NC0000272_1996_Settlement_Agreement_Color_Variance_NPDES

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I. INTRODUCTION
1 . The united States Environmental Protection Agency
(EPA) , the State of North Carolina (North Carolina) , the State of
Tennessee (Tennessee) , Cocks County, Tennessee (Cocke County) ,
the City of Newport, Tennessee (Newport) , the Tennessee
Environmental Council (TEC) , the American Canoe Association
(ACA) , and Champion International Corporation (Champion) enter
into this Settlement Agreement to resolve the concerns of
Tennessee, Cocke County, Newport, TEC, and ACA with the amended
modified water quality color variance granted by North Carolina
to Champion on December 11, 1996, and approved by EPA on December
26, 1996, and with the NPDES permit issued by North Carolina to
Champion on December 12 , 1996. It is .also intended that this
Agreement will be the basis for resolution of the contested case
proceeding pending before the North Carolina Office cf
Administrative hearings to which all of the foregoing, except
EPA, are parties .
II. PROCEDURAL HISTORY
2 . Champion operates a bleached kraft pulp and paper mill
on the Pigeon River at Canton, North Carolina, and d4scharges
treated wastewater from its mill operations, domestic wastewater
from the Town of Canton, and leachate from its active landfill
into the river. The Pigeon River below Canton is designated by
North Carolina as a Class C river (secondary recreation, fishing,
aquatic life, including propagation and survival, and wildlife)

...-
and flows from North Carolina northwestwardly into Tennessee.
Under the Federal Water Pollution Control Act (commonly referred
to as the Clean Plater A- t) , 33 U. S .C. § 1251 rPT„ and under
North Caroiina , s Water and Air Resources Act , N.C . Gen. Stat. §§
143-211 L-t a_q„ Chamnion is required to have an NPDES permit for
these discharges .
3 . Until January 1, 1997, when the permit issued on
December 12, 1996, by the State of North Carolina took effect,
Champion was operating its Canton mill under an NPDES permit
issued by EPA, effective October 25, 1989 . EPA issued that
permit after objecting to, and subsequently vetoing, the permit
that North Carolina had issued to Champion in mid-1985 . EPA
vetoed the North Carolina permit on the grounds that it did not
reasonably ensure compliance with Tennessee ' s narrative water
quality criteria for color. On November 13, 1985, EPA notified
Champion that it had assumed permitting authority for the
Champion permit . North Carolina and Champion challenged EPA' s
authority to take over the permit in federal court . In 1987, the
District Court for the Western District of North Carolina
rendered an opinion upholding EPA' s permitting authority. .
Chamn, on " `Pp, 648 F.Supp. 1390 (W.D.N.C. 1987) . This opinion
was upheld by the Fourth Circuit Court of Appeals in 1988 ,
Epa, 850 F.2d 182 (4th Cir. 1988) , and EPA issued its
permit on September 25, 1989 . Champion and the Dead Pigeon River
Council appealed the EPA permit . After an administrative hearing
before EPA Administrative Law Judge Thomas B. Yost, the permit
was upheld on February 12, 1992

4. In 1988, the NPDES Committee- of the North Carolina
Environmental Management Commission granted Champion a variance
from the North Carolina narrative water quality criterion for
color. EPA approved this variance on August 11, 1988 .
5 . The EPA-issued permit and the North Carolina color
variance have operated together to control the contribution of
effluent color by Champion to the Pigeon River, by the use of a
predictive model and a color limitation .of 50 true color units on
a monthly average basis at the North Carolina/Tennessee state
line.
6 . Champion ' s EPA-issued permit for the Canton mill (NPDES
Permit No. NC0000272) was set to expire on October 24 , 1994 . On
March 28, 1994, Champion applied to the North Carolina Department
Of Environment, Health and Natural Resources (NCDEHNR) for
renewal of this permit . At that time, North Carolina advised
Champion that it believed EPA was the proper permitting agency,
since EPA had assumed control of the facility ' s permit in the
previous permit cycle. Champion, therefore, applied to EPA for a
renewal on April 15 , 1994 . EPA then advised Champion that North
Carolina was, in fact, the proper permitting agency, and Champion
filed its renewal application with North Carolina on November 18,
1994 .
7 . The 1988 color variance was reviewed by the North
Carolina Environmental Management Commission as a part of its
triennial revieo; and was. continued on May 12, 1993 . On November
29 , 1994, EPA approved the continued variance.
8 . On June 6, 1996, North Carolina conducted a public

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hearing in Haywood County, North Carolina, to consider renewal of
NPDES permit :do. :;C0000272 and modifications to the 1988 color
variance. A public comment period extended for thirty (30) days
after t:e public hearing. The effluent color limitation for the
Canton :•!ill was one of the issues subject to comment .
9 • Tennessee provided public comment at the hearing as
well as in writing thereafter through the Tennessee Department of
Environment and Conservation (TDEC) and .the Tennessee Wildlife
Resources Agency (TWRA) . Those comments stated that color in the
river in Tennessee was still objectionable, particularly during
the low-flow period from mid-summer through fall . The comments
further stated that additional conditions needed to be placed on
effluent color to meet the Tennessee narrative water quality
criterion for color. ACA members also participated in the public
hearing. TEC provided written comments which also raised
objections to the noticed permit . EPA also provided comments on
the publicly-noticed draft permit by letter, dated July 3 , 1996 .
TEC and ACA also subsequently submitted additional comments to
EPA expressing concerns regarding the permit and variance.
10 . Following the public hearing, North Carolina,
Tennessee, EPA and Champion attempted to resolve the color issue
through several formal and informal mechanisms . Based on the
public record and EPA' s comments, a proposed final permit was
prepared on October 1, 1996 . The North Carolina NPDES Committee
then modified the 1988 c:uior' varia ,c, u;i Uctober 15, 1996 .
11 . Discussions among North Carolina, Tennessee and EPA
continued thereafter; additional targets for continued color

reductions and more restrictive mass-based color limits were
Placed in the Permit and variance by North Carolina, based on
comments received, and Tennessee was added as a specifically-
named member of the Variance Review Committee, which would
periodically consider the variance conditions . These changes
were documented in the variance modification by a new Amended
Order of the North Carolina NPDES Committee issued on December
11, 1996, and in the permit issued on December 12 , 1996.
12 . EPA Region 4 supported the December 1996 variance
amendments by letter dated December 9 , 1996; and EPA Region 4
subsequently approved the amended color variance modification by
letter dated December 26, 1996.
13 . BY letter dated December 23 , 1996, Tennessee advised
EPA that it considered the permit to be invalidly issued and that
North Carolina had failed to comply with § 402 (b) (5) of the Clean
Water Act, 33 U.S .C. § 1342 (b) (5) . Subsequently, on January 13 ,
1997, Tennessee filed a contested case petition with the North
Carolina Office of Administrati•ve Hearings challenging the permit
and color variance. Thereafter, Champion, Cocke County, and
Newport were allowed to intervene in the North Carolina contested
case proceeding.
14 . In an effort to resolve the color issue without time-
and resource-consuming litigation, North Carolina, Tennessee,
Cocke County, Newport, Champion, and EPA agreed to an informal
negotiation process . The North Carolina contested case
proceeding was stayed during this process until September 26,
1997 . On November 21, 1997, TEC and ACA were also allowed to

intervene in the North Carolina contested case proceeding.
15 . The agreements which follow constitute what the parties
to this Agreement believe to be an appropriate and reasonable
resolution of the pending disputes surrounding the contested
permit and variance. All parties to this Agreement are conUnitted
to the ultimate achievement of water quality standards in the
Pigeon River, both in North Carolina and in Tennessee. This
Agreement and the modified variance and .the permit resulting
therefrom represent a major step toward that goal . At the same
time, the parties recognize that there is further work to be done
and they are committed to attaining further reductions in color
in the river at the quickest possible pace.
III. TECHNOLOGY MODIFICATIONS
TO THE VARIANCE/PERMIT
16. The parties hereby agree to the following measures to
achieve additional color reduction over that required in the
permit issued on December 12, 1996 and by the color variance
adopted on December '_i, 1996 [hereinafter the December 1996
permit and variancej . The parties further agree that the
December 1996 permit and variance will be modified [hereinafter
the 1997 Permit and the Revised Variance] to reflect these
requirements and effectuate this Settlement Agreement . Except as
modified by the Settlement Agreement, all other provisions of the
December 1996 permit and variance, including the monitoring and
reopener provisions, will be maintained in the 1997 Permit and
the Revised Variance.

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17 . The December 1996 permit and variance required that
Champion implement a one-year demonstration of full-scale bleach
filtrate recycling (BFR�') technology on the mill ' s pine line and
that, as of December 1, 1998 , Champion implement and operate
BFR"' technology on its pine line, unless Champion could
demonstrate to the NPDES Committee that BFR"' was not
commercially viable. Champion has nearly completed the process
of the required demonstration phase of BFR"'. Based on the
results of the demonstration effort, Champion commits to continue
the full operation of the BFR_'w technology on the mill ' s pine
line on a continuing basis, subject to the process set forth in
Paragraph 22 .
18 . The 1996 permit and variance required Champion to
evaluate the potential for additional minimization of color
losses from the manufacturing Processes and raw material storage
areas (i.e. in-mill color minimization; or, spill
prevention/control measures) that might result in further color
reductions and to report its findings to the NPDES Committee.
Reports were to be submitted by March 1, 1998 and again by June
1, 2001 , so that they could be used by the Committee in
conjunction with the required variance review process held every
three years to determine if the variance would be readopted or
made more stringent . As a part of the efforts to resolve the
challenge to the 1996 permit and variance, a Technology Review
Workgroup was fcsreu, compr= sc^d c,=
exNeres on the pulp and paper
industry from EPA and representatives of the environmental
agencies for the States of Tennessee and North Carolina . The

Technole_y Review 4iorkarcup shall replace the previously existing
North Carolina Variance review Committee and shall be maintained
during to life of the 1997 Permit in order to make the
recommendations and determinations which this Agreement calls for
such Workaroup to make. The Technology Review Workgrouu shall,
at all times , be chaired by EPA and be comprised of three
technical representatives from EPA with expertise on the pulp and
paper industry, two environmental agency. representatives from the
State of Tennessee, and two environmental agency representatives
from the State of North Carolina. The Workgroup shall make
itself available to consult with and provide information to
community representatives at appropriate times . In addition,
consistent with any limitations under law or regulation relating
to confidential business information, copies of all written
reports and recommendations generated pursuant to this Agreement
shall be provided to the parties to the Agreement at least 20
days before any recommendation or determination by the Workgroup
becomes final . The Workgroup shall review any comments or input
received on such documents prior to making its final
recommendations or determinations . Any comments or input
received by the Workgroup shall be made available to all parties
to this Agreement .
19 . Working with the Technology Review Workgroup, Champion
has already begun the process of identifying and implementing
Possible prevention and control measures wnich car. be Laken to
further reduce color discharges from the mill . Champion commits
to further evaluate mill operation so as to fully identify

opportunities for preventing and controlling measurable black
liquor 'leaks and spills (best management practices - BMPs) . This
evaluation will include gathering more extensive and detailed
data on sources of color within the mill to substantially improve
the accuracy of measurements , to improve the mill ' s existing BMP
program, and to complete efforts to identify, quantify and
substantially improve the accuracy of a mass balance of sources
of leaks and spills of black liquors, including unmeasured
sources and discharges during periods of fiber line disruption.
Such BMPs include: further upgrading and integrating of sewer
monitoring (e.g. , additional flow measurement and sampling
stations to facilitate more comprehensive and daily monitoring of
sources) and automated mill process control systems with
operational procedures and management oversight to reduce black
liquor leaks and spills; continuing operator training;
identifying and implementing additional controls for known but
unmeasured sources (e.g. , evaporator set, knot rejects bin, etc. )
Of liquor 'losses ; modifying the digester area to facilitate
capturing leaks and spills; diverting clean water discharges; and
capturing and recycling liquors during fiber line disruptions
through detailed scheduling of planned outages and contingency
planning for unplanned outages . Champion also commits to
thoroughly evaluate additional measures to modify its process
operations and controls to remove or reduce sewer generated
color.
20 . Champion agrees to provide a report to the Technology
Review Workgroup and the NPDES Committee no later than June 1,

t
1998 - This report will identify a strategy and time line for
implementing those color reduction measures identified in
Paragraph 19 until the target effluent limitations in Paragraph
24 are met or all measures in Paragraph 19 have been fully
implemented. The report will include an explanation of and
rationale for both the implementation strategy and the proposed
time line. The report will also identify those measures which
will be implemented in the event that the effluent limitations
set out in Paragraph 22 are not achieved by the color reduction
measures specified in that paragraph.
21. Four BMPs which have already been identified as having
both a high potential for achieving color reduction and a high
level of implementability are: a) installation of replacement
digester recirculation pumps and a spill collection sump; b)
installation of a pine courtyard Parshall flume slide gate; c)
installation of weak black liquor tank containment, and; d)
correction of evaporate set demister clogging, installation of
condensate instrumentation and sampling ports for the evaporator
set, and assurance of continued dry conveying of knot rejects .
Champion commits to fully implement all four of these BMPs by
June 1, 1998 .
22 . The 1996 permit and variance required that the annual
average effluent true color loading should not exceed 98 , 168
lbs/day and that the monthly average true color loading should
not exceed 125, 434 lbs/day. Based on current demonstrated
achievable levels which have resulted from measures that champion
has already undertaken to reduce -color from the mill , the parties

agree that the 1997 Permit and Revised Variance shall provide
that beginning January 1, 1998, the monthly average discharge of
true color from, the mill shall not exceed 95, 000 lbs/day. Based
on an analysis of the available data from the BFR-"" demonstration
project and the spiil prevention/control measures that have
already been identified by Champion and the Technology Review
Workgroup as being implementable in the near-term, it is
anticipated that full-scale implementation of BFR_'H on the pine
line combined with the four BMPs identified in Paragraph 21 will
reduce annual average color loading by approximately 40% below
the limits in the December 1996 permit . Therefore, the 1997
Permit and Revised Variance will require that , beginning December
11 1998, the annual average discharge of true color shall not
exceed 60, 000 lbs/day and the monthly average true color loading
shall not exceed 69, 000 lbs/day. However, if by October 1, 1998,
the Technology Review Workgroup determines , and the NPDES
Committee agrees, that there are overwhelming technical, economic
or operational barriers to Champion' s ability to attain the
above-stated color loading limits , the Technology Review
Workgroup shall recommend to the NPDES Committee the alternate
interim limits to become effective December 1, 1998 . The
Workgroup shall, at the same time, also recommend to the NPDES
Committee a new effective date for achieving an annual average
color loading limit of 60, 000 lbs/day. These recommendations
shall be based on what the Workgroup concludes Ciaamoion can
reasonably be expected to achieve, giving due consideration to
the demonstrated discharge levels -which the mill has , in fact,

achieved and taking into account the evaluations conducted
pursuant to Paragraph 19 and the report submitted by Champion
pursuant to Paragraph 20 . Based on the Workaroup' s
recommendations , the NPDES Committee will determine the alternate
interim limits to become effective on December 1, 1998, as well
as a new effective date for achieving an annual average color
loading limit of 60, 000 lbs/day. The permit will then be
modified in' accordance with North Carolina' s permitting process
to reflect these determinations .
23 . The 1996 permit and variance required Champion to
evaluate color reduction strategies for further optimization of
BFR"` technology and to report on the feasibility of
implementation on the hardwood line. Champion commits to begin
implementation of that portion of the BFR"` technology which
involves the recycling of the Eo stage of the hardwood line by no
later than January 1, 1999 . Champion further agrees to provide
an evaluation of that implementation as well as the potential for
full implementation of the BFR_` technology on the miil , s
hardwood line to the Technology Review Workgroup and the NPDES
Committee by December 1 , 1999 . The evaluation will include data
reflecting the color reduction benefit gained from the partial
implementation and a projection of potential color reduction
benefit to be gained from full implementation of the BFR
technology on the hardwood line.
24 . . Based on the work that Champion and the Technology
Review Workgroup have already done in the area of in-mill color
reduction measures, it is anticipated that further color

reducticns , beyond those to be cbtained by BFR7" on the pine line
in combination with the four BMPs identified in Paragraph 21
could he expected after implementation of the BMPs and measures
to reduce and/or remove sewer generated color identified in
Paragraph 19, and partial BFR' (i. e. , recycle of Eo filtrate) on
the hardwood line. This combined package of in-mill color
reduction measures (i .e. , the four BMPs in Paragraph 21, the
additional BMPs and sewer-generated color reduction measures
identified in Paragraph 19 as implemented pursuant to Paragraph
20, full implementation of BFR on the pine line, and partial BFR
on the hardwood line) shall hereinafter collectively be referred
to as the Near-Term Package. it is further anticipated that full
implementation of the Near-Term Package could be effectuated by
June 1, 2000 , resulting in a target color annual average loading
within a range of 48, 000-52, 000 1bs/day. Champion shall submit
to the Technology Review Workgroup by January 1, 2001 , a report
on the feasibility of achieving a target annual average color
loading limit within the range of 48, 000-52, 000 lbs/day based on
full implementation of the Near-Term Package. This report shall
include all available data necessary to derive the lowest
achievable annual average and monthly color loading limits . By
April 1, 2001, the Technology Review Workgroup shall recommend,
considering the feasibility report submitted by Champion and the
demonstrated performance of the mill, the lowest achievable
annual ?l)Pr��n �- -�
�ge '- "' vnonthls color loading effluent limitations .
The Workgroup evaluation and recommendation report shall be
submitted to the NPDES Committee and the other parties to this

Agreement . If the recommended limits are within the target
range, the limits shall become effective on May 1, 2001, by
written notification from the Director of the North Carolina
Division of Plater Quality. If the limits determined to be
achievable by the Workgroup are not within the target range, the
Permit shall be modified in accordance with North Carolina' s
Permitting process to reflect those limits. The Workgroup' s
recommendation of limits under this Paragraph shall take into
account appropriate effluent variability.
25 . The 1996 oermit and variance contain provisions to
limit color in the Pigeon River at the NC-TN state line to a
maximum monthly average of 50 true color units . The new effluent
limitations in this Agreement at Paragraphs 22 and 24 are more
stringent than the provisions in the 1996 permit and variance and
will result in color levels at the state line well below 50 true
color units . It is possible to calculate the monthly flow at the
Hepco gage above which instream color will not exceed 50 true
color units for any specific color discharge from the Champion
facility. Using the 69, 000 lbs/day monthly average true color
loading limit anticipated in Paragraph 22 to become effective
December 1, 1998, the flow which will provide for color less than
50 true color units at the Hepco gage is 330 cubic feet per
second (cfs ) . Therefore, the parties to this Agreement agree
that the scope and magnitude of the 1996 variance will be reduced
in the Revised Variance to provide zhat : affc.uLive December 1,
1998, color in the Pigeon River at the Hepco gage shall be less
than 50 true color units whenever -monthly average flows are

I
greater than 330 cfs . The parties to this Agreement further
agree that should alternate interim limits be set pursuant to
Paragraph 22 , or when r..onthly limits are established pursuant to
Paragraph 24 , the above variance conditions will be revised in
accordance with the above approach. Using North Carolina's
governing flow criteria (30W) , historical flow records, and the
December 1, 1998 effluent limits in Paragraph 22 , it is expected
that color in the Pigeon River at the Hepco gage will be less
than 50 true color units 91% of the applicable time. Similarly,
using the May 1, 2001 effluent limits in Paragraph 24 , it is
expected that color in the Pigeon River at the Hepco gage will be
less than 50 true color units 96% of the applicable time.
Champion agrees to cooperate fully with any periodic independent
monitoring (including activities such as splitting samples)
requested by EPA or the State of North Carolina. In-stream
monitoring data gathered during the 1997 Permit term will be
evaluated at the end of the 1997 Permit term to determine whether
the limits established under the Permit , in fact, attained the
color levels as expressed in the variance. This information will
be used to develop new requirements for the next permit which
further reduce color levels in the Pigeon River.
26. As Paragraph 25 recognizes, there could still be some
Periods of time, corresponding to periods of tower flows in the
river, when color at the Hepco gage might exceed 50 true color
units . Champion agrees to develop a contingency plan for
mitigating the occurrence and degree of these potential
exceedances which correlates measures designed to achieve

mitigation with periods of lowest flow, with -particular attention
being given to periods of higher recreational use in the river.
In develooing the plan, Champion shall evaluate any reasonable
means, including scheduling of maintenance, 'intermittent
treatment, and production curtailment, which would achieve
additional color reductions during temporary periods of lower
flows in the river, when color at the Hepco gage might exceed 50
true color units . The contingency plan -shall be submitted by
December 1, 1998, for review by the Technology Review Workgroup.
Champion agrees to work in good faith with the Workgroun to
resolve any issues which arise during this review in order to
achieve a mutually acceptable plan. By February 1, 1999 the
Technology Review Workgroup will recommend to the NPDES Committee
either approval of or modifications to the plan. The NPDES
Committee will approve the contingency plan, either as submitted
or with the changes the Committee determines are appropriate.
The plan shall become effective upon approval , which shall be no
later than March i , 1999 .
27 . Champion commits to, and North Carolina will direct,
the continuing improvement of existing process and related
technologies which could improve the efficiency of all water-
using equipment and operations throughout the mill, with the goal
Of meeting North Carolina ' s water quality standards under the
Clean Water Act without a variance .
and variance required Champion to
evaluate and report to the NPDES Committee on end-of-pipe color
reduction technologies that could conceivably be implemented at

. ................
the mill. The evaluation was to include an incremental color
improvement analysis which concentrated on the technical,
economic, and cperational feasibility of the application of these
technologies on a continuous or intermittent basis . The
intermittent application of these technologies was to look
particularly at periods of low river flow. These reports were to
be submitted to the NPDES Committee for its consideration as part
of the water quality standards Triennial Reviews to determine
whether the variance should be readopted or made more stringent.
The reports were to identify specific economic and implementation
issues associated with the incremental improvement of color
levels expected by installing these technologies at the mill.
They were also to project the expected additional color reduction
Possible using the identified technology. The first such
evaluation/report, which was due March 1, 1998, has essentially
been completed as a result of the Technology Review Workgroup•s
efforts . A subsequent evaluation/report was to be due March 1,
2001 . Champion agrees to provide this evaluation/report,
together with an updated report on the results of all ongoing and
any additional planned color reduction activities , to the .
Technology Review Workgroup and the NPDES Committee March 1,
2001 . The Technology Review Workgroup shall evaluate this
combined report and make recommendations to the NPDES Committee
for further color reduction targets for inclusion in the next
NPDES permit .
29 • The parties agree that the 1997 Permit shall require
that Champion and any successor-in-interest to Champion' s

ownership and/or operation of the Canton mill use their best
efforts in good faith to imDlement the BERM technology, BMPs and
other color reduction measures in accordance with the terms of
this Agreement, and to achieve the effluent limitations required
by and to be determined under this Agreement, as well as the
effluent limitation targets required by Paragraph 24 .
30 . The 1997 Permit shall also provide that neither
Champion nor any successor-in-interest to Champion' s ownership
and/or operation of the Canton mill will increase the mill 's
current pulp production capacity during the permit term, unless
this can he done in way that also reduces color loading.
31 . Champion' s Canton mill already meets or exceeds the
technology requirements of the Pulp and Paper Cluster Rule for
limits on dioxin. The 1997 Permit shall require that the Canton
mill continue to meet those requirements . All other requirements
of the Cluster Rule, including any monitoring requirements, will
apply to Champion in accordance with timeframes established
Pursuant to the Pule .
IV. ASSISTANCE TO DOWNSTREAM COMMUNITIES
AND COMMUNITY INPUT
32 . The parties to this Agreement recognize the concerns
Of communities downstream from the Champion mill regarding the
economic impacts that may have resulted from Champion ' s discharge
over the years . The parties are committed to working with those
downstream communities to assist in the development- of
recreation, tourism, and other economic opportunities in those
areas . EPA will identify available programs, initiatives, and

technical resources •,rit:.in the Agency which may be available to
support and further suc development opportunities in Cocke
County. EPA will also suopert and work closely with TVA on its
Quality Communities _:itiative, a community based effort being
undertaken by ^VA, the coal of which is to develop a long-term
economic develcpment strategy for Cocke Countv and surrounding
areas . In addition, North Carolina and Tennessee will foster
joint planning and public input on decisions affecting the Pigeon
River by establishing a Joint Watershed Advisory Committee and
Champion will establish a facility Community Advisory Committee.
V. ECOLOGICAL ASSESSMENT OF THE PIGEON RIVER
SYSTEM AND THE WATERVILLE RESERVOIR
33 . Over the years, a number of studies have been conducted
by various entities on the health of the aquatic biological
community in the Pigeon River and, in particular, analysis of
fish flesh contamination. However, EPA believes that a more
current evaluation of the levei of contaminants remaining in the
system and the cverali health of the river and of the Waterville
Reservoir should be undertaken. EPA will lead, in cooperation
with North Carciiaa and Tennessee, an independent evaluation of
current information on the Pigeon River. The evaluation will
include convening a group of scientists to evaluate existing
data, to identify additional data needed, and, if necessary, to
conduct an ecological assessment . EPA agrees to take the lead in
convening the scientific panel . The informatics gathered from
such an assessment would be used to determine ::het:^.er any
significant ecological or health risks exist, and, if so, what,
if any, steps could and should be taken to address those risks .

VI. ADDITIONAL COVENANTS AND
AGREEMENTS OF THE PARTIES
34 . In consideraticn of the covenants and agreements made
by the other parties to this Settlement Agreement , _forth Carolina
covenants and agrees to Modify the amended modified color
variance granted to Champion on December 11, 1996, and to revise
NPDES Permit No. NC0000272 issued to Champion on December 12 ,
1996, to reflect the requirements found in Section III of this
Settlement Agreement . North Carolina agrees that these
modifications to the variance and permit will be made and the
1997 Pe=,a t and devised 'variance incorporating those requirements
will be finalized and will become effective no later than
December 31, 1997 . North Carolina agrees that it will not
further modify the 1997 Revised Variance prior to the triennial
review, or further modify the 1997 Permit prior to its expiration
in 2001 except as provided in this Agreement, unless North
Carolina seeks to impose -ore stringent requirements in the
variance and/or the permit to protect water quality. North
Carolina agrees to conduct public hearings on Champion' s next
NPDES perm..it renewal application by June or July or 2001 and to
make its decision on reissuance of the NPDES permit, as well as
its decision on extension of or modifications to the color
variance, by October 31, 2001 .
35 . In consideration of the covenants and agreements made
by the other parties to this Settlement Agreement , Champion
agrees to the modifications to be made by North Carolina to the
variance granted it on December 11, 1996 , and to the NPDES permit
issued to it on December 12 , 1996 . Champion further agrees not

to seek administrative or judicial review cf the 1997
:revised
Variance and/or the 1997 Permit as long as they are consist
ent
with this Agreement . Champion agrees to submit its NPDES permit
renewal applicaticn for the Cantcn mill no
'_ate_ than March 1,
2001 .
36. In consideration of the covenants and agreements made
by the other parties to this Settlement Agreement, Tennessee,
Cocke County, Newport, TEC and ACA agree that they will neither
oppose EPA,s approval of the 1997 Revised Variance, nor request
that EPA object to the 1997 Permit . Tennessee, Cocke County,
Newport, TEC and ACA further agree that they will not seek
administrative or judicial review of the 1997 Revised Variance
and/or the 1997 Permit so long as they are consistent with this
Agreement. The same parties further agree that they will not
seek to have any change in water quality standards that Tennessee
might make during the life of the 1997 Permit effective against
Champion prior to the next permit term.
37 . EPA has reviewed and considered the proposed changes to
the December 12 , 1996 permit and the December 11, 1996 variance
called for by this Agreement in accordance with its obligations
under the Clean `'dater Act . EPA hereby represents that as long as
the 1997 Permit and Revised Variance are consistent with this
Agreement, it will approve the 1997 Revised Variance and will not
object to the 1997 Permit .
38 . Tennessee, Cocke County, Newport, -C, ACI:, North
Carolina and Champion agree to enter into an agreed order to
resolve the North Carolina contested case proceeding, statp o

'n nncccoo cr = 1
'r No. 97 EHR 0041 .
That
agreed order, .which will be filed with the Administrative Hearing
Officer as soon as the Q
97 Permit and Revised variance have both
been issued, -rill '_ncO�JOrate by reference this Settlement
Agreement and will constitute a dismissal with prejudice of the
contested case Petition. The agreed order also will reflect that
North Carolina Senior Administrative Law Judge Fred G. Morrison
is suitable to all parties as a mediator of any disputes that may
arise regarding North Carolina's or Champion' s compliance with
this Settlement Agreement . Disputes will be presented to Judge
Morrison if the parties are unable to reach resolution under the
informal dispute resolution procedures specified in Section VII
Of this Settlement Agreement .
VII. DISPUTE RESOLUTION
39 • North Carolina, Tennessee, Cocke County, Newport, TEC,
ACA and Champicn agree that should a dispute arise regarding
compliance with this Settlement Agreement by any of those
parties, the parties shall first attempt to resolve the dispute
informally. it is the 'intent of the parties that EPA, which is
not a party to the North Carolina contested case proceeding, may
participate so as to facilitate informal dispute resolution if
requested by any other ;arty to do so, and if EPA chooses to do
SO. .
40 . As a condition precedent to a party bringing any civil
suit for breach of this Settlement =.greement , that party must
first attempt to resolve the purported dispute as expeditiously

as possible with the following framework. All time frames for
infOrm p
aliv resolving disutes .;nay he lengthened by mutual
consent . Eac cf the parties will designate a representative for
info -tal dispute resolution. A party representative claiming
that a dispute has arisen will summarize the dispute in writing,
and circulate the written summary to all other party
representatives within five (5) working days . If the party
representatives fail to resolve the dispute within twenty (20)
working days , the parties agree that any party, except EPA, shall
next seek resolution of the dispute by calling for a formal
mediation, to be conducted by Senior Administrative Law Judge
Fred G. Morrison. Notwithstanding any other provision in
Paragraphs 34 & 40 of this Agreement, if a dispute arises
regarding this Agreement, the parties agree that any party may
make any administrative or judicial filing necessary to avoid the
running of any limitations period for bringing such
administrative or judicial action.
41 . All the parties agree that should a d=_spute
arise
regarding any actions EPA is to undertake as part of this
Settlement Agreement, the parties shall attempt to resolve the
dispute informally . All time frames for informally resolving
disputes may be lengthened by mutual consent . Each of the
parties shall designate a representative For informal dispute
resolution. These representatives may be for
same
representatives designated under paragraph 40, art A.a ove b party
representative claiming that a dispute has arisen shall summarize
the dispute in writing, and circulate the written summary to all

other party renresentat",-es within five (5) wor:;_ra oays . The
party representatives will endeavor to resolve the dispute within
twent_✓ (20) working days . For any such dispute, EPA ' s party
representative :•;il' :nitiaily be designated by t e Region 4
Administrator. _f the Parties are unable to reso
lve the dispute
with the Region 4 representative, any party may request that EPA
Headquarters designate a representative for that particular
dispute, and. the parties, working with the EPA representative,
will have an additional ten (10) working days to resolve the
dispute.
VIII- RESERVATION OF RIGHTS
42 . The covenants and agreements set forth in this
Settlement Agreement do not pertain to any matters other than
those expressly specified in the Settlement Agreement . All
parties reserve, and this Settlement Agreement is without
Prejudice to, all rights any party to this Agreement may have
against any other par-,-.- _o this Agreement with respecz to all
other matters .
IX. EFFECTIVE DATE
43 . Each party shall execute the signature page of this
Settlement Agreement and return the executed signature page to
EPA. The Settlement Agreement shall become effective upon EPA's
receipt of executed signature pages from all of the parties .
Upon receipt of all executed signature pages , EPA shall
immediately issue a notice letter , l
_ anrties st�tir_g the date
on which the Settlement Agreement became effective. The parties
all acknowledge that because this Settlement Agreement is

intended to be the basis for _ -resolution ct the North Carolina
contested case prcceedi:g
T
= cn r n p
-_ •r_l 7cc r nc cr
al-.., No. EgR 041 Tennessee was required to have the Settlement
Agreement approved t":rcugh _-its statutory r_om
settlement prcmise and
procedure before it executed the Agreement. Under
Tenn. Code Ann. 5 20-3 -103 , the settlement of any litigation to
which Tennessee is a party must be approved by the Attorney
General and Reporter, the Comptroller of the Treasury, and the
Governor. North Carolina was required to have the Settlement
Agreement apprc•red by the Department of Environment and Natural
Resources as the agency responsible for issuing the permit, and
by the NPDES Committee, as the agency responsible for issuing the
variance.
X- AUTHORIZED SIGNATURES
44 . Each of the undersigned representatives of the parties
certifies that e or she is fully authorized by the party he or
she represents to enter into the terms and conditions of this
Settlement ;.grEement and to legally g _y bind such party to this
Agreement .
IT IS SO AGREED:
UNITED STATES ENV IRONMENTAL'PROTECTION AGENCY
John H. Hankirson, Jr: Date:
Regional Administrator

STATE 07 "ORT= C ROLItiA
BY: L.0
Wayne 1dcDevltt Date: 17�3d_ �
Secretary, DENR
By. e
Daniel .6.�Q�, Date: iZ/ sa/5-1
V . Besse
Chair:ian, = —�
[Co orminginal Commit`ee
g to original si dated 12/22/971
S OF T 5a
ustin P. Wilson Date:
eputy Governor for Policy
COCK C UNPY TE S
By: /
arold E. 'Cates Date:�Qo. C 7
County Commissioner
CITY OF d1WPORT, NNESSEE
B
ames E. Rob nson Date:
Mayor -- - -
TENNESSEE ENVI 0NMENTAL COUNCIL
By-
JohrL Noels Date: 1
Pigeo ivlr=Coordinatcr
AME CANOE�Sgp IATION
By;David
,
E. Date:
J,&n ns
Director bf ,6onservation
and Publie�Policy
CHAMPION
AAa
PORAT N
By: _
Richai Date:
Senior V' t,Environm nt ath & Safety
[Conforming to original signature dated 12/19/971