Allyson Duncan, a former member of the North Carolina Utilities Commission who left in 1998, a year before the end of her eight-year term, represented a newly formed gas authority before the Utilities Commission within months after resigning.

Duncan’s early departure to join the Kilpatrick Stockton law firm raised questions at the time about how quickly she should represent clients before the commission. Her representation of the gas district escaped scrutiny, by the media or otherwise.

The Senate unanimously confirmed Duncan in July 2003 to the U.S. 4th Circuit Court of Appeals. She has received bipartisan praise, with both GOP Sen. Elizabeth Dole and Democrat Sen. John Edwards supporting her nomination by President Bush. She is a Republican.

Duncan joined Kilpatrick Stockton on May 11, 1998. The multistate law firm counsels a number of utility companies, and represents them when they have matters that need approval from the commission, including rate changes, expansion of service, sales, and mergers.

Shortly after joining Kilpatrick Stockton, Duncan began to meet with the Albemarle Regional Energy Authority, which was formed by five counties — Camden, Chowan, Currituck, Pasquotank, and Perquimans — and four municipalities — Elizabeth City, Edenton, Hertford, and Winfall — in northeastern North Carolina. AREA was a natural-gas district. In 1997 the General Assembly passed legislation that permitted local governments to create public gas enterprises.

Officials, both elected and appointed, from each jurisdiction made up the AREA board. The northeastern local governments for years had been frustrated by what they believed was lackluster economic development, and blamed part of the problem on insufficient natural-gas service. North Carolina Natural Gas held the franchise rights to the northeast, but did not extend service to much of the territory because it wasn’t economically viable to do so.

The willingness to expand gas pipelines in the northeast changed drastically in 1998, however, when voters approved $200 million in bonds for areas with undeveloped gas service. AREA, which was formed with state Senate President Pro Tem Marc Basnight as “a driving force,” hoped it could position itself to harvest a large portion of the bond money.

But AREA’s first order of business was to persuade the Utilities Commission to revoke NCNG’s franchise rights to the northeast counties. NCNG came under review in July 1998 by the commission under a new state “Use It or Lose It” law, in which gas companies were required to provide service in their franchise areas within three years or lose their rights to the territories. NCNG was prepared finally to extend gas service to many unserved areas if it could secure a sizable amount of the bond funds.

AREA formed at its first meeting in Elizabeth City on March 30, 1998. Duncan resigned her position on the commission in early April, and joined Kilpatrick Stockton the following month.

News reports at the time raised the issue of Duncan’s potential conflicts of interest if she represented utility clients before the commission too quickly after leaving. An article in the May 20, 1998 News & Observer of Raleigh reported that Duncan was contemplating “what would constitute an appropriate ‘hiatus’ before she might begin appearing before her former colleagues on behalf of telecommunications companies or energy marketers.”

Federal law prohibits certain former public officials in the U.S. government from representing clients before, or even communicating with, boards or commissions they formerly served on for one year after leaving. North Carolina has no such law; the state only forbids former regulators from representing clients who have cases before commissions when the member leaves.

“You sort of have to chart your own course,” Duncan told The News & Observer.

The newspaper ran an editorial four days later about Duncan’s situation and the “revolving door phenomenon.”

“It’s reasonable to require those in certain government posts to put some time and distance between their public service and their private careers,” the editorial said. “But…the state has a duty to eliminate the dilemma with laws requiring those in certain government posts to avoid dealing with agencies they represented or with related ones for a year or two.”

The Triangle Business Journal also reported Duncan’s move and her potential representation of clients before the commission.

“Our firm has been at the forefront of reshaping the telecommunications, utilities, and natural gas industries in the Southeast…” Jim Cain, Kilpatrick Stockton’s senior partner in Raleigh, told the Triangle Business Journal in an April 13, 1998 article “Allyson fits extremely well in that focus.”

The weekly business publication reported that “it’s not uncommon for commissioners to join law firms after their term ends,” but said “Duncan is believed to be the first sitting utilities commissioner to make such a move.”

The General Assembly has been criticized in the past for not passing legislation that slows down the ”revolving door.” Many former state legislators themselves have returned to the capital to lobby their former colleagues.

“I think that it is not unreasonable to say that people in certain [government] roles might be limited in their contacts for a certain period,” said Ken Broun, a professor at the University of North Carolina School of Law who teaches professional responsibility. “A year strikes me as an appropriate time.”

Both The News & Observer and Triangle Business Journal noted that Duncan could possibly represent BellSouth Corp. and Enron Corp., two Kilpatrick Stockton clients, before the commission. AREA wasn’t far enough along in its development to be noted by the media, and Duncan’s representation of the group so soon after leaving the commission was never reported.

Duncan was formally introduced to AREA board members at a meeting June 15, 1998, as a representative of Kilpatrick Stockton. The law firm also represented gas companies Frontier Energy, El Paso Gas Company, and Enron. According to the AREA meeting minutes, Duncan informed the group that she formerly served on the Utilities Commission and that the commission “wants to see natural gas expansion occur in the state.” The meeting minutes stated that “her firm” would underwrite the cost of an expanded gas study, which AREA agreed to. Duncan told CJ that it was Frontier that would underwrite the study, not Kilpatrick Stockton.

On July 13, 1998 AREA informed the commission of its intent to organize as a natural-gas district. The group cited the “Use It or Lose It” law as the reason for its action. At a Pasquotank County commissioners’ meeting Aug. 3, Chairman Jimmie Dixon (also chair of AREA) said the gas authority had hired Duncan to lobby the legislature.

Dixon also felt confident enough to make another claim at the August meeting. According to the minutes, Dixon said, “(AREA) has the support of the North Carolina Public Utilities Commission….” The minutes also stated that Dixon “noted that although there are other regions in the state interested in forming natural gas authorities, the Albemarle Regional Energy Authority would be the first to receive funding for expansion of natural gas.” NCNG’s franchise rights hadn’t been addressed by the commission yet, AREA was in its infancy, and the bonds wouldn’t be approved until November.

In an interview this spring, commission Chairman Jo Anne Sanford said she didn’t know why Dixon made that claim. “We don’t foretell decisions,” Sanford said. “By what he meant or said, I don’t know.”

Dixon did not respond to questions about promises made to AREA, which were submitted to him in writing as he requested.

Duncan did not answer questions about her role with AREA or her relationship, if any, with the commission at the time, when reached by CJ last week.

“I don’t think you have your facts straight,” she said, without giving CJ the opportunity to explain the information it wanted to ask about.

“I don’t think this is productive,” she added. “I don’t have any problem with my representation of AREA.”

By August 1998 AREA geared up to challenge NCNG’s right to serve 17 northeastern counties. The commission scheduled a public hearing in Raleigh for Oct. 27, and AREA told all its members to plan to appear at that hearing.

In early September the bond referendum had been approved for the November 1998 ballot, and Dixon and Duncan urged leaders from the northeastern local governments to work for passage of the referendum. Dixon, at a Sept. 8 Pasquotank commissioners meeting, again claimed that AREA would have priority for funding if the gas bonds passed.

At an Oct. 12, 1998 meeting Duncan introduced a Frontier Energy representative to AREA members, who said their interest in the northeast was contingent on passage of the bond funds.

Duncan also reported at the meeting that she was trying to get the commission to move its scheduled Oct. 27 public hearing to Elizabeth City, which would produce greater representation from AREA members to speak against NCNG. She succeeded. Of the 17 individuals who testified against NCNG at the hearing, 16 represented AREA governments, AREA economic development agencies, or AREA itself. One of the most repeated complaints was that NCNG had the exclusive franchise for 40 years and did nothing with it. Dixon asked the commission to allow AREA “to be the appointed franchise of (its) five-county area.”

The gas bond referendum passed Nov. 4. On Nov. 12 AREA members and Duncan met with Gisele Rankin of the N.C. Utilities Commission Public Staff, a separate agency from the commission that is designed to represent the public before the commission in utilities cases. The attendees discussed procedures to apply for the bond money, despite the fact that NCNG’s franchise was theoretically still in doubt.

AREA also began to entertain offers from outside gas companies who were interested in serving the northeast, now that the $200 million bonds were passed. However, no companies sought to obtain rights to serve the northeast themselves or request the bond money on their own, lending credence to Dixon’s claim that AREA would be first to receive bond funds.

Meanwhile, in submitted written arguments to the commission, Duncan battled NCNG lawyer Edward Finley over admissibility of testimony and requests for information.

On Dec. 7 and Dec. 8 the commission heard oral testimony about the fate of NCNG’s franchise rights to the northeast. Duncan reported to AREA in a Dec. 14 meeting that “North Carolina Natural Gas became very contentious during the hearing, and questions from the Utilities Commission were very hostile.” The minutes said Duncan “felt extremely positive about the hearing.”

At a Jan. 11, 1999 AREA meeting Duncan reported that wording in the bond legislation required gas districts to be franchised to receive bond money. The minutes state that Duncan questioned the commission about it at its last meeting, and the commission found out from bill drafters that “that sentence was not meant to be included in the bill.” According to the minutes, Duncan “asked the Commission to follow up on this situation.”

On March 8, 1999 AREA set a deadline to receive proposals from private companies to serve the northeast, even though AREA did not own franchise rights. On March 17 the commission revoked NCNG’s franchise rights for 14 of the 17 Northeast counties, including those represented by AREA.

Sanford told The News & Observer at the time, “It will be a free-for-all [for the franchise], in a good sense of the word. The franchise that prevented anybody else from providing gas service will no longer act as a barrier.” However, no “free-for-all” materialized, as the territory was ceded to AREA by all other companies, even though the group had no expertise in the gas business.

By March 2001 AREA’s successor organization, the Albemarle Pamlico Economic Development Corporation, in partnership with Carolina Power & Light, had been awarded the northeast franchise and $188.3 million of the $200 million in bond money by the commission.

It is still unclear why Duncan left the commission early and whether Kilpatrick Stockton hired her with specific client(s) in mind. CJ was unable to contact Jim Cain of the law firm after leaving phone messages, and Cain has yet to respond to questions submitted by electronic mail.

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].