Home Dominion Power Secret Sellout or Pay to Play? Terry McAuliffe’s Parting Gift to Dominion...

Secret Sellout or Pay to Play? Terry McAuliffe’s Parting Gift to Dominion Energy and the Atlantic Coast Pipeline


by Jon Sokolow

Did Terry McAuliffe sell out Virginia right before he left office?  Or did he do something even worse?  Did McAuliffe accept $58 million (paid to various entities) in a pay to play scheme to guarantee Virginia would approve Dominion Energy’s Atlantic Coast Pipeline?

In late December, the then-outgoing Virginia Governor, a longtime cheerleader for the ACP, committed the state to a secret Memorandum of Understanding with Dominion and its pipeline partners.  This agreement, apparently never before reported in Virginia, let Dominion buy its way out of paying for damages to Virginia’s forests and water quality caused by construction of, and possibly by operation of, the ACP.  And McAuliffe did this before the pipeline has even been approved – it still has not been approved – much less built.

Let that sink in for a moment.

Terry McAuliffe gave Dominion a full and complete release from any and all damage to Virginia’s forests and water from the Atlantic Coast Pipeline.

And because this secret agreement has now been exposed, we know exactly what Virginia’s forests and water were worth to Terry McAuliffe.  It turns out not much. McAuliffe sold Virginia’s forests for $38,650,000 and he sold our water for half that – $19,200,000.  That’s a total of $57,850,000.  Not a penny more.  Literally, according to the agreement.

Even worse, it appears that this is not just another raw deal for taxpayers, not just another episode of taxpayer funded corporate welfare.  In fact, the agreement looks very much like a pay-to-play scheme like the one Dominion just signed with North Carolina – even the amount paid is almost exactly the same ($57,800,000) – right before that state approved the ACP.  At least one newspaper in North Carolina is describing that deal as a “pay-to-play scheme or a quid pro quo,” one that environmentalists and free market advocates agree is both unethical and vulnerable to a court challenge.  Even supporters of the pipeline in North Carolina admit that deal is corrupt: it sure looks like they’re buying the permit, by paying up this slush fund.

Virginia agreement was signed on December 28, 2017, apparently without any public disclosure, by outgoing Secretary of Natural Resources Molly Ward, and the details are sickening.  In fact, the deal is worse than the one signed by North Carolina.

First, Dominion agreed to pay $38,650,000 to three public and private entities, referred to as “Forest Mitigation Partners,” who are tasked with dispersing funds to others to  restore or enhance forest habitats that are “similar to those adversely impacted by the pipeline.  In return, Dominion gets a full release from any further liability: “The Parties further agree that such amount fully satisfies any and all mitigation responsibilities related to and otherwise fully offsets the direct or indirect forest-related impacts of the Project in Virginia.”  This language leaves the state without a remedy if the cost of damage to Virginia’s forest exceed the amount in the fund.  Construction accident – use the fund.  Pipeline leaks two years from now – use the fund.  Pipeline explosion ten years from now – you’ve already been paid Virginia.  And if the money is gone?  Too bad.  You don’t need to be a lawyer to understand that’s what “fully satisfied” means.

Second, the agreement says that, in return for a payment of $19,200,000 (to a group of entities known as “Water Quality Mitigation Partners”), Dominion gets a full release for any damage to water quality: “The Parties agree that such amount fully satisfies any and all mitigation responsibilities related to and otherwise fully offsets all water quality impacts caused by forest fragmentation.”  Lawyers may argue for years which “water quality impacts” were caused by “forest fragmentation” – the poorly drafted agreement defines none of these terms.  What is clear is that no matter how much damage is done, as far as the state is concerned Dominion is off the hook.

And in case there was any doubt on the breadth of the release Dominion gets, the agreement adds that “this Agreement reflect the full extent of natural resources-related mitigation measures and investments contemplated for the Project by the Parties.”  That’s Dominion’s way of saying don’t ask us for another dime, no matter what.

But this agreement contains something even far worse.  It says exactly how this agreement came about – “The Commonwealth requests, and Atlantic agrees to pay” the stated amounts – and then discusses how Dominion will get its money back “in the unanticipated event that the Project fails to obtain and maintain State Approvals.”  The key word there is “unanticipated.”  It suggests that Dominion was not just capping its liability but rather trading $58 million for a commitment from McAuliffe that the pipeline would be approved – a commitment that rejection would be, in the words of the agreement, an “unanticipated event.”  Paying millions of dollars to approve a private company’s pet project is exactly what it looks like – a good old fashion pay-to-play scheme – exactly like the one now being roundly criticized, even by pipeline supporters, in neighboring North Carolina.

If Virginia ultimately approves the Atlantic Coast Pipeline, it will be noted that the going rate for that regulatory approval is $58 million – exactly the amount Dominion paid for approval in North Carolina and now, apparently, in Virginia.

Except that Virginia’s agreement is far worse than the one signed by North CarolinaNorth Carolina’s agreement does not say that the $58 million paid to the state is in return for a release of further liabilities.  There is no such release language in the North Carolina agreement.  To the contrary, North Carolina’s agreement says “Nothing in this Memorandum shall be construed as precluding or otherwise barring the Governor of the State of North Carolina from recovering damages or equitable remedies from Atlantic for spills or leaks stemming from the ACP.” Virginia chose not to extract any such concession from Dominion, demonstrating that rolling belly up for Dominion is the “Virginia Way” – or at least Terry McAuliffe’s way.

Virginia now has a new Governor – and a large group of newly elected legislators who refuse to bow to Dominion’s every wish.  Governor Northam himself has pledged to protect Virginia’s natural resources and its water.  But the deal signed by McAuliffe would leave the state and taxpayers holding the bag if damage caused by Dominion’s $5.5 billion pipeline exceeds the paltry amount it set aside for potential damage.

Will Governor Northam allow this agreement to stand?  Will members of the Virginia’s legislature – regardless of where they stand on the pipeline – tolerate this taxpayer funded rip-off?  Or will Governor Northam and Secretary Strickler do right by Virginia and immediately revoke this reprehensible agreement with Dominion?

For every elected official in Virginia, the simple question is this:  Which side are you on?

  • RobertColgan

    Sounds like Dominion has taken a page directly from Trump’s “The Art Of The Deal”——-always screw the other guy and pretend it’s fair and just.

    Should Dominion succeed in getting that pipeline (currrent Republican odds favor it)
    there are two scenarios in a dichotomized analysis of threat assessment:
    1) The pipeline never leaks, never causes any environmental destruction except for that related to its construction and maintenance.
    2) The pipeline leaks, causes damage (a speculative continuum from small incident all the way to major explosion and terrible forest fire/ecosystem carnage)

    and the only measurement tool we have is the track record of pipelines:


    which shows over a 30 year period (1986 to 2016) more than 9,000 incidents and damages of 8.5 Billion$, 548 people killed, 2,576 injuries as a result of the more major incidents. Environmentally there have been many less prominent incidents—-which caused damages to the ecosystem but were not given a monetary evaluation.
    Damages to future generations from toxic exposure to hydrocarbons is NOT included in any of this data.
    (I note that the governmental page which used to be public disclosure of pipeline accidents is no longer functioning—(Trump administration: “They don’t need to know the facts”)

    McAuliffe just dropped about 50 points in my esteem.
    If he was willing to sign off on a deal that places future Virginians at risk, then he’s not to be trusted.

    That “deal” with Dominion is no different than signing off on a “no tort” auto insurance policy . . .and ending up being broadsided, chronically injured ——with no ability to sue or collect damages even though the other driver was clearly at fault.

  • In other pipeline news…

    DEQ to submit report on approved MVP erosion & sediment control and stormwater plans to State Water Control Board
    February 2, 2018

    RICHMOND, VA. – Prior to construction of the Mountain Valley Pipeline, the Department of Environmental Quality (DEQ) will submit a report to the State Water Control Board (Board) on DEQ’s approval of the final erosion and sediment control and stormwater plans, the annual standards and specifications, and the Supplemental Karst Evaluation Plan.

    “Because of the depth of citizen concerns and to assure transparency, we plan to follow the same notification procedures for MVP as required for the Atlantic Coast Pipeline,” said Director David Paylor. “DEQ will provide a report to the Board and the public as soon as they are finalized and approved.” Last month at its deliberations of the upland Section 401 water quality certification for Atlantic Coast Pipeline, the Board required DEQ to report on the adequacy of these plans.

    DEQ has required each pipeline developer to submit detailed, project-specific erosion and sedimentation control and stormwater plans for every foot of land disturbance related to pipeline construction to protect surface water quality during and after construction completion. These plans must be approved by certified planners before any construction can begin.

    These programs– erosion and sediment control, stormwater management and upland certification give DEQ a variety of regulatory tools to protect water quality across the range of pipeline activities, not just temporary construction impacts to streams and wetlands. “DEQ will hold the developers to the highest standards for which they are accountable and take appropriate action for any problems that occur,” Paylor said.

  • Jason Rylander

    Remarkable reporting. The “Virginia Way” clearly needs to change. This kind of pay to play politics must stop. It’s mind boggling the lip service too many Democratic politicians pay to environmental values. Doubling down on fossil fuels, selling out our forests and waters, and delaying investments in renewable energy is unacceptable in these times.

  • Clint Rose


  • Bob

    The “McAuliffe Way”: Do as I say, not as I do. The people of Virginia have really been snookered by this fast-talking shyster. He has made deal after deal that has been bad for Virginia. Hopefully he will be fully exposed for his self-serving actions before he gets elected to any other office.