### MEMORANDUM

To : Jodi Howard, US EPA/SPPD/CCG

From : Colin Hayes, ERG

Date : December 22, 2009

Subject : Summary of November 23, 2009 Meeting Between US EPA and Shintech

On November 23, 2009, US EPA met with representatives of Shintech to discuss

Sh intech’s proposal regarding the Section 114 survey response and testing for their facilities.

The meeting was held at US EPA’s Research Triangle Park location. The following individuals

were present:

Colin Hayes, ERG

Jodi Howard, US EPA /OSQPS

Jim Hodges

, Shintech

- Freeport

Mark Garza , Shintech

Michael Bracy, The EOP Group ( consultant for Shintech )

Michael O’Bannon

– The EOP Group (consultant for Shintech)

Richard Mason, Shintech

David Wise

, Shintech

- Addis

Penny Lassiter , US EPA/OAQPS

Peter Tsiri gotis, US EPA/OAQPS

KC Hustvedt , US EPA/OAQPS

Nick Parsons, US EPA/ OAQPS

The following individuals participated via teleconference:

Jennifer Gibbs, US EPA/ Region 6

Patricia Welholm

, US EPA/Region 6

Marcia Moncrieffe , US EPA/Region 6

David Garcia , US EPA/ Region 6

Mark Kataoka , US EPA/ OGC

Ed Messina, US EPA/ OECA

Charlie Garlow , US EPA/ OECA

David Tidholm

, Shintech

- Counsel

Marcia Mia , US EPA/ OECA

Foll owing general introductions, EPA opened the meeting by outli ning the nature of what SPPD

does and the Section 112 requirements.2

EPA noted that the PVC standard that was issued was ultimately vacated and EPA ended up

settling on a deadline suit to reinstitute standards for the PVC manufacturing industry.

EPA added t hat multiple standards have been vacated or partially vacated recently and that

the PVC vacatur took away a lot of the flexibility in setting standards.

EPA stated that because there are less than 30 facilities, the MACT standard will be based on

the perfo rmance of the best 5 facilities.

EPA added that Shintech’s Plaquemine facility is the newest plant and Shintech also owns

some other newer plants. EPA wants to capture those for this rulemaking.

EPA noted that the court did leave EPA some flexibility. EP A could incorporate variability

and the ability to subcategorize based on size of plant.

EPA indicated a proposal date of September 2010, with a promulgation date of July 2011.

Shintech stated that the company wants to support EPA’s effort and that the p ro mulgation of

a new standard for the industry is a good idea

.

Shintech added that it is unique ; there are differences in its processes that are important to

understand.

Shintech added that when looking at the cost of conducting the survey and the testing, t here is

little to gain

Shintech then gave a presentation. A copy of the presentation is included as Appendix A to

this memorandum.

Shintech has three U.S. plants: Freeport , TX, Addis , LA, and Plaquemine , LA

Plaquemine is the only integrated site with VCM production. Part of the plant was

s tarted up late last year . The plant is c urrently manufacturing PVC as of S ept ember of

last year

.

VCM is piped into the Freeport and A ddis plants.

All three plants make the same mater ials and use the same modular process

.

The Shin

- etsu process was licensed in 1974

Reactor

- suspension resin; equal parts of VCM and water; some initiator

.

The reaction is stopped at 60

- 80% completion. The slurry is discharged to a slurry

tank.

There is a s lurry tank , s lurry column , recovery p rocess , and c entrifuging/drying

.

The i dentical process is used in all three facilities, even though it dates back to 1974

.

Shintech stated it is c onstantly up grading computers and technologies.

Shintech noted that about 70% of the product goes to the con struction industry (pipe,

vent pi pe, home building, PVC conduit) and about 40% goes into packaging, meat

wrap, IV tubing, blood bags, etc.3

EPA inquired as to the difference between ― grade ‖ of resin and ― type ‖ of resin.

Shintech responded that t he resin gra des are a function of chain length. Shintech has l ess

than 12 grades

— SE950 is the predominant grade (―950‖ length of polymer chain

— 950 units

long) . SE950 is the p rimary resin used for extrusion application (pipe, siding, windows,

doors, extrusion apps) a nd constitutes about 70% of production

.

EPA asked if Shintech ha s any emissions information according to the diff erent grades being

produced . Shintech responded that they only have monitors on thermal oxidizers to meet the

10 ppm limit.

Shintech noted tha t there is n o distinctive difference in the maw materials for the different

grade s. SE 950 would be a conservative grade to test for and would be the ― best picture ‖ for

the 114 request . Shintech added that they have only looked historically at vinyl chlor ide but

are confident that SE 950 would be a conservative grade

.

EPA noted that it set limits like that back in National L ime and added that it can ’ t set

emissions limits based on the highest emissions

.

Shintech stated that o ther grades (other than SE950) o nly constitu t e about 30% of

production

— PVC is a monthly product

.

Shintech noted that reaction time (what determines the chain length) and chemicals going

into the process are the same

— inputs and outputs are the same. May only be a 1

- 2%

difference in emiss ions between grades.

EPA asked whether there is historical data to support the 1

- 2% difference in emissions ?

Shintech stated that o ne production unit may run only SE 950 all the time and another unit

might be dedicated to running other grades

.

EPA stated th at it is concerned that the process can significantly impact emissions

.

Shintech stated that its production units range from 1974

- 2008 and they went back to older

units to retrofit with current technology. Shintech added that its Addis and P laquemine

faci lities are practically identical . The company retrofitted 2 of 3 plants in A ddis t o use same

slurry strippers as P laquemine

.

EPA asked if there were s crubbers after the incinerators.

Shintech noted that 99% of what is incine rated is nitrogen. There is a quench using an

alkaline sol ution and the scrubber is downstream

. Want to recover as much vinyl chloride as

possible . The company uses condensers and chilled scrubbers

.

Shintech stated it is o n track to do sampling at its Freeport facility.

Shintech stat ed that the s i tes are identical except for size. In terms of size, A ddis and

Plaquemine are the same; P laquemine has other waste stream s going into the incinerator

.

Shintech noted that EPA did some wastewater dioxin testing a few years ago

.

EPA stated tha t unless it has data, the new limit s will have to be complied with at all times.

Just like HON rule

.4

Shintech noted that Louisiana and Texas have difference s in permitting (emission limits).

Shintech noted that most SSM emissions are tied to planned shutd ow n and maintenance

activities and added that t his info rmation will be provided in the 114 request

.

EPA c larified that the company doesn’t need to test only one grade for 30 days

--- can do

multiple grades; in fact this would be desired. The s ame num ber of samples

— just additional

analysis

.

Shintech stated that it wants to satisfy the section 114 at only the one site

.

EPA expressed its concern that two sites not testing are in fact the newest plants in the

industry. EPA has to set limit s on the best performi ng 5. EPA added that those two plants

would likely fall into the top five. EPA added that this , comb ined with the SE950 grade

issue, creates concerns

.

EPA added that the data may be exactly the same but the Agency cannot determine that until

it get s the data and look s at it

.

Shintech stated that the data is going to be the same w h ether it test s one facility or all three.

EPA stated that historically, many MACT standards used engineering judgment in setting the

standards ; the courts basically said they did not care about engineering judgment . EPA must

use actual data and the only way to do it is through Section 114 requirements

.

EPA added that if there is redundancy (as shown by the data) , then EPA will set standards

based on that; but this fact has to be proven and cannot be based on assumption s or

judgments

.

Shintech stated that the i ssue is p rimarily from a cost standpoint; it is not a good time

.

EPA asked why Shintech only submitted a test plan for Freeport ? EPA stated that it has

n othing to compare it to without testing plans for the other two plants

.

Shintech responded by stating that the t es t ing protocol would have be en the same at all three

plants and EPA can superimpo se the test plan on all three plants

.

EPA asked if Shintech is planning on doi ng t hree surveys.

Shintech indicated that is their intent.

EPA stated that s ome industries have voluntarily started lo o king at things like alternative

surrogates, CO equating to VOC, etc. with the thinking that their lives might be better down

the road. EPA i s open to considering better ways of doing things or looking at other data,

even if EPA hasn’t asked for it.

Shintech stated that i ndustry feels that VCM is a good surrogate; the problem is that industry

has to go through a case

- by

- case MACT every time the y want to do something.

EPA noted that time is winding down. Shintech stated they had a better understanding of the

issues and will get back to EPA on day next week. EPA agreed this timeframe was

acceptable.5 Appendix A

Shintech Presentation Slide sPRESENTATION FOREPA PVC MACTMeetingNovember 23, 20091Shin-Etsu Chemical - Shintech’sParent CompanyPVC Capacity and Market SummaryTechnology overviewShintech’s historyProcess discussionPVC MACT testing request2SHINTECH - wholly owned subsidiary of SHIN-ETSU Chemical Co., LTDSHIN-ETSU Group (As of March 31, 2008)1) $13.7 Billion Global Sales(JPY100 = US$1.00)2) 20,241 Employees, production bases in 16 countriesMajor Product and Market PositionsWorld WidePVC(Polyvinyl Chloride) 1Silicon Wafers1Cellulose Derivatives 1Silicones4(No.1 in Japan)Synthetic Quartz Glass 1(for photomasks)Rare Earth Magnets 1(for hard disc drives)SHIN-ETSU AND ITS GROUP3SHINTECH GLOBAL PVCTECHNOLOGY SUPPORTSHINTECHTS+QCTX & LASHIN-ETSUPVC R&D CENTERKASHIMA, JAPANC.I.R.E.S.TS + QCESTARREJA,PORTUGALSHIN-ETSU PVC EUROPETS+QCNETHERLANDSSHIN-ETSUKASHIMA, JAPANCUSTOMERSHIN-ETSUPOLYMERPILOT PLANT &PROCESS EQUIPMENT4SHIN-ETSU GROUP PVC WORLD CAPACITYSHINTECH U.S.A.•Freeport, Texas :3,200MM LBS per year(1,450K Tons)•Louisiana(before expansion):1,300MM LBS per year(590K Tons)(after expansion)2,600MM LBS per year(1,190K Tons)SHIN-ETSU JAPAN :1,210MM LBS per year(550K Tons)CIRES PORTUGAL :440MM LBS per year(200K Tons)SHIN-ETSU PVC NETHERLANDS:990MM LBS per year(450K Tons)Total PVC Production Capacity : 8,440MM LBS per year(after expansion) (approx. 4 million Tons)5CHANGE IN THE CAPACITY IN THE USA (MM LBS)2009Shintech 5,800 (35%)Oxyvinyl 3,653 (22%)Georgia Gulf 2,653 (16%)Formosa 2,524 (15%)Westlake 1,526 (9%)Certainteed 481 (3%)Dispersion/Copolymer 655 (4%)17,2926Shintech uses the state-of-the-art PVC productiontechnology developed by Shin-EtsuShin-Etsu technology- is used for about 18% of world’s PVC resin production- is adopted by 12 International Licensees worldwidePrecisionPVC resin through computer controlConsistencyfrom large reactorsQualityfrom anti-fouling reactor designISO 9001 and 14001 standards certified7SHINTECHBrief History1974 Freeport Plant start-up2000 Addis Plant start-up2008 Plaquemine Chlor-Alkali/VCM/PVC plants start upOperation OutlineCorporate office -Houston, TXPlant Location -Freeport, TX / about 800 Acres(3.1 million)- Addis, LA / about 1,200 Acres(4.8 million)- Plaquemine, LA/ about 3,100 Acres (12.6 million)Facility - 3 Independent PVC Production Plants (TX & LA)Total PVC Capacity (Jan ’07) - 5,200 Million lbs/yr (2 million MT)Employees (Apr ’07) - 45389PVC MACT Testing Plan ProposalShintech has proposed to utilize the testresults from one site as therepresentative data for all three sitesThe uniform technology used throughouteach site provides a redundancy elementThe proposed production grade is themajority of product manufacturedThe only difference among the sites isproduction scale