Detroit Bulk Storage did not go far enough to prevent air pollution, said Lynn Fiedler, chief of the air division of the Michigan Department of Environmental Quality.
"In order for the bulk storage and handling of petroleum coke to be considered for this location, at a minimum, an enclosure or similar containment measure is necessary, as well as further control of fugitive emissions during petroleum coke handling," Fiedler said in a letter to the company.
Detroit Bulk Storage respects the decision, attorney and spokeswoman Teri Whitehead said, adding, "At this stage, we are going to review all our options with regard to the storage of petroleum coke."
Petroleum coke is a byproduct of oil refining and is burned as fuel in cement kilns and power plants. Increasing volumes of the byproduct are being generated as refineries process more oil from Canadian tar sands.
Detroit's mayor ordered the company to remove massive piles of the black, grainy waste product from a site along the Detroit River near the Ambassador Bridge last year after many residents complained of an air and water pollution risk. The piles were from Marathon Petroleum Corp.'s refining exports from oil sands in the Canadian province of Alberta.
Similar protests have arisen in Chicago, where dust from growing piles blew into a neighborhood and park in 2013. The City Council in April banned new facilities handling the product and required existing ones to enclose their piles within two years.
Michigan DEQ spokesman Brad Wurfel said the agency had conducted extensive testing of petroleum coke and found it was similar to coal, with high levels of carbon and low toxicity.
"Sitting in a pile and being stored properly, it's not a threat to the environment or public health," Wurfel said. "But stored improperly, it will reliably generate nuisance dust that diminishes air quality."
A DEQ assessment in February found that prolonged exposure to "particulate matter," or tiny particles in the air, from the coke piles could cause respiratory and cardiovascular problems.
Detroit Bulk Storage's proposal for a new site in River Rouge called for using essentially the same techniques that generated controversy at the Ambassador Bridge location, he said. The DEQ might look favorably on a plan that would assure secure storage, he said.