AQ_F_0100010_20221006_ENF_SOC-Corr_FinalDraft

KILPATRICK KILPATRICKTOWNSENO&STOCKTONLLP
TOWNSEND OCT 0 6 2022 www.tJpaRu.ktowneend.wm
T�aNEa� o.,
AIR QUALITY
STATIONARY SOURCE COMPLIANCE Suite 1400,4208 Six Forks Road
Raleigh,NC 27609
1919 420 1700 f 919 420 1800
direct dial 919 420 1726
di=t fax [phone]
TRoessler@KilpaDickTownsend.00m
October 3, 2022
Taylor Crabtree
Assistant Attorney General
Environmental Division
114 W. Edenton Street
Raleigh, North Carolina 27603
Re: Stericycle, Inc. v. North Carolina Department of Environmental Quality,
Division of Air Quality,20 EHR 00968—Special Order by Consent and
Settlement Original Signature Pages
Dear Taylor:
As requested, please find enclosed the original signature pages for the Special Order by
Consent and Settlement Agreement in the above-referenced case. Please let me know if you need
anything else or have any questions.
Sincerely,
l � i
Todd S. Roessler
Enclosure
ANCHORAGE ATLANTA AUGUSTA BEIJING CHARLOTTE DALLAS DENVER HOUSTON LOS ANGELES NEWYORK RALEIGH SAN DIEGO
SAN FRANCISCO SEATTLE SHANGHAI SILICON VALLEY STOCKHOLM TOKYO WALNUT CREEK WASHINGTON WINSTON-SALEM
20881121VA

STATE OF NORTH CAROLINA IN THE OFFICE OF
ADMINISTRATIVE HEARINGS
COUNTY OF ALAMANCE 20 EHR 00968
STERICYCLE, INC.,
Petitioner,
SETTLEMENT AGREEMENT
V.
NORTH CAROLINA DEPARTMENT OF
ENVIRONMENTAL QUALITY,
DIVISION OF AIR QUALITY,
Respondent.
Petitioner Stericycle, Inc. ("Stericycle") and Respondent North Carolina Department of
Environmental Quality,Division of Air Quality("DAQ")(collectively,the"Parties")hereby enter
into this Settlement Agreement("Agreement")in order to resolve a matter in controversy between
them. This matter arose out of the issuance of a civil penalty assessment by the DAQ.
WHEREAS Stericycle operates a facility in Haw River, NC (hereafter referred to as the
"Facility") with two hospital, medical, and infectious waste incinerators ("HMIWIs'.') known as
Unit 1 and Unit 2. The Facility currently operates under Title V Air Quality Permit No. 05896T25,
issued on December 19, 2016.
WHEREAS the Facility is subject to 15A NCAC 02D.1206,which establishes regulations
for HMIWIs in North Carolina requiring HMIWIs to adhere to emissions standards and operational
standards as well as monitoring, recordkeeping, and reporting requirements. Rule 02D .1206
1

incorporates by reference portions of the federal New Source Performance Standards including 40
CFR § 60.56c. 15A NCAC 02D .1206(d)(4).
WHEREAS this section of the federal regulations provides that the "[u]se of the bypass
stack shall constitute a violation of the PM, dioxin/furan, HCI, Pb, Cd and Hg emissions limits."
40 CFR § 60.56c(f)(6).
WHEREAS on April 22, 2019, the bypass stack at Unit 1 was opened as designed for
eleven(11)minutes after a fuse blew in the control panel.
WHEREAS on August 13, 2019, the bypass stack at Unit 2 was opened as designed for
thirteen(13)minutes after a breach in the piping in the Facility's packed bed scrubber.
WHEREAS based on these two bypass events DAQ issued a Civil Penalty Assessment in
the amount of$10,000 with$308 in investigation costs on January 31, 2020.
WHEREAS Petitioner filed a Petition for Contested Case Hearing on February 28, 2020
challenging this Civil Penalty Assessment.
WHEREAS on November 22,2021, Stericycle filed a notice of voluntary dismissal without
prejudice to allow the parties additional time to resolve the matters in controversy between them.
NOW THEREFORE, for and in consideration of the mutual promises contained herein and
without the adjudication of the findings of fact or conclusions of law set forth herein, the Parties
agree to settle the controversy as follows:
1. In order to avoid the cost and delay of further litigation, the Parties have entered into this
Agreement and have agreed that all Parties have been correctly designated and that there
is no question as to misjoinder or nonjoinder.
2

2. In any challenge to any future civil penalty assessment levied by DAQ based on the use of
the bypass stack, Stericycle agrees that it will not raise 15A NCAC 2D .0535 as a defense
in such a challenge unless (1) there has been a substantive change in either the law or
regulation relating to HMIWIs, 15A NCAC 2D .0535, or provisions governing periods of
startup, shutdown and malfunction, including any substantive change in applicable federal
law or regulation that is incorporated by reference, which occurs after the effective date of
this Agreement, and (2) Stericycle contends that as a result of this change 15A NCAC 2D
.0535 is applicable to bypass events at the Facility.
3. Stericycle agrees that it will not refile its challenge to the civil penalty issued on January
31, 2020.
4. DAQ agrees that it can consider, as part of its evaluation of the assessment factors in N.C.
Gen. Stat. § 14313-282.1 and as part of its enforcement discretion in deciding whether to
issue a civil penalty for bypass events,whether Stericycle has timely demonstrated to DAQ
that the bypass event was the result of an unavoidable mechanical or operational failure.
Subject to the restrictions set forth in Paragraph 2, Stericycle reserves the right to file a
Petition for Contested Case Hearing to challenge any such determinations made by DAQ
pursuant to N.C. Gen. Stat. § 15013-23.
5. The Parties agree and acknowledge that they have reviewed, negotiated and agreed to the
terms herein as a result of an arms' length transaction entered in good faith. No inference
or presumption shall be made against the drafter of this document as to the meaning of any
term herein.
3

6. The Parties agree and acknowledge that the consideration for this settlement is the promises
contained herein and that this Agreement contains the whole agreement between them.
7. This Agreement shall be construed and interpreted in accordance with the laws of the State
of North Carolina, without giving effect to North Carolina's rules concerning conflicts of
laws. The exclusive venue for enforcement of this Agreement is North Carolina.
8. This Agreement shall become effective immediately following execution by both of the
Parties. In the interests of time and efficiency, the signature pages may be delivered
separately to the Parties. Scanned and e-mailed execution are as valid as original execution.
Thereafter, all copies of the Agreement and executed signature pages shall constitute an
original.
9. This Agreement shall be binding upon the Parties, their successors and assigns, upon
execution by the undersigned, who represent and warrant that they are authorized to enter
into this Agreement on behalf of the Parties hereto.
10. This Agreement is entered into knowingly, intelligently, and voluntarily.
[signatures on following page(s)]
4

RESPONDENT NC DEPARTMENT OF ENVIRONMENTAL QUALITY,
DIVISION OF AIR QUALITY
Sign
BY Here
Michael Abraczinskas
Director
Division of Air Quality
North Carolina Department of Environmental Quality
Date:
-------------------------additional signature on the following page----
5

PETITIONE T R C E, INC.
By:
ichard M. Moore
Executive Vice President
North American Operations
Date:
6

BEFORE THE NORTH CAROLINA
ENVIRONMENTAL MANAGEMENT COMMISSION
STATE OF NORTH CAROLINA )
COUNTY OF WAKE )
IN THE MATTER OF: ) SPECIAL ORDER BY CONSENT
STERICYCLE, INC. )
SOC 2022-
HAW RIVER, ALAMANCE COUNTY )
NORTH CAROLINA )
[SITE NUMBER 1000010] )
This SPECIAL ORDER BY CONSENT(hereinafter referred to as the"ORDER")is made
and entered into pursuant to North Carolina General Statute 143-215.110 by and between
STERICYCLE, INC. (hereafter referred to as the "COMPANY") and the ENVIRONMENTAL
MANAGEMENT COMMISSION, an agency of the State of North Carolina(hereinafter referred
to as the"COMMISSION").
WITNESSETH:
I. The COMMISSION and the COMPANY do hereby stipulate and agree to the following:
A. The COMPANY operates a facility in Haw River,NC (hereafter referred to as the
"FACILITY") with two hospital, medical, and infectious waste
incinerators ("HMIWIs") known as Unit 1 and Unit 2. The FACILITY currently
operates under Title V Air Quality Permit No. 05896T25, issued on December 19,
2016.
B. To control emissions from the HMIWIs, each is equipped with several control
devices, including a packed bed scrubber, a venturi scrubber, and a sulfur
impregnated carbon bed. Each is also equipped with a bypass stack, which is
designed to allow the FACILITY to divert high pressure and high temperature gases
and circumvent its emission control equipment, thereby releasing uncontrolled
emissions into the atmosphere, in the event of a process upset that may result in a
potentially catastrophic event that could cause harm to the employees, the
FACILITY, and the environment.

Special Order By Consent
STERICYCLE, INC.
C. The FACILITY is subject to 15A NCAC 02D .1206, which establishes regulations
for HMIWIs in North Carolina requiring HMIWIs to adhere to emissions standards
and operational standards as well as monitoring, recordkeeping, and reporting
requirements. Rule 02D .1206 incorporates by reference portions of the federal
New Source Performance Standards including 40 CFR § 60.56c. 15A NCAC 02D
.1206(d)(4).
D. This section of the federal regulations provides that the "[u]se of the bypass stack
shall constitute a violation of the PM, dioxin/furan, HCI, Pb, Cd and Hg emissions
limits." 40 CFR § 60.56c(f)(6). The COMPANY contends, among other things,
that these violations can be excused by the SSM defense set forth in 15A NCAC
2D .0535.
E. On April 22, 2019, the bypass stack at Unit 1 was opened as designed for eleven
(I1)minutes after a fuse blew in the control panel.
F. On August 13,2019,the bypass stack at Unit 2 was opened as designed for thirteen
(13)minutes after a breach in the piping in the FACILITY's packed bed scrubber.
G. On January 31, 2020, the bypass stack at Unit 1 was opened as designed for three
(3)minutes after a relay on the ash system shorted out.
H. On March 29, 2020, the bypass stack at Unit 2 was opened as designed for twelve
(12) minutes after a faulty draft transmitter registered a positive draft when in fact
the system was shutting down normally.
I. On July 2, 2020,the bypass stack at Unit 1 was opened as designed for eleven(11)
minutes after a failure in the water level controller in the primary cooling vessel
caused a low water condition.
J. On July 23, 2020, the bypass stack at Unit 2 was opened as designed for five (5)
minutes after an ID fan vibration sensor detected high vibrations and automatically
initiated a fan shutdown sequence.
K. On October 22, 2020, the bypass stack at Unit 1 was opened as designed for three
(3) minutes after a fault in the programmable logic controller resulted in control
power loss.
L. On November 13,2020,the bypass stack at Unit 2 was opened as designed for three
(3) minutes after a faulty level controller in the cooling tower caused an
unacceptably high temperature in the absorber.
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Special Order By Consent
STERICYCLE, INC.
M. On February 1,2021,the bypass stack at Unit 1 was opened as designed for two(2)
minutes after a faulty feed hopper resulted in a programmable logic controller fault.
N. On February 3,2021,the bypass stack at Unit 2 was opened as designed for two (2)
minutes after a short in a conduit caused the programmable logic controller to fault.
O. On September 15,2021,the bypass stack at Unit 2 was opened as designed for two
(2) minutes after the lead operator mistakenly turned off the scrubber in Unit 2
when intending to shut off Unit 1.
P. On October 15,2021,the bypass stack at Unit 1 was opened as designed for twelve
(12) minutes after the absorber pump failed, resulting in high absorber
temperatures.
Q. On December 31, 2021, the bypass stack at Unit 1 was opened as designed for six
(6)minutes due to an electrical short in wiring in the conduit next to the feed hopper
which tripped the programmable logic controller.
R. On April 28, 2022, the bypass stack at Unit 2 was opened as designed for one (1)
hour and two (2) minutes due to a loss of cooling water flow, which resulted in a
high adsorber temperature.
S. The COMPANY has undertaken efforts to reduce the frequency of bypass events
at the FACILITY.
T. The COMPANY commissioned a risk analysis to identify potential process and
infrastructure improvements that could help reduce the frequency and duration of
events that result in opening of the bypass stack.
U. Based on the results of that analysis, the COMPANY has committed to make the
following upgrades to the FACILITY, which are intended to address design
changes that may mitigate identified process failure modes and their consequences
and may result in mitigating events that result in use of the bypass stacks at the
FACILITY.
1. Electrical: Wiring redone,including consideration of wire routing to bypass
critical components;more robust DC power supply, including separation of
power sources to bypass critical components and non-critical components;
redundant power supplies for all 24VDC devices; power supplies with
selective fuse break technology; redundant AC power supply; new control
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Special Order By Consent
STERICYCLE, INC.
panels; new electrical components (fuses, circuit breakers, power supplies,
etc.); and new uninterruptible power supply.
2. Mechanical S st: Redundant pump for evaporative cooler brine
recirculation; acid gas absorber and evaporative cooler pumps switched
from belt driven to direct driven; replace piping between the new pumps
and the system components; new, stainless steel pipe supports; convert
emergency bypass system from hydraulic to pneumatic; and replace limit
switches and add new switches to certain locations.
3. Instruments: New instruments; thermocouples replaced with duplex
thermocouples; and redundant duplex thermocouples in bypass critical
locations.
4. Controls: New HMI control and process monitoring screens; redundant
HMI computers and screens; and new control logic(automatic switching to
redundant pumps, comparative logic between redundant thermocouples,
more robust alarming and interlocks, active control of process related
equipment, etc.).
THEREFORE, the COMMISSION and the COMPANY, desiring to resolve and settle the
compliance issues between them, have agreed to enter into this ORDER with the following terms
and conditions:
II. The COMPANY, desiring to operate in a safe and environmentally sound manner during
the period of this ORDER and thereafter in accordance with the rules and regulations of
the COMMISSION, does hereby agree to the following conditions to help reduce
associated bypass events:
A. Unless excused or delayed pursuant to Paragraph V,the COMPANY will complete
the upgrades to the Unit 1 HMIWI at the FACILITY by November 30, 2022 and
upgrades to the Unit 2 HMIWI at the FACILITY by June 30, 2023.
B. Within thirty (30) days of the completion of the upgrades, the COMPANY shall
submit to the Division of Air Quality ("DAQ") a written report confirming the
completion of the upgrades.
C. The COMPANY will submit a -Bypass Reduction Plan ("PLAN") to DAQ for
approval within fifteen (15) days of the entry of this ORDER. Upon written
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Special Order By Consent
STERICYCLE, INC.
approval of the PLAN by DAQ, the COMPANY will retain records demonstrating
compliance with the Procedures set forth in the PLAN for the duration of this
ORDER.
III. The COMPANY shall pay the following penalties:
A. The COMPANY agrees to pay DAQ a civil penalty in the amount of sixty-five
thousand dollars ($65,000) for the bypass events described in Section 1, D.-P. of
this ORDER. This amount shall be paid within 30 days of the effective date of this
ORDER.
B. The COMPANY agrees that, unless excused under Paragraph IV, the COMPANY
will pay stipulated penalties according to the following schedule during the period
of this ORDER:
Deadlines and Requirements Stipulated Penalties
Failure to comply with schedule deadline $250 per day for the first 5 days and
$500 per day thereafter.
Bypass event that lasts for less than 5 minutes
that are not attributable to a failure to adhere $2,500
to the Bypass Reduction Plan
Bypass event that lasts between 5 and 10
minutes that are not attributable to a failure to $5,000
adhere to the Bypass Reduction Plan
Bypass event that lasts for less than 20
minutes that are not attributable to a failure to $10,000
adhere to the Bypass Reduction Planl
The COMPANY shall notify DAQ in writing of any violation of Paragraph II of this
ORDER within ten (10) days of discovering such violation. Failure to pay the civil
penalties within thirty(30)days of receipt of the Director's written demand will be grounds
for a collection action, which the Attorney General is hereby authorized to initiate. The
only issue in such an action will be whether thirty(30)days has lapsed.
IV. Upon the occurrence of any bypass event during the period of this ORDER, the
COMPANY shall notify DAQ as soon as possible but no later than twenty-four(24)hours
after the event occurs. Within thirty (30) days of the event, the COMPANY shall submit
Bypass events that are attributable to a failure to follow the Bypass Reduction Plan or that last longer than twenty
minutes are not covered by this SOC and will be dealt with through the Division's ordinary enforcement processes.
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Special Order By Consent
STERICYCLE, INC.
a written explanation to DAQ regarding the cause of the bypass event and records
demonstrating compliance with the Protocol set forth in the PLAN.
V. The COMPANY's obligation to comply with the schedule set forth in this ORDER for the
completion of upgrades for which a stipulated penalty may be assessed,may be delayed or
excused only to the extent that noncompliance is caused by circumstances beyond control
of the COMPANY, as determined by the DAQ Director. Failure to obtain funding will not
be considered events beyond the COMPANY's control. If any such delaying event occurs,
the COMPANY shall notify DAQ in writing within ten (10) days of encountering or
discovering the delaying event, describing in detail the event or delay,the precise cause(s)
of the event or delay, the measure(s) taken and to be taken by the COMPANY to prevent
or minimize the event or delay, and the schedule by which those measures will be
implemented.
VI. In addition to the stipulated penalties set forth in Paragraph III,in the event the COMPANY
violates this ORDER, the COMPANY may be subject to an injunction action pursuant to
N.C.G.S. § 143-215.114C for relief necessary to prevent or abate future bypass events.
Subject to footnote 1 and except as authorized pursuant to Paragraph III and this Paragraph,
the COMPANY shall not be issued any further Notices of Violation or Civil Penalties, or
otherwise be subject to enforcement action for the violations specified in Paragraph I or for
bypass events that occur during the pendency of this ORDER. Any other violations for
which the COMPANY is responsible, shall subject the COMPANY to appropriate
enforcement action pursuant to N.C.G.S. §§ 143-215.114A, 143-215.11413 and 143-
215.114C.
VII. The COMPANY agrees to waive any rights it may have to seek judicial review to challenge
this ORDER. All notices and reports required by this ORDER shall be delivered to:
Regional Air Quality Supervisor
N.C. Dept. of Environmental Quality
450 West Hanes Mill Rd, Suite 300
Winston Salem, North Carolina 27105
All payments required from the COMPANY by this ORDER shall be delivered to:
Enforcement Group—Payments
NCDEQ—DAQ
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Special Order By Consent
STERICYCLE, INC.
1641 Mail Service Center
Raleigh,North Carolina 27699-1641
Any notice required or permitted by this ORDER to the COMPANY shall be delivered
to:
Stericycle, Inc.
Kirk Yarbrough
Facility Manager
1168 Porter Ave.
Haw River, NC 27258
Don Nuss
Regional Compliance Manager
3614 Hoskins Court
Hamilton, OH 45011
VIII. Final approval of and entry into this ORDER are subject to the requirements that the
COMMISSION give notice of proposed special orders to the public, and that the public
have at least thirty(30) days within which to comment on the ORDER.
IX. Should any provision of this ORDER be declared by a court of competent jurisdiction to
be inconsistent with Federal or State law and therefore unenforceable, the remaining
provisions hereof shall remain in full force and effect.
X. The Parties may jointly stipulate and agree to modify this ORDER at any time subject to
the requirements of 15A NCAC 02D .2203. Any modifications of this ORDER must be
agreed to in writing and signed by both parties.
XI. In the event that the COMPANY experiences more than nine (9) bypass events in any
ninety-day period, the DAQ Director may terminate this Order. Such termination shall be
effective immediately upon notice in writing to the COMPANY.
XII. Except as otherwise set forth herein, this ORDER is not and shall not be interpreted to be
a permit or modification of an existing permit under Federal, State or local law, and shall
not be construed to waive or relieve the COMPANY of its obligations to comply in the
future with any permit.
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Special Order By Consent
STERICYCLE, INC.
XIII. This ORDER is effective on execution by the COMMISSION and shall expire ninety(90)
days after DAQ's written acknowledgment of the written report prepared, certified and
submitted by the COMPANY demonstrating that the FACILITY has completed the
upgrades set forth in paragraph I.T or on June 30, 2023, whichever comes first.
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Special Order By Consent
STERICYCLE, INC.
ATTESTED: STERICYCLE, INC.
"t:-��
BY:
Richard M. Moore
Executive Vice President
North American Operations
DATE:
APPROVED AND ACCEPTED:
BY:
Environmental Management Commission
DATE:
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