1. NEW SOURCE REVIEW A Perspective from the Forest Products Sector September 2003 Tammy R. Wyles Director, Environmental Affairs

2. Scope of Coverage u 200+ manufacturing facilities in 30+ states u Tissue and toweling, paper, and pulp u Lumber, plywood, oriented strandboard (OSB), particleboard, etc. u Chemicals (primarily formaldehyde and resins) u Gypsum wallboard u 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 u 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 u Heavily involved in recent rulemaking - technical leader for AF&PA workgroup - provided examples and suggestions

4. The Nature of the Beast u Many projects have incremental gain in production; many are just quality of efficiency u 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.) u Actual-to-potential accounting has typically been a mill- wide exercise and calculations may be repeated several times a year, leading to double counting u No consideration of project impact

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

7. NSR Reform Perspective u 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 u PCP exclusion - has been helpful in past - elimination of “primary purpose” test is an improvement

8. NSR Reform Perspective (continued) u 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 u Clean unit exclusion - may be helpful - application on pollutant-by-pollutant basis makes sense, but will likely limit use

9. RMRR Rulemaking u Tube replacements and dryer hoods are probably the most common maintenance projects u Certainty, more than anything, will be the biggest help u Have been using the criteria from the 2000 Detroit Edison case, which still leads to case-by-case calls by industry u 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 u Probably is not a perfect solution u Has the concept of an NSR program become obsolete or will that happen in the future? u Are the multi-pollutant approaches the better solution?