ILLINOIS POLLUTION CONTROL BOARD
November
19,
1987
RIVERSIDE COATINGS,
INC.
Petitioner,
v.
)
PCB 87—94
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
JEFFREY
C.
FORT AND BRADLEY R.
O’BRIEN
MARTIN,
CRAIG, CHESTER
AND SONNENSCHEINJ APPEARED ON BEHALF OF PETITIONER,
and
PAUL JAGIELLO APPEARED ON BEHALF OF RESPONDENT.
OPINION AND ORDER OF THE BOARD
(by J.
Anderson):
Procedural History
This matter comes before the Board on the petition for
variance filed
by Riverside Coatings,
Inc.
(Riverside Coatings)
on July
2,
1987
as amended July
9, August
3 and August
11,
1987.
The subject matter of the petition relates
to Riverside’s
status
in the Board’s RCRA (35 Ill. Adm.
Code Part 700 et seq.)
program for
the issuance of permits to facilities which treat,
store,
or dispose
of hazardous waste.
Riverside Coatings
petitioned
the Board
to hold that:
(a)
its
Part A permit
is
issued,
or
(b)
in
the
alternative,
that
it
be
granted
a
variance
from
the
requirement
that
it
file
a
Part
A
permit
application within the time period specified
in 35
Ill. Adm. Code Section 703.150
and
that
its Part A
permit
application
be
deemed
filed
with
the
Agency.
As this petition requests a variance from the RCRA rules,
the
proceeding was conducted pursuant to the RCRA—specific notice and
comment procedures of
35 Ill. Adm.
Code 104.142
as well as the
general variance procedures of the remainder
of Part 104.
Written public comments objecting
to the grant of variance were
filed on July 21 and 28; these comments reflect the views of
44
residents of the City of Geneva.
83—99
—2—
On August
11,
1987,
the Illinois Environmental Protection
Agency
(Agency)
filed
its Recommendation that variance should be
granted from
35
Ill.
Adm. Code 703.155(d)
(rather
than Section
703.150
as suggested by Riverside Coatings) provided that
Riverside Coatings demonstrates that
it
is
in compliance with the
requirements of 35
Ill. Adm. Code Part 725,
Subpart
G (Closure
and Post Closure)
and Subpart H (Financial Requirements).
The
Agency also noted that 35
Ill. Adm.
Code 104.182(d)
requires that
a Recommendation
that variance be granted must contain
a draft
permit.
The Agency believes that this
is inapplicable under
these circumstances, as the Part A permit application attached to
Petitioner’s Amended Petition
for RCRA Variance as Attachment B
(Pet.
Ex.
1,
Attachment
B) would be the relevant permit
in this
proceeding.
The Agency stated
that.
it did not suggest attachment
of conditions
to the Part A permit itself,
as the Agency’s
position
is that Petitioner must demonstrate
its compliance with
35
Ill.
Adm. Code 725 Subparts G and
H prior
to
the granting
of
the variance requested.
Hearing was held
on September 15,
1987,
at which
some
members of the public were present,
including some persons who
had
filed written objections
The
45 day period
for written
comments concerning the Agency Recommendation expired on
September
28,
1987.
The only comment was that filed by Riverside
Coatings, which was accompanied by
a motion
for expedited
decision.
The Board has prioritized
this decision in response
to
Riverside’s motion.
The Riverside Coatings Operation
Riverside Coatings,
Inc.,
is
a
small five employee company
located approximately thirty—five miles west of Chicago
in
Geneva,
Illinois.
Geneva has
a population of approximately 9,000
persons.
Riverside Coatings operates a “recycling process”
for off—
site paint overspray and flushed solvents.*
Flushed solvents are
materials used
to clean out the paint lines
for each color
change.
Overspray is the spray that
is sprayed past parts that
are
to be coated.
There are two types
of paint overspray.
The
two oversprays are conventional baked
enamel and high—solid baked
enamel.
Conventional baked enamel
is typically collected by an off—
site operator
in drums from waterwash spray booths and sent to
Riverside Coatings for recycling.
After
it
is received by
Riverside Coatings, vacuum distillation
is used
to distill off
*
In using
the term “recycling”
the Board does not intend
to
imply that it
is holding
that this is
a recycling process
pursuant to 35 Ill.
Adm.
Code 720.131(b).
83—100
—3—
water
and solvents.
The remaining solid material
is then blended
with color pastes and solvents
in order
to bring
it back to the
specified color and viscosity.
The recycled material
is then
shipped back to the customer.
Riverside Coatings asserts that
there
is no loss of reclaimed solvents or paint which would
ordinarily become hazardous waste
for landfilling or
incineration.
In
addition,
the distillation unit
is self—
contained and completely enclosed and Riverside Coatings asserts
that
it discharges
no pollutants
to the air
or water.
High solid baked enamel
is an expensive material that is
advantageous to use since
it remains wet.
Since
it remains wet,
the overspray can
be easily collected in baffles and backboards
where it
is collected
by troughs or drums
for shipping.
After
the high—solid baked enamel
is received by Riverside Coatings it
is put into mixing kettles,
combined with solvent for viscosity
and blended
for color.
Distillation is not necessary.
The
recycled material
is then returned
to the customer.
Riverside
Coatings asserts that there is no loss of reclaimed solvents or
paint which would become hazardous wastes and would be either
landfilled
or
incinerated.
The flushed solvents that are recycled by Riverside Coatings
contain 35—60
solid paint.
After
it
is received by Riverside
Coatings, the flushed
solvent
is processed through vacuum
distillation.
Solvent remaining after the distillation process
is sent back
to the customer.
The remaining solid
portion
is
blended with virgin materials to meet color and viscosity
specifications and
is returned to
the customer.
Riverside
Coatings asserts that there are no still bottoms for disposal,
nor
is there any pollutant discharged into either the air or
water.
The recycling facility currently owned
and operated
by
Riverside Coatings,
Inc., was owned and operated by Riverside
Laboratories
from 1956
to 1986.
The recycling operations
performed by Riverside Laboratories were similar to Riverside
Coatings,
Inc.’s, current operations,
including the recycling of
paint overspray and flushed solvents.
Riverside Coatings
is located
in the same building
as
is
Riverside Laboratories, which conducts
a paper saturating
business.
Riverside Coatings occupies about one—quarter of
the
building’s floor space,
and its operations are separated
from
those of Riverside Laboratories by a cinder block wall
and fire
door.
Permit History
In late 1985,
the Agency advised Riverside Laboratories that
the Agency believed that certain aspects of the paint recycling
operation were regulated
as
a hazardous waste activity.
It
83—101
—4—
appears that Riverside Laboratories disagreed,
but that Riverside
Laboratories did file
a Part A permit application with
the
Illinois Environmental Protection Agency on February 20,
1986.
(Pet.
Ex.
1,
Attachment
A)
While the Agency reviewed
the
application,
at no time did the Agency advise Riverside
Laboratories that the Part A application was not timely.
Thus,
pursuant
to
35
Ill. Adm. Code Section 703.153, Riverside
Laboratories gained interim status
for its recycling facility.
As aforementioned,
in April,
1986,
Riverside Coatings,
Inc.,
purchased its present facility
from Riverside Laboratories.
Riverside
Coatings
asserts
that
the
only
change
resulting
from
the
purchase
was
a
change
in
ownership,
with
no
material
change
in the recycling operations.
Riverside Coatings asserts that the
permit application filed on February 20,
1986 by Riverside
Laboratories accurately portrays the current operations
of the
Riverside Coatings,
Inc.,
facility.
35
Ill.
Adm. Code 703.155(d)
“Changes During Interim Status”
provides that:
Changes
in the ownership or operational control of
a
facility
may
be
made
if
the
new
owner
or
operator
submits
a
revised
Part
A
permit
application
no
later
than
90
days
prior
to
the
scheduled change.
When a transfer of ownership or
operational control
of
a facility occurs,
the old
owner
or
operator
shall
comply
with
the
requirements
of
35
Iii. Mm.
Code 725,
Subpart
H
(financial
requirements)
,
until
the
new
owner
or
operator has demonstrated
to the Agency that
it is
complying
with
that
Subpart.
All
other
interim
status
duties
are
transferred
effective
immediately
upon
the
date
of
the
change
of
ownership
or
operational
control
of
the
facility.
Upon demonstration
to the Agency by the
new
owner
or
operator
of
compliance
with
the
Subpart,
the Agency shall
notify
the old owner
or
operator
in
writing
that
it.
no
longer
needs
to
comply
with
that
Part
as
of
the
date
of
demonstration.
Riverside Coatings did not file
a Part A application
90 days
prior
to the ownership change, and Riverside Laboratories has not
maintained the financial assurance on behalf of Riverside
Coatings.
Riverside Coatings did
file
a Part A permit
application on June
24,
1987.
However, Riverside Coatings has
not,
as yet obtained
insurance to meet the financial requirements
of Section 725, Subpart
H.
83—102
—5—
The Record Developed At Hearing
At hearing, Riverside Coatings presented as witnesses its
president,
Tom
Fallon,
and
its
environmental
consultant,
Vic
Cravillo.
Mr.
Fallon
discussed
the
operations
of
Riverside
Coatings, the circumstances of his purchase of the company,
and
his
attempts
to
secure
environmental
impairment
insurance
to
comply
with
Subpart
H requirements, Mr. Cravillo discussed the
various
documents
which
he
had
prepared
on
behalf
of
Riverside
Coatings
for
submittal
to
the
Agency,
including
its
waste
characteristic
in—flow plan,
inspection plan, contingency plan
and
emergency
procedures,
their
manifest/recordkeeping,
operation
log,
personnel
training,
and
closure
plan.
The Agency reiterated
its
position
that
variance
should
be
granted
from
what it
characterized
as
“merely
paperwork
requirements”
in
light
of
the
Riverside
Coatings
application
for
liability
insurance
and
submittal
of
information
to
demonstrate
compliance
with
other
applicable
regulations.
Geneva
residents
John
Brayton,
Curtis
Kenyon,
and
Donald Slavecek also appeared
to ask questions and to
present
their
concerns.
Mr.
Fallon
explained
that
he
had
been
a
sales
agent
for
various companies,
including Riverside Laboratories,
for about
20
years,
and
that
when
the
recycling
operation
now
known
as
Riverside Coatings became available,
he bought it.
In his direct
testimony
Mr.
Fallon
stated
that
Riverside
Coatings
did
not
file
a
Part
A
application
because
he
believed that Riverside
Laboratories Part A Permit transferred automatically to his new
company.
On cross-examination,
Mr. Fallon acknowledged that he
did not check with anyone to verify his assumption that Riverside
Laboratories was
in compliance with all rules.
Mr.
Fallon also
stated
that,
as a recycler, he did not believe he was subject
to
the RCRA requirements as his operations met some,
but not all,
of
the criteria
of
35
Ill. Mm. Code 720.131(b).
That section
establishes procedures by which
the Board may determine that
a
material
is not
a “solid waste”
for RCRA purposes;
the Board will
not detail Riverside Coatings’ arguments concerning this section,
as the section by its terms requires that all, not just some,
of
the criteria be met.
As
to Riverside’s operations, Mr. Fallon supplemented
the
petition by stating that Riverside Coatings limits the amount of
material
it has on its premises for storage pending processing
to
50 drums,
and that any one drum is typically on its premises for
no more than
two weeks.
The drums are stored on
a concrete pad
in an enclosed loading dock which
is locked at night.
The
storage area
is equipped with a sprinkler system.
As to financial requirements, Mr. Fallon testified that his
company
is
in compliance with the closure assurance requirements,
as the company has established
a trust containing
$1,813, the
estimated costs
for removal and disposal of any wastes on site
83—103
—6—
and for decontamination of the area.
Riverside Coatings does not
presently have the required environmental impairment insurance to
cover
sudden occurances but Mr. Fallon explained that his efforts
this year
to obtain such insurance had been fruitless until
recently.
As
of April,
the two insurance
brokers whom
he had
contacted could not locate
a company who would provide coverage
(Pet.
Exh.
4).
In September, however, Riverside Coatings located
an
insurer, the American Insurance Group
(MG),
which
does
provide coverage “although it
is
very
expensive”.
Based
on
Mr.
Fallons’
description of his operations, AIG “did not foresee any
difficulty”
with Riverside’s obtaining coverage.
However, AIG’s
final decision is contingent on its analysis of an environmental
risk assessment
to be performed by an engineering firm approved
by AIG.
Mr.
Fallon anticipates
a decision by AIG
in
approximately three months.
(R.
25—26,
Pet.
Exh.
5).
Mr. Fallon introduced
into the record
a March
2,
1987
memorandum from USEPA headquarters to the regional offices.
The
memorandum provides guidance concerning facilities which are
seeking Part B RCRA permits and which could not comply with
liability coverage requirements due
to the “constrained insurance
market”.
USEPA stated
its belief that it would
be appropriate
to
allow facilities who were otherwise in compliance with all
applicable regulations an
“additional few months”
to obtain
insurance coverage.
Six months was suggested as sufficient extra
time,
although facility—specific adjustments could
be made.
(JSEPA suggested that permits should be denied for failure to
obtain insurance only at the end of
the additional extension of
time.
(Pet.
Exh.
6)
John Brayton expressed concerns shared by
27 other
citizens
who reside near Riverside Coatings’
facility.
One concern,
which
was also articulated
by Curtis Kenyon, was about odors and
fumes.
However, these witnesses were not aware that Riverside
Coatings
is
an operation independent of Riverside Laboratories,
and were not able
to state which operation was the source of the
odors.
Mr. Brayton, who
is
a member of the Geneva Fire Department,
also expressed concerns arising
from his experience and belief as
to the hazardous nature of the solvents and other materials
processed by Riverside Coatings.
Mr. Brayton felt that
Riverside’s security system
is defective, noting that there
is no
security officer on the grounds and that trucks containing drums
of chemicals have been left parked outside the facility.
Although admitting that he had not had an opportunity to review
Riverside Coatings’ contingency plan,
Mr. Brayton felt that due
to the explosive nature of the chemicals on the grounds, that
Riverside should have
a vapor detection system in its facility,
since
an explosion “would take out the sprinkler system and
everything
else with it”.
Mr. Brayton concluded
that, while
he
would “not like
to see the facility shut down, that
he was very
83—
04
—7—
concerned about
the lack of liability insurance to clean
up and
pay
for medical expenses
in the event of any accidents.”
Mr.
Brayton was also generally critical about
the lack of
communication
by
the
facility
with
the
community
about
the
nature
of the chemicals and the operation.
These concerns were
reiterated by Donald Slavecek.
The
Board’s
Determination
This situation poses
a very close judgment call
for the
Board.
The RCRA Part A and Part B permit system was structured
to allow continued operation of facilities
in existence at the
time
the
rules
came
into
effect.
While
the
rules
clearly
contemplate
a purchase situation
of the sort presented here, they
require
timely
notice
and
filings.
Riverside
Coatings’
explanation of its failure
to comply
is very thin.
The Board acknowledges the general validity of Riverside
Coating’s
arguments
that
there
has
been
some
confusion
over
the
scope of the facilities covered by the RCRA rules.
However, such
arguments are not relevant
to this case.
Mr. Fallon testified
that he merely assumed that
in purchasing the facility that all
permits were transferred
to him, and apparently made no
investigation of what requirements applied
to his facility.
Accordingly,
Mr. Fallon could hardly have been confused about
legal arguments concerning whether his facility was the type that
needed
a
RCRA
permit.
His hardship,
then,
is largely self—
imposed.
On
the
other
hand,
the
materials
reclamation
service
provided by Riverside Coatings,
if performed in accordance with
applicable regulations,
is an environmentally beneficial one.
Moreover,
the
Board
acknowledges
that
this
situation
is
somewhat
analogous to one
in which
a very small business
is purchased by
an employee of that business.
In such cases, while the purchaser
may have the experience to continue operating the business as was
done
previously,
the
purchaser
may
lack
experience
overall,
such
as
experience
in
business
management,
including
investigation
of
all
regulatory
requirements.
It
is
clear
in this case that since belatedly entering into
the
RCRA
compliance
process
in
conjunction
with
the
filing
of
this variance petition, that Riverside Coatings has made
considerable
progress
in
areas
which
can
generally
be
characterized
as
risk
assessment
and
management.
As
a
result
of
the
filing
of
the
petition,
Riverside
Coatings’
operations
and
risk
management
plans
are
receiving
scrutiny
by
the
Agency
earlier
than
might
be
expected
given
the
sheer
volume
of
Part
B
permit
applications
with
which
the
Agency
must
deal.
The
Board
places
weight
on
the
fact
that
the
Agency
continues
to
recommend
grant
of
variance
from
the
Part
A
application
filing
deadline,
based
on
its
assessment
that
there
should
be
no
adverse
83—105
—8—
environmental
impact as long as Riverside Coatings demonstrates
compliance with all other
applicable regulations.
Concerning
the liability insurance issue, Riverside Coatings
has adequately made its case that the required insurance was not
obtained
earlier
this
year
because
this
type
of
coverage
was
simply not being provided by insurance carriers.
As this
circumstance was beyond Riverside Coatings’
control,
the alleged
hardship
in
this
respect
is
not
entirely
self—imposed.
Finally, while denial
of variance would not inevitably lead
to the shutting down of this facility (although an enforcement
action
certainly
could
be
brought
seeking
this
result),
Riverside
Coatings
could
be
liable
for
substantial
monetary
penalties
for
operation
of
its
facility
without
a
RCRA
permit.
It
is
questionable
whether
such
liability
would
aid
in
enforcement
of
the
Act,
since,
as
aforestated,
the
Board
gives
weight
to
the
fact
that Riverside Coatings has already provided most of the
required
Part
A
information,
that
environmental
impairment
insurance
coverage
has
recently
been
difficult
to
obtain,
and
that
Riverside
Coatings
would
appear
to
have
a
reasonable
likelihood
of
receiving
such
insurance
in
the
near
future.
The
Board
finds
that,
based
on
all
of
the
facts
presented
here,
that
denial
of
variance
would
impose
an
arbitrary
or
unreasonable
hardship.
The
Board
will
grant
variance
from
35
Ill.
Adm.
Code
703.155(d)
until February
19,
1988,
by
which
time
Riverside
Coatings
will
be
required
to
file
proof
of
insurance
with
the
Agency.
In
so
finding,
the
Board
does
not
discount
the
concerns
expressed
by
Riverside
Coatings’
neighbors.
As
to
the
odor
complaints,
the
Board
notes
that
this
variance
insulates
Riverside Coatings from enforcement only against a charge that it
is
operating
without
a
permit.
Enforcement
for
violations
of
other
regulations
is
still
possible.
As
to
Mr.
Brayton’s
concern
about
the
absence
of
a
vapor
detection
system
in
the
Riverside
Coatings
facility,
this
record
is
insufficiently
detailed
to
allow
the
Board
to
draw
any
conclusions
about
the
matter.
The
Board
trusts
that
the
Agency
will consider the matter
as
a part of its permitting oversight of
this
facility.
This
Opinion
constitutes
the
Board’s
findings
of
fact
and
conclusions
of
law
in
this
matter.
ORDER
1)
Riverside
Coatings,
Inc.
is
hereby
granted
variance
from
35
Ill.
Adm. Code
703.155(d),
subject
to
the
following
conditions:
83—106
—9—
a)
This
variance
will
terminate
on
February
19,
1988
or
upon Riverside Coatings’
submittal to the Agency of
proof that its facility complies with all requirements
of
35 Ill. Mm.
Code,
Subpart H
(Financial Requirements)
particularly
as
it
relates
to
environmental
impairment
insurance,
whichever
first
occurs.
b)
During
the
term
of
this
variance,
Riverside
Coatings
shall
provide
the
Agency
with
any
additional
information
specified
by
the
Agency
in
writing
as
necessary
to
demonstrate
compliance
with
35
Ill.
Mm.
Code
Part
725,
Subpart
G
(Closure
and
Post
Closure).
c)
Riverside
Coatings
shall
operate
its
facility
in
accordance
with
the
methods
and
procedures
outlined
in
its
Part
A
application
and
in
documents
submitted
in
support
thereof.
Riverside
Coatings
shall
take
such
additional
measures
as
are
necessary
to
prevent
emissions
of
nuisance
odors
from
its
facility.
2)
Within
45
days
of
the
date
of
this
Order,
Petitioner
shall
execute
and
forward
to
Paul
Jagiello,
Enforcement
Programs,
Illinois
Environmental
Protection
Agency,
2200
Churchill
Road,
Springfield,
Illinois
62794—9276,
a
Certification
of
Acceptance
and
Agreement
to
be
bound
to
all
terms
and
conditions
of
this
variance.
The
45—day
period
shall
be
held
in
abeyance
during
any
period
that
this
matter
is
being
appealed.
Failure
to
execute
and
forward
the
Certificate
within
45
days
renders
this
variance
void
and
of
no
force
and
effect
as
a
shield
against
enforcement
of
the
rules
from
which variance was granted.
The form of said Certification
shall
be
as
follows:
CERTIFICATION
I,
(We),
___________________________,
having
read
the
Order
of the Illinois Pollution Control Board,
in PCB
87—94,
dated
November
19,
1987,
understand
and
accept
the
said
Order,
realizing
that
such
acceptance
renders
all terms and conditions
thereto
binding
and
enforceable.
Petitioner
By:
Authorized
Agent
83—107
—10—
Title
Date
3)
Section 41
of the Environmental Protection Act,
Ill.
Rev.
Stat.
1985
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.
I,
Dorothy
M.
Gunn,
Clerk
of
the
Illinois
Pollution
Contro
Board,
hereby certify that the above Opinion and Order was
adopted
on
the
/9~Z
day
of
~
,
1987,
by
a
vote
of
7-0
Dorothy M.
Gunn,
Clerk
Illinois
Pollution
Control
Board
83—i
OS
