RG Steel Sued By Feds Prior To Bankruptcy
FOLLANSBEE – Just three months before RG Steel’s bankruptcy and liquidation, the Department of Justice filed a lawsuit to collect civil penalties from the company for multiple alleged environmental infractions.
The federal complaint – filed in U.S. District Court in Wheeling in February – shows the government seeks to collect as much as $32,500 per day for each alleged violation of the Clean Air Act and the Solid Waste Disposal Act during operations at the Mountain State Carbon coke plant in Follansbee, as well as at the now-closed Mingo Junction and Steubenville facilities.
Because the Mountain State Carbon facility is a 50-50 venture between RG and Severstal North America, both of these defendants are represented in federal court by attorney Kenneth Komoroski. In answering the government’s complaint last week, Komoroski states that RG “no longer owns or operates the Mingo Junction and Steubenville facility and no longer operates the Mountain State Carbon facility.”
As part of RG’s bankruptcy, Buffalo, N.Y.-based Frontier Industrial purchased the Mingo facility for $20 million. RG sold the Steubenville plant and land to Wheeling-based Herman Strauss Inc. recycling for $15 million.
An order signed by U.S. District Judge John Preston Bailey states that RG sought to delay the Justice Department’s lawsuit the day after filing for bankruptcy on May 31. Bailey eventually allowed the government’s case to proceed, leading to last week’s response by Komoroski.
According to the federal complaint, the Justice Department claims RG pumped excessive amounts of sulfur dioxide into the air and failed to properly handle “muck oil,” a condensate that results from coke production.
The complaint states that “coke oven gas condensate generated at the Follansbee facility is a solid waste that displays the toxicity characteristics for benzene,” noting that this should be considered “hazardous waste.”
Noting that steel production at the Mingo and Steubenville facilities has ceased, the complaint states “coke oven gas continues to be transported by pipeline from the coke ovens at the Follansbee facility throughout the Steubenville complex.”
However, Komoroski said his clients do not consider coke oven gas condensate to be hazardous waste, noting the steelmaker never intended to discard the material. He also admitted the Follansbee, Mingo and Steubenville facilities would have the potential to emit more than 100 tons of sulfur dioxide per year when running, but emphasized neither the Mingo nor Steubenville plants have operated since 2009.
The government also alleges that on “numerous” occasions between July 2004 and August 2008, the basic oxygen furnace shop at the Mingo plant produced “visible particulate emissions of fugitive dust” in violation of the Clean Air Act.
Komoroski countered by noting the steelmaker installed additional air emission controls in 2008 that would “prevent fugitive dust emissions” in the event someone would try to operate the Mingo mill again.
Esmark Inc. purchased all the former Wheeling-Pitt. facilities in 2006 before selling them to Russian steelmaker OAO Severstal for $1.23 billion in July 2008. Severstal, after idling the Steubenville and Mingo plants, later sold these plants to RG, but maintained the 50 percent stake in the coke plant. RG liquidated its assets after filing for bankruptcy last year.