Federal Regulations Eroding Pulp, Paper Industry Competitiveness

Sep 16, 2015

By Donna Harman
President & CEO
PaperAge (September/October)

If you’ve ever stood on a beach as the waves rolled in and felt the sand wash out, you have witnessed the power of erosion. Unless something is done to protect the shore, wave after wave can dramatically alter the landscape and demolish even the most solid rock over time. Erosion – the power to destroy – is a great metaphor for how the cumulative burden of federal regulations can threaten even an otherwise solid industry.

Despite an admirable record and continued leadership on sustainability, pulp, paper and wood manufacturing is facing just such a threat. New regulation has been followed by new regulation with even more taking effect this fall. Each one hits before the last one has been fully absorbed, creating a cumulative compliance burden that runs into the billions of dollars. Something has to change – and we’re working hard to see that it does.

An honest look at the landscape should make even impartial observers recognize that our industry is a core part of the bedrock of the U.S. economy. The forest products industry accounts for approximately 4 percent of the total U.S. manufacturing GDP, manufacturing over $200 billion in products annually, and employing approximately 900,000 men and women. The industry meets a payroll of approximately $50 billion annually and is among the top 10 manufacturing sector employers in 47 states.

Our success is built in part on our commitment to sustainable manufacturing. Our sustainability initiative — Better Practices, Better Planet 2020 — includes one of the most extensive collections of quantifiable sustainability goals for a major U.S. manufacturing industry. We also use biomass residuals from manufacturing operations to produce bioenergy that provides significant carbon reducing benefits to the environment. Unfortunately, rather than acknowledge this commitment and the unique innovations of our industry federal regulations have disregarded them and put our companies and the employees and communities they support at risk.

One wave threatening our industry is the U.S. Environmental Protection Agency’s (EPA) proposed greenhouse gas regulation of existing utilities. These proposed regulations will limit the types of biomass that can be used for compliance even though the EPA has acknowledged that biomass energy can have climate benefits compared to fossil fuels.  EPA’s own revised accounting framework for biogenic CO2 emissions and the accompanying policy guidance released by the agency almost one year ago recognize the carbon benefits from certain forest products manufacturing residuals. This proposed greenhouse gas rule will remain a threat until EPA provides greater certainty about the carbon neutrality of the biomass energy produced and used by our industry.

That wave will be followed this fall by another in the form of a new ozone regulation. As of this writing, EPA’s proposed new rule on ozone would reduce the existing standard from 75 parts per billion (ppb) to between 65 and 70 ppb. This move comes despite the fact that states have not fully implemented the tougher 2008 standards EPA established. This new regulation also fails to acknowledge that air quality has gotten significantly better over the last several years. In our own industry, nitrogen oxide (NOx) and volative organic compound (VOC) emissions from pulp, paper and wood product mills also continue to decline. At 65 ppb, the paper and wood products industry would be hit with as much as $3 billion in new capital costs necessary for compliance.

Like surf pounding the shore, this series of federal regulations has a massive impact on our industry. That’s why AF&PA has taken such an active leadership role on efforts in Congress to reform the federal regulatory process. We won’t stand by while one unnecessary or poorly defined regulation after another erodes our industry’s competitiveness and helps to collectively impose more than $10 billion in new capital obligations over the next 10 years.

In this Congress, we have worked with members of both parties on four separate regulatory reform proposals. Three of these bills have been passed by the House of Representatives and show that common sense regulatory reform in Washington is possible: the EPA Science Advisory Board Reform Act of 2013 (H.R. 1029), the Secret Science Reform Act of 2014 (H.R. 1030) and the Regulations From the Executive in Need of Scrutiny Act of 2015 (H.R. 427). 

We will continue to build on that momentum and will work as long as it takes to protect our industry and the employees and communities it supports from the destructive cumulative power of unsustainable federal regulations.