Big Energy Front Group Launches Push for Troubled Atlantic Coast Pipeline

The Consumer Energy Alliance, an industry front group, is pressing for the controversial and legally imperiled Atlantic Coast Pipeline. The group was led by Michael Whatley (left), an energy industry lobbyist, until June when Whatley stepped down to take over as chair of the N.C. Republican Party. It's now led by energy industry lobbyist David Holt (right). (Photos via HBW Resources.)

Big Energy Front Group Launches Push for Troubled Atlantic Coast Pipeline

The group argued that building the pipeline would save North Carolinians money by bringing more natural gas into the non-drilling state, characterizing that as an "energy justice" issue.

A lobbying group formed by oil and gas industry insiders to push for increased fossil fuel production has turned its focus from promoting offshore drilling in the Atlantic to championing Dominion Energy's and Duke Energy's controversial Atlantic Coast Pipeline (ACP). It's doing so under the guise of being a pro-consumer group concerned about energy justice, even while its members include major gas production companies as well as Dominion Energy.

Last week, the Consumer Energy Alliance (CEA) had a letter to the editor published in The News & Observer of Raleigh making the case for the proposed pipeline, which would carry fracked gas from West Virginia over 600 miles through Virginia to North Carolina. The project has faced numerous legal challenges, and its construction has been suspended ahead of an appeal the U.S. Supreme Court is expected to hear early next year related to a lower court's revocation of a U.S. Forest Service permit allowing it to cross the Appalachian Trail. The pipeline has also come under criticism from racial justice advocates who've pointed out that African-American and Native American communities will bear disproportionate environmental burdens related to the project, and it faces a civil rights complaint over state and federal agencies' failure to assess its health impacts on communities of color.

Signed by CEA North Carolina director Kevin Doyle, the letter called ACP opponents -- who include the Sierra Club as well as conservation groups such as Highlanders for Responsible Development, Alliance for the Shenandoah Valley, and the Virginia Wilderness Committee -- "fringe activists." It argued that building the pipeline would save North Carolinians money by bringing more natural gas into the non-drilling state, characterizing that as an "energy justice" issue.

The letter comes on the heels of two reports the CEA recently released in North Carolina -- one purporting to show that burning more natural gas saves consumers money and another claiming that it's good for the environment. The former was based on calculations developed by Orion Strategies, a West Virginia-based public relations firm that serves the energy industry. A version of the CEA's environmental report that was released in Pennsylvania, one of the nation's top gas-producing states, has come under fire from public health advocates as misleading.

Meanwhile, the CEA's letter to the editor did not address the pipeline's ballooning costs, initially estimated at $5.1 billion but now hovering around $7.8 billion, which ultimately will be borne by the pipeline's end users: captive customers of the pipeline sponsors' monopoly utility affiliates. Nor did the letter address the fact that -- even by Dominion's own calculations -- the projected demand for gas has dropped off since the pipeline was initially proposed in 2014, putting its profitability at risk.

"The demand outlook for gas has changed dramatically since the project's inception and much of the project's original justification has evaporated," according to an analysis of the ACP released earlier this year by Oil Change International and the Institute for Energy Economics and Financial Analysis. "Indications are that the project's affiliated utility customers may struggle to convince state regulators to pass the full cost of pipeline transportation agreements through to utility customers. Indeed, the project does not represent good value to the ratepayer."

The CEA's letter also ignored other public costs associated with building pipelines, including potential damages related to spills, explosions, and other failures. An analysis released earlier this year by the FracTracker Alliance, a group that studies the risks of oil and gas development, looked at U.S. pipeline incidents over a nine-year period. It found there had been 5,500 incidents in that time resulting in more than 125 fatalities, almost 600 injuries, evacuations of almost 30,000 people, and more than $4 billion in damages. In addition, the letter ignored the costs of the ACP's projected annual emissions of 68 million metric tons of climate pollution, equivalent to emissions from 20 coal plants.

But then, the CEA wasn't formed to promote the interests of residential and other small-scale energy consumers. It was formed by a lobbyist for energy companies who wanted to promote his clients' business.

From CEA to NCGOP

The CEA was launched in the late 2000s by Michael Whatley, chief of staff for former U.S. Sen. Elizabeth Dole (R-North Carolina) and founding partner of HBW Resources, a Washington, D.C.-based Republican lobbying firm with ties to the tar sands industry in Alberta, Canada. In a 2010 strategy proposal presented to an Alberta government official and obtained by Salon, Whatley said he was interested in "conducting a grassroots operation" in "target states" in the U.S. to build opposition to stricter fuel standards aimed at addressing climate change -- standards that would have hurt the extraordinarily polluting tar sands industry.

Whatley went on to create the CEA with backing from big oil and gas producers including BP, Chevron, ExxonMobil, Marathon, and Shell. Headquartered in Houston, the CEA also has regional chapters in places including Florida and the Southeast. Its board of directors includes lobbyists for the industry group Airlines for America; U.S. steel giant Nucor; and GE's power division, which makes gas turbines. It also includes the chair of the Virginia Association of Manufacturers, a Caterpillar executive, and energy lobbyist David Holt -- the "H" in HBW Resources. The CEA's current membership list includes leading energy industry groups such as the American Gas Association and the Natural Gas Supply Association, major gas producers including BP and Exxon Mobil, and power generators including Dominion Energy, the ACP's lead partner.

With Whatley at the helm, the CEA previously focused on promoting oil and gas drilling off the Atlantic Coast. A 2015 Facing South investigation showed that the nonprofit CEA and HBW Resources corporate lobbying group were essentially the same entity, which was running the pro-drilling Outer Continental Shelf Governors Coalition out of North Carolina Gov. Pat McCrory's (R) office. That effort to promote Atlantic drilling has faltered, with McCrory voted out of office in 2016 and a growing number of Republicans turning away from offshore drilling. Today the coalition's membership includes no governors representing Atlantic Coast states.

In response to these political setbacks, CEA appears to be boosting its lobbying efforts. According to OpenSecrets.org, the group has spent at least $290,000 lobbying at the federal level this year, a significant increase over the $200,000 it spent in all of 2018. Among its several registered lobbyists are Kevin Doyle, author of the recent letter to the editor published in North Carolina. Besides serving as CEA's vice president of state affairs, Doyle is also the managing partner of Wexford Strategies, a Florida-based lobbying firm that he describes as a "strategic partner" for HBW Resources. CEA's lobbying is part of a bigger effort to promote the ACP, with a recent MapLight analysis finding that the utility giants behind the project have spent over $109 million on lobbying since the plans were unveiled.

As a 501c4 "social welfare" nonprofit, the CEA does not contribute directly to political candidates. In fact, to protect the CEA's nonpartisan status Whatley resigned his post with the group in June because he took a partisan position: He now chairs the North Carolina Republican Party, which lost its last chair, former U.S. Rep. Robin Hayes, after he was indicted on charges of conspiracy and lying to the FBI as part of an ongoing bribery case involving a GOP donor seeking a regulator's removal. Whatley, a maxed-out Trump donor who lives in Gastonia, North Carolina, retains his position at HBW Resources working on behalf of energy companies.

Under Whatley's chairmanship of the North Carolina GOP, the state legislature's Republican leadership has continued its investigation into Democratic Gov. Roy Cooper's actions on the ACP. At the time the Cooper administration was considering ACP permits, which it ultimately granted, the governor negotiated a deal with Dominion and Duke to set up a $58 million fund for environmental mitigation, economic development, and renewable energy projects in the pipeline's territory in eastern North Carolina. It's similar to one that former Virginia Gov. Terry McAuliffe (D) negotiated with Dominion before leaving office.

Though Cooper and Duke Energy have both said the North Carolina mitigation fund was negotiated separately from the pipeline permitting, Republican lawmakers have questioned whether there was an inappropriate quid pro quo and took away Cooper's control of the fund. A report released last month by investigators hired by legislative Republicans said Cooper "improperly used the authority and influence of his office" in the permitting process but did not personally benefit from those decisions. Cooper has said he did nothing wrong, while his spokesperson called the investigation "fake." Lt. Gov. Dan Forest, who's running for the Republican nomination to take on Cooper next year, recently called for an FBI investigation into the mitigation fund's creation, as the state party under Whatley continues to press the matter.

Meanwhile, Duke Energy's recent stock sale to raise money to finance its share of the pipeline project's costs did not get the price the company was hoping for, though a spokesperson said it still got what it needed to press on.

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