Chesterfield, Virginia, USA 31 May 2017 -- (From the Chesterfield Observer) -- The future of a $2 billion proposed paper mill in Chesterfield may hinge on the success of its Chinese parent company's efforts to develop new technology in China.

In early May, Tranlin Inc., also known as Vastly, announced that construction of its Chesterfield mill was on hold as the company continues testing its more advanced facility in China. The new technology, the Observer has learned, may have added significance: It could be key to helping the Chesterfield operation negotiate a complex system of trading for pollution credits with other Virginia companies to dump nutrient pollution into the James River.

Announced in 2014, the planned mill was expected to go into operation by 2020 but has experienced a series of delays, largely involving problems with obtaining environmental permits.

It is not known how long the delays will last, but the timetable is likely to be affected by how soon new technology developed in China can be approved and put in place in the Chesterfield operation.

An official with Tranlin acknowledged in an email that some of the new technology is being developed at a paper mill in Heilongjiang (Black Dragon) Province in an area of northeastern China that borders Russia.

Lisa Randall, associate director of corporate communications for Tranlin, wrote that the plant is the newest operated by Shandong Tranlin Paper Company Ltd., parent company of the Chesterfield project, and that "our parent firm's newest facility demonstrates Tranlin's most advanced, proprietary Third Generation Technologies, machinery and processes."

She added: "Because the company would like to apply these efficiencies to our manufacturing design here in the U.S., the company has extended timetables for project work. Environmental studies and work to finalize the project requirements continue."

Ben Thorp, a consultant who is advising Tranlin on technology and marketing issues, says the sprawling Chinese plant, which can produce up to one million tons of product a year, is near the city of Jiamusi in Heilongjiang Province.

"We hope the new technology will reduce pollution," says Thorp, a retired American pulp executive with experience at James River Corp. and Georgia-Pacific Paper Co.

Tranlin, which has been offered more than $30 million in state economic development incentives, had hoped to proceed quickly with its project on 850 acres of land in eastern Chesterfield. The proposed plant is unusual because it will use farm field leftovers, not trees, as raw material to produce paper that would be made into high-end paper products such as paper plates. This method is billed as being more ecologically friendly. The mill also will not use bleach in its processes as typical tree-based mills do, reducing pollution.

Over time, however, it became apparent that simply being a "green" proposal wasn't enough. The project is on the banks of the James River, just off Interstate 95 and Willis Road, and needs about 20 permits to proceed. It recently received an exception from the state Department of Environmental Quality for an air permit for a facility that will convert paper rolls imported from China into smaller ones that can be used to make paper towels or dinnerware.

Tranlin has yet to apply for any other permits.

One of the project's biggest hurdles stems from a 2009 agreement between the EPA and the six states in the Chesapeake Bay watershed. To improve the health of the estuary, the agreement capped the amount of nutrients, such as nitrogen and phosphorous, that can be dumped as waste into tributaries of the Chesapeake Bay.

States were to set maximum nutrient loads that can be dumped into the watershed, with the idea of creating a zero-sum system in which industries can trade pollution "credits" with one another as needed without ever surpassing or increasing the maximum.

One problem for Tranlin was that when Virginia set its total number of credits, it largely took into account existing entities that were already permitted to dump treated nutrients into the water, without considering how new industries locating along the watershed might be affected.

"Virginia gave away 100 percent of the targets to companies and localities," says Thorp, adding, "that presents a unique challenge to anyone in Virginia."

To help correct the problem, Gov. Terry McAuliffe issued an executive order to adjust the system last year. A final agreement came last summer. But by then, Tranlin was already falling behind.

It has deferred accepting more than $2 million in funding from the Virginia Economic Development Partnership because it was unable to meet requirements for development and hiring along the way. Tranlin, which has received $5 million through a special governor's fund, was targeted to have invested $950 million and hired 960 employees by the end of this year.

So far, the firm has invested about $9 million and has 25 employees. According to Randall, six employees have been laid off and others had been transferred to China to work on the advanced pollution technology. In another development, Jerry Z. Peng, the head of Tranlin-Vastly, resigned suddenly in March.

To regain traction, Tranlin has been talking about swapping credits with other companies with facilities along the James River, such as Dominion Energy, which operates a major coal-fired power station nearby. Asked about the talks, Randall replied, "We have been in regular dialogue with local and state officials regarding all project requirements." Thorp says one problem is that it isn't known how long it will take for the technology upgrades to be completed in China and applied here.

Some doubt whether the system will work, or whether the Chesterfield plant will be built.

Jeff Corbin, a former U.S. Environmental Protection Agency official who served as an adviser on the Chesapeake Bay, says a basic problem is that Tranlin plans on dumping a large amount of nutrients. He says he first heard that the expected annual total was 300,000 pounds of nitrogen and phosphorous but later learned it might be cut in half. "Regardless, that's a big discharge," says Corbin, who is now senior vice president for water quality at Restoration Systems LLC, based in Raleigh, North Carolina.

Corbin thinks it's unusual that Tranlin's parent company would plan to build a plant in Chesterfield and then proceed with building a more advanced one in China. Asked if he questions the viability of the Chesterfield project, he says, "I absolutely do."

Randall said Tranlin has hired third-party consultants to conduct environmental surveys at the site to help prepare permit applications.