The 2025 Regular Texas Legislative Session Concludes: Key Energy, Oil, and Natural Gas Bills Analyzed

Overview of the Session

Key Energy, Oil, and Natural Gas Bills

• What It Does: HB 49 provides legal protections for landowners and oil and gas companies involved in treating and selling wastewater (produced water) for release into rivers, lakes, and streams. It limits tort liability for producers, conveyors, and treatment operators, provided they comply with Texas Railroad Commission (RRC) and Texas Commission on Environmental Quality (TCEQ) regulations. Liability remains for gross negligence or intentional misconduct.
• Status: Passed by the Legislature and effective September 1, 2025.
• Impact: This bill encourages the beneficial reuse of treated oil and gas wastewater, potentially reducing disposal costs and environmental risks from injection wells. By shielding companies from liability (except in cases of gross negligence), it fosters innovation in wastewater treatment and reuse, which could support water-scarce regions. However, environmental groups like Environment Texas warn of risks to waterways if treatment standards are inadequate, fearing contamination from residual pollutants.
• Analysis: HB 49 reflects Texas’ pro-industry stance, prioritizing oil and gas operations while addressing water scarcity. Critics argue it shifts potential environmental risks to the public, as treated wastewater entering waterways could have long-term ecological impacts if not rigorously monitored. The bill’s fiscal neutrality (no significant state or local costs) makes it appealing, but its success hinges on robust RRC and TCEQ oversight.

• What They Do:
  • SB 1150 mandates that oil and gas companies plug inactive wells after 15 years, reducing risks of methane leaks and groundwater contamination.
  • SB 1146 reduces legal liability for landowners who allow industry to plug orphaned wells on their property, incentivizing cleanup without burdening non-well-owning landowners.
• Status: Both bills passed and await Governor Greg Abbott’s signature.
• Impact: These bills address Texas’ growing problem of approximately 150,000 inactive and 7,000 orphaned wells, which pose environmental hazards like methane emissions and aquifer contamination. SB 1150 shifts responsibility to operators, while SB 1146 encourages voluntary cleanup by protecting landowners. The Sierra Club supports strengthening these measures, particularly by ensuring bonds follow wells to cover plugging costs.
• Analysis: These bills are a pragmatic step toward mitigating legacy environmental issues in the oil and gas sector. They align with industry support for better well management while addressing public concerns about groundwater safety. However, their effectiveness depends on enforcement and adequate funding for the RRC, which requested $100 million to plug orphan wells. The bills avoid expanding government scope, maintaining a lean regulatory approach.

• What It Does: The state budget allocated an additional $5 billion to the Texas Energy Fund, primarily to finance new natural gas power plants. Of this, $1.8 billion supports the Texas Backup Power Package Program, funding backup power (including solar and storage) for critical infrastructure like nursing homes and water treatment plants.
• Status: Included in the state budget, finalized June 2, 2025.
• Impact: The fund reinforces Texas’ commitment to dispatchable power, addressing grid reliability concerns post-Winter Storm Uri. Natural gas plants, which can be activated quickly, are prioritized to meet rising electricity demand. The backup power program diversifies options, supporting vulnerable facilities during outages. However, environmental advocates lament that most funds favor fossil fuels over renewables.
• Analysis: This investment underscores Texas’ “all-of-the-above” energy strategy but leans heavily on natural gas, reflecting political priorities under Governor Abbott and Lieutenant Governor Dan Patrick. The $1.8 billion for backup power is a nod to resilience, but the focus on gas plants may lock in long-term fossil fuel dependence, potentially raising consumer costs if gas prices spike.

• What They Proposed:
  • SB 388 (King): Required 50% of new ERCOT generation capacity after January 1, 2026, to be dispatchable (e.g., natural gas, excluding batteries), with renewables paying fees for “dispatchable credits” if the threshold wasn’t met.
  • SB 715 (Sparks): Forced wind and solar companies to pay “firming” fees to ensure grid reliability, potentially retiring 15% of Texas’ wind fleet and discouraging new projects.
  • SB 819 (Kolkhorst): Imposed stringent permitting and environmental impact requirements on wind and solar projects, not applied to oil, gas, or coal facilities.
• Status: All three bills failed to pass, a significant victory for renewable energy advocates.
• Impact: The defeat of these bills preserves Texas’ competitive energy market, where renewables account for nearly 90% of new electricity capacity. Had they passed, they could have added billions in costs to consumers, stifled renewable growth, and favored fossil fuels. Industry groups like the Advanced Power Alliance and Texas Solar + Storage Association, alongside the Texas Oil and Gas Association, opposed these measures, citing threats to grid reliability and economic growth.
• Analysis: The failure of these bills signals a shift in Texas’ energy politics, with lawmakers recognizing the need for all generation sources to meet soaring demand. Critics of the bills, including Senator Nathan Johnson (D-Dallas), argued they were “heavy-handed” and disrupted a market already adapting to reliability needs. This outcome protects Texas’ status as a renewable energy leader while avoiding policies that could have raised electricity bills.

• What It Does: Streamlines permitting for rooftop solar and battery storage, making it easier for Texans to install clean backup power.
• Status: Passed and awaits the governor’s signature.
• Impact: This bill supports consumer access to solar and storage, enhancing energy resilience for homes and businesses. It aligns with calls for stronger consumer protections for rooftop solar installations and fair compensation for surplus power fed to the grid.
• Analysis: SB 1202 is a win for distributed energy, counterbalancing the session’s fossil fuel focus. It empowers property owners and supports grid stability by encouraging decentralized power. However, its impact may be limited without additional incentives or funding for adoption.

• SB 783 (State Energy Conservation Office): Allows the adoption of modern energy codes for new residential and commercial buildings, promoting efficiency. Passed and awaits signature.
• HB 4212 (Curry): Establishes a conservation account for land, water, and wildlife, potentially securing future funding. Passed the House but requires budget allocation.
• HB 3356 (Patterson): A companion to SB 715, it stalled in the House Calendars Committee, reinforcing the defeat of anti-renewable measures.

Broader Context and Implications

• Natural Gas Prioritization: The $5 billion Texas Energy Fund expansion and bills like HB 49 underscore a strong legislative preference for natural gas, driven by grid reliability concerns and political support from leaders like Abbott and Patrick.
• Renewable Resilience: The defeat of SB 388, SB 715, and SB 819 signals growing recognition that renewables are critical to meeting Texas’ electricity demand, projected to hit 75 gigawatts in February 2025.
• Environmental Trade-offs: While bills like SB 1150 and SB 1146 address environmental risks from oil and gas, others like HB 49 raise concerns about waterway contamination, highlighting tensions between industry and ecological priorities.
• Consumer Costs: Critics warn that favoring natural gas could tie electricity prices to volatile gas markets, as seen in 2022 when exports drove up local costs. Defeating anti-renewable bills likely prevented additional consumer cost spikes.

What’s Next?

• Grid Reliability: With ERCOT projecting low risk of energy emergencies in early 2025, the state must ensure new gas plants and renewables come online swiftly.
• Climate Considerations: Bills addressing climate impacts, like water infrastructure investments, passed, but broader emissions reduction proposals stalled, reflecting GOP resistance.
• Public Engagement: Advocacy from groups like the Sierra Club and Advanced Power Alliance shaped outcomes, underscoring the importance of stakeholder input.

Conclusion