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| 3 | 5 | | |
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| 4 | 6 | | A BILL TO BE ENTITLED |
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| 5 | 7 | | AN ACT |
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| 6 | 8 | | relating to financial assurance requirements for operators under |
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| 7 | 9 | | the jurisdiction of the Railroad Commission of Texas. |
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| 8 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 11 | | SECTION 1. Chapter 91, Natural Resources Code, is amended |
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| 10 | 12 | | by adding Section 91.115 to read as follows: |
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| 11 | 13 | | Sec. 91.115. FINANCIAL ASSURANCE REQUIREMENTS FOR |
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| 12 | 14 | | OPERATORS. (a) The Railroad Commission shall accept financial |
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| 13 | 15 | | assurance mechanisms, including but not limited to, self-insurance |
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| 14 | 16 | | and parental bonding, to demonstrate an operator’s ability to |
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| 15 | 17 | | satisfy financial security obligations for the operation and |
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| 16 | 18 | | closure of produced water recycling pits and other related |
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| 17 | 19 | | facilities. |
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| 18 | 20 | | (b) An operator that owns or controls multiple subsidiaries |
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| 19 | 21 | | operating under separate P-5 organization reports may satisfy |
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| 20 | 22 | | financial security requirements through a single consolidated |
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| 21 | 23 | | bond, subject to a demonstration of financial adequacy to the |
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| 22 | 24 | | Commission. |
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| 23 | 25 | | (c) The Railroad Commission shall develop and implement a |
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| 24 | 26 | | system allowing operators to submit an annual report identifying |
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| 25 | 27 | | facilities covered under specific bonding mechanisms and ensuring |
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| 26 | 28 | | financial responsibility is properly assigned when assets are |
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| 27 | 29 | | transferred through mergers, acquisitions, or sales. |
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| 28 | 30 | | (d) The Commission shall adopt rules necessary to implement |
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| 29 | 31 | | this section, including but not limited to establishing: |
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| 30 | 32 | | (1) criteria for demonstrating financial adequacy for |
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| 31 | 33 | | self-insurance and parental bonding; |
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| 32 | 34 | | (2) requirements for the submission and approval of |
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| 33 | 35 | | consolidated bonding structures for multiple P-5 operators; and |
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| 34 | 36 | | (3) procedures for tracking and assigning financial |
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| 35 | 37 | | responsibility when transactions result in changes of ownership. |
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| 36 | 38 | | (e) Nothing in this section shall diminish the authority of |
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| 37 | 39 | | the Railroad Commission to require additional financial security in |
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| 38 | 40 | | cases where the commission determines that an operator’s financial |
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| 39 | 41 | | assurance is insufficient to cover potential closure and |
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| 40 | 42 | | remediation costs. |
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| 41 | 43 | | SECTION 2. The Railroad Commission shall adopt rules to |
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| 42 | 44 | | implement Section 91.115, Natural Resources Code, as added by this |
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| 43 | 45 | | Act, no later than December 31, 2025. |
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| 44 | 46 | | SECTION 3. This Act takes effect September 1, 2025. |
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