Bill rewrite will allow East Millinocket mill profit-sharing, restart to proceed, attorney says

State Sen. John Cleveland (far right) listened to attorney John Clark (left) outline fixes to a bill, LD 1792, during a committee hearing on Friday.
State Sen. John Cleveland (far right) listened to attorney John Clark (left) outline fixes to a bill, LD 1792, during a committee hearing on Friday. Buy Photo
Posted March 21, 2014, at 7:03 p.m.

AUGUSTA, Maine — A legislative attorney has rewritten key elements of a pending bill that would allow negotiations aimed at restoring 212 jobs at an East Millinocket paper mill, officials said Friday.

Attorney John Clark told the Legislature’s Joint Standing Committee on Energy, Utilities and Technology during a work-session on Friday that he is rewriting provisions in LD 1792 that would have forced hydrodam owner Brookfield Asset Management to negotiate a profit-sharing agreement with mill owner Cate Street Capital.

Per committee wishes, the rewrite allows the profit-sharing agreement but does not require it, said Clark, deputy director of the Legislature’s Office of Policy and Legal Analysis. This effectively remedies flaws in the bill that Brookfield attorney Harold Pachios called unconstitutional.

“We make it very permissible. We don’t make it prescriptive,” said Sen. John J. Cleveland, D-Androscoggin, the committee’s chairman. “This provides clarity for their discussions.”

The rewrite, Clark said, holds to the intent of the original law written nearly 20 years ago — it allows the profit-sharing agreement only to complement the retention of the mill’s workforce. Legislators feared that Brookfield, which also owned the East Millinocket and Millinocket paper mills at the time, would close the mills in favor of selling electricity. Under state law, Mainers own the water of Maine’s rivers.

The rewrite eliminates clauses that would have interfered with a contract between Brookfield and Cate Street regarding electricity generation. It also cuts any taking of money expressed or implied in that interference. Conditions upon which the profit-sharing can occur are described, Clark said.

“I don’t believe there is any legal issue with the bill,” Clark said.

Pachios said that he looked forward to reading the rewrite. He called the first draft of LD 1792, An Act To Protect Jobs in the Forest Product Industry, unconstitutional during a committee hearing on March 5. Clark said the committee will get the new verbiage early next week.

“From what I understand, apparently they are concerned about the U.S. Constitution, and that’s a step in the right direction,” Pachios said Friday during a telephone interview. He and Cate Street officials did not attend Friday’s session.

Cate Street and Brookfield, which owns three Penobscot River dams that feed power to the mill and to the wholesale electricity market when the mill is down, have been in intermittent talks regarding the profit-sharing agreement for about three weeks, officials from both companies confirmed Friday.

Cate Street made an offer to Brookfield on March 7. Brookfield counter-offered 11 days later, and Cate Street responded to the counter on Friday, Cate Street spokesman Scott Tranchemontagne said.

Tranchemontagne said he doesn’t know where the negotiations stand. Cate Street’s legal representative, whom Pachios identified as Portland attorney Christopher Howard, did not return a message left on Friday.

Gov. Paul LePage first announced the profit-sharing agreement proposal on Feb. 12. It is among several goals that Cate Street subsidiary Great Northern Paper Co. LLC officials say they must achieve to restart the mill by May 1. Great Northern Paper stopped production on Jan. 23, and it laid off 212 of 256 mill workers on Feb. 6, devastating an already limp Katahdin region economy.

Cate Street officials and LePage also met on Friday morning, LePage spokeswoman Adrienne Bennett said. She and Tranchemontagne declined to comment on the matters discussed.

The bill’s co-sponsor, Rep. Steve Stanley, D-Medway, and Tranchemontagne were pleased with the wording of the new bill. Cleveland said a committee vote on it would likely occur next week, but no date has been set.

If the committee approves it, the bill goes to the House and Senate floor for votes. It could be signed by LePage into law next week.

Stanley and Tranchemontagne said they don’t know what impact a failure to pass the bill, or successfully concluding negotiations with Brookfield, would have on the mill’s restart plans.

Cate Street officials “haven’t said anything about that,” Stanley said.

 

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