PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Beatrice Holloway, Responsible Partner Harrison Caldwell, Of Counsel (Environmental & Land Use)
FROM: Rafael Dominguez, Associate (Real Estate)
DATE: September 30, 2022
RE: RCRA Compliance Review — Allegheny Chemical Coatings, Inc. — All Facilities
MATTER NO.: 1006-00003
CLIENT: Crestline Packaging Solutions LLC
REVIEWED BY: Harrison Caldwell, Of Counsel
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I. Purpose and Scope
This memorandum presents Calderwood & Harkness LLP's review and analysis of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901–6992k, compliance status of Allegheny Chemical Coatings, Inc. ("ACC" or the "Target") across all four of its operating facilities. This review has been prepared in connection with the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline" or "CPS") of one hundred percent (100%) of the outstanding common stock of ACC (the "Transaction" or the "Proposed Acquisition").
The Proposed Acquisition is structured as a stock purchase at a purchase price of Ninety-Four Million Five Hundred Thousand Dollars ($94,500,000). Because the Transaction is structured as a stock acquisition — as opposed to an asset purchase — Crestline will succeed to ACC as a going concern and will thereby inherit all of ACC's existing RCRA obligations, hazardous waste generator status designations, EPA identification numbers, and any associated contingent liabilities arising from past or ongoing hazardous waste management practices. This structural feature of the Transaction has significant implications for the scope of environmental due diligence and the allocation of risk, as discussed more fully in Section V.F below and in the companion memoranda addressing environmental representations and warranties in the draft Stock Purchase Agreement.
The scope of this memorandum encompasses the following categories of RCRA compliance review for each of ACC's four operating facilities:
(i) hazardous waste generator classification at each facility, including the regulatory basis for such classification and the applicable regulatory requirements under 40 CFR Part 262 and the corresponding state regulations;
(ii) EPA identification numbers and generator notification status under 40 CFR § 262.18;
(iii) hazardous waste manifests and shipping records for the most recent three-year period (2019–2021), including review of manifest execution, designated treatment, storage, and disposal facilities ("TSDFs"), and exception reporting;
(iv) biennial hazardous waste reports required for Large Quantity Generators under 40 CFR § 262.41 and any applicable state-specific reporting requirements;
(v) inspection history and enforcement actions, including review of regulatory inspection reports, notices of violation, consent orders, administrative and civil enforcement actions, and corrective action obligations under RCRA Sections 3004(u) and 3008(h); and
(vi) overall compliance assessment and risk analysis relevant to the Transaction.
In preparing this memorandum, Calderwood & Harkness reviewed the following categories of materials and sources:
• Environmental records produced by ACC through Seller's counsel, Hargrove, Dalton & Speer LLP (Franklin Speer, Partner; Megan Trask, Associate), pursuant to Calderwood & Harkness's environmental document request list dated July 25, 2022 (the "Environmental Document Request"). The Environmental Document Request specifically sought, among other items, all RCRA generator notifications, hazardous waste manifests, biennial reports, inspection reports, notices of violation, consent orders, and corrective action documents for all ACC facilities;
• Phase I Environmental Site Assessment reports prepared by TerraVerde Environmental Consulting LLC ("TerraVerde") for each of ACC's four operating facilities, dated between August 15 and August 25, 2022, prepared in general accordance with ASTM Standard Practice E1527-21;
• Interviews conducted with ACC's Environmental Health & Safety Manager, Carl Johannsen, including a telephonic interview on August 30, 2022 and follow-up correspondence via email on September 8 and September 14, 2022; and
• Publicly available regulatory database information, including queries of the EPA RCRAInfo database, the Pennsylvania Department of Environmental Protection ("PA DEP") eFACTS database, and West Virginia Department of Environmental Protection ("WV DEP") database systems.
This memorandum is intended to feed into the Comprehensive Environmental Diligence Summary Memorandum, a draft of which is currently dated October 22, 2022, and which will synthesize the findings from all environmental regulatory compliance reviews, Phase I and Phase II Environmental Site Assessment analyses, and related assessments into a unified environmental risk profile for the Transaction.
II. Executive Summary
ACC operates four facilities relevant to this review, spanning two states (Pennsylvania and West Virginia) and encompassing a range of manufacturing, blending, and distribution operations. The facilities, their locations, and their RCRA generator classifications are summarized as follows:
(1) McKeesport Main Plant, 2200 Iron Works Boulevard, McKeesport, Allegheny County, Pennsylvania 15132 — ACC's headquarters and primary manufacturing facility; classified as a Large Quantity Generator ("LQG") of hazardous waste under RCRA;
(2) Charleroi Specialty Coatings Plant, 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022 — secondary manufacturing facility specializing in water-based and UV-curable coatings; classified as a Small Quantity Generator ("SQG") of hazardous waste under RCRA;
(3) Clarksburg Resin Blending Facility, 1875 Route 50 West, Clarksburg, Harrison County, West Virginia 26301 — resin receipt, blending, and redistribution facility; classified as a Conditionally Exempt Small Quantity Generator ("CESQG"), also referred to as a Very Small Quantity Generator ("VSQG") under the 2017 Generator Improvements Rule, of hazardous waste under RCRA; and
(4) Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, Hancock County, West Virginia 26062 — finished goods storage and distribution only; not a hazardous waste generator under RCRA.
Our overall conclusion, based on the review of available documents and information described herein, is that ACC is in substantial compliance with RCRA Subtitle C hazardous waste requirements across all four of its operating facilities. No open violations have been identified at any facility. No pending enforcement actions, consent orders, administrative orders on consent, unilateral administrative orders, or judicial enforcement proceedings under RCRA have been identified. No RCRA corrective action obligations under Section 3004(u) or Section 3008(h) of RCRA have been identified at any facility.
The most recent regulatory inspection of any ACC facility was a RCRA compliance evaluation inspection conducted by the Pennsylvania Department of Environmental Protection at the McKeesport Main Plant on April 14, 2021. That inspection resulted in no violations being noted. The inspection report, which was produced by ACC in response to the Environmental Document Request, indicates a thorough review of ACC's hazardous waste management practices at the McKeesport facility and confirms compliance with applicable LQG requirements.
Biennial hazardous waste reports at the McKeesport facility, as required for LQGs under 40 CFR § 262.41, are current through reporting year 2021 (the most recent reporting period). The Charleroi facility, as an SQG, is not required to submit biennial reports under federal regulations, though PA DEP state-specific reporting requirements have been satisfied.
No material RCRA-related liabilities have been identified that would independently affect the Transaction or require a purchase price adjustment. However, RCRA compliance status at the McKeesport facility should be considered in the broader context of the environmental risk profile of that facility, which includes subsurface contamination conditions (toluene in groundwater, trichloroethylene in sub-slab soil gas, and lead and tetrachloroethylene in soils) that are addressed in the Phase II Results Analysis Memorandum and the Vapor Intrusion Risk Assessment Memorandum being prepared concurrently by this firm. While those conditions are currently being managed under the Pennsylvania Act 2 Land Recycling and Environmental Remediation Standards framework rather than RCRA corrective action, the potential for RCRA corrective action obligations to arise in the future cannot be entirely excluded, as discussed in greater detail in Section V.E below.
III. Facility-by-Facility Analysis
A. Facility 1 — McKeesport Main Plant (Headquarters)
1. Facility Identification. The McKeesport Main Plant serves as ACC's headquarters and primary manufacturing facility. The relevant identifying information for this facility is as follows:
The McKeesport facility is located in a mixed-use industrial area along the Monongahela River corridor. The surrounding area includes other industrial operations, as well as commercial and residential properties in the broader McKeesport community. ACC has operated continuously at this location since its acquisition of the property approximately thirty-five years ago, and the facility predates ACC's ownership as a site of industrial operations under Keystone Metalworks. The historical use of the property as a steel fabrication facility is relevant to the broader environmental risk profile of the site, as discussed in the Phase I ESA Review Memorandum and the Phase II Results Analysis Memorandum, but does not directly implicate ACC's RCRA compliance status.
2. RCRA Generator Status. Classification: Large Quantity Generator (LQG)
EPA Identification Number: PAD-098-721-445
The McKeesport Main Plant is classified as a Large Quantity Generator of hazardous waste under RCRA and is subject to the full suite of LQG requirements set forth in 40 CFR Part 262, Subpart C, and the corresponding Pennsylvania Department of Environmental Protection regulations at 25 Pa. Code Chapter 262a. LQG status is consistent with the volume and nature of hazardous waste generated at this facility, which serves as ACC's primary manufacturing site for solvent-based and epoxy coatings and involves the use of significant quantities of organic solvents and heavy-metal-containing materials.
The principal hazardous waste streams generated at the McKeesport facility, based on review of hazardous waste manifests, biennial reports, and information provided by Carl Johannsen during interviews, include the following:
• Spent solvents, including toluene, xylene, methyl ethyl ketone ("MEK"), and ethylbenzene, classified as F003 (spent non-halogenated solvents — xylene, acetone, ethyl acetate, ethyl benzene, ethyl ether, methyl isobutyl ketone, n-butyl alcohol, cyclohexanone, and methanol) and F005 (spent non-halogenated solvents — toluene, MEK, carbon disulfide, isobutanol, pyridine, benzene, 2-ethoxyethanol, and 2-nitropropane) listed wastes under 40 CFR § 261.31. These represent the largest hazardous waste stream by volume at the facility and arise from solvent-based coating formulation, equipment cleaning, and line changeover operations;
• Off-specification coating products and residues containing heavy metals, including chromium and lead, potentially classified as D007 (chromium — TCLP threshold of 5.0 mg/L) and D008 (lead — TCLP threshold of 5.0 mg/L) characteristic wastes under 40 CFR § 261.24. These wastes arise from quality control rejections, end-of-run residues, and expired or damaged inventory;
• Laboratory waste from quality control operations, including small quantities of spent reagents, contaminated glassware, and analytical waste; and
• Contaminated rags and wipes from manufacturing and maintenance operations, which may constitute hazardous waste depending on contamination levels, though ACC has indicated that it manages solvent-contaminated wipes in accordance with the conditional exclusion provisions of 40 CFR § 261.4(b)(18) (the "Solvent-Contaminated Wipes Rule") where applicable.
Based on the biennial reports and manifest records reviewed, ACC generates in excess of 1,000 kilograms (approximately 2,200 pounds) of hazardous waste per calendar month at the McKeesport facility, which is the threshold triggering LQG classification under 40 CFR § 262.13(d). This generation rate has been consistent throughout the review period (2019–2021) and is commensurate with the scale and nature of manufacturing operations at the facility.
As an LQG, ACC is subject to the most stringent set of generator requirements under RCRA, including but not limited to: compliance with the hazardous waste determination requirements of 40 CFR § 262.11; maintenance of an EPA identification number and current generator notification; use of the Uniform Hazardous Waste Manifest (EPA Form 8700-22) for all off-site shipments; compliance with 90-day accumulation provisions under 40 CFR § 262.17; pre-transport requirements for packaging, labeling, marking, and placarding under 40 CFR Part 262, Subpart C; recordkeeping and reporting requirements, including biennial reporting under 40 CFR § 262.41; development and maintenance of a contingency plan and emergency procedures under 40 CFR Part 262, Subpart M (incorporating by reference 40 CFR Part 265, Subpart D); personnel training under 40 CFR § 265.16; and compliance with land disposal restrictions under 40 CFR Part 268.
3. Manifest Review. Calderwood & Harkness and TerraVerde reviewed hazardous waste manifests for the McKeesport facility for the most recent three-year period (calendar years 2019 through 2021). The manifests were produced by ACC through Seller's counsel in response to the Environmental Document Request. The review encompassed uniform hazardous waste manifests (EPA Form 8700-22) for all hazardous waste shipments originating from the McKeesport facility during the review period, as well as associated land disposal restriction notifications and continuation sheets where applicable.
Based on this review, the following observations are noted:
• All manifests reviewed appear to be properly executed on EPA Form 8700-22 in accordance with the requirements of 40 CFR Part 262, Subpart B. Manifests include the generator's name, address, and EPA identification number; the transporter's name and EPA identification number; the designated receiving TSDF's name, address, and EPA identification number; a description of the hazardous waste including proper DOT shipping name, hazard class, and UN/NA number; the quantity of waste in appropriate units; the applicable waste codes; and all required signatures and dates.
• All manifests were signed by ACC's EHS Manager, Carl Johannsen, as the designated authorized representative of ACC for purposes of hazardous waste management at the McKeesport facility. Mr. Johannsen's authority to sign manifests on behalf of ACC is documented in ACC's internal EHS procedures.
• The designated treatment, storage, and disposal facilities appearing on the manifests reviewed appear to be properly permitted facilities holding current RCRA Part B permits or interim status. The principal TSDFs utilized by ACC during the review period include Pinnacle Systems (Deer Park, Texas facility, EPA ID TXD-055-141-378) and Stonefield Corporation (East Chicago, Indiana facility, EPA ID IND-006-028-081). Both facilities are well-known, nationally permitted commercial hazardous waste management operations.
• No discrepancies were identified between manifests shipped by ACC and exception reports. Under 40 CFR § 262.42, an LQG must contact the transporter and/or the TSDF if it does not receive a signed copy of the manifest from the TSDF within 35 days of the date the waste was accepted by the initial transporter, and must file an exception report with EPA (or the authorized state) if it has not received a copy within 45 days. Our review of ACC's records did not identify any exception reports filed during the review period, and ACC's EHS Manager confirmed that no manifest discrepancies requiring exception reporting occurred during 2019–2021.
• ACC maintains a 90-day accumulation area at the McKeesport facility in compliance with the LQG accumulation provisions of 40 CFR § 262.17. Under these provisions, an LQG may accumulate hazardous waste on-site in containers, tanks, drip pads, or containment buildings for up to 90 days from the date the waste was first placed in the accumulation area without obtaining a RCRA storage permit, provided that the generator complies with specified conditions regarding container management, labeling, dating, and closure; secondary containment; inspections; emergency preparedness; and personnel training. During TerraVerde's Phase I site reconnaissance of the McKeesport facility (conducted August 15, 2022), containers in the 90-day accumulation area were observed to be properly labeled with the words "Hazardous Waste," dated with the accumulation start date, closed when not in use, and maintained in good condition without evidence of leaking, bulging, or corrosion. Secondary containment was observed to be in place and appeared adequate. No containers appeared to have exceeded the 90-day accumulation limit based on the dates observed.
4. Biennial Hazardous Waste Reports. As a Large Quantity Generator, ACC is required to submit a Biennial Report (EPA Form 8700-13A/B) to the Pennsylvania Department of Environmental Protection every even-numbered year, reporting hazardous waste generation and management activities for the preceding odd-numbered calendar year. This requirement is set forth in 40 CFR § 262.41 and the corresponding PA DEP regulations.
Calderwood & Harkness reviewed the following biennial reports for the McKeesport facility, which were produced by ACC through Seller's counsel:
• 2018 Biennial Report (covering reporting year 2017), submitted to PA DEP;
• 2020 Biennial Report (covering reporting year 2019), submitted to PA DEP; and
• 2022 Biennial Report (covering reporting year 2021), submitted to PA DEP.
All three biennial reports appear to have been timely filed within the applicable submission deadlines. The quantities of hazardous waste reported in the biennial reports are consistent with LQG status (i.e., generation of 1,000 kg or more per calendar month) and are not inconsistent with the scale and nature of manufacturing operations conducted at the McKeesport facility. The waste codes and TSDF designations reported in the biennial reports are generally consistent with the information reflected on the manifests reviewed for the corresponding time periods, providing cross-referencing confirmation of the accuracy of ACC's waste tracking and reporting practices.
5. Inspection History. Most recent inspection: PA DEP RCRA compliance evaluation inspection conducted April 14, 2021.
Result: No violations noted.
The inspection report for the April 14, 2021 compliance evaluation was produced by ACC in response to the Environmental Document Request. The report, prepared by the PA DEP inspector, confirms that the inspection covered a comprehensive evaluation of ACC's RCRA compliance at the McKeesport facility. Specifically, the inspection report indicates that the inspector reviewed the following program areas:
• Generator status and notification, confirming that ACC's EPA identification number and generator notification were current and that ACC's generator category was correctly determined;
• Hazardous waste determination procedures, including review of the methods and documentation ACC uses to determine whether its waste streams constitute hazardous waste under the listing and characteristic criteria of 40 CFR Part 261;
• Container management, including inspection of the 90-day accumulation area for proper labeling, dating, condition of containers, closure of containers, and compliance with accumulation time limits;
• Accumulation time limits, confirming that no containers in the 90-day accumulation area had exceeded the permissible accumulation period;
• Manifest procedures, including review of manifest execution, recordkeeping, and exception reporting;
• Contingency plan and emergency procedures, including review of the written contingency plan, emergency coordinator designations, and arrangements with local emergency responders;
• Personnel training records, confirming that employees involved in hazardous waste management had received required initial and annual refresher training; and
• Land disposal restriction ("LDR") notifications and certifications, confirming that LDR documentation was properly completed and attached to manifests for applicable waste shipments.
The inspection report concluded with no violations noted and no follow-up actions required. No notice of violation, compliance advisory, or enforcement referral was issued as a result of the inspection.
In addition to the April 14, 2021 inspection, Calderwood & Harkness reviewed ACC's records and queried the PA DEP eFACTS database and the EPA RCRAInfo database for any prior RCRA violations or enforcement actions at the McKeesport facility within a ten-year lookback period (2012–2022). No prior RCRA violations, notices of violation, administrative orders, consent orders, civil penalties, or judicial enforcement actions were identified within this period.
No RCRA corrective action obligations under Section 3008(h) or Section 3004(u) of RCRA have been identified for the McKeesport facility. No RCRA Facility Assessments ("RFAs") or RCRA Facility Investigations ("RFIs") are known to have been conducted or required at this facility.
6. Additional RCRA Observations. ACC maintains a written Contingency Plan and Emergency Procedures plan for the McKeesport facility, last updated in February 2021, which is consistent with the requirements applicable to LQGs under 40 CFR § 262.17 (incorporating by reference the contingency planning requirements of 40 CFR Part 265, Subpart D). The contingency plan designates Carl Johannsen as the primary emergency coordinator for the facility, with two alternates identified by name and contact information. The plan includes evacuation routes, descriptions of emergency equipment maintained on-site, and documentation of arrangements with local emergency responders, including the Allegheny County Local Emergency Planning Committee ("LEPC") and the McKeesport City Fire Department.
Personnel training records appear current. Annual hazardous waste management training is conducted by Carl Johannsen for all employees whose duties involve, or may involve, hazardous waste management activities at the McKeesport facility. Training records for the period 2019–2022 were produced and reviewed, and they document initial training for new employees and annual refresher training for continuing employees, consistent with the requirements of 40 CFR § 265.16 (applicable to LQGs through 40 CFR § 262.17).
ACC does not hold a RCRA Treatment, Storage, or Disposal Facility ("TSDF") permit for the McKeesport facility or any other facility. All hazardous waste generated at McKeesport is shipped off-site to permitted TSDFs within the 90-day accumulation period applicable to LQGs. ACC does not operate any on-site treatment, storage (beyond 90-day accumulation), or disposal units that would trigger RCRA permitting requirements under 40 CFR Part 270.
Note Regarding Subsurface Contamination: The McKeesport facility has separate and distinct environmental issues related to subsurface contamination, including toluene detected in groundwater, trichloroethylene ("TCE") detected in sub-slab soil gas, and lead and tetrachloroethylene ("PCE") detected in soils. These conditions are addressed in detail in the Phase II Results Analysis Memorandum and the Vapor Intrusion Risk Assessment Memorandum being prepared concurrently by this firm. These subsurface conditions do not appear to be the subject of any open RCRA corrective action proceeding. However, as discussed in Section V.E below, if any solid waste management units ("SWMUs") are identified at the McKeesport facility in the context of a future RCRA Facility Assessment or other regulatory review, additional RCRA corrective action obligations could potentially arise.
B. Facility 2 — Charleroi Specialty Coatings Plant
1. Facility Identification. The Charleroi Specialty Coatings Plant is ACC's secondary manufacturing facility, specializing in water-based and UV-curable coatings. The relevant identifying information for this facility is as follows:
The Charleroi facility represents ACC's newer and environmentally cleaner manufacturing operation. The facility was constructed by ACC in 2003 on former agricultural land (a greenfield site) within an established industrial park. The facility's focus on water-based and UV-curable coatings, as opposed to solvent-based coatings, results in significantly fewer hazardous waste streams compared to the McKeesport Main Plant. This product-line distinction is the principal driver of the lower generator classification at this facility.
2. RCRA Generator Status. Classification: Small Quantity Generator (SQG)
EPA Identification Number: PAD-112-583-667
The Charleroi facility is classified as a Small Quantity Generator of hazardous waste under RCRA and is subject to the SQG requirements set forth in 40 CFR Part 262, Subpart B, as reorganized by the 2017 Generator Improvements Rule (81 Fed. Reg. 85,732 (Nov. 28, 2016)), and the corresponding PA DEP regulations at 25 Pa. Code Chapter 262a.
SQG status reflects the lower volume of hazardous waste generated at this facility, which primarily manufactures water-based and UV-curable coatings involving significantly fewer hazardous solvent-based waste streams compared to the McKeesport Main Plant. The principal hazardous waste streams generated at the Charleroi facility include:
• Limited quantities of spent solvents from equipment cleaning operations, primarily acetone and isopropyl alcohol, used in smaller volumes for equipment and line purging during product changeovers;
• Off-specification materials containing isocyanates, which are used in minor quantities in certain specialty coating formulations produced at this facility; and
• Laboratory waste from quality control and research and development operations conducted in the facility's on-site laboratory.
Based on the records reviewed, ACC generates between approximately 100 kilograms and 1,000 kilograms of hazardous waste per calendar month at the Charleroi facility, which is consistent with SQG classification under 40 CFR § 262.13(c). This generation rate has been relatively stable during the review period. The SQG classification imposes a set of regulatory requirements that are intermediate between those applicable to LQGs and those applicable to CESQGs/VSQGs, including reduced recordkeeping and reporting obligations compared to LQGs, but with meaningful container management, accumulation time limit, manifest, and emergency preparedness requirements.
3. Manifest Review. Hazardous waste manifests for the Charleroi facility were reviewed for the 2019–2021 period. Consistent with the facility's SQG status and lower volume of hazardous waste generation, the manifest activity at this facility is significantly lower than at McKeesport, with approximately four to six manifest shipments per year during the review period.
All manifests reviewed were properly executed on EPA Form 8700-22. The designated TSDFs appearing on the manifests appear to be appropriately permitted facilities. No manifest discrepancies or exception report issues were identified during the review. The waste codes, waste descriptions, and quantities reported on the manifests are consistent with the waste streams described above and with the facility's SQG status.
4. Biennial Hazardous Waste Reports. As a Small Quantity Generator, the Charleroi facility is not required to submit biennial reports under the federal RCRA regulations. The biennial reporting requirement of 40 CFR § 262.41 applies only to Large Quantity Generators. However, the Pennsylvania Department of Environmental Protection may impose certain state-specific waste reporting requirements on SQGs. A review of ACC's records indicates that ACC has complied with applicable PA DEP state-specific reporting requirements for the Charleroi facility.
ACC's generator notification (EPA Form 8700-12) for the Charleroi facility was submitted and is current, reflecting the facility's SQG status and the appropriate waste codes for the hazardous waste streams generated at the facility. Under 40 CFR § 262.18, a generator must submit a notification to EPA (or the authorized state) before treating, storing, disposing of, transporting, or offering for transportation hazardous waste. The generator must also re-notify if there is a change in generator status, waste codes, or other information previously reported.
5. Inspection History. No PA DEP RCRA inspections were identified for the Charleroi facility within the review period (2012–2022) based on review of ACC's records, the PA DEP eFACTS database, and the EPA RCRAInfo database. The absence of inspections is not unusual for SQG facilities, which are generally subject to lower inspection priority and frequency compared to LQGs in EPA's and state agencies' compliance monitoring programs.
No violations, enforcement actions, consent orders, or RCRA corrective action obligations were identified for the Charleroi facility. The facility has a clean regulatory history since its construction and commencement of operations in 2003.
The Phase I Environmental Site Assessment prepared by TerraVerde for the Charleroi facility (dated August 18, 2022) identified no Recognized Environmental Conditions ("RECs"), Controlled Recognized Environmental Conditions ("CRECs"), or Historical Recognized Environmental Conditions ("HRECs") at the site, confirming the facility's clean environmental profile. This is consistent with the facility's history as a greenfield development on former agricultural land with no prior industrial use.
6. Additional RCRA Observations. SQG accumulation provisions under 40 CFR § 262.16 appear to be followed at the Charleroi facility. Under these provisions, an SQG may accumulate hazardous waste on-site for up to 270 days without a RCRA storage permit, provided that the waste is shipped off-site to a TSDF located more than 200 miles from the generator's site, or for up to 180 days if the waste is shipped to a TSDF located 200 miles or less from the generator's site. ACC's primary TSDFs (Clean Harbors in Deer Park, Texas and Heritage Environmental Services in East Chicago, Indiana) are located more than 200 miles from the Charleroi facility, and therefore the 270-day accumulation limit applies. A review of ACC's records indicates that waste shipments from Charleroi have been made within the applicable accumulation time limits during the review period.
Written emergency procedures are maintained at the Charleroi facility consistent with SQG requirements under 40 CFR § 262.16(b)(9). While the SQG emergency procedure requirements are less detailed than the full contingency planning requirements applicable to LQGs, they include posting of the name and telephone number of the emergency coordinator, the locations of fire extinguishers and emergency equipment, and the telephone number of the local fire department.
No RCRA TSDF permit is required for or held by the Charleroi facility. All hazardous waste is shipped off-site to permitted TSDFs within the applicable regulatory timeframes.
Based on the foregoing review, the Charleroi facility presents a low RCRA risk profile.
C. Facility 3 — Clarksburg Resin Blending Facility
1. Facility Identification. The Clarksburg Resin Blending Facility is a leased facility used for resin receipt, blending, and redistribution, with minimal manufacturing activity. The relevant identifying information for this facility is as follows:
The Clarksburg facility is a leased property, which distinguishes it from the McKeesport and Charleroi facilities that are owned in fee simple by ACC. The lease is structured as a triple-net lease, and the environmental provisions of the lease allocate responsibility for remediation of tenant-caused contamination to the tenant (i.e., ACC). The environmental provisions of the Clarksburg lease are analyzed in detail in the Clarksburg Lease Environmental Provisions Analysis memorandum prepared separately by this firm.
The historical use of the property as a trucking terminal, including the presence and removal of a 15,000-gallon diesel underground storage tank ("UST") in 2012 by the prior tenant, Valley Freight Lines Inc. (now dissolved), is a relevant historical condition. The UST removal and associated soil remediation were conducted under the West Virginia UST program. A closure letter was issued by WV DEP on March 22, 2013 (WV DEP Site ID: WVUST-2012-04887). Institutional controls associated with the UST closure were recorded at the Harrison County Clerk's Office at Book 1245, Page 312. This historical UST condition is managed under the WV UST program (RCRA Subtitle I) rather than RCRA Subtitle C (hazardous waste), and it is discussed in the Phase I ESA Review Memorandum for the Clarksburg facility and the Clarksburg Lease Environmental Provisions Analysis.
2. RCRA Generator Status. Classification: Conditionally Exempt Small Quantity Generator (CESQG) / Very Small Quantity Generator (VSQG)
EPA Identification Number: WVD-054-319-882
The Clarksburg facility is classified as a Conditionally Exempt Small Quantity Generator ("CESQG") of hazardous waste under the longstanding RCRA regulations. This generator category has been redesignated as "Very Small Quantity Generator" ("VSQG") under the 2017 Generator Improvements Rule (81 Fed. Reg. 85,732); however, the West Virginia Department of Environmental Protection continues to reference both terms in its guidance and regulatory materials. For purposes of this memorandum, both designations are used interchangeably.
CESQG/VSQG status reflects the very limited hazardous waste generation at this facility. The Clarksburg facility is primarily a blending and redistribution operation rather than a full-scale manufacturing site. Raw materials (primarily epoxy resins and hardeners) are received at the facility, blended to customer specifications, and redistributed. The amount of hazardous waste generated as a byproduct of these operations is minimal.
The principal hazardous waste streams at the Clarksburg facility include:
• De minimis quantities of off-specification resins that cannot be reworked or returned to the manufacturing process; and
• Small quantities of spent solvent (primarily acetone and MEK) from equipment cleaning operations.
Based on the records reviewed, ACC generates less than 100 kilograms of hazardous waste per calendar month at the Clarksburg facility, which is the threshold for CESQG/VSQG classification under 40 CFR § 262.13(a). CESQG/VSQG status carries significantly reduced regulatory obligations compared to SQG or LQG status, as discussed in Section 6 below.
3. Manifest Review. Manifest activity at the Clarksburg facility is very limited, consistent with the facility's CESQG/VSQG status. Approximately one to two hazardous waste shipments per year were made from the Clarksburg facility during the 2019–2021 review period. Manifests for these shipments were reviewed and no discrepancies were noted. All manifests were properly completed and identified permitted TSDFs as the receiving facilities.
As a CESQG/VSQG, ACC is permitted under 40 CFR § 262.14 to send hazardous waste to a broader range of facilities than those available to SQGs and LQGs, including certain state-permitted solid waste facilities, in addition to RCRA-permitted TSDFs. However, ACC's records indicate that it has voluntarily utilized permitted TSDFs for disposal of hazardous waste from the Clarksburg facility, which is a conservative and commendable practice.
4. Biennial Hazardous Waste Reports. As a CESQG/VSQG, the Clarksburg facility is not required to submit biennial hazardous waste reports under either federal RCRA regulations or West Virginia DEP regulations. No biennial reports were identified or expected for this facility.
5. Inspection History. No WV DEP RCRA inspections were identified for the Clarksburg facility during the review period (2012–2022) based on review of ACC's records, the WV DEP database, and the EPA RCRAInfo database. The absence of RCRA inspections is common for CESQG/VSQG facilities, which receive the lowest inspection priority in state and federal compliance monitoring programs due to their minimal hazardous waste generation.
No violations, enforcement actions, consent orders, or RCRA corrective action obligations were identified for the Clarksburg facility.
Note Regarding Legacy UST Contamination: As noted above, the legacy diesel UST contamination at this facility (WV DEP Site ID: WVUST-2012-04887; closure letter issued March 22, 2013; institutional controls recorded at Harrison County Clerk's Office, Book 1245, Page 312) is managed under the WV UST program (RCRA Subtitle I) and is not a RCRA Subtitle C hazardous waste issue. The UST-related conditions are discussed in the Phase I ESA Review Memorandum for the Clarksburg facility and the Clarksburg Lease Environmental Provisions Analysis.
Note Regarding Pending Phase II Analytical Results: A Phase II Environmental Site Assessment was commenced at the Clarksburg facility on October 3, 2022, with field sampling activities completed on October 7, 2022. Analytical results from Keystone Analytical Laboratories, Inc. remain pending as of the date of this memorandum. The Phase II investigation was conducted to evaluate potential subsurface impacts in the vicinity of the former UST location and certain other areas identified by TerraVerde during the Phase I ESA. If the Phase II analytical results reveal the presence of hazardous constituents above applicable screening levels, the RCRA analysis for the Clarksburg facility may need to be updated. This memorandum should be supplemented when and if those results are received.
6. Additional RCRA Observations. CESQG/VSQG status carries a substantially reduced regulatory burden compared to SQG or LQG status. Under 40 CFR § 262.14, a CESQG/VSQG is not subject to the full manifest requirements, biennial reporting requirements, contingency planning requirements, or personnel training requirements that apply to SQGs and LQGs. However, a CESQG/VSQG is still required to make hazardous waste determinations under 40 CFR § 262.11 and must manage its hazardous waste in a manner that does not present an imminent and substantial endangerment to human health or the environment.
Notably, although the federal regulations do not require CESQGs/VSQGs to use hazardous waste manifests for shipments of quantities under 100 kilograms, ACC voluntarily manifests all hazardous waste shipments from the Clarksburg facility. This practice is a best practice that provides enhanced documentation and chain-of-custody tracking for hazardous waste shipments and demonstrates ACC's commitment to sound environmental management practices even where not legally required.
The environmental provisions of the Clarksburg lease allocate responsibility for remediation of tenant-caused contamination to ACC as the tenant. Accordingly, any RCRA-regulated releases by ACC during its tenancy at the Clarksburg facility would be ACC's remediation obligation under the terms of the lease. Because the proposed Transaction is structured as a stock purchase, Crestline will succeed to ACC's lease obligations, including the environmental remediation obligation, upon closing.
Based on the foregoing review, the Clarksburg facility presents a low RCRA risk profile.
D. Facility 4 — Weirton Warehouse & Distribution Center
1. Facility Identification. The Weirton Warehouse & Distribution Center is a leased facility used exclusively for finished goods storage and distribution. The relevant identifying information for this facility is as follows:
The Weirton facility is the most recently developed of ACC's four facilities and is the only facility at which no manufacturing, mixing, blending, or other production activities occur. The facility is used exclusively for the warehousing and distribution of finished, packaged coating products. The building was constructed in 2016 on a parcel that was previously part of a larger Granite Harbor & Co. site, which underwent environmental remediation under the West Virginia Voluntary Remediation and Development Program ("VRDP"). A Certificate of Completion was issued by WV DEP in September 2015, prior to construction. Engineering controls (a cap system) and institutional controls (land use restrictions) were implemented as part of the VRDP remediation and remain in effect. A deed restriction reflecting the institutional controls was recorded at the Hancock County Clerk's Office at Book 487, Page 89.
The VRDP-related conditions at the Weirton site are managed under the WV VRDP program and are not RCRA Subtitle C matters. These conditions are discussed in the Weirton Lease and VRDP Certificate Review memorandum prepared separately by this firm.
2. RCRA Generator Status. Classification: Not a hazardous waste generator
No EPA Identification Number is required for the Weirton facility, and none has been obtained by ACC. No hazardous waste is generated at this facility. The Weirton Warehouse & Distribution Center is used exclusively for the storage and distribution of finished coating products in sealed, packaged form. No manufacturing, mixing, blending, formulation, equipment cleaning, laboratory operations, or other activities that would generate hazardous waste as defined under 40 CFR Part 261 are conducted at this facility.
Because the Weirton facility is not a generator of hazardous waste, it is not subject to the hazardous waste generator requirements of 40 CFR Part 262, including EPA identification number requirements, manifest requirements, accumulation provisions, biennial reporting requirements, contingency planning requirements, or personnel training requirements applicable to generators.
3. Manifest Review. Not applicable. No hazardous waste is generated or shipped from the Weirton facility.
4. Biennial Hazardous Waste Reports. Not applicable. The Weirton facility is not a hazardous waste generator and is not subject to biennial reporting requirements.
5. Inspection History. No WV DEP RCRA inspections were identified for the Weirton facility during the review period, which is expected given the absence of hazardous waste generator activity at this facility. No violations, enforcement actions, consent orders, or RCRA corrective action obligations were identified.
Note Regarding VRDP Controls: The institutional and engineering controls at the Weirton site that were implemented in connection with the WV VRDP Certificate of Completion are managed under the WV VRDP program and are not RCRA Subtitle C matters. Compliance with and maintenance of these controls are discussed in the Weirton Lease and VRDP Certificate Review memorandum.
6. Additional RCRA Observations. No RCRA Subtitle C compliance obligations apply to the Weirton facility with respect to hazardous waste generation, management, or disposal. The only RCRA-adjacent requirements potentially applicable to the Weirton facility relate to universal waste management. Under 40 CFR Part 273, facilities that accumulate universal wastes (including spent fluorescent lamps, batteries, pesticides, and mercury-containing equipment) in quantities below the threshold of 5,000 kilograms are subject to the small quantity handler of universal waste provisions. ACC's records indicate that the Weirton facility may accumulate small quantities of spent fluorescent lamps and batteries generated from routine facility maintenance, and that ACC manages these materials in compliance with the universal waste provisions of 40 CFR Part 273 and the corresponding WV DEP regulations.
Based on the foregoing review, the Weirton facility presents no RCRA risk profile concerns.
IV. Summary of RCRA Generator Status Across All Facilities
The following table summarizes the RCRA generator status, EPA identification numbers, and inspection history for each of ACC's four operating facilities:
As reflected in the table above, ACC's RCRA generator status ranges from Large Quantity Generator at its primary manufacturing facility (McKeesport) to non-generator status at its warehouse and distribution facility (Weirton). This distribution is consistent with the nature and scale of operations conducted at each facility and does not present any anomalies or inconsistencies. No open violations, pending enforcement actions, or corrective action obligations have been identified at any facility.
V. Cross-Cutting RCRA Compliance Observations
In addition to the facility-by-facility analysis presented above, Calderwood & Harkness identified a number of cross-cutting RCRA compliance observations that apply across multiple ACC facilities and that are relevant to the overall risk assessment for the Transaction. These observations are discussed below.
A. Hazardous Waste Determination Procedures
ACC performs hazardous waste determinations in accordance with the requirements of 40 CFR § 262.11 at the point of generation at each of its facilities that generate hazardous waste. Carl Johannsen, ACC's Environmental Health & Safety Manager, oversees hazardous waste determination procedures at all four facilities, including periodic site visits to the Charleroi, Clarksburg, and Weirton facilities.
Waste characterization at ACC relies on a combination of process knowledge and analytical testing. Process knowledge — i.e., the generator's knowledge of the raw materials, chemical processes, and waste-generating operations involved — is used as the primary basis for determining whether a waste stream constitutes a listed hazardous waste under 40 CFR §§ 261.31–261.33. For characteristic waste determinations (ignitability, corrosivity, reactivity, and toxicity under 40 CFR §§ 261.21–261.24), ACC supplements process knowledge with analytical testing, including Toxicity Characteristic Leaching Procedure ("TCLP") analyses, to confirm whether waste streams exhibit any of the four characteristics of hazardous waste.
Based on our review of ACC's waste determination documentation, including waste profiles, TCLP analytical reports, and waste characterization records, no deficiencies were observed in ACC's hazardous waste determination procedures. Waste codes assigned to manifested waste streams appear consistent with the known composition and characteristics of the waste and with the results of TCLP analyses where available.
B. Training. At the McKeesport Main Plant (LQG), ACC is subject to the personnel training requirements of 40 CFR § 265.16, as applicable to LQGs through 40 CFR § 262.17. These requirements mandate that facility personnel who handle hazardous waste must successfully complete a training program that teaches them to perform their duties in compliance with RCRA requirements. Initial training must be completed within six months of employment, and annual refresher training is required thereafter. Training records must be maintained at the facility and must document the job title, job description, and training received by each employee.
ACC meets these LQG training requirements at McKeesport through an annual training program administered by Carl Johannsen. Training records for the period 2019–2022 were produced by ACC and reviewed by Calderwood & Harkness. The records document initial training for new employees and annual refresher training for continuing employees involved in hazardous waste management activities. The training program covers hazardous waste identification and characterization, container management procedures, manifest execution, emergency response procedures, and spill prevention and response.
At the Charleroi Specialty Coatings Plant (SQG), SQG training requirements under 40 CFR § 262.16(b)(9)(iii) are met. While the SQG training requirements are less prescriptive than those applicable to LQGs, SQGs must ensure that all employees are thoroughly familiar with proper waste handling and emergency procedures relevant to their responsibilities.
At the Clarksburg Resin Blending Facility (CESQG/VSQG), there is no formal RCRA training obligation under federal regulations for CESQGs/VSQGs. However, ACC provides basic hazardous materials handling training to personnel at the Clarksburg facility as a matter of corporate policy. This practice, while not legally required under RCRA, is consistent with best management practices and demonstrates a responsible approach to environmental compliance.
C. Emergency Preparedness
The McKeesport Main Plant's Contingency Plan and Emergency Procedures plan, last updated in February 2021, satisfies the contingency planning requirements applicable to LQGs under 40 CFR Part 262, Subpart M (incorporating by reference the requirements of 40 CFR Part 265, Subpart D). The plan includes the following elements:
• Designation of Carl Johannsen as the primary emergency coordinator for the facility, with two alternates identified by name, title, office telephone number, home telephone number, and cellular telephone number;
• Description of evacuation routes and procedures, including facility maps showing primary and secondary evacuation routes and designated assembly areas;
• Description of arrangements with local emergency responders, including the Allegheny County Local Emergency Planning Committee ("LEPC") and the McKeesport City Fire Department, consistent with the requirement of 40 CFR § 265.37(a);
• Description of emergency equipment maintained on-site, including portable fire extinguishers, spill containment materials, decontamination equipment, and personal protective equipment;
• Notification procedures for reporting emergencies to local authorities, the National Response Center, and PA DEP, as applicable; and
• Procedures for emergency response to fires, explosions, and releases of hazardous waste or hazardous waste constituents.
The Charleroi facility (SQG) and Clarksburg facility (CESQG/VSQG) maintain simplified emergency procedure postings consistent with the applicable requirements for their respective generator categories. SQG emergency preparedness requirements under 40 CFR § 262.16(b)(9) require posting of emergency information in a conspicuous location near the telephone. CESQG/VSQG facilities have no formal emergency preparedness requirements under federal regulations, but ACC maintains basic emergency procedure postings at the Clarksburg facility as a best practice.
No emergency incidents requiring activation of contingency plans or emergency procedures were reported at any ACC facility during the review period (2019–2022), based on ACC's records and information provided by Carl Johannsen.
D. Land Disposal Restrictions (LDR)
Land disposal restriction ("LDR") notifications and certifications for hazardous waste shipments from the McKeesport facility were reviewed as part of the manifest review process. Under the LDR program, set forth in 40 CFR Part 268, generators of hazardous waste are required to determine whether their waste is restricted from land disposal, and if so, to provide appropriate notification to the receiving TSDF. LDR notifications must be attached to the manifest or otherwise provided to the TSDF.
The LDR notifications and certifications reviewed for McKeesport waste shipments appear to have been properly completed and attached to manifests as required. The notifications identify the applicable treatment standards, waste codes, and subcategories for each waste stream. No deficiencies in LDR compliance were identified during the review.
E. RCRA Corrective Action
No RCRA corrective action obligations under Section 3008(h) or Section 3004(u) of RCRA have been identified at any ACC facility. Section 3004(u) of RCRA requires corrective action for releases from solid waste management units ("SWMUs") at RCRA-permitted TSDFs and, through EPA policy and practice, has been applied to facilities subject to RCRA corrective action authority. Section 3008(h) provides independent authority for EPA or authorized states to require corrective action at interim status TSDFs. Because ACC does not hold a RCRA TSDF permit and has never operated as a TSDF, the Section 3004(u) corrective action trigger has not been implicated.
No solid waste management units ("SWMUs") have been formally identified at any ACC facility by PA DEP or WV DEP in the context of RCRA corrective action proceedings. No RCRA Facility Assessments ("RFAs") or RCRA Facility Investigations ("RFIs") have been conducted or ordered at any ACC facility, based on available records and regulatory database searches.
However, it must be noted that the subsurface contamination conditions identified at the McKeesport facility during the Phase II Environmental Site Assessment — including toluene in groundwater, trichloroethylene ("TCE") in sub-slab soil gas, and lead and tetrachloroethylene ("PCE") in soils — are conditions that, in theory, could implicate RCRA corrective action authority if solid waste management units are identified at the facility in the future. These conditions are currently being addressed through the Pennsylvania Act 2 Land Recycling and Environmental Remediation Standards Act (35 P.S. §§ 6026.101–6026.908) framework rather than through RCRA corrective action. The Act 2 program is Pennsylvania's voluntary cleanup program and provides a liability release mechanism for participants who demonstrate attainment of applicable remediation standards. However, the Act 2 program is distinct from and does not preempt RCRA corrective action authority. If PA DEP were to expand its review of the McKeesport facility or if SWMUs were identified in a future RCRA Facility Assessment — for example, in connection with a future permitting action or regulatory inspection — additional RCRA corrective action obligations could arise. The likelihood of this scenario is assessed in the companion Comprehensive Environmental Diligence Summary Memorandum.
F. Successor Liability Considerations
The structure of the Proposed Acquisition as a stock purchase has direct and significant implications for RCRA compliance and liability. Because Crestline will acquire one hundred percent of the outstanding common stock of ACC, ACC will continue to exist as a legal entity and will retain all of its existing RCRA obligations, liabilities, and regulatory relationships. Crestline, as the sole shareholder of ACC, will control the entity that holds those obligations.
This is in contrast to an asset purchase structure, where the seller retains its corporate identity and associated liabilities, and the buyer acquires only the specified assets. In an asset purchase, RCRA liabilities might — depending on applicable state law, the terms of the asset purchase agreement, and federal regulatory policy — remain with the seller entity. However, even in an asset purchase, successor liability doctrines, the "mere continuation" exception, and federal environmental liability principles may in certain circumstances impose RCRA liability on an asset purchaser. In the stock purchase context presented here, these successor liability complexities do not arise because ACC itself continues as the RCRA-regulated entity.
Specifically, upon closing of the Transaction:
(i) ACC's EPA identification numbers (PAD-098-721-445, PAD-112-583-667, and WVD-054-319-882) will remain in effect and associated with ACC as the generator entity;
(ii) ACC's generator status classifications (LQG at McKeesport, SQG at Charleroi, CESQG/VSQG at Clarksburg, non-generator at Weirton) will continue unchanged;
(iii) ACC will remain responsible for compliance with all applicable RCRA requirements at each facility, including generator requirements, manifest requirements, reporting requirements, and any contingent corrective action obligations; and
(iv) Any historical liabilities arising from past hazardous waste management practices at ACC's facilities will remain with ACC and will be inherited by Crestline as the new owner of ACC.
Crestline should ensure that ACC's RCRA Generator Notification (EPA Form 8700-12) is updated promptly following closing to reflect any changes in ownership information, contact persons, or other relevant details, but the existing EPA identification numbers will remain in effect. Under 40 CFR § 262.18, a generator must provide notification of any changes by submitting an updated Form 8700-12 to the appropriate EPA Regional Administrator or authorized state agency.
VI. Conclusions and Recommendations
A. Overall Compliance Assessment
Based on Calderwood & Harkness's review of ACC's RCRA compliance records, hazardous waste manifests, biennial hazardous waste reports, inspection history, regulatory database searches, Phase I Environmental Site Assessment reports, and interviews with ACC's EHS Manager, ACC is in substantial compliance with RCRA Subtitle C hazardous waste requirements across all four of its operating facilities.
No open violations have been identified at any ACC facility. No pending enforcement actions, consent orders, administrative orders on consent, unilateral administrative orders, or judicial enforcement proceedings under RCRA have been identified. No RCRA corrective action obligations under Section 3004(u) or Section 3008(h) of RCRA have been identified. No solid waste management units have been formally designated at any ACC facility.
The McKeesport Main Plant (LQG) presents the highest RCRA risk profile among the four facilities due to the volume and nature of hazardous waste generated, the presence of multiple listed and characteristic hazardous waste streams, and the operational complexity of the facility. However, the April 14, 2021 PA DEP RCRA compliance evaluation inspection — which resulted in no violations — provides favorable and relatively recent evidence of compliance at this facility. Additionally, the absence of any violations or enforcement actions within the ten-year lookback period (2012–2022) supports the conclusion that ACC has maintained a consistent record of RCRA compliance at McKeesport.
The Charleroi Specialty Coatings Plant (SQG) presents a low RCRA risk profile, reflecting its newer construction, greenfield development history, limited hazardous waste generation, and clean regulatory record. The Clarksburg Resin Blending Facility (CESQG/VSQG) presents a similarly low RCRA risk profile, reflecting its minimal hazardous waste generation and the limited scope of manufacturing activities at the facility. The Weirton Warehouse & Distribution Center (non-generator) presents a negligible RCRA risk profile, as no hazardous waste is generated at the facility.
B. Risk Assessment for Transaction
No material RCRA-related liabilities have been identified that would independently warrant a purchase price adjustment, specific RCRA-focused indemnification provisions beyond those already contemplated in the broader environmental representations and indemnification provisions of the draft Stock Purchase Agreement, or other material transaction-level adjustments. The RCRA compliance picture across all four facilities is favorable and does not present a basis for deduction from or adjustment to the $94.5 million purchase price.
However, the RCRA compliance picture should be read together with and in the context of the broader environmental risk profile at the McKeesport facility. As