‘I don’t believe it was a dead end’

The Senate lost interest in paper mill rescue. Why remains a mystery.

By: - December 2, 2021 6:00 am
Park Falls paper mill

The Park Falls Pulp & Paper mill in the city of Park Falls. (Erik Gunn | Wisconsin Examiner)

Second of two parts

On the same day that the Wisconsin Assembly overwhelmingly approved a $15 million loan guarantee that officials in Park Falls hoped would save the city’s historic paper mill, a Wisconsin state senator pronounced the legislation all but dead.

Language completely unrelated to the bill but tacked on in the second part of AB-682 had prescribed a raft of drug-abuse prevention policies for people working on highway and other transportation projects. For the Senate, that section sank the measure, according to Sen. Mary Felzkowski (R-Irma).

“I have no idea why that language was put in there, but in doing so, their version was dead,” Felzkowski said in an interview Nov. 11, hours after the Assembly’s 96-2 vote to pass AB-682.

Sen. Mary Felzkowski

Just three days earlier, on Nov. 8, Felzkowski had circulated a draft Senate bill without the offending section. In her co-sponsorship memo, she noted that on the subject of aid to the Park Falls Pulp & Paper mill and another mill in Wisconsin Rapids, the proposed legislation was identical to the Assembly bill. “This bill does not contain language pertaining to any other policies or directives,” she wrote. 

The following week — before the draft was even formally introduced — the Park Falls mill went up for auction, with tools and equipment sold off to online bidders.

For Democratic lawmakers as well as city officials in Park Falls who had staked the future of the mill on the Assembly bill, the Senate’s failure to take up the Assembly’s legislation right away remains a disappointment as well as a puzzle.

No GOP Senate sponsor

Sen. Janet Bewley (D-Mason), whose district includes the city of Park Falls and who is also the leader of the Senate Democrats, says that the disputed part of the Assembly bill didn’t have to be fatal to the legislation.

Sen. Janet Bewley Official legislative headshot
Sen. Janet Bewley

“I don’t believe it was a dead end, and I am very disappointed that my Republican colleagues in the Senate didn’t do anything,” Bewley said this week in an email message responding to questions from the Wisconsin Examiner. “The drug testing language issue could easily have been solved if there was a will to act, but there wasn’t.”

Bewley served as the only Senate co-sponsor of the bill, which had bipartisan sponsorship in the Assembly.

She says the Senate could have come back into session after the Assembly passed the bill and could have amended it to remove the offending section, returning it to the Assembly for a concurrence. But she believes a less dramatic response would have been sufficient to make a difference.

“Senate Republicans didn’t need to come back into session,” Bewley said. “All they had to do was hold a public hearing and vote the bill out of committee.”

Interested investment groups had been working to come up with a proposal that could persuade the liquidation company that had taken over the plant to skip the auction and reach a deal. “Some kind of buy-in from the Senate Republicans would have sent a strong signal to investors, any one of which might have been more willing to make a better offer for the bill,” Bewley said.

Sen. Majority Leader Devin LeMahieu  (R-Oostburg) didn’t respond Wednesday to a Wisconsin Examiner request by email to discuss the legislation and the reasons that the Senate didn’t take any action to advance it. Even as the Assembly was fast-tracking its bill, however, the Senate appeared much less engaged with the legislation.

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When Rep. Scott Krug (R-Nekoosa) introduced AB-682, the bill had no Senate companion bill. Although the absence of a twin bill in one or the other house isn’t unheard of, it’s unusual, particularly when legislation is a high priority for either party.

And with the “mill bill,” the absence of a Republican Senator as co-author was especially conspicuous. Sen. Patrick Testin (R-Stevens Point) had co-authored with Krug an earlier attempt to rescue both the Park Falls mill and the Verso Paper plant in Wisconsin Rapids. But Testin — who is seeking the Republican nomination to run for lieutenant governor in 2022 — never signed on to the new legislation.

Since early November, the Wisconsin Examiner has made several attempts to reach Testin directly via email to ask about the legislation. There has been no response.

Krug said he was unaware of any reason other than the drug-testing section for the lack of interest in the other chamber. “I wish I had more insight on it than I did,” Krug told the Wisconsin Examiner in an interview late last month.

A Senate bill lands late

With no Senate companion to the bill, Felzkowski’s alternative got its formal introduction as SB-712 on Friday, Nov. 19 — one day after the close of the Park Falls mill auction.

Felzkowski said in an interview when the bill was still in draft form that she hoped that there could be a hearing in mid-December and Senate action in January.

Krug told the Wisconsin Examiner that even with the auction, he remains hopeful that a buyer could still make a successful offer to take over the plant.

Rep. Scott Krug headshot
Rep. Scott Krug

“I haven’t heard anybody say, ‘Okay, we’re done — we’re not going to do anything. We’re not interested any more,’” Krug said. “The point of the bill was knowing that the value of an idle facility is definitely not worth as much as a facility that’s got some state backing.”

Krug and his Assembly colleagues are waiting for the Senate bill’s hearing, “if they’re going to do one at all,” he said. Once that happens, “we’ll definitely try to figure out a plan around that and see if we can get this to work.”

But he also suggested that the Wisconsin Economic Development Corp. (WEDC) could find a way to act on its own to provide the needed backing.

“If this is something that both chambers still want to do, why hasn’t WEDC put forward a 13.10 proposal to the Joint Finance Committee and just done it without us?” Krug said. “I think that’s something that could still happen a lot quicker than waiting for the Senate to come back in January.”

The reference is to Section 13.10 in the state statutes, which prescribes the role of the Legislature’s Joint Finance Committee in approving certain expenditures and changes to appropriations under the state budget. It applies only to items that are already in an enacted budget, however, which would appear to put the paper mill rescue efforts beyond reach.

‘The end of an era’

Park Falls Mayor Michael Bablick said that for weeks leading up to the auction, he saw the governor’s office and WEDC “working as hard as they could to use all the traditional methods” available to support a successful purchase of the mill.

The historic headquarters building for Park Falls Pulp & Paper in Park Falls, Wisconsin. (Erik Gunn | Wisconsin Examiner)

The business plans being floated by prospective buyers “were quite good,” Bablick said. But after years of no reinvestment in the plant, “it was going to need some significant capital expenditure in order to get it on a stable footing.”

That’s where state aid could have helped. “It was too risky without it, even though the business plan was good,” he said.

On the day before Thanksgiving, Bablick issued a one-page statement on the future of the mill — or, more precisely, the future of the city without the mill.

The process of liquidating the plant will take two years, with the city and the liquidation company that owns it working together “to ensure blight prevention, reuse, economic recovery, and protection of the environment,” Bablick stated.

The city’s first, big challenge will be how to address the city’s water utility, for which the plant was the single largest customer accounting for two-thirds of the city’s water use. In anticipation of the mill’s potential loss, he noted, the city in 2020 hired a consultant to analyze the water utility’s financial condition; the report is likely to be complete and made public sometime in the first half of 2022.

The mayor’s statement carried with it an air of finality. “The liquidation of the Mill,” Bablick stated, “represents the end of an era and the beginning of a new one.”

Part 1: Struggling to save the Park Falls paper mill

How two paper mills became political pawns

For Rep. Scott Krug (R-Nekoosa) AB-682 marked the second attempt at a bill to save two shuttered paper mills: Park Falls Pulp & Paper in Park Falls and the Verso Paper mill in Wisconsin Rapids, in Krug’s own district.

In the process, both plants were caught up in political maneuvers between the administration of Gov. Tony Evers and the Legislature, led in both houses by Republicans, each doing battle with the other since before the governor took office.

Originally, the Park Falls mill was an add-on to legislation written to help Verso’s Wisconsin Rapids mill, which closed in July 2020 in the midst of the COVID-19 pandemic, laying off 900 people.

Timber-cutting and hauling business owners who had lost revenue with the Verso shutdown proposed to start a cooperative to purchase the Wisconsin Rapids mill to reestablish their market. Krug and Sen. Patrick Testin (R-Stevens Point) introduced AB-367/SB-369 in late May 2021, offering a $50 million loan guarantee to help the co-op group finance the transaction.

In June, Krug and Testin added an amendment for an additional $15 million to help a similar co-op group that was forming to buy the Park Falls plant, which had shut down in May.

From the start, the first “mill bill” contained what Democrats and the Evers administration considered a poison pill: It required the funds, now $65 million in total, to come from Wisconsin’s share of the American Rescue Plan Act (ARPA) federal COVID-19 relief funds doled out to states.

Starting early in 2021, the Legislature’s Republican majority made repeated attempts to force Evers to cede control over Wisconsin’s ARPA money. First they tried to require the executive branch to submit all spending plans to the GOP-controlled Joint Finance Committee, where they could be blocked; Evers vetoed that bill. They followed that with a series of bills that prescribed various uses for the funds. Evers vetoed those, too.

The original “mill bill,” introduced in May, was part of a second round of legislation that again aimed to bait the governor into bending to the Republican majority’s priorities.

Even before that first bill was officially introduced (although after it had begun circulating in draft form), Evers had attempted his own gambit with the two mills. He named them among the projects he would fund with the $1.6 billion windfall from the federal government that the state would get if it agreed to expand the state’s Medicaid plan under the Affordable Care Act.

Republican lawmakers, however, refused to vote on Evers’ expansion proposal or the accompanying spending wish list — including the two paper mill projects.

In June, Evers thought he had brokered a deal to amend the Republican legislation for the mills so that the funds were covered from the state’s general purpose revenue rather than ARPA. But the Assembly voted on the legislation June 22 without amending it and the Senate concurred a week later, setting it up for an Evers veto in early July, in which he warned that using ARPA dollars risked upending the entire deal.

Republicans argued that it was a justifiable use of the ARPA money because the COVID-19 pandemic had, they asserted, played a role in the closing of both plants.

In an interview in November, Krug questioned Evers’ veto. “It still hasn’t been told to us from the federal government that we can’t use those dollars” for that purpose, he said. 

By the time of the new bill, the Verso situation had changed dramatically. Instead of $50 million, the new bill has a $1 million grant for Verso to keep the heat on in its plant over the winter while it negotiates a potential acquisition. Krug said Verso is planning to follow through with keeping “all critical machinery heated throughout the winter” and hoped to see the new legislation get enacted.

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Erik Gunn
Erik Gunn

Deputy Editor Erik Gunn reports and writes on work and the economy, health policy and related subjects, for the Wisconsin Examiner. He spent 24 years as a freelance writer for Milwaukee Magazine, Isthmus, The Progressive, BNA Inc., and other publications, winning awards for investigative reporting, feature writing, beat coverage, business writing, and commentary. An East Coast native, he previously covered labor for The Milwaukee Journal after reporting for newspapers in upstate New York and northern Illinois. He's a graduate of Beloit College (English Comp.) and the Columbia School of Journalism. Off hours he is the Examiner's resident Springsteen and Jackson Browne fanboy and model railroad nerd.

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