NC Attorney General brings $12M suit against Illinois owner of closed Canton paper plant

Attorney General Josh Stein is suing the Illinois-based corporate owner of Canton's now shuttered paper mill, saying that by closing the century-old Haywood County operation and throwing more than 1,000 people out of work, Pactiv Evergreen violated the terms of a $12 million state economic incentives grant that it has refused to return.

“Taxpayers in North Carolina invested in Pactiv Evergreen to bolster our state’s economy,” Stein, who is also the Democratic candidate for governor, said in a May 23 statement.

“We held up our end of the bargain, and we cannot let Pactiv cut and run away with our state’s money. My office has been working with Pactiv over the last year to address the company’s obligations under the JMAC agreement, but it has become clear that legal action was necessary to hold Pactiv accountable.”

The Citizen Times reached out to Pactiv.

The suit filed in Wake County Superior Court is on behalf of the N.C. Department of Commerce, which arranged the 2014 Job Maintenance and Capital Development grant. Pactiv is listed as Blue Ridge Paper Products and Evergreen Packaging, two prior owners that were part of deals that lead to the 2020 merger with Pactiv.

The JMAC Agreement provided Pactiv Evergreen with $12 million in economic development incentives in exchange for a commitment to maintain operations, and at least 800 jobs, at Pactiv Evergreen’s paper mill in Canton through Dec. 31, 2024, Stein's office said. Pactiv Evergreen closed the mill and terminated all its employees in May 2023.

A month before the 115-year-old iconic paper mill's shutdown, Gov. Roy Cooper and Stein said if the plant closed, they would look to enact "clawback" provisions of incentives.

In March, a spokesperson for Stein confirmed the AG's office and staff have been in "continued conversations" with Pactiv and other parties for the past 10 months.

Asked why he chose to sue now, Stein said despite efforts by him, Cooper, N.C. Secretary Commerce Machelle Baker Sanders, Canton Mayor Zeb Smathers, they could not find a "positive resolution" with Pactiv.

Mill closure was 'gut punch' to state's economy

Once owned by Champion, the United Steelworkers union bought the mill in 1999 and formed Blue Ridge Paper. Struggling with consistent financial losses, the mill workers sold the factory in 2010 to Evergreen Packaging, a New Zealand company owned by billionaire Graeme Hart.

A decade ago, the company was facing a U.S. Environmental Protection Agency requirement to replace old coal-fired boilers. New natural-gas powered boilers would cost $50 million, including new supply lines, Evergreen said.

In a last-minute vote the General Assembly approved the incentives, giving the company $12 million over six years. The company was required to employ at least 800 full-time workers for at least 10 years.

At the time, the mill employed about 1,000 people with an average annual wage, including benefits, of $78,300.

Before the final $2 million incentive installment was paid in 2021, Evergreen merged with Pactiv, with Hart remaining majority owner with a 77% stake of Pactiv Evergreen.

The company is publicly traded on the Nasdaq Stock Market with revenues of $6.2 billion and profits of $320 million in 2022.

More: Canton paper mill bell sounds for final time, signaling an end after 115 years

"Pactiv Evergreen's closure of the Canton paper mill was a gut punch to our state's economy and the people of Canton and Haywood County," Cooper, who was attorney general when the incentive agreement was made, said in a statement. "This company broke its commitment to keep the mill open and the state is taking action to hold them accountable."

Smathers said he was "appreciative" but "not surprised" at the lawsuit.

“AG Stein and his team are doing exactly what they said they would do when the mill closed, hold the company accountable. We teach our children that when you make promises, you keep those promises," the mayor said.

Stein is set to face Republican Lt. Gov. Mark Robinson in the Nov. 5 general election. The Citizen Times reached out to Robinson, who has criticized incentives but has not called for their elimination.

More: Missouri demolition, redevelopment company may buy closed Canton paper plant

Who's ahead in the race for NC governor? Here's what the latest polls say.

Joel Burgess has lived in WNC for more than 20 years, covering politics, government and other news. He's written award-winning stories on topics ranging from gerrymandering to police use of force. Got a tip? Contact Burgess at jburgess@citizentimes.com, 828-713-1095 or on Twitter @AVLreporter. Please help support this type of journalism with a subscription to the Citizen Times .

This article originally appeared on Asheville Citizen Times: NC Attorney General brings $12M suit against Illinois owner of closed Canton paper plant