Engineering Assessment of Hydrogen Sulfide Issues

1. Engineering Assessment of Hydrogen Sulfide Issues • Confirmed industry cost estimates • Relative costs & performance of WWTS controls • Emerging activated sludge trend • Cost impact of activated sludge in other states • Phasing-in new activated sludge units • Reporting and controlling H2S from WWTS in other states • Methyl mercaptan issues from WWTS?

2. Confirmed Paper Industry Cost Estimates • Published cost data for activated sludge in close agreement with industry aggregate capital cost estimate; based on M. Fels “Optimized design of WWTS,” 1997; referenced in Feb. 6 DAQ package • Also confirmed by WWTS consultant • No clear cost differences for 3 AALs

3. Paper Industry Cost Estimates for Activated Sludge

4. Fertilizer Facility Cost Estimates for 3 Proposed AALS

5. Relative Cost & Performance: Aerated basin vs Activated sludge Aerated stabilization basin - More cost effective - Comparable but slightly less performance - 2 of 3 US mills installed aerated basins - 4 of 5 NC mills installed aerated basins, typical of southern mills - Most installed 20-40 years ago

6. Relative Cost & Performance: Activated sludge vs Aerated basin Activated sludge • Better wastewater treatment performance • Less space, more effective in colder climates • Irony that the following not air quality driven - 2 of 3 Canadian mills with AS due to improved water quality discharge, especially during winter - 1 of 3 US mills with AS due to space constraints, - Trend of US & Canadian mills switching to AS

7. Relative cost & performance: Activated sludge vs Aerated basin

8. Cost Impact in Other States • Paper mills able to bear costs for installing / switching to activated sludge in 6 states: Florida, Michigan, Minnesota, North Carolina, Washington, Wisconsin, Canada

9. Phasing-in New Activated Sludge • Few mills in south have limited success combining AS with AB • In contrast, 3 mills in Washington successfully combined AS with AB - Most concentrated wastewaters to AS - Less concentrated wastewaters to AB

10. Reporting & Controlling Air Emissions from Paper Mills WWTS • Based on states contacted, common practice for most mills not to report air emissions from WWTS • Measured air emission data limited from WWTS - So limited any generalizations are indefensible • Paper industry uses computerized model to predict/estimate emissions • No incentive to report, yet alone control emissions • Limited experience in cost effective controls

11. Methyl Mercaptan from WWTS • One NC mill indicates MM emissions 10% of H2S - Suggests 1,500 ug/m3 at property line - 30 times AAL - Methyl Mercaptan current AAL = 50 mg/m3 • NCASI data shows MM emissions 100% of H2S - Suggests 15,000 ug/m3 at property line - 300 times AAL • Another NC mill shows MM emissions non issue

12. Summary (page 1 of 2) • Industry capital cost estimates confirmed - Paper industry -- $340 million across range of 3 AALs if WWTS not exempt - Paper industry -- $5-10 million across AAL range if WWTS exempt - Fertilizer plant $ range 2-fold across AAL range • Aerated basins more common / cost-effective • Activated sludge cost more / perform better • Emerging trend for activated sludge for sensitive waters in at least 6 states and Canada

13. Summary (page 2 of 2) • Phasing-in - Mixed results, good and bad • NC paper mills reporting consistent w/industry • Methyl mercaptan may be air quality issue with paper mill WWTS • DAQ recommends exempting paper mill WWTS: - Incomplete understanding of extent & control of emissions as well as factors affecting emissions - Need time to further study complex issues - Economic hardship argument