After accusing Severstal Sparrows Point of repeatedly discharging high levels of hazardous gases and soot from its blast furnace, the Maryland Department of the Environment (MDE) has offered to settle its claims with the steelmaker rather than take the matter to court, according to documents obtained by The Brew.

At stake is about $2.5 million in potential fines stemming from furnace “slips” whose emission of untreated pollutants was first disclosed by The Brew and later confirmed by company records subpoenaed by MDE.

The blast furnace is located less than half a mile from houses along Jones Creek. More than 30,000 Baltimore County residents live within a two-mile radius of the furnace.

“Somewhat Unusual”

While calling the offer to settle the case prior to going to court “somewhat unusual,” Michael F. Strande, assistant attorney general for MDE, defended the decision yesterday.

The state’s intention, he said, was to allow Severstal management “the opportunity to put all their cards on the table and respond to our allegations, which, I repeat, are allegations at this point.”

Strande said he would “not try this case in the media,” but did offer this example: “If what we called a violation [of state pollution laws] is not a violation but a malfunction, we can settle that matter [with Severstal].”

A memo outlining the state’s case cites about 100 violations (each day that a violation continues is considered a separate violation). MDE is empowered to seek penalties of up to $25,000 for each violation, or about $2.5 million in all.

MDE charges that in at least 22 instances, mostly between October 2009 and January 2010, the towering “L” blast furnace released into the atmosphere 5 grains per standard cubic foot dry of particulate matter, mostly iron dust, coal dust and zinc soot.

That’s 167 times the maximum permitted standard of 0.03 gr/scfd. The furnace also released significant amounts of untreated greenhouse gases, including carbon monoxide, according to MDE’s complaint letter.

Election-Year Considerations

While no state official will say so for the record, MDE’s decision to negotiate with Severstal reflects the politically sensitive nature of penalizing a major Maryland employer in deep financial trouble in an election year.

Gov. Martin O’Malley and his aides have met with officers of the United Steelworkers Union (USW) who have complained that aggressive enforcement of a 1997 consent decree requiring the steel mill to fix longstanding air and water pollution problems could put jobs in jeopardy.

With Severstal in the process of temporarily idling Sparrows Point – and throwing at least 1,000 employees out of work – no state or local politician wants to appear to be a “job killer.”

At the same time, the politicians support the cleanup of Chesapeake Bay, whose waters in Baltimore Harbor have been contaminated by hazardous chemicals from the steel mill.

Two weeks ago, aides to the governor, as well as state and county legislators representing eastern Baltimore County, met with Sparrows Point plant manager David A. Howard at the Dundalk office of Baltimore County Councilman Johnny Olszewski, Sr., to discuss the mill shutdown and layoffs.

Regulatory issues at the steel plant – including new air pollution permits – were among the matters that came up at the meeting, according to a participant.

Would Litigation Hurt Sale of the Mill?

While none of the assembled officials suggested making regulatory issues “go away,” there was a consensus that the threat of environmental litigation could be an impediment to a restart by Severstal and could scare away a potential new owner, sources said.

Asked yesterday why MDE decided to offer Severstal the opportunity to resolve the pollution violations administratively, MDE spokesperson Jay Apperson issued this statement:

“It would not be appropriate for us to comment on any legal strategies involving an active case. Having said that, it is not unusual for MDE to explore the possibility of resolving a claim in this manner. It can be in the public interest to resolve alleged violations without the time and the expense to taxpayers of litigation.

“The resolution of a case in this manner will normally include appropriate penalties and procedural and operational changes where necessary and appropriate.”

Asked if MDE had a timeframe for resolving the dispute, Apperson replied:

“There is no hard-and-fast timeframe to resolve a case prior to litigation. We can terminate discussions at any time. The law does require that any claim be filed within three years of when the department knows of or should have known of a violation.”

Talks Not Yet Scheduled

In a recent letter, Scott R. Dismukes, chief council for Severstal, agreed to discuss a possible settlement with MDE. A meeting has not yet been scheduled between the state and company, according to Strande, who said he was waiting to hear back from Dismukes.

An e-mail seeking comment from Dismukes was not answered last night.

In the past, Dismukes and Russell Becker, chief environmental officer at Sparrows Point, have denied that the furnace releases constituted a violation of Maryland pollution laws.

Becker said that the discharges involved malfunctions that were quickly corrected by the company, while Dismukes suggested that the original state permits for the L furnace allowed for the discharge of pollutants from the equipment.

Falling Debris and Wailing Sounds

The state began the pollution investigation a year ago following a sudden pressure surge at the blast furnace that caused red-hot debris to explode from the furnace top and set fires in nearby lots that required Baltimore County firefighters to extinguish.

This September 29, 2009, incident was cited in the state’s list of violations of air pollution laws. The agency listed five more major events last October and November where a “dirty-gas bleeder” released untreated pollution into the atmosphere, in one case for one hour and 35 minutes, as well as numerous shorter discharges.

These incidents were documented by the company’s own furnace logs, which MDE subpoenaed following an article in The Brew.

A contributory factor for the pressure surges was a new “diet” of iron-ore pellets instituted by Severstal management as a cost-cutting measure.

Through last fall and early winter, dirt and other impurities in the iron ore caused pressure buildups and “slips” in the giant furnace.

Characterized by high-pitched wails as superheated gases escaped through the bleeder valves, the discharges became so regular that some employees were concerned about their personal safety.

Specialized pipes known as tuyeres were repeatedly damaged, often catching on fire, and had to be replaced. But despite such problems, the company kept the furnace running on the pellet diet.

In July, Severstal shut the furnace and other steelmaking operations until further notice, citing a slow down in customer orders.

Last week, Severstal’s chief operating officer who instigated the pellet “diet,” Alexander Pogozhev, left the company after his employment contract was not renewed.

– Mark Reutter can be reached at reuttermark@yahoo.com.