The small Cincinnati company seemed to be fighting for its life in a 1977 plea to the Environmental Protection Agency to relax the agency's toxic waste requirements.

"We don't have the wildest guess as to costs to meet the EPA's limits," complained Edwin Roof, executive vice president of Varland Metal Service Inc. "We do estimate that we will be obliged to discontinue at least 85 percent of our present operations and . . . our total plant output would be not more than 35 percent to 40 percent of what it is at present.

"Obviously, it is doubtful that we could survive under such circumstances."

Varland in 1981 is not only surviving, it has increased its plating and is doing it at a lower cost, as a residual benefit of its advanced pollution control system which has brought it close to compliance with EPA regulations that aren't scheduled to take effect until 1983.

The Reagan administration now has put those electroplating rules on its list of federal regulations to be reviewed to see if they cost industry more than the benefits they produce. The review is scheduled for completion by October.

At the same time, however, at least part of the industry has come to its own radical conclusion about the economics of the strict EPA rules -- not only are they feasible, they're profitable.

By using advanced recycling technology or redesigning their plants for more efficiency, some electroplaters are saving large sums of money on metals and water while complying with the regulation. Not only does the pollution-control equipment pay for itself in a few years, it keeps on cutting costs and adding to profits.

The electroplating industry presented one of those no-win dilemmas for federal regulators a few years ago: while it consisted largely of "Mon-and-Pop" operations, the industry as a whole created a giant pollution problem. There are about 10,000 of the mostly tiny plants, which put a thin protective metal finish on just about all metal products, from refrigerator doors to paper clips, from supersonic jets to nuts and bolts.

This electroplating technique uses electrical charges and requires large amounts of water for baths and rinses.

The process caused the industry to become the largest single contributor of toxic metal wastes into public sewage treatment plants, dumping more than a billion gallons a day of water filled with lead, cadmium, cyanide, chromium, copper, nickel and zinc.

The public wastewater systems could get out some of the poisons, but not all, so billions of gallons of water flowed out of the treatment plants carrying traces of the metals toxic to people, livestock and plants.

In issuing its final regulation limiting the amount of toxic waste a firm could dump into municipal waterworks, even the flinty eye of the EPA blinked at its own original forecast: about 20 percent of all electroplating companies would go out of business because of the rules.

Anticipated aid by the Small Business Administration reduced the forecast to 5 percent but, even at that, the electroplating rule carried the highest anticipated closure rate ever for any EPA regulation.

But that gloomy outlook now has brightened some in the short time since the rules were made final in 1979, EPA says, because of the different recycling technologies electroplaters have started adopting.

A number of these technologies had been developed earlier, but it wasn't until EPA established clean-up rules that companies became interested in the more efficient processes, says Steven Schatzow, deputy EPA administrator for water regulations and standards. Some members of the industry will attest to that now.

John Maliszewski, president of Reliable Plating of Milwaukee, conceded that without EPA's not-so-gentle nudge he probably would not have installed his eight-month-old ion transfer system for chromium recovery in his nickel-chrome plating operation, where 30 people are employed.

But as he rattles off the statistics on the recycling equipment, which makes the plant exceed EPA's 1983 requirements two years early, it's clear he's delighted with it.

The system will pay for its $30,000 cost in 2 1/2 years because of the savings on water and raw materials, Maliszewski figures.He has reduced the amount of chrome he buys by almost 90 percent, from 1,400 pounds a month about 14,000 gallons a day to 200 gallons a day.

"It just makes good business sense, aside from the ecological advantage," Maliszewski says. Even without the EPA rules, he would want to use a recovery system, "knowing what I know now."

Ted Garrett, a Washington attorney representing the National Association of Metal Finishers, says Maliszewski's experience must be an exception, that most electroplaters haven't started trying to comply with the 1983 standards and that many say they would have to fold before they could meet the requirements.

Varland's recycling system is an experimental project, subsidized by EPA with the help of the metal finishers association, he points out. And most small shops wouldn't be able to afford the initial cost of the recycling systems, he argues.

But at the Cincinnati EPA office, George Thompson, chief of the nonferrous metals and minerals branch of the research division, has seen Varland Metal's recycling system in operation and is enthused. "It's utopic," he says, "Much better than we had planned for."

The system at Varland, a firm with about 100 employes, would sell commercially for about $38,000 for the equipment for each of the different metals, Thompson said. "I would say if you were to do an economic evaluation, any plater should be able to afford the capital outlay."

In Grand Rapids, Mich., where regulations stricter than EPA's have been in effect since 1971, the local electroplaters seem to have come to the same conclusion and have not been wiped out but have increased slightly in number, according to officials there.

Carl Nowak, a chemist in charge of Grand Rapids' water pollution control program, said almost all of the city's 42 metal finishers have put in recycling systems. These typically have cost $75,000 per unit and have paid for themselves generally in three to six months, Nowak reports.

His description of how the local industry achieved the technological advance necessary to meet the stringent rules profitably has the ring of Midwestern simplicity:

"They were losing all [that metal] down the drain. They had to do something to reclaim it, so they did."