Relating to the treatment and beneficial use of fluid oil and gas waste and related material, including a limitation on liability for that treatment or use.
ModeratePlan for compliance
Low Cost
Effective:2025-06-20
Enforcing Agencies
Railroad Commission of Texas (RRC) • Texas Commission on Environmental Quality (TCEQ)
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Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: June 20, 2025
Compliance Deadline:June 20, 2025 (To secure liability protection, all waste transfers occurring on or after this date must meet the new contractual and permit standards).
Agency Rulemaking: The Railroad Commission of Texas (RRC) is mandated to adopt rules governing the treatment and beneficial use of fluid waste.
*Regulatory Gray Zone:* Between June 20, 2025, and the final adoption of RRC rules, operators must strictly adhere to existing permits. Do not engage in novel "beneficial uses" (e.g., agricultural or industrial application) until the RRC explicitly defines the technical standards for those specific uses.
Immediate Action Plan
Audit Permits: Immediately verify that all treatment facilities and disposal wells are operating strictly within RRC/TCEQ permit limits; correct any deviations before June 20.
Redraft MSAs: Issue addendums to all waste hauling and treatment contracts inserting the statutory "beneficial use" language.
Update Manifests: Modify internal waste tracking systems to flag loads intended for recycling versus disposal.
Notify Insurers: Submit the new statutory protections to your underwriter to review coverage terms and rates.
Operational Changes Required
Contracts
Legal departments must amend agreements to operationalize the "contractual understanding" requirement in Section 122.003(a). Without this specific language, the liability shield is void.
Master Service Agreements (MSAs): Insert clauses stating that fluid waste is transferred with the specific intent of treatment and beneficial use.
Offtake/Sales Agreements: Contracts transferring treated waste to third parties must explicitly obligate the buyer to put the material to beneficial use.
Surface Use Agreements: Leverage Section 1(a-2) to negotiate lower indemnity caps, as the statute now provides surface owners independent protection from third-party liability.
Hiring/Training
Dispatch & Logistics: Train personnel handling manifests to verify that waste destined for treatment is coded correctly. A standard disposal manifest may not satisfy the "intent for beneficial use" evidentiary standard.
Permit Compliance: Operational teams must understand that regulatory non-compliance now creates tort liability. Any deviation from RRC/TCEQ permit parameters automatically voids the statutory liability shield.
Reporting & Record-Keeping
Chain of Custody: Maintain a rigorous audit trail linking the waste generator to the treatment facility and the final beneficial user. You must prove the "contractual understanding" existed at the moment of transfer.
Compliance Logs: Maintain daily logs proving adherence to Section 122.004 rules and TPDES permits. In the event of a lawsuit, these logs are the primary defense to prove eligibility for the liability cap.
Fees & Costs
No New State Fees: The bill does not impose new regulatory fees.
Insurance Savings: Risk managers should contact carriers immediately. The statutory limitation on liability and the ban on exemplary damages for compliant operators should be leveraged to negotiate reduced premiums for General Liability and Pollution Legal Liability policies.
Strategic Ambiguities & Considerations
Definition of Non-Oilfield "Beneficial Use": The bill allows treated waste to be used outside the oilfield, but the RRC has not yet defined the chemical standards for such uses (e.g., road base, cooling water). Until these rules are published, the scope of "beneficial use" remains a high-risk area.
"Byproduct" Classification: The law extends protection to "byproducts," but fails to clearly distinguish between a protected byproduct and hazardous waste. Rely on current hazardous waste classifications until the RRC clarifies this threshold.
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Under current state law, fluid oil and gas waste treatment facilities are generally indemnified from liability for subsequent uses of treated waste products related to oil and gas production, with exceptions for personal injury, death, or property damage resulting from exposure to the waste or its treated products. The bill author has informed the committee that this indemnification does not extend to oil and gas producers, third-party conveyers, or to all beneficial uses of treated products and that the current framework allows for broad exceptions to indemnification, potentially exposing entities to significant liability risks. C.S.H.B. 49 seeks to expand and clarify indemnification protections for entities involved in the production, conveyance, and treatment of fluid oil and gas waste by revising applicable statutory provisions relating to tort responsibility in order to offer clearer legal standards and promote innovative, sustainable waste reuse.
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 Railroad Commission of Texas in SECTION 2 of this bill.
ANALYSIS
C.S.H.B. 49 amends the Natural Resources Code to make the following changes to the general exemption from liability in tort for a consequence of the subsequent use of a treated item granted to a person who takes possession of fluid oil and gas waste, produces a treated item from the waste, and transfers the treated item to another person with a certain contractual understanding regarding its use:
·specifies that the taking of possession of fluid oil and gas waste is for treatment;
·changes the type of produced treated item from a treated product generally considered in the oil and gas industry to be suitable for use in connection with the drilling for or production of oil or gas to treated waste;
·includes as an action which the exempt person may take as an alternative to transferring the treated item the putting of the treated item to a beneficial use; and
·changes the nature of the contractual understanding from an understanding that the treated item will be used in connection with the drilling for or production of oil or gas to an understanding that the treated item will be put to a beneficial use.
C.S.H.B. 49 exempts, except as otherwise provided, a person, including an owner of the surface estate of real property, who produces fluid oil and gas waste or who supplies or conveys fluid oil and gas waste to a treatment facility for the purpose of generating treated waste from liability in tort for the following:
·a consequence of the subsequent treatment of that fluid oil and gas waste to generate treated waste;
·the subsequent use of that treated waste by any person; and
·exposure to any component of the waste or any byproduct of the process used to generate treated waste.
C.S.H.B. 49 exempts, except as otherwise provided, an owner of the surface estate of real property on or under which fluid oil and gas waste is produced, conveyed, or transported from liability in an action for damages for personal injury, death, or property damage arising from exposure to fluid oil and gas waste, treated waste, or a byproduct of a process used to generate treated waste.
C.S.H.B. 49 makes the following changes with respect to the provision that establishes that tort responsibility provisions do not affect the liability of a person in an action brought by a claimant for damages for personal injury, death, or property damage arising from exposure to fluid oil and gas waste or a treated item:
·changes the treated item from a treated product to treated waste;
·removes the specification that the liable person is a person who treats fluid oil and gas waste for beneficial use;
·includes exposure to a byproduct of a process used to generate treated waste as an applicable exposure; and
·conditions the provision on the exposure occurring as a result of the following:
othe person's gross negligence or intentional, wrongful act or omission; or
othe person's negligence and the person not treating, generating, using, or disposing of the fluid oil and gas waste, treated waste, or byproduct in conformity with applicable Railroad Commission of Texas (RRC) rules or with an applicable Texas Pollutant Discharge Elimination System program permit issued by the Texas Commission on Environmental Quality.
The bill prohibits a claimant awarded damages for a tort premised solely on the liable person's negligence and regulatory nonconformity under the bill from being awarded exemplary damages.
C.S.H.B. 49 specifies that the oil and gas waste for which the RRC is required to adopt rules to govern treatment and beneficial use is fluid oil and gas waste and requires the RRC to adopt rules to govern the treatment and beneficial use also of treated waste and any byproduct of a process used to generate treated waste.
C.S.H.B. 49 applies only to a cause of action that accrues on or after the bill's effective date. A cause of action that accrues before the bill's effective date is governed by the law as it existed immediately before the bill's effective date, and that law is continued in effect for that purpose.
EFFECTIVE DATE
September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE
While C.S.H.B. 49 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.
The substitute omits the provisions from the introduced that did the following:
·revised provisions relating to the ownership of fluid oil and gas waste that is transferred for treatment and subsequent beneficial use by changing the specified purpose for which a person takes possession of the waste from treating the waste for a subsequent beneficial use to generating treated product; and
·defined "treated product" as the product of a process that treats, filters, refines, extracts, or otherwise alters any portion or component of fluid oil and gas waste to render it suitable for a beneficial use.
While both the introduced and the substitute revise the general exemption from liability in tort for a consequence of the subsequent use of a treated item granted to a person who takes possession of fluid oil and gas waste, produces a treated item from the waste, and transfers the treated item to another person with a certain contractual understanding regarding its use, the introduced retained the statutory treated item as a treated product, whereas the substitute changes the treated item from a treated product to treated waste and makes conforming changes throughout the bill to reflect this change. The substitute includes a specification that is not in the introduced that the taking of possession of fluid oil and gas waste is for treatment.
With regard to the bill's exemption for a person who produces fluid oil and gas waste or who supplies or conveys fluid oil and gas waste to a treatment facility for the purpose of generating an applicable treated item from liability in tort for, among other things, exposure to an applicable process byproduct, the substitute includes the following which were not included in the introduced:
·a specification that such an exempt person includes an owner of the surface estate of real property; and
·exposure to any component of the waste.
The substitute includes an exemption that is not included in the introduced for, except as otherwise provided by the bill, an owner of the surface estate of real property on or under which fluid oil and gas waste is produced, conveyed, or transported from liability in an action for damages for personal injury, death, or property damage arising from exposure to fluid oil and gas waste, treated waste, or a byproduct of a process used to generate treated waste.
HB49 fundamentally shifts the risk profile for oil and gas waste recycling by expanding civil liability protections for operators, treaters, and surface owners, effective June 20, 2025. The law removes the restriction that treated waste must be used solely for oil and gas purposes to qualify for immunity, effectively opening new commercial markets for recycled fluids while shielding compliant parties from tort liability regarding the waste's subsequent use. Implementation Timeline Effective Date: June 20, 2025 Compliance Deadline: June 20, 2025 (To secure liability protection, all waste transfers occurring on or after this date must meet the new contractual and permit standards).
Q
Who authored HB49?
HB49 was authored by Texas Representative Drew Darby during the Regular Session.
Q
When was HB49 signed into law?
HB49 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB49?
HB49 is enforced by Railroad Commission of Texas (RRC) and Texas Commission on Environmental Quality (TCEQ).
Q
How urgent is compliance with HB49?
The compliance urgency for HB49 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB49?
The cost impact of HB49 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB49 address?
HB49 addresses topics including civil remedies & liabilities, environment, environment--general, environment--water and oil & gas.
Legislative data provided by LegiScanLast updated: November 25, 2025
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