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LINCOLN, Maine — About 200 workers will be furloughed from Lincoln Paper and Tissue LLC in response to a recovery boiler explosion last month that hampered the company’s ability to make pulp, company co-owner Keith Van Scotter said Wednesday.
The layoffs affect about half the company’s workforce. The laid-off workers attend to the company’s two paper machines and pulp-making operations, the areas served by the recovery boiler, which exploded on Nov. 2 when a tube within it leaked water onto a hot smelt bed, creating steam and pressure, Van Scotter said.
“It is not permanent,” Van Scotter said of the planned layoff. “It is indefinite, though.”
The company’s three tissue-paper machines will continue to operate at full capacity, Van Scotter said.
Company leaders sent notices to the mill’s approximately 400 workers on Wednesday. It was unclear when the layoffs would occur. Van Scotter declined to comment on a timeline on company layoffs or next moves.
According to the U.S. Department of Labor, the federal Worker Adjustment and Retraining Notification Act requires “employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs.” In general, employers are covered by the federal act if they have 100 or more employees.
It was unclear whether the WARN Act applied in this case.
Duane Lugdon, who helps paper mill unions negotiate contracts as the United Steelworkers union’s international representative in Maine, said that the act allows a waiver with catastrophic events such as the explosion. Mill leaders told Lugdon that they would seek a waiver, he said.
Van Scotter declined to confirm whether the company would seek a waiver.
“It is extremely distressing that [workers to be laid off] will face this notice at this time of year,” Lugdon said. “Obviously we have known that the business would be facing this circumstance until the boiler is rebuilt.”
“But you can expect that any business facing a catastrophic event like the explosion of this boiler might do the same,” he added.
The troubled mill received more bad news a month after the recovery boiler explosion. On Dec. 2 the company was hit with a $5 million federal lawsuit accusing it of defrauding ISO-New England by falsely claiming a reduction in its electricity use to gain revenue. Company officials have said they committed no wrongdoing.
The Maine Department of Labor’s Rapid Response Team began assisting millworkers and leaders on Wednesday, Gov. Paul LePage said. Affected workers or their families should contact the Bangor Career Center, which serves Penobscot County, at mainecareercenter.com.
“Our administration is going to do everything it can to help these millworkers,” LePage said in a statement on Wednesday. “The explosion at the mill was extremely unfortunate, and we stand ready to assist in investing in the facility.”
Town leaders will meet with mill officials on Thursday afternoon to discuss the layoffs, Lincoln Town Manager William Lawrence said. A town hall-style meeting is set for 3 p.m., LePage spokeswoman Adrienne Bennett said. No meeting location had been released as of 6:30 p.m.
Union leaders likely will begin talks with mill management on the layoffs early next week, Lugdon said. The subjects typically covered in such negotiations include job recall rights, severance pay and health care benefit extensions, he said.
“These are difficult decisions because they affect our hard-working employees and the surrounding communities,” Van Scotter said in a brief statement issued by the company. “However, they are necessary for the long-term survival and success of our business.”
Lincoln Town Council Chairman Steve Clay said he hoped the layoffs would be brief.
“We will do what we can to help. We don’t know what that is until we find out more about what they need,” Clay said.
It was not clear whether the lawsuit is also a factor in the layoffs.
Filed by the Federal Energy Regulatory Commission on Dec. 2, the lawsuit accuses Lincoln Paper, Portland-based Competitive Energy Services and its owner, Richard Silkman — a former director of the Maine State Planning Office — of manipulating a demand-response program administered by ISO-New England that paid users to reduce their electricity consumption during peak hours.
FERC alleges that the accused entities manipulated the program by creating “a false baseline to create the illusion” that the user, whether Lincoln Paper and Tissue or a CES client, was reducing its consumption of electricity, which in turn allowed the user “to extract payments for phantom load reductions,” according to the suits.
The lawsuits seek penalties of $5 million against Lincoln Paper and Tissue, $7.5 million against CES, and $1.25 million against Silkman.
The lawsuit defendants have denied any wrongdoing since the dispute began years ago.
LePage took a swipe at the legal action in his statement about the hardships the mill has endured.
“Lincoln Paper and Tissue has received a multi-million dollar fine, far beyond the alleged wrongdoing,” LePage said. “As a result of this very aggressive penalty that treats the mill like a sophisticated energy trader hundreds of hard-working Mainers have been affected and are now out of a job two weeks before Christmas. We need rational policies from the federal government that prevents wrongdoing, but does not put hardworking Mainers out of work.”
Van Scotter declined to comment on LePage’s statement late Wednesday.
The Nov. 2 boiler explosion awoke some residents, vibrated homes several hundred yards away and drew firefighters from three towns. The boiler blew out several panels atop the multistory building it is housed in. The recovery boiler burns and recaptures materials generated by the pulping process, company officials have said.
Company officials kept the area closed off for 24 hours to allow the dissipation of any hazardous gases that might have accumulated.
BDN staff writer Whit Richardson contributed to this report.