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Legislature putting investigator onto Cooper Administration over Atlantic Coast Pipeline

Posted November 14, 2018 6:25 p.m. EST
Updated November 14, 2018 8:06 p.m. EST

Route of the Atlantic Coast Pipeline through eastern N.C.

— State legislators will hire an investigator to review Gov. Roy Cooper administration's handling of the Atlantic Coast Pipeline amid Republican suggestions that the governor may have extorted Duke Energy for millions over a key project permit.

The decision came at the end of the second legislative committee meeting in a row on the controversy during which Republican lawmakers essentially asked rhetorical questions from a lectern. No one from the administration was there to answer.

The Governor's Office said Republicans "staged another bizarre kangaroo court to score political points." Cooper has repeatedly denied the pay-to-play accusations, which Republican leaders present not as fact, but as open questions that the administration won't answer to their satisfaction.

"We have been more than patient," Sen. Harry Brown, R-Onslow, said Wednesday. "The governor has stonewalled us for almost nine months now."

The administration has addressed many of the questions Republicans have posed, but to the media, including WRAL News. GOP leaders in the majority at the General Assembly say their own questions, in repeated letters to top administration officials, have been dismissed, including those in a detailed letter sent in early September.

"May be a perfectly reasonable explanation," Sen. Paul Newton, R-Cabarrus, said at one point Wednesday, during a presentation titled "Serious Unanswered Questions."

Pipeline permit, fund announced on same day

The backstory begins in January, when the Department of Environmental Quality approved a crucial state permit for the Atlantic Coast Pipeline, which will bring fracked natural gas from West Virginia into North Carolina for Duke Energy, Dominion Energy and other partners. The same day that permit was announced, the administration announced a $57.8 million mitigation fund that the pipeline group would pay into for economic development, environmental mitigation and renewable energy grants along the pipeline route.

The money would be held outside the state treasury in an escrow fund designated by the governor, and spending decisions would be made later, via executive order, according to a memorandum laying out the plan.

The timing raised concern: Had the administration held back on the permit while negotiating the fund?

The partnership had already agreed to a similar fund in Virginia, which the natural gas pipeline will also traverse. But that agreement, for roughly the same amount, was with the state. North Carolina's agreement was specifically with the governor, and the administration had pushed for just that arrangement.

The legislature moved quickly to reroute the money, passing a law that would funnel any payments to schools in counties the pipeline will cross. They raked Cooper's new legislative liaison over the coals in a February hearing, then sent the administration written questions, demanding answers on how the mitigation fund was negotiated.

Cooper later said he had not planned to decide himself how grants were given out, but that he envisioned an appointed board of experts deciding how to support job creation along the pipeline path. This wasn't written into the memorandum or written down anywhere the administration could point to. The administration also said it wanted to work outside the treasury because it did not trust the Republican-controlled General Assembly.

Top General Assembly leadership created a committee over the summer to look at the issue, as well as the administration's response to Hurricane Matthew. That committee met for two hours in August without members asking questions of Cooper Chief of Staff Kristi Jones or other administration officials in the room. The group, chaired by House Speaker Tim Moore and Senate President Pro Tem Phil Berger, created a subcommittee to dig deeper on the pipeline issue.

That subcommittee met for the first time Wednesday, and Cooper spokeswoman Sadie Weiner said the administration wasn't invited. Republicans said it was, and they pointed to repeated letters asking the administration to answer questions before the hearing date, which they also said they delayed last month at the administration's request due to ongoing Hurricane Florence response operations.

Brown asked during Wednesday's meeting if anyone wanted to speak for the administration, and no one answered.

Cooper spokesman Ford Porter said in a statement Wednesday that the legislature "should focus on bipartisan hurricane recovery and funding public schools and less on kooky whodunit capers that just make them look silly."

Lawmakers haven't questioned Duke officials

GOP subcommittee leaders acknowledged that they haven't reached out to Duke or other pipeline partners to ask whether they feel extorted, which is what their questions suggest. Brown said the investigator will do so.

Spokespeople for Duke and Dominion sidestepped the question when WRAL News put it to them via email Wednesday. Duke spokeswoman Tammie McGee simply laid out the pipeline approval process in response.

"As part of receiving federal approval for the project, we worked with all three states (West Virginia, Virginia, North Carolina) to develop mitigation measures for these impacts," she wrote. "In North Carolina, a memorandum of understanding was developed as part of this mitigation process. The state of North Carolina determines how to administer those mitigation funds."

Those funds haven't been paid out. Half was supposed to be paid when final construction approval came from the federal government. That has been granted, but it was later stayed by a federal court as part of an ongoing lawsuit. The other half was to be due when the pipeline goes into service.

Among the issues GOP legislators pointed to Wednesday: A draft permit denial letter in the project case file, which is available online. The draft is dated after DEQ staff recommended a green light for the permit.

Why would the state need a denial letter at that point, Newton asked. Was it a threat, he asked.

Aaron Ruby, a spokesman for the pipeline developers, told WRAL News Wednesday that the first time anyone from the ACP, Dominion or Duke saw the draft denial letter was when a reporter sent it to him two weeks ago, long after the permit and mitigation fund were decided.

DEQ spokeswoman Bridget Munger told WRAL News when asked about the letter in February that it's "common practice for staff to prepare both an approval letter and a denial letter" for projects like this one – those that include a public hearing and where the permitting decision is made by the division director.

"The hearing officer’s report may make a recommendation, but the director makes the final decision after reviewing all the supporting documentation that is provided with the report," Munger said in an email at the time. "Therefore, both approval and denial letters are drafted in preparation for the director’s decision."

Munger pointed to only one other example where a draft denial letter was created: A permit tied to the Alcoa dam project on the Yadkin River.

Cost of investigator unknown

The subcommittee may eventually subpoena administration officials, Brown and other leadership said. For now, the subcommittee chairs, Brown and Rep. Dean Arp, R-Union, are empowered to pick an investigator. Brown volunteered to include one of the subcommittee's Democrats, Sen. Floyd McKissick, D-Durham, in that process.

Chuck Stuber, a former FBI agent who ran for state auditor two years ago as a Republican, was in the audience for Wednesday's meeting. He declined comment afterward. Brown said he wasn't familiar with Stuber and that no decision has been made who to hire.

There was bipartisan support Wednesday for getting answers to at least some of the questions Republicans posed, if not for the methods proposed.

"I agree that we do need information," McKissick said during the meeting. "We just don't need to engage in a witch hunt."

Rep. Becky Carney, D-Mecklenburg, said it would be better to subpoena administration officials instead of spending an unknown amount on an investigation. She asked several questions about cost, and Brown said he'd come back to the subcommittee with that information.

The committee took a voice vote on its decision to hire an investigator, as opposed to a roll-call vote, making it difficult to determine exactly how everyone voted. It appeared all of the Republicans voted yes and that Carney voted no. McKissick said after the meeting that he voted no as well.

A subsequent vote to send the administration an open records request seeking pipeline decision documents appeared to be unanimous.

"This thing just doesn't look or smell very well," Brown said. "And yet we've gotten nowhere from this administration."