Jul 11
2023
Risks vs. benefits of proposed Lockport plant
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An India-based plastics company is seeking to build its first U.S. plant in the Town of Lockport, despite strong objections from environmental groups who argue such a facility could harm human health and the environment.
But the plant’s potential ecological impact isn’t the only issue up for debate: The firm wants tax breaks, and could further benefit from a limited environmental review.
SRI CV Plastics Inc. is seeking $500,000 in subsidies, including $311,856 from the Lockport Industrial Development Agency, to build a $2.3 million, 14,000-square foot factory in the Lockport Industrial Park.
The firm’s CEO, Varunkumar Velumani, said he plans to also seek low-cost hydropower from the New York Power Authority. His facility may also be eligible for additional tax credits from Empire State Development Corp.
The firm is also likely to avoid most of the state’s environmental review requirements. Decades ago, the Lockport IDA completed what’s called a Generic Environmental Impact Statement for its industrial park, meaning companies that locate there must complete only a limited review, rather than a full Environmental Impact Statement. A limited review would save SRI CV Plastics time and money.
Other industrial park tenants, like Yahoo!, Exel Inc. and Bison Bag have previously benefited from the limited environmental review.
The Lockport IDA will hold a public hearing on Velumani’s subsidy application Thursday at 8 a.m.
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The facility would receive new and recycled plastic to create PVC pipes and food packaging, like produce containers used by grocery stores. The plant would hire 25 workers — 20 full-time and five part-time — that would pay between $35,000 and $60,000 annually. The subsidies work out to $22,222 per job.
“I’m creating a job and without plastic a human cannot live at the moment in this part of the world. Without plastic you cannot live your life,” Velumani told Investigative Post,
Watchdogs, though, warn that even a plant working with recycled plastics will use so-called virgin plastic, which is a product of oil and gas drilling.
Velumani’s proposal has generated more angst than most IDA projects.
Sixty-two organizations from across New York signed a June 29 letter to the Lockport IDA asking the board to reject the company’s application. Signatories included the National Resource Defense Counsel, the Clean Air Coalition of Western New York, the New York Public Interest Research Group, and Judith Enck, a former regional administrator for the Environmental Protection Agency and head of the group Beyond Plastics.
“This is the last kind of facility you want to be attracting to your community,” Enck said.
Variety of subsidies
In his IDA application, Velumani noted that he chose the Lockport Industrial Park because labor costs will be cheap and regulations few. And if he doesn’t win the tax breaks, he said he’ll take his enterprise elsewhere.
The subsidies Velumani is seeking include:
- $227,816 in property breaks over a 15-year period.
- $59,040 in sales tax exemptions.
- A $25,000 mortgage tax break.
Without the tax breaks, Lockport schools would collect about $288,000 in property taxes. Instead, the schools would receive $115,000 in payments-in-lieu-of-taxes. Similarly, Niagara County would collect nearly $92,000 in property taxes without abatements, but would instead collect only $36,800.
Jacob Whiton of the national subsidy watchdog group Good Jobs First said the company could benefit from state and federal programs that allow pollution control equipment to depreciate in value rapidly, meaning firms have to pay less tax.
“It’s a tax break for just complying with the law,” he said.
Velumani said he’s seeking the subsidies “to scale up very quick.”
“The subsidy helps us to boost the business by other [means] than putting our own money,” he said. “If we get a good subsidy we can create a number of jobs.”
In his application, Velumani noted that he is seeking a total of $500,000 in subsidies. His application does not name specific subsidies besides the IDA tax breaks.
Subsidies for the fracking and plastics industries aren’t rare. Pennsylvania, in fact, granted its largest-ever tax subsidy to Shell’s ethane cracking plant, valued at $1.6 billion over 25 years. The Erie County IDA has subsidized various plastics manufacturers over the years, and Invest Buffalo Niagara advertises a suite of tax breaks for plastics companies.
Enck said IDAs shouldn’t grant such subsidies.
“It’s one thing if a company wants to come in on their own dime and try to go through a process to site a facility like this,” she said. “It’s another thing for public subsidies to be used to support a facility like this.”
Limited environmental review
A Lockport official said SRI CV Plastics would likely be able to avoid preparing a full Environmental Impact Statement under New York’s State Environmental Quality Review Act. That’s because the Lockport IDA already completed a Generic EIS, meaning the company would only have to conduct a limited review of the plastics plant.
“Typically, as long as it’s in accordance with that EIS, they don’t have to reopen SEQR,” said Andrew Reilly, the longtime town planner who now works with Lockport on a contract basis. “SEQR only has to be done once.”
That could save SRI CV Plastics hundreds of thousands of dollars – perhaps even more.
On its IDA application, the company noted that it had not yet begun an environmental assessment.
In stating their opposition, environmental groups cited a 2022 poll showing 80 percent of American voters support reducing single-use plastics. The groups also noted a 2023 survey that found 73 percent of Americans don’t want new plastic production facilities.
Velumani’s proposal comes as New York lawmakers have enacted measures to curb the use of plastic and reduce carbon emissions. A ban on plastic bags used by stores took effect in 2020. The Climate Leadership and Community Protection Act has resulted so far in the state laying out plans for future legislation to slow climate change.
And this year, lawmakers introduced legislation that, if passed, would ban plastics made with polyvinyl chloride — the chemical set ablaze earlier this year in East Palestine, Ohio — and reduce the use of other plastics.
Impacts of plastic, fracking
The plastics industry uses byproducts of fracking, or hydraulic fracturing. That’s the process of injecting water and chemicals into underground shale formations to extract methane.
Ethane, a byproduct of fracking the Marcellus Shale formation found in New York, Pennsylvania, Ohio and West Virginia, is “cracked” to make plastic.
A 2017 Yale study found fracking releases 20 chemicals into the air associated with causing cancer. Pennsylvania residents have complained of poor air quality and respiratory issues tied to the ethane plant near Pittsburgh.
Meanwhile, microplastics can harm both humans and wildlife.
“There are concerns with plastic having impacts on various hormonal functions within body systems that can have long term reproductive … endocrine system, immune system response issues in human beings and wildlife,” said Matthew Mehalik, executive director of the Pittsburgh-based Breathe Project, which monitors the fracking industry in the region. “So plastic itself is a problem.”
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Some 1,000 fracking wells across Pennsylvania, Ohio and West Virginia feed into the Falcon Ethane Pipeline, which ends at Shell’s Ethane Cracker plant in Beaver County, Pennsylvania, outside of Pittsburgh. Shell processes ethane into plastic pellets called nurdles, which are later melted down and formed into plastic products.
Velumani said he will likely import Shell’s nurdles into Lockport.
Though it’s been in full operation for less than a year, Shell has already faced a lawsuit and state rebuke for violating air quality regulations.
While Velumani said he plans to use his Lockport facility to process recycled plastic into new products, he said he’ll also need “virgin” plastic from Shell or a similar Exxon Mobile facility — though Shell’s plant is closer. He said the plastic products he’ll make — PVC pipe and food packaging — will likely consist of 70 percent recycled plastic and 30 percent virgin plastic.
It’s not yet clear what air or water permits Velumani will need. A spokesperson for the state Department of Environmental Conservation said the agency has not received an applications from SRI CV Plastics.
Terry Burton, Velumani’s attorney, suggested the plant may not need “special pollution permits” because there will be “no venting of toxic fumes in the air” and the water used to cool the plastic will “not [be] discharged” but rather “recirculated.”
However, Enck, the former EPA administrator, said some negative impacts on human health and the environment are likely.
“You could breathe in microplastics. It also may get into drinking water,” she said. “There has been real concern for workers who work every day with vinyl chloride and PVC plastic.
“The large companies that work with this material have had some pretty serious environmental law violations and some pretty serious occupational health issues.”
Velumani, in defending his proposal, said there are “other polluters in Lockport” and dismissed concerns that his plant could harm residents, employees or the environment.
“It’s like a kitchen, when you produce something, it creates some kind of smoke and some kind of smell that’s negligible for the environment,” he said. “It’s not explosive.”
