HB206

Regular Session

Relating to a limitation on a county's authority to require a cash bond before approving the construction of a pipeline.

ModeratePlan for compliance

Low Cost

Effective:2025-05-26

Enforcing Agencies

Texas Civil Courts (via injunctive relief or declaratory judgment against non-compliant counties)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: May 26, 2025 (Assumes 2/3rds legislative vote for immediate effect; otherwise September 1, 2025).
Compliance Deadline: Immediate. Any application filed on or after the effective date is exempt from cash bond mandates.
Agency Rulemaking: None. This is a direct statutory restriction on county authority. There is no "gray zone" awaiting state agency clarification, but individual counties may revise their own permitting ordinances in response.

Immediate Action Plan

Audit Pending Applications: Identify all pipeline permit applications currently in queue. If a project is not time-critical, delay filing until May 26, 2025, to avoid the cash bond requirement.
Update AP Controls: Instruct finance teams to reject wire transfers for county cash bonds effective immediately.
Prepare Surety Partners: Contact your surety brokers. Ensure you have a facility ready to issue bonds or LOCs quickly if counties shift their requirements from cash to alternative security instruments.
Distribute Statutory Text: Provide the specific text of HB206 to your Government Affairs and Permitting teams for use in field negotiations.

Operational Changes Required

Contracts

EPC & MSAs: Review Master Service Agreements with Engineering, Procurement, and Construction (EPC) firms. Explicitly state that "Cash Bonds" for county permits are non-reimbursable expenses for projects filed post-effective date.
Joint Operating Agreements (JOAs): Update Authorizations for Expenditure (AFEs). Remove line items for "County Road/Construction Bonds" to accurately reflect reduced capital requirements to partners.

Hiring/Training

Landmen & Permit Agents: Field staff must be issued a copy of Texas Local Government Code § 240.911. Train them to respectfully but firmly refuse county clerk requests for cash bonds, citing the specific statute.
Accounts Payable: Implement a "Stop Payment" flag for any check request payable to a county government labeled "Performance Bond" or "Cash Bond" without Legal Department approval.

Reporting & Record-Keeping

Proof of Filing Date: The ban applies strictly to applications filed *on or after* the effective date. You must secure and archive time-stamped receipts or certified mail return receipts for all county filings. This document is your primary defense if a county attempts to enforce a bond requirement retroactively.

Fees & Costs

Liquidity Improvement: Immediate elimination of idle cash trapped in county escrow accounts.
Potential Cost Shifts: Anticipate that counties may pivot to requiring Surety Bonds or Irrevocable Letters of Credit (LOCs). While these preserve cash, they will incur premium costs or impact credit facility capacity.

Strategic Ambiguities & Considerations

"Cash" vs. "Security": The law explicitly bans *cash* bonds. It does not ban Surety Bonds, Letters of Credit, or Certificates of Insurance. Expect hostile counties to demand high-value LOCs or onerous insurance limits as a proxy for the lost cash bond.
Fee Restructuring: Counties may attempt to recoup perceived financial exposure by increasing non-refundable "Application Fees" or "Inspection Fees." Monitor county fee schedules closely for sudden hikes.
Enforcement Vacuum: There is no state oversight agency (like the RRC) to police county compliance. If a county refuses to process a permit without cash, your only remedy is seeking a writ of mandamus or injunctive relief in District Court.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsCity Government City Government--annexation County Government County Government--finance Oil & Gas Utilities Utilities--natural Gas Bonds

Official Analysis

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BILL ANALYSIS

C.S.H.B. 206

By: Craddick

Energy Resources

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Texas is a leading energy producer. According to the Texas Economic Development and Tourism Office, Texas is the top producer of both crude oil and natural gas in the United States, with nearly 480,000 miles of pipelines running throughout the state, and is home to one‑fourth of the country's proved natural gas reserves. These pipelines can be critical for the safe transportation of oil, natural gas, and other resources. However, the bill author has informed the committee that some counties have begun to require cash bonds as a condition of approval for pipeline construction in those counties. These requirements can place an undue financial burden on pipeline developers and create regulatory uncertainty, potentially delaying infrastructure projects that are vital to the state's economy. C.S.H.B. 206 seeks to address these concerns by prohibiting counties from requiring a cash bond as a condition of approval for pipeline construction.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 206 amends the Local Government Code to prohibit a county from requiring a cash bond as a condition of approval for the construction of a pipeline in the county's boundaries. The bill applies only to an application for approval to construct a pipeline filed with a county on or after the bill's effective date.

EFFECTIVE DATE

September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 206 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

Both the introduced and the substitute prohibit a county from requiring a cash bond as a condition of approval for the construction of a pipeline in the county's boundaries. However, the substitute omits the provisions from the introduced that did the following with respect to this prohibition:

·exempted a county that grants the person proposing the construction of the pipeline the right to approve or deny the use of the bond proceeds from the prohibition; and

·entitled such a person to a full refund of the cash bond if the person denies the use of the bond proceeds.

House Authors

Rep. Tom CraddickRepublican · Primary Author

Senate Sponsor

Sen. Brian BirdwellRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 206

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to a limitation on a county's authority to require a cash
	bond before approving the construction of a pipeline.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subchapter Z, Chapter 240, Local Government
	Code, is amended by adding Section 240.911 to read as follows:
	Sec. 240.911. BOND FOR PIPELINE CONSTRUCTION. A county may
	not require a cash bond as a condition of approval for the
	construction of a pipeline in the county's boundaries.
	SECTION 2. Section 240.911, Local Government Code, as added
	by this Act, applies only to an application for approval to
	construct a pipeline filed with a county on or after the effective
	date of this Act.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 13, 2025

TO:	Honorable Drew Darby, Chair, House Committee on Energy Resources

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB206 by Craddick (Relating to limitations on a county's authority to require a cash bond before approving the construction of a pipeline.), As Introduced

No fiscal implication to the State is anticipated.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

LBB Staff:

JMc, RStu, BC, CWi

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Frequently Asked Questions

Common questions about HB206

What does Texas HB206 do?

Texas counties are statutorily prohibited from requiring cash bonds as a condition for approving pipeline construction applications filed on or after May 26, 2025. This legislation immediately frees up working capital for Midstream, E&P, and Utility operators, though it leaves counties the option to pursue alternative security measures like surety bonds or letters of credit. Implementation Timeline Effective Date: May 26, 2025 (Assumes 2/3rds legislative vote for immediate effect; otherwise September 1, 2025).

Who authored HB206?

HB206 was authored by Texas Representative Tom Craddick during the Regular Session.

When was HB206 signed into law?

HB206 was signed into law by Governor Greg Abbott on May 26, 2025.

Which agencies enforce HB206?

HB206 is enforced by Texas Civil Courts (via injunctive relief or declaratory judgment against non-compliant counties).

How urgent is compliance with HB206?

The compliance urgency for HB206 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB206?

The cost impact of HB206 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB206 address?

HB206 addresses topics including city government, city government--annexation, county government, county government--finance and oil & gas.

Legislative data provided by LegiScanLast updated: November 25, 2025

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