It’s kind of a perfect storm. The economic dislocations caused by the pandemic and war in Ukraine have led to record gas prices, and with them, tremendous pressure to encourage more oil and gas production. All in an election year.
The New York Times article continues:
Experts say that it is now impossible for Mr. Biden to meet his pledge to the world that the United States will cut its emissions in half by 2030, the amount the scientists say is necessary if the planet’s largest economy is to do its part to avoid the most catastrophic consequences of global warming.
Mr. Biden’s best hope for climate action is in the $2.2 trillion climate and social spending legislation stalled on Capitol Hill, which includes about $300 billion in tax incentives designed to galvanize markets for wind and solar energy and electric vehicles. If enacted, it could cut the nation’s emissions roughly 25 percent by 2030, getting about halfway to Mr. Biden’s promised target.
The House passed the legislation last year but it came to a standstill in the Senate in December, when Senator Manchin said he would not vote for it.
Why wouldn’t Joe Manchin III vote for the Administration’s Build Back Better bill? For all of his protestations about the child tax credit not being permanent, or the size of the bill being too big, or other excuses, the real reason behind his opposition seems to be the age-old favorite: economic self-interest. Thanks to a New York Times Exposé, we see in detail why Joe said no. By the way, it bears saying that nothing Joe did was illegal. However, it sure looks like he violated Senate ethics rules, which according to the New York Times Exposé, “forbid members from acting on legislation to further their financial interests or those of immediate family members.” And he directly screwed the people who voted for him and indirectly the rest of us.
When Manchin was elected to the West Virginia state senate in 1986, his annual senate salary for that part time job was $6,500. According to U.S. Senate financial disclosure forms, in 2020 Manchin, who drives a silver Maserati Levante, and his wife owned assets worth between $4.5 million to $12.8 million. Yes, people really do go into politics to make money.
The bulk of Manchin’s wealth derives from the company he co-founded with his brother, Enersystems, Inc. According to the New York Times Exposé:
Enersystems Inc. is now run by Mr. Manchin’s son, Joseph Manchin IV. In 2020, it paid Mr. Manchin $491,949, according to his filings, almost three times his salary as a United States senator. From 2010 through 2020, Mr. Manchin reported a total of $5.6 million from the company.
What is Enersystems and what does it do? It is an energy company that sells “gob,” a type of low-grade coal mixed with rock and clay that is typically heaped onsite as waste (above), but which can be burned (relatively inefficiently) to produce electricity. Enersystems was at its outset and still is a business with a single customer: American Bituminous Power Partners, or AmBit.
AmBit was the brainchild of two developers and came into being in 1987, just after Manchin’s election to the state Senate in 1986. The idea was to build a power generation plant, known as the Grant Town plant, that would burn gob and then sell the electricity to Monongahela Power, a local West Virginia utility in Manchin’s district. AmBit had entered into a long-term contract with Monongahela and now they needed a permit to build the Grant Town plant. For that, they turned to Joe Manchin, whose family had worked in coal.
According to the New York Times Exposé,
The Environmental Protection Agency was concerned the Grant Town plant would be too close to an existing coal-burning plant, resulting in excessive levels of sulfur dioxide, a threat to human health and plant life, according to documents obtained through a public records request.
Dale Farley, the West Virginia state official in charge of issuing air pollution permits at the time, recalled in an interview that Manchin approached him about approving the Grant Town plant. “He was pretty smooth about it,” said Mr. Farley, now 72 and retired. “But he let it be known that he was definitely interested in the project going forward.”
Mr. Farley struck an agreement with Monongahela Power… to limit emissions from the nearby plant, allowing the Grant Town plant to proceed.
What Mr. Farley didn’t know was that Manchin was planning to sell gob to the Grant Town plant. Had he known at the time that Mr. Manchin planned to have a financial relationship with the plant, “it would have bothered me,” Mr. Farley said.
Having secured the permit, Manchin and his brother co-founded Enersystems in 1988, and immediately began to buy up or lease mines for the sole purpose of acquiring their gob. Again, from the New York Times Exposé (emphasis added in bold):
On Oct. 5, 1989, one of Mr. Manchin’s companies, Transcon Inc., bought an old coal mine in Barrackville, five miles south of Grant Town, for $380,000, … That same day, he sold the property and its gob piles to AmBit for $500,000 — a profit of $120,000.
But Mr. Manchin was not only a supplier of fuel to the Grant Town plant. He also got a share of its revenue.
Shortly before the plant opened, he signed another deal with AmBit, involving yet another old coal mine that Mr. Manchin owned, this one south of Farmington, Mr. Manchin’s hometown. He leased that mine, along with the gob on that property, to AmBit. In return, AmBit agreed to pay not just rent to Mr. Manchin, but also one percent of the gross revenue from electricity generated by burning gob from Mr. Manchin’s old coal mine,...
Those terms, while not unheard-of, were generous to Mr. Manchin, said Stefanie Hines, a lawyer who teaches at West Virginia University and specializes in mineral rights. “These aren’t deals you give to everybody,” Ms. Hines said.
Once the Grant Town plant opened, Mr. Manchin urged his fellow state lawmakers to back a tax credit for power plants that burn gob, ... It passed the following year.
And that’s not all. In 2006, Manchin was elected governor of the state of West Virginia. As governor (above), he had the power to appoint members to the state’s Public Service Commission, which sets the electricity rates paid by Manchin’s constituents. When AmBit sought a rate increase from the PSC during Manchin’s tenure, Monongahela, under pressure from Manchin, supported it. The increase has been very costly for Manchin’s constituents. Per the New York Times Exposé:
The consequences of that rate increase turned out to be enormous. Since 2016, Grant Town has cost Mon Power $117 million more than it would have spent to buy that power from other sources, according to documents filed last year with the Public Service Commission. The utility had little choice but to buy the electricity; its contract with Grant Town doesn’t expire until 2036.
The extra costs were passed on to residents, burdening ratepayers in one of the poorest states in the nation.
And, of course, benefiting Manchin, under his percentage rent lease with AmBit.
But it gets worse. AmBit, fearing that the climate regulations in the Build Back Better bill would reduce its bottom line, approached Monongahela for a buy-out of their long-term contract. Monongahela rejected the offer, which resulted in a dispute that Monongahela took to the Public Service Commission for resolution. The PSC was leaning heavily against AmBit, which would of course have affected Manchin’s percentage take. Just ten days before the PSC was to rule, Manchin announced he would not support Build Back Better. Problem solved! For Manchin.
So here is how the Manchin deal unspools:
· Manchin sells gob to AmBit.
· AmBit generates electricity from the gob and sells it to Monongahela Power.
· Monogahela resells the electricity to its customers, Manchin’s constituents.
· Manchin’s constituents pay Monongahela at the rates set by the state’s utility commission.
· Then in reverse, Monongahela pays AmBit, which pays Manchin a percentage of the rates paid by his constituents.
Pretty slick, almost as slick as that silver Maserati.
The fact that Manchin has screwed the very people who voted him into power is pretty clear, and yet he will likely retain his U.S. Senate seat. Equally clear are the consequences of his opposition to the climate mitigation measures embodied in the Build Back Better bill. The bill’s failure will mean more investment in and tax subsidies for fossil fuels at the expense of renewables, more fracking, more pollution, more methane releases, more CO2 in the atmosphere, more droughts, more atmospheric rivers, more flooding, more food insecurity, and more climate migration. Greenhouse gas emissions have increased again this year after falling temporarily during the pandemic. We’re moving against the tide and running out of time, as the Sixth Assessment Report of the International Panel on Climate Change makes crystal clear.
But hey, who cares if the Earth is getting hot? What’s cool is that Joe Manchin III will be able to pull up to the pump in his silver Maserati Levante and tell the station attendant to, “Fill ‘er up!” at a price that doesn’t include the costs to the planet.
Or as Louis XV said, "Après moi, le déluge." Except in this case, it will be literal.
Keep it real!
Marilyn
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