In a letter sent by North Carolina Gov. Roy Cooper to Mike King, CEO of Pactiv Evergreen, Cooper says that closing the Canton paper mill would violate the terms of a 2015 economic development deal and require the company to repay the state $12 million.
“North Carolina has been a partner to Pactiv Evergreen since it purchased the Canton mill, as demonstrated through a 2015 economic development agreement that provided $12 million to your company, efforts to rebuild and restore transportation vital to the plant’s operation in the wake of Tropical Storm Fred, and many other actions,” reads the letter, sent by Cooper on March 16.
Cooper went on to urge Pactiv Evergreen to “explore all options to keep the Canton mill in operation” either through sale, repurposing or other options, and warns of consequences if it’s not.
“The mill’s closure would be a clear violation of a contract that two Pactiv Evergreen subsidiaries signed with the North Carolina Department of Commerce in February 2015,” Cooper said.
Signed by Republican Gov. Pat McCrory back in 2014, the Job Maintenance and Capital Development (JMAC) Agreement promised the mill’s owners $12 million over 10 years to convert its coal-fired boilers to natural gas, contingent on the company spending at least $51 million.
An October 2022 report on the grant program says that the $12 million has been fully disbursed and that the company had actually spent more than $56 million.
Some, including Canton Mayor Zeb Smathers, had openly wondered if there weren’t clawback provisions in the agreement or if the mill’s closing could possibly place Pactiv Evergreen in noncompliance with the terms of the deal.
The Smoky Mountain News first reported that the grant was still active after a North Carolina Department of Commerce spokesperson said that the DOC had begun an investigation into the specific circumstances of the company’s action as it might relate to repayments under the JMAC agreement.
“In this Job Maintenance and Capital Development Agreement (“JMAC Agreement”), Pactiv Evergreen promised to maintain operations at the Canton mill and to retain at least 800 full-time employees through December 31, 2024,” Cooper’s letter reads. “Closing the paper mill in Canton would be a clear breach of the JMAC agreement. That breach would require you to repay in full the $12 million received under the contract. If you follow through your announced plans we will demand full repayment of those funds.”
Cooper said the breach would occur because Pactiv Evergreen promised to retain at least 800 full-time employees through Dec. 31, 2024 as part of the agreement. Also cc’d on the letter are Attorney General Josh Stein and several members of his staff.
Smathers said he wasn’t surprised to see the letter.
“The conversation I had with Gov. Cooper in the hours following the closure announcement, he is doing exactly what he said he would do, which is put money in his budget for Canton and hold Pactiv Evergreen responsible for their legal obligations whether that is grants or cleanup,” Smathers said. “This letter is proof he is doing that. Where does it go from here? We’ll see. From day one, Democrats and Republicans in Raleigh have seen this not as a Canton crisis but as a statewide crisis. I appreciate Gov. Cooper’s tenacity in holding the company responsible to taxpayers.”