By Lauren G. Sepulveda

May 21, 2025

The Texas Legislature passed battery energy storage system (“BESS“) decommissioning bill HB 3809 yesterday.  If signed into law by Governor Greg Abbott, it will take effect on September 1, 2025 and create Chapter 303 of the Texas Utilities Code, which will require all BESS leases entered into on or after September 1, 2025 to include decommissioning and financial assurance provisions that largely mirror those required for wind and solar leases by Chapters 301 and 302 of the Texas Utilities Code, with added recycling and disposal requirements for battery components.

More specifically, if HB 3809 is signed into law, the following provisions will be required to be included in BESS leases:

  • The lessee will clear, clean and remove from the property each battery, transformer, and substation installed and owned by the grantee.
  • For each foundation installed in the ground for each battery, transformer, or substation installed and owned by the lessee, the lessee will clear, clean and remove the foundation from the ground to a depth of at least three feet below the surface grade of the land, and ensure each hole or cavity created by the removal is filled with soil of the same or similar type as the predominant soil on the property.
  • For each buried cable, including power, fiber-optic and communication cables installed and owned by the lessee, the lessee will clear, clean and remove the cable from the ground to a depth of at least three feet below the surface grade of the land, ensure each hole or cavity is filled with soil of the same or a similar type as the predominant soil found on the property, and clear clean and remove each overhead power or communication line installed and owned by the grantee on the property.
  • The lessee will be responsible for collecting and reusing or recycling, or shipping for reuse or recycling, all components of the BESS practicably capable of being reused or recycled, and for properly disposing of components of the facility not capable of being reused or recycled at a facility authorized under state and federal law to dispose of hazardous substances for a component considered hazardous under those laws, or for nonhazardous components, at a municipal solid waste landfill or other appropriate waste disposal facility authorized under state and federal law to dispose of that type of component.
  • At the request of the landowner, which must be made not later than the 180th day after the later of the date the landowner receives written notice from the lessee of its intent to suspend operations or decommission the battery facilities, the lessee shall:
    • clear, clean and remove each road constructed by the lessee on the property, ensure the hole or cavity created by the removal is filled with the soil of the same or similar type as the predominant soil found on the property; and
    • remove from the property all rocks over 12 inches in diameter excavated during decommissioning, return the property to a tillable state using scarification, V-rip or disc methods, and ensure each hole created during this process is filled with soil of the same or similar type as the predominant soil found on the property and the surface is returned as near as reasonably possible to the same condition as before the grantee dug holes or cavities (to include reseeding pastureland with native grasses prescribed by an appropriate governmental agency, if any).
  • The lessee shall obtain and deliver to the landowner evidence of financial assurance (i.e., parent company guaranty, letter of credit, bond, or other form reasonably acceptable to the landowner) equal to the estimated amount by which the cost of removing the BESS facilities from the property, recycling and disposing of the components, and restoring the property to as near as reasonably possible to the condition of the property as of the date the agreement begins exceeds the salvage value of the BESS facilities, lets any portion of the value of the BESS facilities pledged to secure outstanding debt.
    • An independent, third-party engineer must estimate the cost of removal and restoration at the lessee’s expense, and the estimate must be delivered to the landowner on or before the 10th anniversary of the battery operation date. An updated estimate must be delivered to the landowner every five years for the remainder of the lease term.
    • The financial assurance must be delivered to the landowner not later than the earlier of the date the lease is terminated, or the 15th anniversary of the battery operation date.
  • The financial assurance must remain in place at all times after initial delivery until the lessee’s removal and restoration obligations are complete.

If HB 3809 is signed into law, a wind lease subject to Chapter 301 of the Texas Utilities Code that authorizes the operation of a BESS facility must include the recycling and disposal obligations for battery components detailed in Chapter 303, and the financial assurance delivered to the landowner must be sufficient to secure the performance of those provisions in Chapter 303 related to the recycling and disposal of battery components.  The same is true for solar leases subject to Chapter 302 of the Texas Utilities Code that authorize the operation of a BESS facility; such leases must include the recycling and disposal obligations for battery components detailed in Chapter 303, and the financial assurance delivered to the landowner must be sufficient to secure the performance of the Chapter 303 provisions related to the recycling and disposal of battery components.

We are continuing to monitor bills related to renewable energy as they make their way through the Texas Legislature, and we are ready to assist our clients with  meeting all new requirements that come out of this legislative session.