Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.
Civitas Institute says governor used elected office for personal gain in negotiating 'slush fund' from Atlantic Coast Pipeline operators
The Civitas Institute has filed a state ethics complaint
against Gov. Roy Cooper, seeking a ruling and possible investigation into questions of his handling of $57.8 million from a utility coalition building the Atlantic Coast Pipeline.
"Not only is there a question that these funds could be considered an illegal gift under the State Government Ethics Act's gift ban, but they might trickle into projects or accounts that benefit the governor and/or his political campaigns,"
Civitas President Donald Bryson says in release issued Wednesday, Feb. 14.
"If declared ethical, this action sets a terrible precedent for what our elected officials can do outside of the constitutional process,"
- "This is a serious matter of public trust and transparency, and it's critical the people of North Carolina know exactly what happened, and whether any of Cooper's actions violate ethics laws."
Civitas filed the complaint as McClatchy's The Insider reported Cooper has ordered the staff of the State Board of Elections and state Ethics Commission to "refrain from taking any substantive action with respect to elections or ethics law policy decisions"
until a lawsuit challenging the merger of the two agencies wraps up.
Meanwhile, Carolina Journal received confirmation that neither Cooper nor his newly hired lobbyist Lee Lilley have responded to a pointed series of 15 questions about the pipeline fund posed Monday by Sen. Bill Rabon, R-Brunswick, and Rep. David Lewis, R-Harnett, chairmen of the Senate and House rules committees, respectively. They requested a response no later than Thursday.
"So far, the only statements we've seen are clear dodge sound bites from junior members of the governor's press office. Neither the governor, nor any senior member of his administration who actually participated in soliciting these funds and negotiating this deal, has made any public comments,"
a legislative source said.
"Gov. Cooper's administration's record on transparency, accessibility, responsiveness to both the press and the legislature - and by extension the public - may be the least transparent and secretive in state history, with the possible exception of the scandal-plagued Easley administration,"
the source said.
Cooper spokeswoman Noelle Talley dismissed the seriousness of the complaint.
"Even in the realm of partisan political attacks, this is absurd,"
"The memorandum of understanding on this fund expressly called for an executive order to set up the guidelines for how it would be allocated. That order and other documents setting up the fund would include strong conflict of interest provisions above and beyond what is already required by law,"
"Decisions about distribution of the funds were to be made by experts through an open and transparent application process - subject to public records and open meetings laws,"
she said. Only government entities and qualified nonprofits would be eligible. She cited the Rural Infrastructure Authority and the Clean Water Management Trust Fund as examples of organizations that could fulfill those goals and distribute the funds.
The Civitas complaint mirrors much of what CJ has reported since Cooper's Jan. 26 announcement he would collect the nearly $58 million. The news release was issued less than a half hour after the state Department of Environmental Quality announced it awarded a vital water permit necessary to extend the 600-mile natural gas pipeline through eight North Carolina counties.
The memorandum of understanding between Cooper and the pipeline operators said money would be used for three purposes: repairing environmental damage, underwriting economic development, or supporting renewable energy projects in the eight counties along the pipeline's path.
Critics, including former Gov. Pat McCrory, Lt. Gov. Dan Forest, and former House Republican Leader Paul "Skip" Stam, have criticized the secretive Cooper deal as a slush fund (see here and here), or an improper government exaction requiring pipeline operators to pay for something they already were entitled to receive.
The Civitas complaint says the short time frame in which the DEQ and Cooper announcements were issued make it appear the payment and permit were related.
Cooper contends the money was a voluntary gift from the energy companies. But the complaint cites state Rep. Pricey Harrison, D-Guilford, saying the money was a negotiated deal. "It was just that that was a condition of getting the permit granted," Harrison was quoted Feb. 6 by WRAL-TV.
Carolina Journal first broke the news that the energy companies brokered a much different deal with Virginia authorities than the Mitigation Memorandum of Understanding Cooper made with the pipeline operators. Negotiations continue between the developers and West Virginia, where the fracked gas originates. The Civitas complaint picked up on that point:
"Governor Cooper's fund is far more open-ended, unconstrained, and rife with potential for abuse" than the Virginia agreement, the complaint said. "Governor Cooper ... can spend funds from this account at his pleasure, and on projects or initiatives that have little if anything, to do with mitigating the environmental impact of the pipeline."
The complaint raises the specter that the Cooper escrow fund could run afoul of several provisions of the N.C. State Government Ethics Act, which expressly forbids elected officials from leveraging their offices for personal gain.
The Ethics Act also forbids state officials and covered persons from using their official positions to generate any foreseeable financial benefit, and prohibits state officials from accepting gifts of any value in exchange for official action. The Ethics Act also requires officials to exercise due diligence before acting on any potential conflicts of interest.
Wednesday afternoon, Senate leader Phil Berger, R-Rockingham, and House Speaker Tim Moore, R-Cleveland, asked Cooper to recuse himself from taking any action on House Bill 90.
"To help avoid the potential conflicts of interest created by the ethics complaint he is facing and the property he owns near the pipeline, Gov. Cooper should immediately recuse himself from acting on this bill and allow it to become law without his signature,"
Berger and Moore said in a joint statement.
"It is clear Governor Cooper's use of his elected, state position and official title to secure private industry dollars and spend them at his discretion creates potential conflicts of interest,"
the complaint said. But it is unclear if he exercised sufficient due diligence before signing the agreement.
Potential violations and conflicts of interest, according to the complaint, include:
- Cooper could use the fund to financially help past, present, and future political supporters, notably Conservation Votes, the N.C. Sierra Club, N.C. League of Conservation Voters, and Environment America. These organizations have partnered with companies specializing in mitigation services, or law firms and nonprofits compensated for advocacy or representation in renewable energy disputes.
- Cooper received hundreds of contributions from individuals and businesses along the pipeline route. They could be rewarded with money from the escrow fund.
- If Cooper used his official office and title to get money from a company in exchange for a state permit and approval of the pipeline, that could constitute an impermissible gift.