State ethics rules seldom prevent lawmakers from proposing or voting on legislation that affects industries they work for.
by Ken Ward Jr. and Kate Mishkin, The Charleston Gazette-Mail
This article was produced in partnership with the Charleston Gazette-Mail, which is a member of the ProPublica Local Reporting Network.
Toward the end of this year’s legislative session, a little-noticed bill was moving through the West Virginia House of Delegates to limit legal challenges that had slowed new natural gas-fired power plants in the state.
Delegate Roger Hanshaw, a Republican lawyer from Clay County who was serving as vice chairman of the Judiciary Committee, took to the floor to explain the legislation.
“This bill is a little inside baseball to practitioners of environmental law in West Virginia,” explained Hanshaw, a supporter of the bill.
It wasn’t the first time that Hanshaw engaged in some pretty effective legislative inside baseball on energy bills.
Last year, Hanshaw engineered passage of a bill that gave natural gas companies a broad exemption from chemical tank safety standards that West Virginia put in place after a 2014 spill that contaminated drinking water for 300,000 people.
Hanshaw was elected speaker in late August, succeeding Tim Armstead, who is now a justice on the West Virginia Supreme Court. Hanshaw is expected to be re-elected speaker in January. In the position, Hanshaw wields significant control over which bills are called up for votes and which are sent to committees to effectively die.
When he’s not in the state Capitol, Hanshaw makes his living as an attorney with the Charleston-based firm Bowles Rice, where his clients have included natural gas companies and gas industry lobby groups.
Over the last three years, he has represented the operator of a Fayette County natural gas waste disposal site in legal battles with state regulators and nearby landowners. He argued its case before the state Environmental Quality Board and the state Supreme Court. Then, he filed a brief on behalf of two industry groups when the case went to a federal appeals court.
Under the state’s ethics laws, those overlapping interests aren’t enough to keep Hanshaw from voting on matters affecting the industry, including the bill to help stop coal-funded legal challenges to power plants.
Legislative controversies over natural gas have grown in recent years as the industry’s production has greatly expanded. Hanshaw illustrates both the industry’s increasing ties to lawmakers and how West Virginia ethics laws sometimes leave state residents in the dark about such potential conflicts.
West Virginia’s ethics laws allow legislators to vote on matters that would benefit themselves, their businesses and their clients. In fact, a House policy, known as Rule 49, forces them to vote, so long as at least four others also stand to benefit.
In February, for instance, more than a dozen delegates were ordered to vote on a bill to make it easier for gas companies to assemble larger mineral tracts for drilling, despite asking to be excused because of potential conflicts. One of those lawmakers is the in-house counsel for a gas company.
A ProPublica and Charleston Gazette-Mail review found that over the past five years, the House speaker approved just 14 of 245 delegate recusal requests, a rejection rate of 94 percent.
Hanshaw’s financial disclosure, filed with the state Ethics Commission, makes no mention of his connections to the natural gas industry. It lists his employer as Bowles Rice and describes his work as the “private practice of law.”
Hanshaw says he’s able to separate his legal practice from his work as a lawmaker, even when the interests overlap. In an interview in mid-November in his Capitol office, he said that the natural gas industry represents less than half of his legal practice, and that the work focuses mostly on advising clients about financial transactions or regulatory compliance rather than litigation.
“I represent whoever comes through the door.”
Hanshaw isn’t the only legislator with experience in West Virginia’s oil and gas business. He’s not even the only one at his own law firm.
Sen. Corey Palumbo, D-Kanawha, also is a partner at Bowles Rice. His practice areas include “oil and gas litigation,” according to the law firm’s website.
Palumbo has litigated against landowners on behalf of gas producers, work that drew attention two years ago when he was the co-sponsor of an unsuccessful bill to make it harder for residents to sue gas companies for damaging their property.
Palumbo said recently that he doesn’t remember a lot of the details of that legislation or exactly how he came to co-sponsor it. But he said that he represents a wide range of businesses in litigation, and that gas companies make up less than half of his practice.
“Everyone is sort of shaped by who they are and what they do,” Palumbo said. “I’m someone who represents business, and that shapes my views sometimes.”
Palumbo said he doesn’t make legislative decisions based on what would make businesses, including his clients, happy. “I just try to do what’s right,” he said.
More than a dozen lawmakers who served during the 2018 regular session listed some financial connection to the gas industry on their annual disclosure forms filed with the state Ethics Commission. Delegate Moore Capito, a Kanawha County Republican, for example, reported on his financial disclosure that he is an in-house counsel for Greylock Energy, a gas company.
So should those lawmakers be voting on gas industry legislation?
“I think the obvious answer to your question is no; legislators shouldn’t be voting on issues that affect their own business interests,” said Julie Archer, project manager for the West Virginia Citizen Action Group, which advocates for stronger government ethics standards. Archer said that West Virginia’s Ethics Act “seems pretty clear” that lawmakers should recuse themselves, but “it also gives them a lot of wiggle room” to vote anyway.
Part of the issue is that West Virginia has a citizen Legislature, like 40 other states, in which lawmakers keep their day jobs but come to Charleston for 60 days a year and a few days each month.
One major strength of such arrangements is that members with different backgrounds can use their varying areas of expertise and experiences to help educate colleagues as they go through the process of making laws.
For example, Democratic state Sen. Mike Romano, a lawyer from Harrison County, uses his past experience as an accountant in the gas industry to grill lobbyists about gas leasing and royalty bills.
Yet, Romano says he sees a clear problem with lawmakers who work in the gas industry voting on legislation that affects that industry. “That presents a clear conflict of interest,” he said.
Some conflicts, though, aren’t even disclosed. Lawmakers who are lawyers like Hanshaw don’t have to identify their clients, even if they represent parties that have vested interests in the outcomes of particular bills. The state Ethics Commission has never considered requiring those details, the agency’s executive director said.
Romano and Palumbo both said they believe requiring some kind of disclosure, such as general practice area or large clients, would be a good idea. “The more people know, the better choices they can make at the ballot box,” Romano said.
In written responses to questions from the Gazette-Mail and ProPublica, Hanshaw initially dismissed the idea, saying forcing lawyers to identify clients would violate legal ethics rules.
In the mid-November interview, however, Hanshaw conceded that some types of information about clients, such as when lawyers handle litigation, are a matter of public record that could be disclosed in Ethics Commissions filings. He said there are ways to let the public know what kind of law an attorney practices and generally what kinds of clients attorney-legislators have.
Hanshaw said that West Virginians have “a heightened interest” in government ethics rules this year in the wake of a spending scandal that prompted the impeachment of four state Supreme Court justices and the resignation of the fifth. (Two of the justices remain on the court.)
More than four decades ago, lawmakers in the West Virginia House of Delegates set a strong standard for themselves, aimed at preventing conflicts of interest from affecting their legislative votes.
In 1975, House members approved Rule 49, which said that any member “with a personal or private interest” in a bill was required to announce that interest and not vote.
Two years later, though, legislators watered the rule down. Instead of prohibiting members from voting on matters in which they had an interest, they would be told not to vote only if the matter affected them “directly and not as one of a class.”
In 2017, the rule was amended to define a class as five or more similarly situated people.
The way the rule has been interpreted in recent years, delegates are seldom ever excused from voting.
Take, for example, the February vote on the bill to make it easier for gas companies to force unwilling gas owners to allow drilling on their property.
More than a dozen House members said they had a conflict and asked to be excused from voting.
Judiciary Chairman John Shott, R-Mercer, was the first to ask. He said his father owned one-one hundred sixtieth of some gas reserves and he might eventually benefit from the bill when he inherits that gas.
Then-Speaker Armstead, R-Kanawha, ruled that Shott did not stand to benefit any more than anyone else and told Shott he had to vote. (Lawmakers do not have the ability to abstain from votes in West Virginia.)
A parade of other delegates followed with their own requests not to vote.
Some were like Shott. They owned some small piece of a natural gas tract that might be made more accessible to drilling if the bill passed. Some had existing gas leases they felt might become more lucrative.
Others, like Capito, worked directly for a gas company. Capito said he always asks for a Rule 49 exemption from voting on oil and gas bills “in an abundance of caution.”
Armstead made them all vote. The bill passed on a 60-40 vote. The 20-vote margin meant recusals wouldn’t have swayed things either way. Some of those who asked to be excused voted against the bill, while some voted for it.
Hanshaw was not among those who asked for a Rule 49 exemption, because he said he did not believe his legal work for the gas industry was a conflict with that bill. He voted for the bill.
As the natural gas bill illustrates, Rule 49 seldom results in members not voting on legislation where they may have a conflict of interest.
“It’s rare,” House Clerk Steve Harrison said. “One of the things about having a citizen Legislature is that there are so many bills that are going to affect the person or affect the business that there is an interest there, but it is almost always as a member of a class.”
A bill that affects only a business owned by a delegate would be an example of a conflict that qualifies for being excused from voting, Harrison said.
Angie Rosser, executive director of the West Virginia Rivers Coalition, worries that lawmakers who are employed by certain industries might “naturally take cues from those industries on policy decisions.”
She thinks the system needs to be changed.
“The issue seems magnified in West Virginia because there are so many political ties to industries now seeing profit benefits from the rollbacks of various regulations,” she said.
Just as Hanshaw is not the only West Virginia legislator with ties to the gas industry, the gas industry is not the only politically powerful sector with links to lawmakers. The chairman of the Senate Energy, Industry and Mining Committee is a coal mine manager, in charge of safety at a Mettiki Coal operation. The House Democratic whip is a United Mine Workers of America union official. Other lawmakers work in the insurance business, as teachers, or run auto parts stores or funeral homes.
But the Ethics Commission has found that being speaker of the House is different from being a rank-and-file lawmaker. While “certain conflicts of interest are inherent in part-time service” as a lawmaker, it has said, the presiding officer “has an even higher duty” to the citizens of the state. The speaker, for example, controls committee assignments and agendas, as well as the House floor agenda.
Commissioners examined the issue in 2012, when then-Speaker Rick Thompson, a Democrat, sought their approval to take a new outside job as a lawyer for the West Virginia Education Association, a powerful teachers’ union.
This arrangement was too much, as far as the commissioners were concerned. They said it presented an “inescapable conflict” for a House speaker to also work for a lobbying group. They also ruled that, because Thompson had been speaker for several years at that point, the job offer might appear to the public like the association was hiring him “because of his unique ability to influence legislation.”
Hanshaw says his situation is distinct from Thompson’s and more closely mirrors that of Armstead, his predecessor.
Armstead had been a House member since 1998 when, in 2014, the Republicans won a majority and elected him speaker. But Armstead was also an in-house lawyer for Columbia Gas Transmission, a pipeline company. He worked mostly in the company’s commercial division, and mostly on issues outside West Virginia.
Ethics commissioners said Armstead could continue to be speaker and hold his job because he had held the gas company job for more than a dozen years.
“That is me,” Hanshaw said. “I was a lawyer at our firm before I was ever elected to the House at all.”
With a doctorate in chemistry from Notre Dame, experience litigating over environmental issues and certification as a parliamentarian, Hanshaw has a leg up on many citizen legislators in navigating the lawmaking system. Like Romano’s inside knowledge of the gas business, Hanshaw said his experience can help on issues involving science or regulatory matters.
In 2014, the year Hanshaw was elected to the House, a chemical storage tank just upstream from the regional drinking water intake in Charleston leaked into the Elk River, contaminating the supply and prompting a “do not use” order that lasted up to a week for some residents. In response, both houses of the Legislature unanimously passed a tough bill adding new safety rules for aboveground storage tanks around the state.
Starting in 2015, as the water crisis faded, various industry groups tried to have the law revisited. The state’s growing oil and gas industry complained the loudest.
In 2017, Hanshaw introduced a bill to give oil and gas operations a broad exemption from the bill.
After the bill passed, Hanshaw was one of three lawmakers honored as “Champions of Industry” by the West Virginia Manufacturers Association.
In an interview, Hanshaw said he introduced the bill because three small oil and gas companies in his district raised concerns about the chemical tank regulations.
None of the companies was a client, Hanshaw said. And even if they had been, he said, he doesn’t get into discussions with clients about legislation that might help them.
“I don’t let people come in here and talk about business,” he said. “And I don’t let people come to my daytime job and talk about the Legislature.”
Image: By Roger Hanshaw for WV House of Delegates - District 33/ via Facebook