Gov. Roy Cooper’s office did coordinate with state environmental officials on the timing of a key water quality permit approval and a controversial $57.8 million deal with Dominion Energy over the Atlantic Coast Pipeline. But a Policy Watch review of more than 19,000 pages of public records found no evidence that the voluntary fund, outlined in a Memorandum of Understanding between Cooper’s office and Dominion, explicitly greased the way for project to proceed.
Republican lawmakers have repeatedly alleged that the permit approval was contingent upon Dominion ponying up $57.8 million for a voluntary economic development fund. Both the approval and the fund were announced on the same day, Jan. 26, 2018, just 23 minutes apart.
Ten months after the media, including Policy Watch, and several environmental advocates filed Public Records requests seeking information about how the deal was struck, the governor’s office responded on Dec. 20 at 6 p.m., providing more than 5,700 documents totaling 19,000 pages . (WRAL has made these documents public  on its website.)
Republican lawmakers also received the records; they had attempted to informally get documents from the governor’s office, but receiving no response, later filed a formal public records request. Last month, a legislative subcommittee also hired Eagle Intel,  a private firm of three former special agents — one FBI and two IRS — to investigate the governor’s office and the circumstances behind the MOU.
Under the MOU, Dominion Energy and Duke Energy would have paid $57.8 million to an escrow fund, which would have been under the governor’s, not lawmakers’ or the state treasurer’s, control. The money would be used for economic development and renewable energy projects in the eight counties along the ACP route: Northampton, Halifax, Nash, Wilson, Johnston, Cumberland, Sampson and Robeson.
Last year, the legislature passed a law to remove the fund from the governor’s control and redirect the money — not yet due — to public school districts in those counties. The bill and the vote appeared to be political posturing: Lawmakers could continue their pattern of challenging the governor’s authority, while claiming to give money to chronically underfunded public schools.
The main takeaways
- The governor’s office and the NC Department of Environmental Quality coordinated on the timing of their respective announcements.
Secretary Michael Regan and senior members of the DEQ staff, particularly Deputy Secretary Doug Heyl, routinely communicated with the governor’s office about the status of various permits. However, this type of correspondence among members of the executive branch and state agencies is not unusual.
Gov. Cooper knew when DEQ would approve the permit; DEQ knew the MOU was coming. On Jan. 1, 2018, William McKinney, general counsel for Gov. Cooper’s office, exchanged text messages with the governor: “Should review it with Regan if he hasn’t seen it,” Cooper wrote. “It’s what we discussed earlier, right?”
Another email sent Jan. 24 among senior members of the governor’s staff circulated talking points and prepared for the inevitable questions the permit approval and the MOU would raise.
The MOU was signed on Jan. 25, but announced the following day, the governor’s office recently told Policy Watch. The timing was designed to show how the fund and a solar agreement with Duke Energy that would boost that energy sector “helped counterbalance the carbon impact and small number of permanent jobs resulting from the ACP construction.”
The governor’s senior staff edited DEQ press releases about the permit approvals and disapprovals. On Jan. 26, 2018, shortly after DEQ announced it had approved the water quality permit, the governor’s Communications Director Sadie Weiner forwarded the press release to her colleagues, noting “we will have a release out shortly.”
- Duke Energy and Dominion Energy had exclusive access to the governor’s office. The natural gas industry deployed a full-court press to convince Gov. Cooper and his energy policy director, Jeremy Tarr, that the ACP was a worthwhile project.
Tom Farrell, CEO of Dominion, and Lynn Good, CEO of Duke, met with Cooper several times. In some cases, no staff was present; the meetings were one-on-one. In others, staff from the Commerce Department also attended. In one meeting, Farrell met with Cooper to discuss Dominion’s merger with SCANA, a natural gas company.
Aubrey Hilliard of Texican, the largest natural gas marketer in the US, met with Cooper and DEQ staff, including Assistant Secretary Sheila Holman, to discuss the need for the ACP, Transco pipeline expansions and the possibility of extending the project into South Carolina.
On Dec. 29, 2017, Ken Eudy, the governor’s senior adviser, told attorney William McKinney that “Kathy [Hawkins of Duke Energy]” wants to sign tyhe document. I don’t think that we should let it linger much longer.“
- ACP proponents and opponents placed immense pressure on both DEQ and Gov. Cooper.
Thousands of letters flooded the governor’s office opposing the ACP. Millionaire environmental philanthropist Fred Stanback called it a “big mistake” that would lock the state into fossil fuels for the next 40 years.
When Jeremy Tarr, the governor’s energy policy advisor sent a summation of the dueling viewpoints, he noted that “the arguments for the opponents are more developed because they have provided me much more information.”
Proponents, including the state Commerce Department, the mayor of Rocky Mount and many economic development officials, claimed the ACP would create much-needed jobs.
The utilities bombarded the governor’s office with studies and facts and figures touting the alleged economic benefits. (However, neither Dominion nor Duke mentioned they would earn a whopping 14 percent rate of return on their investment.) Also buried in the report is that the total direct jobs “impact,” after construction, for North Carolina is just 52.
In fact, Dominion’s main contractors and inspection firms are from out-of-state, primarily Texas and Oklahoma.
As early as October 2017, the governor was weighing the pros and cons, likely knowing that his position on the project would be controversial, regardless. From Eudy: “We’re aiming to give the governor the best rationale for his decision that we can.”
- Gov. Cooper questioned the purported economic benefits of the ACP.
Throughout 2017, the governor asked his staff and the Commerce Department to “walk” him through the job creation. He also wanted to know if the projections were “realistic.” Since Dominion had announced the ACP would extend into South Carolina, Gov. Cooper asked, “What does that say about the need for the ACP?” — meaning that there would be a surplus of natural gas in the project’s original three states.
Even some of the ardent ACP supporters were cooling to the economic projections. Durwood Stephenson of the US 70 Corridor group wrote, “We are concerned as access costs” — millions of dollars to tap into the ACP line — “are beyond the means of our farmers and citizens and excessive for economical development projects.” Stephenson suggested a fund that will “provide jobs and economic opportunities. Without this fund, the pipeline will become an asset for Duke and Dominion with little benefit to local consumers and economic development interests. Do not encourage Gov. Cooper to risk his credibility until the jobs and development issues are assured.”
- Odds and ends: The original amount of the voluntary fund was $80 million.
Lee Lilley, a former federal lobbyist for Dominion at the McGuire Woods law firm, interviewed for a job with Cooper’s staff just a month before the MOU was signed. A longtime friend of William McKinney, Lilley was hired as the governor’s legislative liaison in January, and started his new job the week after the MOU was announced. Lilley played no role in the MOU, the governor’s office later told Policy Watch.
State geologist Ken Taylor and a DEQ colleague Jeff Reid sent the governor’s office a scientific paper detailing how refrigerated natural gas could be stored in “underground granite caverns” in Wilson County, as well as in the western Piedmont, along the Transco pipeline.
When senior advisor Ken Eudy heard that former Gov. Pat McCrory questioned the legality of the MOU, he responded to a colleague: “Hasn’t he found a job yet?”