News: CJ Exclusives

Constitutional questions surrounding $57.8 million pipeline deal persist

Former legislative counsel Cohen wonders why governor got involved in a deal normally handled by private parties

Gov. Roy Cooper (CJ file photo by Kari Travis)
Gov. Roy Cooper (CJ file photo by Kari Travis)

Constitutional questions persist about the murky $57.8 million deal between Atlantic Coast Pipeline operators and Gov. Roy Cooper.

“Laws are presumed to be constitutional,” Gerry Cohen, former general counsel for the General Assembly, told Carolina Journal on Thursday, Feb. 15. “So this law the legislature’s passed … is on its face constitutional. But it doesn’t mean it’s actually constitutional.”

Gov. Roy Cooper said Wednesday he would let House Bill 90 become law without his signature. The legislation diverts the financial gift from Cooper’s control to local education agencies. School districts in the eight North Carolina counties through which the natural gas pipeline passes would decide how to spend the money.

A letter sent Thursday to legislative leaders by Cooper’s chief of staff Kristi Jones didn’t address the constitutional matter, either. It said the governor’s top attorney William McKinney and senior adviser Ken Eudy negotiated the deal with pipeline operators. And had the General Assembly not interfered with the arrangement, the letter suggested, mitigation funds might start flowing soon. (Read the letter here.)

While the letter doesn’t mention possible legal action, Cohen said Cooper may act against the measure. “The governor letting this become law doesn’t mean he can’t challenge it later in court,” Cohen said.

He’s not sure who else might have standing to file a court challenge. Because the Mitigation Memorandum of Understanding between Cooper and the energy companies building the 600-mile pipeline from West Virginia to Robeson County didn’t name specific recipients, or designate exact sums of money for particular use, Cohen said they might not have standing to file a lawsuit.

But, he said, the pipeline coalition could withdraw the money, as Cooper warned Wednesday.

“I don’t think the legislature has any power without the consent of the grantor, the donor, to spend it on something else than what’s specified,” Cohen said. Cooper and the pipeline partners wanted to use the money for environmental mitigation, economic development projects, and renewable energy activities.

Duke Energy and Dominion Power, two members of the pipeline coalition, failed to respond to a query about whether they intend to abide by the legislature’s reallocation of their money, questions about Farm Bureau’s involvement in stimulating the discretionary fund deal, or other matters.

Duke’s corporate communications office sent a response, stating:

“As part of the approval process, we worked with all three states through which the pipeline passes to develop mitigation measures for these impacts. In North Carolina, a memorandum of understanding was developed as part of this mitigation process. The state determines how to administer those mitigation funds.”

The biggest question in Cohen’s mind remains whether the $57.8 million is state money.

“It appears it’s skating really close to the edge whether they are state funds,” Cohen said. “If they are state funds, then the legislature would have to approve their appropriation.

“Certainly the governor has the authority to accept funds under whatever terms the grantor chooses. But that’s not the same thing as spending that money,” he said.

Republican legislative leaders redirected the money because they believe Cooper’s plan would violate constitutional requirements that state money be appropriated through the legislative process.

But a wrinkle developed Thursday, when it was revealed by “NC SPIN” host Tom Campbell the $57.8 million, which Cooper has called a voluntary contribution, wasn’t negotiated by Cooper’s office but by private parties through the N.C. Farm Bureau. It is unclear what impact that development might have on an ethics complaint filed by the Civitas Institute against Cooper on Wednesday.

Farm Bureau president Larry Wooten did not return a call for comment.

Before Jones sent the letter to lawmakers, Republican leaders continued considering their options. “Legislators are still learning about this and other breaking news regarding the pipeline fund through media reports today, so the speaker’s office will once again need time to review the new information coming to light before responding further,” said Joseph Kyzer, spokesman for House Speaker Tim Moore, R-Cleveland.

“I think we would need to see some additional details on this before weighing in further,” said Shelly Carver, spokeswoman for Senate leader Phil Berger, R-Rockingham. 

Lee Lilley, a former Dominion Energy lobbyist recently hired by Cooper as a lobbyist, came under fierce questioning earlier this month about the pipeline deal.

State Rep. Jimmy Dixon, R-Duplin, chairman of the House Agriculture Committee, and chairman of Appropriations for Agriculture, Natural and Economic Resources, said he was surprised when Cooper announced his desire to set up an escrow fund with the energy companies’ money, that secret negotiations took place, and that Farm Bureau was part of the process.

“To be perfectly candid, this is the first instance in which it has been proposed or revealed that Farm Bureau had anything to do with it. I’ve been a member of Farm Bureau for 51 years, and I’ve worked closely with them” on a host of legislation the organization supported or requested, Dixon said.

He wouldn’t guess why Farm Bureau turned the deal over to Cooper.

“It would be speculative on my part until I heard them say this is the way we were involved, this is why we were involved. But I will pose that question to the particulars that I deal with in the Farm Bureau,” and tell them he would have liked to have been asked to contribute to the discussion, Dixon said.

Cohen said it’s a good question why Farm Bureau didn’t simply consummate a private deal with the pipeline operators to run secondary gas spurs to businesses and communities along the pipeline route instead of shifting the negotiated deal to Cooper.

Under state law, “The pipeline operators certainly have the power to simply have an agreement with a third party if it’s for certain purposes,” Cohen said. He is not aware of any federal regulatory restrictions to privately paid gas line extensions.

  • caesar

    Cooper should resign!