Railroad candidate caught in mess over oil waste
Jim Wright, the Republican nominee for a seat on the Railroad Commission, is a leading player in a controversy over an oil field waste facility in South Texas that involves lawsuits, environmental violations and the candidate securing the release of an $800,000 bond from the agency he hopes to help lead.
Wright, a South Texas rancher and oil field service company owner, defeated Railroad Commissioner Ryan Sitton in the Republican Party primary in March. He faces Democrat Chrysta Castañeda in the November general election for the seat on the agency that regulates the oil and gas industry.
Wright developed DeWitt Recyclable Products, about four miles north of Cuero, after receiving a permit in 2012 from the Railroad Commission. In 2014, he sold the project to the Florida company Watson Energy Investments in a $1.3 million deal, but remained listed as president of the company on agency records,
court filings show.
DeWitt opened in the summer 2016 and was touted as state-of-theart. The facility was designed to take oil-soaked muds from drilling sites and other waste products and recycle them into crude oil, diesel fuel and clean dirt.
The facility was supposed to make money by charging customers to handle the waste and then selling the recycled products.
The Railroad Commission, however, shut down the facility in January 2017 after an inspector documented waste stockpiled directly on the ground, storage tanks for waste materials leaking onto the ground, and multiple unpermitted pits of waste.
Shortly after the facility was shut down, Watson Energy Investments fell behind on its payments to Wright. He exercised an option in the contract to take control of the facility. In a lawsuit filed in March against his former business partners, Wright maintains that Watson still owes him $495,000 of payments from sale and another $180,000 in crude oil royalties.
Railroad Commission officials fined the facility more than $181,000 for the violations and held Wright responsible. In an October 2017 letter to the Railroad Commission, Wright’s attorney, Chris Pepper, said Wright did not have ownership or operational control of DeWitt after the sale and that despite requests, his name was never taken off agency records for the facility.
Although he did not admit personal liability for the facility’s operations after the sale, Wright nonetheless agreed to settle the case to clean up and reopen the facility, Pepper wrote. Wright entered into a settlement in Nov. 2017, agreeing to pay the fine in 24 monthly payments, agency records show.
Wright said in an interview the buyers were supposed to change ownership records after the sale, but failed to do so. After paying $1.5 million over the past three years to clean up the site, Wright said, he has worked with many of project’s original investors to reopen under a new company, Eagleford Recycling Services
A permit remains pending, but Wright pledged to recuse himself from any proceedings before the Railroad Commission involving the site or any potential competitors — if he wins the race.
One point of contention between Wright and DeWitt’s creditors has been the $800,000 in bonds that the company paid to the Railroad Commission in July 2016 to ensure a proper cleanup if the facility were to close. Using a bank account opened in DeWitt's name, Wright received nearly $500,000 of that bond money in Nov. 2018 and the remaining $300,000 in July. He said all of it was used for cleaning up the site.
“I got it cleaned up and it didn’t cost the taxpayers a dime,” Wright said.
In addition to his dispute with the buyers of DeWitt, Wright is also fighting in court with creditors and vendors seeking roughly $4 million from the now-defunct company.
Houston storage tank companies Tidal Tank and McAda Drilling Fluids sought to get paid for storage tanks they rented to DeWitt. When the facility shut down, large amounts of oil field waste remained inside the rented tanks, solidified and required expensive cleaning work by a crew in hazmat suits.
The two storage tank companies fought with DeWitt, Wright and his other company, Cuero Land Management, in court to determine who was responsible for cleaning the tanks. Wright ultimately paid to have the tanks cleaned and returned them to Tidal and McAda, but did not pay their invoices.
A state district court in Houston awarded Tidal $666,860 in damages in an October 2017 decision. McAda is still seeking payment of more $72,000 in invoices from DeWitt, according to a May lawsuit filed in state district court in Cuero.
McAda’s lawsuit alleges that the cleanup costs were not as high as Wright claims, that he opened a bank account under DeWitt’s name after the company was dissolved to collect the $500,000 in bond money and transferred those funds to Eagleford Recycling Services to keep those funds away from creditors.
Unless the courts intervene, McAda said in its lawsuit, Wright would do the same thing with remaining $300,000 of bond money.
Wright’s lawyer, Van Huseman said the debts belong to DeWitt, not Wright. He said the foreclosure gave him the right to the bond money, which was used for the cleanup.
“The money went where it was supposed to go and where we told the Railroad Commission it would go,” Huseman said.