The Daily - Senator Joe Manchin’s Conflict of Interest

Episode Date: March 29, 2022

At every step of his political career, Senator Joe Manchin III has helped a West Virginia power plant that is the sole customer of his private coal business, including by blocking ambitious climate action.A Times investigation has revealed the strands of the unusual relationship between Mr. Manchin and that especially dirty power plant, showing just how entwined they are.Guest: Christopher Flavelle, a climate reporter for The New York Times.Have you lost a loved one during the pandemic? The Daily is working on a special episode memorializing those we have lost to the coronavirus. If you would like to share their name on the episode, please RECORD A VOICE MEMO and send it to us at [e-mail]. You can find more information and specific instructions here.Background reading: How Mr. Manchin aided coal, stymied climate legislation, and made a fortune.Want more from The Daily? For one big idea on the news each week from our team, subscribe to our newsletter. For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

From The New York Times, I'm Sabrina Tavernisi. This is The Daily. Today, Senator Joe Manchin of West Virginia has long been tied to the coal industry. But a Times investigation reveals just how entwined Manchin and one especially dirty power plant are. My colleague, climate reporter Christopher Flavelle, on exactly how Manchin intervened on behalf of a coal plant and earned millions along the way. It's Tuesday, March 29th. Chris, you've been working on this investigation into Senator Joe Manchin of West Virginia for a couple of months now. Give us the top line of what you uncovered.

Sure. So my goal with this story was to go beyond what we already knew. And what climate reporters and many people in West Virginia and elsewhere already knew was that Joe Manchin has had longstanding financial ties with the coal industry. He, according to his Senate financial disclosure documents, gets about half a million dollars a year in income from what we call a coal brokerage that he and others own. And so the goal with this story was to find out more about what that means, what the specific nature of his financial ties to the coal industry look like, who are his clients, what are the services he provides? Where does the money come from? And so I spent time really digging into what exactly can we find out about what his business, EnerSystems, does and what the money that he's making, which is about three times his salary

as a senator, what that money is for. And it's a very private business in the sense that it shares almost no information. So finding out what it does took some digging. And what I found at a high level was a very unusual relationship between Mr. Manchin and this one coal-fired power plant, the Grandtown power plant, and a pattern that lasted decades where Mr. Manchin would, on the one hand, use his influence as a public official to benefit this plant and its owners, and on the other hand, benefit himself in terms of money coming into his business. And that sort of intertwined relationship only became more complicated as his power grew as he rose through the ranks of politics. Okay, so tell us exactly how that relationship worked.

So it goes back to the late 1980s. This is when Joe Manchin was just starting his career as a public servant. He had just been elected a state senator in West Virginia. That was a part-time job. He made just $6,500 a year. His main business was working at his family's carpet store near his hometown of Farmington. But that wasn't going well. The business was struggling. But the one thing he had going for him was he was very well connected. Though he was just a state lawmaker,

his uncle was a state treasurer and his father was close friends with the governor. And so into that situation comes a business opportunity in the form of two developers. So around this time, the U.S. was trying to become more energy independent by encouraging more electricity to be generated using alternative sources. You've got the residue of the energy crisis from the 1970s.

And officials want new sources of power that can help America wean itself off foreign energy. foreign energy. So two developers from Pennsylvania came to West Virginia looking to get on this train of alternative energy. And specifically, they had in mind waste coal, this byproduct of coal mining, sometimes called GOB, which... Wait, GOB? GOB. So GOB is an acronym. It stands for garbage of bituminous, in this case, bituminous coal, black coal. It's basically garbage. So, until recently, when coal miners were pulling coal out of the ground, they would get coal, but they'd also get sort of an additional material that was sort of a coal mixed with rock or clay or sand. And the problem with that was it doesn't burn very well. And so for decades and decades, coal miners had nothing to do that was useful with this gob. So they would leave it literally piled up outside coal mines where it was treated as just trash. And it wasn't until the 80s that the technology really existed to use this gob for something else.

And in this case, these two developers realized there was a way to configure a power plant that you could actually burn what had previously been garbage and make electricity. Okay, so this waste coal product, gob, Okay, so this waste coal product, GOB, qualified as alternative energy in the context of the 1980s when the U.S. government was trying to wean America off foreign sources of energy. And so even though this stuff was actually garbage, just kind of a waste product, there was an incentive to burn it because the context had shifted. And as you point out, the technology had changed. And these two guys want to do it. That's right. But two problems came up. And the first challenge was just straight money. Because this gob, this waste coal, is actually quite hard to burn. It's also very expensive. And so initially,

the utility in West Virginia called Monpower was reluctant to sign this contract because they said, we don't know if this will make sense for us economically. Now, the developers were eventually able to persuade Monpower to sign a contract to buy this stuff. But once they had the contract, there was a second hurdle they had to clear. And that was the environmental hurdle. Because Gob has high contents of mercury and sulfur, federal regulators said, wait a second, is this going to be okay for air pollution? And that's where Mr. Manchin got involved. How so? What does Manchin do? So I spoke with the state official who was in charge of issuing these air pollution permits.

And he said that even now, more than 30 years later, he still remembers Joe Manchin coming over to him in the state capitol and saying, you know what, this Grantown plant, I'd really like them to get this permit. I hope you can find a way to help them get this permit. So the state official found a way to meet EPA's concerns and get that permit issued. So Manchin personally intervenes on behalf of this plant and clears away all the environmental hurdles. But what was in it for him? plant and clears away all the environmental hurdles. But what was in it for him? So it turns out that around the same time Mr. Manchin was helping this plant get through its red tape, he'd also set up a pair of businesses. And those businesses seem to have been built with the purpose of providing services specifically to the Grandtown power plants. In particular, one of his businesses would be the supplier of Gob to the Grandtown power plants.

So he would be getting paid for providing fuel to the same plants whose red tape problems he had just helped clear up. So he basically goes into business with the Gob plant he just cleared all the hurdles from. Yeah, at the same time. And the thing that stuck out for me in talking to a state official who helped arrange the air pollution permit said he didn't know at the time that Mr. Manchin had any kind of financial relationship with the Grandtown Power Plant and that if he had known that, it would have bothered him. Grandtown Power Plant, and that if he had known that, it would have bothered him. And this question came up, whether it was appropriate for Mr. Manchin to be in business with this company. And time and again, he's responded by saying he wasn't breaking any rules.

And Chris, do we know what the business arrangement actually was? I mean, how much money Manchin stood to gain here? arrangement actually was? I mean, how much money Manchin stood to gain here? So it's hard to find specific information on how much money he made early on in this relationship. One thing we do know is I was at the county courthouse near where this plant is located, and I managed to find a lease that Mr. Manchin signed with the owners of the Grandtown Power Plant right before the power plant started operating. And that deal gave Mr. Manchin 1% of all the revenue that the power plant earns from electricity created by burning the gob that it gets from this site that Mr. Manchin owns. And so we know Manchin was making money from this power plant almost right away. Wow. So Manchin actually gets a cut of what the plant makes. I mean, if the plant makes money,

he makes money. It's actually even better than that for Mr. Manchin. Even if the plant didn't make money, he's getting 1% of gross revenue. So even if the plant were losing money, he would still get paid a share of what the plant brings in in terms of revenue from burning his gob. Wow. So not even profit, but revenue, just total income to the plant. Right. And I spoke with an expert who follows these kinds of deals in West Virginia, and she said

it's the kind of deal you don't sign with just anybody because it puts Mr. Manchin first in line for that money from the plant. Okay, so what happens after the plant actually opens? So in 1993, after clearing those hurdles, the plant opens. Mr. Manchin is still a state lawmaker and he uses his influence as a state lawmaker to push a tax credit that benefits plants that burn gob. Now at the time, Grantown isn't the only plant in West Virginia that burns gob, but it's one of a very small number, one of just three. And so even then, early on, he starts facing criticism that as a lawmaker, he's using his

power to benefit a plant that's also the customer for his company. And he brushes that off. He says, you know what? The state ethics officer tells me it's okay. This tax cut doesn't just benefit my customer, so I think it's okay. But this idea that he's existing in a gray area with this business is there almost from the beginning. And so is the position for Mr. Manchin that despite the concerns, these relationships are okay. The other important thing happening at this time in the 1990s is it starts to become clear that this plant maybe isn't a super solid business operation. Because almost as soon as it starts operating, the plant goes to state regulators and says, you know what? Our operating costs are actually higher than we thought they would be. We need to get more money for the power that we sell. And initially, the first time they made this plea, state regulators said no. Bond Power also said no. So the first attempt to sort

of solidify their business fell apart. But in 2006, they went back to state regulators and said, we really, really need help. We really need to get more money for the power we generate. This time they succeeded. And they succeeded because MonPower, the utility that had earlier said, no, we don't support that. This time MonPower was on board. And something else is different too. Joe Manchin, by this point, was governor. And I dug through transcripts from old lawsuits, and I found a case where somebody who knew Mr. Manchin and was involved in the plants said in a deposition that he had gone to Joe Manchin as governor at this time and said, we need help for the plants. The plant needs more money. And according to this deposition, Joe Manchin told his chief of staff

to go and talk to Maughan Power, get Maughan Power on board. And indeed, Maughan Power came around. And once Maughan Power came around, so did state regulators. So based on this testimony, there is a straight line between Joe Manchin using his power as governor and this power plant getting more money for the electricity it produced. And the reason that matters to households is that the rate increase that was approved in 2006 was passed directly onto rate payers. That meant higher charges for households in West Virginia, which is already one of the poorest states in the nation. So it sounds like the deciding factor here, the thing that really changed the power company's mind about this rate increase, is the fact that Manchin, as governor, intervenes. And the result is higher rates for West Virginians, Manchin's constituents. Right. Now, when I asked Mr. Manchin, he declined to answer questions. So we'll never know what happened. What we do know is that

Mr. Manchin, according to this source, used his authority as governor to intervene with the power company. And also, we know that the result was unequivocally higher rates for households in West Virginia. And Chris, should we assume that the rate increase that happened resulted in more money for Manchin himself? We're never going to know exactly what the financial change was for Joe Manchin, but what we do know is that by this point, according to federal data, the Grantown Power Plant was the only customer for the gob, the waste coal, that Mr. Manchin's company was providing. So in a very direct sense, what's good for the Grantown

power plants is good for Joe Manchin. And if we take Grantown at its word, Grantown at this point was saying that without the rate increase, they could go out of business. So if that's true, Mr. Manchin getting involved meant that he saved his only customer. We also know that, well, the rate increase might not have been enormous from the perspective of individual households. For the state as a whole, it was huge. In fact, the latest numbers I've seen suggest that over the lifetime of this contract, it's going to mean hundreds of millions of dollars extra being paid by West Virginia households as a whole, beyond what they would have otherwise had to pay for other sources of power. But even with all that, the conflicts that came up from Joe Manchin's relationship with the Grandtown Power Plant as a state official were really nothing compared to

how those conflicts played out once he got to the U.S. Senate. We'll be right back. So what happens to Joe Manchin's relationship with the grandtown power plant when he becomes u.s senator so in 2010 joe manchin is first elected to the senate and initially the epa is holding the coal industry to impossible standards he becomes a champion for coal that i do believe that seven billion people on mother earth has had an impact on the environment we have a responsibility we also have seven billion people that Mother Earth has had an impact on the environment. We have a responsibility. We also have 7 billion people that would like to eat and provide for themselves and their family.

So we've got to find that balance. It's not surprising. He represents West Virginia. Mr. Chairman, EPA's proposed standards for new coal-fired power plants would effectively prevent any new plants from being constructed. And he takes the steps that you would expect. Right. Unfortunately, the Environmental Protection Agency has chosen a regulatory path devoid of common sense. He opposes new rules from the EPA that would crack down on mercury emissions from power plants,

which are a significant public health hazard. He pushes back on regulation of coal ash, which is a big issue in West Virginia. Bo's what I say. Boil it down just a bit simpler. Is this administration in the year that it has left trying to put coal out of business? Yes, sir. Yes, sir. It has most certainly done that, and it's doing it in a rapid rate. But it turns out that at the same time

that Mr. Manchin was being sort of a defender of coal and a defender of West Virginia, there was more going on. In particular, when I dug through these federal records, it turns out that after he became a senator, the amounts of waste coal that Grant Town was getting from Joe Manchin's company increased considerably. When he joined the Senate, only about a quarter of the waste coal that was used by Grandtown came from Joe Manchin's company. In other words, Grandtown had other suppliers as well for this garbage coal.

Right. He was one among many. That's changed. At this point, based on the most recent available data, more than 80% of the waste coal that gets burned at Grandtown comes from Joe Manchin's company. So the relationship between Joe Manchin's company. So the relationship between Joe Manchin and this plant becomes ever tighter. Now, when I asked Grantown and Mr. Manchin what explained that change, that tightening business relationship, I got no comment from either of them. But there's something else that's happening that's probably even more important. I spent a long time digging into this question of, well, who actually owns the Grandtown Power Plant?

And on paper, that's an easy question to answer. There's a company called American by Tuminous, created by these two developers, and it's owned Grandtown ever since. But behind that company are a series of holding companies. And behind those holding companies turned out to be a series of major corporations with business interests that go well beyond West Virginia. Those companies are, at various points, Edison International, a major utility company, NRG Energy, a big energy company,

and then Sumitomo, a Japanese-based conglomerate that has business in all kinds of areas. And why does that matter? The thing that matters is, at the same time that those three corporations had ownership stakes in Grantown, they were also lobbying the Senate. And not just lobbying the Senate, they were lobbying the Senate on issues that were under the jurisdiction of committees Mr. Manchin sat on. So I think the important part of this part of the story is it really shows how Mr. Manchin's potential confidence of interest grew along with

his power. Okay, so let me see if I understand what you're saying, Chris. So in the period when Manchin is in the U.S. Senate, you know, arguably a more powerful position than governor of West Virginia, his company becomes even more entwined with the plant. I mean, they become absolutely codependent on one another, it sounds like. And at the same time, the parent company of the plant is actually lobbying Congress quite aggressively, it sounds like. And those things taken together are kind of disturbing because it's almost as if his own company is lobbying him. Right. And I spoke with ethics experts on this. And the way they described it to me is, there's no indication that anything that happened meant that Mr. Manchin was breaking the law.

There's also no indication that anything that happened meant Mr. Manchin was breaking the law. There's also no indication that anything that happened meant Mr. Manchin was breaking Senate rules. I have to say, Chris, it feels like it shouldn't be allowed. I mean, what's the logic there? So the only thing that Senate rules prohibit are for a senator to take an action that directly benefits the senator or his family or a small category of people around him. But didn't this one do that?

It did it, but with other beneficiaries as well. So take one good example. In 2016, Mr. Manchin sponsored a bill that would give states authority to regulate coal ash and take that away from the federal government. federal government. Well, on one hand, that's something that West Virginia wants and other states want because they want more power to control energy industries in their states. But it also was especially beneficial for Grantown because Grantown, because it burns waste coal, which produces a lot of coal ash, they really depend on a lighter regulatory touch. So take that action. Do we know whether Mr. Emmett Manchin sponsored that bill because he thought philosophically it was the right regulatory approach? Or did he sponsor that bill because it was good for Grandtown? It's the kind of question

we can never answer. And the fact that we can't answer it, I think really highlights the hole in the way Senate rules are applied, not to the companies that are owned by senators, but to their clients, right? So as one expert put it to me, we want to know not just what Manchin owns, but where the money is coming in to those companies from. And that's a real blind spot in these ethics requirements. Now, as problematic as Joe Manchin's relationship with this power plant might have seemed until recently, it didn't have any obvious impact on the public interest or on party policy or on U.S. policy. Now, that changed in 2020. Climate change and climate warming, global warming is an existential threat to humanity.

We have a moral obligation to deal with it. Because in 2020, Joe Biden became president. And by the way, the whole idea of what this is all going to do, it's going to create millions of jobs. And it's going to clean the environment. Our health and our jobs are at stake. And he ran and won on a campaign of addressing climate change. But the Senate also became evenly split. And in an evenly split Senate, Joe Biden's climate agenda really depends on every Democrat in the Senate voting in favor of his bills. All eyes remain on that familiar Democratic Senator Joe Manchin,

the West Virginia Democrat signaling... And Joe Manchin effectively became the decider. Senator Joe Manchin is the most sought-after swing vote in the 50-50 Senate. As the most arguably conservative member of that caucus. All eyes on Joe Manchin. I'm trying to think of the last time a senator had as much power as Joe Manchin has right now. And right now, all eyes remain on him.

Joe Biden now relies on Mr. Manchin for his support. Right. Manchin, we don't know if he would vote for such a bill. And the result was, all of a sudden, what had been until then an unusual situation with Joe Manchin, but not an especially important one, all of a sudden became crucial to the future of American climate policy. And you could think of this as sort of the third chapter in this saga of Joe Manchin's relationship with Grandtown Power Plans. Because all of a sudden, Democrats, President Biden, and arguably the world are looking to see whether this climate agenda can pass. And it all comes down to Joe Manchin.

Simply put, I will not support a bill that is this consequential without thoroughly understanding the impact that it'll have on our national debt, our economy, and most importantly, all of our American people. Every elected representative needs to know what they are voting for and the impact it has, not only on their constituents, but the entire country. But it turned out that even as these negotiations are playing out in public in Washington over the fate of Mr. Biden's climate agenda, a very different fight was happening behind closed doors in West Virginia. And what was that? Well, at the same time Mr. Manchin was negotiating with Mr. Biden over his climate agenda,

the power plant was going to state regulators and saying, we still have a problem. We need even more help because our business is in jeopardy. Specifically, the power plant said to state regulators, we want to get out of our contract. We want to buy out. What that means is the power plant said, we want to take all the money we're going to get in the future from the utility for the power we create and just get that

all at once right now. And they said one of the reasons they need it is because they're worried that the federal government might tighten climate rules. And they said if that happens, they're not ready for it. They need that influx of money now to cushion themselves against the potential of tougher climate regulations. So it sounds like they're looking at the big climate agenda that Biden is trying to pass and kind of seeing the writing on the wall and basically trying to protect themselves from that. Correct. So what happened?

trying to protect themselves from that. Correct. So what happened? In November, Grandtown gets a hearing to see if they can persuade state regulators to help them get this infusion of cash. The hearing does not go well for Grandtown, and it sure looks as though they are not going to get this cash infusion they've been asking for.

Now, separately, meanwhile, there's been months of negotiations between Mr. Manchin and the White House over this climate bill. A few weeks after the hearing, Mr. Manchin finally comes out and states his position. And I cannot vote to continue with this piece of legislation. I just can't. I've tried everything humanly possible. I can't get there. You're done. This is a no. His position is no. He will not support the climate bill, which effectively dooms it.

This is a no on this legislation. I have tried everything I know to do. And the president is wrong. Are those two things related? We'll never know. But the timing raises the question of whether what happened in West Virginia influenced Mr. Manchin's decision on the climate bill. So how does Manchin explain it? So on December 19th of last year, Mr. Manchin released a long statement explaining his reasons for why he could not support this climate agenda. And among the reasons were what he said was his concern that you couldn't push the US power sector to move too fast. That if you tried to accelerate the move away from fossil fuels, there'd be a disaster. And so it opens the door to at least

wondering whether or not the effects of tougher rules on the Grantown power plants were on Mr. Manchin's mind. We'll never know. When I asked Mr. Manchin's office if that case affected his decision to oppose Mr. Biden's bill, his office wouldn't comment beyond saying that Mr. Manchin opposed the bill for the reasons he'd said, including fears of inflation, other concerns. Yeah, I mean, I guess he's not exactly going to say, why, yes, I'm opposing this climate bill because there's a company that pays me half a million dollars a year and it's going to be affected by it. But it sort of leaves this residue of, you know, there's enough there for all of us to wonder what his motivations really are, right? Right. But the fact is that the whole problem with having a senator, a powerful senator, with these outside financial ties is it always raises the question, what's really motivating his decisions? And when the decision in question is the entire fate of U.S. climate policy,

at a moment when other countries are looking to the U.S. to lead on climate change, then all of a sudden what started 30 years ago as a relationship between a state lawmaker and one small power plant assumes gargantuan proportions and arguably changes the course of U.S. climate policy. Chris, thank you.

Thank you. We'll be right back. Here's what else you need to know today. On Monday... Nobody believes we're going to take down... I was talking about taking down Putin. President Biden defended his comment that Vladimir Putin should be removed Nobody believes we're going to take down, I was talking about taking down Putin. President Biden defended his comment that Vladimir Putin should be removed as president of Russia,

saying it was a personal expression of his, quote, moral outrage at Putin and not a change in American policy aimed at toppling the Russian leader. The last thing I want to do is engage in a land war or a nuclear war with Russia. Biden made the jarring remark during a speech in Warsaw over the weekend, prompting outrage in Russia where nationalists believe the U.S. is out to destroy their country. And a federal judge ruled that former President Donald J. Trump and a lawyer who had advised him on how to overturn the 2020 election most likely had committed felonies. Judge David Carter of the Central District of California wrote that the actions

of Mr. Trump and the lawyer, John Eastman, amounted to, quote, a coup in search of a legal theory. Mr. Trump has not been charged with any crime, and the judge's ruling had no immediate practical effect on him. But it marked a significant breakthrough for the Congressional Committee investigating the January 6th attack on the Capitol by bolstering the committee's argument that Trump's efforts to block Congress from certifying the results of the 2020 election could well rise to the level of a criminal conspiracy. Today's episode was produced by Michael Simon-Johnson and Stella Tan, with help from Rochelle Bonja and Ricky Nowetzki. It was edited by Paige Cowett, contains original music by Brad Fisher and Marion Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg

and Ben Landsberg of Wonderly. That's it for The Daily. I'm Sabrina Tavernisi. See you tomorrow.