News: CJ Exclusives

Cooper spokesman faces barrage of questions about pipeline fund

Lee Lilley, a former lobbyist for pipeline operator Dominion Energy and Cooper's legislative liaison, offered little to Republicans skeptical of Atlantic Coast Pipeline 'voluntary contribution'

Map from Department of Environmental Quality
Map from Department of Environmental Quality

Lee Lilley did little to assuage Republicans’ concerns over a $57.8 million “voluntary” payment to Gov. Roy Cooper’s office from companies building the Atlantic Coast Pipeline.

Lawmakers doggedly questioned Lilley, who Cooper hired as his director of legislative affairs less than a week ago, during the meeting a joint appropriations committee of the General Assembly on Thursday, Feb. 8.

Lilley, former legislative director for U.S. Rep. G.K. Butterfield, D-1st District, and a Dominion Energy lobbyist, had few answers for lawmakers, but Republican lawmakers acted on their own, designating the money, as part of House Bill 90, to help schools in the eight counties affected by the pipeline — Cumberland, Halifax, Johnston, Nash, Northampton, Wilson, Robeson, and Sampson.

Republican lawmakers rapidly fired questions at Lilley amid complaints from Democrats. They repeatedly asked Senate Majority Leader Harry Brown, R-Onslow, to end the barrage and return to the agenda, which involved funding for H.B. 90 — N.C. Truth in Education.

Brown didn’t waver.

“These are appropriate questions,” he said, noting that the pipeline funding provision was part of the bill. “I rule that it will be allowed today.”

Sen. Paul Newton, R-Cabarrus, wasted little time in bringing up the term, “slush” fund, which, he said, some people are calling the payment laid out in the memorandum, signed by Cooper’s lawyer, William McKinney.

“Do you know where the money’s going to go?” Newton asked. Lilley referred him to the memorandum.

In that memorandum, the Atlantic Coast Pipeline utilities agree to pay $57.8 million to an escrow account controlled by the governor. The money is supposed to cover costs of environmental harms caused by the pipeline, economic development projects, and renewable energy facilities in the eight N.C. counties the pipeline would cross. The payments would occur in two phases: one when the Federal Energy Regulatory Commission authorizes all the permits, and the second when the pipeline starts operating.

Carolina Journal and other media outlets have raised questions about the structure of the agreement, which falls outside the normal budgetary process and has not been approved by the General Assembly.

Republicans on Thursday asked Lilley whether he thought the project promoted economic development, about whether ratepayers would be ultimately responsible for the $57.8 million, and about whether this would become common practice, or if it’s a good practice. What happens with the money if the project falls through?

Several GOP lawmakers asked if anyone seriously believes the monetary arrangement had no connection to the pipeline’s approval — and if Cooper asked for the money.

Lilley, who acknowledged he represented Dominion during the federal phase of the Atlantic Coast Pipeline approval process — offered little of substance.

Who could explain the details of the memo, lawmakers asked, including how it came together and the relevant timeline? Again, Lilley could offer no answer. Newton, for instance, asked whether Lilley was familiar with the Hobbs Act, which addresses extortion.

Democrats said they knew little about provision targeting the $57.8 million to the schools, many of which are in parts of the state that continue to struggle economically. They also asked about how the memorandum differed from those in Virginia, which signed a similar agreement, and West Virginia, where negotiations on an agreement continue.

Cooper said a portion of the funds would be used for mitigation of construction disturbances to land and wildlife. The rest would be spent on unrelated economic development and renewable energy projects.

The North Carolina memorandum is light on detail and fundamentally different from the specific arrangement Virginia reached with pipeline principals on how to spend mitigation funds.

As for H.B. 90, the measure has two other contentious but less-controversial provisions. One would phase in funding over a three-year period, beginning with the 2019-20 school year, to pay for a mandated reduction in class sizes for grades kindergarten through three. GOP leaders had argued earlier budgets had offered school districts enough money to hire additional teachers, but the districts had diverted the funds for other purposes. H.B. 90 would direct funding to teachers.

The other provision would, for the third time since December 2016, combine the State Board of Elections and the state Ethics Commission in to a single Bipartisan State Board of Elections and Ethics Enforcement.

The previous mergers were ruled unconstitutional violations of separation of powers by state courts. Judges said the earlier versions did not give the governor enough control over the agency.

Most recently, the N.C. Supreme Court said the structure of the board — with four members of the governor’s party and four members of the opposing party — invited deadlocked votes, frustrating the governor’s ability to execute election laws.

Under the new version, the state board would have nine members — four registered Democrats, four registered Republicans, and one voter either registered with a third party or unaffiliated. The governor would select the partisan board members from a list of six candidates nominated by each party, and the ninth member from a list of two candidates provided by the eight board members.*

The governor also would have the ability to remove a member from the new board for any reason.

House Rules Committee Chairman David Lewis, R-Harnett, told the committee these changes should satisfy the court’s objections.

House Minority Leader Darren Jackson, D-Wake, objected to an immediate vote on the measure. Even though the bill is in the form of a conference committee report, and can be taken up by both chambers simultaneously, because of the procedural objection the bill has to sit for three legislative days. The bill cannot get final approval earlier than Tuesday, Feb. 13.

In a statement on the bill from Cooper through spokeswoman Sadie Weiner, the governor said: “It’s clear that the legislature finally bowed to public pressure on class size and expanding Pre-K, which is positive for our students, but it’s unfortunate that it has been lumped in with political shenanigans.”

*Editor’s note: This article was edited after initial publication to correct the process for appointing the ninth member of the state elections/ethics board.