News: Quick Takes

Cooper to NCGA staff: Pipeline fund a ‘voluntary contribution’ to state

Responding to questions from the General Assembly’s senior nonpartisan staff, officials from Gov. Roy Cooper’s budget office said a $57.8 million agreement Cooper made with the operators of the Atlantic Coast Pipeline is a “voluntary contribution” that will be distributed by a yet-to-be-named board of directors.

The response came in a memo Mark Trogdon, director of the legislature’s Fiscal Research Division, shared Friday, Feb. 2, with legislative leaders. Trogdon said the budget office’s reply was “not responsive” to the legislature’s questions and suggested Cooper or members of his administration may wish to explain the agreement in detail to lawmakers.

The agreement was laid out in a Mitigation Project Memorandum of Understanding between the four utilities that will build and operate the $5 billion Atlantic Coast Pipeline and Cooper. In it, the ACP agrees 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.

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

The memo from legislative staff to General Assembly leaders raised similar concerns. It concluded:

[I]t does not appear that the MOU is a legally binding contract but is more in the nature of a statement of intent. However, if the funds are ultimately transferred to an escrow account, we looked at whether the governor has any authority to direct the use of the funds as suggested in the MOU.

We asked attorneys handling environmental law, economic development, and energy policy to look into whether there was authority under state or federal law for this type of arrangement, and they found no law specifically addressing this issue. We also looked at whether the governor has specific independent authority and again found that there was no law related to this issue, including no law that specifically prohibits it. Absent additional details regarding where the money is and how it will be handled, we cannot give a further legal opinion.

Trogdon, along with director of bill drafting Kory Goldsmith and director of legislative analysis Karen Cochrane-Brown, asked Office of State Budget and Management officials five questions:

1. Who “owns” the $57.8 million?

2. Are these State funds?

3. Where the funds will be deposited (State treasury?)

4. Who will administer the fund?

5. Legal authority to enter into such a MOA?

OSBM replied:

Currently the fund does not exist, though the ACP has agreed to deposit half the money into an escrow account upon completion of a FERC action and the remainder upon completion of the project. The MOU states that the fund will go to purposes of mitigation, renewable energy and economic development in the areas affected by the pipeline construction. Once the fund is established, a board of directors, as yet to be named, will oversee its operation through a designated administrator. Because the fund will be established after the company’s voluntary contribution toward the above mentioned goals, it is not a fine, penalty, or forfeiture.

Trogdon was not satisfied. “Obviously, this is not responsive to the questions asked. The only new information appears to be that a board of directors will oversee the operation through a designated administrator,” the memo said.

He invited members of the administration to address the Joint Legislative Energy Policy Committee, which meets 1 p.m. Tuesday.

At press time, the governor’s office had not responded to an email asking if anyone with the governor’s office would attend that meeting.