In his pursuit to build ethanol plants in eastern North Carolina, DFI Group President William Horton says he unwittingly got on the wrong side of the most powerful politician in the state.

Economic developers’ enthusiasm over Horton’s promise to bring jobs and a market for locally grown farm products was tempered by his deals with outsiders to deliver natural gas to his proposed plants.

Horton attempted to work with South Carolina-based gas company SCANA Corporation and Texas-based El Paso Merchant Energy Corp. to deliver liquefied natural gas to the plants. Meanwhile, Senate President Pro Tem Marc Basnight promoted friends at the Albermarle Pamlico Economic Development Corporation in their effort to get up to $200 million in taxpayer-funded bond money to build a pipeline in the east.

Horton explores ethanol in the east

In early 2000, APEC and partner CP&L requested $44.2 million in bond funds for the beginning phase of their project in northeastern counties. At the same time, Horton was planning the first of three proposed ethanol plants at a site near Williamston in Martin County. During the process, Horton was introduced to Rick Watson, president of North Carolina’s Northeast Partnership, which shared its offices and staff with APEC. Horton discussed with Watson road and infrastructure improvements to the site of the proposed plant.

Access to natural gas was crucial to Horton’s plans. Horton had reached a preliminary agreement with SCANA to explore the extension of a pipeline into eastern North Carolina to serve the ethanol plants. Little did he realize, however, that the SCANA project would pose a threat to the fledgling APEC-CP&L venture.

DFI’s efforts to connect a SCANA pipeline to its plants repeatedly faced obstacles. The two parties broke off their agreement when DFI was unable to get its plants off the ground, SCANA spokesman Robin Montgomery said. Horton said he was unaware that APEC-CP&L was planning a pipeline when he started working with SCANA.

Horton said SCANA officials told him they backed off because of pressure from CP&L in North Carolina. Horton said Watson had told him to “stay under the radar screen” on his project with SCANA, and that DFI would not get environmental permits from the state until the Utilities Commission approved bond money for APEC’s pipeline.

After the arrangement with SCANA failed, but still maintaining hope for a site in Martin County, Horton turned his attention to another site on Radio Island, in Morehead City’s harbor.

Including in the plan was the delivery of liquefied natural gas to the Radio Island site and the barging of natural gas to the Martin County plant on the Roanoke River. DFI reached an agreement with El Paso Merchant Energy Corp. of Houston to transport liquefied natural gas.

Plans for the Radio Island project, however, didn’t get very far. Citizens of Carteret County, especially in Morehead City and Beaufort, opposed the plant. DFI abandoned its plans for Radio Island in February 2001. But later in February the State Ports Authority granted El Paso an option to lease land on Radio Island for a gas terminal. Again unknowingly, Horton had ushered in potential competition to the APEC-CP&L (now called Eastern North Carolina Natural Gas) gas pipeline project in the east, this time just as it was about to apply for the remaining $149.6 million in natural-gas bond funds.

Horton said that in hindsight his agreement with El Paso “was the beginning of the demise of our relationship with the Northeast Partnership,” because it posed a threat to the eastern North Carolina pipeline project. He repeatedly had difficulty getting environmental permits for his ethanol plants.

Horton alleges conspiracy

Despite ENCNG’s success winning $188.3 million in bond funds, Watson and Basnight’s other political allies in eastern North Carolina apparently held a grudge against Horton because of his attempts to find a competing supplier of natural gas. Former Wake Forest Mayor Jim Perry rekindled a friendship with Horton in November 2001 on the basis that he could help smooth over sore feelings with Basnight, whom, he said, also was a friend of his. Perry said he could help Horton get political support for his projects.

Horton said associates of Basnight’s told him on many occasions that he would never get permits for his plants because of Horton’s perceived interference in Basnight’s plans to bring natural gas to eastern North Carolina.

Horton alleges that officials, including Watson and Perry, launched an attempt to take over his ethanol investments by invoking Basnight’s political power. He said the officials threatened that if he didn’t sell his proprietary information and knowledge to them, they would put him out of business. Since then, loans to Horton have been recalled and lines of credit to him have been cut off.

Chesser is associate editor at Carolina Journal.