News: CJ Exclusives

N.C. Bankrolled Climate Change Nonprofit

Air Quality Department also recruited N.C. companies to join

N.C. air quality officials bankrolled a new national nonprofit that seeks to persuade companies, organizations, and state and local governments to report their greenhouse gas emissions in hopes of curbing climate change.

The N.C. Division of Air Quality paid $100,000 to help fund The Climate Registry, a California-based group, and aggressively recruited companies to join as pollutant reporters, public records show.

Records also show that Brock Nicholson, deputy director of DAQ, played a key role in launching the nonprofit. Nicholson, who is on The Climate Registry’s board of directors and executive committee, traveled on behalf of the registry, charged all his costs to DAQ, and tried to recruit surrounding states to join and pay membership fees.

The Department of Environment and Natural Resources, of which DAQ is a part, has backed the registry as well. DENR Secretary William Ross and Gov. Mike Easley gave their blessing to North Carolina’s grant to the group, and DENR paid $3,500 to join the registry’s roll as an emissions reporter for 2008.

In addition, air quality officials conducted a recruitment seminar last year at DENR’s offices in Raleigh aimed at persuading companies to join. Nicholson also sent a letter on DENR stationery to more than 3,000 entities in North Carolina, many of them DAQ-regulated companies, asking them to sign on.

In an interview with Carolina Journal, Nicholson defended DAQ’s participation in the registry. “This is not unlike any agency that’s a member of a national organization that promotes the activities related to what the organization does,” he said.

But questions remain about North Carolina’s involvement with the nonprofit, and about groups that push companies to catalogue or reduce greenhouse gas emissions in general.

“Groups which advocate such C02 restrictions generally have a vested interest — their business plan boils down to getting the government to buy their product, because it’s too expensive otherwise,” said John Christy, distinguished professor of atmospheric science and director of the Earth System Science Center at the University of Alabama in Huntsville.

What is The Climate Registry?

The Climate Registry, a 501(c)(3) tax-exempt organization, is designed to provide a uniform standard for measuring greenhouse gas emissions in North America. Its mission is to get companies, organizations, municipalities, and other entities to report their carbon footprint.

The goal, according to the registry’s Web site, is to create “a vehicle for politically and geographically diverse states/Native Sovereign Nations//provinces and territories to take action together on climate change.” Among other advantages, members benefit by showing “environmental leadership” and by having access to discussions on “evolving [greenhouse gas emissions] policy.”

Thirty-nine states, the District of Columbia, nine Canadian provinces, six Mexican states, and three Native American tribes have signed on as members of the registry. Members are not required to report their emissions on a state-, province-, or tribe-wide basis. Instead, they serve as grantors to the registry, appointing a board member, signing a statement of principles and goals, and paying annual fees ranging from $20,000 to $50,000, depending on the state or region’s population.

They also serve as a conduit for recruiting entities within the state, province, or tribe as reporters. Unlike member states or regions, reporters sign on to track and report their own emissions. Reporters are still required to pay annual membership fees ranging from $450 to $10,000.

The registry has created what it calls a Climate Registry Information System that reporters use to input their greenhouse gas emissions information. The public then has access to the verified emissions reports. Supporters say the goal is to give companies a leg up on tracking emissions if a national cap-and-trade system becomes law.

Every state in the South has joined the registry except West Virginia, Kentucky, Mississippi, Louisiana, and Arkansas. Several states in the Midwest region — Nebraska, North Dakota, South Dakota, and Indiana — have not joined, either. Neither has Texas or Alaska.

Nearly 300 entities have joined as reporters nationwide. In North Carolina, eight companies, including energy giants Progress Energy and Duke Energy Corp., have signed on. DENR is the only part of state government that has joined as a reporter.

Although the registry’s reporting system is sold as voluntary, the group also supports state-level mandatory reporting of greenhouse gas emissions. In January, the registry’s board of directors created a committee to “further explore options for how the Registry might support state, provincial and regional mandatory [greenhouse gas] reporting needs.”

Financial backing

Little is known about the registry’s budget because its IRS Form 990 is not yet available. But documents obtained by CJ show that the registry estimated its budget at $1.89 million for fiscal 2008. The registry had $938,368 in total assets on Dec. 31, 2007, according to a balance sheet.

The registry is financed primarily from fees paid by its member states and reporters. It does, however, receive grants from private sources. Among them are the Arthur Blank Family Foundation, Kendall Foundation, Merck Family Fund, and the Energy Foundation.

Kendall, Merck, and the Energy Foundation are climate-change alarmist groups that award grants to environmental causes in the United States. In 2006, Merck gave grants to the Center for Climate Strategies for its Vermont and South Carolina projects. As reported previously by CJ, CCS is an environmental advocacy group that has influenced climate-change policy in North Carolina.

North Carolina joins the registry

North Carolina’s official involvement with the registry began early last year. E-mail records obtained by CJ show that Nicholson began sending and receiving correspondence about the registry in January 2007. Travel records show that his first meeting with the registry took place in February 2007.

In addition to serving on the board of directors, Nicholson joined the group’s steering committee and executive committee. He also moderated conference calls between registry staff and board members and traveled to registry-sponsored meetings on DAQ time.

As part of North Carolina’s participation, Nicholson drew from DAQ funds to make two payments of $50,000 to the registry for the 2007 and 2008 calendar years. The donations were voluntary but vital to get the registry up and running in its beginning stages.

According to DAQ spokesman Tom Mather, the funding came equally from two sources: an Environmental Protection Agency grant and a portion of DAQ’s share of revenues from the state gasoline tax.

The fees were to help seed the registry, Nicholson said. “We don’t anticipate that they will ever be paid again … we have made no commitment to pay any more, either.”

DENR paid $3,500 to participate as a reporter in 2008. The fee will be due annually if officials continue the membership next year.

“We thought it was important that DENR set an example and also be a reporter,” Nicholson said. “We hope that it expands to the entire statement government, but before we suggest people should participate, we need to set an example by doing it ourselves.”

Aggressive recruitment

As part of his recruitment efforts, Nicholson sent letters, made phone calls, and helped conduct at least one meeting aimed at getting entities to join the fold.

In May, Nicholson sent a letter on DENR stationery to more than 3,000 DAQ-regulated entities asking them to join the registry. E-mail records show that he worked personally to recruit companies such as SAS and Duke Energy.

On Oct. 2, 2007, DENR opened its offices in Raleigh for an afternoon session aimed at recruiting companies to join. The meeting resulted in Cormetech Inc., a Durham-based manufacturing company, becoming the second reporter in the entire nation to sign on.

Asked whether companies might feel pressured to join the registry because DAQ is a regulatory agency, Nicholson said that joining was voluntary and that the recruitment letter was “perfectly appropriate.”

But Marlo Lewis, a senior fellow at the Competitive Enterprise Institute, questioned the ethics of the action. “When a regulatory agency approaches a regulated entity and invites them to participate, the participation itself might not be regulating, but the participation is in someway coercive, so to say it is voluntary is really misleading,” he said.

David N. Bass is an associate editor of Carolina Journal.