Legislators interrogate Cooper’s newest aide over control of mitigation money

Thursday afternoon Lee Lilley ambled over to Room 643 of the Legislative Office Building thinking he had been summoned to cordially introduce himself to Joint Appropriations Committee.

But Lilley, on his fifth day on the job as Gov. Cooper’s new legislative director, instead walked into a buzzsaw.

Republicans interrogated Lilley, a former Dominion Power federal lobbyist at McGuireWoods, on the backstory of Cooper’s $57.8 million Memorandum of Understanding with the utility over the Atlantic Coast Pipeline. The North Carolina portion of the controversial multi-state project will traverse 160 miles through eight eastern counties.

The MOU calls for Dominion and Duke, co-owners of the $5.5 billion project, to voluntarily contribute a total of $57.8 million to a mitigation fund. The money is to be used to offset the environmental harm caused by the construction and operation of the pipeline, plus to stimulate economic development and renewable energy along the route. A third party chosen by the governor will administer the funds.

In late January, Gov. Cooper announced the MOU shortly after state environmental officials approved of a key water quality permit. The timing raised questions not only among Republicans but also environmental advocates, who wondered if the deal was essentially a payoff.

“The appearance of evil is insurmountable,” said Rep. Dean Arp at the committee meeting.

Cooper’s office and Lilley both denied that the MOU is related to the granting of permits. Lilley, who lobbied the federal, not the state government on Dominion, responded to many of the questions with “I don’t know” or “I can’t speak to that.”

“There’s a question of integrity when it looks like we’re setting up slush funds” — the term the GOP uses for the mitigation fund — “and allowing public officials to take large sums of money outside the normal course of business,” said Rep. Justin Burr.

The pretense for the questioning was an education funding bill under discussion; Republican lawmakers had also ambushed their Democratic colleagues by unexpectedly rolling financial aspects of the MOU into that legislation. In the bill, Republicans shifted the funds from environmental mitigation and economic development to school systems in the eight counties affected by the pipeline.

Virginia officials signed a similar agreement with Dominion, also for $57.8 million in late December, as Democratic Gov. Terry McAuliffe left office.

Virginia’s agreement was signed by Dominion and the Secretary of Natural Resources; North Carolina’s MOU was signed by Cooper’s general counsel William McKinney and Dominion.

However, the main difference between the two MOUs is that North Carolina still holds Dominion and Duke liable for future environmental violations; Virginia releases the utility from future damages. In both states, a pro-rated amount of money would be returned if the pipeline is not finished.

In some aspects, Cooper’s MOU also resembles a deal brokered in 2000 by then-attorney general Mike Easley with Smithfield Foods. Easley negotiated an agreement with the pork producer to commit $15 million for the development of “environmentally superior technology” to manage swine waste. Additionally, the company pays $1 per hog it owns in North Carolina through 2025. The annual amount is capped at $2 million. The payments go into an escrow account managed by PNC Bank. Each year, as part of the Environmental Enhancement Program, the attorney general’s office solicits proposals and awards funding to groups working on water quality projects in the state.

Ironically, while cutting school funding, Republicans have also protested that this money should by law go to schools, not environmental projects. However, Easley’s settlement has survived legal scrutiny.

Cooper’s MOU differs in that it clearly states it’s not a “settlement,” but many of the same mechanisms are at play.

It’s worth noting that McGuireWoods, Lilley’s former employer, is one of the most powerful lobbying firms in the nation, representing many business interests, including Smithfield Foods and Dominion. A generous campaign contributor the firm gave more than $92,000 to the campaigns of North Carolina lawmakers, both Republican and Democrat, in the last half of 2017. When factoring in sums for the entire election cycle, the total exceeds $336,000, according to state campaign finance reports.

Top Democratic recipients include Sen. Dan Blue, who received $2,000 in the last half of the year and $14,000 overall. Rep. Darren Jackson, who is on the Joint Appropriations Committee, received $2,000 but only $6,250 in total.

But the main benefactors of the firm’s largesse are Republicans, which is to be expected because the party is in charge. For example, Rep. Burr, an outspoken critic of Lilley and Cooper, accepted $2,000 from the firm, and $10,750 overall.

Sen. Harry Brown, who led yesterday’s committee proceedings, received $3,000 in the July-December reporting period, which counted toward his total take of $21,500.