The Atlantic Coast Pipeline, LLC’s

Appearance of Fraudulent Misrepresentation

of its
Product and Project

A Report of the

Alliance to Protect Our People and the Places We Live

(APPPL)

www.apppl.org

by Nancy LaPlaca, J.D.

May 2018
 Table of Contents

Summary 3

Three Petitions to Investigate Fraudulent Misrepresentation of the

ACP, LLC Product and Pipeline

Petition #1: That the State investigate whether or not Duke and
Dominion Energy knowingly and with Intent to deceive: (1) failed
and continues to fail to disclose that the ACP will be extended past 4
Robeson County NC into South Carolina, requiring more
infrastructure in North Carolina; and (2) that the ACP is presently
being extended to Hamlet NC through an illegally segmented
pipeline that is already under construction and should have been
included as a part of the ACP federal and state permit applications.

Petition #2: That the State investigate whether Duke and Dominion
Energy knowingly, and with intent to deceive, made and are
making false statements to shareholders, ratepayers and
regulators that methane Is a “clean” alternative to coal by ignoring 5
the vast body of evidence that fracking Is risky, dangerous and
harms the public.

Petition #3: That the State investigate whether or not Duke and
Dominion Energy, knowingly, and with intent to deceive, have
failed and are neglecting to disclose to shareholders, ratepayers 6
and regulators that the production of natural gas results in
greenhouse gas emissions that are a stunning 86 times worse
than CO2 (carbon dioxide) over a 20-year period, per the
Intergovernmental Panel on Climate Change’s 5th Assessment.

Conclusion: The Appearances of Fraudulent Misrepresentation by 9

the ACP, LLC are real and need investigation and legal review.

About the Author: Nancy LaPlaca, J.D., is a regulatory consultant

with decades of public policy and regulatory experience. Nancy served
4 years as Policy Advisor to an elected public utility commissioner and
has worked as an independent intervener and consultant for various
environmental groups, including NC WARN, the Energy and Policy
Institute, Climate Voices US and others. Nancy has expertise in natural
gas power plants, pipelines, gas supplies and reserves, methane
leakage, and the U.S. Greenhouse Gas Inventory. Nancy spent years
working to de-bunk “clean” coal and carbon sequestration.
Page 2 of 9
 The Atlantic Coast Pipeline, LLC’s
Appearance of Fraudulent Misrepresentation
of its Product and Project
Summary

This report addresses why we believe that, in the course of its push to build and own half of
the Atlantic Coast Pipeline (ACP), as well as to vastly increase methane-powered (natural
gas) electric power plants, it appears that Duke Energy has committed fraudulent
misrepresentation.

Fraudulent misrepresentation occurs when a person (or corporation like Duke Energy)
knowingly makes a false statement or fails to disclose a material fact. In plain language, it’s
lying. The elements of civil fraud are:

(1) false representation or concealment of a material fact;

(2) reasonably calculated to deceive;
(3) made with intent to deceive;
(4) which does in fact deceive; and
(5) resulting in damage to the injured party.” Forbis v. Neal, 649 S.E.2d 382, 387 (N.C.
2007) (quoting Ragsdale v. Kennedy, 209 S.E.2d 494, 500 (N.C. 1974))

In relation to the Atlantic Coast Pipeline, there are three major claims made by Duke and
Dominion Energy that have the appearance of fraud and the intentional misrepresentation of
the pipeline’s scale and scope and its product – carbon-based, fracked, methane gas. These
three misleading claims signal the appearance of fraud and fraudulent misrepresentation.

1. That the terminus of the pipeline is Pembroke, located in Robeson County, NC.

2. That Duke Energy has claimed and continues to claim that methane is a “clean” and
safe alternative to coal by ignoring the vast body of evidence that fracking is risky,
dangerous and harms the public
3. That Duke Energy has failed to disclose to shareholders, ratepayers and regulators
that the production of natural gas results in greenhouse gas emissions that are a
stunning 86 times worse than CO2 (carbon dioxide) over a 20 year period, per the
Intergovernmental Panel on Climate Change’s 5th Assessment

While this report documents three major areas where there appears to be misrepresentation
that rises to the level of fraud, there are also additional activities and areas of
misrepresentation that are detailed in a second report issued by APPPL.

“The Call to Achieve 100% Carbon-Free Energy and Suspend Work on the Atlantic Coast
Pipeline Project”, written by Rev. Mac Legerton of Pembroke NC, the alleged terminus of the
ACP. His report also disputes this claim and sites other areas where there are additional
appearances of misrepresentation and deceptive practices by Duke and Dominion Energy.
His report also proposes a politically viable solution to suspend work on the ACP Project for
one year during which a broad-based process of public deliberation is facilitated to decide
how to achieve a commitment to 100% carbon-free clean energy. During this same time, the

Page 3 of 9
multiple appearances and allegations of fraudulent misrepresentation outlined in the two
reports can be formally investigated.

Three Petitions to Investigate Fraudulent Misrepresentation of the ACP Product and

Pipeline

Based on the appearance of fraudulent misrepresentation by Duke Energy regarding the

Atlantic Coast Pipeline Project, the Alliance to Protect our People and the Places We Live
(APPPL) calls on the State of North Carolina to investigate and determine the circumstances
and facts surrounding the ACP, LLC’s questionable claims and alleged, deceptive activities.
Petition #1: That the State investigate whether or not Duke and Dominion Energy
knowingly and with Intent to Deceive: (1) failed and continues to fail to disclose that
the ACP will be extended past Robeson County NC into South Carolina, requiring more
infrastructure in North Carolina; and (2) that the ACP is presently being extended to
Hamlet NC through an illegally segmented pipeline that is already under construction
and should have been included as a part of the ACP federal and state permit
applications.

Duke Energy is investing billions of dollars of ratepayer funds in the ACP and new fracked
gas power plants. Despite its public statements that the ACP would end in Lumberton, North
Carolina, statements from Dominion executives tell a different story: Duke and Dominion plan
to build the pipeline all the way to South Carolina.1 As the executive who leaked the news
said, “everybody knows” [the pipeline won’t end in NC]. The executive went on to say on the
recording that additional infrastructure will be needed in North Carolina to extend the pipeline
into South Carolina.

Dominion Energy is now in the process of purchasing additional infrastructure in South

Carolina, strengthening the allegations that the ACP owners have misled and deceived NC
regulators and officials in relation to the scale, scope, and purpose of the Atlantic Coast
Pipeline.

A critical concern is that facilities are now under construction in St. Elba Island, GA that will
turn methane gas into liquid propane for export overseas. Once gas from the ACP reaches
St. Elba Island, GA and is exported, the price of gas in North Carolina will inevitably rise. It
will also inevitably rise as the supply of fracked gas diminishes. These realities raise serious
questions related to consumer protection from rising costs of this harmful fossil fuel. Building
and owning pipelines are driving higher profits for utilities, as a recent study of the utility DTE
showed.2

While elected officials and regulators advocate against offshore oil drilling, they are either
unaware or unconcerned that the Atlantic Coast Pipeline is opening the literal floodgates to
offshore gas.

1https://www.utilitydive.com/news/report-dominion-to-consider-expanding-atlantic-
coast-pipeline-into-south-c/506216/
2http://www.energyandpolicy.org/pipeline-profits-may-be-driving-decision-for-dte-energy-
gas-plant/
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Secondly, Duke Energy’s Piedmont Gas Pipeline is presently under construction from the
alleged terminus of the ACP in Pembroke to Hamlet, NC where ACP gas will replace gas now
supplied by Transco, Duke’s competitor, to the Duke Energy Smith Gas-Powered Plant. This
additional pipeline, although set to carry ACP gas, has been segmented out of the ACP for
unknown reasons. When asked about this at the Robeson County Public Hearing on the
proposed Metering and Regulating Station in Pembroke, NC representatives refused to
answer. A lawsuit against the ACP, LLC and the Robeson County Board of Commissioners
was filed and is awaiting court proceedings as a result of the alleged irregularities related to
the county’s permitting process. In its last reply to questions from the NC Department of
Environmental Quality in December 2017, the ACP continued to claim that its terminus was
Pembroke, NC.

The segmentation of adjoining pipelines out of and beyond proposed pipeline routes is
usually practiced when utility companies want to avoid certain regulations or hide planned
development that will make the permitting process more difficult. It has been alleged that both
of these motives may be present in the segmentation of the Piedmont Gas Pipeline out of the
ACP and the extension of the ACP into South Carolina. These appearances of deceit may
rise to the level of fraudulent misrepresentation as a result of further investigation and legal
review.

Petition #2: That the State investigate whether Duke and Dominion Energy knowingly,
and with intent to deceive, made and are making false statements to shareholders,
ratepayers and regulators that methane Is a “clean” alternative to coal by ignoring the
vast body of evidence that fracking Is risky, dangerous and harms the public

Duke Energy’s Climate Report fails to consider the vast body of work that shows fracking is
risky and dangerous to human health, and to our air, water and wildlife. There are now 1200
studies on the public health risks of “fracking” (hydraulic fracturing)3 . The body of research on
health effects from the production of natural gas is growing by leaps and bounds.

Duke Energy’s Climate Report fails to consider the vast body of work that shows fracking is
risky and dangerous to human health, and to our air, water and wildlife. There are now 1200
studies (4) on the public health risks of fracking (hydraulic fracturing). The body of research
on health effects from the production of natural is growing by leaps and bounds.

Duke Energy has ignored the mounting scientific evidence that fracking causes birth defects,4
infertility and miscarriages, can pollute drinking water,5 and causes earthquakes.6

Clearly, fracking is a danger to public health and the environment. By continuing to call
fracked gas “clean,” Duke Energy, with the appearance to willfully, and with the intent to

3 www.steingraber.com
4https://www.usnews.com/news/special-reports/energy-of-tomorrow/articles/
2014/12/05/fracking-linked-to-infertility-miscarriages-birth-defects
5 https://www.scientificamerican.com/article/fracking-can-contaminate-drinking-water/
6https://www.forbes.com/sites/jamesconca/2016/09/07/the-connection-between-
earthquakes-and-fracking/#36bfbe466d68
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deceive, has made and continues to make false statements to shareholders, regulators and
ratepayers.

Unfortunately, this type of misleading behavior is what we have come to expect from
Dominion and Duke Energy, corporations that have used every opportunity to buy off our
politicians,7 whitewash concerns, turn a blind eye to toxic pollution, and then stick ratepayers
with the final bill. This appearance of deceit may well rise to the level of fraudulent
misrepresentation as a result of further investigation and legal review.

Petition #3: That the State investigate whether or not Duke and Dominion Energy,
knowingly, and with intent to deceive, have failed and are neglecting to disclose to
shareholders, ratepayers and regulators that the production of natural gas results in
greenhouse gas emissions that are a stunning 86 times worse than CO2 (carbon
dioxide) over a 20-year period, per the Intergovernmental Panel on Climate Change’s
5th Assessment.

In 2013, the Intergovernmental Panel on Climate Change (IPCC) stated8 that there is no
scientific argument for using a multiplier that methane is 34 times worse than coal (over 100
year time), rather than the more accurate 86 times worse than coal (over 20 years).
Consistent with its own findings, in 2014 the IPCC’s 5th Assessment9 officially applied the 86x
multiplier (over 20 years).

Determining the sources of methane has been more difficult than determining the sources of
CO2.10 This is because the main sources of methane, which are fossil fuels, biogenic (rice
paddies, marshes and animals), and fires, required detective work measurements of other
gases, chemical analyses, isotopic signatures, and observations of land use.

Which source contributed more methane to the rapidly increasing methane in our
atmosphere: fossil fuels, biogenic sources or fires?

After 10 years of research, the puzzle was solved in 2018: 17 of the 25 total teragrams of
yearly methane increase were proven to come from fossil fuels. Despite the protestations of
industry, there is now clear evidence that mining and burning fossil fuels production contribute
more to the increase of methane than biogenic sources. (NASA estimates that one teragram
is more than the weight of 200,000 elephants.)

Ignoring the widely-known, peer-reviewed scientific fact that methane is 86 times more
powerful a GHG than CO2 doesn’t make it go away. As noted writer Philip K. Dick said,
“reality is that which, when you stop believing it, doesn’t go away.”

7http://www.richmond.com/news/virginia/documents-reveal-dominion-s-immense-
outreach-on-atlantic-coast-pipeline/article_24213564-00a9-5890-b318-7ea67603a69e.html
8 http://www.ipcc.ch/report/ar5/syr/
9 http://www.ipcc.ch/report/ar5/syr/
10https://www.desmogblog.com/2018/01/16/nasa-study-resolves-climate-mystery-
confirms-methane-spike-ties-oil-gas
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We already know the extent of Duke Energy’s willful ignorance. After pretending for decades
that toxic coal ash was not polluting ground and surface water, Duke Energy estimates total
clean-up costs for Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP) will cost
$5.1 BILLION.11 Duke Energy has shown willful ignorance on the real costs of coal ash, and
ratepayers and citizens should not have to bear the staggering future costs of Duke Energy’s
short-sightedness.

#ExxonKnew, and So Did Duke Energy

One of the biggest environmental stories of 2017 was the #ExxonKnew scandal: that Exxon
was well aware of the effects of fossil fuels on climate change fifty years ago, deceiving the
public and its own shareholders, and funding $30 million to climate deniers and groups
working to confuse the public on climate change.12

The Merchants of Doubt

The #ExxonKnew deception has been rightly compared to the decades-long efforts by the
tobacco industry to deny the link between smoking and lung cancer. Professor Naomi
Oreskes of Harvard (and co-author Erik Conway)13 rocked the world of climate denial with
Merchants of Doubt, which traced the roots of climate denial to a small group of right-wing
ideologues who also promoted cigarette smoking as safe.

The same methods -- and often the same individuals -- worked to discredit environmentalists
like Rachel Carson, push the idea that acid rain is good for environment, and that tobacco
isn’t linked to lung cancer. These groups manipulated the public and press on issues in past
decades and are doing the same now with climate change.

The strategy is repeated: discredit the science, sow confusion and doubt, and offer its own
“experts.” Similarly, Shell knew that fossil fuels were responsible for climate change as far
back as the 1980s.14

Massachusetts Attorney General Maura Healey is also part of the lawsuit against
ExxonMobil, stating “Fossil fuel companies that deceived investors and consumers about the
dangers of climate change should be, must be, held accountable.” In a jaw-dropping act of
hubris, Exxon is arguing that Healey’s lawsuit violates their free speech and other
constitutional rights.15

11 https://energync.org/duke-energy-subsidiaries-request-rate-increases/
12https://www.scientificamerican.com/article/exxon-knew-about-climate-change-
almost-40-years-ago/
13 https://histsci.fas.harvard.edu/people/naomi-oreskes
14 https://histsci.fas.harvard.edu/people/naomi-oreskes
15 https://histsci.fas.harvard.edu/people/naomi-oreskes
Page 7 of 9
Healey added, “[w]e can all see today the troubling disconnect between what Exxon knew,
what industry folks knew, and what the company and industry chose to share with investors
and with the American public.” New York has a similar lawsuit.16

New York banned fracking in 2014 based on health risks,17 followed by bans in Vermont and
Maryland,18 with even Florida is considering a ban.19

Are Duke Energy and Dominion Power aware of these lawsuits? There is no question that
electric utilities have been aware that climate change could fuel more powerful studies, and
yet still funded groups promoting denial.20 The study also warned that:

• climate-related factors, such as heat, humidity, winds, and storm frequency and
severity are critical, but were not examined in the report;
• increasing GHGs will likely influence these factors;
• climate change could have “significant impacts” on utility operations due to sea level
rise in coastal areas, as well as extreme weather events;
• climate change will affect electricity demand.

Fossil fuel companies like Exxon, Duke Energy and others are clearly in denial about creating
a nightmarish future for our children, with ever-increasing droughts, floods, heat waves, crop
failure and extreme weather.

At the very least, Duke Energy had constructive knowledge of methane’s impact on climate,
and fracking’s danger to public health and the environment. Duke Energy, a sophisticated and
wealthy corporation was surely aware of these widely-known, and widely-reported facts:

• Fracking harms public health and the environment, contaminates groundwater and
causes earthquakes, and
• Methane (natural gas) is not “cleaner” than coal, rather, it’s actually worse for the
climate because it is a far more potent greenhouse gas.

In addition, ratepayers, not Duke Energy, will be responsible for paying for the ever-
increasing cost of fracked gas fuel that flows through the ACP, and is burned by Duke-owned
fracked gas power plants.

Why would Duke Energy want to invest in clean energy when it owns a good part of the
fracked-gas cycle, from the pipelines that ship the gas to the power plants that burn it?

16https://www.commondreams.org/news/2018/03/30/victory-people-judge-tosses-out-
exxons-attempt-keep-climate-crisis-knowledge-hidden
17https://www.nytimes.com/2014/12/18/nyregion/cuomo-to-ban-fracking-in-new-york-
state-citing-health-risks.html
18 http://thehill.com/policy/energy-environment/327266-maryland-governor-signs-
fracking-ban-into-law
19https://www.naplesnews.com/story/news/local/florida/2018/03/16/fracking-ban-bill-
dies-florida-legislature-second-year-conservationists-hopeful-2019/431395002/
20 http://www.energyandpolicy.org/harvey-irma-power-outages-climate-change/
Page 8 of 9
Conclusion: The Appearances of Fraudulent Misrepresentation by the ACP are real and
need investigation and legal review.

North Carolina’s courts and legislature have imposed liability for representations made with
knowledge of falsity. According to www.thelawdictionary.com, all fraud is misrepresentation,
but not all misrepresentations are necessarily fraud. The difference comes down to what the
accused knew or should have known when the act of fraud or misrepresentation took place.

The distinction is important because fraud is often a much more serious offense than
misrepresentation.

In North Carolina, the elements of fraud are:

1. A false representation or concealment of a material fact that
2. Is intended to and
3. Does in fact
4. Reasonably induce reliance and
5. Results in injury or damage.

Fault and scienter (knowledge) is also required.

Did Duke Energy commit fraudulent misrepresentation by ignoring the enormous climate
impacts from its increased use of methane? For many, there is no question that Duke Energy
did, indeed, engage in behavior that appears to comport and comply with the elements of
fraud.

Duke Energy repeatedly, and in many press releases, press statements and reports, assert
that methane (natural gas) is a cleaner alternative than coal? Duke Energy ignored health
effects, earthquakes, birth defects and the vast and growing body of knowledge of the
damage from fracking. In dockets at the North Carolina Utilities Commission (NCUC),21 Duke
Energy repeatedly moved to strike testimony on the climate effects of natural gas, the
enormous amount of leakage from natural gas, and the overstated supplies and risk to
ratepayers from investing in a dirty, climate-destroying fuel that may not even last for the 30
years its power plants and pipelines are expected to be used.

There is no question that Duke Energy knowingly concealed these material facts, over and
over and over. And there is no question that the citizens and ratepayers of North Carolina are
relying on Duke Energy to understand the full consequences of its decisions.

The damage and destruction that are happening now due to climate change are just a
glimpse of ever-escalating future damages. Duke Energy is knowingly and willfully driving us
over a ‘climate cliff.’

This report has focused on three major areas of ACP practices and claims that mislead the
public and provide the appearance of rising to the level of fraudulent misrepresentation of
both the pipeline and its product. Such potential findings can only be formally determined by
policy makers and legal review. The Alliance to Protect our People and Places We Live
(APPPL) has published this report in order to provide evidence of the reasons for official

inquiry and legal review of the ACP practices and claims.

21 http://www.ncwarn.org/legal-filings/
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