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Report Alleges Conflicts Of Interest Among Texas Oil And Gas Regulators

A well pump is seen popping up from behind a white solid plastic fence.
Gabriel C. Pérez

Texas oil and gas regulators make big bucks from the industries they oversee and fail to recuse themselves when arbitrating conflicts or determining penalties for companies they’ve invested in, according to a new report.

And it all may be perfectly legal.

The report says conflicts of interest create a condition of “regulatory capture” at the Railroad Commission of Texas, the agency that regulates fossil fuel extraction and pipelines in the state.

The report was written by money-in-politics watchdog group Texans For Public Justice, and Commission Shift, a group pushing for reform of the agency.

The notion that Railroad commissioners are cozy with oil, gas and pipeline companies will not surprise many who closely follow commission business. Commissioners themselves, elected statewide by the Texas voters, speak openly and proudly about their close ties to industry and their desire to promote and protect it.

But the details outlined in the report suggest commissioners may have financial as well as political motivations for taking the actions they take while in office.

We think it's time to get money out of decisions that are made at the state agency,” Virginia Palacios, executive director of Commission Shift, said. “Oklahoma has a pretty simple, clear-cut rule that their oil and gas commissioners can't have any interest in the businesses that they're making decisions about.

The report looks specifically at the record of Railroad Commission Chair Christi Craddick. Two further reports will review the financial holdings of the two other commissioners.

Among other things it found that Craddick "cast a deciding vote" in favor of a pipeline company that she owned thousands of dollars of stock in and received $22,500 in campaign contributions from the company. It also says she failed to recuse herself from ruling in a dispute between two companies despite owning shares in both.

Palacios said she thinks Craddick’s failure to recuse in these instances may have broken the agency’s own rules. Andrew Wheat, a research director for Texans For Public Justice, is unsure.

“The fact is that the vast majority of this — if not all of it — is legal and the reason is that we have extremely lax laws and rules in Texas governing conflicts of interests,” he said.

Craddick and her office did not return a request for comment before deadline.

A spokesperson for the Railroad Commission replied to a request for comment with links to sections of the Texas Government Code and the commission's employee handbook dealing with ethical considerations and “the process for a commissioner’s recusal."

Lawmakers and state staffers tasked with reviewing the agency have frequently called for reforms. Proposals have included toughening campaign finance rules, limiting what conflicts between oil and gas operators are heard by commissioners, and changing the name of the commission to improve transparency. For the most part, these ideas fail to gain traction in the Legislature.

Among other things, the report calls for making Railroad commissioners divest financially from companies they regulate, strengthening recusal rules, increasing financial disclosure requirements, and further restricting campaign contributions commissioners can accept from the oil and gas industry.

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Mose Buchele is the Austin-based broadcast reporter for KUT's NPR partnership StateImpact Texas . He has been on staff at KUT 90.5 since 2009, covering local and state issues. Mose has also worked as a blogger on politics and an education reporter at his hometown paper in Western Massachusetts. He holds masters degrees in Latin American Studies and Journalism from UT Austin.