After partisan crossfire, new bill revises aid to threatened paper mills

A plan for the state to revive shuttered paper mills in central and northern Wisconsin has taken a new, bipartisan turn after Democrats and Republicans each tried to use the issue as a bargaining chip earlier this year.

New legislation, AB-682 in the state Assembly, would provide a $1 million grant to the Verso Paper mill in Wisconsin Rapids and a $15 million loan guarantee for the Park Falls Pulp and Paper mill in Park Falls. The bill went before the Assembly Forestry, Parks and Outdoor Recreation Committee for a public hearing on Tuesday, and lawmakers are trying to fast-track it for passage.

The proposed $1 million grant to Verso would be to keep the company’s closed Wisconsin Rapids paper mill heated during the coming winter, said Rep. Scott Krug (R-Nekoosa) at Tuesday’s hearing. He said that would allow the company to continue its negotiations with a proposed buyer instead of being rushed to complete the transaction.

Without the funds, Verso has reportedly been planning to turn off the plant’s heat, which “would render those [paper-making] machines virtually useless after a winter freeze,” said Krug.

Atlas Holdings LLC made an offer this summer at $20 a share to purchase all of Verso’s plants. In addition to the closed paper mill in Wisconsin Rapids, the Atlas offer includes a paper-converting plant that is still operating in the city, as well as plants in Escanaba and Quinnesec, Mich.

Verso has since told Atlas it wants a higher price, Krug said. He speculated that the company was delaying a deal as winter draws near, “to start getting people to panic, to try to drive up the offer from Atlas.” The grant to keep the heat on would “take the pressure off” the negotiations, he explained; without that, he suggested, the deal could collapse.

The other portion of the bill would be to authorize a $15 million loan from the Wisconsin Economic Development Corp. (WEDC) to prevent the possible dismantling and sale of the Park Falls Pulp and Paper mill’s machinery. That mill was sold recently, Krug said, to a buyer who appears ready to strip the plant’s assets — sparking concern that it “was heading to the recycling heap if we don’t find somebody that can actually turn this production into something that can make a profit.”

The bill leaves open terms and performance contingencies, allowing WEDC to impose those on the loan if the agency wishes, Krug said.

The legislation’s co-sponsors include Democrats as well as Republicans. At Tuesday’s hearing, Democratic lawmakers questioned witnesses closely, but indicated they were open to the proposal.

The new bill attempts to pick up the pieces after a dramatically different earlier proposal foundered this summer.

Krug and Sen. Patrick Testin (R-Stevens Point) proposed legislation in May to provide loans that cooperatives formed by the state’s timber industry could use to purchase the plants — $50 million for the Wisconsin Rapids mill and $15 million for the Park Falls mill.

Their legislation called for using funds from Wisconsin’s share of the American Rescue Plan Act (ARPA). That essentially guaranteed that Gov. Tony Evers would veto the bill. He has consistently axed legislation trying to control how the ARPA funds are spent, on the grounds that state law gives the executive branch sole discretion on the state’s use of most federal funds.

At the same time, however, Evers listed the two mill projects as among those he would fund with the $1 billion windfall the state would receive if the Legislature’s Republican majority reversed its unstinting opposition to accepting federal funds to expand BadgerCare (Medicaid). The lawmakers declined to take the bait.

As the ARPA-funded measure from Krug and Testin advanced, Evers offered an amendment replacing the ARPA funding with money from Wisconsin’s general revenues, promising to sign the legislation in return. That deal collapsed when the GOP leaders sat on the amendment, and Evers subsequently vetoed the bill.