ILLINOIS POLLUTION CONTROL BOARD
February 19, 1987
ALLIED-HASTINGS BARREL
AND DRUM SERVICE, INC.,
Petitioner,
V.
)
PCB 86—21
ENVIRONMENTAL PROTECTION
)
AGENCY,
Respondent.
RICHARD W. COSBY APPEARED ON BEHALF OF PETITIONER;
WILLIAM D.
INGERSOLL APPEARED ON BEHALF OF RESPONDENT.
OPINION AND ORDER OF THE BOARD
(by 3. Anderson):
On February
5,
1986, Allied—Hastings Barrel and Drum Service
Inc.
(Allied—Hastings)
filed a petition seeking extension until
December 31,
1987 of the variance granted in PCB 83—119, May 18,
1984.
Allied—Hastings seeks variance from 35
111. Adm. 215.211,
215.212, and 215.204(j), which regulate Volatile Organic Compound
(VOC)
emissions.
On October
7,
1986,
the Agency filed a
Recommendation that variance be denied because of Allied—
Hastings’
asserted failure
to
a) comply with the conditions of
the prior variance,
b) provide sufficient information concerning
environmental impact, and c) propose
a specific program by which
compliance could reasonably be achieved by December
31,
1987.
Hearing was held on October
8,
1986;
no members of the public
were present.
At hearing, Allied—Hastings proposed an amendment
to its compliance plan which was reduced
to writing
in an
Amendment to Petition filed October 22, 1986.
Allied—Hastings
filed post—hearing briefs on December
3,
1986 and January 7,
1987.
The Agency’s brief,
filed December
29,
1986, noted that
the “Agency contends that Petitioner
still has not proven
adequate basis
for the requested relief.
However,
the Agency
does not maintain the same strenuous opposal
(sic)
that it held
prior
to the compliance plan amendment.”
The Facility
The Allied—Hastings facility is located
in the Chicago
Metropolitan Area,
within Air Quality Control Region 67,
at 915
West 37th Street, Chicago.
The facility
is located in an
industrial, commercial and residential area.
Allied—Hastings
reconditions steel drums to which exterior, and
in some cases
interior, coatings are applied as an integral part of the
76-15
—2—
process.
At hearing,
the bulk
of the testimony was presented by
John A. Krause.
Mr.
Krause, his mother and his brother own all
shares
in the company.
Mr. Krause,
together with his brother,
“runs and works
in the plant”,
as he has done for approximately
30 years.
In addition
to the family, Allied—Hastings employs
about 40 other persons.
After tax profit in the company’s last
accounting year was $100,000.
Allied—Hastings reconditions fifty—five
(55) gallon steel
drums, both tight head and open head styles.
Its customers
include chemical, oil and ink companies.
While some companies
simply buy Allied—Hastings product, others store drums on—site
and call Allied—Hastings
to pick up the drums, recondition and
clean them, and return them for reuse.
Drums may be recycled
in
this matter some
5—6
times.
Tight head drums are used for materials which are easy to
pour such as oil or
solvents.
The top of
a tight head drum is
not removable.
R.
40—41.
Open head drums have removable tops.
The top is fastened to the body of
the drum with a lockable ring
or burr.
Open head drums can be used for paint,
varnish, resin
—
any material that
is heavy and not easily poured. R.4l.
A tight head drum is first inspected and then washed when it
comes to Allied—Hastings.
To wash the tight head drums, the two
bungs are removed and the drum is submerged
in a heated caustic
solution.
The caustic solution
is heated to approximately 180
degrees Fahrenheit to
increase the strength of the solution.
The
caustic bath removes the paint, the oil, and any solvent that may
remain in the drum.
The drum is submerged in the bath for
approximately five minutes. R.46—47.
After
the caustic bath,
the tight head drums are siphoned,
rinsed, siphoned, and then dried with forced air.
Then the
inside of
the tight head drum is checked
for cleanliness.
Finally,
the drums are tested
for
leaks.
After testing, all
of
the drums are painted on the exterior
in accordance with customer
specification;
less than 5
are coated on the interior as well.
After painting,
the tight head drums are cured
in
a drying oven.
R.47—5l.
Open head drums are processed by first removing the tops of
the drums.
Then the tops and drum shells are cleaned.
Cleaning
is accomplished by placing the empty open head drums upside down
on a conveyor belt which
travels through an incinerator
forty
feet long, eight feet high and five feet wide.
The temperature
in the incinerator reaches 1000 degrees Fahrenheit.
When the
drums exit the incinerator, they are cherry red
in color.
R.49,
51,
73.
The open head drums are then shot blasted to remove any ash
left by the incinerator
and to polish the surface of the drums.
76-16
—3—
The clean open head drums are then tested by submerging
in water
after being covered with
a rubber gasket and checked for leaks
using seven pounds of air pressure.
If the clean drums do not
contain leaks, they are sent to the interior coating line.
After
the top
is reattached the drums are sent through the exterior
coating line. R.49—5l.
Allied—Hastings reconditions an equal number of tight head
and open head drums.
However, although all of the drums are
painted on their
exterior, less than five percent of the tight
head drums are lined.
In contrast, approximately 75
of the open
head drums are lined.
In all, approximately 30 to 40 percent Of
all the drums reconditioned by Allied—Hastings are lined.
R..63—
64.
Allied—Hastings has three separate coating lines
—
two
exterior lines and one interior
line.
One exterior line serves
only tight head drums and one serves only open head drums.
The
interior coating line is primarily
for open head drums.
Eachof
the three
lines has a cure oven.
Because of the size of the
building housing the facility, Allied—Hastings cannot extend its
curing ovens.
R.60—71.
In December
of 1985, Allied—Hastings ordered a shot blaster
for
its tight head drum line.
The shot blaster cost
approximately $80,000
and was purchased to improve the exterior
surfaces on the tight head drums.
The shot blaster went on line
two weeks before
the October,
1986 hearing.
R.7l—72.
Allied—
Hastings asserts that with both styles of drums receiving the
better surface ‘preparation that shot blasting allows,
the
possibility of finding
a high solid, low
VOC
exterior coating
formulation that will work in production increases.
In addition
to the shot blaster,
the company purchased an
automatic spray system to apply
its coatings.
The automatic
spray system was installed in the summer
of 1985 at
a cost of
approximately $25,000,00.
The automatic spray system uses less
paint than the system it replaced.
R.72—73.
Allied—Hastings presently uses
a hot airless spray
application system on all three coating lines.
The company
asserts that because
it has been unsuccessful in its search for
compliance exterior coatings,
it is still using conventional
exterior enamels to cover
the outside of
its drums.
The company
further asserts that because no compliance interior linings are
on the market, Allied—Hastings
is using Mobiliner 114
for its
interior lining, an epoxy phenolic lining long accepted by the
company’s customers as satisfactory in performance for about 15
years.
R.69—70.
76-17
—4—
Past Compliance Efforts
In
its pursuit of variance
in PCB 83—119, Allied—Hastings
identified
two possible compliance options:
1)
installation of
afterburners
to reduce emissions from its coating lines
in order
to meet the VOC reduction requirements of 35
Ill. Adm. Code
215.205(a)
or
2)
use
of coating materials with
a lower VOC
content than those
in use at that time.
The afterburner option
was rejected on the grounds that the cost of operation and
installation of such a system was beyond
its financial means:
the capital cost of installation
in 1983 was estimated to be
$865,000, and the total cost of control was estimated to be
$3436/ton of emission reduction.
Consequently, the company
reports that,
during the term of the prior variance, its
compliance efforts centered primarily on a testing program for
high solids, low VOC exterior coatings.
The company hoped
to
find exterior coatings sufficiently low in VOC content
to allow
for internal offset of
its
interior linings, pursuant to 35 Ill.
Adm. Code 215.207.
The company further notes that while
the
Order
in PCB 83—119 required testing of replacement interior
coatings,
that none were
tested because no high solids,
low VOC
coatings were available.
Two replacement exterior
coatings had been tested prior
to
grant of variance, and seven more were tested during the variance
term.
Without going
into detail concerning deficiencies of any
particular product, none proved satisfactory.
Reconditioned,
hence weathered,
drums do not accept coatings as easily as newly
manufactured drums; they may also require thicker coatings to
cover
flaws.
The summary of Allied—Hastings’
experience was that
the high solids exterior coatings tested on the company’s coating
lines did not provide a finish that met the industry’s standards
for acceptable appearance.
Allied—Hastings could not cure the
high solids paint, and its ovens could not dry it.
Not only
would
the high solids low VOC paints not cure,
but they would not
easily cover flaws on the reconditioned drum and therefore,
more
paint had to be applied.
The application of the coating was too
heavy and would not stick
to the drum.
Increasing the temperature of the cure ovens,
different
nozzles, various pressure settings, and increasing barrel
rotation did not help.
While various manufacturers had suggested
that the company extend its cure ovens to increase residence
time,
this is not possible due to the plant’s physical
configuration. R.66,
82—83.
Proposed Compliance Plan
In its initial petition, the Company had proposed only to
continue its testing program for replacement coatings.
However,
in response
to the Agency’s
initial negative view of
the
company’s ability to achieve timely compliance via this route,
at
76-18
—5—
hearing Allied—Hastings proposed an alternative plan.
The new
plan would involve installation of ducting
to vent emissions from
the spray booths and cure ovens on the coating lines to the drum
incinerator on the open head line.
Allied—Hastings asserts that
those VOC emissions which
are not destroyed by the 1000—1200
Fahrenheit heat
in the drum incinerator will be destroyed in the
1400-1600
Fahrenheit heat of the afterburner
to which emissions
from the drum incinerator
are ducted.
While this approach was generally disfavored by the Agency
in 1983, Allied—Hastings asserts that as of August,
1986 the
Agency entered into discussions with it concerning this plan.
Allied—Hastings noted that this system had been employed by
Columbus Steel Drum,
a drum reconditioning company located
in
Michigan.
Allied—Hastings,
in cooperation with another Chicago
company, had
retained Columbus’
engineer
to prepare
a feasibility
report.
In
its October
22, 1986 amendment to its petition,
Allied—Hastings asserted its belief that the study would be
concluded by December
31,
1986.
Allied—Hastings also stated that
installation of necessary ducts and fans could
be commenced
during the first quarter of 1987, assuming the report did not
conclude that the project was
in some way infeasible.
Alleged Hardship
Allied—Hastings favors
the above described approach because
the only capital expense involved relates to installation of
ducting and fans, and operating expenses would be nominal because
no additional use of natural gas would
be required.
This is
in
considerable contrast
to the $865,000 capital cost of
installation of an afterburner.
While Allied—Hastings has
already made some capital
investment of $105,000 for its shot
blaster
and automatic spray booth
to facilitate use
of any
satisfactory high—solid,
low—VOC coatings,
it notes that use of
such coatings increases the per drum production costs about 20,
a cost which
it cannot pass on due to the condition of the
recycled drum industry.
The price structure for reconditioned drums
is depressed.
The current price
for
a one time recycled drum is about $10.50.
Three years ago the price was $11.00
or $11.50.
The current
price
for recycling
a drum, where the customer supplies the drum,
Allied—Hastings picks it, reconditions and cleans
it,
and then
returns the reconditioned drum is about $6.00 to $7.00.
By
contrast, drum manufacturers are charging $12.80
for a new drum.
R.55—56.
The result
is that Allied—Hastings
is
in competition with
new drum manufacturers, as well as drum reconditioners.
Mr.
Krause testified that he has lost accounts
to new drum
manufacturers because of
a $2.30 price difference between the
cost of
their new and his recycled drums, and that he has also
76-19
—6—
lost accounts
to two drum reconditioners who undercut his price
by $0.50 per drum.
At the same time prices for
the product are dropping, costs
of doing business are rising.
Between 1985 and 1986,
the
company’s costs
for liability insurance rose from $30,000
to
$125,000
for half the coverage with
a high deductible.
Costs
of
disposal of the residues from the drums have increased five—fold
since last year.
They are expected to continue to increase
in
1987, particularly in light of the requirements of Section 39(h)
of the Act requiring treatment of hazardous waste streams to
render them non—hazardous.
Asserted Environmental Effect of Emissions
Allied—Hastings reports that,
according to the most recent
data supplied by the Agency,
its annual VOC emissions are 52.8
tons, 19.48 tons per year
in excess of those allowed by 35 Ill.
Adm. Code 215.204(j).
At hearing, the company elicited testimony
from Harish Narayan,
an Agency field investigation officer
familiar with the facility,
in support of its contention that the
emissions from its facility have minimal environmental impact and
are not interfering with attainment of
the ambient air quality
standard
for ozone.
Allied—Hastings notes that the Agency’s Air
Quality Bulletins for the 1983,
1984, 1985
(Pet. Exh.
4,5,6)
show
a clear downward trend
in the number
of days of exceedance at the
three air quality monitoring stations closet to the facility,
as
shown below.
1983
1984
1985
57th
& Museum
3
0
0
84th
& Kedvale
4
1
0
103rd
& Luella
2
0
0
The company asserts that
it has received no complaints from
neighbors concerning odors from the paint lines (although in 1985
complaints were received concerning caustic smells from the wash
lines).
R.78.
Finally,
the company essentially argues that its
excess daily emissions are de minimus,
as they equal
0.031
percent of the hydrocarbons generated on a summer week day in
Chicago by mobile sources including vehicular traffic.
Agency Recommendation
It is the Agency’s position that variance should be
denied.
In
its original Recommendation,
the Agency had asserted
that Allied—Hastings had failed to demonstrate hardship or
a
feasible compliance plan.
In its post—hearing brief,
the Agency
76-20
—7—
appears to have retreated from this position, and indeed
characterizes the emissions ducting approach “as a promising
proposal to use the existing system (which
is already using large
quantities of natural gas to heat
it)
to destroy the emissions
from a separate part of the process”.
The Agency maintains,
however,
its original position concerning evidence presented
addressing past compliance efforts, environmental impact, and
consistency of
a variance grant with federal law, as summarized
below.
As
to compliance efforts,
the Agency notes that the company
has not complied with various terms of the PCB 83—119 variance
Order.
In addition
to its failure to test any interior coatings,
Allied-Hastings failed to comply with limitations on the VOC
content of the coating to be used.
The Order set average annual
limitations of 5.0 lb./gal.
for interior coatings and 3.7
lb./gal.
for exterior coatings; figures reported by the company
were 5.08 lb./gal.
and 4.20 lb./gal., respectively.
Thus, the
Agency asserts, Allied—Hastings has made
no progress
in emissions
reductions since
1984.
The Agency additionally notes that since
the denial
of an operating permit on February 24, 1986,
the
company has been operating without a permit.
Allied—Hastings, however,
asserts that its emissions in 1985
were 2.04 tons below
those emitted
in 1983.
(However,
it
is to
be noted that due
to lack of demand for its product, Allied—
Hastings is currently operating
at a full production level only
four days
a week.
R.60.
This record is unclear as to whether
this was the case
in 1985).
The Agency’s primary concern
is that Allied—Hastings’
description of the relationship between its excess emissions and
overall hydrocarbon emissions
is insufficient to prove that its
excess emissions will not interfere with attainment of the ozone
standard
in Cook County.
While agreeing that the monitored
exceedances
for
ozone have decreased,
the Agency asserts that the
company has made no real reductions
in its own emissions to
correspond to the decrease.
The company’s alleged failure
to make this demonstration
leads
to the Agency’s concern about consistency of grant of
variance with federal law.
The Agency notes
that
35 Ill. Adm.
Code 215.204(j)
is a part of the RACT II rules which are awaiting
USEPA approval
as
a part of the State Implementation Plan
(SIP).
Any variance in effect at the time the SIP is approved
would be required
to be submitted to USEPA for approval as part
of the SIP.
The Agency doubts that Allied—Hastings has made a
strong enough demonstration to allow for approval by USEPA
consistent with the Clean Air Act.
In this context,
as an alternative
in the event the Board
grants variance,
the Agency suggests that the Board should
76-21
—8—
accelerate
the compliance schedule to require Allied—Hastings to
apply
for
a construction permit no later than 60 days from grant
of variance,
and
to complete construction no later
than 90
days
after permit issuance.
The purpose of this acceleration would be
to avoid
the necessity for
any decision by USEPA.
In reply, Allied—Hastings asserts that the demonstration it
has made is all that can currently be reasonably expected.
The
company notes that in another recent variance Recommendation,
the
Agency has acknowledged that “it
is difficult to determine
the
petitioner’s
contribution
to these excesses ozone
exceedances
in light of the effect that other sources of hydrocarbons,
including motor vehicles, have on ozone concentration
in that
area.”
Agency Recommendation, Trilla Steel Drum Corp.
v.
IEPA,
PCB 86—9,
p.
10.
In making this statement concerning
the Trilla
facility, which
is located at 2959 W.
47th Street, Chicago, the
Agency was discussing ozone exceedances at two of the monitoring
stations which have been discussed
in relation to Allied—Hastings
facility at 915 W.
37th Street
in Chicago.
Allied asserts that
even
if
it had been able to afford
the commissioning
of elaborate
modeling studies of its relatively small emissions,
that the
studies would have little practical utility given
the limitations
of ozone modeling
and prediction techniques acknowledged by the
Agency and the Board
in the RACT
I and RACT II
rulemakings.
Allied—Hastings therefore believes that the Board may grant
variance consistent with federal
law.
Board Conclusion
The case presented here poses avery close judgment call
for
the Board.
The Board
finds that Allied—Hastings has made a
persuasive argument as
to
the adequacy of the showing
it has made
concerning
the effect of its 19.48 excess—of—standard VOC
emissions on ozone attainment in Chicago;
to require submittal of
extensive modeling
studies would contribute little
to this
record.
Allied—Hastingshas also explained its failure to test
interior coatings and has informed the Board as
to the depressed
condition of the drum reconditioning industry as well
as other
conditions which affect the company’s economic situation.
Allied—Hastings has not, as the Agency correctly notes, made the
progress towards emission reductions which it anticipated
in
1984;
the VOC content of its coatings remains the same.
The
unpermitted operation of this facility since the permit was
denied on February
24,
1986 also concerns the Board.
The Board
notes
that given the company’s VOC emission levels,
the Agency
could
not issue
a permit absent extension of variance beyond
December
31,
1985.
While this petition was
filed
in February,
1986 prior
to the denial
of the operating permit on February 24,
the Board
also notes that this problem would have been avoided
if
the company had timely sought modification and extension of the
1983 variance once
it became clear that
it was having little
success
in discovering
suitable replacement coatings.
76-22
—9—
However, considering
the facts that Allied—Hastings has
developed and committed
to what appears
to be an effective and
economically reasonable compliance plan, and considering its
small size and economic situation, and its relatively low level
of total VOC emissions,
the Board concludes that denial of
variance would impose an arbitrary or unreasonable hardship.
Variance
is granted through December
31,
1987 from 35 Ill. Adm.
Code 215.211, 215.212 and 215.204(j).
As Allied—Hastings has not
objected to the compliance timetable suggested by the Agency,
this will be incorporated as a condition.
The company will also
be required to reapply for
an operating permit for
the existing
facility, as well as
to timely apply for all needed permits to
construct and operate the proposed emissions ducting system.
The Opinion constitutes the Board’s findings of fact and
conclusions of law in this matter.
ORDER
1)
Allied—Hastings Barrel
and Drum Service,
Inc.
is hereby
granted variance from 35
Ill. Adm. Code 215.211,
215.212 and
215.204(j), subject
to the following conditions:
A.
This variance will expire on December
31,
1987 or at
such earlier time as compliance
is achieved with VOC
limitations;
B.
As expeditiously as
is practicable,
but no later than
60
days from the date of this Order, Allied—Hastings shall
apply to the Agency for
a construction permit to
effectuate the compliance plan described in the
foregoing Opinion and in Petitioner’s October 22,
1986
Amendment to Petition For Variance:
A) ducting of VOC
emissions from the existing coating lines and paint
spray booths
to the existing drum incinerator.
B)
Installation of necessary equipment to accomplish such
ducting shall
be completed
as expeditiously as
is
practicable,
but in no event later than 90 days after
the date of issuance of
the construction permit.
C.
As expeditiously as
is practicable,
but no later than 60
days of the date of this Order, Allied—Hastings shall
apply for
a permit
to operate its existing facility.
Upon completion of installation of the equipment
described in subparagraph b)
above, Allied—Hastings
shall timely apply for any necessary modifications to
its operating permit.
D.
During
the term of this variance,
the annual average VOC
content of coatings shall not exceed 4.20 lbs./gal.
for
exterior coatings,
and 5.08 lbs./gal.
for
interior
coatings.
76-23
—10—
E.
Beginning June
1,
1987,
and every third month
thereafter, Allied—Hastings shall submit written reports
to the Agency detailing all progress made
in achieving
compliance with Section 215.204(j).
To the extent these
activities
involve testing
for replacement coatings,
said reports shall include information on the names of
replacement coating and the manufacturers specifications
including per cent solids by volume and weight, per cent
VOC by volume and weight, per cent water by volume and
weight, density of coating, and recommended operating
parameters; detailed description of each test conducted
including test protocol, number
of runs, and complete
original test results; the quantities and VOC content of
all coatings utilized during the reporting period;
the
quantity of VOC
reduction during the reporting period;
and any other information which may be requested by the
Agency.
The reports shall
be sent to the following
addresses:
Environmental Protection Agency
Division of Air Pollution Control
Control Programs Coordinator
2200 Churchill Road
Springfield,
IL
62706
Environmental Protection Agency
Division of Air Pollution Control
Region
1, Field Operations Section
1701 South
First Avenue
Suite
600
Maywood, IL
60153
2)
Within 45 days of
the date of this Order, Allied—Hastings
shall execute
a Certification of Acceptance and Agreement to
be bound to all
terms and conditions of the variance.
Said
Certification shall
be submitted to both the Agency at the
addresses specified
in paragraph 4.
The
45 day period shall
be held
in abeyance during any period that this matter
is
being appealed.
I,
(We),
_____________________,
having read the Order of
the Illinois Pollution Control Board in PCB 86-21, dated
February
19,
1987, understand and accept the said Order, realizing that
such acceptance renders all terms and conditions thereto binding
and enforceable.
76-24
—11—
Petitioner
By:
Authorized Agent
Title
Date
IT
IS SO ORDERED.
B.
Forcade dissented.
I, Dorothy M. Gunn,
Clerk of the Illinois Pollution Control
Board, hereby certify that the above ~pinion and Order was
adopted on the
/
/~
day of
~
,
1987
byavoteof
~
.
~
/~/~
Dorothy M. Gánn, Clerk
Illinois Pollution Control
Board
76-25
