The Old Knox Highway Utility District Board

The Old Knox Highway Utility District Board reviews proposals for a new pipeline from their district to Greeneville that would benefit US Nitrogen. Pictured from left to right are President Butch Shaw, Secretary Randy Lawson and Interim Manager Jonathan Stepp.

Negotiations between Old Knox Highway Utility District and US Nitrogen remain underway and -- as of Monday -- now include an option that could eliminate the company's need to directly access the Nolichucky River.

The Old Knox Board voted unanimously on Monday to make two water-rate offers to US Nitrogen. These offers follow a proposal presented to the district board by US Nitrogen in which the company would build a pipeline from Greeneville to their Midway plant.

US Nitrogen would then gift the pipeline to Old Knox through a contract agreement, under which the company would also pay for the pipeline's maintenance by Old Knox.

That was the deal Old Knox Board Chairman Butch Shaw said was presented to him on Monday morning by C&C Millwright Maintenance Co. President Jerry Fortner, acting as a representative for US Nitrogen.

The proposal had one follow-up question for Shaw to take to the full board: How much profit would the district want to make off the water passing through the pipeline each month?

Shaw said that Fortner passed along from US Nitrogen a suggested profit margin to the utility district of $15,000 per month.

The board responded with two prposals:

The board accepted the figure suggested by Fortner, after including enough to cover the utility's cost, a percentage of the district's water loss and a 25-year depreciation rate on the pipeline.

State regulatory boards would require the district to depreciate the pipeline for 50 years, counting that depreciation over the life of the pipeline as an actual expense.

US Nitrogen had proposed calculating depreciation on a 38-year basis, Shaw said.

The board agreed, however, on a 25-year depreciation of $70,000 per year.

The second water rate proposed by the utility district board was for a 50 percent markup on the district's cost for the water from Greeneville, which the board said would cover the water loss and depreciation and leave the district with a varying profit margin based on US Nitrogen's water usage.

The cost for US Nitrogen under that rate would be $2.31 per 1,000, according to board member Randy Lawson.

"I would like to make it a good number, not just for [US Nitrogen] but for our community and our county, and to give them the option of going to town instead of the river," Shaw said.

Either rate would benefit the district, Lawson said, because it will "cut in half" the water loss that the district must report annually to the state.

The rate amount dominated the board's discussion during its monthly meeting on Monday.

Several citizens were in attendance, prompting the board to set up an outside meeting space for additional room.

"I was at that Industrial Development Board meeting Friday, and I stood at the very back with most of you all," Shaw said to the audience gathered at the meeting.

"I'd rather you sit here and sweat and hear what we're saying and know what's going on rather than go through that again.

"We're here to serve the people," he added.

IDB MEETING

Friday's IDB meeting stirred a new round of controversy after many in attendance were unable to hear portions of the meeting as the board members spoke amongst themselves. No microphones were used at the meeting.

It is rare for more than a very few citizens to attend meetings of the Industrial Development Board, but County Mayor Alan Broyles, chairman of the IDB, said in an interview Monday evening that he had expected a larger-than-usual audience at the meeting scheduled for last Friday.

For that reason, he said, he arranged to move the meeting site from the Courthouse Annex, the usual location, which has very limited space, to the G. Thomas Love Board Room at the Greeneville Light & Power System, where there is much more seating area for citizens.

Broyles said he had expected that there might be 30-40 people attending the meeting besides the board members.

But he said he was very surprised when the room was filled to standing-room-only for the meeting.

He said in the interview that, if he had anticipated such a large turnout, he would have made sure there were microphones for the board members to use so that the audience could more easily hear the proceedings.

Some audience members were very vocal in their displeasure at being unable to hear, and also in their general opposition to the IDB's reason for meeting - to consider resubmitting a permit application to the Tennessee Department of Transportation asking for permission for the board to lay a double-pipeline along several miles of state right-of-way between the US Nitrogen plant and the Nolichucky River.

Mayor Broyles had two Cocke County residents removed from the building after they spoke out following a warning he had issued against any additional "outbursts" from the audience.

One of the two individuals, Eddie Bruce Overholt, of Bybee, was subsequently charged by the Greeneville Police Department with interfering with a public meeting and resisting arrest.

After Broyles' warning, Overholt had spoken out to ask that the board speak more loudly so that everyone could hear. He said later that he did not consider his asking that question to be "an outburst" of the kind Mayor Broyles had warned against.

PIPELINE PROPOSAL

The proposed double-pipeline at the center of it all would travel from US Nitrogen in Midway to the Nolichucky River.

While this proposal has had a lot of support within the community, it has also drawn concern and objections from some environmentalists and from numerous individuals who live on or near the river in Greene and Cocke counties.

Tennessee Department of Environment and Conservation officials say that the water US Nitrogen would discharge into the river after using it for cooling purposes woul not damage the environment downstream.

TDEC approved water and air quality permits for the plant, including for the pipeline.

However, TDOT denied the first permit application from the IDB, citing that no private entity can benefit from the state right-of-ways.

The IDB amended the language of its application to emphasize the potential use of the pipeline for other industries that may located in western Greene County, saying that such industries would need to meet state permits and then apply to the IDB for approval to utilize the pipeline.

OLD KNOX CONCERNED

However, this change, potentially broadening the pipeline's usage to other industries, was of considerable concern to Shaw and Old Knox Interim Manager Jonathan Stepp.

Their concern was 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 nonpotable (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 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."