Shandong Sun Paper files first permit application with ADEQ, incorporates with new Arkansas name of ‘Sun Bio’

Nearly 11 months after Gov. Asa Hutchinson held a historic ceremony to sign a memorandum of understanding with Shandong Sun Paper, the Chinese paper goods giant has filed its first permit application with the state Department of Environmental Quality (ADEQ) — jumpstarting the countdown for construction to begin on one of the largest economic development projects ever in south Arkansas.

According to a summary of air permit applications released by ADEQ on Thursday, the Chinese paper giant’s Arkansas subsidiary, Sun Bio, filed its initial application for a Title V air permit on March 16. Arkansas Secretary of State corporate filings show that Sun Bio Materials Company was incorporated as a for-profit company on Feb. 24, 2017. Sun Bio’s foreign address is listed as 1 Youyi Road, Yanzhou, Shandong, the same address as Shandong International Paper & Sun’s global headquarters in the eastern Chines province that is famously touted as the birthplace of Confucius and the Ming dynasty.

In December, ADEQ Becky Keogh told Talk Business & Politics that she and her staff were holding meetings with Sun Paper officials on pre-engineering and environmental permitting for the $1.3 billion bio-products mill in Clark County. At the time, Sun Paper officials said they hoped to begin construction on the project in the first quarter of 2017, but that timetable was pushed back to the third quarter of 2017 due to permitting considerations. Talk Business & Politics was unable to reach Sun Paper representatives late Thursday evening to get an update on whether the construction target has been pushed back further.

According to the one-line summary detailing Sun Bio’s initial permit application, the Chinese paper goods giant is seeking a “major source” unified air permit for construction and operation. According to a possible scenario of the pre-construction permit process provided by ADEQ officials, the sprawling project will likely need two storm water permits – one for the construction phase of the project and an operational permit once the facility is built – and a wastewater discharge permit.

When ADEQ receives a permit application, staff in the regulatory area covered by the permit first conduct an initial review to determine whether the application is “administratively complete,” as defined by regulations. If deficiencies are found, the applicant is notified and asked to submit additional information. Once the administratively complete determination is made, a legal notice announcing that finding is published. The notice also provides the opportunity for initial public comment and to request a public hearing on the proposal. It is the ADEQ’s discretion whether to schedule such a hearing.

According to ADEQ officials, large industrial projects can typically take from six months up to a year or more to gain final approval under the federal Clean Air Act Title V rules for so-called “major sources” of air pollution, which is an industrial facility that emits or has the potential to emit 100 tons of any air pollutant, 10 tons of any hazardous air pollutant or 25 tons of a combination of hazardous pollutants annually.

In September, Sun Paper officials announced they had completed talks with global consulting and engineering firm Pöyry Engineering of Helsinki, Finland, to begin design plans for the multi-billion project in south Arkansas. The Chinese company has also hired Mullenix & Associates LLC and Quattlebaum, Grooms & Tull PLLC law firm in Little Rock to help the company navigate its first major investment in the U.S.

Julie Mullenix, Sun Paper’s local spokesperson, said Pöyry has in-depth knowledge of the pulp and paper industry from raw materials and production through to end products. After Sun Paper completed feasibility studies, the decision was made by the company for the Arkadelphia mill to produce dissolving pulp, not fluff pulp as was first considered. Dissolving pulp is used in the manufacturing of rayon for consumer and industrial applications, and Sun Paper already has an established customer base and a large market in China for that product.

Meanwhile, Andrzej Bednarski, international project manager for Sun Paper, spoke last week at a Ouachita Baptist University luncheon, providing details to local officials of the much-anticipated project. At his meeting at the State Capitol with Gov. Hutchinson in April 2016, Sun Paper Chairman and Founder Hongxin Li said the south Arkansas mega-project will create 250 new jobs at an average salary of $52,000 a year.

“This project will be the most modern, the highest efficiency and the most environmentally progressive factory in the paper industry in all of North America,” Li said. “We would like to extend our special gratitude to the people of Arkadelphia and the other communities we visited during out investigation, and we appreciate your hard work and look forward to continuing our relationship with the city and its people.”

Arkansas Forestry Commission data shows that between 2011 and 2015 Arkansas grew approximately 25 million tons of pine timber, the product that Sun Paper will rely on heavily. Roughly 16.1 million tons of pine timber were harvested leaving 8.9 million tons across the state. Sun Paper could use up to 4 million tons of pine timber per year, the commission said.

According to the memorandum of understanding signed by state economic officials and Sun Paper, the Chinese company does qualify for a full package of state incentives, including Create Rebate and Tax Back programs, sales exemptions on equipment, property tax abatement, a recycling tax credit, customized training for company workers and the development of an intermodal facility for a public rail yard located at the Gum Springs site.

However, the project will not qualify for superproject status under Amendment 82, which allows the state to issue bonds to pay for infrastructure improvements on projects that exceed $500 million in investment and create at least 500 jobs.