@NCCapitol

@NCCapitol

Cooper's control of $58M pipeline fund raises questions

Posted February 4, 2018 6:00 a.m. EST

The 600-mile Atlantic Coast Pipeline, which will run from West Virginia to North Carolina and cost $5 billion to build, is designed to meet the growing need for natural gas in eastern North Carolina.

— A $57.8 million fund set up through the Governor's Office as part of the Atlantic Coast Pipeline project is raising constitutional questions, accusations of quid-pro-quo politics and the prospect of legal wrangling.

Such mitigation funds are not unusual for large utility projects expected to disturb wetlands and other vulnerable natural areas. But Republican legislators and an array of voices outside the legislature, including former Gov. Pat McCrory, question the way this one would be set up.

The three-page memorandum laying out the basics says the money will be held in escrow by a third party the governor picks and that the money will be spent on environmental mitigation, economic development and renewable energy projects along the pipeline's route. The funds would be paid by the company set up to build the pipeline, which is a partnership between utility companies, including North Carolina's Duke Energy and Virginia's Dominion Energy.

Spending details will be set out later, via executive order from the governor, the agreement states. This would sidestep, House Appropriations Chairman Nelson Dollar said, the legislature's constitutional authority to appropriate state money. Dollar said the governor can recommend spending priorities, but he can't decide how to spend it on his own.

"They may try a variety of wording, but it's very clear that the General Assembly appropriates public dollars in the state of North Carolina," said Dollar, R-Wake.

Gov. Roy Cooper's office said he has the authority "to administer funds that are not appropriated by the General Assembly," but it did not provide examples where the executive branch had previously done so.

"The (Atlantic Coast Pipeline builders), as they have in other states, provided these funds to be administered by the executive branch to ensure environmental mitigation and economic development in areas affected by this project," Cooper spokesman Ford Porter said in an email. "Gov. Cooper will continue to work to protect the environment and create good jobs across North Carolina."

Senate President Pro Tem Phil Berger's office said Thursday that he's examining the fund and its potential ramifications. McCrory, who now has a morning radio show in the Charlotte area, used part of that show this week to question why the media and Republican legislators weren't keying on the mitigation agreement after the Carolina Journal reported its details Monday.

"Who has control over this $58 million?" McCrory asked. "Who gets to spend it?"

McCrory also questioned whether the payment represents the quid in a quid-pro-quo deal for Cooper's Department of Environmental Quality to sign off on the pipeline's route through North Carolina. A major permit for water crossings was announced Jan. 26, the same day as the mitigation fund. The news releases on the permit and the fund were issued about 20 minutes apart.

McCrory called the connection "a very interesting and disturbing political signal."

"How do you work with government in the future?" McCrory said. "If local and state governments start requiring payments, we need to ask some serious questions on how those figures were developed (and) who negotiated them."

Cooper's office said the permit approval didn't depend on the mitigation fund and that the permit went through the normal review process run by environmental regulators.

“So then, it’s just a voluntary payment?" Joseph Coletti, a senior fellow for the right-leaning John Locke Foundation, said with a chuckle. "OK.”

Anti-pipeline activists who staged a sit-in Friday at Cooper's office{{/a} took a similar view, saying the governor sold out them out for $58 million.

The Atlantic Coast Pipeline operators agreed to a similar payment in Virginia, where the pipeline would run across the state and eventually hook North Carolina into shale gas fields in West Virginia. Coletti said there is "more detail and direction" in that agreement, though.

"This one, there’s not a lot there, but what’s there doesn’t look good," he said.

Paul Stam, an Apex attorney and a former majority leader for North Carolina House Republicans, confirmed Friday that he's researching the fund for potential clients, whom he declined to name.

“It’s not a function of the executive branch to collect money from private people in exchange for permits and then decide how to spend the money," Stam said.