The regulators need regulating

Earlier this month the Sunset Commission, a Texas government institution that oversees state agencies and evaluates their effectiveness, released a report calling for several changes to be made to the Texas Railroad Commission, starting with its name.

Defying logic, the Texas Railroad Commission actually has nothing to do with railroads. Instead, it regulates the state’s extremely profitable oil and gas industry.  The commission consists of three statewide-elected commissioners, one of whom holds the position of chairman. If the Texas Legislature adopts the Sunset Commission’s suggestions, the name will be changed to the Texas Energy Resources Commission, or something similar. The Railroad Commission, the state’s oldest agency, hasn’t dealt with railroads or transportation in almost 30 years. One wonders why it has taken this long for the state to propose changing the name to something accurate.

The Sunset Commission’s report also contained several recommendations with more potential impact than mere semantics. The most contentious of these was the suggestion that campaign contributions for the Railroad Commission’s three members be strictly regulated, to avoid conflicts of interest with interested parties in the industry.

Because of large campaign contributions that aren’t confined to election seasons but happen throughout the commissioners’ six-year terms, the report says, it is “difficult to assure the public that the Commission’s regulatory decisions are made solely in the public’s interest, not simply in favor of large donors — especially when many key Commission decisions, rightly or not, favor the industry.”

In response, the report recommends limiting “the solicitation and receipt of campaign contributions by a Commissioner or any candidates seeking the office to a year and a half timeframe around the election, rather than throughout the full six-year term.” In addition, it suggests prohibiting “a Commissioner from knowingly accepting contributions from a party with a contested case before the Commission,” and requiring “the automatic resignation of a Commissioner that announces or becomes a candidate for another elected office.”

Despite the U.S. Supreme Court’s recent Citizens United v. FEC decision, the report says, “nothing has changed that would affect the continued appropriateness of these recommendations.”

The suggestions are a step in the right direction. The Texas Railroad Commission oversees the most oil and gas production of any state, with an estimated state economic impact of over $100 billion. Before 1973 and the years of OPEC dominance, the Texas Railroad Commission had almost total control of the world’s oil prices. Not only does the commission allocate production and price levels, but it also enforces industry compliance with federal environmental and safety regulations. While it doesn’t have the power it once did, it’s still a very big deal. Because of this, making sure the three commissioners aren’t being subsidized by the very industry leaders they’re supposed to regulate is absolutely imperative.

However, the Railroad Commission itself is not on board with the Sunset Commission’s proposal. In its official response to the report, the Railroad Commission “generally agrees with” the name change, but doesn’t show the same friendliness to the restrictions on campaign contributions. The response to all three of those proposals is the same: “The Commission should be held to the same standards as all other statewide-elected executive branch officials.” That isn’t to say the commission is united in their opposition, however. In the Railroad Commission’s most recent meeting, Chairman Barry Smitherman expressed amicability to the recommendations, saying that the restricted contribution period was still more than enough time to raise funds, but fellow Commissioner David Porter dissented.

The Railroad Commission’s official response doesn’t acknowledge the problem the Sunset Commission’s proposal aims to deal with, and it’s not a very substantial argument. While the three Railroad Commissioners are indeed statewide-elected executive branch officials, they have unique and enormous power over the economic, environmental and safety regulations of one of the world’s largest industries. They’re three of the most influential officials not just in Texas, but in the entire country, and they can’t be judged by the same standard as other state officials when it comes to campaign finance. With that in mind, it’s hard not to see the Railroad Commission’s response as the political equivalent of a spoiled child complaining that it’s “not fair,” without backing the complaint up with any real reasoning.

It’s difficult to put an actual number on the amount of money the three commissioners stand to lose if the Legislature passes the Sunset Commission’s recommendations, but it’d likely be a substantial sum. According to the Texas Ethics Commission, between 2010 and the present, Smitherman, Porter and incoming Commissioner Christi Craddick amassed over $200,000 in campaign contributions, with over half of that amount going to Porter. All three are relatively new to their positions, so it remains to be seen how much they’d be raking in outside of the Sunset Commission’s suggested window.

Fortunately, the Railroad Commissioners can’t do much to influence the decision on their own campaign finance rules. That’ll be up to the state Legislature, which will take the Sunset Commission’s proposals into account when it convenes in January. One can only hope our state government exercises common sense not only with regards to the Railroad Commission’s obviously necessary name change, but also to its campaign contributions.