.

Anne M. Jackson, P.E.
Minnesota Pollution Control Agency
ph: (651) 296-7949

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