News: CJ Exclusives

‘Mitigation’ money from Atlantic Coast Pipeline nowhere in sight

A Dominion Energy spokesman told Carolina Journal roughly 85 percent of the Atlantic Coast Pipeline will traverse existing utility right-of-way, including this area in Halifax County. (CJ photo by Don Carrington)
A Dominion Energy spokesman told Carolina Journal roughly 85 percent of the Atlantic Coast Pipeline will traverse existing utility right-of-way, including this area in Halifax County. (CJ photo by Don Carrington)

Eight North Carolina school districts tapped to split $57.8 million from Atlantic Coast Pipeline developers aren’t likely to see that money anytime soon.

Pipeline partners haven’t paid the state because a memorandum of understanding negotiated with Gov. Roy Cooper includes conditions that haven’t been satisfied. Court challenges against pipeline construction filed by environmental groups threaten to prolong the wait.

“At this time, no funds have been paid to the state,” Duke Energy spokeswoman Tammie McGee told Carolina Journal by email.

“We remain committed to fulfilling our obligations under the mitigation agreement,” McGee said, once the terms are met.

McGee said the agreement among Cooper and pipeline partners called for half of the $57.8 million to be paid to the state when construction authority was granted for the entire pipeline, and construction was not tied up by a court order or “a reasonable risk” of being halted by court order.

“The remainder will be provided when the project is placed into commercial service,” McGee said.

Dominion Energy and Southern Company Gas, also partners in the $57.8 million deal, haven’t responded to questions about it. A fourth partner, Piedmont Natural Gas, is owned by Duke Energy.

The Federal Energy Regulatory Commission approved construction of the $6.5 billion pipeline in late 2017. The 600-mile underground transmission line will carry 1.5 billion cubic feet of natural gas daily from West Virginia, through Virginia, to Robeson County in southeast North Carolina.

Construction has been on again, off again amid regulatory and legal skirmishes.

The 4th U.S. Circuit Court of Appeals ordered construction halted on Sept. 24. Environmental groups sued to kill U.S. Forest Service permits to drill below the Blue Ridge Parkway and Appalachian Trail in Virginia. A three-judge panel Sept. 28 heard oral arguments on that challenge, as well as a second challenge to state water quality permits.

“In addition to these other federal approvals that are now in litigation … the FERC approval for the overall pipeline is now in court, and being challenged,” said D.J. Gerken, senior attorney for the Southern Environmental Law Center who argued the case before the three-judge panel.

“It hasn’t happened very often for FERC to get held up,” Gerken said. “That will be playing out for a while.”

The pipeline partners don’t have to make any payments until those matters are resolved, so the eight school districts in the pipeline’s path won’t see any money before then.

The GOP-led legislature devised the school funding plan after saying Cooper’s side deal was illegal. The mitigation fund Cooper set up bypassed a constitutional mandate requiring state revenues to be allocated by the General Assembly. Lawmakers passed House Bill 90 assuming control of the money, redirecting it to school districts.

“Only if the funds are received will they go to those affected schools,” said Joseph Kyzer, a spokesman for House Speaker Tim Moore, R-Cleveland.  

“The money wasn’t actually appropriated in this year’s budget. Thus, the nonreceipt of those funds to this point does not create any budget gap,” Kyzer said.

Cooper termed the multimillion-dollar side deal a voluntary contribution for renewable energy projects and economic development, and to offset habitat damage. But the deal was hammered out in secret among the parties, and details of its genesis remain elusive.

CJ was the first media outlet in the state to question the unusual nature of the deal. It has reported extensively on the fund. (Find stories at this link.)

Republicans suggested the deal was a political slush fund for the Democratic governor, saying a pay-to-play scheme could harm the state’s business climate.

State Department of Environmental Quality officials testified in a March meeting of the Joint Legislative Commission on Energy Policy the $57.8 million was not necessary for mitigation. They already negotiated an all-inclusive $6 million payment from pipeline developers to cover all repair costs due to construction, based on a standard formula used in granting state permits.

At an Aug. 29 meeting the Joint Legislative Committee on Governmental Operations created an investigative subcommittee to delve deeper into the matter. The subcommittee was scheduled to meet Oct. 4, but the session was postponed until mid-November. The Cooper administration requested the delay so it could focus on Hurricane Florence recovery efforts.