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Signed Into Law
Signed June 20, 2025Effective 2025-09-01
SB2321

Regular Session

Relating to the regulation of emissions by the Texas Commission on Environmental Quality during an event affecting electric demand or grid reliability.

Government Affairs & Regulatory Compliance Analysis

SB2321: Government Affairs Overview

SB 2321 establishes a statutory framework allowing the Texas Commission on Environmental Quality (TCEQ) to waive emissions enforcement penalties during ERCOT-declared grid emergencies. This legislation affects both commercial power generation facilities and businesses with on-site backup generation (e. g.

Phil King·Senate Bill·Regular Session

Moderate
Low Cost
Effective:2025-09-01

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SB2321
Moderate
Relating to the regulation of emissions by the Texas Commission on Environmental Quality during an event affecting electric demand or grid reliability...
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
TCEQ
Primary Author: Phil King
89th Texas Legislature
jdkey.com
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Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: August 1, 2025 (Recommended). Your Emergency Operations Plans (EOPs) and reporting templates must be updated prior to the effective date to ensure readiness for the Fall/Winter 2025 season.
  • Agency Rulemaking: While the statute is effective immediately upon the date listed, TCEQ will likely issue guidance or initiate rulemaking between Q4 2025 and Q2 2026 to standardize the submission format for waiver requests. Until then, utilize existing STEERS reporting channels supplemented by the specific data points required by this bill.

Immediate Action Plan

  • 1. Update EOPs: Immediately draft an "SB 2321 Compliance Addendum" for your Emergency Operations Plan defining the trigger point for the waiver.
  • 2. Create Reporting Templates: Develop a standardized form that captures all data points required by Section 382.086(c) to ensure no information is missed during the chaos of a grid event.
  • 3. Review Insurance: Consult with your broker to ensure operating under a "state-sanctioned waiver" does not trigger exclusions in your Environmental Impairment Liability (EIL) policies regarding intentional pollution.
  • 4. Audit Fuel Contracts: Ensure fuel supply agreements have robust emergency delivery clauses to support the "commercially reasonable" defense.

Operational Changes Required

Contracts

  • Fuel Supply Agreements: Review contracts for diesel or natural gas delivery. To meet the "commercially reasonable steps" standard for minimizing emissions, your contracts must prioritize delivery during force majeure events. Inability to secure clean fuel due to weak contracts may void your waiver eligibility.
  • O&M Vendor Agreements: If facility management is outsourced, amend Master Services Agreements (MSAs) to explicitly require vendors to maintain the specific "Defense File" logs required by Section 382.086(c).
  • Demand Response/ERS: Update participation agreements to reflect that asset deployment is subject to SB 2321 compliance protocols.

Hiring/Training

  • Control Room & EHS Training: Operators must be trained to identify the specific ERCOT notification that triggers the "Waiver Period."
  • Protocol Shift: Staff must be trained to prioritize grid reliability over permit limits *only* when the trigger is active, while simultaneously logging the specific actions taken to minimize the exceedance.

Reporting & Record-Keeping

  • The "Defense File": You must create a specific log for grid emergencies that tracks:
  • Facility Name, Contact Info, and TCEQ Customer Reference Number (CN).
  • Specific units involved in the exceedance.
  • Event details: Date, time, pollutant type, quantity, and duration.
  • Proof of Mitigation: A narrative log detailing control equipment status and operator decisions made to minimize emissions.
  • STEERS Filing: You must still file deviation reports via the State of Texas Environmental Electronic Reporting System (STEERS) within standard regulatory windows (24 hours/2 weeks) unless TCEQ rulemaking provides an alternative channel.

Fees & Costs

  • No New State Fees: There are no new licensure or filing fees associated with this bill.
  • Cost Impact: Internal administrative costs will be incurred to update EOPs and legal review of fuel contracts.

Strategic Ambiguities & Considerations

  • "Commercially Reasonable Steps": The statute requires you to take "commercially reasonable steps" to minimize emissions to qualify for the waiver. This term is undefined. Does it require purchasing premium fuel? Does it require load shedding if grid stability allows? Risk: TCEQ enforcement may interpret this strictly. Document *every* decision to prove reasonableness.
  • Discretionary Waiver ("May" vs. "Shall"): Subsection (d) states TCEQ *may* waive enforcement. It does not mandate a waiver. If TCEQ determines your exceedance was caused by poor maintenance rather than the emergency, you remain liable for penalties.
  • Federal Liability: This state law provides a defense against TCEQ administrative penalties. It does not provide immunity from federal EPA enforcement or third-party civil litigation.

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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 11, 2025
Passed Senate
Apr 16, 2025
Passed House
May 28, 2025
Signed
Jun 20, 2025
Effective
Sep 1, 2025
TopicsEnvironmentEnvironment--airUtilitiesUtilities--electricUtilities--generalElectric Reliability Council of TexasEnvironmental Quality, Texas Commission On
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House Sponsors

Rep. Phil KingRepublican · 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 SB2321

Q

What does Texas SB2321 do?

SB 2321 establishes a statutory framework allowing the Texas Commission on Environmental Quality (TCEQ) to waive emissions enforcement penalties during ERCOT-declared grid emergencies. This legislation affects both commercial power generation facilities and businesses with on-site backup generation (e. g.

Q

Who authored SB2321?

SB2321 was authored by Texas Senator Phil King during the Regular Session.

Q

When was SB2321 signed into law?

SB2321 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce SB2321?

SB2321 is enforced by Texas Commission on Environmental Quality (TCEQ).

Q

How significant are the changes in SB2321?

The regulatory priority for SB2321 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB2321?

The cost impact of SB2321 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB2321 address?

SB2321 addresses topics including environment, environment--air, utilities, utilities--electric and utilities--general.

Q

What are the key dates for SB2321?

Key dates for SB2321: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

Q

What are the penalties under SB2321?

SB2321 establishes the following penalties: administrative penalty of Standard TCEQ enforcement penalties (variable based on violation) for Failure to submit required documentation regarding emissions exceedances during a grid emergency waiver period, or failure to take commercially reasonable steps to minimize emissions.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB2321?

SB2321 primarily affects utility companies and energy providers. 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