BILL ANALYSIS

H.B. 3809

By: Darby

State Affairs

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that battery energy storage systems (BESS) are now the state's second-fastest growing energy technology and rapidly expanding across Texas and the ERCOT grid with over 10,000 megawatts operational as of late 2024. Additionally, the bill author has informed the committee that while these systems enhance grid reliability, lower consumer costs, and provide economic and environmental benefits, their growth raises concerns about long-term land use, decommissioning, and accountability. H.B. 3809 seeks to address these issues by establishing a statewide comprehensive legal framework for agreements between non-utility BESS operators and landowners that clarifies developer responsibilities for proper recycling and disposal of components, requires grantees to provide financial assurances, and enforces environmental protections to safeguard landowners and communities.

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

Facility Removal

H.B. 3809 amends the Utilities Code to require a battery energy storage facility agreement to provide that the grantee is responsible for removing the battery energy storage facility from the landowner's property and that the grantee, in accordance with any other applicable laws or regulations, must safely do the following:

·clear, clean, and remove from the property each battery energy storage resource, transformer, and substation;

·for each foundation of a battery energy storage resource, transformer, or substation installed in the ground:

oclear, clean, and remove the foundation from the ground to a depth of at least three feet below the surface grade of the land in which the foundation is installed; and

oensure that each hole or cavity created in the ground by the removal is filled with soil of the same type or a similar type as the predominant soil found on the property;

·for each buried cable, including power, fiber-optic, and communications cables, installed in the ground:

oclear, clean, and remove the cable from the ground to a depth of at least three feet below the surface grade of the land in which the cable is installed; and

oensure that each hole or cavity created in the ground by the removal is filled with soil of the same type or a similar type as the predominant soil found on the property; and

·clear, clean, and remove from the property each overhead power or communications line installed by the grantee on the property.

H.B. 3809 establishes that "battery energy storage facility" includes the following for purposes of its provisions:

·a battery energy storage resource; and

·a facility or equipment, other than a facility or equipment owned by an electric utility, defined by reference to the Public Utility Regulatory Act, used to support the operation of a battery energy storage resource, including the following:

oan underground or aboveground electrical transmission or communications line;

oan electric transformer;

oa power conversion system;

oa battery management system;

oa heating, ventilation, and air conditioning system;

otelecommunications equipment;

oa road; or

oa maintenance yard.

H.B. 3809 requires a battery energy storage facility agreement to provide that the grantee is responsible for doing the following:

·collecting and reusing or recycling, or shipping for reuse or recycling, all components of the battery energy storage facility practicably capable of being reused or recycled, in accordance with any other applicable laws or regulations; and

·properly disposing of components of the battery energy storage facility not practicably capable of being reused or recycled as follows:

oat a facility authorized under state and federal law to dispose of hazardous substances for a component considered hazardous under those laws; or

ofor nonhazardous components, at a municipal solid waste landfill or other appropriate waste disposal facility authorized under state and federal law to dispose of that type of component.

H.B. 3809 requires a battery energy storage facility agreement to provide that, at the request of the landowner, the grantee must do the following:

·clear, clean, and remove each road constructed by the grantee on the property;

·ensure that each hole or cavity created in the ground by the removal is filled with soil of the same type or a similar type as the predominant soil found on the property; and

·if reasonable:

oremove from the property all rocks over 12 inches in diameter excavated during the decommissioning or removal process;

oreturn the property to a tillable state using scarification, V-rip, or disc methods, as appropriate; and

oensure that the following conditions are met:

§each hole or cavity created in the ground by the removal is filled with soil of the same type or a similar type as the predominant soil found on the property; and

§the surface is returned as near as reasonably possible to the same condition as before the grantee dug holes or cavities, including by reseeding pastureland with native grasses prescribed by an appropriate governmental agency, if any.

The bill requires a landowner to make such a request not later than the 180th day after the later of the date on which the battery energy storage resource is no longer capable of generating electricity in commercial quantities or the date the landowner receives written notice of intent to decommission the battery energy storage facility from the grantee.

Financial Assurance

H.B. 3809 requires a battery energy storage facility agreement to provide that the grantee must obtain and deliver to the landowner evidence of financial assurance that conforms to the bill's requirements to secure the performance of the grantee's obligations under the bill. The bill establishes that acceptable forms of financial assurance include a parent company guaranty with a minimum investment grade credit rating for the parent company issued by a major domestic credit rating agency, a letter of credit, a bond, or another form of financial assurance reasonably acceptable to the landowner. The bill requires the amount of financial assurance to be at least equal to the estimated amount by which the cost of removing the battery energy storage facilities from the landowner's property, recycling or disposing of all the components of the battery energy storage facilities, and restoring the property to as near as reasonably possible the condition of the property as of the date the agreement begins exceeds the salvage value of the battery energy storage facilities, less any portion of the value of the battery energy storage facilities pledged to secure outstanding debt.

H.B. 3809 requires a battery energy storage facility agreement to provide the following:

·that the estimated cost of removing the battery energy storage facilities from the landowner's property, recycling or disposing of all the components of the battery energy storage facilities, and restoring the property to as near as reasonably possible the condition of the property as of the date the agreement begins and the estimated salvage value of the battery energy storage facilities must be determined by an independent, third-party professional engineer licensed in Texas;

·that the grantee must deliver to the landowner the estimated cost of removal and recycling or disposal of the battery energy storage facilities and the salvage value on or before the 10th anniversary of the commercial operations date of the battery energy storage facilities;

·that the grantee must deliver an updated estimate of that cost and salvage value at least once every five years after the initial estimate for the remainder of the term of the agreement; and

·that the grantee must deliver financial assurance not later than the earlier of the date the battery energy storage facility agreement is terminated or the 15th anniversary of the commercial operations date of the battery energy storage facilities located on the landowner's leased property.

H.B. 3809 establishes that the grantee is responsible for the following:

·the costs of obtaining financial assurance and determining the estimated removal, recycling, and disposal costs and salvage value; and

·ensuring that the amount of financial assurance remains sufficient to cover the amount consistent with the estimates required by the bill's provisions relating to financial assurance.

H.B. 3809 prohibits the grantee from canceling financial assurance before the date the grantee has completed the grantee's obligation to remove the grantee's battery energy storage facilities located on the landowner's property in the manner provided by the bill, unless the grantee provides the landowner with replacement financial assurance at the time of or before the cancellation. The bill requires financial assurance provided by the grantee, in the event of a transfer of ownership of the grantee's battery energy storage facilities, to remain in place until the date evidence of financial assurance meeting the bill's requirements is provided to the landowner.

Applicability

H.B. 3809 establishes that an agreement that authorizes the grantee to operate a battery energy storage facility in the same modeled generation station and interconnected at the same point of interconnection as a wind power facility is subject to statutory provisions governing wind power facility agreements. The bill establishes that an agreement that authorizes the grantee to operate a battery energy storage facility in the same modeled generation station and interconnected at the same point of interconnection as a solar power facility is subject to the bill and to statutory provisions governing solar power facility agreements.

H.B. 3809 does the following:

·voids a provision of a battery energy storage facility agreement that purports to waive a right or exempt a grantee from a liability or duty established by the bill's provisions;

·entitles a person who is harmed by a violation of the bill's provisions to appropriate injunctive relief to prevent further violation; and

·establishes that the bill's provisions are not exclusive and that these remedies are in addition to any other procedures or remedies provided by other law.

Definitions

H.B. 3809 defines the following terms:

·"battery energy storage facility agreement" as a lease agreement between a grantee and a landowner that authorizes the grantee to operate a battery energy storage facility on the leased property;

·"battery energy storage resource" as a battery energy storage system, whether connected at the transmission or distribution level, that is used to provide energy or ancillary services at wholesale and is not registered with ERCOT as a self-generator;

·"commercial operations date" as the date on which the battery energy storage resource is approved for participation in market operations by a regional transmission organization, not including the generation of electrical energy or other operations conducted before that date for purposes of maintenance and testing;

·"grantee" as a person, other than an electric utility, who does the following:

oleases property from a landowner; and

ooperates a battery energy storage facility on the property; and

·"recycle" as the processing, including disassembling, dismantling, and shredding of battery energy storage cells, modules or other equipment, or their components, to recover a usable product.

Procedural Provision

H.B. 3809 applies only to a battery energy storage facility agreement entered into on or after the bill's effective date.

EFFECTIVE DATE

September 1, 2025.