AUGUSTA – The new owners of an idled paper mill in Augusta may be required to set aside $1.7 million to eventually close a sludge dumping site off Church Hill Road.

The Department of Environmental Protection wants the $1.7 million to cover the expense of removing the sludge.

The potential new owner of the mill is Augusta Tissue. American Tissue, which operated the business from May 2000 to August 2001, filed for bankruptcy this past January.

Judge Louis Kornreich of U.S. Bankruptcy Court in Bangor in April cleared the way for Augusta Tissue to buy the closed mill and 170-acre dump property.

Since then Augusta Tissue has been in discussions with the DEP to secure the sludge site license, a critical part of the purchase. Sludge, which is mixed with ash for bulking, is a byproduct of the papermaking process.

The mill could open this fall, and 80 workers could be employed by next year at an average salary of $12 to $13 per hour.

A group of family members, led by Nima Nili, 28, has proposed to buy the mill and dump for an undisclosed sum.

A business plan filed with the DEP shows that investors expect to lose about $500,000 during the first year after the mill reopens.