Raleigh, N.C. — The N.C. House of Representatives passed legislation Tuesday by a vote of 104-12 requiring that the $57.8 million dollars from energy companies building the Atlantic Coast Pipeline (ACP) go to the eight public school systems directly impacted by the project. The measure, H.B. 90, passed the N.C. Senate on Monday and now goes to Gov. Roy Cooper.
The $57.8 million would come from Duke Energy and Dominion Energy, with whom Cooper negotiated a deal creating a discretionary fund. The deal was signed by the governor’s general counsel one day before his Department of Environmental Quality approved permits that allowed the ACP to move forward.
News of the fund was presented to the public and lawmakers simultaneously, in a “Memo of Understanding” (MOU). It highlights the intention of the fund — to pay for mitigating any damage to wildlife and natural resources caused by the project, economic development along its path and renewable energy projects. It also says that the governor would later appoint a board to dole out the money to projects fitting the MOU’s description, and he would issue a more detailed executive order with “directives.” The fund is in addition to mitigation costs ACP must pay by rule in N.C.
However, lawmakers on both sides of the aisle have been questioning the deal, with some calling it a “slush fund.” In a committee meeting last week after S.B. 90 was introduced, lawmakers grilled the governor’s new legislative director Lee Lilley, a former lobbyist for Dominion Energy, with questions about the fund’s management, origin and whether the money from energy companies was truly “voluntary,” as described by Lilley in the meeting.
“Do you know whether the governor has ever asked private parties for a voluntary contribution in connection with environmental permitting in the past?” asked Sen. Paul Newton (R-Cabarrus) in the meeting. Just a week on the job, Lilley had few answers but agreed to take the questions from lawmakers in writing.
While several Democrats on the committee objected to the line of questioning, Democratic Rep. Pricey Harrison (D-Guilford) told television station WRAL, “It wasn’t that they (the energy companies) were paying $57 million or whatever it was to get the permit. It was just that that was a condition of getting the permit granted.”
Lawmakers delivered the questions on Tuesday with directions that they be answered by 4 p.m. on Thursday. The 15 questions range from requesting information about how the fund came about, what other companies the governor has received contributions from and whether the arrangement violates ethics laws and constitutional separation of powers.
“Gov. Cooper’s deal looks like a payment-for-permit and doesn’t pass the smell test, and the right thing to do is to take this ‘voluntary contribution’ to the state and use it to fund the educational needs of children in the poor, rural communities impacted by the Atlantic Coast Pipeline,” said Senate Majority Leader Harry Brown (R-Onslow), chair of the Senate Appropriations/Base Budget Committee.
Also at issue, the MOU says that the governor of N.C. will return part of the money to energy companies if the project is canceled, even for denial of or loss of approvals and permits. Lawmakers wanted to know how that could affect future state budgets or energy ratepayers.
The bill that now sits on Cooper’s desk, sponsored by Rep. Craig Horn (R-Union) and Sen. Chad Barefoot (R-Wake), directs the fund to the eight counties along the Atlantic Coast Pipeline as it carries natural gas through some poor areas of eastern N.C. On that list are North Hampton, Halifax, Nash, Wilson, Johnston, Sampson, Cumberland and Robeson counties. Cooper is from Nash County.
“Legislative Republicans have set a new low for partisan hypocrisy this week,” said Cooper spokesman Ford Porter. “Nearly every Republican legislator claims to support the Atlantic Coast Pipeline yet they wanted to stop counties in its path from getting resources to ensure this project is a success. While meeting our energy needs, it is vital that we take steps to grow the economy and protect our environment in the counties this pipeline will cross. The ACP has provided similar funds in Virginia and engaged in negotiations with all three states where construction is to occur.”
However, Virginia’s $57.8 million deal is different. Virginia’s plan is signed by the secretary of the Virginia Department of Natural Resources with specific amounts directed to “mitigation partners,” including the Virginia Outdoors Foundation and the U.S. Endowment for Forestry and Communities who will develop selection criteria for the projects.
N.C.’s House Bill 90 also carries some key elements that educators statewide want addressed. It phases in a requirement that schools have fewer than 16 to 18 children per classroom in grades K through 3 and provides a separate $60 million funding stream for public schools to hire “specials” teachers for classes like art, music, P.E. and languages.
After the Republican-led General Assembly passed the smaller class size initiative in 2015, objections from school districts revealed a problem. Special subject teachers, or “program enhancement” teachers like art, music and P.E., were being included in the teacher headcount for schools, throwing off the “per child” ratio.
“What we did not know is how many program enhancement teachers there were in the state of N.C. That is part of what has created the problem,” said Barefoot. “In the 1990s there was a classroom teacher allotment and there was a program enhancement allotment. Those allotments were combined giving the appearance that those schools had lower student-to-teacher ratios, by simply calling all program enhancement teachers, classroom teachers. So then when we were lowering those down, as we went into classrooms, the classes weren’t getting any smaller.”
If this bill is signed into law, schools will not have to make any teacher-student ratio changes for the 2018-19 school year. Schools will still get the $70 million each year to cover the expense of hiring additional K-3 teachers over the next four years, but they will also get the money for special subject teachers immediately, with more available as data shows what schools need. Lawmakers estimate that over the next four years schools will have $250 million in recurring state dollars for the special subject teachers.
The bill also increases funds to make Pre-K available to all kids currently on the waiting list for the program, which provides assistance for at-risk kids below kindergarten age.
“We know we have a lot of kids coming to school not prepared to be in school,” said Horn. “We have committed in this bill to move to a statutory funding of North Carolina pre-K, and we’ve put enough money in it so that every eligible child can have access to N.C. pre-K.”
The General Assembly adjourned on Tuesday afternoon to reconvene May 16, 2018, for the short session. Cooper has 30 days to sign or veto the bill and has not indicated publicly what he plans to do.