The Texas Railroad Commission Is A ‘Captive Agency’

It’s long been an open secret that Texas’ oil and gas regulators are friendly to the industry. A new series of reports shows just how deep their ties go.

by

Before being elected last year to serve as one of three commissioners of the Texas Railroad Agency, Jim Wright was on a crusade to protect some oil businesses from state regulation. The irony should be nearly palpable; the Railroad Commission (RRC) is tasked with overseeing virtually all segments of the state’s oil and gas industry. It permits oil wells and pipelines, inspects drilling sites for compliance with state rules, and fines operators who violate the law. Anyone in the Texas oil and gas business is ultimately answerable to the three commissioners.

In 2016, Wright, who at the time owned an oilfield waste disposal company, made his first campaign donations to RRC commissioners. He wrote checks totaling $1,500 to commissioners  Ryan Sitton and Christi Craddick. The same year, Wright joined an industry task force that lobbied the RRC to loosen regulations that protect water supplies from chemicals in oilfield waste pits. A Gulf Coast state representative—whom Wright had given $60,000 in contributions—attempted to pass legislation that would give the task force more political sway.   

The legislation failed and the task force fizzled—Wright’s company was fined more than $18,000 for oilfield waste violations in 2018. And while Wright’s efforts to reign in state regulators fell flat, they appear to show his willingness to protect industry players from state oversight. The details of Wright’s past dealings come courtesy of a new report, produced by political watchdog groups Commission Shift and Texans for Public Justice, which analyzed public records, financial disclosures and other documents. Their findings reveal that Wright still owns stakes in the very companies he’s tasked with regulating and that the RRC’s other commissioners present myriad conflicts of interest. The report released Thursday is the final chapter of a series titled “Captive Agency.” The previous installments focused on commissioners Craddick and Wayne Christian, who also maintain financial interests in oil and gas companies.

“This agency affects so much of what happens in this state, whether you’re talking about climate change or keeping our grid reliable,” says Virginia Palacios, the executive director of Commission Shift. The agency also oversees the flaring of massive amounts of usable natural gas in the Lone Star State, which can allow companies to release hundreds of tons of potent greenhouse gases such as methane into the atmosphere. Natural gas pipelines statewide froze during the February storm, cutting off supply to gas-fired power plants and playing a key role in days-long power outages. “The agency didn’t act, and that is the reason that people died and we saw billions of dollars in damages in this state,” Palacios says. 

After the winter storm, the commissioners attempted to deflect blame away from the fossil fuel industry. When the agency formed a task force to address future severe winter weather, it picked all four members from a list of candidates crafted by the Texas Oil and Gas Association, one of the state’s most powerful industry lobby groups. 

Those actions gel with the reports by Commission Shift and Texans for Public Justice, which found that as a commissioner, Wright has supported deregulation policies that would benefit oil waste companies like the one he once owned. The groups also found that Craddick and Christian, the agency’s chair, had similar conflicts of interest, and the commissioners rarely recused themselves from cases with apparent conflicts. 

According to the report, Christian has held or sold thousands of dollars worth of stocks in companies with drilling interests in Texas—Royal Dutch Shell, Diamondback Energy, Conoco Phillips—as well as Kinder Morgan, one of the nation’s largest pipeline companies, based in Houston. The report found that while Christian held stock in ConocoPhillips, the company was involved in an eight-year-long water pollution case that came before him at the RRC. 

Meanwhile, the report estimates that Craddick’s oil and gas assets are worth between $1.5 million and $1.9 million; she also owns an estimated $1.4 million worth of mineral interests on more than 140 properties. The commissioner has rarely recused herself from cases that present a potential conflict of interest, including one involving a leaking pipeline. Craddick owned at least $17,520 in the unnamed company’s stock, and received $22,500 in campaign contributions from the company. She eventually voted to levy no fines against the company. 

A Commission spokesman declined to provide a comment, referring the Observer to staffers for each commissioner. “In accordance with the Texas Ethics Commission, my personal financial statements are fully disclosed to the letter of the law and publicly accessible,” Craddick said in a written statement. Commissioners Wright and Christian did not respond to a request for comment. 

It’s long been an open secret that the Railroad Commission is more than friendly to the industry that it’s been tasked with regulating Palacios says. In 2011, the state’s Sunset Advisory Commission, which issues recommendations to reform or shut down state agencies, concluded that the RRC should adopt a stronger recusal policy, move certain contested cases out of the RRC’s jurisdiction to a statewide administrative office, and prohibit commissioners from taking money from companies that had cases in front of the agency. Other states with heavy oil and gas presence, such as Oklahoma, require statewide officials to divest from companies that they may be required to regulate. The Sunset Commission stated that RRC’s current practices raised “inevitable concerns” about the influence of industry on its regulators. But the RRC did not adopt any of the recommended reforms. 

The Railroad Commission could enforce existing rules around conflicts of interests, or create new policies around transparency. But it’s unlikely that the agency would curtail its own power. That leaves the Texas Legislature, which could pass bills overhauling the agency. But, Palacios says, oil and gas money fuels legislative races across the state, too– and there’s historically been little indication that the legislature wants to reform the agency. 

“I think the devil’s advocate position would be, ‘Well it’s helpful to have someone who understands the industry sitting in this seat,’” Palacios says. “But for them to have active business interests that are more profitable while they’re sitting in that seat, and afterwards—that’s a conflict with the public interest.”

Top image: The hints of sunlight begin to disappear behind a pair of pumpjacks in the oilfields of Penwell, Texas. Credit: Eli Hartman/Odessa American via AP