State sues Pactiv Evergreen over $12 million subsidies for shuttered Canton mill

BPR News | By Felicia Sonmez

This is a developing story and will be updated.

North Carolina Attorney General Josh Stein on Thursday sued Pactiv Evergreen, the company that owns the now-shuttered paper mill in Canton.

State and local leaders have been demanding that Pactiv Evergreen repay $12 million in funding it received as an economic incentive to create jobs at the mill, which closed one year ago this week.

So far, the company has not done so – and Stein, who is the Democratic nominee for governor, said in his lawsuit that the company did not uphold its end of the bargain when it shuttered the 115-year-old plant.

The company received the $12 million in exchange for job creation in late 2014. To receive the funds, the company was required to employ a minimum of 800 full-time employees for the duration of the 10-year contract.

“This decision had devastating practical consequences for the hardworking employees of the Canton Mill and for the community more broadly,” the complaint stated. “But it also had legal consequences.”

In a phone interview Thursday morning, Stein said his office and other state and local officials have been engaged with Pactiv Evergreen for months about addressing its obligations, “but it has become clear to us that we needed to bring this legal action in order for the state to get repaid.”

“We sued Pactiv Evergreen today for a very simple reason: It failed to live up to the contract it signed with the state of North Carolina,” Stein said.

“The deal was clear: We would provide them $12 million in economic development incentives. They would employ 800 people and stay open until December 31, 2024. We lived up to our end of the deal. They did not.”

North Carolina Gov. Roy Cooper (D) said in a statement Thursday that the state is taking action to hold the company accountable.

“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 said.

A Pactiv Evergreen spokeswoman did not immediately respond to a request for comment.

Last week, Pactiv Evergreen announced that it has signed an exclusive letter of intent with St. Louis-based company Spirtas Worldwide, which specializes in demolition, environmental remediation and property redevelopment.

The sale has not been finalized and could take several months.

Canton Mayor Zeb Smathers told BPR last week that while he is hopeful about the site’s future and the potential new owner’s stewardship, Pactiv Evergreen is “still on the hook, as they should be, for many environmental responsibilities and economic responsibilities.”

In a phone interview Thursday, Smathers said he welcomed the state’s action and applauded Stein and the Department of Justice, who he said “have had our back in Canton and Haywood County since zero hour.”

“This company has broken our economy, tried to break our spirits, and broken promises, and that’s not how we raise our children in this state,” Smathers said. “That’s not what we demand from people and companies in North Carolina. And this is what happens. There are consequences for one’s actions.”

In addition to the economic incentives, Pactiv Evergreen has also faced criticism for its handling of environmental issues related to the site. The former mill has continued to rack up environmental violations over the past year, and federal authorities have become involved in recent months.

There is also the lingering question of how Canton’s wastewater treatment – which has been handled by Pactiv Evergreen – will be managed in the future. In recent weeks, the treatment site at the Canton mill has begun to omit a sewer stench that has frustrated residents and local officials.

Separate from the issue of the economic incentives, Pactiv Evergreen has sought the return of $2.5 million in property tax dollars that it says it overpaid due to an inaccurate assessment by the county, the Asheville Citizen Times reported. Stein told BPR Thursday that that is a separate matter that is being addressed by Haywood County.