HB3422 - Relating to the removal of battery energy storage facilities.

  89R5030 SCR-D     By: Gerdes H.B. No. 3422       A BILL TO BE ENTITLED   AN ACT   relating to the removal of battery energy storage facilities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Title 6, Utilities Code, is amended by adding   Chapter 303 to read as follows:   CHAPTER 303. BATTERY ENERGY STORAGE FACILITY AGREEMENTS           Sec. 303.0001.  DEFINITIONS. In this chapter:                 (1)     "Battery energy storage facility" includes a   facility or equipment used to support the operation of battery   energy storage, including an underground or aboveground electrical   transmission or communications line, an electric transformer,   telecommunications equipment, a road, a meteorological tower, or a   maintenance yard.                 (2)     "Battery energy storage facility agreement" means   a lease agreement between a grantee and a landowner that authorizes   the grantee to operate a battery energy storage facility on the   leased property.                 (3)  "Grantee" means a person who:                       (A)  leases property from a landowner; and                       (B)     operates a battery energy storage facility on   the property.           Sec.   303.0002.     APPLICABILITY. This chapter applies only to   battery energy storage that is a generation asset as defined by   Section 39.251.           Sec.   303.0003.     WAIVER VOID; REMEDIES. (a) A provision of a   battery energy storage facility agreement that purports to waive a   right or exempt a grantee from a liability or duty established by   this chapter is void.           (b)     A person who is harmed by a violation of this chapter is   entitled to appropriate injunctive relief to prevent further   violation of this chapter.           (c)     The provisions of this section are not exclusive. The   remedies provided in this section are in addition to any other   procedures or remedies provided by other law.           Sec.   303.0004.     REQUIRED AGREEMENT PROVISIONS ON FACILITY   REMOVAL. (a) A battery energy storage facility agreement must   provide that the grantee is responsible for removing the grantee's   battery energy storage facilities from the landowner's property and   that the grantee shall, in accordance with any other applicable   laws or regulations, safely:                 (1)     clear, clean, and remove from the property each   piece of battery energy storage equipment, including any   transformers or substations;                 (2)     for each foundation of battery energy storage   equipment, including a transformer or substation installed in the   ground:                       (A)     clear, clean, and remove the foundation from   the ground to a depth of at least three feet below the surface grade   of the land in which the foundation is installed; and                       (B)     ensure that each hole or cavity created in   the ground by the removal is filled with topsoil of the same type or   a similar type as the predominant topsoil found on the property;                 (3)     for each buried cable, including power,   fiber-optic, and communications cables, installed in the ground:                       (A)     clear, clean, and remove the cable from the   ground to a depth of at least three feet below the surface grade of   the land in which the cable is installed; and                       (B)     ensure that each hole or cavity created in   the ground by the removal is filled with topsoil of the same type or   a similar type as the predominant topsoil found on the property; and                 (4)     clear, clean, and remove from the property each   overhead power or communications line installed by the grantee on   the property.           (b)     The agreement must provide that, at the request of the   landowner, the grantee shall:                 (1)     clear, clean, and remove each road constructed by   the grantee on the property; and                 (2)     ensure that each hole or cavity created in the   ground by the removal is filled with topsoil of the same type or a   similar type as the predominant topsoil found on the property.           (c)     The agreement must provide that, at the request of the   landowner, if reasonable, the grantee shall:                 (1)     remove from the property all rocks over 12 inches   in diameter excavated during the decommissioning or removal   process;                 (2)     return the property to a tillable state using   scarification, V-rip, or disc methods, as appropriate; and                 (3)  ensure that:                       (A)     each hole or cavity created in the ground by   the removal is filled with topsoil of the same type or a similar   type as the predominant topsoil found on the property; and                       (B)     the surface is returned as near as reasonably   possible to the same condition as before the grantee dug holes or   cavities, including by reseeding pastureland with native grasses   prescribed by an appropriate governmental agency, if any.           (d)     The landowner shall make a request under Subsection (b)   or (c) not later than the 180th day after the later of:                 (1)     the date on which the battery energy storage   facility is no longer capable of storing electricity in commercial   quantities; or                 (2)     the date the landowner receives written notice of   intent to decommission the battery energy storage facility from the   grantee.           Sec.   303.0005.     REQUIRED AGREEMENT PROVISIONS ON FINANCIAL   ASSURANCE. (a) A battery energy storage facility agreement must   provide that the grantee shall obtain and deliver to the landowner   evidence of financial assurance that conforms to the requirements   of this section to secure the performance of the grantee's   obligation to remove the grantee's battery energy storage   facilities located on the landowner's property as described by   Section 303.0004. Acceptable forms of financial assurance include a   parent company guaranty with a minimum investment grade credit   rating for the parent company issued by a major domestic credit   rating agency, a letter of credit, a bond, or another form of   financial assurance acceptable to the landowner.           (b)     The amount of the financial assurance must be at least   equal to the estimated amount by which the cost of removing the   battery energy storage facilities from the landowner's property and   restoring the property to as near as reasonably possible the   condition of the property as of the date the agreement begins   exceeds the salvage value of the battery energy storage facilities,   less any portion of the value of the battery energy storage   facilities pledged to secure outstanding debt.           (c)  The agreement must provide that:                 (1)     the estimated cost of removing the battery energy   storage facilities from the landowner's property and restoring the   property to as near as reasonably possible the condition of the   property as of the date the agreement begins and the estimated   salvage value of the battery energy storage facilities must be   determined by an independent, third-party professional engineer   licensed in this state;                 (2)     the grantee must deliver to the landowner an   updated estimate, prepared by an independent, third-party   professional engineer licensed in this state, of the cost of   removal and the salvage value at least once every five years for the   remainder of the term of the agreement; and                 (3)     the grantee is responsible for ensuring that the   amount of the financial assurance remains sufficient to cover the   amount required by Subsection (b), consistent with the estimates   required by this subsection.           (d)     The grantee is responsible for the costs of obtaining   financial assurance described by this section and costs of   determining the estimated removal costs and salvage value.           (e)     The agreement must provide that the grantee shall   deliver the financial assurance not later than the earlier of:                 (1)     the date the battery energy storage facility   agreement is terminated; or                 (2)     the 10th anniversary of the commercial operations   date of the battery energy storage facilities located on the   landowner's leased property.           (f)     For purposes of this section, "commercial operations   date" means the date on which the battery energy storage facilities   are approved for participation in market operations by a regional   transmission organization and does not include the generation of   electrical energy or other operations conducted before that date   for purposes of maintenance and testing.           (g)     The grantee may not cancel financial assurance before   the date the grantee has completed the grantee's obligation to   remove the grantee's battery energy storage facilities located on   the landowner's property in the manner provided by this chapter,   unless the grantee provides the landowner with replacement   financial assurance at the time of or before the cancellation. In   the event of a transfer of ownership of the grantee's battery energy   storage facilities, the financial security provided by the grantee   shall remain in place until the date evidence of financial security   meeting the requirements of this chapter is provided to the   landowner.          SECTION 2.  Chapter 303, Utilities Code, as added by this   Act, applies only to a battery energy storage facility agreement   entered into on or after the effective date of this Act. A battery   energy storage facility agreement entered into before the effective   date of this Act is governed by the law as it existed immediately   before that date, and that law is continued in effect for that   purpose.          SECTION 3.  This Act takes effect September 1, 2025.