ILLINOIS POLLUTION CONTROL BOARD
July 27, 1989
CONTAINER CORPORATION OF
)
AMERICA
(CAROL STREAM PLANT),
)
Petitioner,
v.
)
PCB 87—183
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
ROY M. HARSCH AND DANIEL
F.
O’CONNELL, OF GARDNER, CARTON AND
DOUGLAS, APPEARED ON BEHALF OF PETITIONER; AND
JOSEPH R.
PODLEWSKI, JR.,
OF THE ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY, APPEARED ON BEHALF OF RESPONDENT.
OPINION AND ORDER OF THE BOARD
(by J. Anderson):
This matter comes before the Board upon a request
for
variance filed by Container Corporation of America
(“CCA”),
on
November
30,
1987,
as amended on January
20,
1988,
as secondly
amended on February 23, 1988 and as thirdly amended on May 1,
1989.
In its third amended petition, CCA is requesting a
variance from the Board’s regulations governing emissions from
flexographic and rotogravure printing operations under
35
Ill.
Adm. Code 215.401—215.407 and 215.245 until December
31,
1990.
PROCEDURAL
HISTORY
CCA’s original petition requested a variance until December
31, 1989
to allow CCA to pursue a site—specific rule and
in
the
alternative until December
31,
1992
to allow CCA
to
install
control systems, should the Board deny CCA’s petition for a site—
specific rule.
In response to a December
3,
1987 Board Order, CCA filed an
amended petition on January
20,
1988.
This amended petition
advised the Board that CCA had filed a petition for site—specific
relief from Section
215.245 as
a primary compliance method,
with
installation of control
equipment
as an alternative compliance
method.
However, CCA did not address the challenge
to the
validity of Section 215.245 raised
in its original petition,
which the Board had required CCA to brief in its December
3,
1987
Order.
By an Order of January
21, 1988,
the Board noted CCA’s
101—235
—2—
failure
to address the
issues raised
in challenging the validity
of Section 215.245 and again ordered CCA to brief those issues.
In response to the Board’s January
21,
1988 Order, the
Agency and CCA filed their respective pre—hearing briefs and CCA
filed its second amended petition on February 23, 1988.
CCA’s
second amended petition asserted, among other contentions,
that
the Board’s Subpart P rules were invalid because they were not
properly adopted.
(2d Amended Pet.
at
8).
On June
2,
1988,
the Board issued an Interim Order
in regard
to the issues discussed in CCA’s pre—hearing brief.
In that
Order the Board found that challenges to the validity of the
regulations as applied are limited “within the variance
proceeding to matters concerning uncertainty of meaning of
the
regulations.”
(Container Corp.
of America
v.
IEPA,
PCB 87—183,
June
2,
1988 at 3).
The Board also found that “such burden of
proof
as may exist
in the instant matter
resides with
Petitioner.” (Id).
Fina11~’, the Board found
that
the standard
to be met by the petitioner
for this variance proceeding was
arbitrary or unreasonable hardship as specifically provided for
in Section 35 of the Environmental Protection Act
(“Act”) and not
technical feasibility or economic reasonableness as maintained by
CCA.
The Board then directed the Hearing Officer
to proceed to
hearing.
On June 21,
1988,
the Agency filed a recommendation that the
Board deny CCA’s petition for variance.
Hearings on this matter
were held on December
14,
1988 and April
14,
1989;
no members of
the public attended either hearing.
CCA filed
a third amended
petition on May
1, 1989,
“to conform to its proof at hearing.”
(3rd Amended Pet.
at.
1).
By order
of May 11,
1989,
the Board
construed CCA’s third amended petition as intended solely
to
clarify the exact nature of
the relies sought,
rather
than
to
commence variance proceedings
anew.
CCA filed
a post—hearing brief on May
12,
1989.
The
Agincy
filed
a post-hearing brief
on May
26,
1989 and CCA filed a reply
brief
on June
5,
1989.
BACKGROUND
Until September 1986, CCA was a wholly owned subsidiary
of
Mobil Corporation.
On September
30,
1986, JSC/MS Holdings,
Inc.
completed acquisition of CCA.*
Upon acquisition, JSC/MS merged
*
On September
30,
1986,
JSC/MS Holdings,
Inc.
was
a newly fcr:~ed
company;
the common
stock
at
that point was owned 50
by
Jefferson Srnurfit Corporation and 50
by the Morgan Stanley
Leveraged Equity Fund,
L.P.
and their
investors.
(Resp.
Ex.
3
~t
1).
—3—
with
and into CCA, with CCA surviving the merger.
(Resp.
Ex.
3 at
1)
CCA’s Carol Stream Plant,
in DuPage County, manufactures
folding cartons.
Plant operations include the use of two
rotogravure presses, which are the subject of this variance
proceeding.
Press No.
9 has no control equipment for volatile
organic materials (“VOM”).
The tons of VOM used in Press
No.
9
in 1986,
1987 and 1988 were approximately 471,
186 and 170
respectively.
(3rd Amende~dPet. at
3, Agency Response Brief
at
14,
CCA Post—Hearing Brief at
4).
The tons of VOM Press No.’ 10 used
in 1986,
1987 and 1988
were 235,
145 and 360 respectively.
(Agency Response Brief at
14,
CCA Post—Hearing Brief
at
4).
Press No.
10
is equipped with a
VOM incinerator system which has an efficiency rate of
approximately 55.
(R.
at
52).
Since CCA emits
less than 1,000 tons of VOM yearly,
ii~was
exempt from the Board’s emission limitations
for rotogravure
printing operations until November
9,
1987.
(35 Ill. Adm.
Code
215.401,402).
When the Board amended its regulations governing
VOM emissions
from rotogravure and flexographic printing
operations,
the amount of VOM emissions triggering the exemption
from
the requirements of Section 215.401 for sources
in ozone
non-attainment areas decreased from 1,000 TPY to 100 TPY.
(In
re: Proposed Amendments to
35
Ill. Adm. Code 215: Flexographic
and Rotogravure Printing, R85—21,
Docket
B;
35
Ill. Adm. Code
215.245).
Affected facilities were required to be
in compliance
by December
31,
1987.
Since CCA filed
its original variance
petition within twenty days of the effective date of Section
215.245,
the effect of
that rule as it applies
to CCA is stayed
pending the disposition of this variance proceeding.
(Ill.
Rev.
Stat.
ch.
111—1/2, par. l038(b)(l987);
35
Ill. Adm. Code
104.102)
DISCUSSION
Hardship
In
its
third
amended
petition,
CCA
states
that
it
will
bring
its plant into compliance by installing add—on control equipment.
(3rd
Amend Pet.
at
5).
However, CCA asks the Board to grant
it
twelve
months,
until
December
31,
1989
to
“bring
the
plant
to
a
profit—making basis
so that
it can qualify
for capital
funds
needed for the control
equipment.”
(Id.)
At that time CCA states
that
it “will commit
to either
install the controls, reduce
solvent usage on presses
9 and
10 below 100 tons per year or
cease operation of the presses by December
31,
1990.”
(Id.)
CCA
states that in the event
that
it
determines the plant
is
generating sufficient revenues,
it will upgrade and install
control equipment on a schedule allowing compliance by December
101—237
—4—
31,
1990.
(Id.
at 6).
CCI½, further asserts that its Carol Stream
plant is currently running at an operating loss and that it
“would be economically unreasonable to require the installation
of control equipment
...
at a plant which already has a
substantial operating loss.”
(Id. at 10).
In recommending that CCA’s variance not be granted, the
Agency states,
inter alia,
that CCA has not established the
requisite hardship associated with the immediate installation of
PACT controls. (Agency Response Brief, at 5,22).
Specifically,
the Agency states that the issue in this case is not whether
compliance with
the Board’s regulations
is economically
unreasonable as asserted by CCA, but whether compliance will
cause an unreasonable or arbitrary hardship for CCA.
(Id. at
22).
In support of this position, the Agency cites the Board’s
previous language in its June 2, 1988 Order
in this proceeding.
The Board agrees with the Agency, and indeed has stated
in
its June
2,
1988 Order, that arbitrary or unreasonable hardship,
not economic unreasonableness,
is the requisite standard
in
variance proceedings.
The issue then
is whether the
profitability of CCA’s Carol Stream plant,
independent from the
parent corporation,
is the sole consideration in determining an
arbitrary or unreasonable hardship.
Essentially, CCA argues that since
its Carol Stream plant
has not been profitable
in recent years
it should be given until
December
31,
1989
to “return to a more profitable basis.”
(CCA
Post—Hearing Brief
at
1).
CCA supports its position that any
hardship considerations should focus on the plant’s
profitability, as opposed to the corporation’s, by arguing that
the plant is independent from the corporation,
financially,
structurally and operationally.
(Id. at
15,
R.
at 114).
In response,
the Agency argues
that
hardship considerations
are not determined solely by the economic impact compliance would
have on the plant but on the economic
impact compliance would
have on CCA as a corporation.
(Agency Response Brief at
23,
citing Alton Packaging Corp.
v.
IEPA, PCB 83—49
(February
25,
1988),
appeal docketed,
No.
5—88—0322
(5th Dist.))
Citing
testimony by CCA witnesses made at hearing,
the Agency further
argues that CCA has the financial capability to bring
the plant
into compliance,
regardless of the plant’s
individual
profitability.
(Agency Response Brief at
25,
R.
at
163).
The •Board
is persuaded in this instance
that considerations
of arbitrary or unreasonable hardship of compliance include
hardship on the corporation,
not solely on the individual plant.
After all,
it
is Container Corporation of America that is seeking
this variance for its Carol Stream Plant.
The Board holds
that a
variance cannot be granted simply to allow time to determine the
101—2~8
—5—
profitability of an individual plant before making any
committment whatsoever to a compliance plan.
The Board is also persuaded that CCA has the financial
capability to bring this plant into compliance.
As stated in
CCA’s Annual Report for
1986*,
“further substantial sums for
pollution control
may be required
in the future, although, in
the opinion of management of CCA, such expenditures will not have
a material effect on its financial condition.”
(Resp.
Ex.
3 at
10;
R.
at
157).
The Boai~dis further persuaded by the.Age’~cy’s
argument that “this
is not a case where funding for pollution
control equipment simply cannot be obtained.”
(Agency Response
Brief at
27).
As asserted by the Agency,
it
is clear
frOm CCA’s
financial data,
CCA’s own admission and from testimony by CCA’s
Controller
that funds
for CCA’s pollution control equipment are
eminently available.
(Id.,
citing Resp.
Ex.
at
3—8,
Resp.
Ex.
9
at par.
27 and R.
at 170—172).
The Board agrees with the Agency that the fact that the
Board has granted variances from Section 215.245 and/or 35
Ill.
Adm. Code Part 215, Subpart
P since December
31, 1987
is
irrelevant
to CCA’s variance
request
in this case.
(Agency
Response Brief at 29).
Each of
the variances cited by CCA were
decided on the individual merits
in each case.
In no case has
the Board granted time to determine the profitability of
a plant
prior to the selection of a compliance plan,
as requested by CCA
in this instance.
The Board believes that any hardship on CCA
is
to a large
degree self-imposed.
Since CCA filed
its original petition on
November
30,
1987,
little progress has been made toward
identifying or committing to a definite compliance
plan.
Compliance Plan
CCA states
in its third amended petition that it proposes
to
bring
its plant into compliance by installing control
equipment.
In the same paragraph, CCA also requests
that the
Board grant CCA until December
31,
1989 to determine
profitability of the plant,
at which time
it will “either install
the controls,
reduce solvent usage on presses
9 and
10 below 100
tons per year or cease operation of the presses by December
31,
1990.”
(3d Amended Pet. at
5).
Again,
in CCA’s post—hearing
brief, CCA states that
it will install control equipment
“if
the Plant
is generating sufficient revenues” on December
31,
1989.
(CCA Post—Hearing Brief at
11).
*
The most
recent Annual Report prior
to CCA’s filing a variance
petition on November
30,
1987.
101—2 39
—6—
The Board finds that this
is not a definite compliance
schedule that will bring CCA into unquestioned compliance,
as
asserted by CCA.
Although this variance petition was filed
in
November,
1987, CCA has still not committed to a definite
compliance plan.
CCA’s conditioning commencement of a compliance
schedule upon the plant’s profitability alone disqualifies CCA
for lack of a definite compliance plan.
CCA’s further
vacillation over which compliance method it ~
choose if the
plant
is profitable,
sheds more doubt upon the definiteness of
compliance within a reasonable period of time.
CCA’s inclusion
of a possible installation schedule to commence after
a
profitability determination
is speculative; as
it
is premised on
several conditions precedent,
it does not provide anymore
definiteness.
Additionally, the pollution control technology
in
this area
is well known and readily available.
In sum, CCA has
failed
to commit
to a specific compliance plan.
Environmental Impact
CCA contends that VOM emissions from its Carol Stream plant
have no identifiable adverse environmental impact.*
CCA argues
that the plant’s environmental impact
is negligible because of
the limited operations at the plant
as well as the incinerator on
Press No.
10.
(CCA Post—Hearing Brief at
6).
In response,
the Agency states
that:
als
a major
hydrocarbon
source
located
in an
ozone non-attainment area, CCA contributes,
to
an
unquantified
degree,
to
the
‘frequent
pervasive
and
substantial’
violations
of
the
ozone
ambient
air
quality
standards
detected
in
Northern
Illinois
over
the
past
several
years.
(Agency Response Brief
at
28, citing Ekco Glaco Corporation
v.
IEPA,
PCB 87—41
(December 17,
1987)
appeal docketed,
No.
88—
803
(1st Dist.).
In support
of its position,
the Agency points
out that
“over
the three year period 1985—1987,
CCA averaged 490
tons of VOM emissions to the atmosphere yearly.”
(Id.).
The Board finds unacceptable CCA’s contention that the
environmental
impact emissions from the Carol Stream plant are
negligible.
The VOM emissions from CCA’s plant,
as indicated
in
the record,
are indeed significant.
*
CCA’s estimated contributiofl
to ozone emissions
in the Chicago
area as less than 0.1
is unsubstantiated
in the record,
except
as information obtained from CCA’s Corporate Counsel
in Clayton,
Missouri.
(R.
at
166,
3d Amended Pet.
at
7).
101 240
—7—
Consistency With Federal Law
CCA maintains that the Board may grant the requested
variance consistent with the Clean Air Act and federal
regulations.
CCA contends that the variance would not be a
delayed compliance order as defined in
40 CFR 65.01(e).
CCA
further argues that if the granting of the variance would require
a revision to the Illinois State Implementation Plant
(SIP), the
variance would be approvable as
a SIP revision because VOM
emissions ~fromthe Carol Stream platit would not interfere w±th
the attainment or maintenance of ambient air quality standards.
Finally, CCA alleges that the Clean Air Act does not require
imposition of
Subpart P (Sections
215.401
through 215.407)
controls on the Carol
Stream plant because those controls do not
constitute Reasonably Available Control Technology
(PACT)
for
that plant.
In response, the Agency first notes that Section 215.245 has
not yet been approved by the United States Environmental
Protection Agency (Agency) as part of
the Illinois
SIP.
Thus,
the Agency does not believe that
the requested variance would
need to be submitted as a SIP revision unless Section 215.245
is
approved by USEPA before the expiration of
the variance,
if
granted.
However,
the Agency states that
it has reviewed the
variance petition, the applicable air quality standards,
the most
recent Illinois air quality report, and other information.
Based
upon that review,
the Agency maintains that the variance,
if
granted, would not be approvable as
a SIP revision.
(See e.g.
53
Fed. Reg.
45104
(November
8,
1988)).
Because
the requested
variance would not be consistent with federal
law,
the Agency
contends that the Board cannot grant the variance.
Since CCA has failed to commit
to
a specific compliance
plan,
any hardship suffered by CCA is self-imposed and therefore
not arbitrary or unreasonable, and the environmental
impact
during the requested variance is not minimal.
Therefore,
the
Board will not grant
the variance,
and thus need not decide
whether the variance would be consistent with federal
law.
The
Board notes,
however,
that CCA’s contention that Subpart
P
controls are not RACT for
its Carol Stream plant
is not germane
to the issue of consistency of
the requested variance with
federal
law.
Indeed, as the Board has previously held,
that
claim
is not relevant
in
a variance proceeding,
where the
standard
is arbitrary or unreasonable hardship,
not economic
reasonableness.
(Contai.~ner Corp.
of America
v.
IEPA,
PCB 87—183,
June
2,
1988.)
CONCLUSION
The Board finds
that CCA has not presented adequate proof
that compliance with the Board’s regulations would
impose
an
arbitrary or unreasonable hardship upon CCA.
Based on the
101—24 1
—8—
record, particularly CCA’s own admissions,
it is evident
that CCA
has the funds available to bring its plant into compliance with
the Board’s regulations.
Additionally,
the environmental impact
of CCA’s VOM emissions as major ozone precursors
in the Chicago
area and CCA’s significant lack of
a definite compliance plan
further militate against the grant
of a variance
in this matter.
This Opinion constitutes the Board’s findings of fact and
conclusions of law in this matter.
ORDER
The Petitions for Variance filed on November 30,1987,
January
20,
1988,
February 23, 1988 and May
1,
1989 by Container
Corporation of America for
its Carol Stream Plant,
for variance
from 35
Ill. Adm. Code 215.401—215.407 and 35
Ill. Adm. Code
215.245 are hereby denied.
Section
41 of the Environmental Protection Act,
Ill. Rev.
Stat.
1987 ch.
111 1/2 par.
1041,
provides
for appeal of Final
Orders of
the Board within
35 days.
The Rules of the Supreme
Court of
Illinois establish filing requirements.
IT
IS SO ORDERED.
J. Marlin and B.
Forcade concurred.
I, Dorothy
M. Gunn,
Clerk of
the Illinois Pollution Control
Board,
hereby certify that th~--a~ove
Opinion and Order was
adopted on the.~’7~day of
~
,
1989,
by a vote
of
______.
/~_~
(2
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~
Dorothy M. c~1nn, Clerk
Illinois Po~utionControl Board
‘~Oi~2~’2