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I. Executive Summary

Pollution Control Industries, Inc. (PCI) is a privately held, diversified waste management company engaged in the collection, treatment, recycling and disposal of hazardous and non-hazardous industrial wastes. PCI is one of the nation's leading environmental management firms. PCI owns and operates two fully permitted RCRA Part B treatment, storage and disposal facilities in East Chicago, Indiana and Memphis, Tennessee. We have branch offices with account representatives located across North America. PCI offers a variety of waste management services including fuel blending, stabilization and chemical fixation making wastes safe for landfill, technical field services, lab pack/depack consolidation, aerosol can recycling, gas cylinders, hazardous/non-hazardous waste management options, transportation, high hazardous chemical management, on-site services and RCRA/DOT training.

The Indiana Department of Environmental Management (IDEM) and the Tennessee Department of Environment and Conservation (TDEC) and the U.S. Environmental Protection Agency (EPA), Regions IV and V approve PCI processes and methods of waste treatment. PCI compliance with applicable environmental regulations is a critical component of its overall operation, from providing high quality service to our customers, to protecting the health and safety of our employees. PCI strives to maintain the highest ethical and professional standards. Often, Pollution Control Industries internal, self-imposed operating requirements are more stringent than those imposed by the regulations.

PCI collects, transfers and processes wastes generated by customers from a variety of industries, including but not limited to, the chemical, petrochemical, paint and coatings, printing, plastics, educational institutions and pharmaceutical industries. Current customers include many Fortune 500 companies, small quantity waste generators, state, federal and local governmental agencies, universities, hospitals and research centers. PCI also has developed relationships with numerous brokers and service groups within the industry. We processed approximately over 70,000 tons of waste in 2002.

PCI was founded at the Indiana facility in 1986. The Tennessee facility was acquired in 1998. The company employs approximately 275 people. Pollution Control Industries technical positions make up approximately 45 percent of our work force; this includes Operational Managers, Chemists, Lab Technicians, Field Chemists, Administrative Managers and Maintenance Technicians. PCI periodically reviews and upgrades management in order to maintain the adequacy of PCI operational, financial and management controls. PCI offers continuous training to motivate its work force.

Our web-site address is www.pollutioncontrol.com. Back To Index

Company Overview

Indiana Facility

PCI was founded at the East Chicago, Indiana facility in 1986. The PCI property sits on approximately 11 acres in a heavy industrial section of East Chicago and is approximately 20 miles from downtown Chicago, Illinois. West of the facility is a commercial gas manufacturer, located to the east is a rail-yard, south is commercial land use and rail access and north is an aluminum smelter. The closest water stream is the Indiana Harbor Canal, which is approximately 2,700 feet west of the facility. The facility is not located within a one hundred-year flood plain. The majority of the property is dedicated to serving PCIÕs waste management operations. Also located on the PCI property is a rail-line that accommodates up to ten rail cars. The Elgin, Joliet and Eastern Rail Company serve PCI rail operation. EPA Region V and the Indiana Department of Environmental Management (IDEM) originally issued the Part B RCRA permit in 1991. PCI renewed the permit on November 10,1999. The facility has no known site contamination. The facility has storage capacity for up to 4,508 - 55 gallon drum equivalents containers of hazardous waste. PCI operations has essentially been rebuilt since 1992 with the installation of a 178,813 gallon tank farm, a state of the art lab pack/depack facility, a drum processing tower capable of handling 700 drums per day, an aerosol can recycling unit and a non-hazardous processing building with 45,327 gallons of bulk treatment capacity. In addition, a new laboratory and receiving area capable of accepting and analyzing up to 2000 drums per day was constructed in 1997.

PCI main sales, customer service, administrative and corporate functions are managed from the East Chicago location. The East Chicago and Memphis facilities, as well as satellite offices, are connected with a computer network to streamline company communications for customer service, waste movement and waste management operations. PCI has developed specific programs to meet the operationsÕ growing needs. The programs also support the administrative and the regulatory conditions needed to accommodate a changing and demanding regulated industry. Personnel are fully supported with computer-based programs that enhance their departmental responsibility to the operations. Customer information, profiles and shipping documents are entered into the computer system to generate Pollution Control Industries operating records. PCI will continue with its efforts and research into future developments of computer based technology.

Between 1992 and 2002, PCI has invested over $9,000,000 for improvements into the East Chicago facility. These improvements include:

1. The PCI labpack/depack consolidation and treatment building;

2. The construction of an 178,813-gallon tank farm and drum storage warehouse capable of storing 1684 drums. The warehouse contains an automated drum handling system and extensive fire suppression equipment;

3. The installation of a two-stage, fifty-one foot shredding tower that is capable of processing over 700 drums per day. This unit complies with the Clean Air Act, reduces worker exposure and enhances productivity;

4. In 1997, the company opened its new laboratory, receiving and non-hazardous processing building. In 1998, the company moved its Customer Service and Sales personnel to this building in order to provide more effective customer relations;

5. In 1997, PCI made a further commitment to recycling by installing a second-generation aerosol can-recycling unit. This new unit crushes up to 1,000 cans per hour. The contents of the cans are incorporated into the companyÕs fuels program and the metal is reclaimed;

6. Also in 1997, the company purchased a new metal wash unit to clean the shredded metal drum fragments from the automated processing tower prior to sending the metal for reclamation.

In 2003, PCI will introduce a Web-Based information system. This new system allows for faster and accurate data entry and processing. It has been in development for several years and will vastly improve the way our business operates.
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Tennessee Facility

In April 1998, PCI commenced operations in Memphis, Tennessee. PCI purchased the existing facility on approximately 36 acres from Waste Management. The operations and administrative buildings on the site were constructed in 1993. The developed portion of the facility served primarily as a transfer station for Chemical Waste Management. Based on a Phase I and Phase II audit conducted prior to transfer to PCI, the site has no known environmental contamination.

PCI-MemphisÕs Part B Permit was renewed for 10 years in October 2000. The facility is regulated by the Tennessee Department of Environment and Conservation (TDEC) and is zoned for heavy industry. PCI was previously permitted to store up to 2,863 Ò55-gallon drum equivalentsÓ containers on site and that amount has increased to allow up to 9,748 Ò55-gallon drum equivalentsÓ. The permit authorizes PCI to increase capacity of its processing and bulking operations and also enhances its transportation operations. As part of the permit renewal application, PCI constructed an 80,000-gallon tank farm that was completed in 2001. The Memphis facility was modified in 2000, with the addition of a stabilization building and a metal wash unit for shredded drum fragments.

The Memphis permit renewal and operational capacities allow this site to accept and process the same types and similar quantities of waste that are handled at the East Chicago, Indiana facility. This includes a state of the art Lab Pack/Depack facility and a single stage drum-processing tower capable of handling 450 drums per day.

PCIÕs Tennessee 36-acre site is comprised of a laboratory, loading and receiving areas, storage buildings and multiple processing areas. The facility provides customers with services such as fuel blending, stabilization/solidification of wastes, lab pack/depack, hazardous and non-hazardous waste processing, transportation coordination, household community hazardous waste collections, waste reduction consultation and RCRA/DOT consultation. The facility also has a depack processing area and a non-hazardous processing building fully equipped with a non-hazardous shredder and solidification tanks.

In 2000, the Memphis facility received an award in recognition of its outstanding RCRA compliance efforts in 1999, the EI RCRA Environmental Compliance Award.

In January 2003, PCI will be able to expand operations on a 25 acre parcel contiguous to the existing site.

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Waste Handling Operations
Prior to accepting any waste product, PCI reviews each waste stream profile to determine its chemical nature, content and optimal disposal method. Before materials can be processed, a 100% representative sample of each waste stream is taken and remitted to PCI's on-site labs for testing. Every container received is sampled as set forth in the companies' Waste Analysis Plans. Waste Analysis Plans for the Indiana and Tennessee locations are available upon request. The laboratory will complete all testing required by the permit, as well as any additional testing needed to ensure safe handling on-site. Any discrepancies found upon testing and/or paperwork review will be resolved before the waste will be accepted. Most hazardous wastes received by PCI are blended into waste-derived fuels and shipped off-site to permitted cement kilns. Other hazardous wastes may be treated and/or shipped off-site for reclamation or incineration. Non-hazardous low BTU wastes are solidified and disposed of in approved Sub-Title "D" landfills. High BTU, non-hazardous waste may be shipped off-site to waste to energy facilities. PCI also utilizes wastewater treatment facilities for hazardous and non-hazardous liquids that meet the criteria for these programs. PCI continues to diversify by expanding its capabilities and processes to meet the waste management needs of its customer base.
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Liquid and Solid Hazardous Waste Management Capabilities
PCI manages waste generated by customers in a variety of industries. Wastes are collected and transported to our facilities in bulk form, fifty-five gallon drums or in miscellaneous Department of Transportation (DOT) approved containers. Most of the hazardous waste PCI accepts includes solvents, inks, paints, chlorinated compounds, rags, filters, other industrial waste and household items with high BTU content.

For hazardous materials, the BTU test is most relevant. The resulting BTU value will indicate the proper method to appropriately blend wastes to meet our outbound product specifications. Once a waste has been analyzed and accepted, it is entered into PCI's computerized inventory system. PCI assigns each container with a bar code number and label identifying the waste type, generator, waste analysis and method of treatment/disposal. Using this bar code inventory tracking system, every container is tracked through the entire storage/treatment process to the final disposal off-site. The system is also integrated into a manifesting computer program to assure the proper handling and disposal of a generator's waste. Additionally, this system assists management in scheduling and production requirements, as well as providing customers and regulatory agencies with instant information on the status of individual shipments. Depending on chemical composition and physical state, the waste stream is processed through either the liquid fuel blending system or the solid waste system.

Stabilization and Chemical Fixation
Characteristic hazardous wastes that carry the D001 (for oxidizing wastes only), D002, D004-D011 codes and do not contain underlying hazardous constituents with concentrations above the universal treatment standards and those which are also exempt from sub part CC regulations (<500ppm voc) are acceptable materials for PCI's chemical stabilization process. Typical waste include heavy metal compounds, acids and acid sludges, electrical/electronic waste, inorganic chemical and petrochemical waste, incinerator, boiler and industrial furnace residues, multi-source leachates, general debris and inorganic waste containing <30% oil and grease.

The basic stabilization operation immobilizes the leachable metals by combining the waste with stabilization agents such as lime or cement kiln dust. The process produces a non-hazardous cement-like material. These chemical bonding agents form a solid structure around the waste that binds the contaminated material into a solid, non-leachable mass safe for landfill disposal. Acid and caustic wastes are neutralized and oxidizers will be reduced. Back To Index

Automated Drum Processing Units Overview (Tower Operations)
In 1994, PCI significantly increased its drum handling capabilities at the Indiana facility by installing a high efficiency fifty-one foot, two-stage shredding/processing tower. The shredding operation is computer controlled, automated and fully enclosed. Atmospheric emissions are minimized as a result of the enclosed nature of the process. Emissions from the ventilation ports or vents are regulated under the Clean Air Act (CAA), Federal and State requirements and applicable RCRA standards. The system incorporates two slow speed rotary shear type shredders, which puncture and shear metal drums into small pieces. This system facilitates the removal of the contents from the container and reduces the material's particle size suitable to PCI's blending programs. The speed and design of the shredders remove the potential for spark and heat generation. An inert gas (nitrogen) purging system further reduces potential for ignition or explosion. In 1998, the company added a FIKE dry powder fire suppression system that activates at certain pressure levels thereby further reducing the potential for an ignition.

In 1999, at PCI's Memphis facility, the company installed a single stage shredder that is comparable to the East Chicago, Indiana operation. The operation of the shredders at both locations is similar and is described below:

Containers are staged on a conveyer and transported to an elevator that raises the metal containers, two at a time, to the top of the tower. They are then placed in an air-locked, nitrogen-blanketed chamber. Once the nitrogen purge has lowered the oxygen level to safe operating levels, the containers begin their descent through the system. The primary shredder punctures and shreds the drums and is equipped with a hydraulic ram to ensure the proper feed of the drums into the shredder. High BTU liquids may be introduced into the shredder to provide a continuous movement of material through the unit. The secondary shredder is designed to provide a more uniform particle size for the sludges and solids. After shredding, a rotary magnet separates the metal drum fragments from the waste. These drum fragments then fall onto a shaker-grate to remove residual contaminants from the metal. The resulting metal is then washed and recycled as scrap metal. A dual auger system sends sludges, shredded processable solids and liquid waste to a 2,500-gallon hydropulper for further particle reduction and blending. The resulting material is reduced to 1/8th inch particle size and dispersed with other bulk liquid waste. The final product, a pumpable liquid fuel that is consistent in its BTU, halogen and metals content is then stored in one of PCI's tank farms and transferred out via tank truck or rail cars to approved RCRA/BIF permitted cement kilns. At both facilities, PCI processes on average 60,000 gallons of liquid material per day. Solid material that cannot be dispersed, including rags, filters, contaminated protective clothing, resins and other debris, is batch processed through the shredder. The resulting material, depending on chemical make-up and customer disposal selection, is consolidated and shipped

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RCRA/BIF Cement Kiln Disposal
PCI adheres to the Responsible Recycling Hierarchy. The Hierarchy is included in this document. PCI sends most of its processed waste products to permitted RCRA/BIF cement kilns located across the country. A list of PCI's approved facilities is located in Attachment 5 (PCI reserves the right to add and delete facilities from the list). All cement kilns serviced by PCI either meet or will meet the Maximum Achievable Control Technology (MACT) combustion standards. The combustion of organic hazardous wastes at high temperatures in cement kilns is the Best Demonstrated Available Technology (BDAT) for treating high BTU hazardous wastes. Cement kilns are designed to burn at high stable temperatures. With limestone as its primary ingredient, cement provides a natural dry scrubber inside the kiln to capture metals. Cement kilns easily achieve a Destruction and Removal Efficiency (DRE) of at least 99.99% as required by USEPA regulations. By utilizing hazardous waste as a fuel, cement kiln recycling, reduces the consumption of fossil fuels by the equivalent of 1 million tons of coal annually. Back To Index

Liquid and Solid Non-Hazardous Waste Management Capabilities
In addition to PCI's hazardous waste management programs, PCI manages a wide variety of non-hazardous wastes including water-based inks, pastes and glues, latex paints, glycols and adhesives. These wastes tend to have a higher water composition, with little or no fuel value, and generally do not meet the criteria for our fuel blending process. PCI has constructed dedicated non-hazardous waste processing areas at the Indiana and Tennessee locations to handle these waste streams. Non-Hazardous processing includes the bulking of non-hazardous sludges and liquids for solidification and bulking of non-hazardous debris such as wood, plastics and rags for energy recovery. At the Indiana and Tennessee locations, PCI utilizes a shredder to accomplish particle size reduction of solids to comply with Subtitle "D" landfill standards. Given PCI's management of these materials, we have seen a dramatic increase in the amount of non-hazardous waste sent to our facilities over the last several years. PCI's facilities can manage both drummed and bulk non-hazardous waste. Back To Index


Transportation
PCI offers its customers transportation services that can accommodate all of their transportation waste management needs. PCI maintains a fleet of tractors, trailers, tankers and roll-off containers to handle customer pick-ups and off-site disposal of their waste material. PCI will ensure that your waste is transported and disposed of in the safest, most cost-effective manner possible.

At each of our locations there is a Transportation Coordinator to answer any questions and PCI Customer Service Representatives, at the East Chicago location, handle the scheduling of pick-ups and scheduling of drop offs for each location.
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Training
PCI maintains that the responsibility for a safe operation rests with all of its employees. Specific training is given to all responsible on-site supervisory personnel and to the individuals handling, storing and treating wastes. Off-site personnel participate in training programs to meet the requirements of 29 CFR 1910.120. Site design, operational procedures and planning affect the operations; therefore; individuals involved in these functions must be aware of the criteria for a safe and efficient operation. Emergency response training is conducted in accordance with 29 CFR 1910.120 and the Contingency Plan for each facility. This means that each employee, with a specific duty established in the Contingency Plan, will be fully trained as to the specifics of the duty or action required. This training includes drills or simulated emergency situations to provide practice for personnel and to determine the adequacy and effectiveness of the Contingency Plan. PCI has a written health and safety program in place. Training for personnel also encompasses RCRA and DOT training. Each level of personnel is trained to meet or exceed federal, state and company requirements. Back To Index

Environmental and Regulatory Issues

PCI's business operations are affected both directly and indirectly by governmental regulations. This includes various federal, state and local environmental, along with health and safety requirements that are administered and enforced by regulatory agencies. Many of these programs apply to or may in the future be applicable to one or more of PCI's operations. Although PCI intends to make capital expenditures to expand their waste processing capabilities, PCI is not presently required to make material capital expenditures to remain in compliance with federal, state and local laws and regulations relating to the protection of the environment. Back To Index

Federal Regulation
The primary U.S. federal statutes affecting PCI's business are summarized below:

1. Resource Conservation and Recovery Act (RCRA)
RCRA is the principal federal statute governing hazardous waste and solid waste generation, treatment, storage and disposal on active sites. The EPA and state hazardous waste management agencies administer these regulations. The EPA has issued regulations pursuant to RCRA and states have promulgated regulations, under comparable state statutes, that govern hazardous waste generators, transporters, owners and operators of hazardous waste treatment, storage or disposal facilities. Permitted and interim status treatment, storage and disposal facilities are regulated under 40 CFR Parts 264 and 265, respectively. The regulatory requirements include three categories of regulations consisting of administrative requirements, general standards and specific standards. These regulations impose detailed operating, inspection, training, emergency preparedness and response standards, as well as requirements for closure, financial responsibility, manifesting wastes, record-keeping and tracking. These regulations also encompass treatment standards for hazardous wastes intended for land disposal. The facility in East Chicago was first granted its Part B permit under RCRA in 1991 and the permit was renewed in November 1999. The Memphis facility's permit was renewed in October 2000 and is effective for 10 years and the Rancho Cordova facility's permit will be up for renewal in June of 2004.

Industry's implementation of effective waste minimization programs has reduced the volume of hazardous materials and increased the generation of non-hazardous materials. PCI studied and recognized the need to sustain the increasing market demand for the management of these non-hazardous RCRA exempt materials and the need to provide a full service waste management program to PCI's customer base. Therefore, we have developed waste capabilities for the treatment, recycling and disposal of non-hazardous waste.

RCRA also indirectly affects our operations by prohibiting the disposal of certain liquid wastes in landfills. This prohibition has increased the demand for the services that PCI provides.

As part of the U.S. Environmental Protection Agency's commitment to reinvent environmental regulations, the Agency issued the "Universal Waste RuleÓ. The rule is designed to reduce the amount of hazardous waste items disposed of in municipal solid waste streams, encourage recycling and proper disposal, while lessening the regulatory burden on businesses that generate universal waste. To serve this market, the company has made notification to the agency as a "Large Quantity Handler of Universal WasteÓ.


2. The Clean Water Act (CWA)
The Clean Water Act regulates the discharge of pollutants into surface waters of the United States. The Clean Water Act establishes a system of standards, permits and enforcement procedures for the discharge of pollutants from industrial and municipal wastewater sources. The law sets treatment standards for industries and wastewater treatment plants. It also provides federal grants to assist municipalities in complying with new standards. In addition to requiring permits for industrial and municipal discharges directly into the waters of the United States, the Clean Water Act also requires pretreatment of industrial wastewater before discharge into municipal systems. The Clean Water Act gives the EPA the authority to set pretreatment limits for direct and indirect industrial discharges. The Clean Water Act prohibits certain discharges of oil or hazardous substances and authorizes the federal government to remove or arrange for removal of such oil or hazardous substances. The Clean Water Act requires the adoption of the National Contingency Plan to cover removal of such materials. Under the Clean Water Act the owner or operator of a vessel or facility may be liable for penalties or costs incurred by the federal government in responding to discharge of oil or hazardous substances. At present, PCI's Indiana facility does not operate under National Pollutant Discharge Elimination System (NPDES) storm water permit. The Tennessee facility made applications and has been issued a multi-sector NPDES permit for storm water discharge.

3. Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
CERCLA, also known as "Superfund", amended in 1986, provides for immediate response and removal actions coordinated by the EPA for releases of hazardous substances from inactive or abandoned sites into the environment and authorizes the government or private parties to respond to the release or threatened release of hazardous substances. The government also may order persons responsible for the release of hazardous substances to perform any necessary cleanup. Liability extends to the present owners and operators of waste disposal facilities from which a release occurs, to persons who owned or operated such facilities at the time the hazardous substances were released, to persons who arranged for disposal or treatment of hazardous substances and to waste transporters who selected such facilities for treatment or disposal of hazardous substances. CERCLA has been created to provide strict and liability for the cost of removal and remediation, other necessary response costs and damages for injury to natural resources.

Other than a certain administrative consent order and agreement entered into by PCI with respect to a disposal site that PCI delivered a diminimus amount of waste to, prior to 1990, PCI is not aware of any claims against it that are based on CERCLA.

4. Clean Air Act (CAA)
The Clean Air Act provides for federal, state and local regulations of emissions of air pollutants into the atmosphere. Any construction or modification of a facility involving regulated air emissions must be permitted for authorization by the regulatory agency administrating the Clean Air Act for the location of the facility. The Clean Air Act provides for administration and judicial enforcement against owners and operators of regulated facilities, including substantial penalties. In 1990, the Clean Air Act was re-authorized and amended, substantially increasing the scope and stringency of the regulations. The Clean Air Act Amendments of 1990 (CAAAs) requires one comprehensive operating permit to be issued for an entire source. All Part 70 sources (also referred to as "Title VÓ sources) were required to have submitted their Part 70 applications to the State of Indiana on or before December 1996. The Indiana facility's application was submitted to the state and has been identified by the state as administratively complete. The application is now under review by the state. Capital expenditure and implementation of pollution control devices began at the early stages of our operations. Furthermore, Section 112 (r) of the amended Clean Air Act (CAA), signed into law on November 15, 1990, mandates a new federal focus on the prevention of chemical accidents. On June 20, 1996, the EPA published the final rule for CAA§112 (r), the Risk Management Plan Rule (RMP Rule). An estimated 64,000 facilities are subject to the RMP Rule, based on the quantity of the regulated substances under this rule that they have onsite. The risk management planning builds on the Occupational Safety and Health Administration's (OSHA) Process Safety Management Standards (PSM). Although a plan was submitted, PCI does not anticipate exceeding the regulatory threshold of the chemicals identified under RMP. Compliance with the Clean Air Act is not expected to have a material adverse effect on our business, operating requirements or financial condition.

The Tennessee facility has received all required air permits from the Memphis/Shelby County Department of Health, the administrating agency for the CAA, in the Memphis area. Since this facility is classified as a Synthetic Minor under the CAA due to the limited amount of Hazardous Air Pollutants (HAPs) emitted annually, no further action is required at this time.


The Tennessee facility has received all required air permits from the Memphis/Shelby County Department of Health, the administrating agency for the CAA, in the Memphis area. Since this facility is classified as a Synthetic Minor under the CAA due to the limited amount of Hazardous Air Pollutants (HAPs) emitted annually, no further action is required at this time.


5. Emergency Planning and Community Right-to-Know Act.
On May 1, 1997, the U.S. EPA promulgated a final rule adding several new industrial sectors to the list of companies subject to the Emergency Planning and Community Right-to Know Act (EPCRA) Section 313 reporting requirements. Industries affected by this rule are subject to the annual reporting requirements beginning with activities conducted during 1998. Selected chemical management activities of RCRA Subtitle C treatment, storage and disposal facilities are included in EPCRA Section 313 reporting. PCI filed the report and is not expected to have a material adverse effect on our business, results of operations or financial condition. Back To Index

State and Local Regulations
PCI's waste processing facilities are subject to direct regulation by a variety of state and local authorities. Typically, PCI is required to obtain permits from state authorities to operate our facilities and to comply with all applicable regulations.

The states in which PCI operates have their own laws and regulations that may be more stringent than comparable federal laws and regulations governing hazardous and non-hazardous waste disposal, water and air pollution, releases and cleanup of hazardous substances and liabilities of such matters. PCI's facilities and operations are likely to be subject to many, if not all, of these laws and regulations. PCI's overall relationships with all state and local regulatory agencies are in good standing.
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Other Regulations and Company Compliance
There are a number of federal environmental regulatory programs in addition to those described above. Most states and many local authorities also have enacted laws regulating activities affecting the environment. The Federal Occupational Safety has promulgated health and safety standards for workers and Health Administration (OSHA), including regulations related to the handling of hazardous materials and wastes. PCI, its customers and suppliers must comply with OSHA standards to prevent exposures to hazardous chemicals that could be harmful to human health.

1. Inspections
Under RCRA, the Indiana facility is subject to unannounced inspections every quarter by the Indiana Department of Environmental Management (IDEM) and/or the EPA. The facility in Tennessee has unannounced inspections that are conducted semi-annually by the Tennessee Department of Environment and Conservation (TDEC) and/or the EPA. Semi-annual inspections must be conducted for PCIÕs federal approval to receive CERCLA material.

2. Multi Media Review
PCI's Indiana facility received a Multi-Media inspection in March 1998. The intent of a multi-media compliance investigation is to determine a facility's status of compliance with applicable laws, regulations and permits. Emphasis is given to identifying violations of regulations, permits, approvals, orders and the underlying cause of such violations. The purpose of the inspection was to examine the company's operations and data pertaining to Resource Conservation and Recovery Act (RCRA), Clean Air Act (CAA), Spill Prevention Control and Countermeasure (SPCC) regulations under the Clean Water Act (CWA), Toxic Substance Control Act (TSCA), regulations for polychlorinated biphenyl (PCB) management, Solid Waste and Underground Storage Tank (UST) regulations. PCI is currently working with EPA on final resolution for items pertaining to RCRA and CAA; PCI has achieved compliance with the remaining regulatory programs.
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Part B Permits
The requirements of Part B Permits for all facilities are outlined below:

1. East Chicago, Indiana
The East Chicago RCRA Part B Permit allows the storage of up to 4,508 fifty-five gallon drum equivalents and up to 178,813 gallons of bulk hazardous waste. PCI has obtained approval for a wide variety of RCRA waste codes. In addition, the site is approved for the receipt of CERCLA generated material. PCI is not permitted to accept PCBs, radioactive, explosive or bio-hazardous waste material.

The permit consists of eleven permitted acres. PCI's renewed Part B Permit added diversity to the company's previous operation by expanding the acceptance of new waste codes and allowing for computerization of PCI's approval process. The computerized programs interface well with the Agencies fast moving Electronic Digital Information Program (EDI Program) for manifest shipments of waste. The renewal permit was issued on November 10, 1999 and is effective for five years.

2. Memphis, Tennessee
The Memphis RCRA Part B Permit was renewed in October of 2000 and is effective for 10 years. The permit allows for storage of up to 9,748 fifty-five drum equivalents of hazardous waste. The facility is fully permitted by TDEC and the EPA to accept and recycle hazardous and non-hazardous materials.

As part of PCI's permit renewal application, we are currently constructing an 80,000- gallon tank farm on site. The permit also allows PCI to increase capacity of its processing and bulking operations and enhance its transportation.


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Site Audit Evaluation
Each PCI location been audited by the company and by numerous outside parties. These Phase I and II studies have been conducted by independent engineering firms and show no signs of on-site contamination. The CHWMEG is an Association of manufacturers focused on waste recycling and waste management, an independent auditor retained by the Association has audited the East Chicago and Memphis sites. CHWMEG is a nonprofit organization representing waste management facilities, waste generators and industry trade associations dedicated to improving waste management practices through high-quality facility auditing, variety of education and training, research and development and public outreach activities. For a fee, CHWMEG will provide the audit to generators upon request. Audits are conducted with protocol originally developed by the Commercial Hazardous Waste Management Evaluation Group with input from environmental professionals from numerous Fortune 100 companies. Generators requesting the audit will also receive a copy of the protocols upon enrollment. Back To Index

Affiliations
PCI has been actively engaged in a Responsible RecyclingSM program, which mirrors and partners with the Chemical Manufacturers Association's (CMA) Responsible Care® program.

The program includes the adoption of six management practice codes that form the framework for the R2 Program. These Codes are as follows:
-Employee Health and Safety
-Chemical Recycling, Energy Recovery and Disposal Stewardship
-Waste Minimization and Pollution Prevention
-Process Design, Safety and Control
-Transportation
-Community Awareness and Emergency Response

Advent Environmental, a nationally known environmental consulting firm, conducted a third party verification of each member's R2 Program. This audit was performed on behalf of the former NACR and the CMA. The focus of the on-site verification was to confirm that procedures are in place to meet the Codes and to ensure member companies have adopted the overall philosophy of Responsible RecyclingSM. NACR presented PCI with the prestigious Award of Excellence. Advent Environmental audited nine of the nation's most respected TSD facilities against stringent Responsible RecyclingSM and Responsible Care", NACR and CMA program guidelines. PCI's East Chicago facility was among the top three honored with a 99.16% performance rating. This is evidence of our commitment to providing superior environmental services to our customers.

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RCRA Closure Plans
The RCRA Closure plans for both PCI locations are summarized below:

1. East Chicago Facility
As a part of PCI's Part B permit, we have an RCRA-approved detailed closure plan that has been approved by the Indiana Department of Environmental Management (IDEM). This plan details the processes and procedures to be implemented in the event the facility is closed and returned to its original state. The closure plan includes closure cost estimates based on closure by a third party. The cost of decontamination and disposal of all waste is estimated to be $1,032,019.83. PCI's closure requirement is funded with a surety bond for the full amount of the obligation. The closure plan is evaluated annually.

2. Memphis Facility
PCI's Memphis Part B Permit, also has an RCRA-approved detailed closure plan that has been approved by The Tennessee Department of Environment and Conservation (TDEC). This plan details the process and procedures to be implemented in the event that the facility is closed and returned to its original state. The closure plan includes closure cost estimates based on closure by a third party. The cost of the closure and disposal of all waste is estimated to be $888,000. PCI's closure requirement is funded with a surety bond for the full amount of the obligation.

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Technical Field Services

PCI's technical field service groups specialize in the proper categorization, packaging and transportation of lab pack waste. A "lab pack", in accordance with 49 CFR 173.12, refers to small quantities (less than 5 gallons of liquid and 40 pounds of solids) of laboratory wastes, which are securely packed in an outer container and have detailed chemical packing lists attached. Hospitals, research centers, universities and other technical facilities typically generate these wastes. PCI has LabPack facilities at each location. PCI has since expanded their technical field services to include extensive field operations (packing at the source) and depack operations (the unloading and processing of lab pack waste) at all facilities. PCI also provides high hazardous and reactive waste management program and is one of the nationÕs largest household hazardous waste collectors and processors.

Service begins with the submittal of an inventory of chemicals including the chemical names and quantities. PCI then provides a quotation specifying the scope of work and the cost associated with the mobilization, transportation, labor, supplies and disposal for that specific inventory. Qualified service groups may also submit completed drum inventories to PCI for approval. PCI's approval department will verify that the drums are packaged according PCI's lab pack guidelines, in accordance with the DOT guidelines.

PCI's technical field service teams, consisting of two chemists, mobilize out of various locations across the country. These chemists receive on-going, extensive training in EPA and DOT regulations pertaining to the packing, transportation and disposal of hazardous waste materials. Upon arrival at a generator's site, PCI field chemists will complete a contingency plan outlining all the health and safety information for that specific job. A safety station will then be established for the job. This safety station will include spill control equipment, fire extinguishers and a first aid kit. Field chemists will then begin to segregate, inventory and package waste according to EPA and DOT regulations. Once drums are packaged, appropriate shipping labels will be affixed to each container. PCI chemists will then complete all required paperwork, including hazardous waste manifests and land disposal restriction forms. All regulatory paperwork will be reviewed with the generator and appropriate signatures will be obtained. The drums are then loaded onto PCI's technical field service's trucks, which are permitted waste hauling vehicles, for transportation to a PCI facility for processing.

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Orphan Drum Identification
In addition to lab pack/depack, PCI Technical Field Services offers a waste management program for unknown or "orphan" drums. Orphan drums fall into the following two categories:
1. Drums of unknown composition; and
2. Drums of known chemicals that do not fall into an already existing waste stream.

PCI will obtain a representative sample and perform a fingerprint analysis of the material. From these analytical profiles, compatible samples can be commingled to reduce the number of individual waste streams. This process increases efficiency and decreases the cost of analysis and permitting. PCI secures disposal permits for each waste stream and provides a quotation for transportation and disposal.
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High Hazardous Waste
PCI has a High Hazardous Chemical Management program. This program allows us to provide our customers with safe and cost-effective options for handling and disposing of high hazard chemicals and compressed gas cylinders. PCI's high hazard chemists have extensive training and are experienced in the identification, handling, removal and disposal of these hard to handle chemicals.

Services offered by this program include, but are not limited to:
- Explosive Chemical Evaluation and Deactivation
-Known/Unknown Compressed Gas Cylinder Identification and Disposal
-Stabilization and Disposal of Shock Sensitive Chemicals
-Remote Opening Capability
-Unknown Chemical Identification and Disposal
-On-site Detonation Capability
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Household Hazardous Waste
PCI, through its Technical Field Services division, is one of the largest on-site providers of community based household hazardous waste collection programs in the nation. The depth of the trained staff at PCI allows us to manage multiple collection sites in a given weekend. Normally, PCI contracts with local solid waste management districts to offer a program that allows local citizens to drop off used paints, solvents, aerosol cans and other household items that can be disposed of in PCIÕs waste management programs.

PCIÕs on-site personnel will manage the program in conjunction with local environmental officials. During a typical household project, PCI will work with local officials to select a location which is suitable for the collection with traffic lanes, receiving stations, depack stations, safety equipment, spill containment and emergency procedures. Once the household waste has been properly packaged, it is shipped to a PCI facility. The majority of the wastes collected from these programs are processed at our facilities, or sent to various other energy recovery facilities.

In addition to managing household collection programs, PCI is also one of the nationÕs largest processors of household collection waste. PCI has contracts with several service groups who manage household programs throughout North America. The combination of PCIÕs lab pack operations and automated shredding towers makes PCI a viable choice for both municipalities and service groups involved in the waste disposal selection process. Back To Index

Depack Facility Overview
In 1992 PCI built a state of the art lab pack/depack facility at the Indiana facility specifically designed to eliminate potential human and environmental exposures. The depack facility is housed in a 5,000 square foot fully enclosed building. Features of PCI's depack facility include:

1. Tracking
PCI has the ability to track individual containers using computerized scanners (bar code system). This process allows material to be tracked during storage, treatment and final disposition. "Cradle-to-Grave" liability tracking can therefore be assured.

2. Lab Depack Booths/Vapor Suppression
Each modular-processing booth has an exhaust hood, controls for the exhaust air system and a specific control to neutralize/contain vapors released during the bulking process.

Booth 1 is designed to handle flammable and combustible materials. Organic vapors are controlled by a vacuum hood and then passed through a carbon absorption unit. These vapors are absorbed into the carbon and the spent carbon filters are recycled as fuel solids.

Booth 2 is designed to manage corrosive materials that require a caustic air pollution scrubber. A sodium hydroxide scrubber neutralizes any acid vapors released during the bulking process.

Booth 3 is designed to manage the neutralization of compounds that include, but are not limited to, potassium hydroxide, amines and dilute ammonia solutions. Alkaline vapors released during the bulking process are neutralized in a hydrochloric acid scrubber.

Booth 4 is designed to manage flammable solids, ignitable reactives and "dangerous when wet" items. Powders and solids that may be released during the process enter a "Baghouse Dust Collection" system. Particles drop into a lined drum that is sent to a RCRA incinerator.

3. Employee Exposure Minimization
A chemist and/or a technician will bulk materials within a designated booth under either Level B or Level C Personnel Protective Equipment. Each booth is equipped with a positive pressure live airline that is utilized with an air mask. Chemical resistant clothing, inner and outer chemical resistant gloves and chemical resistant boots are additional items of safety gear worn by members of PCI's Technical Field Services team.

4. Fire Suppression System/Explosion Proof Building

a. Each booth has eight heat sensors, which are temperature activated. If the temperature exceeds 140° F, the system blankets the entire booth with a dry powder fire suppressor.

b. Booths 1 and 4 also have photo sensors designed to detect flames. If detection occurs, the booth is blanketed with the dry powder.

c. Electrical outlets are designed to be intrinsically safe against sparking. Blowers and exhaust fans are located within the building to provide proper air circulation through the entire work area.

5. Packing Absorbent
The vermiculite used in packing lab packs is collected utilizing a pneumatic vacuum system. Non-contaminated absorbent is landfilled or re-used. Contaminated absorbent is sent for fuels processing or incineration.

6. Secondary Containment
The lab pack building has contained bermed areas around the storage tanks and drum storage areas. This containment system eliminates the risk of accidental material release spreading throughout the facility.
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Tennessee Depack Facility
PCIÕs Memphis facility contains two Depack booths capable of handling flammables, acids and caustics safely and efficiently. In 2002, this facility was redesigned and upgraded to handle high hazard materials more safely and efficiently. Other lab pack wastes that cannot be handled in Memphis are consolidated and shipped to East Chicago for processing or to an alternative facility for further treatment/disposal. Back To Index

Insurance Coverage Summary

Coverage Summary

A company's philosophy, relating to managing those unforeseen risks potentially possible in an operation such as this, can be quite indicative of the caliber and capabilities of that firm. That is certainly the case with Pollution Control Industries. PCI has been diligent in understanding the risks involved and properly addressing them in the form of risk management and insurance by educating and training their internal personnel, by choosing a major and experienced broker in the environmental insurance arena and by selecting insurers who are both financially sound and offer comprehensive protection programs. The Horton Group of Orland Park Illinois is the broker of record on PCI’s account and has been instrumental in structuring the various insurance coverages that PCI carries.

The current program in place has been designed, in conjunction with PCI, by the American International Group (AIG), a leader in environmental insurance industry. AIG is the largest insurer in the United States and the nation's largest underwriters of environmental risks. The program was specifically structured for PCI and incorporates the most recent coverages available. 

A brief summary of the program follows:

A. Pollution Legal Liability (PLL).

PLL insurance is an essential asset management tool for businesses that have environmental exposures. Whether hazardous or not, practically any substance can cause pollution, given the right circumstances. This coverage provides protections for these types of losses whether sudden or gradual. A limit of liability of $10,000,000 per occurrence and $10,000,000 in the aggregate is provided under PCI’s General Liability Policy and includes coverage for such exposures as claims of third party, off-site bodily injury and property damage including legal defense costs and the cost of cleaning up the off-site contamination. Coverage also extends to on-site third party bodily injury and property damage. The PLL policy exceeds the financial responsibility requirement under the Resource Conservation and Recovery Act (RCRA).  The PLL policy coverage limits are in addition to PCI’s Commercial General Liability coverage limits.

B. Commercial General Liability (CGL)

The CGL policy provides coverage for bodily injury, property damage and personal injury arising from PCI's facilities, premises, operations and products. This is a protection for claims made against PCI by third parties resulting from PCI's negligence. The policy provides a primary limit of liability of $1,000,000 per occurrence and in the aggregate, which is further supplemented by excess umbrella coverage, up to $10,000,000.

C. Commercial Automobile Liability

Providing limits of $1,000,000 combined single limit, and up to $10,000,000 which is further supplemented by the excess umbrella coverage.  This policy protects PCI for claims from third parties for bodily injury and property damage arising from the use of any owned, non-owned or hired automobile. Where hazardous waste requirements are present, the policy has been endorsed to address those for such areas as the MCS90 Endorsement mandated by the Motor Carrier Act of 1980 and pollution liability resulting from the use of an automobile.

D. Workers Compensation/Employers Liability (WC/EL)
The WC/EL policy provides coverage to conform to the statutory requirements of the various states of operations for workplace injuries to employees of PCI. Coverage under the policy has policy coverages up to $1,000,000 for each incident/employee.  The WC/EL policy is further supplemented by excess umbrella coverage, up to $10,000,000.

E. Excess Liability Umbrella

This $10,000,000 policy substantially extends the limits of the primary CGL, Automobile Liability and Employers Liability. Coverage is designed with environmental risks in mind and specific limits of insurance coverage can be addressed on an as needed basis.

F. Contractors Operations & Professional Services (COPS)

This coverage meets the needs of the lab pack and the on-site services group that performs hands-on operations and professional services. This policy insures PCI against pollution claims that may arise from working at others' sites or claims that may arise out of acts, errors or omissions in rendering professional services for limits of coverage of $2,000,000/occurrence and $4,000,000 aggregate for all claims.

PCI has dedicated significant resources to the proper implementation and administration of this encompassing insurance program. Where applicable and within the parameters of the insurance contracts, coverage can be extended to PCI's customers as may be required by various contracts.

PCI has established a record of providing exemplary insurance coverage and risk management practices that offer the prospect of stable and long-term relationships with their clients and customers.

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ENVIRONMENTAL CONTACTS

ENVIRONMENTAL CONTACTS

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