North Carolina

Emails show NC Commerce Department officials responding to HB2 fallout

After the passage of HB2, N.C. Commerce Secretary John Skvarla and otther agency officials dealt with the business fallout.
After the passage of HB2, N.C. Commerce Secretary John Skvarla and otther agency officials dealt with the business fallout.

Even before Gov. Pat McCrory signed House Bill 2, N.C. Department of Commerce officials were discussing possible pushback from the film industry, as they considered the measure’s impact on business.

The conversations, detailed in emails obtained through a records request, provide a further window into the business impact of the law, which has led to convention cancellations, state travel boycotts and PayPal’s scrapping of a new Charlotte operations center.

Soon after McCrory signed HB2 into law on March 23, businesses from around the country were criticizing the legislation, which requires transgender people in government facilities to use bathrooms that correspond with the sex on their birth certificates. It also prevents local governments from banning discrimination against LGBT people in employment and public accommodations.

On March 26, Commerce Department officials sent out an email blast titled “Myths vs. Facts: What New York Times, Huffington Post and other media outlets aren’t saying about common-sense privacy law.” Recipients responded immediately, mostly critical but some supportive, the emails show.

“We are concerned about any legislation that North Carolina would put in place and defend by calling it ‘common sense’ privacy law,” wrote James Blair, a managing director with Navigator Consulting, a site selection firm that works with businesses scouting new locations, including in North Carolina.

“This type of message should be sent by political campaigns, not taxpayer funded agencies,” responded another recipient named Sharlini Sankaran. She had once been the executive director of an organization that promoted experts at North Carolina research institutions, according to her LinkedIn account.

Others, however, backed the law.

“Thank you Gov. McCrory for taking a stand,” wrote a recipient named David Hannah. “I’m with you.”

The emails also show Commerce Department officials receiving word of businesses taking a stand against the state because of HB2, ranging from a homegrown brewery to Silicon Valley-based PayPal. Here are some highlights from the emails:

▪ Hours before McCrory signed HB2, internal emails show a discussion over Disney’s threat to boycott Georgia for film production over a controversial religious liberty bill approved by that state’s legislature.

“This is a rather big stance by Disney, especially considering they now own Marvel and 2/3 of Marvel’s upcoming production slate is tentatively scheduled to film in Georgia,” wrote Guy Gaster, director of the N.C. Film Office, on March 23

Commerce Secretary John Skvarla responded that the North Carolina bill was “materially different.”

“Ga goes to religious beliefs,” he wrote. “NC simply says birth certificate gender controls what locker room/bath room you frequent. Pretty much everything else follows federal law.”

Commerce communications director Kim Genardo also chimed in on March 24, a day after McCrory had signed the bill: “Guy, Let’s not engage in the debate.”

Gaster responded that he was “not engaging,” and would stick to talking points drawn up in the office if contacted by the press.

On March 28, Dave Efird, the deputy general counsel at the department, also joined the conversation. He emailed Skvarla suggesting they talk about the issue, but the emails do not disclose any more details.

On that same day, Georgia Gov. Nathan Deal vetoed the legislation in his state, and Disney never followed through on its threat.

North Carolina’s film industry, however, would feel a backlash over HB2. On April 4, the Observer reported that Lionsgate had pulled production for a new Hulu show that was supposed to be filmed in Charlotte.

▪ On the afternoon of March 30, Sean Lilly Wilson, founder of Fullsteam Brewery in Durham, sent an email to Commerce Department officials, saying: “I’m truly sorry that my convictions preclude us from working together.”

In an attached letter, he said he didn’t want to be associated with North Carolina’s government until the legislation was “overturned, reversed, or modified to shed its malicious intent.” He noted that he had lived in North Carolina for nearly 25 years, raising two children.

The letter went on to say that Fullsteam would not participate in the State Fair, wanted a feature on the company removed from the Commerce Department website and would remove its name from consideration for media missions promoting the state, among other actions.

▪ On March 29, the founder of a San Francisco-based furniture company said he wouldn’t be attending the High Point Market, the major furniture trade show held in High Point. After HB2’s passage, the High Point Market Authority warned that the bill could hurt attendance at the April 16-20 event.

“Just a note to let you know that we are canceling all our travel plans to the High Point market and to North Carolina due to your obsession with trampling on the rights of cities to extend protections to the LGBT community,” Mike Skaar wrote.

▪ On March 31, Mike McBrierty, a lobbyist at Research Triangle Park’s Biogen, sent Skvarla an opinion piece written by the biotech company’s CEO calling HB2 unacceptable.

The state’s reputation as a “strong state for business and innovation” had taken a hit with the law, McBrierty wrote.

Skvarla said he would like to discuss the issue personally and set up a phone call with the Biogen official. Another CommerceDepartment official, John Hardin, emailed McBrierty to say he was glad the lobbyist sent his note because he, too, opposed the bill.

▪ On the morning of April 5, Mark Poole, a financial analyst in the agency, sent out an email with some “breaking news” – PayPal had canceled its plans to open an operations center in Charlotte, costing 400 jobs.

PayPal had announced plans to come to Charlotte on March 18, but expressed concerns after HB2 was signed into law days later. HB2 preempted a Charlotte measure that would have allowed transgender people to use the bathroom of the gender with which they identify.

On March 29, Cecelia Holden, the Commerce Department’s chief of staff, sent an email to Skvarla, saying the “good news for PayPal and every other company in NC is that they can still implement the same concept Mecklenburg law would have, should they choose to do so.”

Companies can decide what works best for them, Holden added.

“Did you share that with them?” she asked. “If not, maybe you should,” she wrote, ending the sentence with a smiley face emoji.

Days later, PayPal pulled out of the state.