Relating to the installation and operation of intermediate bulk container recycling facilities; authorizing a fee.
Medium Cost
Effective:2025-06-20
Enforcing Agencies
Texas Commission on Environmental Quality (TCEQ) • Municipalities (authorized to adopt ordinances prohibiting operations within 2,000 feet of residences)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025.
Compliance Deadline:
Siting: Immediate for any facility not yet operational.
Registration: 30 days prior to receiving the first container for new facilities.
Gap Period: Facilities starting between Sept 1, 2025, and March 1, 2027, have a delayed registration deadline of March 31, 2027.
Agency Rulemaking: TCEQ is required to establish fee structures and inspection protocols prior to March 31, 2027. Expect draft rules and public comment periods in late 2026.
Immediate Action Plan
1.Geospatial Audit: Immediately survey all planned or potential facility locations against the 2,000-foot residential buffer.
2.Expedite Operations: If you are developing a new site, accelerate the timeline to receive your first container before August 31, 2025, to lock in "grandfathered" status and avoid the location ban.
3.Inventory Cap: For satellite locations, implement strict controls to keep inventory under 50 IBCs to avoid the regulatory burden entirely.
4.Vendor Verification: Audit your downstream waste processors. Do not ship hazardous residue containers to unregistered facilities after the effective date.
Operational Changes Required
Contracts
Real Estate & Leases: Insert contingencies in land purchase agreements and industrial leases requiring a certified survey verifying the site is outside the 2,000-foot residential buffer zone.
Vendor MSAs: Update Master Service Agreements with chemical suppliers and waste haulers. Require representations and warranties that the destination facility is fully registered under HB3866.
Insurance: Carriers will likely require proof of HB3866 registration (or proof of grandfathered status) to bind Environmental Impairment Liability (EIL) coverage.
Hiring/Training
Inventory Control: Operations managers must be trained on strict inventory caps. To claim the statutory exemption, a facility must never exceed 50 IBCs on-site.
Compliance Staff: Designate a point of contact for mandatory triennial TCEQ inspections.
Reporting & Record-Keeping
Daily Inventory Logs: You must maintain a daily log of on-site IBCs to substantiate exemption claims (under 50 units) during an audit.
Registration Certificates: Proof of registration must be displayed on-site once issued.
Grandfathering Proof: Existing facilities must preserve bills of lading or receiving tickets dated prior to September 1, 2025, to prove they are exempt from the 2,000-foot ban.
Fees & Costs
New Annual Fees: The legislation mandates fees sufficient to cover TCEQ's administrative costs. The Fiscal Note estimates agency costs at ~$8.4 million in FY2026. With a limited number of regulated facilities, anticipate high per-facility registration fees (potentially thousands of dollars annually).
Civil Penalties: Standard TCEQ administrative penalties apply for operating without registration or violating the buffer zone.
Strategic Ambiguities & Considerations
Definition of "Reconditioning": The statute applies to facilities that "recondition" containers. It is currently unclear if minor activities—such as triple-rinsing or valve replacement—constitute "reconditioning." If TCEQ defines this broadly, simple wash-out facilities will be captured.
"Private Residence" Scope: The 2,000-foot ban applies to private residences. Rulemaking must clarify if this includes zoned-but-empty residential lots, agricultural homesteads, or only occupied structures.
Fee Magnitude: The exact fee schedule is dependent on the final count of regulated entities vs. the agency's $8M+ enforcement budget.
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The bill author has informed the committee that in 2024 a massive fire broke out at a chemical container site in northern Ector County dangerously close to a residential area, and that the fire, fueled by the container material and chemical residue inside the containers, burned for weeks, releasing harmful chemicals into the air and contaminating the groundwater that nearby families depend on, and that some residents were forced to evacuate their homes for over a month due to health and safety concerns. The bill author has also informed the committee that under current law facilities like the one that burned in northern Ector County, which store large numbers of empty chemical containers on a single lot, face minimal regulation while posing significant risks, especially when located near a residential area. C.S.H.B. 3866 seeks to address this issue by prohibiting a person from installing or operating an intermediate bulk container recycling facility within 2,000 feet of a private residence and providing for the registration and inspection of such facilities.
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 rulemaking authority is expressly granted to the Texas Commission on Environmental Quality in SECTION 3 of this bill.
ANALYSIS
C.S.H.B. 3866 amends the Water Code to prohibit a person from installing or operating an intermediate bulk container recycling facility within 2,000 feet of a private residence. The bill applies only to an intermediate bulk container regulated by the Pipeline and Hazardous Materials Safety Administration and defines the following:
·"intermediate bulk container" as a rigid or flexible portable packaging, other than a cylinder or portable tank, that is designed for mechanical handling, with a volume of at least 275 gallons; and
·"intermediate bulk container recycling facility" as a site that accepts intermediate bulk containers for purposes of reconditioning the containers for reuse or disposal.
C.S.H.B. 3866 requires an owner of an intermediate bulk container recycling facility to register the facility with the Texas Commission on Environmental Quality (TCEQ) not later than the 30th day before the date the facility begins receiving intermediate bulk containers, except that an owner that began receiving intermediate bulk containers before March 1, 2027, is not required to register the facility before March 31, 2027.
C.S.H.B. 3866 requires the TCEQ, at least once every three years, to conduct on-site inspections of registered intermediate bulk container recycling facilities to determine compliance with laws under TCEQ jurisdiction. The bill requires the TCEQ by rule to impose an annual fee for registering an intermediate bulk container recycling facility in an amount sufficient to cover the reasonable costs of administering the registration program, including costs associated with implementing the program and inspecting registered facilities. The bill requires the fee received by the TCEQ to be deposited to the general revenue fund to the credit of the water resource management account and restricts the appropriation of the deposited fees to the purposes of the bill's provisions.
C.S.H.B. 3866 exempts a facility from the application of the bill's provisions if the facility does not stage, store, or process more than 50 intermediate bulk containers at any time. The bill expressly does not limit the authority of a municipality to adopt an ordinance prohibiting the operation of an intermediate bulk container recycling facility within 2,000 feet of a private residence.
C.S.H.B. 3866 includes ensuring that intermediate bulk container recycling facilities are not located close to private residences as a policy of the state and a purpose of water quality control provisions relating to underground and aboveground storage.
EFFECTIVE DATE
September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE
While C.S.H.B. 3866 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.
Whereas the introduced applied to an outdoor storage container, defined as a nonvehicular device that is made of nonearthen materials, located on or above the surface of the ground and not inside a structure, located at, or is a part of, a commercial facility, including a for-hire storage terminal, and designed to contain a regulated substance, the substitute applies to an intermediate bulk container recycling facility, and only to an intermediate bulk container regulated by the Pipeline and Hazardous Materials Safety Administration. The substitute includes the following definitions that were absent from the introduced:
·"intermediate bulk container" as a rigid or flexible portable packaging, other than a cylinder or portable tank, that is designed for mechanical handling, with a volume of at least 275 gallons; and
·"intermediate bulk container recycling facility" as a site that accepts intermediate bulk containers for purposes of reconditioning the containers for reuse or disposal.
Whereas the substitute requires an owner of an intermediate bulk container recycling facility to register the facility with the TCEQ not later than the 30th day before the date the facility begins receiving intermediate bulk containers, with an owner that began receiving intermediate bulk containers before March 1, 2027, not being required to register the facility before March 31, 2027, the introduced established the following with respect to the registration of an outdoor storage container by the container's owner:
·an owner is required to register the container with the TCEQ not later than the 30th day after the date the container is installed or the date the owner acquires an installed container from a previous owner, but is not required to register the container before March 1, 2026;
·for a container that was installed before September 1, 2025, an owner is required to register the container with the TCEQ not later than March 1, 2026; and
·an owner required to register the container as an aboveground storage tank or a storage vessel under water quality control provisions relating to underground and aboveground storage is not required to register the container under the introduced version's provisions.
Whereas the introduced required the TCEQ to conduct annual on-site inspections of outdoor storage containers registered under water quality control provisions relating to underground and aboveground storage to determine compliance with the introduced version's provisions and established that such requirement expressly does not limit the TCEQ's ability to inspect a container under other state or federal law, the substitute requires the TCEQ, at least once every three years, to conduct on-site inspections of intermediate bulk container recycling facilities registered under the substitute's provisions to determine compliance with laws under TCEQ jurisdiction.
While both the introduced and the substitute provide for the imposition of a fee for their respective registration programs, the introduced specified that the fee be in an amount sufficient to recover the reasonable costs of implementing the registration program and inspecting registered facilities, whereas the substitute specifies that the fee is an annual fee and that the fee be in an amount sufficient to cover the reasonable costs of administering the registration program, including costs associated with such implementation and inspection. The substitute includes provisions that were not in the introduced requiring the fee received by the TCEQ to be deposited to the general revenue fund to the credit of the water resource management account and restricting the appropriation of the deposited fees to the purposes of the substitute's provisions.
Whereas the substitute exempts a facility from the application of the substitute's provisions if the facility does not stage, store, or process more than 50 intermediate bulk containers at any time, the introduced exempted an outdoor storage container from the application of the introduced version's provisions if the container is:
·a farm or residential tank with a capacity of 1,100 gallons or less used for storing motor fuel for noncommercial purposes;
·used for storing heating oil for consumptive use on the premises where stored;
·a septic tank;
·a surface impoundment, pit, pond, or lagoon;
·a storm water or waste water collection system;
·a flow-through process tank;
·a tank, liquid trap, gathering line, or other facility used in connection with an activity associated with the exploration, development, or production of oil, gas, or geothermal resources, or any other activity regulated by the Railroad Commission of Texas under Natural Resources Code provisions relating to pollution prevention rules and orders; or
·a transformer or other electrical equipment that contains a regulated substance and that is used in the transmission of electricity, to the extent that such a transformer or equipment is exempted by the U.S. Environmental Protection Agency under specified federal regulations.
Whereas the introduced expressly did not limit the authority of a municipality to adopt an ordinance prohibiting the installation or operation of an outdoor storage container in a location more than 2,000 feet from a private residence, the substitute expressly does not limit the authority of a municipality to adopt an ordinance prohibiting the operation of an intermediate bulk container recycling facility within 2,000 feet of a private residence.
Honorable Brooks Landgraf, Chair, House Committee on Environmental Regulation
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB3866 by Landgraf (Relating to the installation and ownership of certain outdoor storage containers; authorizing a fee.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3866, As Introduced: an impact of $0 through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
$0
2027
$0
2028
$0
2029
$0
2030
$0
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue Gain/(Loss) from General Revenue Fund 1
Probable Savings/(Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2025
2026
$8,476,681
($8,476,681)
66.0
2027
$6,741,658
($6,741,658)
81.0
2028
$6,741,658
($6,741,658)
81.0
2029
$6,741,658
($6,741,658)
81.0
2030
$6,741,658
($6,741,658)
81.0
Fiscal Analysis
The bill would amend Water Code related to the location, installation, and ownership of certain outdoor storage containers.
The bill applies to specific outdoor storage containers that are defined as nonvehicular devices containing a regulated substance that are made of non-earthen material and are located on or above the surface of the ground and not inside a structure at a commercial facility. The bill prohibits the installation or operation of an outdoor storage container within 2,000 feet of a private residence. The bill would not limit the authority for municipalities to adopt an ordinance prohibiting installation or operation of a container more than 2,000 feet from a private residence.
The bill would require owners of outdoor storage containers to register the containers with the Texas Commission on Environmental Quality (TCEQ) within thirty days of installation. Containers installed before September 1, 2025, would be required to be registered by March 1, 2026. The bill would require TCEQ to conduct annual on-site inspections of registered containers to determine compliance. The bill would require TCEQ to establish and impose registration fees in amounts sufficient to recover the costs of the program. The bill would exempt certain containers that meet specific conditions from these inspection and registration requirements, including containers already registered as an aboveground storage tank or storage vessel.
This bill would take effect on September 1, 2025.
Methodology
Based on information provided by TCEQ, this analysis assumes that revenue from fees established by TCEQ would be deposited to the General Revenue Fund. This analysis also assumes that TCEQ would assess fees as necessary to generate sufficient revenue to cover all costs associated with implementing the provisions of the bill.
Based on information provided by the TCEQ, the agency estimates that there are approximately 16,784 sites that would be subject to the requirements of the bill including: 1,300 chemical storage and manufacturing sites, 13,327 sites with aboveground storage facility registrations, and 2,157 public drinking water systems, although the exactnumber of containers that would be subject to the requirements of the bill is unknown at this time.
Based on information provided by TCEQ, it is assumed that 81.0 Full-Time Equivalent (FTE) positions would be required to establish and administer the programs necessary to implement the provisions of the bill including, conducting annual inspections, conducting outreach, providing compliance-related assistance, and conducting enforcement-related activities when necessary. In addition to staff-related resources, TCEQ assumes modifications to existing information technology systems would be necessary to support electronic submission of the applicable registration and the associated fees. According to TCEQ, the 81.0 FTEs positions and associated costs would total $8,476,681 in fiscal year 2026 and $6,741,658 in fiscal year 2027. Four FTEs would support the Occupational Licensing and Registration Division in providing public, assistance, outreach, and developing programmatic forms, guidance, and procedures. The remainder of the FTEs would support the Office of Compliance and Enforcement in compliance, investigative, enforcement, and outreach purposes. The FTEs would include: fifteen Enforcement Coordinator II, fifty six Environmental Investigator II, six Natural Resource Specialist II, three Program Specialist II, and one Program Specialist IV. The fifteen Enforcement Coordinator II FTEs would begin in fiscal year 2027.
Salary and wage costs for the 81.0 FTEs totals $3,854,975 in fiscal year 2026 and $4,729,295 per fiscal year in fiscal years 2027 through 2030. Benefit costs total $1,095,584 in fiscal year 2026 and $1,344,066 per fiscal year in fiscal years 2027 through 2030. Other administrative and staff costs total $3,526,122 in fiscal year 2026, $668,297 in fiscal year 2027, and $540,797 per fiscal year in fiscal years 2028 through 2030. One-time expenses in the 2026-2027 biennium include the following: $1,375,000 for professional services regarding information technology (IT) development; $1,122,400 for purchase of approximately twenty three vehicles; $121,500 for computers and software licenses; and $567,000 for furniture and equipment.
Technology
It is assumed that one-time costs totaling $1,375,000 for IT development professional services would be necessary in fiscal year 2026 to support modifications to three existing systems at TCEQ (STEERS, PARIS, and ePay) in order to support electronic submission of the applicable registration and the associated fees for the new program.
Local Government Impact
The fiscal implications of the bill cannot be determined at this time. Based on information provided by TCEQ, an estimated 2,157 public drinking water systems would be subject to the requirements of the bill and would be be required to pay registration fees to TCEQ.
Source Agencies:
304 Comptroller of Public Accounts, 582 Commission on Environmental Quality
LBB Staff:
JMc, FV, MW, AJL
Related Legislation
Explore more bills from this author and on related topics
HB3866 establishes a strict regulatory regime for Intermediate Bulk Container (IBC) recycling and reconditioning facilities, implementing a mandatory 2,000-foot buffer zone from private residences and a new TCEQ registration program. While existing facilities are grandfathered, any facility commencing operations on or after September 1, 2025, faces immediate siting prohibitions and significant annual fees if they store more than 50 IBCs. Implementation Timeline Effective Date: September 1, 2025.
Q
Who authored HB3866?
HB3866 was authored by Texas Representative Brooks Landgraf during the Regular Session.
Q
When was HB3866 signed into law?
HB3866 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB3866?
HB3866 is enforced by Texas Commission on Environmental Quality (TCEQ) and Municipalities (authorized to adopt ordinances prohibiting operations within 2,000 feet of residences).
Q
What is the cost impact of HB3866?
The cost impact of HB3866 is estimated as "medium". This may vary based on industry and implementation requirements.
Q
What topics does HB3866 address?
HB3866 addresses topics including environment, environment--hazardous, toxic & nuclear waste, environment--water, safety and storage tanks.
Legislative data provided by LegiScanLast updated: November 25, 2025
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