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PROCEDURAL BACKGROUND

 

Wallace filed a variance petition on May 20, 2002. The Agency filed its variance

recommendation (Rec) on June 26, 2002 recommending the variance be granted subject to

conditions. On July 11, 2002, Wallace filed its response to the Agency’s recommendation and a

hearing officer order issued June 19, 2002.

 

A hearing was held on July 16, 2002, before Hearing Officer Steven C. Langhoff. Two

witnesses were presented by Wallace: Mr. George Brown, representing Wallace, and Mr. Daniel

Goodwin, a principal engineer for an environmental consulting firm. The Agency presented one

witness, Joe C. Uy. Three members of the public were in attendance, two of who testified: Ms.

Barbara Riddle and Ms. Ruth Riddle. Hearing testimony is synopsized below when the subjects

to which it is relevant are discussed.

 

On August 12, 2002, Wallace filed a motion to correct the hearing transcript. The Board

grants the motion. On August 19, 2002, Wallace filed its post-hearing brief. The Agency filed

its post-hearing brief on August 26, 2002.

 

FACILITY DESCRIPTION

 

Wallace’s pharmaceutical production and processing facility is located at 434 North

Morgan Street, Decatur, Macon County and employs approximately 105 people full time and 20

on a temporary basis. Wallace produces ethical pharmaceutical tablets and liquids that are used

to treat respiratory and central nervous system ailments. Pet. at 2-4.

 

During Wallace’s production process, several of the tablet products use a wet granulation

process. Two forms of wetting agents are used, water and the VOM at issue here: denatured

ethanol. When ethanol is used as the wetting agent, it is evaporated during the drying cycle

resulting in VOM emissions from the dryers. Tr. at 18; Pet. at 5-6; Rec. at 3.

 

REQUESTED VARIANCE

 

VOM emissions are regulated under 35 Ill. Adm. Code 215.482(a) if Wallace’s drying

process exceeds the applicable thresholds of Section 215.480(a). Section 215.480(a) regulates

VOM emission sources at pharmaceutical manufacturing plants whose emissions exceed 15

lbs./day and 2.5 tons/year or less than 2.5 tons/year but more than 100 lbs./day. 35 Ill. Adm.

Code 215.480(a). Section 215.482(a) requires at least 90% reduction in VOM emissions from

each unit. 35 Ill. Adm. Code 215.482(a).

 

 

Wallace is not currently required to comply with the requirements of 35 Ill. Adm. Code

Part 215.482(a). But, in October 2002, due to accelerated production and increased demand

from new product lines, Wallace expects to exceed the thresholds of Section 215.480(a) and

become subject to the Section 215.482(a) control requirements. Pet. at 8; Resp. at 2; Mot. at 2.

 

 

Wallace requests the variance to allow it sufficient time to evaluate and implement

potential options for controlling VOM emissions from its dryers. Pet. at 1. Increased VOM

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emissions are anticipated from accelerated production prior to shutting down its tablet operation

to make improvements to its plant. Pet. at 7. In addition, the facility’s manufacturing forecast

for 2002 represents a production and emissions increase resulting from the introduction of new

products. Pet. at 8.

 

 

Wallace has requested the variance period end on December 31, 2006. Pet. at 31; Mot. at

2.

 

ENVIRONMENTAL IMPACT

 

When deciding to grant or deny a variance petition, the Board is required to balance the

petitioner’s hardship in complying with Board regulations against the impact that the requested

variance will have on the environment. Monsanto Co. v. PCB, 67 Ill. 2d 276, 292, 367 N.E.2d

684, 691 (1977).

 

The Decatur plant has five dryers: a six-rack Lydon dryer, two double-rack Ross dryers,

and two single-rack Ross dryers. To stay below the 100 lb/day threshold, drying batches are

limited to one rack per batch. This makes use of the six-rack Lydon dryer inefficient, and the

facility has not used the Lydon dryer for these products. As for the Ross dryers, the facility has

limited manufacture of VOM-emitting products so as not to exceed the Subpart T thresholds.

Accordingly, none of the five dryers have VOM emission control devices. Pet. at 6-7.

 

Wallace requests a limit of 5 tons of VOM/year per dryer, or up to a total of 25 tons/year.

Wallace estimates that if the requested relief is granted, total 2002 emissions will be less than 15

tons. Wallace asserts that no dryer will exceed 100 lbs./day except the Lydon dryer, which will

be limited to 280 lbs./day. According to Wallace this will be partially offset from less usage of

other dryers. Pet. at 27-28. Wallace states that the increased emission should have no

discernable impact on the area’s ozone attainment status or the environment. Pet. at 28.

 

 

The nearest air quality monitoring station to Wallace’s Decatur facility is located about

one and three-quarter miles from the Wallace facility. Pet. at 3. There have been no

exceedances of the National Ambient Air Quality Standard (NAAQS) for ozone measured at this

monitoring station for either the 1-hour standard or the 8-hour standard during the 1999, 2000,

and 2001 ozone seasons. Rec. at 7-8.

 

 

The Agency agrees that the requested variance should result in no significant

environmental harm, as Wallace is not out of compliance at this time and the requested

relief will not result in an increase in VOM emissions that will threaten violation of the

ozone NAAQS in the area. Rec. at 12.

 

At the hearing, two witnesses, Ms. Barbara Riddle and Ms. Ruth Riddle both from the

Decatur area, testified. Barbara Riddle testified that she is allergic to ethanol and would be

opposed to Wallace’s ability to emit any additional ethanol. Tr. at 65. Barbara Riddle, however,

testified she did not know specifically what the source of the ethanol was that was causing her

allergies. In addition, Barbara Riddle states that she lives near other industries in the Decatur

area besides Wallace’s facility that also emit ethanol. Tr. at 66.

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Ruth Riddle testified that she has asthma and allergies, but is not allergic to ethanol.

Ruth Riddle did not express opposition to the requested variance, but rather concern as to the

level of pollution in the area. Tr. at 70, 71.

   

HARDSHIP

 

In its consideration of a variance, the Board is required, pursuant to Section 35(a) of the

Act, to determine whether the petitioner has presented adequate proof that it would suffer an

arbitrary or unreasonable hardship if required to comply with the Board’s regulation at issue.

415 ILCS 5/35(a) (1998).

 

In 2001, Wallace discovered that the tablet portion of its manufacturing facility needed

upgrades. With respect to the processes at issue here, the ventilation system does not meet

current FDA standards. Correcting this deficiency will result in the tablet process being shut

down for approximately 12 weeks. Tr. at 23. Inventory must be increased prior to the shutdown

to meet customer demands. Pet. at 7. The production increase necessitated by the upgrades will

lead the dryers to reach or exceed the 2.5 ton per year VOM emission control thresholds under

Subpart T. Pet. at 8. Without variance relief, once the threshold is met later this year or in

subsequent years with the inability to employ control measures, Wallace will have to cease

production until the end of the year. Resp. at 3-4. Ceasing production will result in reduced

availability of drug therapies and the loss of jobs. Pet. at 19.

 

 

In addition, Wallace stated that due to pressure from generic manufacturers, it began to

develop new products in 2001. This required a build-up of inventory for distribution to

wholesalers and stores prior to introduction to physicians. About six months of inventory must

be manufactured in a short amount of time in preparation for launching the new products. Tr. at

21.

 

 

Wallace stated that investigation into three different approaches to compliance has

uncovered technical feasibility, timing and or economic problems with each option. Options

investigated included: formulations and/or process revisions to eliminate VOM solvent use,

pollution control devices, and outsourcing. Pet. at 19.

 

 

Wallace also argues that the facility cannot immediately change the process to eliminate

the VOM solvent. The products must undergo a very methodical process for any change to meet

the Food and Drug Administration guidelines and documentation for everything that is done,

including stability studies. This approach would take approximately four years. Therefore, a

process change or reformulation cannot occur in time to comply with the threshold limitations of

Subpart T. Pet. at 10, 18.

 

As to the second approach, Wallace asserts that the facility cannot install pollution

control equipment before the emission thresholds for Subpart T are reached. Because of space

constraints, any control equipment would have to be installed on the roof, which would require

significant engineering and structural reinforcement to support the equipment. Pet. at 9. By the

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time that this would be completed, it would be at least ten months before the control equipment

would be operational. Pet. at 18, 19.

 

Dan Goodwin, consultant for Wallace, testified on evaluating alternatives for pollution

control equipment for Subpart T compliance. Tr. at 46. Mr. Goodwin explained that in addition

to the solvent substitution option, he identified four control technology options: absorption,

adsorption, condensation and oxidation. Absorption was eliminated from consideration because

it would require a large volume of water that would have to be disposed of and would be prone

to freezing while on the roof. Tr. at 47-48; Pet. at 12-13. Adsorption also presented challenges

with respect to rooftop location. Tr. at 48-49; Pet. at 13. Condensation was also eliminated

because the refrigeration capacity needed for it would be problematic, due to weight, for the

location on the roof and electrical requirements. Tr. at 49-50; Pet. at 14.

 

Mr. Goodwin suggested oxidation as the most technically feasible control technology

option, however, he expressed concern as to the cost effectiveness of this technology. To reduce

emissions below the Subpart T threshold level of 12.5 tons, Mr. Goodwin estimated a cost

effectiveness ratio of $87,000 to $102,000 per ton VOM reduced. Using a more conservative

approach for estimating costs to achieve a 90 percent reduction in VOM emitted, Mr. Goodwin

estimated a cost effectiveness ratio of $16,000 to $19,000 per ton of VOM reduced. Tr. at 50-54;

Pet. at 15. Reviewing the Board’s previous rulemaking in Subpart T, Mr. Goodwin recalled that

the Board used $5,000 per ton as a benchmark for reasonable costs. Tr. at 53.

 

As to the third option, Wallace also argues that once the Subpart T emission thresholds

are met, halting production at the Decatur facility cannot be easily replaced with production

elsewhere. Pet. at 16. Wallace estimated that the process of finding a qualified outside

contractor could take several months. Besides the time and costs associated with this approach,

moving the process out of the Decatur facility would result in loss of jobs there. Pet. at 17, 19.

 

COMPLIANCE PLAN

 

During the variance, Wallace proposes to evaluate the possible use of control equipment

and the elimination of VOM from its tablet products or process. Wallace would perform

preliminary research on non-VOM solvents. Pet. at 22. If bench-top evaluations are successful,

Wallace would undertake pilot scale testing of the non-VOM solvents or process modifications.

If bench-top evaluations reveal no suitable non-VOM solvent or process modification, Wallace

will assess suitable add-on control technology. Pet. at 23. If the control technology assessment

reveals no reasonably available control technology for the VOM emissions, Wallace will confer

with the Agency on the potential of a site-specific rulemaking. Pet. at 24-25. Throughout the

variance period, Wallace will submit progress reports to the Agency on a semi-annual basis.

Resp. at Att. B. The compliance plan and a schedule are included in the variance conditions

proposed by Wallace and the Agency.

 

AGENCY RECOMMENDATION

 

The Agency agrees with Wallace that due to sales increases and a production shutdown

required by upgrades, Wallace must increase its production to a point that it will meet or exceed

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the thresholds for Subpart T controls. Without relief, the Agency argues, Wallace will be forced

to shut down its production and lay off employees. Wallace cannot quickly employ control

technology, reformulate its product, or shift production elsewhere. A variance is the only avenue

for continuing Wallace’s production. Accordingly, the Agency argues it would be arbitrary and

unreasonable not to grant the requested variance. Rec. at 4. The Agency recommends a grant of

the variance subject to conditions similar to conditions proposed and later revised by the

Petitioner. Rec. at 13-14; Resp. Att. B.

 

CONSISTENCY WITH FEDERAL LAW

 

 

Wallace and the Agency agree that the variance would be consistent with federal law. In

accordance with Section 35 of the Act, the Board may grant variances only where they are

consistent with federal law. 415 ILCS 5/35 (2000). There is no provision of the Clean Air Act

(CAA) or its associated regulations, that would prohibit the relief requested. This facility is

currently not a major source of VOM or hazardous air pollutants (HAP), nor would it be under

the requested variance. Therefore, the parties believe that variance relief would not implicate

any issues concerning Title I, or Title V of the CAA. Because Part 215 has been approved by the

United States Environmental Protection Agency (USEPA) as part of the Illinois state

implementation plan (SIP), the variance, if granted, will need to be submitted to USEPA as a SIP

revision.

 

CONCLUSION

 

 

In determining whether any variance is to be granted, the Act requires the Board to

determine whether a petitioner has presented adequate proof that immediate compliance with the

Board regulations at issue would impose an arbitrary and unreasonable hardship upon the

petitioner.

 

 

The Board finds that, if the variance is not granted, Wallace will incur an arbitrary or

unreasonable hardship. Wallace has demonstrated that denial of variance would impose an

economic hardship. Even with increased production, Wallace’s VOM emissions will have

additional controls, and its addition to the VOM emissions in the area will be minimal.

Accordingly, the variance request will be granted for the period of approximately 4 and a half

years, subject to conditions.

 

This opinion constitutes the Board’s findings of fact and conclusions of law.

ORDER

 

1. The Board grants Wallace a variance from 35 Ill. Adm. Code 215.482(a) to allow

it to continue production of ethical pharmaceutical tablets at its facility located in

Decatur.

 

2. This variance begins on the date of this order and terminates no later than

December 31, 2006.

 

3. This variance is subject to the following conditions:

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a. The petitioner must begin preliminary research on the search for a non-

VOM solvent or process modification immediately and finish such

research by June 1, 2003. Petitioner must notify the Illinois

Environmental Protection Agency of such results.

 

b. The petitioner must begin the add-on control technology assessment, as

well as the bench-top evaluation of non-VOM solvents or process

modifications selected from preliminary research by June 1, 2003.

Wallace must complete the assessment of suitable add-on control

technology and the bench-top evaluation of non-VOM solvents or process

modification by April 1, 2004. Petitioner must notify the Illinois

Environmental Protection Agency of such results.

 

c. Should the bench-top evaluations prove successful for one or more non-

VOM solvents or process modifications, petitioner must proceed to pilot

scale testing by April 1, 2004, with completion by February 1, 2005.

Petitioner must notify the Illinois Environmental Protection Agency of

such results. If the pilot scale technology proves successful, petitioner

must proceed to full scale manufacturing evaluation and stability testing

which will be completed by December 1, 2005. Petitioner must notify the

Agency of such results. If this phase of process development is

successful, full implementation of the chosen option must be completed by

December 1, 2006.

 

d. At three points throughout the testing process Wallace must evaluate the

success of its attempts to find a non-VOM solvent or process modification.

These three points must be at the conclusion of bench-top testing, pilot

testing and manufacturing and stability testing. At each point, if the tests

have been unsuccessful, Wallace must proceed with either the search for

suitable add-on control technology, file a petition for a site-specific

rulemaking or choose to operate below the Subpart T VOM emission

threshold.

 

e. If add-on control technology is to be installed, the necessary structural

engineering evaluations for add-on control technology, and the design of

control systems be completed within 4 months from the date that the

Petitioner determines that add-on control technology will be utilized. An

application for a construction permit must be submitted to the Illinois

Environmental Protection Agency within a month. Control equipment

shall then be ordered one month after issuance of the construction permit

and must be delivered and installed within an additional four months. The

control system must be started up, go through shake down, and be

operating satisfactorily no longer than two months from this point. Final

compliance must be reported to the Agency no later than December 31,

2006.

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f. If the control technology assessment reveals that there is no reasonably

available control technology for the VOM emissions from the dryers, the

petitioner must report this in the next scheduled report, as listed below.

Petitioner must then confer the Illinois Environmental Protection Agency

about whether they will seek a site-specific rule to increase Subpart T

control thresholds for the Decatur facility. In the alternative, the petitioner

may choose to operate below the Subpart T control threshold.

 

g. Petitioner must provide semi-annual reports indicating progress made

towards the development of a suitable alternative to usage of ethanol in

their process, and the development of a suitable add-on control technology

device to achieve compliance with 35 Ill. Adm. Code 215, Subpart T,

according to the compliance plain contained herein.

 

h. Petitioner’s progress reports must be filed as follows:

 

4/30/03 for the period 9/1/02 – 3/31/03

10/30/03 for the period 4/1/03 – 9/30/03

4/30/04 for the period 10/1/03 – 3/31/04

10/30/04 for the period 4/1/04 – 9/30/04

4/30/05 for the period 10/1/04 – 3/31/05

10/30/05 for the period 4/1/05 – 9/30/05

4/30/06 for the period 9/1/05 – 3/31/06

10/30/06 for the period 4/1/06 – 9/30/06

 

unless compliance is achieved prior to the reports date.

 

i. Each of the five dryers at the Wallace facility is to be limited to 5.0

tons/year of VOM emissions. The Ross dryers is limited to VOM

emissions of 100 lbs./day while the Lydon dryer is limited to 280 lbs/day.

 

IT IS SO ORDERED.

 

If petitioner chooses to accept this variance, within 45 days after the date of this opinion

and order, petitioner shall execute and forward to:

 

Charles E. Matoesian

Division of Legal Counsel

Illinois Environmental Protection Agency

1021 North Grand Avenue East

Post Office Box 19276

Springfield, Illinois 62794

 

A certificate of acceptance and agreement to be bound by all the terms and conditions of the

granted variance. The 45-day period shall be held in abeyance during any period that this matter

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is appealed. Failure to execute and forward the certificate within 45 days renders this variance

void. The form of the certificate is as follows:

 

 

I (We), _____________________________________________________, having read

the opinion and order of the Illinois Pollution Control Board, in PCB 02-207, dated September

19, 2002, understand and accept the said opinion and order, realizing that such acceptance

renders all terms and conditions thereto binding and enforceable.

 

______________________________________________________

Petitioner

 

_____________________________________________________

By:

Authorized

Agent

 

______________________________________________________

Title

 

______________________________________________________

 

  

Date

 

 

Section 41(a) of the Environmental Protection Act provides that final Board orders may

be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the

order. 415 ILCS 5/41(a) (2000);

see also

35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.

Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois

Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The

Board’s procedural rules provide that motions for the Board to reconsider or modify its final

orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code

101.520;

see also

35 Ill. Adm. Code 101.902, 102.700, 102.702.

 

 

I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board

adopted the above opinion and order on September 19, 2002, by a vote of 7-0.

 

 

 

  

  

  

  

  

 

Dorothy

M.

Gunn,

Clerk

Illinois

Pollution

Control

Board