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Signed Into Law
Signed May 19, 2025Effective 2025-09-01
SB1806

Regular Session

Relating to the inspection, purchase, sale, possession, storage, transportation, and disposal of petroleum products, oil and gas equipment, and oil and gas waste; creating criminal offenses and increasing the punishment for an existing criminal offense.

Government Affairs & Regulatory Compliance Analysis

SB1806: Government Affairs Overview

SB1806 converts regulatory non-compliance regarding the purchase, transport, and disposal of oil and gas products from administrative violations into felony criminal offenses effective September 1, 2025. This legislation imposes strict chain-of-custody requirements on transporters and mandates that purchasers verify the Railroad Commission (RRC) authorization of all sellers, exposing corporate officers and operations managers to personal criminal liability for unpermitted activities.

Sen. Kevin Sparks·Senate Bill·Regular Session

Critical
Medium Cost
Effective:2025-09-01

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SB1806
Critical
Relating to the inspection, purchase, sale, possession, storage, transportation, and disposal of petroleum products, oil and gas equipment, and oil an...
Critical Compliance Urgency
Requires immediate attention
Cost Impact
Medium
Effective
2025-09-01
Enforcing Agencies
County and District AttorneysDPSLocal Law Enforcement AgenciesRRC
Primary Author: Sen. Kevin Sparks
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: September 1, 2025
  • *Note:* Criminal penalties apply to any conduct occurring on or after this date. There is no grace period for operations.
  • Agency Rulemaking:
  • DPS Deadline: January 1, 2026. The Department of Public Safety must adopt rules for training officers on cargo tank inspections and forensic sampling.
  • Regulatory Gray Zone: Between Sept 1, 2025, and Jan 1, 2026, the law is in effect, but standardized inspection protocols will not yet be codified. This creates a high-risk period for roadside stops where officer discretion is unchecked.

Immediate Action Plan

  • 1. Audit Vendor List: Immediately run all active crude/condensate sellers against the RRC active operator database. Suspend any vendor without a valid P-5.
  • 2. Update Dispatch Software: Hard-code a requirement for "Initial Owner" identity on all electronic run tickets and manifests.
  • 3. Equip Fleet: Ensure cargo tanks have accessible sampling ports or that drivers carry appropriate keys to prevent forced entry/damage by law enforcement during inspections.
  • 4. Issue Legal Hold: Prepare a "Dawn Raid" protocol for field offices. If a disposal well is flagged for unpermitted operation, it is now a crime scene, not a regulatory inspection.

Operational Changes Required

Contracts

  • Master Service Agreements (MSAs): You must amend MSAs with trucking/transport vendors immediately. Include indemnification clauses specifically addressing the driver's failure to identify the "initial owner" on manifests, which is now a criminal predicate.
  • Purchase Agreements: Update crude and condensate purchase contracts to include a mandatory warranty that the seller possesses a valid, active RRC P-5 Organization Report.
  • Disposal Agreements: Commercial disposal facilities (SWDs) must update intake agreements to refuse any load that does not explicitly document the originating lease/operator.

Hiring/Training

  • Driver Protocols: Update driver safety manuals regarding DPS "comprehensive inspections." Drivers must be trained to facilitate forensic sampling of cargo tanks without violating OSHA standards or causing environmental spills.
  • Procurement Staff: Accounts Payable and Procurement teams require training to perform "Hard Stop" verifications. They must verify a seller’s RRC authorization status *before* issuing a purchase order or payment.

Reporting & Record-Keeping

  • Run Tickets/Manifests: Dispatch software must be updated to make the "Initial Owner" (Operator/Lease Name) a mandatory field. Drivers cannot accept "blind" loads.
  • Vendor Verification Logs: Maintain a timestamped audit trail proving you verified a seller's RRC status prior to transaction. This is your primary affirmative defense against charges of unauthorized purchasing.
  • Seizure Receipts: If DPS extracts a sample for forensic analysis, drivers must obtain a chain-of-custody receipt to reconcile inventory losses, as this product is now evidence.

Fees & Costs

  • Asset Seizure: The law authorizes the immediate sale of seized product at NYMEX market rates. If product is seized, you lose the physical commodity immediately; recovery is limited to cash proceeds after legal adjudication.
  • Insurance Gaps: Review General Liability and D&O policies. Many policies exclude coverage for criminal acts. Since regulatory breaches (e.g., unpermitted disposal) are now felonies, defense costs for these allegations may be uninsurable.

Strategic Ambiguities & Considerations

  • "Comprehensive Inspection" Scope: The statute allows DPS to inspect and sample tanks but does not yet define the safety limits. Until rules are finalized in 2026, it is unclear who bears liability if a trooper contaminates a load or causes a spill during sampling.
  • Valuation of Waste: Felony degrees (3rd vs. 2nd vs. 1st) are based on the "value" of the product or waste. The law does not define how to value "oil and gas waste" (e.g., produced water or sludge). Is it the negative cost of disposal, or the potential value of recoverable skim oil? This interpretation determines the severity of the felony.
  • "Suspected" Product: Officers can inspect tanks "suspected" of containing petroleum products. This grants broad discretion to stop water haulers, potentially disrupting logistics for produced water transport based on officer suspicion alone.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 3, 2025
Passed Senate
Apr 16, 2025
Passed House
Apr 30, 2025
Signed
May 19, 2025
Effective
Sep 1, 2025
TopicsCrimesCrimes--against PropertyOil & GasRailroad CommissionStorage TanksStaff Development & Training
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Senate Authors

Sen. Kevin SparksRepublican · Primary Author

House Sponsors

Rep. Tom CraddickRepublican · Primary Sponsor
Joint Sponsors

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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Quick Reference

Frequently Asked Questions

Common questions about SB1806

Q

What does Texas SB1806 do?

SB1806 converts regulatory non-compliance regarding the purchase, transport, and disposal of oil and gas products from administrative violations into felony criminal offenses effective September 1, 2025. This legislation imposes strict chain-of-custody requirements on transporters and mandates that purchasers verify the Railroad Commission (RRC) authorization of all sellers, exposing corporate officers and operations managers to personal criminal liability for unpermitted activities.

Q

Who authored SB1806?

SB1806 was authored by Texas Senator Kevin Sparks during the Regular Session.

Q

When was SB1806 signed into law?

SB1806 was signed into law by Governor Greg Abbott on May 19, 2025.

Q

Which agencies enforce SB1806?

SB1806 is enforced by County and District Attorneys, Department of Public Safety (DPS), Local Law Enforcement Agencies and Railroad Commission of Texas (RRC).

Q

How significant are the changes in SB1806?

The regulatory priority for SB1806 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB1806?

The cost impact of SB1806 is estimated as "medium". This may vary based on industry and implementation requirements.

Q

What topics does SB1806 address?

SB1806 addresses topics including crimes, crimes--against property, oil & gas, railroad commission and storage tanks.

Q

What are the key dates for SB1806?

Key dates for SB1806: Effective date is 2025-09-01. Rulemaking: Adopt rules establishing training programs and safety protocols for officers conducting comprehensive inspections and forensic sampling of cargo tanks. (2026-01-01). Consult with legal counsel regarding applicability.

Q

What are the penalties under SB1806?

SB1806 establishes the following penalties: criminal penalty of 3rd Degree Felony (Value < $10,000); 2nd Degree Felony ($10,000 - $100,000); 1st Degree Felony ($100,000+) for Theft of petroleum products or oil and gas equipment; purchasing from unauthorized RRC sellers; transporting product to disposal without identifying initial owner.; criminal penalty of 3rd Degree Felony (Value < $10,000); 2nd Degree Felony ($10,000 - $100,000); 1st Degree Felony ($100,000+) for Operating, drilling, or converting a disposal well without a Railroad Commission permit.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB1806?

SB1806 primarily affects property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026