Republicans blast Cooper aide over pipeline 'slush fund'

Republican legislators grilled an energy lobbyist-turned-legislative director for Gov. Roy Cooper on Thursday, peppering him with questions about the administration's $57.8 million pipeline fund and insinuating Cooper may have broken federal bribery laws by tying that fund to a permit approval on the multibillion-dollar project.

Lee Lilley was five days into his new job and said he was unable to answer most questions about the fund. Republicans wanted to know whether the governor sought the money out, and they questioned whether it was truly untethered from the state's decision to permit the Atlantic Coast Pipeline's route through North Carolina, as the governor has said. There were references to the Hobbs Act, which lays out federal rules for public officials on bribery and extortion.

Despite that, Sen. Harry Brown, R-Onslow, who chaired the proceedings, said he didn't think anyone was insinuating anything.

"There's just a lot of questions being asked," Brown said.

The state's permit decision on the 600-mile pipeline was announced the same day as the mitigation fund, which the Cooper Administration has described as a voluntary payment from the utilities building the pipeline, including Duke Energy and Dominion Energy.

Lilley was a Washington, D.C., lobbyist before moving to the Cooper Administration, and Dominion was one of his clients.

He was invited Thursday to introduce himself to a joint House-Senate budget committee that was ostensibly prepared to discuss a bill announced earlier in the day on school funding and class size requirements in early grades. GOP legislators immediately pushed him for answers on the pipeline fund. They used the phrase "slush fund" almost as often as Lilley responded to their questions with some version of "I can't say."

Democrats repeatedly tried to interrupt the questioning, calling the session a shameful exercise in grandstanding unfairly aimed at the governor's newest hire. Many of the questions, though, are similar to questions WRAL News and other media outlets have about the pipeline fund.

A similar fund exists in Virginia, and a third is being negotiated now between pipeline builders and West Virginia, but North Carolina's fund wouldn't flow through the state treasury, seemingly giving Cooper wide latitude over how to spend the money.

Instead, money from the pipeline companies would be deposited in an escrow account "designated by a third party selected by the governor," according to the Memorandum of Understanding laying out the fund's basics. The money would be used to mitigate the pipeline's environmental impacts as it winds through eight eastern North Carolina counties, support economic development in those counties and fund renewable energy projects, the memorandum states. But details, including who would hold the money, haven't been released.

Asked Thursday whose idea the fund was, how the $57.8 million figure was arrived at, who would hold the money and other questions, Cooper spokeswoman Sadie Weiner emailed WRAL News with the following statement:

"The governor was concerned about impacts of the pipeline on Eastern North Carolina. Our office worked with the ACP partners separately from the DEQ permit review process to establish the fund to lessen the impact in the counties affected by the project. We intended for decisions about the distribution of the fund to be made by experts through an open and transparent application process for government entities and qualified non-profits. The Rural Infrastructure Authority and the Clean Water Management Trust Fund are examples of two places that could fulfill those goals and distribute the funds. It is shameful but not surprising that legislative Republicans have turned a positive thing for North Carolina into a political circus."

Republican legislators, pointing to the General Assembly's constitutional power of the purse, moved to block that plan Thursday, passing legislation that would direct the full fund instead to schools in the eight counties: Northampton, Halifax, Nash, Wilson, Johnston, Sampson, Cumberland and Robeson counties. That language was added to a bill delaying class-size requirements and putting new money into K-12 schools as well pre-kindergarten classes, all high priorities for Democrats and for growing schools systems worried they wouldn't be able to meet class-size thresholds in the coming school year.

To vote against the pipeline fund change, Democrats will also have to vote against the school funding when it comes to the House and Senate floors. Republicans hold a veto-proof majority in both chambers.

"It's clear that the legislature finally bowed to public pressure on class size and expanding Pre-K, which is positive for our students, but it's unfortunate that it has been lumped in with political shenanigans," Weiner said in a separate statement.

Republican legislators kept coming back to incredulity Thursday as they questioned Lilley. No one, they said, believes the permit and the pipeline fund are unrelated. Rep. Justin Burr, R-Stanly, repeatedly asked whether Cooper solicited the money and whether that violated state ethics rules.

"On its face, it stinks," Rep. Dean Arp, R-Union, said.

House Minority Leader Darren Jackson said the "ambush" of Lilley was the most shameful thing he has seen in his 10 years at the legislature. He noted last year's abbreviated attempt to impeach Secretary of State Elaine Marshall, also a Democrat, which was voted forward in a House committee and then, seemingly, quietly dropped. Now, Republicans are suggesting the governor violated the Hobbs Act, he said.

"Unfortunately, this is what our politics has become," Jackson, D-Wake, said. "I just want to apologize to Mr. Lilley, who has been here for five days."

Rep. Mickey Michaux, D-Durham, called on Brown to put a stop to the questioning at one point, saying anything that impugns the integrity of the governor shouldn't be allowed in committee.

"Well, I've ruled that it will be allowed today," Brown replied.