This article was originally published by the Texas Observer, a nonprofit investigative news outlet. Sign up for their weekly newsletter, or follow them on Facebook and Twitter.
After resigning his seat earlier this year, former chairman of the powerful Texas House State Affairs Committee Chris Paddie—a top architect of the Legislature’s response to the deadly winter 2021 grid failures—has registered as a lobbyist, state filings show. Paddie has disclosed his work for several clients, most notably Vistra, the state’s biggest power company and a major player in the ongoing energy policy battle that began in the committee he recently helmed.
Though many other Texans have gone straight from public office into private sector lobbying, Paddie’s case is unique in that it poses a direct challenge to an untested revolving door law. Passed in 2019, it’s one of the state’s few restrictions on a former elected official’s otherwise unfettered ability to cash in on insider access and legislative expertise.
By registering as a lobbyist, Paddie could be running afoul of this state ethics law, which already thwarted his initial attempt to lobby earlier this year. In 2019, the Legislature passed a law that prohibits former lawmakers from becoming registered lobbyists within two years of making political contributions to other politicians from their campaign accounts.
This new restriction blocked his initial attempt to lobby: In May, he briefly registered to lobby only to deregister a few days later amid press inquiries about his eligibility. The statute is aimed at preventing lawmakers from plying colleagues with campaign contributions right before leaving office and then promptly trying to influence them as lobbyists.
In late 2021—soon after he announced he wouldn’t run for reelection—Paddie gave $50,000 in political contributions from his campaign account to several Republican House colleagues, including a $25,000 check to Speaker Dade Phelan. Under the law, Paddie would not be allowed to register as a lobbyist until the end of 2023, several months after the coming regular session ends.
Former lawmakers like Paddie who want to become lobbyists have an incentive to open shop soon after leaving office, when their cachet with colleagues—and value to clients—is strongest. With the 2023 session drawing near, the East Texas Republican now claims he found a way to comply.
Late last month, Paddie personally cut a check for $55,500 to his campaign account in order to cover the amount of funds he previously doled out to fellow lawmakers. He disclosed his substantial contribution to his campaign—marked as “Reimbursement for Contributions Made to Candidates”—in an updated campaign finance report submitted days before he again registered as a lobbyist.
In an emailed statement to the Texas Observer, Paddie contended that an alleged offense under the law relates to “the source of the contributions, not that I made contributions to my colleagues. I have the same right as anyone else to make political contributions.”
“In order to address the question of the source of the contributions, I chose to personally reimburse my campaign account for the contributions that were in question. As a result, my campaign account has been made whole and is no longer the source of those contributions. I am now personally the source of the campaign contributions in question,” Paddie wrote.
“I take any question of whether or not I am in violation of any statute very seriously. After consultation with ethics attorneys and taking the described action, I am confident that I am in compliance with the statute in question.”
However, the ethics statute as written does not appear to make Paddie’s distinction between the funding source of the contribution and the contribution itself, according to ethics attorneys who still question whether he’s allowed to lobby.
“It says what it says. And what it says is if you give money to any candidate or elected official, then you’re prohibited from registering for two years,” Andrew Cates, a campaign finance and ethics lawyer in Austin, told the Observer. “There’s nothing in the statute that specifically allows someone to pay your campaign account back and somehow that’s a mitigating factor that the statute no longer applies.”
Cates is very familiar with the statute. Earlier this year, he advised former Brownsville state Representative Eddie Lucio III who, along with Paddie, was the other recently departed legislator to become entangled with the law when Lucio briefly registered to lobby in May. Cates determined that the law was clear and Lucio would simply have to wait two years after his campaign last made a political contribution before he could register.
“I don’t think that [Paddie’s] argument fully covers him, based on the letter of the law. At the end of day, it says you can’t give money to a candidate, period,” Cates said. While he doesn’t agree with the law as written, and believes its effect is at odds with how it was pitched to lawmakers in 2019, Cates says, “Until they go back to session or someone takes it to court, you can’t change what it says.”
Longtime Austin campaign finance lawyer and ethics reformer Fred Lewis agrees. “There is a very serious issue about whether he violated the statute,” he told the Observer.
The law in question—HB2677—was authored by state Representative Craig Goldman, a Fort Worth Republican, and passed on unanimous voice votes in the House and Senate with little debate. Introducing the bill before the floor vote, Goldman said his legislation states “that a former elected official or candidate now registered as a lobbyist may not use funds from their campaign account to make a political contribution.”
But the bill also includes the provision that’s ensnared Paddie, which was emphasized in a House analysis at the time. “Concerns have been raised about the revolving door of candidates and officeholders becoming lobbyists immediately after losing an election or retiring from office. [HB2677] seeks to address this issue by, among other provisions, prohibiting a person who makes or authorizes certain political contributions and direct campaign expenditures from lobbying during the two-year period after the date the person makes or authorizes the contribution or expenditure.”
Paddie joined a handful of other Republican legislators as a co-author on the bill after it passed the House. Representative Goldman did not respond to requests for comment about the intent of his legislation and the purported loophole that his former colleague is using to get around it.
Watchdogs say Paddie’s swift transition from chairman of a key committee charged with overseeing energy companies like Vistra to a hired gun for that same company is a pernicious example of how the revolving door fuels undue industry influence and apparent conflicts in the Texas capitol.
“It looks bad because it is bad,” said Adrian Shelley, executive director of Public Citizen Texas. “You don’t have to be an expert in ethics to understand that Paddie was in a significant position of power as chair of the state affairs committee,” with all the main grid legislation going through his committee.
“He’s gone directly from that position of power to being a rep of the very industry that was the subject of that legislation. To the average person looking at that, it would look like a conflict.”
In addition to Vistra, Paddie is also representing its subsidiaries Luminant—which operates many power plants across the state—and TXU Energy, one of the largest electricity retailers in the state. His report indicates that Vistra will compensate or reimburse him less than $18,870—the lowest threshold for lobby reports—through the end of the year.
Paddie declined to comment on several other questions from the Observer, including what issues he’ll be working on for Vistra and his other clients. Vistra did not respond to a request for comment.
After the grid failures in 2021’s deadly Winter Storm Uri, Paddie was one of the most prominent players in shaping the Legislature’s response. He helmed the main House committee that questioned major power generators about their role in the energy disaster, including the CEO of Vistra, and authored several key bills in the omnibus package of new regulations and reforms of the state’s electric grid.
Many policy experts criticized the reforms as largely insufficient to prevent another extreme weather catastrophe, in part because legislators watered down new regulations at the behest of the energy industry.
Top lawmakers involved in the grid reforms were subsequently showered with contributions from energy industry PACs and executives. In the period immediately following 2021 the regular session, 88 percent of Paddie’s campaign funds—a total of $26,000—came from the energy sector, the Texas Tribune reported. That included Vistra, whose corporate PAC gave his campaign $5,000.
The future of the state’s electric grid will continue to be a key issue in the coming session, particularly as lawmakers debate the Texas Public Utility Commission’s contentious plan to overhaul the electricity market with policies that aim to incentivize firms like Vistra to produce more power during peak demand, and to build new natural gas-fueled power plants.
Residual beefs may keep Paddie on the House side of the capitol as a lobbyist. Last session, Paddie became a target of Lieutenant Governor Dan Patrick, who runs the Senate, as tensions flared over grid policy rifts with the House. Patrick claimed that Paddie and his House committee were serving as a tool of “big business” by killing the lieutenant governor’s plan to claw back massive profits some power generators earned while the cap on wholesale energy prices were temporarily lifted during the freeze. Patrick also alleged that Paddie had misled state utility regulators about the intent of a House bill he carried that created a state securitization fund for power companies that were hit with billions in exorbitant costs from gas suppliers during the emergency.
The two dueled over whether the payouts should include “netting.” The lieutenant governor was pushing regulators to consider the net profits and losses of major electric conglomerates when doling out the state-backed loans, instead of treating each company individually regardless of their corporate parent. Paddie said the bill did not intend to consider netting, saying it would amount to subjectively choosing winners and losers. The PUC ultimately sided with Paddie. Vistra, which took a $2.5 billion hit from the storm, secured $500 million from the state.
In his letter to the PUC, Patrick attacked Paddie’s motivations, pointing to rumors at the time—soon after Paddie had announced he wouldn’t run again—that he was in line for a job as the head of the top lobbying group for the state’s power industry.
That prompted House Speaker and Patrick foe Dade Phelan to defend his top committee chairman. “I am grateful for Chairman Paddie’s steady leadership, his character, and his integrity, all of which were integral to the passage of landmark legislation in the aftermath of Winter Storm Uri,” he said.
Those clients include High Roller Group—an East Texas company based in Paddie’s old district with interests in oil and gas, waste storage, and other industrial sectors—and one of its affiliates called BM Cement. Over several years, Paddie’s campaign received over $50,000 in donations from High Roller executives and LLCs, according to state campaign finance records. The oil and gas outfit drew scrutiny earlier this year over High Roller’s permit application with the Railroad Commission for an oil waste storage facility in West Texas, which was opposed by agency staff due to concerns about its proximity to a major aquifer.
Railroad Commissioner Wayne Christian and another member voted to approve the permit anyway; three days later Christian’s campaign got a $100,000 check from a High Roller subsidiary.
Another is a newly formed entity called the Consumer Choice Coalition, a nonprofit formed last month. Paddie is listed as a director, along with the executive director of the Texas Retailer Association, and a brewery owner affiliated with the Texas Craft Brewers Guild. He’s also representing Incode Technologies, a San Francisco identity verification tech company that was his sole disclosed client when he briefly registered in May.
Filling out his client roster is Reviver, another Bay Area startup that markets technology for “digital license plates.” In 2019, Paddie authored a bill that was backed by Reviver allowing for the use of such digital plates in lieu of physical ones; a pared down version was passed into law.
If Paddie is in violation of the untested 2019 ethics law, it’s not clear what consequences he’ll face—if any. The Texas Ethics Commission (TEC), which is ostensibly supposed to enforce campaign finance and lobbying laws, is notoriously toothless. The agency doesn’t investigate potential violations unless a complaint is filed, and it rarely hands down stiff penalties if it finds regulations were broken. Politicians have also successfully blocked agency enforcement in the courts.
Earlier this year, the Ethics Commission issued an advisory opinion affirming the scope of the revolving door law. However, during discussion of that advisory, former Dallas state legislator and TEC Commissioner Steve Wolens sent out what could be considered a regulatory green light. “If this were an enforcement proceeding, I think I’d have a hard time enforcing the statute because I think it’s unconstitutional,” he said.