Councilor: Seize mill from Brookfield

Posted Aug. 28, 2008, at 10:39 p.m.

MILLINOCKET, Maine — Saying that a multibillion-dollar conglomerate’s decision to indefinitely close the Katahdin Paper mill threatened public well-being, Councilor Scott Gonya has proposed using eminent domain to wrest the mill from its parent company.

“It’s a discussion we need to have,” Gonya, a millworker, said during a council meeting Thursday. “We need to see if it’s legal. I believe it is.”

Eminent domain is defined as a government’s inherent power to seize private property with due monetary compensation, but without the owner’s consent, for civic use or economic development.

It might seem a startling, even radical concept, but Gonya said his extensive research over the past several weeks includes consultation with attorneys from Maine Municipal Association, state Public Utilities Commission officials and management at Bangor Hydro-Electric Co.

All indicate that the idea is at least feasible, said Gonya.

Gonya readily admitted that part of his plan involves coercing Toronto-based Brookfield Asset Management, which owns the mill, into continuing operations. The corporation has $95 billion in assets and netted $110 million in the second quarter of 2008.

“Monday they stopped taking orders,” Gonya said after he and Councilor Jimmy Busque, another millworker, adamantly reasserted over previous Brookfield denials that the mill has been profitable in recent months. “They are very angry at us because we know so much information.

“It just does not look good to close a mill that’s making money,” Gonya said.

He and others suspect that Brookfield can make more money by shutting down the mill and using the hydro generators that help power the facility to sell electricity on the open market.

Brookfield officials could not be reached for comment Thursday.

Gonya’s tentative plan: Use eminent domain to seize the mill and its generators, which make about 37 megawatts of electricity, find a new mill owner and turn the generators into a public utility.

This would greatly lower town utility rates while perhaps generating as much as $14 million in electricity sales on the New England power grid and making Millinocket a magnet for other industries, he said.

But Gonya also advised caution.

“Let’s not rush into this and do a lot of things and harm a lot of people until we know where we stand on it,” Gonya said.

Brookfield abruptly ordered the Sept. 2 shut-down Tuesday, citing burgeoning oil prices and their profit-killing impact upon the mill, which burned about 400,000 barrels of oil in 2007 to help heat the facility and make paper.

Katahdin Paper Co. LLC, a Brookfield subsidiary, first announced on May 29 that oil prices would force an indefinite shutdown in 60 days, putting about 208 employees out of work, unless an alternative energy source was found.

That deadline was extended repeatedly after Gov. John Baldacci and federal legislators intervened, mill paper sales increased and energy efficiencies producing vast savings were introduced, Katahdin officials have said.

Also, state officials who have worked with the mill almost continuously since May 29 matched Katahdin Paper with alternative energy providers who are negotiating to install a biomass boiler that would wean the mill from its oil dependency.

Baldacci has said Brookfield’s latest decision to close Sept. 2, which he and his staff learned of Monday, was abrupt and poorly handled. Brookfield officials have denied this and maintained that the mill is a money-loser.

Baldacci also said he had received assurances from Brookfield that the mill would reopen in 2009 if biomass talks went well. Brookfield officials have not confirmed this.

Mill Manager Serge Sorokin told Town Manager Eugene Conlogue on Tuesday that he would be assembling a management team that would mothball the mill and assemble a biomass proposal for Brookfield’s board of directors to consider, Conlogue said.

Apparently pointing out the corporation’s indifference, Conlogue noted that the first three or so paragraphs of Brookfield’s latest shutdown notice were identical to the one presented in May. He also noted that the notice erroneously referred to the mill’s No. 11 paper machine — a $150 million value and the state’s most modern No. 11 — as the mill’s No. 21 machine.

Busque also said that the town should investigate denying Brookfield access to the Penobscot River as long as the company, which owns Brookfield Renewable Power Inc., continues to export jobs as much as it exports electricity.

“The water belongs to us,” Busque said. “We need to ensure that the waters are used [to create jobs].”

Councilor David Cyr endorsed Busque’s and Gonya’s ideas, adding that some legislative reaction to the looming closure was warranted.

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