US Nitrogen and the Old Knox Highway Utility District reportedly reached a verbal agreement — although not yet a formal one — Tuesday concerning a flat rate per gallon at which the company would buy water from Old Knox.
The water would originate with the Greeneville Water Department and come to the US Nitrogen plant at Midway through a new pipeline that the company has proposed to build and give to the utility district.
The Old Knox Utility District, like most other local water utility districts, buys its water from the Greeneville Water Commission and re-sells it to the utility district customers.
Old Knox board President Butch Shaw contacted The Greeneville Sun Tuesday to announce the verbal agreement with US Nitrogen.
“We’re excited about it,” Shaw said. “This is just what we wanted to do.”
US Nitrogen Responds
A statement from US Nitrogen’s Plant Manager Justin Freeark late Tuesday, however, was less certain, emphasizing the informality of the discussion and the work still to be done.
“US Nitrogen is continuing informal discussions with Old Knoxville Highway Utility District about our requirements for both the consistent, high-volume water supply needed for cooling at our facility and a treatment facility that can house the water that flows from our plant,” Freeark said in an emailed statement late Tuesday.
“At this time, US Nitrogen has not received a formal proposal with rate structures from the Old Knoxville Highway Utility District.
“We are open to reviewing the formal proposal; however, we cannot agree to or adequately evaluate a partial proposal that would not satisfy both the water supply and outflow from the facility,” he added.
“Based on prior discussions, an agreement with Old Knoxville Highway Utility District, Town of Mosheim and the Greeneville Water Commission would include a substantial amount of capital in required infrastructure upgrades and other concessions that would be borne by US Nitrogen.
“US Nitrogen is continuing to pursue all viable options on the table,” Freeark concluded.
Still on the table as an option for US Nitrogen is the double-pipeline proposal that has prompted objections from some environmental groups and from many individuals living near or on the Nolichucky River in Greene and Cocke counties.
For the past several months, the company has been focused on the proposal for a double-pipeline from the plant site at Midway to the Nolichucky River several miles away to the west.
Under that proposal, a pipeline would bring raw water from the river to the plant for use in cooling the industrial operations. The second pipeline would then return the cooling water to the river.
The Greene County Industrial Development Board (IDB) would own the pipeline, and it would be available to other qualifying future industries in the area, according to the amended permit application the board resubmitted to the Tennessee Department of Transportation on Friday.
The board asks TDOT to allow the pipeline to be laid for several miles along state right-of-way.
This was the second attempt by the IDB to apply for the permit. TDOT denied the first application, stating that right-of-ways are not available for the private use of only one company.
A response from TDOT is expected soon, a spokesman from the state department said.
“An application was re-submitted by the Industrial Development Board of Greeneville and Greene County to TDOT in Knoxville last Friday, and we started processing it Monday,” Mark Nagi said.
“This will now be reviewed and a decision expected within two weeks. TDOT regional staff in Knoxville works in collaboration with TDOT Headquarters in Nashville.”
The New Proposal
Shaw said that C&C Millwright Maintenance Co. President Jerry Fortner, acting as a representative for US Nitrogen, first presented the most-recent alternate proposal from the company to Shaw on Monday morning.
C&C is a major contractor for the US Nitrogen project.
According to Shaw, details of the proposal include US Nitrogen’s paying for the water line installation from the plant site to the Greeneville Water Department’s current meter connection for Old Knox, then giving the new pipeline to the utility district.
US Nitrogen also proposed to pay for the maintenance of the pipeline by Old Knox once it is built, he said.
Old Knox Board
Shaw presented the US Nitrogen proposal to the utility district’s board on Monday evening.
The board responded at the meeting by adopting two options for rates at which they would charge US Nitrogen to distribute the water to the company through the new pipeline that would be built.
Shaw said in a telephone interview Tuesday afternoon that he presented the two options on rates to Fortner Tuesday morning.
“It wasn’t an hour and a half before they called me back and said, ‘You’ve got a deal,’” Shaw said.
“Their biggest concern was the water,” he added. “According to their statements to me today, we’ve got that worked out.”
However, Shaw clarified that, for US Nitrogen, this would only provide a potential resolution for the first half of the project.
In order to have a complete alternative to the double-pipeline to the river, the company must now negotiate a deal between itself, the Town of Mosheim and possibly the Greeneville Water Commission for treatment of the plant’s water outflow.
Mosheim Mayor Tommy Gregg emphasized in a telephone interview Tuesday that the town’s Lick Creek Valley Wastewater Treatment Plant has the capacity to take on US Nitrogen’s outflows.
This is because the town received a modified permit from the Tennessee Department of Environment and Conservation that would allow them to route the coolant water around most of the treatment process, since it would not contain any sewage.
Under the modified permit, however, the town would triple the number of times they take samples to ensure that the contaminant levels are within normal ranges before the water enters Lick Creek.
“People say, ‘You can’t handle it,’” Gregg said of the town’s ability to take on the outflows. “Oh yeah, we’ve got the capacity to handle it. It’s nothing that can’t be worked out.”
The plant would need some upgrades and pipelines to divert the coolant water, but the town has some funding in place from an earlier time when Mosheim had planned to completely upgrade the system in order to treat all of US Nitrogen’s outflows directly through the plant, he said.
He added that if another “sweet deal” comes along, the town would also be willing to negotiate with US Nitrogen and the Town of Greeneville as well, especially if it would benefit current customers.
However, he said that it would be hard for Mosheim to abandon their treatment plant after having put so much into its upkeep.
As for Greeneville, Superintendent Laura White said Monday that Greeneville is well able to handle both providing Old Knox with enough water to supply US Nitrogen and with treating US Nitrogen’s water after its usage by the company.
“We’ve got a seven-million-gallon [wastewater] plant, and we’re at about 3.5 million right now,” she said.
However, in order to treat US Nitrogen’s outflows, she said Greeneville would have to have permission from the Town of Mosheim.
Greeneville could, she said, even take on all of Mosheim’s wastewater, which presents the potential opportunity for the “sweet deal” to which Gregg referred.
White said she had once presented the cost of that proposal (taking on both Mosheim and US Nitrogen’s outflows) at about a $3.2 million upgrade to Greeneville’s sewage lines and pump station nearest Mosheim.
She said she presented that figure to US Nitrogen in July 2013, but never received a reply.
Shortly thereafter, she said, she heard about the pipeline proposal to the Nolichucky River.
Old Knox Concerned
Another factor in the overall situation is that the Old Knox Utility District has voiced strong concern over the IDB’s new, broadened application to TDOT to be able to lay the double-pipeline from US Nitrogen to the Nolichucky River.
Potentially broadening the pipeline’s usage to other industries is of considerable concern to Shaw and Old Knox Interim Manager Jonathan Stepp.
Their concern, they have explained, is that a pipeline of that kind could mean a loss of business for the utility district if other industries do tap into the pipeline.
The district owes approximately $1.7 million in U.S. Department of Agriculture-issued bonds.
In order for USDA to protect that funding, part of the bonding contract reads that Old Knox may not allow another utility district to form in its service area, and must take legal action if necessary to prevent that formation.
On Friday, IDB attorney Jerry Laughlin emphasized that the pipeline would only provide non-potable (undrinkable) water and therefore should not be a threat to Old Knox.
However, Shaw said, according to the district’s attorney, Donald Scholes, of Nashville, that distinction would not satisfy the USDA.
In fact, he said a representative from the USDA contacted him late last week to echo their attorney’s concerns about the situation, recommending that Old Knox carefully review their contractual obligations with the USDA.
As a result, the Old Knox board voted unanimously Monday night to take whatever legal action their attorney deems necessary against the IDB to block the proposed pipeline.
“This is action I don’t want to take, but I don’t see that we have any choice,” Shaw said. “We’re bound by the USDA to do that.
“I believe we’ll work out a deal [with US Nitrogen] on the water before the first letter [relating to legal action] is ever sent out,” he later added.
“We don’t want to be fighting with our city leaders, but we’ve got an obligation to protect our district.”