ACP Pipeline Map from NC Dept. of Env. Quality
From an Article by Dan Way, Carolina Journal, January 29, 2018
Is a financial agreement between the governor of North Carolina and a private party legal just because the governor says so?
That’s the gist of the memorandum of understanding hammered out between Gov. Roy Cooper’s administration and the four utilities building the Atlantic Coast Pipeline. Under the deal, announced Friday, the pipeline operators would pay $57.8 million for projects the governor wants, and, in exchange, the operators get to build the multibillion-dollar pipeline across eastern North Carolina. (Read the memorandum here.)
Former N.C. House Majority Leader Paul “Skip” Stam, a Wake County attorney in private practice, says the deal violates the state constitution and would take away the rights of North Carolinians to challenge terms of the agreement in court. In contrast, Gerry Cohen, the General Assembly’s former special counsel, said the agreement seems unusual because it didn’t go through normal budget channels. But Cohen thinks it could survive a possible legal challenge.
Meantime, legislative leaders are seeking guidance on the legality of the arrangement.
“The Speaker’s office is reviewing details of the agreement with the General Assembly’s Fiscal Research Division and the Office of State Budget and Management,” Joseph Kyzer, spokesman for House Speaker Tim Moore, R-Cleveland, told Carolina Journal. “We learned of the fund on Friday afternoon when it was announced to the public and will comment after we receive additional information from those agencies.”
Shelly Carver, a spokeswoman for Senate leader Phil Berger, R-Rockingham, said Berger’s office was looking into the issue.
“It’s beyond me what [Cooper’s] legal authority could be for this,” Stam told CJ. “I know of no authority for this whatsoever.”
The state Department of Environmental Quality evaluates projects and decides whether an applicant has met the requirements to obtain a permit, Stam said. The pipeline developers met their burden.
In addition, Stam said the governor told pipeline developers, in essence: “I’ll give you a permit to which you’re otherwise entitled if you’ll give $58 million to some of my favorite objects of beneficence” — repairing environmental harms, supporting economic development projects, and building renewable energy facilities.
He said Cooper is trying to enact what’s known legally as an exaction. “It’s what the government tries to get private people to pay in exchange for letting them do things with property.”
The agreement states the funding arrangement is not a settlement based on penalties, fines, or forfeitures. (Here is the state law covering distribution of settlements.)
Stam thinks the governor is playing word games.
Just because the governor said it’s not a settlement “doesn’t mean he has the authority to do this, and that it’s not a settlement,” Stam said. The developers aren’t paying for taking land to build the pipeline, in which case money would go to landowners, Stam said. Rather, the governor is saying the developers are paying into the fund because the pipeline would impact the land during construction and limit its use when the pipeline is operating.
Stam is representing the conservative Civitas Institute in a legal challenge of a 1999 settlement reached by former Attorney General Mike Easley and Smithfield Foods. In that deal, Smithfield agreed to pay $15 million to N.C. State University for cleaner hog-waste disposal technology and $2 million a year for 25 years to the attorney general’s office for discretionary spending.
The lawsuit claims the settlement was in fact a fine. The state constitution requires fines to be spent on public schools. Civitas lost in Superior Court, but the ruling is now before the state Court of Appeals.
Joe Coletti, a senior fellow at the John Locke Foundation and former fiscal analyst for the state budget office, called the financial arrangement “extortion.”
“The payment was made under threat to move the project forward,” Coletti said. “The structure of the deal seems designed to skirt the constitutional requirement for the General Assembly to approve the raising and spending of funds. An escrow account approved by the governor with expenditures tied to the governor’s wishes is surely not in keeping with the spirit of the law or the constitution.”
For his part, Cohen, also in private practice, says the agreement may look fishy because it didn’t go through regular budget channels. But he doesn’t see a constitutional problem with it.
“It wouldn’t be the first time a third-party agency administer[ed] private funds,” Cohen said.
“It doesn’t jump out to me that there’s any constitutional issue if a third party says that it’s going to let the governor designate where certain monies are to go,” although he has not read all the documents to make a definitive conclusion, Cohen said.
Cohen said the deal Cooper worked out sounds similar to the structure of Golden LEAF, an independent, nonprofit third party that gives grant money to economic development projects.
One distinction might be that legislative leaders pick some of the members of Golden LEAF’s board of directors, with the governor appointing the rest.
Another difference is that Golden LEAF’s funding comes from a master settlement with cigarette makers. The memorandum of understanding between the governor’s office and the Atlantic Coast Pipeline operators states it is not a settlement and does not involve penalties, forfeitures, or fines.
Cohen said he’s not sure that makes a difference.
CJ has requested records related to the agreement from DEQ.
UPDATED, 2:20 p.m. CJ originally asked DEQ for “readily available background material on the memorandum of understanding between Gov. Cooper and the pipeline operators.”
Jamie Kritzer, spokesman for environmental Secretary Michael Regan, responded, saying CJ should review the memorandum of understanding and address other questions to the governor.
CJ has linked to the memorandum several times.
CJ responded by requesting all documents, correspondence, and emails referencing the memorandum, and asked Kritzer to review the N.C. public records law.
Executive Editor Don Carrington and Editor-in-Chief Rick Henderson provided additional reporting for this story.
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Legislative analysis raises many questions, few answers about proposed pipeline fund
From an Article by Nick Ochsner, WBTV News, February 5th 2018
RALEIGH, NC (WBTV) -
The heads of three non-partisan legislative staffs at the North Carolina General Assembly sent a memo to legislative leadership Friday in response to questions about the $58 million mitigation fund proposed by Governor Roy Cooper related to the state’s approval of key permits for the Atlantic Coast Pipeline.
Cooper announced the creating of the fund in late January, as part of an effort by the owners of the Atlantic Coast Pipeline—which includes Duke Energy—to gain approval for the project in North Carolina.
A press release from Cooper’s office announcing the creation of the fund said the money would “be used for environmental mitigation initiatives such as reducing the carbon footprint and expansion of renewable energy sources.”
The governor’s office said details on how the fund will operate will be forthcoming.
Document: Click SOURCE to read the MOU
The legislative memo sent Friday, obtained by WBTV, outlined questioned posed by staff that had yet to be answered by the governor’s office, including whether there is any legal authority for the creation of such a fund.
“First, it does not appear that the MOU is a legally binding contract but is more in the nature of a statement of intent,” the legislative memo said. “However, if the funds are ultimately transferred to an escrow account, we looked at whether the Governor has any authority to direct the use of the funds as suggested in the MOU.”
Since Cooper announced the creation of the fund, questions have abounded over who would control the money.
According to the memo, a board of directors will oversee its operation through a designated administrator. There is no information in the memo detailing who would appoint the board of directors or the administrator.
Document: Click SOURCE to read the memo from legislative staff
“We asked attorneys handling environmental law, economic development, and energy policy to look into whether there was authority under State or federal law for this type of arrangement, and they found no law specifically addressing the issue,” the memo said. “We also looked at whether the Governor has specific independent authority and again found that there was no law related to the issue, including no law that specifically prohibits it.”
The memo outlined five questions posed to the governor’s office but notes the response received from Cooper’s staff did not answer the questions asked.
A spokeswoman for Cooper’s office did not immediately respond to a request for comment regarding the points outlined by legislative staff.
SOURCE: http://www.wbtv.com/story/37430146/legislative-analysis-raises-many-questions-few-answers-about-proposed-pipeline-fund
Cooper hires pipeline, petroleum lobbyist as legislative director
Wednesday, February 7, 2018, by Nick Ochsner
RALEIGH, NC (WBTV) – Governor Roy Cooper hired a new legislative staffer with ties to the petroleum and natural gas industry the same month he announced a deal to approve permits for the Atlantic Coast Pipeline.
An invitation obtained by WBTV shows Cooper’s office recently held a meet and greet event for Lee Lilley, who the invitation billed as “Governor Cooper’s new Legislative Director.”
Lobbying disclosure records maintained by the U.S. House of Representatives show Lilley worked as a lobbyist on behalf of companies and trade groups connected the petroleum, energy and natural gas industry.
Included in the companies on whose behalf Lilley was registered to lobby Congress in 2017 was Dominion Resources, Inc.
Dominion is a major investor in the Atlantic Coast Pipeline project. Lilley was also registered to lobby Congress on behalf of the American Petroleum Institute, American Transmission Company and Arkema, Inc, a multinational chemical company that manufactures products in the oil and gas industry, among others.
The North Carolina Department of Environmental Quality—a cabinet agency that reports to Cooper—announced it would approve crucial water permits for the Atlantic Coast Pipeline on January 26, 2018. That same day, Cooper’s office announced Duke Energy and Dominion Power would contribute nearly $58 million towards the creation of an environmental mitigation fund.
The fund has come under scrutiny amid questions over who would control the fund, what it would be used for and whether such a fund is allowed under state law.
A copy of a memo drafted for lawmakers by the non-partisan staff at the North Carolina General Assembly found such a fund was unprecedented in state history. The memo concluded that staff from Cooper’s office had yet to answer many questions about the project other than to say the fund would be administered by a committee whose makeup had yet to be announced.
The meet and greet for Lilley was held on January 30, 2018, four days after the pipeline announcement.
Staff in Cooper’s press office have not responded—or even acknowledged—a request for comment submitted by WBTV prior to the publication of today’s story.
However, Cooper’s office formally announced Lilley’s hiring in a press release a little more than one hour after the story detailing Lilley’s hiring and previous lobbying work.
The release from Cooper’s office does not mention his previous work as a lobbyist, be says that Lilley will make $128,000 a year.