News: CJ Exclusives

Why hasn’t governor sued legislature over Atlantic Coast Pipeline fund?

Gov. Roy Cooper in June 2017 (CJ file photo)
Gov. Roy Cooper in June 2017 (CJ file photo)

If Gov. Roy Cooper felt so strongly he had legal authority to create the unusual $57.8 million Atlantic Coast Pipeline mitigation fund, then why didn’t he sue to prevent the General Assembly from commandeering the money?

“That’s a good question. I don’t know,” said Pat Ryan, spokesman for Senate leader Phil Berger, R-Rockingham. “Maybe [the governor and his staff] didn’t think they had a strong enough case.”

Cooper, a Democrat, isn’t timid about taking the Republican-led General Assembly to court when he thinks the legislative branch encroaches on his executive powers.

He’s sued several times over a series of changes to the state elections board. Other lawsuits involved legislation limiting his appointment powers, Senate confirmation of his appointees, funding for the Opportunity Scholarship Program, reorganization of the N.C. Industrial Commission, limiting the number of N.C. Court of Appeals members, and seeking to strike constitutional amendments from the 2018 election ballot.

Cooper’s eagerness to sue over myriad separation of powers claims makes his passive stance on the pipeline stand out. After all, the governor argued the fund was needed to create jobs and address environmental issues important to his political base and the state.

Carolina Journal asked the governor why he stayed on the legal sidelines over the pipeline fund. His office did not answer that or other questions, including whether he still thinks he had authority to create the discretionary fund. Instead, his office sent a summary dated Dec. 20 explaining how the discretionary fund evolved.

Likewise, Cooper didn’t respond to a January 2018 CJ question about the constitutional status of his fund. But documents the Governor’s Office released at the end of December to fulfill a public records request the General Assembly made months earlier included emails showing the CJ query was discussed.

“I believe the Governor has the authority to sign such a document. Courts have typically allowed private industry some latitude in how they spend funds to mitigate for environmental and related effects of projects,” Cooper attorney William McKinney wrote in an internal email that was never sent to CJ.

McKinney’s email didn’t cite any legal references to support his statement, or cite constitutional provisions outlining Cooper’s authority to accept money for a discretionary fund under his control. To date, the state has received no money.

Cooper also stumbled initially explaining how the pipeline fund was negotiated through his office between private entities and pipeline partners.

At a February 2018 press conference, CJ twice asked how his office took the lead hammering out the memorandum of understanding sealing the deal.

“I really don’t know,” he said at the time.

Yet the Dec. 20 summary and other documents show Cooper and members of his senior staff worked hand-in-glove throughout much of 2017. Duke Energy lobbyist Kathy Hawkins pitched the memorandum of understanding idea to Cooper senior adviser Ken Eudy. The pipeline coalition of utility companies wrote the first draft.

CJ broke the story about Cooper’s secret side deal (see CJ series here). Lawmakers responded quickly. They said the state constitution allows only the General Assembly to receive and disburse state money, and raised concerns Cooper might be creating a slush fund from a pay-to-play setup.

Cooper announced the discretionary fund within a half hour of the N.C. Department of Environmental Quality issuing a news release saying it approved a vital water permit to allow pipeline construction. Both items were negotiated simultaneously. Cooper denied any connection between them. He said the discretionary fund would pay for environmental mitigation, economic development, and renewable energy projects.

Documents make clear Cooper wanted to create the mitigation fund because he didn’t trust the General Assembly to use the money for purposes he deemed important. He wanted to coordinate the announcement of the fund with the approval of the permits to help blunt disappointment among environmental groups who were lobbying him to reject the pipeline.

In response the General Assembly passed House Bill 90, which diverted control of the money from Cooper to the General Assembly, and reassigned the spending for education programs in the eight counties the pipeline will traverse.

Berger and House Speaker Tim Moore, R-Cleveland, then created an Atlantic Coast Pipeline subcommittee to investigate the pipeline deal. The subcommittee hired Eagle Intel Services, a private investigation team of former federal special agents, to look into potential improprieties.

Andy Taylor, a political science professor at N.C. State University, said it’s too soon to tell if the committee’s findings could harm Cooper’s standing and 2020 re-election hopes.

“He’s worked hard to cultivate an image of him being kind of squeaky clean,” Taylor said of the governor. Cooper’s said his administration would restore ethical government, which he said was languishing after a decade of Republican control.

“Anything that can permeate public consciousness and undermine that image of him will presumably hurt him,” Taylor said. “It’s possible this is the beginning of an unfolding story that may go to high-profile, full-blown investigation, hearings, and significant and lengthy media coverage.”

Cooper also may have concluded the General Assembly’s argument had merit: The governor didn’t have the constitutional authority to control the money.

Or Cooper may have decided Republicans overplayed their hand.

They’ve portrayed Cooper as exercising “an illegitimate, possibly illegal use of state authority to shake down a private entity,” Taylor said. But instead of telling pipeline partners to keep the money, Republicans diverted the fund to a different use. Doing so made it harder for lawmakers to argue Cooper abused his power for political gain, or did anything illegal.

Rep. Dean Arp, R-Union, made a similar argument, suggesting pipeline partners should not pay the money. Former Gov. Pat McCrory also urged lawmakers not to accept the money because it was tainted.

The $6.5 billion, 604-mile Atlantic Coast Pipeline will carry natural gas from West Virginia to Virginia, and across 195 miles of North Carolina.