Scope of Coverage

1. NEW SOURCE REVIEWA Perspective from the Forest Products Sector September 2003Tammy R. WylesDirector, Environmental Affairs

2. Scope of Coverage • 200+ manufacturing facilities in 30+ states • Tissue and toweling, paper, and pulp • Lumber, plywood, oriented strandboard (OSB), particleboard, etc. • Chemicals (primarily formaldehyde and resins) • Gypsum wallboard • In the west – numerous chemical manufacturing facilities, a few wood products facilities, larger mills in Oregon (Toledo, Wauna, Halsey) and Washington (Bellingham and Camas)

3. NSR Evaluations • Joint technical/legal team at corporate HQ • consistency in the face of inconsistency • drafting of determination requests Training to reinforce early involvement and evaluation of projects • Heavily involved in recent rulemaking • technical leader for AF&PA workgroup • provided examples and suggestions

4. The Nature of the Beast • Many projects have incremental gain in production; many are just quality of efficiency • Change at one point in process will typically impact other areas of the facility (e.g., increase in paper machine production will require additional pulp, steam, etc.) • Actual-to-potential accounting has typically been a mill-wide exercise and calculations may be repeated several times a year, leading to double counting • No consideration of project impact

6. Environmentally Beneficial Projects • Installation of $4 MM storage building for the control of fugitive emissions, leading to dryer raw materials and increased throughput • Installation of overfire air system for increased efficiency, reducing both fuel costs and emissions • Replacement of boiler pre-heater with economizer, leading to a decrease in emissions • Replacement of a fuel oil burner with a burner that can burn a combination of natural gas and fuel oil

7. NSR Reform Perspective • Applicability accounting • will focus on the impact of the project • decisions on future projections may be difficult • recordkeeping requirements • eliminating recordkeeping when there is no causation component will be important to success • PCP exclusion • has been helpful in past • elimination of “primary purpose” test is an improvement

8. NSR Reform Perspective (continued) • PALs • have had experience with these in Oregon and that system has worked well • not a point of focus for our industry in the recent rulemaking • may still be useful – time will tell • Clean unit exclusion • may be helpful • application on pollutant-by-pollutant basis makes sense, but will likely limit use

9. RMRR Rulemaking • Tube replacements and dryer hoods are probably the most common maintenance projects • Certainty, more than anything, will be the biggest help • Have been using the criteria from the 2000 Detroit Edison case, which still leads to case-by-case calls by industry • Will still need to work through definitions (e.g., “identical and serve the same purpose”, “does not alter the basic design parameters”, etc.)

10. The Bottom Line • Probably is not a perfect solution • Has the concept of an NSR program become obsolete or will that happen in the future? • Are the multi-pollutant approaches the better solution?