Rep. Mike Kelly Statement on Department of Energy Finalized Rule on Grain Oriented Electrical Steel to Save Hometown Steel Plant

BUTLER, PENNSYLVANIA -- Today, the U.S. Department of Energy (DOE) issued their finalized rule revising energy efficiency standards for distribution transformers, a dramatic walk-back following public opposition led by U.S. Rep. Mike Kelly (R-PA), a decision that will maintain domestic Grain Oriented Electrical Steel (GOES) production and 1,300 family-sustaining jobs at Cleveland-Cliffs Butler Works in Butler, Pennsylvania.

Thursday's announcement comes after Rep. Kelly, a Butler resident, led a years-long legislative effort to reverse the DOE proposed rule to save these jobs. On Monday, Rep. Kelly held a standing-room only town hall at Butler County Community College in conjunction with Cleveland-Cliffs and UAW Local 3303 calling on DOE to reverse the rule. The Proposed Rule would have increased efficiency standards on distribution transformers, which are already no less than 97.7% energy efficient.

"After more than a year of uncertainty, the Butler Works plant will remain open and Grain Oriented Electrical Steel will continue to be made right here in Butler," said Rep. Mike Kelly (R-PA). "Make no mistake: the sudden reversal of this rule is a direct result of the Butler community's massive pushback against this wrongheaded decision. This is democracy in action. The Department of Energy and the Biden Administration proposed a reckless rule that threatened our regional economy. They should not be celebrated for simply doing the right thing. I'm encouraged, but not satisfied. We will always fight for these jobs. Thank you to union leaders at UAW Local 3303 and to the ownership of Cleveland-Cliffs for standing strong and opposing this rule to achieve a positive result for the workers and the community."

"Today's announcement from the Department of Energy is a victory for the 1,100 members of UAW Local 3303 in Butler, Pennsylvania," said Jamie Sychak, President, UAW Local 3303. "It has been a very long and trying year for Local 3303 and our plant. At the outset of this rule, we faced a plant closure. As they say, that which does not kill us makes us stronger, and we're a testament to that. We fought to protect our jobs, our plant, and our community. And today, we won. The DOE's final rule ensures a viable pathway for UAW-made steel to supply the transformer market long into the future. Throughout this process, we worked closely with Cliffs, our UAW leadership, local, state, federal officials, and the DOE to provide feedback on the proposed rule. Because of the strength of our union, labor is recognized today as a key stakeholder on the policies and decisions of our government. We are grateful that the highest levels our federal government recognize that the workers of America -- the people that make this country go -- have a voice and must be heard on the matters that affect them and our nation."

"We are grateful that the U.S. Department of Energy (DOE) was open to the feedback provided by Cleveland-Cliffs and our clientele of transformer manufacturers, and adopted major changes to the originally proposed transformer efficiency rule. The final rule ensures Cliffs' ability to continue producing highly-efficient GOES in the United States. Once this rule is enacted, we expect to actually see an increase in demand for our GOES, opening the possibility of future investments and expansion of our plants in Butler, PA and Zanesville, OH," said Lourenco Goncalves, Cleveland-Cliffs' Chairman, President and Chief Executive Officer.

BACKGROUND

In January 2023, the U.S. Department of Energy (DOE) published a proposed rule that risked exacerbating existing supply chain challenges for distribution transformers and creating a shortage of related components. This legislation follows a letter Rep. Kelly sent to U.S. Energy Secretary Jennifer Granholm in December 2023 opposing the Biden Administration's proposed rule to mandate the use of amorphous metal (AM) cores instead of Grain-Oriented Electrical Steel (GOES) cores. GOES cores are used in electrical distribution transformers across the country.

A Proposed Rule, or regulation, is a requirement imposed by a federal agency.

In February 2024, Rep. Kelly and Rep. Chris Deluzio (D-PA) introduced The Distribution Transformer Efficiency & Supply Chain Reliability Act of 2024, legislation that would prevent the new DOE rule from taking effect and instead create new standards that increase the energy efficiency of distribution transformers at levels that preserve market opportunities for GOES as well as amorphous steel.

The Proposed Rule increases efficiency standards on distribution transformers, which are already no less than 97.7% energy efficient. Similar legislation has been introduced by the U.S. Senate by Senators Ted Cruz (R-TX) and Sherrod Brown (D-OH).

In December, Reps. Kelly and Deluzio wrote this letter to Energy Secretary Jennifer Granholm opposing the proposed rule.