Near the end of his second term, a large political scandal erupted, Before he took office, the state had filed a lawsuit against Standard Oil Company and their Texas subsidiary, the Waters-Pierce Oil Company. Waters-Pierce's license to operate was revoked, an action upheld by the U.S. Supreme Court in 1900. Partially at the urging of US Senator Joseph Weldon Bailey, Waters-Pierce received a new license to operate under Governor Joseph D. Sayers. Although they claimed to have severed all ties with Standard Oil, Texas filed suit again in 1905 on the discovery that Standard Oil still owned most of the stock in the other company. In the trial, Bailey's influence was revealed, as well as the fact that Bailey had been on the Waters-Pierce payroll at the time. Although Lanham and his administration was not accused of any wrongdoing, the controversy over Bailey's ethics was extremely large.