3711 Mill Street, Wabash, IN, USA 46992

- 7778

Phone: 260

- 563

- 2111 • Fax: 260

- 563

- 8979

www.thermafiber.com VIA EMAIL

June 30, 2011

Ms. Madeline Barch Office of Policy Regulatory Management Division U.S. Environmental Protection Agency Ariel Rios Building, Mail Code: 1806A 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460

RE: SBAR Panel

– Economic Impact of Draft Proposed Regulation Changes to Thermafiber

Dear Ms. Barch:

Thank you again for allowing me to speak at the June 16, 2011 SBAR Panel meeting and to convey my concern regardin g the draft proposed regulation changes recently presented to us by EPA. This letter expands upon my presentation and provides more details specific to Thermafiber with regards to the financial burden that will increase as we attempt to meet the proposed emission limits.

Thermafiber, the company, was formed in 1996 when the assets of three mineral wool plants (i.e. Wabash, IN; Birmingham, AL; and Tacoma, WA) were sold from USG Interiors, Inc. to private investors. This was done in advance of the original MACT promulgation in 1999. T he Birmingham plant closed in

2000 an d the Tacoma plant closed in 2002. Only the Wabash plant remains in operation and has been since its original start date in 1935.

Four private equity groups have owned Thermafiber within the la st 15 years. From 1998 until 2002, Thermafiber operated in conjunction with American Rockwool, Inc., a privately held company with mineral wool plants in Spring Hope, NC and Nolanville, TX. The Spring Hope plant was closed in 2002 and eventually the prop erty was sold in 2009. The Nolanville plant was sold in 2005 and became Amerrock Products. Needless to say, navigating these changes and downsizings has been challenging.

In 2009 and 2010, gross sales for Thermafiber were $38.6 and $39.4 million . After 5 months 2011, gross sales sit at $18.6 million for an annualized projection of $46.1 million. The gain in sales can be largely attributed to two mineral wool competitors ceasing operations. Walter Fiber (formerly Sloss of Birmingham, AL) closed in 2009. Fibrex Insulations of Sarnia, Ontario closed in January 2011.

Once freight and sales adjustments have been factored out, net sales for the prior two years were $$33.5 and $34.4 million. Net sales are projected to be $39.8 million for 2011.

Profitability has been dramatically impacted with the drastic decline in insulation demand and the steep increases in raw materials and fuel. As a percent of net sales, gross margin for the company declined from 27.8% to 20.5% from 2009 to 2010 and currently sits at 1 7.9%. Net income declined from 1.9% to3711 Mill Street, Wabash, IN, USA 46992

- 7778

Phone: 260

- 563

- 2111 • Fax: 260

- 563

- 8979

www.thermafiber.com (1.4%) from 2009 to 2010 and currently sits at (3.2%). This means the projected net income for 2011 will be ($1.25 million). Steps continue to be made to regain pro fitability in a down economy with material

costs t rending upward and fierce competition vying for any available business.

Over the last 10 years, Thermafiber has invested more than $10 million to comply with new regulations and to curb emissions. Several thousand tons of pollutants each year have been re duced as a result of these improvements. Most recently in 2009, Thermafiber invested over $5 million to install incinerators on each of the two cupolas. Special waivers from our existing lenders to spend more than 5 times the annual capital investment li mit for the whole company as spelled out in loan documents had to be secured. Also, additional equity investment from current shareholders had to be raised to help fund the project. This single investment was the largest seen for the company since the la te 1970’s. Duplicating that effort for any further control equipment will be a challenge.

We have digested EPA’s proposal and obtained budgetary capital and operating funds required to meet

the emission reductions.

 Curing Oven

– Thermafiber installed an incinerator (Recuperative Thermal Oxidizer or RTO) as part of the original MACT and got it running in 2003. No changes to Formaldehyde emission limits have been proposed and Thermafiber currently meets that limit. For Phenol, Thermafiber

needs to reduce between 0.86

– 0.87 tons per year to achieve the proposed limits. Thermafiber has very limited stack test data for Phenol as it has never been a pollutant on the radar. To put the reduction another way, EPA is proposing that T hermafiber reduce emissions to 5.67

– 29.78 pounds per year assuming full melt rate and a maximum of 8,760 hours per year. These are exceptionally low levels to even measure. I suspect one upset condition could ruin compliance for the year. For Methanol , again Thermafiber has very limited stack test data. Based upon that data, Thermafiber needs to reduce between 0.26

– 0.27 tons per year to achieve the proposed limits. To put the reduction another way, EPA is proposing that Thermafiber reduce emissions to
11.69

– 35.29 pounds per year assuming full melt rate and a maximum of 8,760 hours per year. Again this is an exceptionally low amount. It is unsure whether additional temperature within the oxidizer is enough to achieve these reductions. Even so, o perating costs would increase as natural gas feed increases. The capability of existing equipment and the associated operating cost increases have not been quantified.

 Collection Chamber

– Thermafiber presently controls particulate emissions from the chamber by use of a mechanical filter (screen house). Based upon limited stack testing, Thermafiber would have to reduce up to 7.59 tons per year of Formaldehyde to meet the proposed lower limit. For Phenol, Thermafiber would have to reduce 17.24

– 22.57 tons per year. For Methanol,

Thermafiber would have to reduce 16.32

– 16.97 tons per year to achieve the proposed limits. Collectively, this means between 33.56 and 47.14 tons per year must be reduced. A budgetary quotation obtained last month from a c ompany skilled in pollution control devices for a large enough incinerator to handle the high volume of exhaust air was $1.772 million. This was strictly for the incinerator. An additional $0.400 million is estimated for a pre

- filter and exhaust stack. Annual operating and maintenance expenses were estimated at $1.043

- $1.084 million. The equipment costs equate to $37,585

- $52,794 per ton reduced. Funding the capital will be challenging and the annual impact to the financials will further drive profi tability in the red.3711 Mill Street, Wabash, IN, USA 46992

- 7778

Phone: 260

- 563

- 2111 • Fax: 260

- 563

- 8979

www.thermafiber.com  Cupola

– Thermafiber installed bag houses for particulate control as part of the original MACT. As previously mentioned, Thermafiber voluntarily installed two incinerators in 2009 to further reduce emissions and cut operating costs. B ased upon the proposed emission limits for COS, Thermafiber would have to cut emissions on one cupola by 4.10 tons per year and on the other by 4.58 tons per year assuming full melt rates and maximum operating hours per year of 8,760.

Whether or not the i ncinerators have the capability to further destroy this pollutant is unknown. EPA is also proposing that Hydrogen Fluoride emissions be reduced. Based upon limited stack testing, Thermafiber would have to reduce 5.63

– 5.95 tons per year of HF. EPA is a lso proposing that Hydrochloric Acid emissions be reduced. To meet the proposed levels

Thermafiber would have to reduce 9.97

– 10.27 tons per year of HCl. On EPA’s website, they list the optimum control technology for HF and HCl as a wet scrubber. To ad d a wet scrubber on the current pollution control train if incinerators, flue gas desulfurization systems, and bag houses is estimated to cost $1.0

- $4.0 million. Annual operating expenses are anticipated to be $0.5

- $2.0 million. The equipment costs e quate to $64,103

- $246,609 per combined ton reduced. Funding the capital will be challenging and the annual impact to the financials will further drive profitability in the red.

On behalf of the 140 employees of Thermafiber, the shareholders, the custome rs, and the community, I urge you to reconsider the stringency of these regulations. Should you want to speak with me, I can be reached at (260)563

- 2111 extension 214 or via email at sedris@thermafiber.com

.

Bes t regards,

Steve Edris

President & CEO

Cc: Mr. David Rostker Office of Interagency Affairs Office of Advocacy

U.S. Small Business Administration 409 Third Street, S.W., 7 th Floor Washington, D.C. 204163711 Mill Street, Wabash, IN, USA 46992

- 7778

Phone: 260

- 563

- 2111 • Fax: 260

- 563

- 8979

www.thermafiber.com Ms. Cortney Higgins

Office of Information and Regulatory Affairs Office of Management and Budget

725 17 th Street, N.W. Washington, D.C. 20503

Mr. Alex Cristofaro

Director Office of Regulatory Policy and Management U.S. Environmental Protection Agency Ariel Rios Building, Mail Code: 1803A 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460

Ms. Susan Fairchild Sector Policies and Programs Division Metals and Minerals Group (D243

- 02) Office of Air Quality Planning and Standards U.S. Environmental Protection Agency

109 T.W. Alexander Drive Research Triangle Park, NC 27711