Railroad Commissioners Struggle to Police Conflicts of Interest, Report Finds

Railroad Commissioners Struggle to Police Conflicts of Interest, Report Finds
The Railroad Commission was created to regulate gushers like this one in Port Arthur, but that hasn't stopped it from cuddling with the oil industry every chance it gets. - PHOTO COURTESY OF THE U.S. LIBRARY OF CONGRESS
The Railroad Commission was created to regulate gushers like this one in Port Arthur, but that hasn't stopped it from cuddling with the oil industry every chance it gets.
Photo courtesy of the U.S. Library of Congress
Back in 2012, during the last Sunset Review hearing on the Texas Railroad Commission, then-commissioners Christi Craddick and Barry Smitherman claimed, straight-faced, that the heads of the agency charged with overseeing oil and natural gas regulation in Texas "self-police" to ensure they don't accept campaign donations from any businesses that have cases pending before the state agency.

Because of this scrupulous self-refereeing, it was clear, the duo contended, that the Sunset Commission's pending recommendations designed to prevent such conflicts of interest in the agency were unnecessary. The pitch worked and the RRC dodged having to enact the Sunset Commission's recommendations to prevent agency officials from getting into such conflicts-of-interest situations.

The thing is, it turns out that in real life the Railroad Commissioners aren't actually very good at this self-policing, according to a report released Thursday by the Texans for Public Justice, a nonprofit that tracks political donations.

As the Railroad Commission faces another Sunset Review next week, the recently released study (commissioned by the Sierra Club, Public Citizen and Texans for Public Justice) tracks eight Railroad Commission cases dating back to 2010. Thousands of dollars from people associated with those pending cases ended up in the campaign coffers of winning Railroad Commission candidates and sitting commissioners. The money came from PACs, executives and an outside law firm involved in six gas-utility rate cases and two injection-well earthquake cases, according to the report.

“There appears to be no state agency in the nation with closer financial ties to the industry it’s supposed to regulate than the Texas Railroad Commission,” Public Citizen Legislative Counsel Carol Birch stated. “The potential for conflicts of interest is enormous.”

In late 2012, the report notes, Smitherman collected $11,000 from Atmos Energy and its law firm, Parsley Coffin Renner, when Atmos and the Parsley firm had two major rate cases pending before the agency. Just two weeks later, Smitherman testified to the Sunset Commission that “the companies self-police this, we self-police it.”

With a 2015 case pending to determine if wastewater injections by EnerVest, Ltd. contributed to unprecedented earthquakes outside of Fort Worth, EnerVest’s CEO and its chairman gave Commissioner Ryan Sitton $20,000, Craddick $5,000 and Commissioner David Porter $1,000. The commissioners, who also took tens of thousands of dollars from EnerVest before opening the case, then found no evidence linking EnerVest’s waste injections to the earthquakes, go figure. Their finding contradicted those of the state’s leading seismologists.

Now, none of this is against the current ethics rules for the RRC because the state regulatory agency doesn't have any stipulations forbidding the commissioners from accepting donations from entities with ties to the oil and gas interests they're supposed to regulate. Still, the report highlights the fact that when it comes down to it, the officials charged with regulating the industry also get money from said industry that helps them keep their official positions. Heck, the divide between the RRC and the industries it oversees is so thin that once many of the commissioners are done serving at the RRC, they go into the oil and gas industry directly, as we've noted before.

The report comes days before the Texas House is scheduled to tackle the Railroad Commission Sunset bill, House Bill 1818, extending the agency's existence until 2029. There are plans to offer an amendment during the state House floor debate to prohibit Railroad Commissioners and candidates from accepting funds from parties with cases before the commission, according to a release issued by Texans for Public Justice. (Considering the fact that past efforts to change the RRC have stayed closer to the ground than Howard Hughes's "Spruce Goose," you might not want to bet money on such an amendment actually getting anywhere.)

“A review of just eight case studies reveals that the Railroad Commissioners misled lawmakers about agency self-policing,” Texans for Public Justice Director Craig McDonald stated. “They embraced fake news before it was fashionable.”
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Dianna Wray is a nationally award-winning journalist. Born and raised in Houston, she writes about everything from NASA to oil to horse races.
Contact: Dianna Wray