BILL ANALYSIS C.S.H.B. 3306 By: Dean Insurance Committee Report (Substituted) BACKGROUND AND PURPOSE With a growing economy and severe storms like Winter Storm Mara and Hurricane Beryl, there is a growing demand for electric transmission and distribution utilities in Texas to build and improve infrastructure. The bill author has informed the committee that utilities in Texas have sought contract work for construction, maintenance, and vegetation management projects but face difficulties in enforcing an indemnity provision in agreements with contractors. Current law voids and makes unenforceable a provision in a construction contract, or in an agreement collateral to or affecting such a contract, that requires indemnification of a utility on projects for electric infrastructure, and therefore, utilities can be held liable for damages incurred by a contractor, which could lead to potential litigation, increased insurance costs, and additional costs to ratepayers throughout Texas. C.S.H.B. 3306 seeks to address this issue by excluding an indemnity provision in a construction contract or in an agreement collateral to or affecting such a contract pertaining to electric infrastructure construction, maintenance, or vegetation management for certain utilities from requirements related to indemnification. 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 this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.B. 3306 amends the Insurance Code to exclude an indemnity provision in a construction contract, or in an agreement collateral to or affecting such a contract, pertaining to electric infrastructure construction, maintenance, or vegetation management for an electric utility, a transmission and distribution utility, or an electric cooperative, as those terms are defined under the Public Utility Regulatory Act, from requirements related to indemnification under provisions relating to consolidated insurance programs. C.S.H.B. 3306 applies only to a contract or agreement entered into on or after the bill's effective date. A contract or agreement entered into 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. 3306 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 excluded an indemnity provision in a construction contract or related agreement pertaining to the installation or construction of electric infrastructure or vegetation management for an electric utility or a transmission and distribution utility from the indemnification requirements, the substitute excludes from those requirements an indemnity provision in such a contract or agreement pertaining to electric infrastructure construction, maintenance, or vegetation management for an electric utility, a transmission and distribution utility, or an electric cooperative.
BILL ANALYSIS
# BILL ANALYSIS
C.S.H.B. 3306
By: Dean
Insurance
Committee Report (Substituted)
C.S.H.B. 3306
By: Dean
Insurance
Committee Report (Substituted)
BACKGROUND AND PURPOSE With a growing economy and severe storms like Winter Storm Mara and Hurricane Beryl, there is a growing demand for electric transmission and distribution utilities in Texas to build and improve infrastructure. The bill author has informed the committee that utilities in Texas have sought contract work for construction, maintenance, and vegetation management projects but face difficulties in enforcing an indemnity provision in agreements with contractors. Current law voids and makes unenforceable a provision in a construction contract, or in an agreement collateral to or affecting such a contract, that requires indemnification of a utility on projects for electric infrastructure, and therefore, utilities can be held liable for damages incurred by a contractor, which could lead to potential litigation, increased insurance costs, and additional costs to ratepayers throughout Texas. C.S.H.B. 3306 seeks to address this issue by excluding an indemnity provision in a construction contract or in an agreement collateral to or affecting such a contract pertaining to electric infrastructure construction, maintenance, or vegetation management for certain utilities from requirements related to indemnification.
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 this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS C.S.H.B. 3306 amends the Insurance Code to exclude an indemnity provision in a construction contract, or in an agreement collateral to or affecting such a contract, pertaining to electric infrastructure construction, maintenance, or vegetation management for an electric utility, a transmission and distribution utility, or an electric cooperative, as those terms are defined under the Public Utility Regulatory Act, from requirements related to indemnification under provisions relating to consolidated insurance programs. C.S.H.B. 3306 applies only to a contract or agreement entered into on or after the bill's effective date. A contract or agreement entered into 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. 3306 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 excluded an indemnity provision in a construction contract or related agreement pertaining to the installation or construction of electric infrastructure or vegetation management for an electric utility or a transmission and distribution utility from the indemnification requirements, the substitute excludes from those requirements an indemnity provision in such a contract or agreement pertaining to electric infrastructure construction, maintenance, or vegetation management for an electric utility, a transmission and distribution utility, or an electric cooperative.
BACKGROUND AND PURPOSE
With a growing economy and severe storms like Winter Storm Mara and Hurricane Beryl, there is a growing demand for electric transmission and distribution utilities in Texas to build and improve infrastructure. The bill author has informed the committee that utilities in Texas have sought contract work for construction, maintenance, and vegetation management projects but face difficulties in enforcing an indemnity provision in agreements with contractors. Current law voids and makes unenforceable a provision in a construction contract, or in an agreement collateral to or affecting such a contract, that requires indemnification of a utility on projects for electric infrastructure, and therefore, utilities can be held liable for damages incurred by a contractor, which could lead to potential litigation, increased insurance costs, and additional costs to ratepayers throughout Texas. C.S.H.B. 3306 seeks to address this issue by excluding an indemnity provision in a construction contract or in an agreement collateral to or affecting such a contract pertaining to electric infrastructure construction, maintenance, or vegetation management for certain utilities from requirements related to indemnification.
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 this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
C.S.H.B. 3306 amends the Insurance Code to exclude an indemnity provision in a construction contract, or in an agreement collateral to or affecting such a contract, pertaining to electric infrastructure construction, maintenance, or vegetation management for an electric utility, a transmission and distribution utility, or an electric cooperative, as those terms are defined under the Public Utility Regulatory Act, from requirements related to indemnification under provisions relating to consolidated insurance programs.
C.S.H.B. 3306 applies only to a contract or agreement entered into on or after the bill's effective date. A contract or agreement entered into 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. 3306 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 excluded an indemnity provision in a construction contract or related agreement pertaining to the installation or construction of electric infrastructure or vegetation management for an electric utility or a transmission and distribution utility from the indemnification requirements, the substitute excludes from those requirements an indemnity provision in such a contract or agreement pertaining to electric infrastructure construction, maintenance, or vegetation management for an electric utility, a transmission and distribution utility, or an electric cooperative.