### STATEMENT OFBRETT S. SMITH SR. DIRECTOR, GOVERNMENT RELATIONS

AMERICAN IRON AND STEEL INSTITUTE ENVIRONMENTAL PROTECTION AGENCY CLEAN POWERPLAN PROPOSED RULE PUBLIC HEARING PITTSBURGH, PENNSYLVANIA- AUGUST 1, 2014 

### Introduction Good afternoon and thank you to the Environmental Protection Agency (EPA) for holding these public hearings on the proposed Clean Power Plan (CPP). My name is Brett Smith, and I amSenior Director of Government Relations for the American Iron and Steel Institute (AISI). AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material ofchoice. AISI is comprised of 22 member companies, including integrated and electric furnace steelmakers, and approximately 125 associate members who are suppliers to or customers of the steel industry. AISI's member companies represent over three quarters ofboth U.S. and North American steel capacity. Steel and other manufacturing industries are the backbone of the U.S. economy. A strong manufacturing sector creates significantbenefits for society, including goodpayingjobs, investmentinresearch and development, essential materials for our national defense, and high-value exports. A robust American steel industry is critical to leading the domestic economy. 

### Steel Industnj is Energy-Intensive and Trade-Exposed
AlSI members are doing everything they canto reduce their energy usage, as well as their environmentalfootprint, over the lasttwo decades. The domestic steel industry has voluntarily reduced its energy intensity by 28 percent since 1990, while reducingits greenhouse gas (GHG) emissions by 33 percent over the same time period. In fact, data presented by the U.S. Department ofEnergy show that the steel industry in the U.S. has the lowest energy intensity and second-lowest C02 emissions intensity of any major steel producingcountry. Nevertheless, the production of steel is inherently energy intensive, as energy is typically 20 percent or more of the cost of makinga ton of steel. The industry consumes substantial amounts of electricity, natural gas, and coal and coke to make our products. Maintaining affordable and reliable sources of these energy sources are critical to the international competitiveness of our industry.

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Steel producers in America are currentlyunder substantial challengesfrom international competitors. The Americansteel industry is once again facing a surge in unfairly traded imports from multiple countries. Countries like China and Turkey continue to disrupt world marketsby subsidizingthe production and exportation of steel by their producers. The overall surge in importshas led some steel producers to file trade cases onfive different products, and a number of facilities have already been idled and workers have lost theirjobs. In several recentcases, foreign steel producers were receiving below marketrates for electricity, whichconstitutes a subsidy. These types offoreign governmentinterventions are creating global overcapacity in steel and a surge of steel importsinto the U.S., inhibiting the industry's ability to recover fully from the recent economic downturn. For the steel industry, operatingin the U.S. under tight margins with substantial subsidized competitionfrom overseas, policies that raise energy costs ondomestic companies threaten our competitiveness. 

### Primary Concerns withProposed Clean PowerPlan (CPP) The proposed CleanPower Plan will impose directrequirements onthe electric utility sector, not onits customers,butit is the customers thatwill bear the costs associated with compliance and reliability risks. Our principal concernis that this may lead to higher costs of electricity to large industrial customers like steel, while potentially lessening the quality and reliability ofthe electric supply that is essential for our industry to operate and succeed. The economic impact will be particularly impactful for the steel industry, giventhe regional differences incurrentfuel mix for the industry. The CPP will have a disproportionate impact oncoal-fired utilities, and there is a high correlationbetween the service areas of those utilities and the location of steel production facilities. The leading states in terms of iron and steel productionin the U.S. are Indiana, Ohio, Pennsylvania, Kentucky, Michigan and Alabama. All of these states are heavily dependent oncoal for electricity production, and in turn, so is our industry. Industrial customers, especially steel producers, will be chargedto offset the costofreplacing coal capacity with other sources, includingthe cost ofnew transmission infrastructure. Additionally, the impact of other proposed or pendingEPA regulations of the utility sector shouldbe recognized as well. These regulations, including the Mercury and Air Toxics Standards (MATS), the Cross State Air PollutionRule (CSAPR), coal combustion residuals, and CleanWater Act section316(b) cooling water intake structures, will all have an impact on coal-fired utilities, and therefore threaten the availability and reliability ofelectricity to largeindustrial customerslike steel. Inaddition to the economic impacts of these collective regulations ofthe electric sector, there will be

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fundamental changes necessary to the production and distribution infrastructure to obtain compliance with the CPP. Another significantconcernis that these proposedregulations do notreflect the fact that efforts to address climate change canonly be effective when undertaken ona global basis. Limitations onC02 emissions institutedin the United Statesmust apply at the same level of stringency to other major steel producing nations, such as China. Otherwise, thecompetitiveness ofenergy-intensive, trade-exposeddomestic manufacturers, suchas steel, in the global marketplace will be lessened. The end result will be that steel production and manufacturingjobs will shift to other nations with weaker, less costlyregulations, and where steel productionis less energy efficient and more environmentallyharmful. 

### Conclusion Again, thank you for the ability to speak about this proposed rule today. The domestic steel industryhas substantial concerns that the CleanPower Planproposedby the EPA may unilaterally raise the costs ofelectricity to large industrial customers like steel, while potentiallylessening the reliability of our electricity supply. They will put steel producers in the U.S. at a disadvantage againstcompetitors inother nations, which often subsidize electricity costs and generally have higher rates ofGHG emissions. Such a result would not only be detrimental to the domestic industry and its employees, but to the larger global environment.

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