EnergyStatewide NewsOil and Gas Lawsuit has Trivial Ties to Railroad Commissioner Candidate Jim Wright

A connection between Wright and environmental violations made by a company he once owned was brought to light, but they occurred after he sold the entity and he has since remediated the problems caused by his purchaser.
August 17, 2020
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News dropped last week of Jim Wright’s, the Republican candidate for Railroad Commissioner (RRC), superfluous connection to two lawsuits by third-parties against debtors of his who never paid outstanding invoices.

Two storage tank companies have sued to obtain portions of a monetary bond issued in Wright’s name after another individual defaulted on their service payments. The Houston Chronicle ran an article insinuating Wright’s connection to the lawsuits was substantial and that he was at fault for the environmental violations levied against a then-former company of his.

Wright purchased a property in DeWitt County and formed DeWitt Recyclable Products (DRP) in December of 2011 — an energy waste management facility. He owned and operated the facility for two years under a permit from the Railroad Commission of Texas (RRC), the body which regulates energy industry-related businesses.

In 2014, Wright sold DRP to Watson Energy Investments, owned by James McCabe for a $300,000 down payment, $1,000,000 spread out over 36 months at three percent interest, and a $1.00 per barrel royalty payment in exchange for 100 percent ownership of the business and its assets.

The facility takes oil and gas waste, and then processes, recycles, and/or disposes of the waste, a method which usually costs between $20 and $30 per barrel. The royalty clause was capped at $70,000 per month.

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Part of the agreement was to replace Wright as the officer of the company on the RRC’s official filings. But either the new owner neglected to or an oversight occurred on the RRC’s end, leaving Wright nominally as the responsible party. On May 2, 2016, Wright was presented documentation from McCabe showing a change of agent from Wright to McCabe for the business.

The only business operations Wright engaged in with his purchasers was to assist them with obtaining an amended permit.

Tangentially, after the sale, McCabe and Watson divested DRP to David Elks who then operated the facility. But in 2016, the DRP was issued a citation for mismanaged waste disposal and leakage by the RRC. Wright says the commission never notified him of the violations despite the RRC’s assertion that Wright was still the officer of record for the site.

The facility’s permit was then revoked, and its operations ceased at the behest of the RRC.

Because Elks stopped fulfilling the required payments to Wright, the contract was breached and pursuant to the original agreement, Wright reassumed control in 2017. He restructured the company into a new entity called Eagleford Recycling Services.

The RRC fined DPR $181,518 for the violations and held Wright responsible, despite his having sold the company years before and assumed removal from the commission filings. The RRC agreed to let Wright pay the fine over a two year period, but ordered him to clean up the problem — a directive he followed swiftly.

He spent, in total, $1.5 million cleaning up a site that should not have legally been his burden to shoulder.

Part of the cleanup included 16 frac tanks that had been used to store cement returns under Elks and had been left to the elements. Wright and the company which he transferred ownership of the facility to, Cuero Land Management, sued the frac tank company to have them remove the units.

However, after a directive from RRC staff attorney Jessica Mendoza who said no new permit would be issued until the problems were remedied, Wright paid for disposal. A team jackhammered the cement and cleaned the other contents of the tanks, clearing them and disposing of the debris.

Had Wright not agreed to repossess the facility, the government would have had to foot the bill for the cleanup as the previous owner, Elks, defaulted.

The RRC held DRP’s $832,580 bond to ensure that Wright followed through with their directive. An agreement between Wright and Elks assigned all rights to the bond money to Wright.

The lawsuits in question were filed by McAda Drilling Fluids and Tidal Tank, the two frac tank companies whose units were rented by DRP.

Those two companies filed suit against DRP to obtain the payments owed to them by the now-defunct company under Elks. Tidal Tank sued to obtain the portion it was owed from the $800,000 bond issued to the RRC, but Wright was not named as a party in the suit despite the bond having been issued to him.

In a default judgment by a Harris County court, Tidal Tank was awarded over $660,000 in damages against DRP, but Wright was neither listed in the suit nor notified of it.

McAda is seeking relief, filing in May of 2020, for $72,516.68 of unpaid invoices, again from the now-defunct DRP — claiming a right to the bond money.

Around the time of the violations, Wright’s wife, Sherry, was hit by a car driven by illegal immigrants from which she emerged paralyzed. Wright spent the better part of three months with her in the hospital.

After the violations were levied, Wright stopped receiving his payment and royalty checks and the DRP, under its new ownership, was dissolved.

Wright is still owed a substantial portion of the agreed-upon $1.3 million payment of sale. Currently, he is owed $495,000 in payments and $180,000 in royalties.

He told The Texan, “It’s a shame what occurred between the sale of the facility and my repossession of it, and because of my remediation, the violations have been resolved.”

“As an oil & gas operator who has been in the industry for more than 30 years, I’m fortunate to own four energy-related companies, and have affiliations with others. The success of these companies has always been based on integrity and honesty,” he added.

Wright secured the upset of the year in Texas politics in March, successfully primarying sitting Railroad Commissioner Ryan Sitton. He was outraised 66 to one, but soundly trumped Sitton by 10 percentage points.

“Regardless of extreme attacks from leftists,” he said, alluding to the attacks levied against him, “who want to put thousands of oilfield workers out of work, we will remain focused on finding ways to create jobs and keep our economy ever-improving for Texas.”

He further added, “I ran for this office to serve the people of Texas, and help rebuild the oil and gas industry which should be important to all Texans.”

“My dedication and honesty is something I place great pride in. This dedication and honesty can be counted on by all of Texas. Let’s keep Texas and America strong.”

Wright will face Democrat Chrysta Castañeda in November.

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Brad Johnson

Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad watching and quoting Monty Python productions.