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Texas Oil and Gas Business Owners Can Run the Agency that Oversees their Businesses

November 4, 2021

Railroad Commissioners have too many connections to the oil and gas firms they regulate, according to latest report from Texans for Public Justice and Commission Shift 

LAREDO, TEXAS — The state’s top oil and gas regulators can own businesses that their agency is supposed to regulate, and new case studies show major gaps in the Railroad Commission’s conflict of interest policies. According to the third report in the Captive Agency series from Texans for Public Justice and Commission Shift, at least one commissioner owns direct stakes in oil and gas companies that the Railroad Commission regulates. 

“Texans should be outraged by the blatant conflicts of interest we found at the Railroad Commission,” said Virginia Palacios, executive director of Commission Shift and co-author of the report. “Weak conflict of interest policies like these raise questions about the independence of the Railroad Commission of Texas, especially as the agency considers rules to prevent another winter power outage disaster.”

The report details how Commissioner Jim Wright reported active interests in 18 oil and gas waste companies in his recent personal financial statements. Some of these companies have had recurring issues before his agency. Commissioner Wright and the Railroad Commission’s ex-permitting manager run a company that specializes in securing permits from Wright’s agency.  

“With winter coming soon, it’s past time for tougher conflict of interest policies to ensure these regulators are prioritizing policies that will actually secure the grid,” said Andrew Wheat of Texans for Public Justice, co-author of the report. “Across three reports in this series, we found widespread need for reform at one of the state’s most powerful and least understood agencies.”

Wright also revived a task force in his first few months as a commissioner, in an apparent effort to change Railroad Commission rules that protect water supplies from the types of waste companies he owns.

Wright and his two commission colleagues also renewed permits in April 2021 for a Blackhorn Environmental waste facility that had committed repeated violations and received multiple public health complaints. While that case was pending the previous September, Blackhorn officials had contributed $3,000 to then-candidate Wright, whose own companies had disposed of 60 loads of oil-based mud at Blackhorn’s facility. Failing to mention these ties, Wright voted to renew Blackhorn’s permits.

"Our family has experienced health impacts from living next to the Blackhorn facility with which Commissioner Wright does business,” said Tara Jones, a rancher who lives in Jim Wells County near the Blackhorn facility. “It was disappointing to see Commissioner Wright vote to repermit the facility despite his business and campaign ties with the company. I have zero confidence the Railroad Commission is capable of effectively regulating operators to ensure the public’s health and safety when commissioners stand to benefit financially from the existence of said operators."

Key Policy Recommendations from Commission Shift:

  • Demonstrate no financial interest: Before serving, commissioners should be required to divest from the industries they regulate, as in Oklahoma.
  • Strengthen and clarify recusal standards: Commissioners should recuse themselves from cases involving a company in which they hold equity, income, or business or if the company donated more than $1,000 to their campaign in the last election cycle. The state legislature should clarify and better enforce conflict of interest policies. There should be no exemption from recusal for business owners who have an interest that is the same as “all others similarly engaged in the profession, trade, or occupation.”
  • Improve financial disclosure: Texas should dramatically increase the maximum values reported in personal financial disclosures, which currently max out at just “$44,630 or more.” 
  • Limit campaign contributions: Railroad Commission candidate fundraising should be limited to the 18-month period preceding that election, with limits of $5,000 per election cycle , just like statewide judicial races.
  • Use a neutral forum for contested cases: Move to independent hearings through the State Office of Administrative Hearings instead of in-house administrative law judges.

Earlier reports in the series focused on personal financial statements submitted by Railroad Commissioner Christi Craddick and Commission Chair Wayne Christian to spot where they may have potential conflicts of interest. Read all three reports in the Captive Agency series on the Commission Shift website, and follow us on Instagram, Twitter, Facebook and LinkedIn.

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Texans for Public Justice is an Austin-based non-profit organized in 1997 to take on political corruption and corporate abuses in Texas. Through research and public advocacy, TPJ participates in  debates on political reform, consumer protection, civil justice and corporate accountability.

Commission Shift is a Texas-based nonprofit building public support to hold the Railroad Commission of Texas accountable to its mission in a shifting energy landscape. We educate and organize a wide array of Texans to build support for changes at the Railroad Commission that improve the agency’s function, transparency, and accountability to the many people and places impacted by the oil and gas industry.

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