Common use of Requested Flexibility Clause in Contracts

Requested Flexibility. This XL Project requires regulatory flexibility for the chemical recovery system (including the existing smelters and the black liquor gasification system); and the flexibility to change the Mini-Mill (No. 4 Paper Machine complex and its ancillary equipment) permit in accordance with current regulations. There are no current full-scale commercial applications of the black liquor Steam- Reforming gasification technology of the type proposed by Georgia-Pacific. Georgia- Pacific has identified two principal risks in attempting to construct and operate a gasification system. The first risk is that, once constructed, the gasification system will require an extended period of unforeseen problem resolution. During this commissioning period, the existing smelters must be available to process liquor to accommodate Georgia- Pacific’s ongoing production demands. The Parties recognize that the existing smelters cannot meet the standard of performance expected to be promulgated under MACT II, and that the commissioning period for the gasification system may extend beyond the applicable MACT II compliance date for existing sources (once established). The second risk is that the gasification system will fail (as defined in Project Element 9). In this case, Georgia-Pacific will construct a standard chemical recovery boiler in lieu of a gasification system to comply with MACT II, and will need to continue to operate the existing smelters, while the standard recovery boiler is constructed. Should either of these two situations occur, as part of this XL Project, Georgia-Pacific is requesting the flexibility to operate the existing smelters past the MACT II compliance date for existing sources (once established). There are three VADEQ permit actions necessary to implement this XL project. The first is a permit to construct and operate the new chemical recovery system. The second is to permit a Kraft liquor trial and the third is to change the steam utilization set in the permit for the Mini-Mill. The change is requested to account for the new steam production expected from combustion of the gasification system product gas. As a condition of receiving DOE funding for the gasification project, Georgia-Pacific has agreed to test a Kraft black liquor sample from a yet to be determined source. The details of this trial will be worked out at a later date; however, it is anticipated that the trial will take place after start-up and will not last more than a total of 500 hours, over the course 1500 hours. During these trials, Georgia-Pacific will need to operate the smelters to process the Mill’s black liquor production. Finally, Georgia-Pacific also has requested modification of certain steam utilization restrictions that were imposed in a permit issued by the VADEQ for the construction and operation of a mini-Mill at the Big Island facility. The restrictions stem from new source review (NSR) regulations issued by EPA under the Clean Air Act (CAA) which are implemented by VADEQ.

Requested Flexibility. This XL Project requires regulatory flexibility for the chemical recovery system (including the existing smelters and the black liquor gasification system); and the flexibility to change the Mini-Mill (No. 4 Paper Machine complex and its ancillary equipment) permit in accordance with current regulations. There are no current full-scale commercial applications of the black liquor Steam- Steam-Reforming gasification technology of the type proposed by Georgia-Pacific. Georgia- Georgia-Pacific has identified two principal risks in attempting to construct and operate a gasification system. The first risk is that, once constructed, the gasification system will require an extended period of unforeseen problem resolution. During this commissioning period, the existing smelters must be available to process liquor to accommodate Georgia- Georgia-Pacific’s ongoing production demands. The Parties recognize that the existing smelters cannot meet the standard of performance expected to be promulgated under MACT II, and that the commissioning period for the gasification system may extend beyond the applicable MACT II compliance date for existing sources (once established). The second risk is that the gasification system will fail (as defined in Project Element 9). In this case, Georgia-Pacific will construct a standard chemical recovery boiler in lieu of a gasification system to comply with MACT II, and will need to continue to operate the existing smelters, while the standard recovery boiler is constructed. Should either of these two situations occur, as part of this XL Project, Georgia-Pacific is requesting the flexibility to operate the existing smelters past the MACT II compliance date for existing sources (once established). There are three VADEQ permit actions necessary to implement this XL project. The first is a permit to construct and operate the new chemical recovery system. The second is to permit a Kraft liquor trial and the third is to change the steam utilization set in the permit for the Mini-Mill. The change is requested to account for the new steam production expected from combustion of the gasification system product gas. As a condition of receiving DOE funding for the gasification project, Georgia-Georgia- Pacific has agreed to test a Kraft black liquor sample from a yet to be determined source. The details of this trial will be worked out at a later date; however, it is anticipated that the trial will take place after start-up and will not last more than a total of 500 hours, over the course 1500 hours. During these trials, Georgia-Pacific will need to operate the smelters to process the Mill’s black liquor production. Finally, Georgia-Pacific also has requested modification of certain steam utilization restrictions that were imposed in a permit issued by the VADEQ for the construction and operation of a mini-Mill at the Big Island facility. The restrictions stem from new source review (NSR) regulations issued by EPA under the Clean Air Act (CAA) which are implemented by VADEQ.

Requested Flexibility. This XL Project requires regulatory flexibility for the chemical recovery system (including the existing smelters and the black liquor gasification system); and the flexibility to change the Mini-Mill (No. 4 Paper Machine complex and its ancillary equipment) permit in accordance with current regulations. There As indicated above, there are no current full-scale commercial applications of the black liquor Steam- Reforming gasification technology of the type proposed by Georgia-Pacificthis technology. Georgia- Pacific has identified two principal risks As such, there is some risk in attempting to construct and operate a gasification systemfull-scale Steam-Reforming Gasifier. There are two main risks that Georgia-Pacific has identified. The first risk is that, once constructed, the gasification system will unit may require an extended period of unforeseen problem resolution. During this commissioning period, the existing smelters must be available to process liquor to accommodate Georgia- Pacific’s ongoing production demands. The Parties recognize resolution and operational deciphering that the existing smelters cannot meet the standard of performance expected to be promulgated under MACT II, and that the commissioning period for the gasification system may could possibly extend beyond the applicable MACT II promulgated compliance date for existing sources (once established)date. The second risk is that the gasification technology will simply not work in full-scale or for this particular operation, in which case a standard recovery boiler would have to be constructed. Again, this will require construction possibly well past the MACT II compliance date. Georgia-Pacific will propose that under either condition stated above, that the existing recovery technology (Smelters) be allowed to operate until either the Gasifier is made functional or the replacement Recovery Boiler is constructed and made operational. Georgia-Pacific also will request that the initial permit reflect emission limits expected from the conventional ▇▇▇▇▇▇▇▇▇ Recovery Boiler. Future limits for the Gasifier would be set based on actual performance data generated after start up. The future limits are anticipated to be lower. Georgia-Pacific will also request that the new steam to be generated by the new gasifier system will fail (as defined be utilized in Project Element 9)any area of the Big Island facility. In other words, the gasifier- generated steam will be used to offset steam generated by a higher cost fossil fuel. This anticipated cost savings is critical in the financial evaluation determining if we can proceed with the project. Currently, the operating permit for the Linerboard/OCC complex and the No.6 Power Boiler restricts the source of steam to operate the linerboard and OCC equipment. This requested flexibility will modify this casepermit to allow steam generated by the gasifier and associated steam-generating equipment to supply steam in place of some amount of steam from the No. 6 boiler. Additionally, some flexibility in emission limits will be required during the anticipated DOE requested trials on other types of pulp mill liquors. During this time period, Georgia-Pacific will construct a standard chemical recovery boiler in lieu of a gasification system to comply with MACT II, and will need to continue to operate the existing smelters, while the standard recovery boiler is constructed. Should either of these two situations occur, as part of this XL Project, Georgia-Pacific is requesting the flexibility to operate the existing smelters past the MACT II compliance date for existing sources (once established). There are three VADEQ permit actions necessary to implement this XL project. The first is a permit to construct and operate the new chemical recovery system. The second is to permit a Kraft liquor trial and the third is to change the steam utilization set in the permit for the Mini-Mill. The change is requested to account for the new steam production expected from combustion of the gasification system product gas. As a condition of receiving DOE funding for the gasification project, Georgia-Pacific has agreed to test a Kraft black liquor sample from a yet to be determined source. The details of this trial will be worked out at a later date; however, it is anticipated that the trial will take place after start-up and will not last more than a total of 500 hours, over the course 1500 hours. During these trials, Georgia-Pacific will need required to operate the smelters at some capacity to process keep the Mill’s black liquor productionmill in operation. FinallyAs described previously, Georgiathere will be some site-Pacific also has requested modification of certain steam utilization restrictions that were imposed in a permit issued by the VADEQ for the construction and operation of a mini-Mill specific regulatory changes required at the Big Island facility. The restrictions stem from new source review (NSR) regulations issued by EPA under federal level, and possibly some at the Clean Air Act (CAA) which are implemented by VADEQ.state level,