Report: Texas oil and gas regulators inundated with money for fossil fuels

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One Saturday in early October 2011, Mike Smith was fishing on a pond on his property northwest of Dallas when he noticed a strange smell that smelled like diesel. Texas was in the middle of a prolonged drought, and the smell was emanating from a dried-up part of the pond. When Smith dug the spot, a yellowish liquid gurgled. Assuming the liquid was likely a petroleum product, Smith contacted Burlington Resources Oil and Gas, which operated wells on its property, to report what appeared to be a leak. Burlington referred the matter to Targa Resources, a pipeline company that operated the lines carrying oil and gas from Burlington wells.

Although they are required to report the contamination under local environmental rules, neither Burlington nor Targa have notified the Texas Railroad Commission, the agency responsible for monitoring oil and gas in the state. They also did not conduct technical assessments to determine the extent of the contamination or its cause. Instead, after Smith filed a complaint with the Commission, the two companies denied responsibility for the cleanup. The conflict dragged on for the next seven years. After agency staff determined that Targa’s pipelines were the likely cause of the contamination, Targa cleaned up the surrounding soil. In 2019, commissioners rejected Smith’s request for additional testing and monitoring and released the two companies from their cleanup responsibilities without imposing fines.

This might have been just another example of an extremely slow regulator if it had not been for the financial interests of the Commissioners in the companies under investigation. Two of the three commissioners who signed the cleanup held shares in ConocoPhillips, Burlington’s parent company, while the case was heard. In 2019, Commissioners Wayne Christian and Christi Craddick sold up to 99 ConocoPhillips shares, according to personal financial information. Craddick also said he held shares in Targa Resources worth up to $ 4,042 at the end of 2019. From 2015 to 2021, the two commissioners raised a total of $ 31,000 in campaign contributions from ConocoPhillips and Targa political action committees and executives employed by companies.

Regulators who hold a financial stake in a company while simultaneously making official decisions that could affect its results are clearly involved in a conflict of interest. Such conflicts are not uncommon in the Texas Railroad Commission, or RRC, which happens to be one of the most powerful agencies charged with protecting the environment in the country’s oil fields. According to recent and upcoming reports from the nonprofit Texans for Public Justice and Commission Shift, another Texas-based nonprofit that oversees the Railroad Commission, the current three commissioners are subject to conflicts of interest.

For starters, more than two-thirds of their roughly $ 10 million campaign contributions since 2015 have come from the oil and gas industry. Last year, Commissioners Craddick and Christian held shares worth hundreds of thousands of dollars in dozens of oil and gas companies, including Shell, Diamondback Energy, Kinder Morgan and ConocoPhillips. Commissioner Jim Wright, who joined the commission in 2020, has held financial stakes in more than 18 oilfield wastewater disposal companies. Wastewater from oil and gas operations is regulated by the DRR, and the operators with which Wright’s companies do business have seen cases reviewed by the agency.

“We need commissioners to make the best decisions for the people of Texas and not always respect the financial interests they expect of them,” said Virginia Palacios, executive director of Shift Commission and co-author of the report.

The RRC is responsible for regulating the oil and gas industry in the country’s largest oil-producing state. It is headed by three commissioners elected for a six-year term in statewide elections. With regulatory authority to cap production in the oilfields, demand environmental guarantees and cleanup, and impose millions of dollars in fines against rebel players, the agency wields enormous power over the industry.

This power, however, is rarely used. In 2011, after a severe winter storm caused power outages in the state, federal regulators recommended weathering pipelines and fossil fuel infrastructure to prevent another similar disaster. But the RRC ignored those warnings, and Texas was once again plunged into darkness earlier this year when winter storm Uri made landfall. More recently, it allowed operators to burn more than a million cubic feet of natural gas every day, a practice that releases billions of pounds of climate-warming pollutants.

As a result, the agency is described by watch groups and advocates as “captive” of industry interests, rarely penalizing polluters or setting strict pollution limits that protect the health and safety of Texans.

This perception is underscored by the fact that commissioners are allowed to accept unlimited election contributions from the same industry they oversee year-round, unlike oil and gas regulators in neighboring states. For example, members of the Oklahoma Corporation Commission are required to dispose of any oil and gas interests before serving on the agency, and campaign contributions are capped at $ 5,000. Such requirements do not exist for RRC commissioners.

The personal financial disclosures that trustees are required to file lack precision as to the size of holdings and the nature of income, and the current upper limit for the disclosure of a given interest is “$ 44,630 or more”. masks the extent of the statutory auditors’ financial ties with any given entity. The agency’s recusal policies require board members to refrain from making decisions in which they have “a personal or private interest,” but what constitutes such an interest is not clearly defined. Texas Rules refer to the state constitution, but the constitution does not provide any additional guidance. The commissioners also decide whether or not to recuse themselves in the event of a conflict of interest. If they don’t, the attorney general can step in to enforce the policy, but the current Texas attorney general himself is mired in ethical scandals.

Despite their numerous financial relationships with oil and gas companies, the commissioners have only recused themselves five times out of hundreds in the past six years, according to Palacios. In 2016 and 2017, Commissioner Craddick recused herself in two cases that did not involve companies in which she had a financial interest. In the 2016 case, she did not provide an explanation for her recusal, and in 2017, she recused herself from voting on whether to involve the state attorney general in the dismissal. of the agency’s executive director (a dismissal that another commissioner accused her of orchestrating).

“It’s strange, because they don’t seem to interpret these rules when it comes to their own financial interests,” Palacios said.

In a statement to Grist, Commissioner Christian said that “his entire investment portfolio consists of mutual funds and other similar accounts controlled without my input by a third party manager”, and that his financial statements personal are “a snapshot in time and could be different.” on a given day. He accused the Shift Commission of being an “anti-oil and gas special interest group”. Commissioner Wright has said he is basing his decisions on what’s best for Texans.

“Maintaining the public trust, not to mention my own personal integrity, is important to me, and I am committed to following all rules and regulations set forth by state law and administered by the Texas Ethics Commission. “, did he declare. Commissioner Craddick’s office did not respond to a request for comment.

Ultimately, ethics rules matter because they improve public trust in the agency, according to Palacios. While there are no documented cases of matching, Commission Shift reports document several instances in which the public may question the impartiality of Commissioners, given that they stand to gain from their decisions.

A Corpus Christi-based waste disposal company is one example. Blackhorn Environmental Services manages non-toxic oil and gas waste and had its license renewed earlier this year. In the run-up to the committee’s vote on whether or not to renew the permit, local residents who live near the Blackhorn site and had suffered adverse health effects protested against the facility. They suspected that the fumes from the facility and the heavy trucks carrying garbage to and from the site were responsible for the runny eyes, burning throats and other health issues they faced. Commissioner Wright, owner of two companies that have used the Blackhorn site to dispose of waste oil and gas, voted to renew the facility’s license.

“It just creates a perception of conflict, and it’s really frustrating for people facing the impacts of pollution,” Palacios said. “They are raising their children there. If they take legal action, how long is that action going to take? And what will it take for the Railway Commission to create the conditions in which people can be healthy and live their lives? “



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