POLITICS:

Manchin maintains lucrative ties to family-owned coal company

Sen. Joe Manchin (D-W.Va.) is more than just a supporter of his state's influential coal producers -- he's a full-fledged industry insider.

On his financial disclosures for 2009 and 2010, Manchin reported significant earnings from Enersystems Inc., a coal brokerage that he helped run before his political star rose. In the 19 months before winning his Senate seat in a hard-fought special election, Manchin reported operating income of $1,363,916 from Enersystems. His next disclosure showed $417,255 in Enersystems income.

Manchin's Enersystems earnings are less than eyebrow-raising in a chamber where more than half the members routinely report net worths above $1 million.

That he derives income from an industry while acting as one of its biggest boosters, however, puts Manchin in a smaller group of lawmakers who play a central policymaking role in sectors that help their bottom line -- such as Rep. Mike Ross (D-Ark.), a former pharmacy owner with health care influence on the House Energy and Commerce Committee, and former Senate Majority Leader Bill Frist (R-Tenn.), whose sale of stock in his family hospital chain sparked a 2005 federal probe.

Asked about his Enersystems income in a brief Capitol interview last week, Manchin said it has "absolutely not" affected his policy decisions.

"I have been in a blind trust for a long time," he added.

Manchin's office did not provide many details about the senator's ties to the company in response to a series of specific questions. Public records and media reports show that he handed day-to-day control of Enersystems to his son after being elected West Virginia secretary of State in 2000 and moved his company holdings into a blind trust between 2005 and 2010, while he served as governor.

Manchin's Enersystems holdings and other in-state assets are being transferred to a new blind trust that complies with federal rules, a source indicated to E&E Daily.

Despite Manchin's defense of his continued Enersystems income, the link is an open secret among coal critics in his home state.

"That's generally known," Cindy Rank, a prominent West Virginia environmentalist, said in an interview about Manchin's coal ties. "I certainly think that his perspective is very much skewed because of his connections to industry."

Manchin's support for coal-industry priorities encompasses an array of hot-button political issues, from his pushback at U.S. EPA plans for the regulation of coal ash as a hazardous waste to the agency's policy on mountaintop-removal mining.

The freshman senator's first bill this year aimed to stop EPA from retroactively vetoing mountaintop-removal permits, a key step in a broader bid by coal companies to roll back the Obama administration's more stringent oversight of mining projects.

"We want jobs, we want an economy, we want to be able to compete, we don't want wars around the world, we don't want to continue to be reliant on foreign oil," Manchin said at a recent hearing, strongly challenging an administration official on coal.

In fact, Manchin was eyeing a pro-growth case for mountaintop-removal projects before running for statewide office. As Enersystems president in 1998, he served on an economic development advisory board that called for more local input into approved uses for sites subject to the ecologically shattering mountaintop-removal process.

"Economic development is what's going to make mountaintop removal palatable," Manchin told the Council for Community and Economic Development at the time, according to the Charleston Daily Mail.

As a senator, he has little trouble attracting industry support. Coal and energy companies are among his biggest donors, including recent contributions from Alpha Natural Resources Inc., Arch Coal Inc. and the National Mining Association.

Manchin's proximity to coal has earned him the ire of Mountaineer State greens who are pushing the Obama administration to do more to crack down on mountaintop removal.

"His presence in Congress at this point in time is very misleading," Rank said.

Jim Sconyers, chairman of West Virginia's Sierra Club chapter, had sharper words about Manchin: "He's been nothing but a mouthpiece for the coal industry his whole public life."

Faircloth and Frist

The prospect that Manchin's $1.7 million-plus in recent Enersystems earnings might tilt him even more strongly pro-coal might seem remote, given the deep economic and cultural connections that the industry maintains in West Virginia.

In addition, the income from his family-owned energy brokerage violates no Senate ethics rules -- thanks to a conflict-of-interest standard drawn broadly enough to prompt howls of dismay from some watchdogs in recent years. As congressional ethics expert Stan Brand explained it, no amount of outside income would be enough on its face to force a senator to step aside on issues in which he had a personal stake.

"The presumption is, you shouldn't recuse yourself from voting unless your conflict is direct and different from a class of people who share the same interest," Brand, a former House counsel now in private practice, said in an interview.

Citizens for Responsibility and Ethics in Washington Executive Director Melanie Sloan, a former federal prosecutor and congressional counsel, cited the case of ex-Sen. Lauch Faircloth (R-N.C.). A hog farmer, he sought and won Ethics Committee approval to maintain his financial interests in the industry while voting and using his seat to press for the extension of subsidies to domestic pork producers.

The panel told Faircloth to proceed as he saw fit because "you're not the only hog farmer" in the nation, Sloan said in an interview. "The only thing you can't vote on is if it's basically a private bill, affecting only your interests."

Perhaps the most famous congressional conflict-of-interest flap in recent years stemmed from Frist's contention that his multi-million-dollar investment in a family-owned hospital company were shielded by a "totally blind" trust.

The former Senate leader later became the subject of a federal investigation into whether he had prior knowledge of poor company earnings before selling his portfolio, though he was ultimately cleared of any charges.

Despite the notoriety that Frist brought to the congressional blind trust -- lawmakers "famously use it to demonstrate their piety," Brand quipped -- Manchin may have more in common with the former North Carolina hog farmer than the Tennessee hospital scion, whose family company was publicly owned and traded at the time of his ethical stumble.

Manchin's stake in the family-owned, private Enersystems "sounds to me an awful lot like Faircloth," Sloan said. "It's always an issue when members of Congress have personal financial interests in things in which they take an active role. The public should be concerned about it and should follow it closely to make their own determination."

While Manchin's coal holdings were not surprising to many sources, not every West Virginia lawmaker maintains a financial tie to the industry. The late Sen. Robert Byrd (D-W.Va.), who before his death distanced himself from coal companies with a warning to "embrace the future," reported only income from a retirement account and rental property before his death and subsequent replacement in office by Manchin.

The Senate ethics committee did not return a request for comment on the rules that governed the 2010 opening of Manchin's blind trust.

Coal in his blood

Manchin, who sits on the Senate Energy and Natural Resources Committee, comes from a family known for entrepreneurship and political ambitions.

One also might say that coal is in his blood.

"I am very proud of the critical role West Virginians play in providing energy to our nation," Manchin said during his maiden speech in the Senate. I imagine the lights in this very chamber would be a little dimmer were it not for West Virginia coal."

As governor, Manchin gained national prominence during the 2006 Sago Mine disaster, where he was active in the response and in pushing for new safety rules at the state and federal level. His advocacy for coal extends to its workers as well; he is supporting a new mine safety law in the wake of another disaster that occurred during his governorship, the April 2010 Upper Big Branch explosion that killed 29 workers.

Manchin's uncle, a union member, died in the Farmington Mine disaster of 1968 (Farmington is Manchin's hometown, in the northern part of the state, and his father and grandfather served as mayor of the tiny community). And Manchin is said to have grown up with Dennis O'Dell, mine safety and health point-person at the United Mine Workers of America.

Of his public and personal support for coal, Manchin said simply last week: "It's just how I believe."

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