NC0000272_EPA 1994 Letter Re.: Stream Variance_19941129

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A 1 1
,'- UNITED STATES ENVIRONMENTAL PROTECTION AGENCY I • �
`177 DOVE::} REGION IV _ Iy^-
345 COURTLAND STREET.N.E. /S
ATLANTA.GEORGIA 30365
NOV 2 9 1994 /0
Mr. A. Preston Howard, Jr. , Director z
North Carolina Department of Environment, �3
Health and Natural Resources 'DEC 3 t994
Division of Environmental Management
P.O. Box 29535 DIY. OF ENVIRONMENTAL MGMNT.
Raleigh, North Carolina 27626-0535 DIRECTORS OFFICE
Dear Mr. Howard:
This is in reference to the State-adopted variance for the
instream color criterion for the Pigeon River. The variance
was initially adopted by the State on July 13, 1988, and was
continued by the Environmental Management Commission NPDES
Committee on May 120, 1993. The conditions, of the initial
variance require reconsideration by the State during each
subsequent triennial review conducted by the State.
T
The continuation _of. _the variance was submitted for EPA
review as a water' q"J:ity standard by letter dated June 11,
1993. The States request for review included the necessary
certification that the variance was duly adopted and
promulgated in accordance with applicable statutory. and
regulatory provisions of the State:
The variance was submitted for Environmental Protection
Agency (EPA) review in conjunction with the triennial review of
water quality standards for the State. On November 2, 1993,
EPA acted on the revisions adopted by the State during the
triennial review, with the exception of the color variance for
the Pigeon River.
Action on the variance was deferred by EPA pending a review
of the variance by the US Fish. and Wildlife (FINS) pursuant to
the provisions of the July 27, 1992 Memorandum of Agreement for
coordination between the EPA, the FWS, and the National Marine
Fisheries Service. That review is now complete. The letter
dated March 31, 1994 sum^; izing the conclusions of the FWS
review of the variance is enclosed for your information. The
conclusion of the' FWS regarding the color variance is -as -
follows:
"Based-on the.absence of listed.species in the project
area; continuation of Champion International's color
variance. of• 50 .true_color.:units _at-the Canton Mill .is not
likely_to.-adversely :impact•.anp.--:Federally-listed or..proposed. '
species. in-the Pigeon:River £rom the discharge location-to
the North Carolina/Tennessee state line. Therefore, the

(2)
requirements of Section 7 of the Act have been satisfied.
However, obligations under Section 7 of the Act must be
reconsidered if: (1) new information reveals impacts of
the identified action that may affect listed species or
critical habitat in a manner not previously considered;
(2) this action is subsequently modified in a manner which
was not considered in the document; or (3) a new species is
listed or critical habitat 'determined that may be affected
by the identified action. "
The applicable federal regulation regarding the State's
obligation in the review and reassessment of variances is
contained in 40 CFR Section 131.20(a) which states:
"The State shall from time to time, but at least once every
three years, hold public hearings for the purpose of
reviewing applicable water quality standards and, as
appropriate, modifying and adopting standards. Any water
'body segment with water quality standards that do not
include the uses specified in Section 101(a) (2) of the Act
shall be re-examined every three years to determine if any
new information has become available. If such new
information indicates that the uses specified in Section
101(a) (2) of the Act are attainable, the State shall revise
its standards accordingly. "
This -provision applies to "water quality standards that do
not include the uses specified in Section 101(a) (2) of the
Act. " . This includes State-adopted variances from water quality .
criteria for specific water body segments.
Title 40, CFR..Section 131.20(c) provides, in pertinent part:
"The State shall submit the results of the review, any
supporting analysis for the use attainability analysis. . .
to the Regional Administrator for review and approval. . . "
In the context of the federal regulations, EPA considers
the variance to be an action taken by the State to modify a use
included in Section 101(1) (2) of the Act to require less
stringent criteria. The requirements for such an action are
the same as for any other standards which are required to be
supported by.a use attainability analysis.
The information provided by Champion includes an update of
the previous analysis used as a demonstration of meeting the
provisions of 40 CFR Section 131.10(g) (6) . This portion of the
regulation allows a revision to water quality criteria when
controls more' stringent. than those required by Sections 301(b)
and 306- of the-Clean Water Act would result in substantial
.:' .widespread social and economic impact. The analysis is based
on the configuration of the Canton Mill prior to the
modernization program, which"was recently completed.

(3)
EPA understands that, at the time of the update to the
previous analysis, production and wastewater treatment
operations at the Canton Mill were in a state of flux, and that
no data were available under the modernized configuration of
the mill for: 1) the influent color loadings to the wastewater
treatment facility, (2) the color removal efficiency of the
wastewater treatment operations, (3) actual effluent color
levels, (4) plant economics under the new production scenario,
or (5) the effect of reduced wastewater flow on the previous
wastewater treatment operations and in relation to available
space at the current site for future incorporation of
operations specifically designed for removal of effluent
color. Based on our conversations with representatives from
Champion, we also understand that the above information will be
available for at least one year of operation of the modernized
mill after May 1995.
In reaching a determination on the color variance it is
EPA's determination '
tion that the information provided by Champion
and submitted to. EPA by the State is the best approximation of
the economics and treatment operations of the Canton Mill at
the time that the variance was continued by the State. Also,
new information is not available at this time which is
sufficient to indicate that the statewide color criterion is
attainable in the Pigeon River.
It is EPA's determination that the State's continuation of
the variance complies with Section 303 of the Clean Water Act
and 40 CFR Part. 131. Therefore, EPA is approving the State's
continuance of the variance as a revision to State water
quality standards.
We .understand that Champion has announced an intention to
implement a new technology to recycle the bleaching wastewaters
within the operations at the Canton Mill. This step will
significantly reduce wastewater flows and the influent color
loading to the treatment operations, and is consistent with
EPA's position that reasonable progress must be demonstrated
toward meeting the statewide color criterion for the Pigeon
River in order for EPA to accept and approve a continuation of
the color variance.
Regarding the State's nest review of the color variance, it
is EPA's expectation that a detailed analysis of the economics
and treatment operations at the Canton Will will be submitted
to the State for consideration in the nest triennial review.
Since the previous variance was continued by the State on
May 12, . 1993, the variance should be reviewed and appropriate
revisions be adopted by the State no later than May 12, 1996.
The analysis must account for new information based on.
operation of the modernized facility, including the following:
(1) influent color loadings-to .the wastewater treatment
facility, (2) color removal efficiency- of the wastewater

(4)
treatment operations, (3) actual effluent color levels, (4) the
economic information necessary to reevaluate the provisions of
the variance pursuant to 40 CFR Section 131.10(g) (6) under the
new production scenario, and (5) the effect of reduced
wastewater flow on the previous wastewater treatment operations
in relation to available space at the current site for
operations specifically designed for removal of effluent
color. The list of treatment technologies should be agreed
upon by the State and EPA prior to initiation of the evaluation
of alternatives. The analysis should also address potential
color prevention technologies in addition to wastewater color
removal technologies.
The analysis should be based on full attainment of the
statewide color criterion in the Pigeon River. Should full
attainment not be demonstrated to be economically achieveable,
the analysis should also address interim levels of compliance
with the statewide color criterion, including but not limited
to: (1) attainment of the statewide criterion at a point
further upstream of the North Carolina/Tennessee state line,
(2) achieving a color level at the North Carolina/Tennessee
state line which is more stringent than the current NPDES
permit requirement, i.e. , less than 50 true color units, or
(3) an instream color level at or near the discharge which will
result in reduced color -levels in downstream segments of the
river. i •
In order for the above information to be timely and useful
in the next triennial review, especially relative to-possible
revisions to the variance and further-progress- towards meeting
the statewide color standard, EPA is requesting, the State of
North Carolina to require Champion International to submit the
above information no later than September 1, 1995. This should
allow Division of Environmental Management staff ample time to
review the information and include a recommendation on any
further continuance of the variance prior to the three year
deadline for reconsideration of the variance.
If you have questions regarding EPA's approval of the
Pigeon River color variance or the information outlined for
continuation of the variance during the State's next triennial
review, please contact me at 404/347-3555, extension 6544.
. Sincerely,.
Robert F. McGhee
Acting Director
Water Management Division
Enclosure -
cc: Mr. Steve Tedder

State of North Carolina
Department of Environment,
Health and Natural Resources • •
Division of Environmental Management
James B. Hunt,Jr., Governor
Jonathan B. Howes, Secretary ID E F=I
A. Preston Howard,Jr., P.E., Director
December 19, 1994
Mr. Derric Brown
Environmental Supervisor
Champion International Corporation
Canton Mill
Box C-10
Canton, North Carolina 28716
Dear Mr. Brown,
The United States Environmental Protection Agency(EPA)has reviewed the color
variance for the instream color criterion for the Pigeon River and determined that.
the state a continuation of the variance complies with Section 303 of the Clean
Water Act and 40 CFR Part 131. The EPA recently approved the continuance of the
color variance in a letter dated November 29, 1994 to A. Preston Howard, Jr.,
Director of the Division of Environmental Management. A copy of the letter has
been enclosed for your information.
We are pleased that EPA has approved the continuance of the variance and
attribute much of their decision to the enormous improvements that your company
has made to the Canton Mill. We applaud your efforts and look forward to working
with you in the coming years to ensure protection of the environment is ma3dmized.
I would like to take this opportunity to outline the schedule of major milestones and
to summarize information that should be submitted to us as part of our Triennial
Review of water quality standards. In accordance with the existing variance
agreement, "Champion shall continue to study and evaluate other color removal
technologies and shall report its findings to the Division of Environmental
Management immediately upon discovery and annually on or before April 30 of each
year." In its letter of November 29, 1994, EPA has requested that the state require
you to submit specific information to us. I refer you to pages 3 and 4 of their letter
for the details of this requested information. In general,you are requested to
provide detailed information on economics and treatment operations at the Canton
Mill. I suspect that you will provide much of this information to us in your report
which is due April 30, 1995. Any information which has been requested and not
submitted as part of this April 30th report shall be due to us no later than
September 1, 1995. After you have had a chance to review the enclosed letter and
scope of information requested, please feel free to call Forrest Westall in our
Asheville Regional Office or me if you have questions.
P.O.Box 29535,Rdeigh,North Carolina 27626.0535 Telephone [phone] FAX [phone]
An Equal Opporhnily Affirmative Action Employer 50%recycled/10%pastconaaner paper

Mr. Derric Brown
December 19, 1994
Page Two
As we have discussed with you in previous conversations, we expect to convene the
NPDES Committee of the Environmental Management Commission(EMC) in early
1995 to begin the variance review process. The NPDES Committee will select
members for a special variance review committee which will have the task of
evaluating technical and economic data and other information submitted on the
color variance issue. We expect to have this special committee assembled in early
1995. Our tentative schedule for other related activities include the following:
• seeking permission from the EMC for approval of the French Broad River
basinwide plan in April 1995,
• submitting our annual status summary report to the NPDES Committee on
color removal at the Canton Mill plant in June 1995,
• submitting a report to EPA on the status of the variance review in
December 1995,
• giving public notice for the Champion permit and variance in late spring or
early summer 1996, and
• issuing NPDES permits for the Pigeon River drainage in October 1996.
I hope that this tentative schedule will be useful to you. We look forward to
working with you in the next phase of the variance review process.
Sincerely,
Steve W. Tedder, Chief
Water Quality Section
Enclosure
cc Forrest Westall
Paul Davis
Fritz Wagner

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LIN

Schedule For Champion Variance Review Process
April 95 Send letter to NPDES Committee describing variance review
process and nominees for Variance Review Committee. Variance
Review Committee to include EHNR staff, and at least two
individuals considered authorities on pulp and paper technology
or environmental aspects of that industry from the university or
research communities.
April 30, 95 Champion to submit annual report on color removal technologies
to DEM
May 10, 95 Seek permission from the EMC for approval of the French Broad
River basinwide plan
May 10, 95 Convene NPDES Committee to begin selection process for
Variance Review Committee
June 95 Convene Variance Review Committee
June 30, 95 Submit annual status summary report to NPDES Committee on
color removal at Canton Mill plant
September 1, 95 Champion to submit information as specified on pages 3-4 of
EPA's November 29, 1994 letter to Preston Howard
December 95 Submit a report to EPA on the status of the variance review
December 95 Variance Review Committee to submit report to NPDES
Committee with recommendation on adequacy of existing
variance
February 96 NPDES to consider Variance Review Committee's report and to
determine if changes in the variance are warranted due to the
effectiveness of the treatment system or because of the advances
in color reduction technologies for this type wastewater
March 96 Give public notice for Champion permit and variance
May 1, 96 Hold hearing for Champion permit and variance
June 11, 1996 Submit "3-year" package to EPA on variance review status
July 12, 96 Convene NPDES committee to review'information presented at
public hearing
Aug 1 - Sept 1, 96 Make decision on permit and variance
October 96 Issue NPDES permits for Pigeon River drainage
BM, 4/6/95
HD.variance review schedule

BENEFITS AND COSTS FROM THE REDUCTION
OF COLOR EFFLUENT FROM THE CHAMPION MILL
INTO THE PIGEON RIVER
PREPARED BY
NATIONAL ECONOMIC RESEARCH ASSOCIATES, INC.
AT THE REQUEST OF
CHAMPION INTERNATIONAL CORPORATION
FEBRUARY 1998
mera

TABLE OF CONTENTS
Pace
I. INTRODUCTION AND SUMMARY OF RESULTS I
A. Introduction 1
B. Summary of the Economic and Employment 2
Impacts of Discharges from the Champion Mill
C. Evaluation of the Bach and Barnett Analysis 4
D. Organization of the Report 4
II. BENEFITS 4
A. Overall Approach 5
B. Rafting and Floating 7
C. Fishing and Sightc_eeing 13
D. Property Values 14
E. Annortioning Benefits 16
F. Nonuse Value 18
III. COSTS 21
A. 50 Percent Reduction 21
B. 50 Units at the Tennessee Border 21
C. 50 Units at the Mill 23
IV. COSTS AND BENEFITS 24
V. EMPLOYMENT CONSEQUENCES 26
VI. EVALUATION OF THE BACH AND BARNETT REPORT 29
A. Discounting 29
B. Indirect Benefits 30
C. The Costs of Color Reduction 33
D. Financial Impact on Champion 33
International Corporation
REFERENCES 34
n,ex"

BENEFITS AND COSTS FROM THE REDUCTION
OF COLOR EFFLUENT FROM THE CHAMPION MILL
INTO THE PIGEON RIVER
I. INTRODUCTION AND SUMMARY OF RESULTS
A. . Introduction
Champion International Corporation owns and operates a paper mill at
Canton, North Carolina that is sited on the Pigeon River. The mill is about 37
miles upstream of the Tennessee and North Carolina border. The United States
Environmental Protection Agency (USEPA) has proposed an NPDES permit for the
mill that would significantly reduce the amount of color allowed to be discharged
from the mill into the Pigeon River. One of many submissions in this permit
proceeding was a report by Bach and Barnett entitled, An Economic impact Analysis
on the Recreational Benefi Pigeon ti (see Reference [1]). This
study concluded that levels of reduction consistent with the April 1987 USEPA
proposal permit would be economic. In December 1987, USEPA published a second
proposal which limited color discharges even more severely than the April proposal.
At the request of Champion, National Economic Research Associates, Inc.,
an economic consulting firm specializing in energy and environmental economics,
evaluated the economic impacts of three color reduction strategies and also reviewed
and evaluated the Bach and Barnett report. First, we estimated the benefits and
costs under three strategies proposed to reduce color discharges from the Champion
mill. One of the plans was proposed by Champion; two were proposed by USEPA.
All the plans had costs significantly greater than benefits, and the most stringent
plan (i.e., the December proposal by USEPA) would have substantial unemployment
impacts. However, Champion's proposal yielded benefits that were closest to cost.
Second, based on our review and evaluation of the Bach and Barnett analysis, we
have concluded that there were several fundamental errors that ' completely
n,eir"

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undermine their conclusion that substantial reductions in color discharges could be
justified on economic grounds.
B. Summary of the Economic and Emoloyment Imnactc of Reducin¢ Color
Discharges_ from the Champion Mill
Table I summarizes our results. The plan proposed by Champion would
reduce color discharges from the mill by 50 percent on a long-term average basis.
The costs associated with this program would be $38.4 million. This is the present
value of the costs over a 10-year period expressed in 1988 dollars. These costs
would be almost four times the benefits from the plan of $10.9 million. Thus, an
expenditure of one dollar achieves only 28 cents in benefits.
The two USEPA proposals would remove more color from the effluent
discharge but at substantially higher costs. Also, costs would exceed benefits by a
far greater margin than under Champion's proposal. Under the less stringent of the
two, which would consistently achieve less than 50 color units in the Pigeon River
at the Tennessee border, the cost would be $113.3 million, with corresponding
benefits of only $17.3 million. This results in a benefit of 15 cents per dollar of
expenditure. The most stringent proposal, contained in the second draft USEPA
permit, would limit discharges at the mill to 50 units of color. This proposed
effluent limit cannot be achieved with current technology and, therefore, would
require that the mill be shut down. The direct cost of this proposal would then be
the cost of building and operating a new facility in a different region, which would
be approximately $1.4 billion. The benefits under this program would be $17.6
million. Thus, for. every dollar of expenditure, this plan would yield benefits of
about one cent. These cost estimates do not include the substantial economic and
social cost impacts on the city of Canton, Western North Carolina or Eastern
Tennessee.
nme rw

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There are several reasons for the striking divergence between costs and
benefits. On the benefit side, relatively small stretches of the Pigeon River which
are immediately downstream of the Tennessee border have good recreational
potential. The whitewater rafting run of five miles is comparatively short. The
river is usable for rafting only when the hydroelectric electric generation demands
at the Walter's Lake plant of Carolina Power and Light (CP&L) result in adequate
releases. Also, other factors unrelated to color tend to make the river less
attractive: the most scenic part of the river in North Carolina has virtually no
water in it at all and is not affected by color discharges from the mill because of
the CP&L water diversion tunnel; and low summer river levels, particularly in North
Carolina, restrict its suitability for most recreation activity.
On the cost side, the plant is already a low color producer in terms of
pounds of color effluent per ton of product. The incremental removal of color
requires increasingly more expensive and untested methods. The low river flows
make the achievement of the lowest level of color impossible without a complete
shutdown of the mill.
Employment is another measure of the impacts of the discharge reduction
plans. The lower discharges of color would increase recreational-related employment
in Tennessee by 77 jobs in the 50 percent reduction plan and by 123 jobs in either
of the two more stringent plans. Based upon U.S. Department of Commerce figures,
the 50 percent reduction plan would increase the number of jobs in North Carolina
by 176, while the 50 units at the border plan would create 539 jobs there. If the
mill were to shut down, as would be required under the USEPA December proposal,
the loss of employment in North Carolina would total over 12,000 jobs, with an
added loss in Tennessee of over 800 paper-related jobs. Thus, under the December
proposal, Tennessee would experience a net loss of almost 700 jobs.
n/e rar

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C. Evaluation of the Bach and Barnett Analysis
Bach and Barnett estimate the direct and 'indirect recreational benefits
from reducing color discharges from the Champion mill to meet 50 color units at
the state line and the costs of achieving these benefits. Based on their analysis,
they conclude that reducing the color discharges to that level is justified on
economic grounds.
We have reviewed and evaluated their analysis and found it to be
seriously flawed. There are several key errors that cause them to incorrectly
conclude that the level of color reduction they evaluated would be justified on
economic grounds. They have failed to discount benefits and have overstated and
miscalculated indirect economic benefits. In addition, they have utilized company-
wide rather than plant-specific data to evaluate local impacts.
D. Organization of the Reoort
The remainder of the report is divided into five sections. Section II
describes the calculation of benefits. Section III discusses the costs of each plan.
Section IV compares the costs and benefits. Section V calculates employment
impacts. Section VI evaluates the Bach and Barnett analysis.
U. BENEFITS
This section discusses how the benefits from reducing color discharges
into the Pigeon River are calculated. We begin by describing our overall approach.
This is followed by a discussion of our estimates of the benefits from greater
recreational use and improved property value on the assumption that color
discharges are eliminated entirely. We then determine the benefits associated with
each of the color discharge reduction programs we evaluated. The section concludes
n,e•r,-a

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with a discussion of other possible sources of benefits -- option values and
existence values.
A. Overall Aooroach
There are two issues regarding .the relationship between reductions in
color discharges into the Pigeon River and improvements in recreational benefits
and in property values. First, it is not clear to what extent reductions in color
discharges from the Champion mill would be perceptible in the river. It is even
less clear that incremental improvements, say from 100 to 50 units on average,
would be noticeable in the river. Second, even if these changes were noticeable,
there is no direct evidence that they would affect. either recreational activity or
property values.
Bach and Barnett allege, however, that color levels in excess of 50 units
reduce the attractiveness of the Pigeon River for recreational uses (whitewater
rafting in particular) and may also reduce property values for land adjacent to the
river. It is important to note that these supposed adverse effects are entirely
hypothetical. Despite an extensive review of the literature we can find no empirical
studies which relate color to recreational activity. Indeed, we have limited evidence
for certain naturally very dark rivers (the Androscoggin River in Maine for
example) on which whitewater rafting and fishing are quite popular activities.
While there is some limited support in the economic literature for a relation
between color and property values, this may simply reflect the statistical association
between color and other unrelated aspects of water quality.
Despite our reservations about the actual impacts of reducing color
effluents, for the purposes of this study we have adopted Bach and Barnett's thesis
and have assumed that color reduction will enhance recreational activity and
n-e-ra

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property values on the Pigeon River and have attempted to quantify the maximum
possible impacts of color changes.
The time available for this study has made a direct investigation of the
Pigeon River infeasible. Consequently, we have relied on data for other rivers to
estimate the benefits from reducing color discharges into the Pigeon River. In our
effort to transfer other results to the Pigeon River we have always allowed for the
maximum benefit potential. The actual benefit levels are quite likely to be lower.
Several recreational activities are feasible on the Pigeon River, including
whitewater activities (rafting, canoeing and kayaking), floating (primarily rafting
although it includes "innertubing," canoeing and kayaking), fishing and general
sightseeing. To calculate the increase in usage for these activities in the absence
of color effluent we used estimates of current usage on Tennessee rivers in the
vicinity with no perceived elevated color levels, particularly the Ocoee and
Hiawassee Rivers. Adjustments must be made to these estimates, since these rivers
are different from the Pigeon River in respects other than color.
To estimate the value of a visit we have utilized a variety of published
sources. For the most part, they are the results of contingent valuation studies.
In these studies participants in an activity are asked to estimate the value of that
activity to them in excess of the costs incurred. These estimates, known as , serve
to define the value of a day. Bach and Barnett also employ valuation. Multiplying
the value per day by the increased number of days gives our estimate of benefits
from reducing color discharges.
Property value benefits presumably derive from scenic advantages of being
along a river of reduced color as well as the enhanced levels of wildlife and
recreation the river can support. Several studies [2,3,41 have related color and
general water quality to property values along coastlines and lake fronts. We have
I11VI'D "

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calculated current values of river-front property along the impacted portion of the
Pigeon River and have used these studies to estimate the increase in property
values attributable to a river with no added non-natural color.
B. Rafting and Floating
Whitewater rafting is feasible on a 4.5 mile stretch of river about
37 miles below the Champion mill -- from River Mile (RM) 26 at the CP&L
Powerhouse to RM 21.5 in Hartford, Tennessee (see Figure 1). As recently as last
summer, a commercial supplier offered whitewater rafting trips on this stretch. The
river below this point has too low a gradient to support whitewater rafting. Over
the 37 miles between the mill and the power plant; both the gradient of the river
and the volume of water are insufficient to support rafting.
Rafting on the Pigeon River is further limited for two reasons. First,
the climate is conducive to rafting only from April to October. Second, during this
period rafting is limited to periods of discharge from the CP&L power plant. When
the plant is not operating (or is operating only one of its three turbines) the
depths are insufficient to support rafting. CP&L's obligation as a public utility is
to generate power so as to minimize electric generation costs without regard to
potential rafting activity. However, we have assumed for the purposes of this study
that CP&L generates electricity during as many daylight hours as are feasible during
the rafting season.
The relatively short length of the Pigeon River run makes whitewater
rafting less attractive than it would be on longer rivers. First, no more than a
half-day trip is possible, while other rivers offer full day trips. Second, since
congestion limits the number of potential rafters per mile, shorter rivers will have
lower capacities.
n,e�rw

-8-
To estimate the number of potential whitewater rafting trips for the
Pigeon River we used data for the Ocoee River, which is the closest comparable
river to the Pigeon River. The whitewater rafting portion of the Ocoee River, like
the Pigeon River, is five miles long, allowing only half-day trips. In addition, it is
also dam-constrained. Total usage on the Ocoee River for 1987 was about 120,000
visits [5]. Following Bach and Barnett, we take this figure as a limit to usage on
the Pigeon River. We assumed that there is no current recreational usage on the
Pigeon River and that over five years usage for whitewater activities would rise to
120,000 visits per year. Thus, we have assumed that an recreational use of the
Pigeon River would be attributable to reductions in color discharges. This obviously
tends to overstate the benefits from lower discharges, since there is currently
recreational usage of the river. The attached brochure (Figure 2) illustrates the
recreational benefits of the Pigeon available today. These visit estimates are
displayed in column (1) of Table II.
To estimate the value for a rafting day we used a study conducted in
Colorado in 1978 [6]. This study found that the consumer surplus from a
whitewater rafting trip averaged $10.94 per person per day. Once again, this
represents the difference between what people would be willing to pay and what
they actually had to pay for a rafting trip. The estimate was made by eliciting
from rafters the amount of money in addition to what they had paid that day that
would cause them to forego that trip on these rivers. Converting this value to 1988
dollars, we find that the benefits are $19.28 per tourist day. Other whitewater
activities, for example, kayaking and canoeing, had similar values.
The equations from which these estimates were drawn show consumers to
be quite sensitive to congestion on the river. Since congestion levels on the Ocoee
n�e,r�a

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River are much higher than those observed in Colorado, we have lowered our
estimate to $13 per trip.
In addition to the five-mile stretch of whitewater between the power
plant and Hartford, there is a more placid stretch from RM 21.5 to RM 16.5 on
which floating is feasible during periods of higher water. On this stretch, the river
resembles the Hiawassee River. We have estimated floating usage for the Pigeon
River based on data for the Hiawassee River. While this activity may be expected
to be constrained somewhat by power generation, water levels further downstream
are less affected by dam activities because of the• lower gradient. Nonetheless,
river levels are probably too low to achieve any significant recreation activities in
August or September. Given that these months generate 35 percent of
noncommercial activity, we have reduced the Hiawassee River floating usage of
80,000 visits [7] by 35 percent to 52,000.
Unlike whitewater rafting, which has been growing at about 6 percent per
year on the rivers for which we have visitation data over time, floating activity
seems to be on the decline. On the Hiawassee River, usage has been declining by
about five percent per year since 1978. In estimating floating usage for the Pigeon
River, we have, therefore, assumed that after reaching capacity of 52,000 trips per
year, usage declines at five percent per year Again, we assumed growth to capacity
would occur over a five-year period. The resultant demands appear in column (2)
of Table II.
Bach and Barnett assume a value of $12.94 per tourist day for floating
activity, based on Water Resources Council criteria. These values seem quite
severely overstated. Based on our visits to the river, a score of 36 would seem to
be a better indication of the value than their assigned score of 62. In particular:
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-10-
1) Bach and Barnett assign a score of 10 out of 30 for recreation
experience, which measures crowding. The large crowds projected
here should reduce this value to 5.
2) Bach and Barnett assign a score of 12 out of 18 for availability of
opportunity. A 12 would indicate no floating opportunities with one
hour, which seems to ignore the French Broad and Hiawassee Rivers.
We find 4 to be a more objective classification.
3) Bach and Barnett assign a score of 10 out of 14 for carrying
capacity. This rating reflects 'optimum facilities to conduct activity
at site potential.' These facilities .are simply nonexistent. A 5,
representing basic facilities, seems quite generous.
4) We accept Bach and Barnett's accessibility rating of 12 out of 18.
5) Their rating of an 18 out of 20 for outstanding esthetic quality seems
highly inflated. The river would still receive municipal waste
treatment discharges and both agricultural and urban runoff. We
have lowered their rating to 10.
The score of 36 translates to a value of $8.30 in 1982 dollars, converted
to $9.76 in 1989 dollars. We have used this value in our estimate for floating
activity.
Table II describes the annual benefits and the present value of these
benefits in 1988 dollars. The present value reflects the annual benefits over the
next 10 years discounted to reflect the time value of money. We used a 10-year
time frame since that is about the expected life of the investments for color
discharge reduction. Discount rates reflect the rate at which benefits can be traded
between years. We have discounted the benefits at an annual rate of 6.79 percent
in excess of inflation. The rate used reflects the after tax cost of money to
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-11-
Champion (13.2 percent) net of a presumed six percent future inflation rate. The
Champion rate reflects the marginal cost of capital in the private sector, since
funds spent cleaning up the Pigeon River would otherwise earn these private sector
rates. The benefits of cleanup should consequently be discounted at the same rate.
Using this method, we derive total benefits over the next 10 years of $8.9 million
for rafting and $2.7 million for floating. The annual benefits and the present value
of the benefits for whitewater activity and floating are given in columns (5) and (6)
of Table II.
We are quite confident that these estimates overstate the actual changes
in value on the Pigeon River. There are at least-six reasons why we expect the
value of additional whitewater activity and floating visits to be substantially lower.
Fi= we have assumed that there is currently no recreational usage on
the Pigeon River. In fact, there is a commercial operation on the river today.
Kayaking and canoeing have also been observed on the river. However, we have
been unable to secure estimates of current usage and have therefore ignored them.
Since our goal is to calculate increases in usage, the value of all current usage
should be subtracted from our value estimates. Our failure to do so clearly
overstates the number of trips that can be attributed to reductions in color
discharge and thereby overstates benefits.
Second the benefits per trip used for whitewater activity was estimated
on much larger and more striking rivers in Colorado. The set of rivers on which
this estimate was based includes, for example, the Yampa River, which "is among
the few rivers in the U.S. on which rafters can spend from three to five days
without encountering roads, private land, or other. evidence of civilization" [6,
page 8] The rivers sampled averaged 42 miles in whitewater length, over eight
times the length of the Pigeon River run. Trips on these rivers averaged 14 miles
n.e-r/a

per day. The shortest of the rivers was almost three times the length of the
Pigeon River. Such unique characteristics would be expected to make this set of
rivers much more valuable than the Pigeon River.
Third• the $13 consumer value assumes a very modest increase in
congestion. The value of a whitewater rafting day declines sharply with the number
of people encountered on a trip. The Colorado study users encountered an average
of only forty people on a trip. With visits of 120,000 per year, Pigeon River
whitewater rafters might well encounter hundreds of people per day. In the
Colorado study, a doubling of encounters reduces the benefits per day by over 40
percent. Thus, fairly moderate increases in usage could lower the benefit per day
estimate substantially.
Fourth. of the two methods traditionally used to estimate the value of
recreational activities, we relied on the contingent valuation method which usually
leads to higher values. It is subject to a number of well-known biases in which
people tend to overstate the value of services. Alternatively, travel cost models
which estimate the demand for a service by the distribution of distances people
were willing to go to participate in an activity, typically give lower values.
Eifth, the current physical facilities at both the dropoff and takeout
areas are grossly inadequate to the task of accommodating the estimated number of
rafters or floaters. We assume that these facilities could be developed over time if
demand warrants but have not included the costs of developing these facilities.
These costs would properly be a subtraction from the benefits associated with these
activities.
Sixth. increased recreation visits on the Pigeon River may consist largely
of visits currently made to other rivers. Thus, in equilibrium, the total increase in
whitewater rafting trips might be much less ,than the 120,000 visits per year
n/eT..a

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projected on the Pigeon River even if that many people do raft on the Pigeon
River. Each visit "cannibalized" from the Ocoee, Hiawassee, or any other river
represents no new value but merely a shifting of value from one site to another.
For these reasons we consider our estimates of both usage and value per
trip to be quite generous and would expect to see far less rafting and floating
usage of the Pigeon River.
C. Fishing and Sightseeiniz
For these activities we have used both the visit estimates and value
estimates. of Bach and Barnett as a base. They have scaled fishing visits to usage
estimates for the Norris Dam tailwaters put-and-take fishery. Their sightseeing
visits are scaled. to estimates for the Hiawassee River. The number of visits for
these activities are given in columns (3) and (4) of Table II.
Our only adjustment is to lower fishing values to account for the costs
of the presumed put-and-take fishery. Failure to include these costs overstates
potential net benefits. One study [61 suggests that these costs can range from
$4.50 to $11.00 per visitor day depending on the length of the fishery. We have
used the average of this range to reduce Bach and Barnett's estimate of the net
benefits for a fishing day of $17.00 to $9.25.
Further, while we have used Bach and Barnett's estimates for the number
of additional fishermen expected, the source of their estimate is unclear. A proper
estimate should take into account the fact that trout are not a viable species in the
Pigeon River below the Canton Mill discharge and that put-and-take fisheries are
generally less efficient in smaller bodies of water. We have accepted their
estimates for lack of better data.
It should be noted that fishing is a viable activity on the more scenic
portions of the river only when whitewater rafting is unavailable. Excessive stream
n.e ra

-14-
flow and heavy boating usage are detrimental to fishing quality. We do not regard
this as a very serious constraint given the limited time available for whitewater
rafting and have therefore made no adjustment.
The annual benefits and the present values for fishing and sightseeing are
described in columns (7) and (8) of Table II. The present value of fishing benefits
is about $1.2 million over ten years, while sightseeing accounts for about
$0.7 million.
D. Property Values
It has been argued that reductions in color can enhance residential
values. A 1979 study [2] in Pennsylvania which focused on overall water quality
rather than color indicated that a completely clean river raises adjacent residential
property values about 25 percent. Similar values were obtained for apparent color
in a 1985 Michigan study [3] on lake-front property and for a combined index of
turbidity and distance in a 1980 study [4) of beach-front property in. Massachusetts.
We have used the 25 percent figure as an upper bound on residential
property improvements on the Pigeon River. We have further assumed that an
property along the Pigeon River not currently blocked by roads, public land, or
Champion property is transformed to residential use. This is obviously an extreme
assumption and causes us to overestimate the impacts of reduced color discharge on
property values.
Our calculation of increased property values had three steps: 1) an
inventory of property along the Pigeon River, 2) a calculation of its value for
residential purposes, and 3) a calculation of the maximum increase in value
attributable to reduced color.
1. Much of the land adjacent to the Pigeon River is publicly owned.
Route 1-40 follows one side of the river while public forest land borders the river
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in many areas. The land between the dam and the powerhouse which contains no
water due to the powerhouse diversion tunnel and is, therefore, unaffected by color
was also excluded. Only about 50 percent of the river is adjacent to usable private
land. We have also excluded plots belonging to Champion and the Cocke County
School District. Since the usage of .these properties cannot be expected to change
with reductions of color in the Pigeon River, we have excluded this land from our
assessment.
2. We had assessed property values only for land in Tennessee and have
assumed that similar values prevail in North Carolina. Residential land and property
was valued at $52.49 per river-foot of frontage. We have assumed that all land
along the river would have this value in residential use. In fact, nonresidential
land and property in Tennessee had a value of only $32.01 per river-foot.
To calculate increases in the value per river-foot of frontage, we used
the 25 percent figure. This increases the value of all potential residential property
by $13.12 per river-foot to $65.61. The results of this calculation are given in
Table III. Property value increases, which are assumed to be instantaneous, total
$2.23 million in North Carolina and $1.87 million in Tennessee.
Again, we feel it quite likely that this estimate overstates potential
benefits. First• we have applied residential-level benefits to agricultural and
commercial land. This is based on the assumption that this land may ultimately be
converted to residential use. The available studies deal exclusively with residential
values. The links between property value and color are far less obvious for land
used for agricultural, forestry, or industrial purposes. However, it is unclear that
private land along the Pigeon River currently used for agricultural or industrial
purposes will be converted to residential use.
n.e r.a

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Second. the 25 percent increase cited is partly attributable to the fact
that more expensive homes are constructed on more desirable land. The net
benefit, which would subtract the cost differentials, is not included here.
Third color may not be the true measure of property desirability but may
instead be a proxy for other measures of environmental quality. A 1973 study [8]
found color much less important to property owners than the ability to sustain fish
and other wildlife. The Michigan study of lakeside property owners found that
turbidity was an important factor in value but notes that turbidity is highly
correlated with other pollution variables which decrease both fishing and swimming
uses. To the extent that these variables are not correlated here, the effects might
well be less.
Fourth we have included several plots of land currently inaccessible by
road. Several areas of vacant land doubtless have no developed residential
infrastructure -- for example, sewage, telephone and water access. The costs of
providing such facilities should be subtracted from any property value increases.
Given these caveats, we find it quite likely that the combined property
value effects will be lower than what we have estimated.
E. Aonortionin¢ Benefits
The recreational and property benefits we calculated in Sections II.B.
through II.D, total $17.6 million over 10 years. These estimates are based on the
complete elimination of color discharges from the Champion mill. The next step is
to determine the proportions of these benefits that will accrue from each of the
specific proposed reduction plans.
Under the most stringent reduction plan, discharges of color would be
limited to no more than 50 units at the pipe. This strategy entails a reduction of
311,000 pounds of color per day on average. We have adopted the Bach and Barnett
n.e r,a

.17_
assumption that 50 units is the limit of color acceptability. Consequently, we have
assumed that the 50 units at the pipe strategy achieves all of the S17.6 million in
benefits.
For the other two strategies, we have assumed that the benefits achieved
are proportional to the reduction in discharges. Thus, the strategy that achieves
50 units at the border would achieve all the potential benefits in Tennessee. This
includes all of the recreational benefits as well as the increase of $1.87 million in
property values in Tennessee. In addition, since this plan also achieves 88 percent
of the discharge reductions under the 50 units at the pipe strategy (274,000 divided
by 311,000), we assume it achieves 88 percent of 'the property value benefits in
North Carolina. As a result, the total benefits from the 50 units at the border
strategy are $17.3 million.
The 50 percent reduction plan removes 172,000 pounds of discharge per
day on average. This achieves 63 percent (172,000 divided by 274,000) of the
Tennessee benefits and 55 percent (172,000 divided by 311,000) of the North
Carolina benefits. Thus, the total benefits from this program are $10.9 million.
This proportionality assumption is somewhat arbitrary. . In the absence of
specific recreational studies on color, it is unclear whether a 50 percent reduction
in effluent will garner more or less than 50 percent of the benefits. Instead, there
might be threshold effects. That is, below a certain color level, all benefits accrue;
above a certain level, no benefits accrue. While 50 units in the stream may
represent the lower threshold, we have no such upper threshold. Further, even the
50 unit lower threshold is controversial. However, we have tested several different
upper thresholds in benefits. The assumption of proportionality yields larger
incremental benefits than any other set of assumptions tested.
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F. Nonuse Value
It is often asserted that there are values other than those accruing to
users of the river. Bach and Barnett cite a study which estimates those benefits at
five times the direct benefits. We reject the notion that there are significant
nonuse benefits for the Pigeon River. First. it is unclear whether nonuse values for
the Pigeon River are positive or negative. Second• even if these benefits are
positive, they are not likely to be large.
The economics literature considers two components of nonuse values:
option values and existence values. Option value is similar to a nonrefundable
admission price that must be paid before one knows. whether or not he or she will
use the river. It represents for consumers the difference between (1) the
willingness to pay to shield themselves from the uncertainties about their demands
for the river and its availability and (2) the expected value of their benefits from
the river.
Substantial theoretical research indicates that option value, this
difference between willingness to pay and expected value of benefits, is as likely to
be negative as positive. Further, in some important cases where it is positive, it is
likely to be small. Whether option values are positive or negative depends on the
nature of the uncertainties confronting users and nonusers. At least five sources of
uncertainty can create option values. These includes: (1) supply of the resource,
(2) income, (3) taste, (4) price of the resource and (5) prices of substitutes or
complements. Examples can be constructed where option value is positive, negative,
or zero for reasonable uncertainty assumptions. Further, V. Kerry Smith's analysis
[9] shows the importance of uniqueness and irreplaceability in assigning a positive
option value. Given that the Pigeon River has no unique characteristics (especially
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given the abundance of substitutes) and that the level of color is reversible at any
time, his analysis implies that option values are unlikely to be positive.
Regarding the magnitude of the option value, in the case of uncertainty
about taste, Freeman [101 points out that the conditions for a large option value
are quite stringent. Option value is unlikely to be large unless "the probability of
demand is low, the expected consumer surplus is large, and the individual is highly
risk averse." [10, p.111 For the Pigeon River, these specific conditions are unlikely
to occur. In particular, rafting on the Pigeon River is quite unlikely to have a
large expected consumer surplus relative to income given the abundant potential
substitutes in the area, both for whitewater recreation and for entertainment in
general.
Finally, the empirical evidence on option value is generally unpersuasive.
While several studies (including the one cited by Bach and Barnett) have concluded
that option values were positive and substantial, these studies have been poorly
done and cannot be used to infer large positive values. There are various reasons
for this, including the fact that the survey questions addressed the wrong issues
and were posed in a confusing manner. As Smith [H] points out:
Empirical efforts to measure option price (and option value) have not
been clear in specifying (or attempting to determine the individual's
perceptions on) the terms of access to the resource and the time
horizon for future use. . . .[T]he terms of access and the individual's
ability to adjust to demand uncertainty . have not been clearly
described (or elicited) from the respondents involved in the
surveys. . . .[T]his limitation is especially important when the option
price is used to measure the value of changes in either features of
the resources or in the uncertainty itself. [I1, p.81
As a result, these studies have generated estimates of surplus much too large to be
easily explained on a theoretical basis.
Further, applying estimates taken from these other studies to the Pigeon
River would be even more tenuous. Even if the wild and scenic rivers of Colorado
n.-e r,-a

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may have significant option values, the transfer of those results to the Pigeon River
is unwarranted.
Considering all of these issues, we have not included any option values in
our estimates. Our best reason for doing so is stated by Professor Richard
Schmalansee [12] of the Massachusetts Institute of Technology, one of the original
contributors to the theory of option value:
Individuals' option prices may exceed or fall short of the expected
value of the contingent surpluses they would derive from a price
change, and it is not obvious how one might judge in a real situation
which was more likely. This suggests that when tastes are the main
source of uncertainty, the expected value of consumer's surpluses
ought to be employed as the best available approximation to the sum
of their option prices . . . . Benefits will be sometimes
underestimated and sometimes overestimated by this procedure, but
there would appear to be no practical way to obtain superior
estimates. [12, p.923]
Existence values represent the utility of knowing of the existence of a
resource for a person who knows he will never use it. We believe that this does
not represent a significant source of benefits on the Pigeon River and have
excluded them from our estimates for two reasons. First. existence value is linked
to uniqueness of the resource. A resource with features available nowhere else (for
example, the Grand Canyon) may have substantial psychic value to nonusers. We do
not believe that nonusers place a large value on the Pigeon River given the
existence of nearby alternatives.
Second. little is known empirically about existence value. Testing for
existence value is fraught with difficulty, since people not actually called upon to
pay for improvements may systematically overstate, for any number of reasons, their
willingness to pay. The most comprehensive study of existence (and option values)
suggests that together they might increase benefit estimates by as much as
50 percent. Even these estimates have come under attack. We find that an
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increase of this size at the Pigeon River to be highly unlikely. However, we note
in passing that even a tripling of all benefits in Table I still results in an
unfavorable benefit-cost ratios for all reduction plans.
III. COSTS
Colored effluent is the byproduct of the removal of lignin from wood
chips in the pulping process. Several technologies are available for color reduction
such as clarifiers. Many of them have already been installed at the mill.
Currently, the mill is one of the lowest producers of pounds of color per unit of
output in the United States.
A. 50 Percent Reduction
The primary source of color discharge is the caustic extraction stage of
the bleach plant. This accounts for 62.7 percent of the color produced by the
facility. Improvements proposed by Champion to cut this contribution by 90 percent
would achieve an overall reduction of 50 percent. This reduction is proposed to be
accomplished by the addition of oxidation chemicals.
The costs of the 50 percent reduction proposal have been estimated by
Champion at $10 million dollars in capital cost and $4 million per year in operating
and maintenance costs. We have converted these costs into a ten year stream and
discounted them at Champion's after-tax cost of money. This yields a discounted
present value of expenses over a 10-year period that is directly comparable with the
benefit estimates. The operating and maintenance expenses were discounted using
the 6.79 percent rate. The present value of the costs of this plan is therefore
$38.4 million. The costs are summarized in Table V.
B. 50 Units at the Tennessee Border
Other technologies that would treat more than the caustic extraction
stream require far greater investments. Champion submitted to the USEPA, at the
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.22.
Agency's request, seven reports detailing methods of reduction sufficient to achieve
no more than 50 color units at the border at any time. Of these, the USEPA
deemed as potentially suitable the lime, polyamine and alum removal systems. Each
technology has a different capital and operating cost, with the alum removal system
being by far the lowest cost. The present value of its costs are $113 million, as
opposed to $141 million for the lime reduction and $162 million for the polyamine
reduction plan. Since the alum removal system is the least expensive of the three
technologies that would achieve 50 color units of the border at any time, we have
used it in the analysis.
We should note that the alum removal process is likely to understate the
cost, possibly greatly so. Fi= no alum process on this scale has ever been
implemented before. Large scale experiments with new technologies often have
substantial unexpected cost increases. Second byproducts of the alum process
would almost certainly violate existing environmental standards. Total dissolved
solids in the wastewater would rise and these discharges must be treated.
Incineration of the sludge would likely cause air quality deterioration. The cost of
meeting existing standards have = been included in these estimates. Champion
estimates that the cost of meeting these requirements could as much as double the
costs associated with the plan.
We have assumed that the plant remains open at this level of expenditure.
While we have not evaluated the detailed economics of plant closure under this
plan, Champion has submitted to USEPA workpapers based on the USEPA gross
margin test. This test compares the ratio of net operating revenues to annual
pollution control costs. Where this ratio exceeds the average ratio of investment
returns for the industry, "the test results indicate that pollution controls would
impose severe economic impacts, [and] a more detailed plant closure analysis would
n/e rw

-23-
be necessary." [14, page 92] Champion's submissions indicate that the 50 unit at
the border strategy fails to pass this test. This raises the possibility of mill
shutdown even under this plan. Were this the case, the quite substantial resource
and employment costs of the more stringent-December USEPA proposal would result.
Only the 50 percent reduction ,plan would have costs within a factor of 50 times
benefits.
C. 50 Units at the Mill
Engineering judgment has determined that these color treatment schemes
cannot simply be scaled up to achieve a discharge level of less than 34,000 pounds
per day on the average, the amount sufficient to assure less than 50 units at
Canton. Also, the mill would not be able to operate on pulp shipped in. Thus, the
only method of achieving 50 units at the mill is the shutdown of the plant. In this
case, the real resource cost of shutdown is the cost of constructing a new mill with
replacement capacity elsewhere in the country. Champion estimates that the
creation of a new mill capable of producing 600,000 tons of pulp .per year would
have capital costs of $1.4 billion. To properly characterize the total resource costs,
we should subtract from this estimate the present value of savings in operating and
maintenance provided by a new plant. Although we have been unable to secure
such an estimate, it is unlikely that this savings could total more than $200 million,
since a $200 million investment to upgrade technology at the Canton mill is barely
economic. Thus, we feel quite confident that the real resource costs exceed
$l billion. This direct cost level is so high as to make precise calculation of its
magnitude a meaningless exercise. We will use the $1.4 billion figure, noting that
substantial changes in this estimate have no effect on the substance of our analysis.
The additional impacts of a shutdown are discussed below.
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IV. COSTS AND BENEFITS
The economic criterion for undertaking any investment, including
environmental enhancement programs, is that the benefits exceed the costs. Even
where environmental benefits are themselves large, undertaking a project whose
costs exceed its benefits is a waste of society's resources. Further, the difference
between incremental costs and benefits should guide the choice between projects.
While none of the three programs pass the benefit-cost test, the
50 percent reduction plan comes the closest by a wide margin. Under the
50 percent reduction plant the present value of the costs over a 10-year period are
$38.4 million. These are $27.5 million greater than the benefits of $10.9 million.
These costs and benefits translate into a benefit-cost ratio of 0.28 (10.9 divided by
38.4). The interpretation of this benefit-cost ratio is that a one dollar of
expenditure yields 28 cents in benefits. The comparison of benefits and costs
benefits are summarized in Table I. This is substantially less than one, and
consequently would not pass the economic criterion for undertaking the investment.
The plan to reduce discharges to 50 units at the border is even less
justifiable. Its costs are 5113.3 million, and they exceed the benefits of $17.3
million by $96.0 million. This results in a benefit-cost ratio of 0.15 -- nearly half
of what could be achieved under the 50 percent reduction plan.
The most costly program -- 50 units at the mill -- achieves the poorest
benefit-cost ratio. The costs would be much greater than either of the other plans
because it would involve shutting down the Champion mill in Canton and
constructing a new one. Under this program the costs would be $1.4 billion. These
are S1.38 billion more than the benefits and would yield a benefit-cost ratio of .01.
A very useful way to look at the alternative programs is by comparing
the increase in costs and benefits that occurs from imposing increasingly stringent
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-25-
discharge removal plans. This is a comparison of the incremental costs and benefits
and describes the additional benefits and costs that accrue from removing additional
color. If the additional costs exceed the additional benefits, then the incremental
reduction in color is uneconomic.
As we have noted above, the least stringent of the programs -- the
50 percent reduction plan -- increases costs by $38.4 million and benefits by
$10.9 million for a benefit-cost ratio of 0.28. The incremental cost of removing
additional color under the 50 units at the border plan is S74.9 million -- the
difference between $113.3 million and $38.4 million. This added expenditure removes
an additional 102.000 pounds of color per day (27.4,000 minus 172,000). However,
this additional color reduction only increases benefits by $6.4 million (17.3 minus
10.9). Thus, the incremental benefit-cost ratio is 0.09 (6.4 divided by 74.9).
The incremental comparison is even more unfavorable under the 50 units
at the pipe plan as proposed by the USEPA. This program would increase costs by
$1.29 billion -- from $113.3 million to $1.4 billion. The added expenditures would
achieve an additional reduction of color discharge of only 37,000 pounds per day.
However, this additional reduction would only increase benefits by $300,000. As a
result, the incremental benefit-cost ratio would be virtually zero.
These incremental results depend crucially on the assumption of 50 color
units as an objective perceptibility standard. If, in fact, there is no perceptible
difference between 50 and 100 color units, then the conclusions are even more
clear. Since the 50 percent reduction plan essentially achieves 100 color units or
less at the border over 95 percent of the time, this plan would achieve all benefits,
no matter how large. Each of the more stringent plans, therefore, have incremental
benefits of zero and cannot be justified on anv rational criterion.
n/e r/a

-26-
In estimating the benefits and costs we have discounted the annual
impacts at Champion's after-tax cost of money. Some have argued that the proper
discount rate to use for the evaluation of projects should be a riskless discount
rate. The basis for this argument is that since the benefits are spread over the
population at large, the risk premium associated with private investment should not
be included. We disagree with this argument. The reason is that funds spent on
this project will deny Champion the ability to undertake other projects capable of
earning the private rate of return. Hence the rate we have used is appropriate.
We would agree, however, were this proposal financed with new money, but that
would not be the case.
Nonetheless, we have calculated the benefits and costs using a real
discount rate of three percent, which is intended to represent a riskless rate. This
substitution does not alter the results, and therefore our conclusions remain
unchanged. Using a lower discount rate raises both the costs and benefits. For
each case, the benefit-cost ratios are slightly IM favorable. Table VI compares the
results at the alternative discount rates.
V. EMPLOYMENT CONSEQUENCES
We have also estimated employment impacts from the three color
discharge reduction strategies. Employment impacts are treated separately from the
benefit-cost impacts because they represent different issues. Jobs created cannot be
examined in isolation. For example, the cost side of the benefit-cost calculations
reflect the employment impacts of the discharge reduction plans. Higher cost levels
always create more jobs, whether or not the costs were incurred efficiently. Thus,
the employment consequences of a particular strategy cannot be added to benefits.
Instead, they represent an alternative perspective.
n.era

_27_
The 50 percent reduction and 50 units at the border strategies would
likely have modest employment impacts ranging from about 250 to 650 additional
jobs. The 50 units at the pipe strategy would lead to a shutdown of the mill which
would impose very substantial employment losses totalling over 12,000 jobs.
Jobs created and lost can be broken down into direct and indirect
components: the direct component consists of the jobs required either to provide
recreation or to maintain color reductions. Indirect employment gains and losses
relate to the employment in other sectors required to support the direct work force.
The U.S. Department of Commerce has issued state- and industry-specific estimates
of total direct and indirect job impacts for given, changes in output in various
industries [13]. For recreation in Tennessee, we have used the hotels, lodging
places and amusements multiplier. It indicates that for an increase of Sl million of
expenditure in this industry group, direct and indirect employment will increase by
60.2 jobs. For discharge reduction activities, we have used the North Carolina
values for the paper and allied products classification and the Tennessee value for
forestry and fishing products. A $1 million expenditure in North Carolina provides
30.1 jobs, while a $1 million expenditure in Tennessee provides. 54.5 jobs.
The direct employment gains in Tennessee follow from the staffing
requirements of the whitewater rafting facilities. Fishing, kayaking and sightseeing
generate no direct employment gains, since they have no direct costs other than the
costs of transportation. Using Ocoee River figures which show commercial rafting
to account for about 85 percent of whitewater activity and using the Bach and
Barnett figures of $20 per trip, we derive maximum expenditures in Tennessee for
whitewater rafting of $2 million (20x.85x120,000). This assumes the 120,000 visits
per year associated with complete color removal. The multiplier of 60.2 direct and
indirect jobs per $1 million in expenditures implies an increase of 123 jobs.
ne ra

.28_
The employment impacts are summarized in Table VII. Under either the
50 units at the border plan or the 50 units at the pipe plan, the concentration of
color will be at the minimum levels of acceptability. Consequently, under either of
these plans there will be the full employment impact of 123 jobs in Tennessee.
The 50 percent reduction plan would have less of an employment impact
because the benefits in Tennessee are less. Recall that we assumed that the
benefits are proportional to the color reduction. Since with the 50 percent
reduction plan the recreational benefits are 63 percent of those under complete
color removal, the employment impacts also would be 63 percent of 123 or 77 jobs.
The plan to provide 50 units at the pipe suggested by USEPA causes mill
shutdown. This shutdown reduces Tennessee commercial output by $15 million as
cited by the Canton Mill Operations Manager, Oliver Blackwell. This in turn causes
a loss of 816 jobs, for a net loss of 693 jobs.
For North Carolina the employment impacts depend on the annual capital
and operating costs of a discharge reduction plan. The operating costs plus an
annualized capital change represent additional employment at the mill. Under the
50 units at the border plan, the annual capital and operating costs would be
$17.91 million. This translates into 539 increased jobs (direct plus indirect) given
the 30.1 multiplier. Under the 50 percent reduction plan the annual costs would be
$5.85 million which would result in 176 more jobs.
Shutdown of the plant under the USEPA standard would have substantial
employment effects in North Carolina. The mill currently employs over 2,100
workers and produces $400 million of paper products per year. Using the
Department of Commerce multiplier of 30.1 jobs per million dollars of output for
paper and allied products in North Carolina, a total loss of over 12,000 jobs can be
nAe r/

_2g_
projected. The direct losses to the community include the $160 million currently
paid to local factors.
Thus, in North Carolina and Tennessee combined, the USEPA standard
would lead to a loss of over 12,000 jobs as well as widespread social costs from the
withdrawal of Champion's substantial support both directly and indirectly through its
employees and supplies of the Western North Carolina-Eastern Tennessee
infrastructure through tax payments.
VI. EVALUATION OF THE BACH AND BARNETT REPORT
We have reviewed and evaluated the Bach and Harnett analysis and found
it to be seriously flawed. There are four key conceptual errors that undermine
their conclusions that it would be economic to substantially reduce color discharges
from the mill. First" they have failed to take into account the fact that benefits
occurring in different years are not of equal value. Second• they have included a
category of benefits (indirect benefits) which have no place in a properly designed
benefit-cost study and which have been misestimated in any case. Third their
examination of costs was entirely hypothetical and bears no relationship to the
benefits achieved. Fourth they have employed the wrong standard in evaluating the
possibility of mill shutdown. The appropriate way to evaluate discharge reduction
strategies is on the basis of their impacts on the Canton mill. Bach and Barnett
evaluate the strategy on a Champion-wide basis. We will address each of these
issues in the following sections.
A. Discounting
The primary distinction in direct benefits between our analysis and that
of Bach and Barnett involves discounting. Bach and Barnett simply sum the year-
by-year benefits to yield a total. This is obviously incorrect. A dollar of benefits
n,e ra

-30-
today is worth more than a dollar of benefits tomorrow, just as a dollar of income
today is worth more than a dollar of income tomorrow. Discount factors which
reflect the relative utility of current and future consumption must be applied to
accurately measure the value of future benefits.
Indeed, once appropriate discount rates are applied, the Bach and Barnett
estimates of recreational benefits are slightly lower than ours. Application of our
6.79 percent discount rate lowers the Bach and Barnett direct benefit estimates from
$18.3 million to $13.1 million. Our corresponding estimate of direct recreational
benefits is $13.50 million (see Table II).
B. Indirect Benefits
Bach and Barnett add to the recreational benefits indirect benefits
reflecting increased expenditures in the community resulting from the recreational
activity. We have strong objections to this technique. Most importantly, this type
of benefit has no place in a properly done benefit-cost study. Secondly, even were
these benefits to be included, they have overstated both the level of expenditures
to which these indirect multipliers should apply and have overstated the multiplier
to be used.
The proper standard for a benefit-cost study is the real resource costs
and the real benefits. In comparing the real resource costs and benefits of the
specific proposals mentioned here, we have a criterion which is independent of the
indirect benefits. Au programs have indirect benefits. Removing those indirect
benefits can therefore have no effect on the analysis. Since the money spent on
this project will be spent in some other way, the indirect benefits are essentially
independent of the program undertaken.
Indirect economic multipliers represent a flawed concept taken in
aggregate. The problem is that money spent on whitewater rafting does not reflect
n,e-ri

-31-
new income but is instead the shifting of income from another purpose. A dollar
spent on whitewater rafting is a dollar not spent on other outdoor activities or
other recreation. The economic multiplier of the dollar spent on whitewater rafting
is offset by the loss of the same multiplier from the foregone activities. In
aggregate therefore, these indirect benefits should be ignored. Each dollar of
indirect benefit represents an indirect dollar of loss to someone else.
If one is interested in the net economic benefits for a smaller region,
this can be calculated. However, we must be careful to subtract out expenditures
which cancel out within the region. To the extent that persons from outside Cocke
County are induced to spend money in Cocke County, those dollars will create
indirect benefits in Cocke County. Only expenditures by those outside Cocke
County create these spillover effects within Cocke County.
However, the number of such visitors is likely to be small. Unpublished
data on a nearby river indicate that 41 percent of all river users travelled less than-,
one hour to the river. Using these data, we have defined the region of direct
economic interest is that within one hour of the Pigeon river. Thus, multipliers
would apply to only 59 percent of all expenditures.
Using the average expenditure figure cited by Bach and Barnett of $20
per day, we find that a total of $8.1 million (in present value terms) should have a
multiplier attached.
This value likely overstatds the benefits. For those travelling in excess of
three hours, it is highly unlikely that they would take a trip as short as those on
the Pigeon River. The abundance of alternative fishing, floating and sightseeing
areas and the comparatively low value of these activities make it unlikely that any
long distance visitors would use the Pigeon River for these purposes. Either the
Chattooga or French Broad on which longer trips are available should be preferred
n.�ra

-32-
by visitors travelling long distances, especially given the uncertainty of water
supply on the Pigeon River.
Bach and Barnett use a multiplier of three to calculate the indirect
benefits. This estimate reflects the spillover.. effects for the whole country, not just
the region. The correct value is much smaller. For example, assume an individual
spends $500 on a raft. If the raft was not manufactured in Tennessee, the spillover
benefits will be created wherever payment for the raft goes. By the theory
outlined above, inclusion of these benefits as a spillover is illegitimate, since these
spillovers are exactly offset elsewhere. The U.S. Department of Commerce estimates
state-by-state multipliers for hotels, lodging and amusements. For Tennessee they
have calculated the direct and indirect benefits to the region as 2.1 times the
dollars spent. Indirect benefits therefore are 1.1 times direct dollars expended.
This is the 2.1 less the 1.0 for the direct effect.
Thus, instead of using an estimate of indirect benefits equal to three
times the direct benefits, a more realistic appraisal would be indirect benefits equal
to at most 65 percent of the direct costs, which is 1.1 times 59 percent of the
costs. Total indirect benefits would therefore total about S8.9 million.
Further, these indirect benefits have offsetting indirect costs in the mill
shutdown case. Given the net output losses of $400 million based on expected 1988
mill sales and using the Department of Commerce multiplier of 2.2, we project
indirect losses of S480 million for the most stringent plan, resulting in combined
indirect losses of over S470 million for both states.
Given the importance of the mill to the local economy as the largest
employer, it is possible that these values substantially understate losses associated
with termination of pulping facilities. For instance, the mill pays almost S1.7
million in taxes per year to counties and municipalities over and above taxes paid
n.e ra

-33-
by its employees. The impacts of these local tax losses on social services and
education is not calculated here.
C. The Costs of Color Reduction
Bach and Barnett assume a capital cost of $60 million and an operating
and maintenance cost of $6 million. The present value of this expenditure,
$102.5 million, is insufficient even to achieve 50 units at the border. Further, we
note that even by their own analysis, the costs of cleanup far exceed the benefits.
D. Financial impact on Champion international Corporation
In evaluating the impact of these expenditures on Champion rather than
on the financial viability of the mill, Bach and ,Barnett have used the wrong
standard. No matter how small the impact on Champion's overall balance sheet, the
economies of the Canton mill must stand on its own merits. An incremental
investment which fails to achieve a suitable rate of return is not justified.
Champion has submitted to USEPA documentation supporting the fact that
the 50 units at the border plan fails to pass the plant gross margin test. Under
this standard, plant economics do not support even this less stringent plan.
n/e r.a

-35-
Environmental Studies Series. EPA-600/5-73-005. (Washington: U.S.
Environmental Protection Agency, October 1973).
[9] Smith, V. Kerry, "Option Value: A Conceptual Overview," Southern Economic
Journal. Volume 49, Number 3 (January, 1983).
(10] Freeman, A. Myrick, 'The Sign and Size of Option Value," i.and Economics.
Volume 60, Number 1 (February, 1984).
[11] Smith, V. Kerry, "Nonuse Benefits in Benefit Cost Analysis," Southern
Economic Journal Volume 54, Number 1 (July ).
[12] Schmalansee, Richard, "Option Demand and Consumer Surplus: Valuing Price
Changes Under Uncertainty," American Economic Review Volume 65,
September 1975.
[13] Bureau of Economic Analysis, U.S. Department of Commerce, Regional
Multinliers: A User Handbook for the Regional Input-Outnut Modeliniz System
(RIMS 11). (Washington: May 1986).
[14] Office of Analysis and Evaluation, U.S. Environmental Protection Agency,
'Workbook for Estimating the Economic Effects of Pollution Control Costs,"
(Washington: USEPA, November 1983).
n�ra

FIGURE 1
DIAGRAM OF THE PIGEON RIVER
BETWEEN CANTON, NC AND NEWPORT, TN
FRENCH BROAD RIVER
NEW►ORT,TM
CONY CREEK a wIL1Dw CREEK
N Tennessee
FWW HARTFORD
RM21s North Carollna
owwr 0M
RM 26.6.0
Tu
CREEK
wALTBE 0
WALTERS LAKE
v 111IEs CRaEK
` Raw NE►CD BRIDGE
BLOW
Esau
aEOGI[
JONATHAN CREEK
IERIVLLI
a
aK7lAND CREEK DUIF
R►163.1
OLT"
ILOTTFARN
ADDITION
7T

-34-
REFERENCES
[1] Bach, Orville E. and Barnett, William H., "An Economic Impact Analysis on
the Recreational Benefits of a Restored Pigeon River and A Financial Analysis
of Champion International Corporation's Ability to Provide for a Clean Pigeon
River", unpublished mimeo., May 9, .
[21 Epp, Donald J. and At-Ani, K.S., "The Effect of Water Quality on Rural
Nonfarm Residential Property Values," American Journal of Agricultural
Economics 61. August 1979.
[3] Brashares, Edith Nevins, "Estimating the Instream Value of Lake Water Quality
in Southeast Michigan," Ph.D. Dissertation, University of Michigan, 1985.
[4] Feenberg, Daniel and Mills, Edwin S. Measuring the Benefits of Water
Pollution Abatement. New York: Academic Press, 1980.
[5] Data supplied in correspondence with Eastern Professional River Outfitters
and confirmed in a conversation with Bob Allen, Tennessee Department of
Conservation.
[6] Walsh, Richard G., Ericson, Ray K., Arosteguy, Daniel J., and Hansen, Michael
P., "An Empirical Application of a Model for Estimating the Recreational
Value of Instream Flow," Completion report OWRT Project No. A-036-COLO.
(Colorado Water Resources Research Institute: Fort Collins Colorado, October,
1980).
[7] Telephone Conversation with Bob Allen, Tennessee Department of
Conservation.
[81 Dornbusch, David M. and Barrager, Stephen M. Benefits of Water Pollution
Control on ProDertd Value. Prepared for the Office of Research and
Monitoring, U.S. Environmental Protection Agency, Socioeconomic
nAe rEr

FIGURE 2
Ga! with the*,.R.. S
P.O. BOX 592
GATLINSURG.
:1 I � Y TiGEON TENNESSEE
RIMER 37738
t �`"`"' •�' 1•". 6751436.5008
. OUTDOOINO
RR 0 TO
32
Q e .
PIGEON FORGE FOOTHILLS
" PARKWAY
e rr + i • j- -__ HARTFORD
r
F• /
ee ;•: TRAFFIC 2H COSBY
a is?NGIR p l
GATL
ET INBURG
WALTERM
�!' ""• ;GREAT SMOKY MOUNTAIN PUNT e
'' r
With t�'r�'•:r+:4�`.�..w%is�NATfONALPARK ,
rs--z�.. +rr^+an!s�--�_z" `a`:,.w.:iS,� c am• <APRIL'-OCTOSER ..
104
. .,PI V`ON •^-�':;:,.:'•,,,•,•,- �• ..To Imur6 a trip rIN of v wpat You phone for Afanatloea Iaven
• RIVER :}.•y :..j: ••: --manly o rats a to d aAGIsdi craRef or I will of liven if we ue
�•9�s�; :;�•;+,,.-�•.Gy:a.•;}' .:yyapl.-ta raft dua.to rMr.Wndltlonr,or If SMn 10 or more days
•,...�,i:Tti �; ::10eaWof cancellation.. .
Ooi ueitkq WHfTEWATER RAFTING TRIPS am on a rsnic
OUTDOORS -; a_� DAILY ftorn our wtpost on 73 of the BIG E.(321 RIVER. Trips
At theefoot of1the
r<p awuntairo,we shuttle you to the putdn where You tecaM.Iroruc-
- .. _ =:i -•'..;-'-"-.. 'Nap In whiearater techniques and ufetY procedures.With a props•
'-"�-��.'�:. _ .r°"�'•�'A'�'.- .•' ebnu{aide In each raft and a kayak ufatY boat to land me way,we
"' -'- -' ' ' ' • ' SPLASH through TWELVE CLASS 35 AND TWO CLASS e51
LOCATED IN 4T.";-.,.-THE BIG SOFT RIVER has beautiful aemry,bu of aplatha,
'�ehdLS LOTS OF�FUNI
j"� Due t'Itit 1'rw fun far all-• BEGINNERS TO EXPERIENCED
PADDLERS•FUN FOR THE WHOLE FAMILY!We emphasize.,
w•Np.EXPERIENCE'IS NECUSARYI
y'Mi.jidEON RIVER OUTDOORS pmIda all safety par,helmets,and
a`"'_;:DN.Iac4ra.,P1,eau:-,hear eomethiog to pt wet in, and TENNIS
!r•.'w�SHO-d FaRVi&'1 ii w.pr,with
raPACKAf E DIEAGATLINBURG .,bjp'1w ravids by-
iilso sell and a PACKAGE DeAC ro ur BIG
' Ay' .. bey thw apids by.We also all hand-designed T•shlro with.cur BIG
3 /2 HOUR TRIPS GEON�VER RAFTING ROUTE. ^+'�
.::....:-.
FURTHER INFORMATON
•`fS1i w•wRta for hiller Infarmadon on our otteday rattln{trip'.
^pehnlght trips,kayak and crave lesnne,group run,what to rear.
atcommodadoM,and ap IhnitL5 '
0

TABLE I
COSTS AND BENEFITS OF PLANS TO REDUCE
COLOR DISCHARGES INTO THE PIGEON RIVER
Total Benefits and Costs Marginal Benefits and Costs
Discharge Benefit/Cost Benefit/Cost
Reduction Plan Benefits' Costal Ratio Benefits2 Costs2 Ratio
-(Millions of -(Millions of
1988 Dollars)- 1988 Dollars)-
(1)/(2) (4)/(5)
(1) (2) (3) (4) (5) (6)
50 Percent Reduction $10.9 $ 38.4 0.28 $10.9 $38.4 0.28
50 Units At Border 17.3 113.3 0.15 6.4 74.9 0.09
50 Units At Pipe 17.6 1,400.0 0.01 0.3 1,286.7 0.00
Sources and Notes
' Total benefits are taken from Table IV. Total costs are taken from
Table V.
2
Marginal benefits and costs are the difference between the figures of a
plan and the plan immediately above it.
n�era

TABLE II
Page 1 of 2
ESTIMATES OF THE MAXIMUM BENEFITS FROM
A PIGEON RIVER WITH NO COLOR DISCHARGES
Visits Consumer Surplus
White- White-
Year water Floating Fishinrt3 Other 3 water FloatinR2 Fishing3 Other3
--------------(Thousands)----------- --------(Thousands of Dollars)-------
(1) (2) (3) (4) (5) (6) (7) (8)
1988 24 10 13 15 $ 312 $102 $117 $ 68
1989 48 21 14 16 624 203 126 73
1990 72 31 15 18 936 305 136 79
1991 96 42 16 19 1,248 406 147 85
1992 120 52 17 21 1,560 508 159 92
1993 120 49 19 22 1,560 482 171 99
1994 120 47 20 24 1,560 458 185 107
1995 120 45 22 26 1,560 435 200 116
1996 120 42 23 28 1,560 414 216 125
1997 120 40 25 30 1,560 393 213 135
Present Value4 $8,886 $2,676 $1,226 $711
Total Recreation Value
(Millions of 1988 Dollars) $13.50
Property Enhancements5
(Millions of 1988 Dollars)
Tennessee 1.87
North Carolina 2.23
Total Benefits
(Millions of 1988 Dollars) $17.59
me r.-a

TABLE II
Page 2 of 2
ESTIMATES OF THE MAXIMU14 BENEFITS FROM
A PIGEON RIVER WITH NO COLOR DISCHARGES
Sources and Notes
1 Whitewater visits are set at a capacity of 120,000. This is in line
with 1987 visits to the Ocoee River of 124,449 visits supplied in
telephone conversation with Bob Allen at the Tennessee Department of
Conservation. Value of $13 per visit derived in text.
2 Floating visits are set at a capacity of 52,000. This was set from
current usage on the Hiawassee (80,000) reduced by 35 percent to
account for low Pigeon River water levels in August and September.
Usage declines by five percent per year after 1992. Value of 9.76
derived in text.
3 Fishing and Other taken from Bach and Barnett.
4 Present discounted values over 10 years at a real rate of 6.79 percent,
derived by taking Champion's 13.2 percent after-tax cost of money and
netting out an assumed 6 percent inflation rate.
5
Property value adjustment taken from Table III.
n/e ra

TABLE III
ESTIMATES OF THE MAXIMUM IMPROVEMENTS IN
PROPERTY VAIDE FROM A PIGEON RIVER
WITH NO COLOR DISCHARGES
(1988 DOLLARS)
Increase in
Value per Foot Total
Miles of Valuel from Reduced Increase
Frontage Per Foot Discharees2 in Value
-------(Dollars/Foot)------- --(Thousand
Dollars)-
(2) (3) (4)
North Carolina:
Residential 4.33 $52.49 $12.91 $ 295
Other Private 28.32 18.78 12.91 1,931
Public Land3 38.614 NA 0 0
Total
$2,230
Tennessee:
Residential 5.53 52.49 12.91 377
Other Private 20.96 18.78 12.91 1,484
Public Lands 14.66 NA 0 0
Total
$1,870
Total of Tennessee
and North Carolina $4,100
Sources and Notes
1 Assumes same value per river foot in North Carolina as in Tennessee.
2 For residential land this value represents an increase of 24.6 percent as
estimated by Epp and Al-Ani, reference (2] . For all other private land,
the same absolute value per foot was applied.
3 North Carolina Public includes: Interstate 40, Highways 19 and 23,
forest, mapping recon, unassigned territory, and Champion property.
4
Includes 9.34 miles to estimate the distance on missing maps. The
calculation was done by noting that there are 12.5 miles from the dam to
the powerhouse and subtracting from this the distances on maps we have
between the dam and the powerhouse.
5 Tennessee public includes: Interstate 40, Edwina Rd. , forest, Cocke
County, unassigned territory, and publicly owned property.
nee.ra

TABLE IV
ESTIMATES OF THE BENEFITS OF PLANS TO REDUCE
COLOR DISCHARGES IN THE PIGEON RIVER
50 Percent 50 Unit Maximum
Reduction At Border At Pipe
(1) (2) (3)
Pounds Per Day Removed 172,000 274,000 311,000
Proportion of Benefitsl
Tennessee 0.63 1.00 1.00
North Carolina 0.55 0.88 1.00
Total Benefits $10.91 $17.33 $17.59
Benefits Per Pound of
Color Per Day Removed2 63 63 57
Marginal Benefit
Per Pound Per Day3 63 63 7
Sources and Notes
I Proportion of benefits is the proportion of total state benefits which
would be observed under each plan. Tennessee benefits include all
2 recreation benefits in Table II.
Total benefits divided by pounds per day removed.
3
Difference in benefits divided by difference in pounds per day removed
from less stringent to more stringent removal.
n.e r a

TA,BLE V
ESTIMATES OF THE COSTS OF PLANS TO REDUCE
COLOR DISCHARGES IN THE PIGEON RIVER
50 Percent 50 Unit Maximum
Reduction At Border At Pipe
(1) (2) (3)
Pounds Per Day Removedl 172,000 274,000 311,000
Capital Cost,
(1988 Dollars) $10,000,000 $43,900,000 $1,400,000,000
Operating and
Maintenance Cost,
(1988 Dollars Per Year) 4,000,000 9,783,000 0
Present Value of
Total Cost2
(1988 Dollars) 38,366,000 113,276,000 1,400,000,000
Cost Per Pound Per Day
of Color Removed
(1988 Dollars) 223 413 4,502
Marginal Cost Per Pound
Per Day of Color Removed4 223 734 34,776
Sources and Notes
1 Pounds removed, capital and operating costs provided by the Company.
2 Total cost taken by adding capital cost to operating and maintenance cost
stream discounted at 6.79 percent real discount rate for 10 years. Real
discount rate assumes 6 percent inflation applied to Champion after-tax
cost of money of 13.2 percent.
3 Total cost divided by pounds per day removed.
4 Difference in cost divided b difference in y pounds per day removed from
less stringent to more stringent removal.
n-e r.

TABLE VI
COSTS AND BENEFITS OF PAINS TO REDUCE
COLOR DISCHARGES INTO THE PIGEON RIVER
Total Benefits and Costs Marginal Benefits and Costs
Discharge Benefit/Cost Benefit/Cost
Reduction Plan Benefitsl Costsl Ratio Benefits2 Costs2 Ratio
-(Millions of -(Millions of
1988 Dollars)- 1988 Dollars)-
(1)/(2) (4)/(5)
(1) (2) (3) (4) (5) (6)
50 Percent Reduction $10.9 $ 38.4 0.28 $10.9 $38.4 0.28
50 Units At Border 17.3 113.3 0.15 6.4 74.9 0.09
50 Units At Pipe 17.6 1,400.0 0.01 0.3 1,286.7 0.00
Sources and Notes
1 Total benefits are taken from Table IV. Total costs are taken from
Table V.
2
Marginal benefits and costs are the difference between the figures of a
plan and the plan immediately above it.
n�ra

SUMMARY OF TENNESSEE
EMPLOYMENT IMPACTS
In its report, National Economic Research Associates, Inc
(NERA) has estimated that approximately 816 jobs will be lost in
Tennessee as a direct or indirect result of the closing of
Champion' s Canton mill. That figure is based upon Champion's $15
million contribution to Tennessee' s economy and a multiplier derive
by the United States Department of commerce based upon the output of -.i.
the forestry industry. NERA Report, p. 28 and Table VII.
This figure is also directly supported by testimony at the
public hearings . Individual suppliers to Champion estimated the
number of jobs lost in each of their operations as follows:
Employees Transcript
Witness Compan Lost Page
Mr. Gordon Chalmers Valmet-Enerdry 50 283
Mr. Armistead Long James Spur, Inc. 450 309
Mr. John Baugues Coal Company 200 311
Mr. Jim Sherrer Huyck Formex 15-20 317
Mr. Randy Edgeman Diversified Energy 180 335
TOTAL EMPLOYEES 895-900 ......
Therefore, the NERA Report accurately estimated the number of direct
jobs lost in Tennessee if the Canton mill closes, and probably
underestimated the actual direct and indirect job losses that would
result.

FFB CFO -
PORTER , WRIGihzq ftB '
5�
MORRIS & ARTHUR F4*Rs
I153 ITN STREET,N.W.
ATTORNEYS AT LAW oAN ON,D.G m
7E EPHOLECOMNE:(m1)611-0Mo l
dI SOUTH HIGH STREET,COLUMBUS.OHIO 4331; TELEOJFlER:(]p1)6UA19! a1
TELECOPIER:[phone] TE2•IX(6m)4l2.17O1 •t
TWX:[phone] 1610ATRI MONF.
101 EASTFOURTH STREET
J.JEFFREY McNEALEY DIRECT DIAL:[phone] ONOTINATI.OHIOHm1 +t-
TELEPHONE:[phone]M
TELECOHER:()IH 411.0991
. 915 EUCILD AVENUE
SUITE I l00 KUNTINGTON BUILDING
aSVEIAND.OHIO"III 24^•'•'
TELEPHONE(116)Ml-9009
February 23, 1988 MECOFlER:ry16144 "Il
ems:
1100 FlRST NATIONAL BANK BUBDING
P.O.BOX 1805O4501
DAYTON.N,OMO4l4B1 �..
TELEPHONE(515)UR-Mil ;.
TELECOPIE2(3I3)2A.066E .Ty.
Mr. John H. Wile s.�<
NERA
123 Main Street
White Plains, NY 10601
Re: Tennessee Impacts
Dear John:
Enclosed is a summary of Tennessee employment impacts as
taken from the administrative record, primarily the testimony in
Knoxville. As you can see, the numbers set forth in the NERA report
as submitted potentially understate actual anticipated impacts,
another degree of conservatism. I thought you might want to put
this in your file for future reference. You should have copies of
the testimony which was previously forwarded to you by Janet Henry
of my office.
S ffJfrey
ely,
j
McNealey
Ec: JJM:klr
Enc.
cc: Benjamin Bilus (w/en
Richlyd Diforio (w/en
o,

T LE
COMPARISON OF COST AND BENEFITS OF
PLANS TO REDUCE COLOR DISCHARGES '
IN THE PIGEON RIVER AT ALTERNATIVE DISCOUNT RATESI
me`µ
6.79% Discount Rate 38 Discount Rate
Discharge Benefit/Cost Benefit/Cost
Reduction Plan Benefits Costs Ratio Benefits Costs Ratio
-(Millions of -(Millions of
1988 Dollars)- 1988 Dollars)-
(1)/C2)
(1) (2) (3) (4) (5) (6)
50 Percent Reduction $10.9 $ 38.4 0.28 $11.4 $ 45.9 0.25
50 Units at Border 17.3 113.3 0.15 18.1 135.4 0.13
50 Units at Pipe 17.6 1,400.0 0.01 18.4 1,655.9 0.01
Sources and Notes
1 See Table I.

ESTIMATES OF EMPIDYMENT IMPACTS OF FLANS
TO REDUCE COIOR DISCH►RGES IN THE PIGEON RIM
2;.J.
Changes in Output Changes in the Number of Jobs
Discharge North North
Reduction Plan Tennessee' Carolina2 Tennessee3 Carolina3 Total
(Millions of 1988 $) -------(Number of Jobs)--------
(3)&(4)
(1) (2) (3) (4) (5) ,
50 Percent Reduction 1.29 5.86 77 176 253
50 Units At Border 2.04 17.94 123 539 662
50 Units At Pipe Recreation 2.04) .385.00 -693 -12,040 -12,733
y Forest -15.00
Sources and Notes
1 Changes in output for Tennessee are derived by multiplying increased visits per
year (120,000) , the proportion of expenditures that are commercial (.85), the cost
per trip (20) , and the proportion of benefits achieved (from Table IV) . The loss
of $15 million of output in the last case is taken from Oliver Blackwell's
testimony before USEPA, page 27.
2 Changes in output for North Carolina are calculated as follows: for the first two
plans they are derived by adding the operating and maintenance cost of a plant and
the capital cost multiplied by the capital recovery factor (.186) . For the 50
units at the mill plan, the loss in output is equivalent to the current output of
the mill.
3 Multipliers are derived from RIMS manual, reference (13] .
I1�eT/cr

+, . ..
ESTIMATES OF EXPIDTHENT IMPACTS OF PIANS :
TO REDUCE COIDR DISCHARGES IN THE PIGEON RIVER -
Changes in Output Changes in the Number of Jobs
Discharge North North
Reduction Plan Tennesseel Carolina2 Tennessee3 Carolina3 Total
(Millions of 1988 $) -------(Number of Jobs)--------
- (3)&(4)
(1) (2) (3) (4) (5)
50 Percent Reduction 1.29 5.86 77 176 253
50 Units At Border 2.04 17.94 123 539 662
50 Units At Pip, Recreation 2.04
p Forest -15.001 -385.00 -693 -12,040 -12,733
Sources and Notes
1 Changes in output for Tennessee are derived by multiplying increased visits per
year (120,000) , the proportion of expenditures that are commercial (.85) , the cost
per trip (20) , and the proportion of benefits achieved (from Table IV), The loss
of $15 million of output in the last case is taken from Oliver Blackwell's
testimony before USEPA, page 27.
2 Changes in output for North Carolina are calculated as follows: for the first two
plans they are derived by adding the operating and maintenance cost of a plant and
the capital cost multiplied by the capital recovery factor (.186). For the 50
units at the mill plan, the loss in output is equivalent to the current output of
the mill.
3 Multipliers are derived from RIMS manual, reference [131 .
me rfa

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The !?resident's Council on Sustainable;Development
li'i ��L'< 3;v S. w! � S:.0 sY.'d 's:. 5 a. � du Te d �7"F4<-t � •s �3�+'d` R i {- } �n J +$� ,�,.! ✓j

SUSTAINABLE COMMUNITIES
TASK FORCE REPORT
PRESIDENT'S COUNCIL ON SUSTAINABLE DEVELOPMENT
730Jackson Place,NW
Washington,DC 20503
202 408 5296,fx.202 408 6839
email <infopcsd®aol.com>
web site <http://www.whitehouse.gov/pcsd>

Dedication
We dedicate this report to the memory of the late Ronald H. Brown,
former Secretary of the U.S.Department of Commerce,and a
Co-Chair of the Sustainable Communities Task Force.

• - rtFetnrr;s�tm
i
Membership .
CO-CHAIRS
Ronald H. Brown, Secretary,U.S. Department of Commerce
Thomas R. Donahue,Former President,AFL-CIO
MEMBERS-
John H. Adams, Executive Director,Natural Resources Defense Council
D. James Baker, Under Secretary for Oceans and Atmosphere, National Oceanic and Atmospheric
Administration,U.S. Department of Commerce
Richard Barth, Chairman,President,and Chief Executive Officer (Retired), Ciba-Geigy Corporation
Carol M. Browner,Administrator,U.S. Environmental Protection Agency
Benjamin F. Chavis,Jr.,National Chair,National African-American Leadership Summit
Dianne Dillon-Ridgley, President, Zero Population Growth
Judith M. Espinosa,Former Secretary of the Environment, State of New Mexico
Michele A. Perrault,International Vice President, Sierra Club
TAsx FoRCE LIAISONS TO CouNcn.MEMBERS
Geoffrey Anderson, U.S. Environmental Protection Agency
John Bullard,National Oceanic and Atmospheric Administration, U.S. Department of Commerce
Jacqueline Hamilton, Natural Resources Defense Council
Jeffrey Hunker, U.S. Department of Commerce
Michael McCloskey, Sierra Club
John Mincy, Ciba-Geigy Corporation
Rebecca Moser,National Oceanic and Atmospheric Administration, U.S. Department of Commerce
Rudy Oswald, AFL-CIO
Harriet Tregoning,U.S. Environmental Protection Agency
TAsx FORCE COORDINATOR
Angela Park,President's Council on Sustainable Development
The federal officials who served on the task force participated actively in developing the recommendations in this
report, but these recommendations do not necessarily reflect Administration policy. This final report represents the
consensus of the council members that served on the task force. While the task force delivered its recommendations
to the council for its consideration, the entire council did not review or endorse this report.

PRESIDENT'S COUNCIL ON SUSTAINABLE DEVELOPMEN-f
r SUSTAINABLL COMm uND"IIiS'f:15K FORCE RBP(IRT

PRF.FA CF.
Preface
The strength, prosperity, and vitality of our communities is a fundamental measure of
our nation's success. As part of its effort to create a national action strategy, the
President's Council on Sustainable Development established the Sustainable Communities
Task Force to examine and articulate the leadership role communities are playing in
creating a sustainable United:States.:The_ten.Councilmembm.na.the task force.were
charged with developing consensus-based policy recommendations on how the United
States can create opportunities, reduce barriers, and encourage collaborative partnerships
to implement sustainable development locally.
The work of the task force began with a simple theory: local communities are providing
much of,the initial impetus and practical leadership for implementing the concepts of
sustainable development. Any national strategy for sustainable development must tap
into this energy and momentum and be rooted in the lessons learned from these commu-
nities. Accordingly, task force members sought input from community activists, business
'leaders, trade unionists, developers, academics, architects, policy experts, and elected
officials and agency staff at all levels of government. In addition, through a series of
meetings, briefings, and roundtables,the task force solicited the expertise and involve-
ment of hundreds of additional community leaders throughout the.country.
Many of these community leaders participated in the six working groups established by
the task force as well as sharing their knowledge on innovative programs and policies that
are already underway and achieving measurable results. The working groups addressed a
wide range of issues relevant to building sustainable communities, including economic
development and jobs, social infrastructure, environmental justice, transportation and
infrastructure, housing and land use, financing, and public participation. The working
groups provided the foundation for the task forte's work. In a bottom-up process,
materials developed by working groups were integrated into task force draft issue state-
ments, goals, and policy recommendations.
To further ensure that the task forte's work was rooted in the realities facing communi-
ties today, the task force worked with communities to draft case studies, and asked the
U.S. Environmental Protection Agency's Urban and Economic Development Division to
commission a compilation of 51 community profiles. The case studies and community
profiles are not intended to serve as models, but rather to highlight the diversity of initia-
tives already underway, and to share lessons learned by communities that are developing
integrated approaches to social, economic, and environmental issues while emphasizing
opportunities for broad public participation.

PRESIDENT'S COUNCIL ON SUSTAINABLE DEVELOPMENT
T• /
4 WMAINABLE CONIMUN[TIES TASK FORCE REPORT
It is with immense gratitude that we recognize and thank the hundreds of individuals
who contributed to the Sustainable Communities Task Force.
This final report reflects the synthesis of three years of work, and it represents the
consensus of council members who served on the task force. While the task force's goals
were ambitious;-its recommeadatitrns-only begin-todeal-with the-wide range of,chal-
lenges facing our nation's communities. But by addressing the most important issues the
task force identified, we hope this report will stimulate a national discussion on how the
concepts of sustainable development can be applied in local decisionmaking to make all of
our communities better places in which to live.
Thomas K Donahue
Task Force Co-chair
Former President
AFL-CIO

PRESIDENT'S COUNCIL ON SUSTAINABLE DEVELOPMENT EXECU VE,
SUSTAINABLE COMMUNMES TASK FORCE REPORT S!,Ai tARY
Executive Summary
Flourishing communities are the foundation of a healthy society. One important
measure of America's potential for long-term vitality will be the emergence of
communities that are attractive, clean, safe, and rich in educational and employment
opportunities. But before engaging in any discussion about sustainable communities, an
understanding of theshared.concepts anddefinitionsof sustainable development must
exist.
WHAT IS SUSTAINABLE DEVELOPMENT?
The term "sustainable development" and its definitions originated in an international
context. The term was popularized by the World-Commission on Environment and
Development,which is also known as the Bruntland Commission, named after its chair
Gro Harlem Bruntland. Established by the United Nations (U.N.) General Assembly in
1984, the commission was asked to learn about the connections between the issues of
environment and development. It held meetings on every continent with people from all
walks of life and presented its final report, Our Common Future, to the U.N. General
Assembly in 1987.
In Our Common Future, the Bruntland Commission defined sustainable development as
development that allows people "...to meet-the needs of the present without compro-
mising the ability of future generations to meet their own needs." This definition was
adopted by the President's Council on Sustainable Development in 1993 as it initiated its
work.
Although the Bruntland Commission's definition addresses the intergenerational and
long-term aspects of sustainable development, alone it is not a comprehensive definition
of the term and its affiliated concepts.
Sustainable development has been described as the integration of the three e's— environ-
ment, economy, and equity. In addition, a variety of themes have become closely
associated with the concept of sustainable development. For development to be sustain-
able, it must satisfy five criteria. Decisions must consider and account for:
. . . Long-term impacts and consequences—Sustainable development requires the use of a
long-term horizon for decisionmaking in which society pursues long-term aspirations
rather than simply making short-term, reactive responses to problems.By keeping an eye
out for the long-term,sustainable development ensures that options for future genera-
tions are maintained if not improved.
. . . Interdependence-Sustainable development recognizes the interdependence of economic,
environmental, and social well-being.It promotes actions that expand economic opportu-
nity, improve environmental quality,and increase social well-being all at the same ume,
never sacking one for another.

q PRESIDFNT'S COUNCIL ON SUSTAIN- FXECLTIVE SUMMARY
ABLE DEVELOPMENT
• • • Participation and transparency—Sustainable development depends on decisionmaking
that is inclusive,participatory, and transparent. It recognizes the importance of process
and decisionmaking that includes the input of the stakeholders who will be affected by
decisions.
• • • Equity—Sustainable development promotes equity between generations and among
different groups in society. It recognizes the necessity of equality and fairness, and it
reduces disparities in risks and access to benefits.
• . • Proactive prevention—Sustainable development is anticipatory. It promotes efforts to
prevent problems as the first course of action.
Sustainable development is one of those rare ideas that could dramatically change the way
we look at"what is" and."what could be:" It is about doing things in ways that work for
the long run because they are better from every point of view—better economically,
environmentally, and socially. It provides a new framework for working together to
expand economic opportunities, rebuild communities, revitalize democracy,develop a
new generation of environmentally superior technologies, link entrepreneurship to envi-
ronmental stewardship, and bring our increasingly urban way of life into balance with
nature. Sustainable development challenges us to envision a society superior to today's
society, and to make it a reality for our children and grandchildren.
WHAT ARE SUSTAINABLE COMMUNITIES?
Sustainable communities are cities and towns that prosper because people work together
to produce a high quality of life that they want to sustain and constantly improve. They
are communities that flourish because they build a mutually supportive, dynamic balance
between social well-being, economic opportunity, and environmental quality. While it is
not possible today to point to a list and say, "These communities are sustainable," the
emerging ideal of sustainable communities is a goal many are striving to achieve. And
while there is no single template for a sustainable community, cities and towns pursuing
sustainable development often have characteristics in common. Generally speaking, they
integrate the five,concepts outlined above and demonstrate their application locally.
Some communities have adopted sustainable community principles through legislation,
executive order, or other actions.
The concept of sustainable communities should be viewed as an ideal for communities to '
pursue—an ideal whose possibilities are enormously exciting.
In sustainable communities, people are engaged in building a community together. They
are well-informed and actively involved in making the decisions that affect their lives. In
making decisions, they consider the long-term benefits to future generations as well as
themselves. They understand that successful long-term solutions require partnerships and
a process that allows for representatives of a community's diverse sectors to be involved
in discussions, planning, and decisions that respond directly to unique local needs. They
also recognize that some problems cannot be solved within the confines of their
community, and that working in partnership with others in the region is necessary to
deal with them effectively. :

MIMCUMT SUMMARY
4 'Si
In sustainable communities, people use this participatory approach to make conscious
decisions about design. The concepts of efficiency and livability permeate decisions about
physical structure. Development patterns promote accessibility, decrease sprawl, reduce
energy costs, and foster a human-scale built environment.
In sustainable communities, all people have access to educational opportunities that
prepare them for jobs to support themselves and their families in a local economy that is
dynamic and prepared to cope with changes in the national and global economy. In
sustainable communities,partnerships involving business, government, labor, and
employees promote economic development and jobs. They cooperatively plan and carry
out development strategies that-create diversified local economies built on unique local
advantages and environmentally superior technologies. These efforts can strengthen the
local economy, buffering the effects of national and international economic trends that
sometimes result in job losses in a community. Such partnerships also invest in the
education and training necessary to make community members more productive, raise
their earning power, and help strengthen and attract business. Use of environmentally
superior technologies for transportation, industry, buildings, and agriculture boosts
productivity and lowers business costs while dramatically reducing pollution, and solid
and hazardous wastes.
Businesses, households, and governments in sustainable communities make efficient use of
land, energy, and other resources, allowing the area to achieve a high quality of life with
minimal waste and environmental damage.These communities are healthy and secure and `
they provide people with clean air, clean water, and safe food.
WHY ARE COMMUNITIES KEY TO SUSTAINABLE DEVELOPMENT?
Whether the United States and other nations will achieve a sustainable future largely
depends on how well the concepts and principles of sustainable development are inte-
grated into decisionmaking at the community level. If efforts to build a sustainable future
are to take hold, they must do so in the day-to-day lives of people in their workplaces,
stores, neighborhood associations, community organizations, local government, labor
unions, schools, and religious institutions. '
It is in communities where people work,play, and feel most connected to society.
Problems like congestion,pollution, and crime often seem abstract when they appear as
national statistics, but they become personal and real at the community level. In the same.
way, sustainable development may remain a remote theoretical concept for.many people
until it is described in the context of community. Then it becomes more clear that
sustainable development is directly related to aspects of people's daily lives and their
fundamental needs, such as educational and job opportunities, health care, affordable
housing, clean air and water, and convenient transportation. It is within communities
that children the basic education and skills that will allow them to thrive in the changing
marketplace.

.y PRESIDENT'S COUNQL ON SUSTAIN- EkTCIJTIVE SLiMMARY
V111 ABLE DEVELOPMENT
It is within communities that people can most easily bring diverse interests together,
identify and agree on goals for positive change, and organize for responsive action. While
the challenges facing the nation are difficult to resolve at any level of government, local
communities offer people the greatest opportunity to meet face-to-face to fashion a shared
commitment to a sustainable future. Nothing could do more to foster 'sustainable devel-
opment than a nationwide effort to apply this idea at the community level.
Much of what is needed to create more sustainable communities is within reach if people
and their community institutions join forces. Many communities are beginning to use
sustainable development as a framework for thinking about their future. By building
upon their leadership and innovation,marshaling and reorienting government resources,
and creating new standards for process and participation, strengthened communities can
provide the foundation for a stronger, revitalized America.
TASK FORCE RECOMMENDATIONS
POLICY RECOMMENDATION 1
Community Based Public Dialogue,Planning,Priority-Setting,and Implementation
Bring people together to idcmtify,prioritize,and learn about key issues in their community;
develop a vision of wbat they want their community to he;set goals for realizing that vision;
establish indicators for measuring progress;identify the resources needed to reach the goals;and
implement actions that will advance them.
Action 1. Community-based coalitions can create educational, media, and civic journalism
campaigns to encourage participation in'civil life and voting, disseminate high-quality information
on community issues,and promote public discussions that will lead to the resolution of these issues.
Coalitions should be as broad as possible,including industry and business,schools,newspapers,tele-
vision and radio stations, community groups, labor, local government, religious institutions, and
organizations working on social, economic,and environmental issues.
Action 2. As part of the dialogue and planning process, community-based coalitions can work to
draft an economic development strategy that will fulfill basic human needs by taking advantage of
local and regional opportunities and new economic trends, such as the opening up of global
markets and the improvement of environmental and communications technologies. Coalitions
should include businesses, employees,unions,chambers of commerce, local government,
community groups, and residents.
Action 3. Federal and state governments—in consultation with local government, the private
sector, and nongovernmental organizations—should support local planning that integrates
economic development,environmental protection,and social equity concerns and should promote
public participation in planning efforts. For example, they should reaffirm the value of such
planning through the reauthorization of the Intermodal Surface Transportation Efficiency Act,
and they should apply the requirements of such planning to federal and state funding and incen-
tives for economic development,housing,transportation, and environmental programs.

Ea9iCU7I%-T SUMMARY
POLICY RECOMMENDATION 2
Open and Inclusive Decisionmaking
Encourage and facilitate open and inclusive decisionmaking processes.
Action 1. All levels government should ensure substantial opportunity for public participation in
all phases of planning and decisionmaking to allow those affected by decisions to have a voice in
the outcome. Governments should create new methods and expand existing ones for getting the
public involved in planning and development decisions,as well as in the legislative process,taking
steps to ensure that historically under-represented groups are involved.
For example, regional planning organizations, metropolitan planning organizations (MPOs),
zoning boards, and other government entities that are active in the design of communities should
take responsibility for ensuring that local residents have a substantive opportunity to participate in
crucial early planning and development decisions.
Action 2. All levels of government,but especially local government,should identify impediments
to greater public involvement in decisionmaking—such as language barriers and lack of child care
and transportation—and develop strategies to overcome them.
Action 3. Businesses can encourage.their managers and employees to participate in community
affairs and can establish advisory boards to recruit residents to provide input to the company on
issues relevant to the community.In addition,businesses can give'employees flexibility to increase
the time that they and their families can devote to community activities.
Action 4. While working to minimize all unacceptable environmental risks,all levels of govern-
ment should work with community groups and the private sector to ensure that environmental
risks and benefits are more equitably distributed among and within communities.
POLICY RECOMMENDATION 3
Access to Information on Sustainable Communities
Increase the ability of communities to improve their economic, environmental, and social well-
being by improving access to usable information about sustainable communities initiatives,
and disseminating that information to interested parties and key decisionmakers.
Action 1. Institutions and individuals with knowledge or expertise in sustainable community
development should coordinate efforts to share and provide information to communities,decision-
makers, and other relevant constituencies. They should explore ways to link currently existing
databases; coordinate technical assistance; co-sponsor conferences and other meetings; take
advantage of emerging communications technologies,such as the Internet; and provide easily acces-
sible points of entry for those interested in this information.
These institutions and individuals include government agencies,elected officials, nonprofit organi-
zations,businesses,academic institutions,economic development and environmental
organizations, community groups,and professional associations (from planners, architects, and
engineers to ecologists and economists).
Action 2. All levels of government should improve the user-friendliness of government-collected
information and technologies to help communities use them to solve problems and to educate the
public. Potentially useful information includes census data,Toxics Release Inventory data, other

PRESE)ENT'S COUNCIL ON S[iSTAIN- EXECUTIVE SUMMARY
AFILE DEVELOPMENT
right-to-know statistics,public investment and lending information, economic statistics, and data
derived from remote sensing and satellite technologies. Potentially useful technologies for manipu-
lating this data include mapping tools,geographic information systems (GIS),and customized GIS
application databases (e.g.,LandView B).
Action 3. Community-based coalitions should work with companies,federal and state regulatory
agencies,and health risk assessors to develop profiles of neighborhoods that are environmentally
high-risk as a tool for setting pollution abatement priorities.
POLICY RECOMMENDATION 4
Cooperation.Among Communities.._
Encourage the communities within a region to work together on issues that transcend their
political boundaries.
Action 1. Communities should collaborate to identify,prioritize, and learn about key problems
in their region; develop a vision of what they want their region to be like; set goals for realizing
that vision; establish benchmarks for measuring progress toward these goals; ascertain the
resources needed to reach the goals;and determine the actions that will advance them.
Action 2. States, counties,and municipalities should collaborate to create a system of regional
accounts that measures the costs and benefits of local land use, development, and economic trends,
and show how these benefits and costs are distributed in the short and long run. The federal
government should work with state and local governments to ensure that federal statistical
resources are available and used appropriately to support the measurement of benefits and costs.
Action 3. Federal and state governments should provide incentives for communities to collabo-
rate on issues that transcend local political jurisdictions,such as transportation,land use, economic
development, and air and water quality. Federal and state agencies responsible for environmental
protection, economic development,land use, and transportation policies should work with one or
more selected geographic areas to develop integrated planning and development activities, and to
require region-wide cooperation in these areas.
POLICY RECOMMENDATION 5
Building Design and Rehabilitation
Streamline processes and encourage design and rehabilitation of new and existing buildings
to use energy and maler•ials• efficiently, enhance public health.preserre historic and natural
settings, and contribate to a sense of community identity: and discourage zoning and
construction practices that do the opposite.
Action 1. Builders, architects, and engineers should design new buildings and rehabilitate existing
ones to be healthy, livable,resource-efficient, and adaptable to new uses. These buildings should
feature energy efficiency, daylighting,non-toxic recycled and recyclable construction materials,
and designs that promote human interaction. They should also recognize the importance of
historic preservation—capturing the resource of the embodied energy of existing buildings=and
promote zero-waste building practices.
Action 2. Builders and landscape architects should encourage building design that recognizes the
integration between the built and natural environments through landscaping techniques such as

ca-vcc MW sunmAer
the use of native plants,which can reduce the need for fertilizers,pesticides, and water; and shade
trees which can reduce energy use.
Action 3. Federal,state,and local governments should work with builders, architects,developers,
contractors, materials manufacturers,service providers, community groups,and others to stream-
line regulations that allow builders and architects to implement the above-outlined sustainable
building and construction practices. They should publish or otherwise make available information
about model building codes,zoning ordinances, and flexibility for better building permit approval
processes for residential and commercial buildings—so that local decisionmakers can adapt them
to reflect local conditions and values.
Action 4. Lenders,community groups, and historic preservation groups can work together to
identify financing for retrofitting buildings to be energy-efficient and for rehabilitating historic
buildings. Local governments can enact ordinances to preserve historic buildings,adapting them
for new uses whenever possible, and removing incentives for demolishing them.
Action 5. Educational institutions at all levels,particularly technical and graduate schools,should
provide interdisciplinary training to encourage engineers,architects, landscape artists, and other
design professionals to integrate sustainable building and construction practices, as outlined above,
into common use.
POLICY RECOMMENDATION 6
Community Design
Design new communities and improve avisting ones to use laird and infrastructure gfflciently,
promote mixed-use and mired-income development, retain public open space, and provide
diverse transportation options to integrate the places in which people live and tvork with the
ncitural environment.
Action 1.Local jurisdictions should structure or revise local zoning regulations and permit
approval processes to encourage mixed-used,mixed-income development co-located with diverse
transportation options in areas that are already developed and especially where transit infrastruc-
ture is already in place.
Action 2. Federal and state governments and the private sector should form teams to help local
jurisdictions reduce sprawl, and design developments that are resource-efficient and livable.
Teams should include design and financing professionals,engineers, transportation specialists, land
use experts,economic development and energy-efficiency experts,retailers, natural resource
managers, and others.
Action 3. The federal government should change federal tax policy to provide the same tax
treatment of employee parking benefits and employee benefits relating to the use of mass transit,
walking,and bike riding. For example,employers currently receive a tax deduction for providing
parking and most do not charge for employee parking. While a much smaller tax-free benefit(less
than half the amount) is also available for transit, no such incentive exists for those who neither
drive nor take transit.
Action 4. The federal government should give credit toward attainment of national Clean Air
Act Amendment ambient air-quality standards to communities that lower traffic by adopting
zoning,building code,and other changes that encourage more efficient land use patterns that
reduce air pollution from motor vehicles.

LL gg PRESIDENT'S COUNCIL ON SUSTAINABLE DEVELOPMENT
XH SUSTAINAniSf COMM93ND7ES TASK FORCE REPORT
POLICY RECOMMENDATION 7
Reduce Sprawl and Promote Smarter Growtb
Reduce sprcnrl and promote smarter geogrctphical growth of existing communities and the
siting of new ones to enhance economic opportunities and meet finure needs while
conserving open space and respecting the camping capacity of the natural environmew.
Action 1. The federal government should redirect federal policies that encourage low-density
sprawl to foster investment in existing communities.For example,it should encourage shifts in
transportation spending toward transit, highway maintenance and repair,and expansion of transit
options rather than new highway or beltway construction.It should also change the capital gain
provision in section 1034 of the Internal Revenue Service code to allow homesellers to defer tax
liability even if they purchase a new home of lesser value.-Currently the code allows deferred tax
liability on capital gain realized during ownership only if homesellers purchase another home
priced at least equal to the one sold.
Action 2. Federal agencies should work with states and communities to develop ways to evaluate
the costs of infrastructure in greenfield or relatively undeveloped areas to examine subsidies and to
correct market incentives in the financing of capital costs of infrastructure,such as sewers and
utilities,for development of land bordering metropolitan areas.In addition, local governments and
counties can work together to use community impact analyses and other information on the envi-
ronmental carrying capacity of a region as the foundation for land use planning and development
decisions.
Federal and state governments should also help local governments develop a metropolitan or
regional planning instrument to evaluate alternative modes of development,accounting for the
present value and costs of infrastructure,transportation inefficiency,land consumption,provision
of social services, environmental quality, congestion, and fiscal impacts, as well as the impact on
access to jobs,services, open space, and social and cultural amenities.
Action 3. All levels of government,policy experts,residents,and community organizations can
work together to conduct analyses of how public resources for infrastructure are spent to benefit
different communities—for example, comparing the center city, outer suburbs, and rural areas.
These analyses can be used to reorient priorities,if necessary, and direct future expenditures.
Action 4. Local governments and counties can create community partnerships to develop regional
open space networks and urban growth boundaries as part of a regional framework to discourage
sprawl development that threatens a region's environmental carrying capacity.These partnerships
can conserve open space through acquisition of land and/or development rights. For example,
public water departments can budget to acquire land necessary to protect public water supplies.
Private land trusts can expand their acquisition of wetlands or other valuable open space.

ERECLMVESUKIMARY -
r1.:i
r
POLICY RECOWMI ENDATION 8
Creation of Strong,Diversified Local Economies
Promote economic development strategies that capitalize on unique local attributes and on
technological advancer in energy and resource efciencti; to create Jobs and build strong,
diversified local economies.
Action 1. Communities can conduct an assessment of their economic, natural, and human
resources to identify their comparative advantages and niche in the larger regional, national,and
global economies. Ideally,this inventory and assessment would be conducted as part of a public
dialogue and planning process within the community and the region.
Action 2. Local governments,businesses, and nonprofit organizations with relevant expertise
should work together to create recycling-related manufacturing in conjunction with community-
based projects to collect and recycle municipal solid waste. All levels of government should
support these efforts by providing information and incentives, and by supporting pilot projects
and leveraging their funding with public-private partnerships.
Action 3. Federal and state agencies should assist communities that want to create eco-industrial
parks that enhance economic efficiency and promote environmental responsibility.They can do so
by reducing regulatory impediments to the siting of eco-industrial parks that produce low levels of
pollution through a zero-waste strategy in areas with mixed-use zoning;sharing information on
similar efforts;and funding pilot projects.
Action 4. National business associations,large corporations, environmental groups, and federal
and state agencies can work together to promote best practices and techniques in the areas of
pollution prevention,materials reuse,and energy efficiency to small-and medium-sized companies.
Action 5. Federal agencies should help communities with former military facilities to convert
them to new uses using principles of sustainable development. They can do so by bringing
together development experts from multiple agencies and providing information on the range of
alternatives for redevelopment.
Action 6. The federal government and businesses should improve working conditions. Govern-
went,for example,should set an adequate minimum wage and proper health and safety standards;,
and businesses could provide greater flexibility to telecommute,set work schedules to provide
more time for community participation and/or parenting,and provide assistance with day care.
Action 7. Federal, state, and local government should support job creation and minimize large
disparities in the distribution of wealth through tax strategies,health and welfare programs, and
other government policies.

PRESIDENr'S COUtiCTI.ON SUSTA[N',\]31-E DEVELOPMFNT
`..' !'• SUS'1'AINAELE COMMUNITIES TASK FORCE REPORT '
POLICY RECOMMENDATION 9
Basic Education,Job Training, and Lifelong Learning
Expand and coordinate education and job training programs to allow all people to expand
their knowledge and improve their ability to adapt to the changing job markel and
participate in contmuni{v affairs as informed educated citizens.
Action 1. Businesses;teachers'unions,school officials, students, religious institutions, and local
government within a community should develop training programs to ensure that workers have
the necessary skills to take advantage of current and future economic development opportunities.
They should work together to integrate current training programs, and they should marshal
funding from the private sector,schools, and government to fill gaps in these programs.In
addition to school curriculum, the programs include school-to-work, community service, summer
jobs programs,apprenticeships, and job corps opportunities.
Action 2. Community-based coalitions should work together to invest in education and to link
education and the community by sponsoring youth,tutoring, and other programs; directly
funding projects; and providing in-kind and volunteer support. These programs should also focus
on the needs of local employers.
Action 3. Federal and state governments should help people pursue education and job training
throughout their lives by providing tax deductions on tuition, low-interest student loans, and
other kinds of financial assistance.
Action 4. Federal and state governments,the private sector, and local communities should
promote widespread public access to computers and computer skills training.
POLICY RECOMMENDATION 10
Cleanup and Redevelopment of Brownfield Sites
Create partnerships with community residents, environmental organizations, community
development corporations, lenk s, businesses, and all levels of government to clean up,
redevelop, or stabilize brownficld sites by eliminating bamievs and creating incentives for
environmental cleanup and reorienting existing state avid federal economic development
funding and programs to include these sites.
Action 1. All levels of government should continue to encourage investment in brownfrelds rede-
velopment by eliminating barriers to and creating incentives for the cleanup and redevelopment of
brownfield sites. Current efforts,such as the 1995 EPA Brownfields Initiative, need to continue
evolving to work in partnership with diverse parties to clarify important issues and find shared
solutions.These issues include: lender liability for cleanup;uncertainties for investors such as
consistent and quantifiable cleanup standards, enforceable indemnity agreements, and covenants-
not-to-sue;timely and conclusive efforts to detect contamination to allow cleanup and property
sales to proceed;realistic cleanup standards appropriate to future uses of sites; and strengthening
local workforce development.
Action 2. All levels of government should work with the mortgage bankers and other members
of the financial community as well as with community groups to reexamine policies in light of the
substantial progress that has been made by EPA and the Congress to respond to the lending

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'1.!j 5 SLISTAINA➢LE COMMUNITIES TASK FORC17 REPC-RT j
1
Action 3. Community-based coalitions should work together to address disorder issues such as
littering,graffiti,and loitering before they lead to criminal activities. Law enforcement officials
and local governments should work with residents and businesses to identify opportunities to
prevent potential problems such as improving lighting in specific areas, and cleaning up vacant
lots.
POLICY RECOMMENDATION 13
Community Environmental Protection Pilots
Explore the feasibility and effectiveness of alternative environmental regulatory systems
tln-ough community-level pilot programs that set performance-based standards that are more
stringent than existing environmental standards,and that give businesses greater flexibility in
meeting the netv standards.
Action 1. The U.S.Environmental Protection Agency(EPA) should encourage communities to
develop pilot programs for attaining one or more environmental standards that are more stringent
than those set by EPA.Participants in the programs—including but not limited to industry,
government agencies, and community groups—would set the standards;and would work with
regulators to ensure and verify that they are met.
Action 2.EPA and state environmental protection agencies should accelerate efforts to conduct a
series of demonstration projects to assess the benefits and costs of alternative regulatory
approaches.
For example,projects could demonstrate the cost-effectiveness of setting more stringent standards
while giving polluters longer time periods to achieve compliance.Another project could research
and work to demonstrate the benefits (if any) of environmental performance of an entire facility
rather than on separate air,water and soil requirements.Such a project might stipulate that envi-
ronmental gains for an entire facility exceed what would have been achieved through
source-by-source or media-specific regulations.Working with the private sector and nongovern-
mental organizations,the federal government should review and evaluate the lessons learned from
these demonstration projects. Based on the success of the first round of demonstration projects,a
second set of projects should be launched within two years.
POLICY RECOMMENDATION 14
Pollution Prevention Partnersbips
Increase public private pollution prevention efforts at the community level.
Action 1.Regulators, businesses,labor unions,community groups, and policy experts can create
partnerships to implement programs that encourage pollution prevention.
Action 2. Community-based coalitions can regularly gather data on pollution in a community
and combine it with population data and relevant health statistics,including diet and lifestyle
choices, to reach agreement on what programs are needed to lower local health risks.

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c
POLICY RECOMMENDATION 15
Prevention and Natural Disaster Reduction
Shift the focus of the federal disaster relief system from cure to prevention.
Action 1. All levels of government should identify and eliminate government incentives,such as
subsidized flood plain insurance and subsidized utilities,that encourage development in areas
vulnerable to natural hazards.
Action 2. Accurate risk assessments can facilitate development of safe land use policies and
management approaches, especially in coastal and riverine environments,and near fault zones and
other geologically active sites.
Action 3. Community-based coalitions can develop improved building codes and related enforce-
ment, and create strategic plans for design and maintenance of community infrastructure,and
support appropriate agriculture and forestry practices. For example,local regulatory agencies can
adopt more rigorous building codes, to ensure that new construction minimizes the impacts of
floods,hurricanes, and other natural disasters.
Action 4. Federal agencies,perhaps through a specific interagency effort,should incorporate
sustainable redevelopment principles into the federal disaster relief system.The interagency group
should work closely with state,local, and private organizations to create a unified approach within
established disaster relief mechanisms.They can package technical assistance programs from
existing federal, state, and local programs,utilities, and other public and private resources.

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
I. Introduction
The following report details the Canton Mill's ability to attain the lowest achievable
annual average and monthly average color loading limits based on the Mill's performance
from December 2001 —August 2003. Section A (8.), Paragraph 5 of the 2001 NPDES
Permit provides in part, as follows:
"...By October 1, 2003, the permittee shall submit to the North Carolina
Division of Water Quality a report including a statistical analysis of the
permittee's monthly average color discharge, mill performance as related
to color, all available data necessary to derive the lowest achievable
annual average and monthly average color loading limits... "
This report is submitted to fulfill the requirements of Section A(8.),Paragraph 5. Based
on the Mill's performance from December 2001 —August 2003 and the Mill's continued
commitment to color improvement, Blue Ridge Paper Products believes an annual
average color limit of 42,000 pounds per day and a monthly average color limit of 52,000
pounds per day are feasible.
1

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
Il. Color Performance
Set forth below is a summary of the actions implemented and planned for further color
improvement at the Canton Mill. These actions satisfy the `Highest Certainty' items
recommended by the Division of Water Quality and the Technology Review Workgroup.
2.1 Process Optimizations Items
The sixteen Process Optimization Items recommended in the Bleach Environmental
Process Evaluation and Report prepared by Liebergott&Associates Consulting Inc. and
GL&V Pulp Group Inc. have all been evaluated and implemented where appropriate.
2.2 Improved Black Liquor Leak and Spill Collection and Control
This recommendation consists of four elements including:
1) Continuous improvement of operating practices so more leaks and spills are recovered
rather than discharged to the sewer;
2) Improvement in preparation for planned outages to maximize capture of tank clean-out
waste and routing to recovery;
3) Reduction of clean water that continuously runs into sewers to prevent dilution of
smaller spills and facilitate recovery of highly colored wastewaters; and
4) Improvement in the equipment used for the handling of knot rejects to prevent black
liquor leaks into the recovery sumps.
The following is a discussion of actions relating to each element.
2.2.1 Continuous Improvement of Operating Practices etc.
A number of Best Management Practices (BMPs)have been implemented to improve the
recovery of colored discharges within the mill. These include: A) Color testing on the
2

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
Primary Influent every 2 hours;B) The use of the off-line, spare clarifier for process
losses and intentional diversions; C) Piping the Hardwood Brown Spill tank to the Pine
Blow Tower for additional spill collection capability and Hardwood Fiberline outage
management; and D) Implementation of control logic in the Pine Brownstock area to
minimize tank overflows during shutdowns.
The Mill began 24-hour color testing in 2-hour increments on the primary influent in
2001. The purpose of this increased color testing is to improve the mill's ability to
respond to process upsets on an immediate,real-time basis. If high 2-hour color results
are detected, the Wastewater Treatment Plant(WWTP) operators communicate the
information to mill operations and in-mill investigations begin. If necessary, diversion of
the primary influent to the off-line, spare clarifier is initiated. The high color material
that is captured in the off-line clarifier is later discharged into the system at a rate that has
a minimum impact on color and is not disruptive to the WWTP system. The off-line
spare clarifier is also used during outage situations when high color material cannot be
recovered by the in-mill spill control systems due to upset conditions, lack of recycle or
evaporator capacity or intentional diversions.
In order to increase the Hardwood Fiberline's ability to recycle recovered brownstock
material, piping was installed from the Hardwood Brown Spill tank to the Pine Blow
Tower. Prior to installation of this piping, there was no outlet for recycled hardwood
brownstock material when that system was shut down. This design allows for the
Hardwood Brown Spill tank to be recycled into the Pine Blow Tower and is especially
useful in hardwood outage situations when the recycle of additional recovered material is
required. Color savings from this 2001 project are reflected in the improvements seen
around the hardwood brownstock or 2B sewer area as well as improved color
performance.
3

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
During the first quarter of 2003, additional control logic was developed and implemented
on the pine brownstock system to prevent high colored filtrate tanks (ls` 2nd, and 3Td stage
Pre-OZ filtrate tanks) from overflowing and potentially reaching the sewer. The control
logic is designed to alert the operator when the brownstock filtrate tank(s) reach 85%
with audible and visual alarms. If the tank level(s) continues to rise to 90%, the pine
brownstock operators receive a"high-high" level alarm and warning text on their
monitors. The control logic then automatically interlocks (i.e., shuts down) the washer
stock feed pump that is associated with the high-level filtrate tank. Further, additional
controls have been built into the logic for the Pine Brown Spill tank. The alarm logic for
this tank checks the tank level at various times each day. If the tank level is greater than
50% at either time period, the Pine Brownstock Operator will receive an audible alarm as
well as a text message stating that the"Pine Brown Spill tank level is high." The control
logic will then check the level three hours later and if the level is still above 50%, the
operator will receive another alarm stating that the "Pine Brown Spill tank level is still
too high." In addition, if the Brown Spill tank level exceeds 80%, the operator receives a
high level alarm on his/her Digital Control System (DCS) graphic. All of these control
system improvements have enhanced the operator's ability to monitor the system and
prevent spills and losses from these processes.
2.2.2 Improvement in Preparation for Planned Outages
Color management of planned outages has improved significantly as a result of the
following practices:
• Increasing color testing from 2 hours to one hour before outages, during outages
and upon start-up;
• Improved communication between the Wastewater Treatment Plant and mill
operations;
• Utilization of the off-line, spare clarifier;
4

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
• Developing tank draining schedules where only the necessary vessels are emptied
for inspection and scheduled maintenance;
• Reducing tank levels to the lowest level possible prior to shutdown.
To effectively monitor color performance during maintenance outages, the W WTP
operators begin hourly color testing on the primary influent when the Recovery operation
initiates its shutdown procedure. The hourly color data is posted on the mill's Plant
Information(PI) System where it is widely available to operations and support personnel.
If a result is greater than 300 color units, it is immediately communicated to the Recovery
and Pulp Mill foremen via the mill radio system and they institute investigative action to
pinpoint the source. The appropriate corrective action is then taken. The Pulp Mill and
Recovery foremen also communicate their investigative findings with one another to
ensure effective troubleshooting is in place.
If an hourly color result is elevated and mill operations communicates that there has been
a process loss, the WWTP operators will divert the primary influent flow to the 1 million
gallon off-line, spare clarifier for temporary storage. There have also been instances
when the WWTP operators diverted the primary influent flow without direct
communication of a spill. The WWTP operators are trained to take action and route high
colored primary influent to the off-line, spare clarifier when necessary. The high color
material is later fed into the WWTP system at a slow, non-disruptive rate. Such a slow
feed rate minimizes the material's impact on secondary effluent color and does not
disrupt the WWTP process. For very high colored material captured in the off-line
clarifier, polyamine may be added in small amounts. Small amounts of polyamine aid in
the color removal of the concentrated material captured in the clarifier without negatively
affecting the sludge quality as larger amounts of polyamine have been demonstrated to
do. During normal mill operations, full-scale application of polyamine was not proven to
be effective and it created unmanageable sludge conditions; however, polyamine has
been effective on these higher color concentration events captured in the off-line clarifier.
5

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
Also, if at any time high colored material is seen in the primary influent, or if mill
operations communicates a process loss/intentional diversion, the WWTP operators can
immediately divert the primary influent flow into the off-line, spare clarifier. Improved
communications between the WWTP and mill operations have allowed for optimal use of
the off-line clarifier, especially in outage situations when overall spill system capacity is
in demand.
Tank draining schedules are developed in preparation for planned maintenance outages.
Increased attention has been given to draining only the tanks and lines requiring
inspection and/or maintenance rather than draining entire sequences. Draining the entire
sequence was a routine approach in the past so that vessels would be empty and available
for maintenance if problems were detected. The schedule has been optimized so that
inspections are rotated between outages, thereby ensuring that all tanks are inspected
while reducing the frequency that individual tanks must be emptied. However, issues
may arise where more frequent maintenance is required on certain vessels and
appurtenances and in these cases, the tanks must be drained before a scheduled inspection
is due. In preparation for all scheduled outages, it is standard practice to focus on
reducing tank levels to minimize the amount of material to be drained. This practice also
reduces potential losses in the event of an upset process condition during shutdown,
outage, or start-up periods.
These practices have measurably improved outage color performance. Specifically,
reductions in the color losses are demonstrated by the 2002 semi-annual shutdowns
(outages performed twice per year, lasting approximately one week with each outage
involving half of the mill operations). In a comparison of semi-annual outage primary
influent color data, the 2002 data showed an average 38%reduction in the maximum
daily primary influent color from historical performance (1996—2001). These
improvements are significant given that the majority of the spill recovery systems were
implemented in 1997 and 1998.
6

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
2.2.3 Reduction of Clean Water that Continuously Runs into Sewers
There has been a greater than 90,000 gallon per day reduction in the amount of clean
water being sewered, primarily in the mill's digester courtyard. This reduction in flow
was achieved by implementing customized Double Mechanical Seals and Water
Management Systems on the 18 digester re-circulation pumps. This project has involved
extensive trialing of different types and combinations of specially designed mechanical
seals over the past several years. The decrease in flow from the mechanical seals is at
least 3 to 4 gallons per minute per pump,which equates to a daily flow savings greater
than 90,000 gallons. The removal of non-mechanical seal pump packing water from the
digester sewers has also contributed to improved color performance for the area. Since
complete implementation of the mechanical seals, measured color in the area has been
reduced by approximately 60%. This is due in part to the removal of seal water that
could be contaminated by black liquor leaks on the non-mechanical seal packing and
from the recovery sumps operating more efficiently. With less clean water dilution in the
sewers leading to the recovery sumps,the effective conductivity of the material increases
and can be captured for re-use in the process at a greater efficiency. Customized Double
Mechanical Seals and Water Management Systems have also been installed on the
Knotter feed pumps for both the Pine and Hardwood Fiberlines, to further reduce water
infiltration to the sewer.
2.2.4 Improvement in Equipment used for Handling Knot Rejects
Two projects have been completed to improve the equipment used for handling knot
rejects. Black liquor from the Knot Rejects Collection bins is routed to a dedicated U-
drain, which flows to a dedicated knot bin sump pump for each Fiberline. The flow from
the knot bin areas is collected and pumped to the Brown Spill tank for each respective
Fiberline. Recovery of this material has contributed to improved color performance, as
7

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
demonstrated by Figure 1 below. The Hardwood Fiberline Brownstock sewer color has
shown the most dramatic reduction in color, which results from:
• Having the flexibility to send contents from the Hardwood Brown Spill tank to
the Pine Blow Tower during shutdown and start-up from an outage;
• Reducing the amount of clean water dilution by installing the Double Mechanical
Seals and Water Management Systems;
• Capturing the black liquor from the knot rejects system and;
• Improved communication and color monitoring.
Monthly Average Hardwood Brownstock and Digester Area Color
Since Installation of Double Mechanical Seals and
Water Management Systems
12000
10000
m 8000
9
N C
n 6000
O
a 4000
2000
0
O ON N COY COY O O
N N N
O O o o O O O O O o
Q
+Hardwood Brownstock and Digester Area Color
Figure 1
8

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
III. Improvements in BFR�r"Reliability
Approximately$1.5 Million has been spent on Bleach Filtrate Recycle process
improvements for 2002—2003. This has resulted in improved BFRTm closure rates over
the past year and operational variability is also showing improvement in the Metals
Removal Process (MRP). In August 2003, the monthly average closure rate reached
targeted levels with improved MRP uptime and equipment reliability matching Fiberline
reliability. To improve process variability, a new media filter and a new ion exchange
softener were installed in the MRP. Due to accelerated degradation of the original three
media filters over recent months, they will also be replaced by the end of 2003. With this
additional equipment,metallurgy changes and other process improvements,MRP
downtime is expected to be reduced significantly. Having four media filters and three ion
exchange softeners will provide enough capacity for the MRP to remain online while
repairs are made to an individual media filter or softener. These projects are beginning to
demonstrate improved closure rates, reduced operational variability of the MRP, and
increased mechanical reliability of the MRP, all of which should aid in reducing both
measured and unaccounted color. As was expected, a recent statistical evaluation
demonstrated that lower closure rates are a major contributor to elevated secondary
effluent color and unaccounted color, individually as a main effect and also combined
with other factors as an interaction effect. These effects will be discussed in a later
section.
9

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
IV. Color Challenges in 2002—2003
As a result of many years of color reduction activities and those discussed herein, the
monthly average secondary effluent color for the period December 2001 through October
2002 was 39,833 lbs/day. However, due to unforeseen and complex issues discussed in
this report, secondary effluent color increased in late 2002.
In November 2002, secondary effluent color variability began to increase. The
contributing source(s) were not readily evident. Out of the 15 sewer and process areas
measured daily, there were no measured sources that were statistically out of control
except for the Pine Eo filtrate, and that influent contribution was less than 5,000 lbs/day
over the in-control average. Two major sewer areas, the Bleach Plant Filtrate Acid Sewer
and the Hardwood Brownstock/Digester Area Sewer were actually operating below their
average level of performance. The unaccounted color averaged about 23,000 lbs/day for
the month(compared to a 2002 YTD average of approximately 10,000 lbs/day). A
thorough review of all sewered, color-contributing sources revealed that the hardwood
screen rejects were not being quantified in the daily in-mill color analysis. Data has been
collected and the average color contribution from the hardwood screen rejects is 3,000
lbs/day. This source has been a small portion of the mill's unaccounted color since 1996;
therefore, it is not a significant contribution to the elevated unaccounted color seen during
this period. Further, the Wastewater Treatment Plant Color removal effect was dropping.
Elevated unaccounted color and reduced WWTP color removal are indicators that
support the presence of Sewer Generated Color(SGC), yet closure was averaging 77%
and the color contribution from the Bleach Plant Filtrates, the historical pre-cursors of
SGC, were running below average as illustrated in Figure 2 below.
10

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
Monthly Average Color In the Bleach Plant Acid Sewer
Jan•02 through Jan•03
16000
14000
i 12000
a 10000
U 8000
6000
4000
4 9 '
t Color 6A
Figure 2
As the Canton Mill has reduced releases of brown colored material, a greater percentage
of the primary influent color has become unaccounted color. Color is a pH dependent
parameter and Blue Ridge is in un-charted territory with such low brown color effluents
and the BFRTM technology. The result of increasing the pH of an acidic bleach plant
filtrate in the laboratory shows a visually significant increase in color. The Sewer
Generated Color phenomenon has been duplicated on the bench in multiple studies and
the National Council on Air and Stream Improvement (NCASI) supports that color is a
pH dependent phenomenon. Sewer Generated Color does not disappear when the pH is
adjusted from alkaline back to neutral conditions.
Duke University graduate level internship and thesis studies performed at the Canton Mill
in 19941 and 19952 showed, on average, Sewer Generated Color for Pine D1 filtrate was
an increase of 32-47% above the original sample color and Sewer Generated Color for
Hardwood Dl filtrate was 64-88%. Regarding WWTP color removal, data suggested
1 `A Laboratory Analysis of Color Removal Across a Pulp and Paper Mill Wastewater Treatment Facility"
by Aimee Winter McCord
2 "A Laboratory Analysis of the Color Removal Mechanism Occurring Across the Wastewater Treatment
Plan"by Chad Salisbury
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October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
some hardwood Sewer Generated Color may be removable across the WWTP (3%
reduction in color after WWTP process), but pine filtrates showed an average increase in
color of21% in the simulated WWTP process. Data from this study show brown source
color removal up to 70% and the long-term average color removal across the WWTP
from primary influent to secondary effluent is 25%. The annual Color Pies showing the
breakdown of mill sewers compared to primary influent color support the presence of
Sewer Generated Color as unaccounted color has averaged 25% (19,081 lbs/day) since
1996. Of this 25%, the hardwood screen rejects contribute a small amount(currently
about 2,700 lbs/day). The period from November 2002 through April 2003 is evidence
that specific interactions and operational conditions can significantly intensify the Sewer
Generated Color effect. Bench scale studies are planned to better understand the various
types and magnitudes of the major interaction effects pinpointed during the period of
elevated color. It is recognized that these conditions may change and new effects may
need to be studied in the future.
Figure 3 below shows the trend of increasing unaccounted color and decreasing WWTP
color removal that began in November 2002.
12

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
Unaccounted Color and WWTP Color Removal %
30000 Monthly Averages: Jan-02 through Feb-03 35.00%
T Y 9 9
v 25000 30.00%
a n
25.00%0
g 20000
c 20.00%z
4 15000 3
15.00%0
01 10000
d
u 10.00%0
5000 5.00%
0 0.00%
Ca
0 0 0 0 0 0 0 0 0 0 0 0 0 0
ti Q Q co O 2 c)
—�--Unaccounted Color +WWTP Color Removal °/u
Figure 3
The trend of increasing unaccounted color and simultaneous decreasing WWTP color
removal continued in December and a Color Team was formed including representatives
from Operations, Environmental and the Technical Manufacturing Support group. This
team initially audited the color measurement system as well as monitored sewer areas and
related instrumentation for accuracy as well as potential unmeasured sources of color.
When there were no anomalies discovered, the team focused on analyzing process
parameters for shifts and deviations that could contribute to elevated color. Processes in
the Fiberlines and Recovery area were reviewed in most detail while deviations from the
Paper Machines were also considered. The Pine Bo filtrate was consistently the only
color source that was running above its upper control limit but the causes were unlmown.
Multiple statistical analyses were performed including CUSUMs or Cumulative Sum
charts to identify if, in fact, statistically significant shifts were occurring. While there
13 .

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton, North Carolina
were several process parameters that were discovered to be operating outside their normal
ranges of variability, the most notable shifts were seen in the Fiberlines. Specifically, the
Pine Fiberline Bleach Plant and the Hardwood Fiberline Pre-Bleach and Dl (first D)
stages. Additional statistical studies were performed and targets were established for the
above parameters as well as others, based on early 2002 when the color performance was
in the 36,000—39,000 lbs/day range. As the Fiberlines began reaching the established
targets, the unaccounted color remained elevated.
During the latter part of 2002, the variability in the White Liquor strength and solids
increased. This change was believed to be negatively impacting the Fiberline operations
by causing increased carryover into the bleach plants. These issues corresponded to the
decreased color performance seen beginning in November 2002. Elevated White Liquor
solids were then identified as an interaction effect contributing to elevated secondary
effluent and unaccounted color and this parameter was added to the Daily Color
Monitoring list. Also during late 2002, the quality of purchased lime for the Causticizing
operation was compromised due to flooding and other issues with the Mill's normal lime
supplier. Negotiations with additional lime suppliers are ongoing to improve the quality
of purchased lime.
Upon startup from the Cold Mill Outage in April 2003, unaccounted color increased even
further to the 35,000—40,000 lbs/day range from pre-Cold Mill levels in the 20,000
lbs/day range. Pine Eo filtrate color was back below the in-control average yet
unaccounted color was still high. Detailed Analysis of Variance (ANOVA) Factorials
were performed in an effort to determine which factors and combinations of factors were
affecting secondary effluent color and unaccounted color significantly. For these
analyses, an alpha of.05 was used. The results of the ANOVAs proved that there were
multiple statistically significant main effects and interaction effects "responsible" for the
elevated secondary effluent color and unaccounted color. This means that the effect
impacting the dependent variables (secondary effluent and unaccounted color)was not
14

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
doing so by chance. The interaction effects involve relationships between certain
parameters that significantly affect color. Subtle operational changes made in late 2002
had triggered a major Sewer Generated color problem and greater than 30 effects,
including main and interaction effects, were pinpointed. The most significant main
effects were BFRTM Closure,Pulp Mill Flow and Hardwood Pre-Bleach Conductivity.
There were numerous significant interaction effects, some including up to four interacting
factors, which is evidence of the problem's complex nature. To determine if the effects
had been present during periods of"good" color performance, ANOVAs were performed
on those periods as well. The only main effect that was statistically significant in
impacting secondary effluent color from January 2002—July 2002 was Closure and there
were no main effects nor interaction effects that were statistically significant for
unaccounted color during the period of good color performance. As a result of the
ANOVA studies, a daily color monitoring information report was created which tracks
the color-impacting parameters via targets and 30-day trends. Closure was the most
significant main effect contributing to elevated secondary effluent color. Given the
increase in bleach plant filtrate that reaches the mill sewer when closure rates are low,
there is a larger volume of low pH material available to undergo the Sewer Generated
Color effect. Because it has been shown that Sewer Generated Color is not removed
across the Wastewater Treatment Plant, lower closure rates translate into a measurable
increase in secondary effluent color. In addition to being a main effect, closure was a
statistically significant color-impacting variable in 13 different interaction effects as well.
Pulp Mill flow was the second most significant main effect contributing to elevated
secondary effluent color. Similar to closure, elevated flow from the Pulp Mill is likely to
be low pH material, which is a pre-cursor for Sewer Generated Color.
Hardwood Pre-Bleach Conductivity is the measure of conductivity from a pulp filtrate
sample taken off of the Pre-Bleach washer. Elevated conductivity indicates increased
carryover into that stage. Increased carryover from the pre-bleach stage can affect the
15

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
first stage of bleaching (D1),potentially requiring elevated acid usage on the D 1 stage.
This was observed during the period of elevated color and was also a statistically
significant main effect and interaction effect in the ANOVA analyses. Elevated acid use
in the bleach plant could intensify the Sewer Generated Color effect by further reducing
PH.
Also, it was believed that start-up of the entire mill from the Cold Mill outage required
adequate time to reach stable operation. This stable operation was not achieved until
mid-May. Challenges from the Cold Mill start-up had to be managed before the targets
from the ANOVA Factorial analyses could properly be incorporated into the daily
operation. At this point unaccounted color and secondary effluent color finally began
reaching normal ranges.
Incorporation of the results from the ANOVA studies into the Daily Color Monitoring
Information report has proven to be a useful tool for color management at the Canton
Mill. It is recognized that the conditions causing these effects may change in the future
and new effects may need to be studied/evaluated. Since the Daily Color Monitoring
Information report has been in use, the average secondary effluent color has dropped
from 49,0241bs/day (average during November 2002 through April 2003 period of
elevated color) to 42,669 lbs/day. The Canton Mill is utilizing this new tool and will
continue to use and develop innovative tools for troubleshooting color in the future.
16

October 1, 2003 Report
Blue Ridge Paper Products Inc.
Canton,North Carolina
V. Statistical Analysis of Data
The average secondary effluent color from December 2001 through August 2003,
excluding the period of elevated secondary effluent and unaccounted color, is 39,833
lbs/day. Based on a statistical evaluation of the mill's monthly average color
performance, for the same period, the achievable secondary effluent color using a 95`h
percentile distribution is 43,189 lbs/day. The 2002 annual average secondary effluent
color was 41,171 lbs/day. Blue Ridge is committed to continued color performance
improvements and recommends an annual average secondary effluent limit of 42,000
lbs/day.
Blue Ridge recommends a monthly average effluent limit of 52,000 lbs/day based on the
color challenges encountered in the past year. Data for the December 2001 through
August 2003 period is attached to this report.
17

Blue Ridge Paper Products Inc.
Monthly Average Secondary Effluent Color: Dec-02 through Aug-03
Attachment 1: October 1, 2003 Report
Monthly Average Ibs/day
Month Secondary Effluent Color
Dec-01 36,821
Jan-02 39,040
Feb-02 39,870
Mar-02 37,886
Apr-02 42,477 Monthly Average Ibs/day
May-02 42,458 Secondary Effluent Color Excluding Nov-02 -Apr-03
Jun-02 41,312 Dec-01 36821
Jul-02 41,686 Jan-02 39,040
Aug-02 40,750 Feb-02 39,870
Sep-02 39,480 Mar-02 37,886
Oct-02 36,382 Apr-02 42,477
Nov-02 48,014 May-02 42,458
Dec-02 44,701 Jun-02 41,312
Jan-03 51,269 Jul-02 41,686
Feb-03 48,324 Aug-02 40,750
Mar-03 50,412 Sep-02 39,480
Apr-03 51,423 Oct-02 36,382
May-03 40,955 May-03 40,955
Jun-03 42,458 Jun-03 42,458
Jul-03 44,734 Jul-03 44,734
Aug-03 42,527 Aug-03 42,527
2002 average 41,174 95th percentile 43,189
2003 ytd average 46,513 period average 40,591
95th percentile for 2003 51,369