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Signed Into Law
Signed May 19, 2025Effective 2025-09-01
SB879

Regular Session

Relating to an exemption for drillers or operators of closed-loop geothermal injection wells from certain requirements applicable to persons involved in activities under the jurisdiction of the Railroad Commission of Texas.

Government Affairs & Regulatory Compliance Analysis

SB879: Government Affairs Overview

SB879 deregulates the closed-loop geothermal sector by eliminating Railroad Commission (RRC) drilling permit fees and Form P-5 Organization Report filings for qualifying operators. This exemption, effective September 1, 2025, lowers market entry barriers for "pure-play" geothermal developers but creates a bifurcated compliance track relative to traditional oil and gas operations.

Sen. Brian Birdwell·Senate Bill·Regular Session

Low
Low Cost
Effective:2025-09-01
Business Impact

Who SB879 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: low

Standard regulatory changes (effective 2025-09-01). Review during normal business planning.

⚡

Energy

Affected business types:

  • Power generators
  • Electric utilities
  • Renewable energy developers
  • Battery storage operators
View all energy legislation
💧

Water

Affected business types:

  • Water utilities
  • Wastewater treatment facilities
  • Municipal water districts
  • Agricultural water users
View all water legislation

Key Operational Considerations

  • 1Joint Operating Agreements (JOAs): Review overhead provisions. Future JOAs for closed-loop projects should not allocate costs for P-5 maintenance or drilling permit fees.
  • 2Authorizations for Expenditure (AFEs): Update AFE templates for projects commencing after September 1, 2025, to remove line items for Natural Resources Code Sec. 85.2021 drilling fees.
  • 3Accounting: Update accounts payable protocols to stop automatic renewals of P-5 fees for entities that operate *exclusively* closed-loop geothermal wells.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SB879
Low
Relating to an exemption for drillers or operators of closed-loop geothermal injection wells from certain requirements applicable to persons involved ...
Low Compliance Urgency
Requires routine attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
Railroad Commission of Texas
Primary Author: Sen. Brian Birdwell
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 (Applies to applications filed on or after this date).
  • Agency Rulemaking: The RRC must update its digital filing systems to accept applications without the standard fees. Monitor the RRC docket in Summer 2025 for guidance on how to claim the exemption without triggering automatic system rejections.

Immediate Action Plan

  • Audit Asset Portfolio: Determine if your entity operates *exclusively* closed-loop geothermal wells. If you hold traditional O&G leases, assume you must still maintain your P-5.
  • Freeze Applications: Do not file new permit applications for closed-loop projects in late August 2025. Delay filing until September 1, 2025, to capture the fee exemption.
  • Update Internal Controls: Modify regulatory calendars to remove P-5 renewal reminders for qualifying entities.

Operational Changes Required

Contracts

  • Joint Operating Agreements (JOAs): Review overhead provisions. Future JOAs for closed-loop projects should not allocate costs for P-5 maintenance or drilling permit fees.
  • Authorizations for Expenditure (AFEs): Update AFE templates for projects commencing after September 1, 2025, to remove line items for Natural Resources Code Sec. 85.2021 drilling fees.

Hiring/Training

  • Regulatory Staff: Train filing teams to distinguish between "closed-loop" (exempt) and "open-loop/hydrothermal" (non-exempt) projects. Filing the wrong permit type will result in unnecessary fee payments which are non-refundable.
  • Accounting: Update accounts payable protocols to stop automatic renewals of P-5 fees for entities that operate *exclusively* closed-loop geothermal wells.

Reporting & Record-Keeping

  • P-5 Exemption: Qualifying operators are no longer required to file the Form P-5 Organization Report (Natural Resources Code Sec. 91.142).
  • Proof of Eligibility: You must maintain the RRC authorization letter confirming your facility operates under a "permit by rule" (Water Code Sec. 27.037) to substantiate your exemption status during agency audits.

Fees & Costs

  • Fee Elimination: The Drilling Permit Fee (Sec. 85.2021) is waived for qualifying wells.
  • Administrative Savings: Annual P-5 filing fees are eliminated for qualifying operators.

Strategic Ambiguities & Considerations

  • Mixed-Asset Operators: The statute exempts a "person" involved in closed-loop geothermal from P-5 requirements. It is unclear if an operator holding *both* traditional O&G assets (requiring a P-5) and geothermal assets can claim partial exemptions. We anticipate the RRC will rule that holding *any* non-exempt asset triggers the full P-5 requirement.
  • Financial Assurance Mechanisms: The Form P-5 is the standard administrative trigger for filing financial assurance (bonding). The RRC has not yet clarified how it will track and enforce plugging liability for operators who are no longer required to file a P-5.

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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Jan 22, 2025
Passed Senate
Apr 3, 2025
Passed House
May 2, 2025
Signed
May 19, 2025
Effective
Sep 1, 2025
TopicsEnergyEnergy--generalEnergy--geothermalEnvironmentEnvironment--waterMines & Mineral ResourcesInjection WellsPermitsRailroad Commission
03

Senate Authors

Sen. Brian BirdwellRepublican · Primary Author
Coauthors (1)

House Sponsors

Rep. Drew DarbyRepublican · Primary Sponsor
Joint Sponsors

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Brian Birdwell

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Quick Reference

Frequently Asked Questions

Common questions about SB879

Q

What does Texas SB879 do?

SB879 deregulates the closed-loop geothermal sector by eliminating Railroad Commission (RRC) drilling permit fees and Form P-5 Organization Report filings for qualifying operators. This exemption, effective September 1, 2025, lowers market entry barriers for "pure-play" geothermal developers but creates a bifurcated compliance track relative to traditional oil and gas operations.

Q

Who authored SB879?

SB879 was authored by Texas Senator Brian Birdwell during the Regular Session.

Q

When was SB879 signed into law?

SB879 was signed into law by Governor Greg Abbott on May 19, 2025.

Q

Which agencies enforce SB879?

SB879 is enforced by Railroad Commission of Texas.

Q

How significant are the changes in SB879?

The regulatory priority for SB879 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB879?

The cost impact of SB879 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB879 address?

SB879 addresses topics including energy, energy--general, energy--geothermal, environment and environment--water.

Q

What are the key dates for SB879?

Key dates for SB879: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by SB879?

SB879 primarily affects energy companies and power generators. 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