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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

07/22/03: KRC Supports State Proposal To Deny Hazwaste Permit To LWD Incinerator  Posted: August 30, 2003

Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428 phone (502) 875-2845 fax

e-mail: fitzKRC@aol.com

www.kyrc.org

July 22, 2003

Michael V. Welch, P.E. Manager

Hazardous Waste Branch

Division of Waste Management

14 Reilly Road

Frankfort, Kentucky 40601

Re: Tentative Decision To Terminate Interim Status; LWD Inc.

EPA ID # KYD-088-438-817, Pending 83-108

Dear Mr. Welch:

The Kentucky Resources Council, Inc., has reviewed the extensive record in support of the tentative decision of the Cabinet to terminate Interim Status and to deny the Part B Application of LWD Inc., for operation of a hazardous waste treatment, storage and disposal facility in Calvert City, Kentucky, and believes that the record compels the conclusion that the facility authorization and permit should be denied forthwith and that closure should be ordered immediately for the facility. KRC offers these specific comments in support of the proposed termination of interim status and denial of the Part B application.

The record of the LWD facility is one of financial distress and performance lapses that create the circumstances in which public health and welfare may be jeopardized by continued operation. The trail of agreed orders cataloguing significant violations of recordkeeping and performance standards, and of the failure of the company to satisfy financial obligations relating to fines, penalties, assessments and financial assurance, justify immediate action to close the facility.

The pendency of bankruptcy proceedings relating to LWD Inc. should not inhibit the Cabinet from moving forward expeditiously to compel closure of this troubled facility. Relief from the reach of any automatic stay should be vigorously pursued so that the termination of interim status and denial of the permit can move forward, since those actions are exempt from the stay provisions as actions by the state in the exercise of regulatory powers.

The Sixth Circuit Court of Appeals has reaffirmed that the police powers of the state, including the regulatory authority of the Cabinet, is unaffected by the automatic stay provisions. Where the "proceeding is to carry out the government's police or regulatory power then there should be no stay. U.S. v. Jones & Laughlin Steel Corp., 804 F.2d 348, 350 (6th Cir. 1986). The police power exception to the automatic stay would permit the issuance of an injunction for closure, and the enforcement of an injunction and would allow the entry of a money judgment. In re Commerce Oil Co., 847 F.2d 291, 295 (6th Cir. 1988).

There can be no serious dispute that the chronic compliance problems of the facility, documented graphically in the Agreed Orders and inspection reports in the administrative record of this proposed action, justify and compel the conclusion that the facility authorization should be terminated. Nor can it be seriously debated that the violations, facility performance and site conditions present a real potential for adverse effects on public health and welfare.

Operation of hazardous waste incinerators at less-then-optimal combustion conditions generates a range of pollutants of human health and ecological concern, from uncombusted and partly-combusted organic and inorganic constituents of the wastes, to products of incomplete combustion such as dioxins, furans and other compounds of concern that are created or liberated during combustion. Carbon monoxide (CO) is viewed as an indicator of combustion efficiency, and the Cabinet has information indicating that combustion conditions, as reflected in surrogate monitoring of CO levels, have been less-then-optimal. The lack of financial health of the company does not create management conditions in which compliance is easily achieved and maintained on the consistent basis properly demanded of such a potentially hazardous activity.

The record also reflects that the company has been unable to maintain currency in shipment for disposal of hazardous ash generated by the facility. The aggregation of ash on site creates a potential for additional releases into the environment of the ash and its constituents.

The performance and compliance record justifies the Cabinet's proposed action independent of the failures of the company to meet financial assurance and penalty obligations. While the automatic stay provisions of the Bankruptcy Code may prevent enforcement of a judgment for fines or penalties, the stay provisions should not preclude the Cabinet from exercising regulatory powers to declare the authorization void based on the failures to provide financial assurance and the numerous other non-financial performance lapses. The Cabinet should seek relief from the stay provisions with respect to the failures of the company to make payments on fines, penalties and to post financial assurance, and should organize the final statement of basis by separating into two categories the bases that justify the proposed action in the first, the financial reasons, and in the second, the non-financial failures of compliance with operating conditions and regulatory requirements.

The performance record of the LWD facility reveals numerous serious operational failures on the part of the facility. The facility's problems have been self-inflicted, and fully justify the proposal to terminate interim status and to deny the Part B permit.

It is an embarrassment to the Commonwealth that, many years after the time when the facility should have been operating under all of the recordkeeping, monitoring, financial and performance conditions imposed under fully Part B permits, the facility continues to exist in "interim status."

It is remarkable that the company, having created the circumstances in which lapses in financial and performance obligations have reached the point of justifying the ultimate sanction of denial of permit and termination of interim status, would try to restrain the Cabinet from issuing public notice and commencing the termination process on the basis that "public notice of the Cabinet's determination will cause LWD's customers to lose confidence in the company's ability to operate." The Cabinet is to be commended for defending against the company's effort to prevent the public from being informed of the status of the facility.

This troublesome chapter in the regulatory history of the state's management of hazardous wastes should be ended by finalizing the proposed termination of interim status to the LWD facility and denial of the Part B Application. Thank you for your consideration of these comments.

Cordially,

Tom FitzGerald

Director

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