by Anne Meador
UPDATE below
A secret non-disclosure agreement between Calvert County, MD officials and Dominion Cove Point LNG may have concealed financial projections crucial to calculating the full benefit Dominion will receive from property tax breaks passed by the Board of County Commissioners last November.
A public information request by the AMP Creeks Council reveals that the parties entered into a non-disclosure agreement on August 21, 2012 prior to negotiating property tax credits. At a contentious meeting on November 5, 2013, the Board of County Commissioners passed a multi-year “payments in lieu of taxes” scheme for Cove Point LNG. While some state officials and many trade union members spoke out in favor of the project, many residents felt debate was abruptly cut short.
Dominion’s plan to expand its natural gas liquefaction facility on the Chesapeake Bay in southern Maryland is at the the center of a state- and nationwide controversy about fracking, an oil and gas extraction process which injects water and chemicals into shale rock. If Cove Point LNG goes through, it will be the second terminal to export fracked gas and might initiate fracking in the state of Maryland.
Proponents say that Cove Point LNG will bring jobs and tax revenue to the area.
Kelly Canavan of AMP Creeks Council said in a press release that the non-disclosure agreement proves that Cove Point LNG has benefited from “sweetheart legislation.”
Under the payments in lieu of taxes plan, or PILOT, Dominion will make pre-determined payments for five years, then get a credit equal to 42% of its property tax for the next nine years. If the project goes as planned and expenditures reach $500 million by 2018, then Dominion will make a one-time payment of $25 million to the County.
Back in November, Dominion spokesman Dan Donovan said, “To me, it’s our way of paying our fair share. We’ll pay a lot of taxes.”
Yet County officials have declined to say just how much savings Dominion would receive from the tax credits. “You would think that when you’re making a budget calculation like that, it would be very relevant to the conservation what the financial implication would be,” said Josh Tulkin, director of the Maryland chapter of the Sierra Club, after the November meeting.
The non-disclosure agreement indicates that taxpayers have not had access to Dominion’s financial information or projections, sales estimates and business plans. “Hiding financial information from the public so that they cannot understand a tax deal that affects them as residents of Calvert County is unethical,” Canavan said.
View a series of emails between Calvert County and Dominion officials, and the final non-disclosure agreement (pdf):
UPDATE:
Calvert County Commissioner Susan Shaw vigorously defended the non-disclosure agreement she signed in 2012, saying it protected “proprietary business information” and that such agreements are “not that unusual.” Dominion requested the agreement, she said.
Shaw maintained that non-disclosure agreements like the one signed by Calvert County and Cove Point LNG are “standard business practice” to secure the “best deal” for County residents. She was also adamant that it had not hindered the Board’s ability to answer questions with respect to safety concerns or financial benefits that Dominion might receive through tax credits.
“There’s no conspiracy here,” she said.
Cove Point resident Sue Allison reacted with anger and dismay when she learned of the non-disclosure agreement. She felt that for months, she had been going to County Commissioners with questions they were legally barred from answering.
“They shouldn’t have signed a non-disclosure agreement,” she said. “Everyone has been wondering why they have been silent on our concerns and directing us to Dominion. That makes us feel kind of foolish going to our County Commissioners when our efforts were wasted.”
If they signed one, Allison says, they should at least have made it public.
But Shaw also defended the Board of County Commissioners’ decision not to inform the public of the existence of the agreement. “Was there a reason it should be made public? It’s business as usual,” she said. “Of course, routinely people do not disclose they are protecting proprietary business information, so you get the best deal for the County that you can possibly get.”
She cited a recent purchase of property by the County as an example in which she felt keeping details quiet was an advantage. “They’re [the public are] never privy to all the information. Do you think we’d let the public know what we’re doing?”
Concealing information from the public is precisely the problem, according the Fred Tutman of Patuxent Riverkeeper. “The whole idea of a non-disclosure agreement defeats the idea of open government,” he said. “It’s a shocking derailment of democracy.”
In Tutman’s opinion, secrecy has undermined the process from the beginning. “They hide behind secrecy, claiming it’s in the public interest.” He thinks there is no way to evaluate Shaw’s claim that she got the best deal for the County. “We don’t know. How would we know what the best deal possible was? They can’t tell us what the other deals on the table were,” he said.
“A non-disclosure agreement means that if you knew too much about this transaction you probably wouldn’t like it,” Tutman said. “It’s shocking that a public official would take refuge behind a claim of secrecy.”
Beyond the non-disclosure agreement lies the question, did Calvert County even need to give Dominion Resources incentives in the form of tax credits to undertake the $3.8 billion expansion of its facility?
Mike Tidwell of Chesapeake Climate Action Network says that Dominion “has no good options in terms of location.” For Commissioner Shaw, on the other hand, it’s a matter of profitability. “If the taxes are too high, they can’t make a profit, then they’re not going to make a deal. They’re not going to make a deal if they’re going to lose money.”
Before signing the non-disclosure agreement and exploring tax credit plans for Dominion, however, Shaw did not feel that it was necessary to investigate whether the company had the option to locate elsewhere.
“Why would I? My job is to represent the taxpayers of Calvert County. My job is not to worry about getting a deal somewhere else,” she said.
Dominion Cove Point LNG has not yet responded to DC Media Group’s request for comment.
