Texas House Bill 3809 Imposes New Requirements on Battery Energy Storage Lessees

On May 29, 2025, Texas Governor Greg Abbott signed House Bill No. 3809 into law. This bill emerged from a series of legislative efforts aimed at regulating renewable energy, including S.B. 388, S.B. 715, and S.B. 819, but it stands out as the only one to be enacted during this session. The new law will come into effect on September 1, 2025, and it imposes additional requirements on certain battery energy storage operators that enter into leases on or after that date.

H.B. 3809 specifically mandates decommissioning requirements for battery energy storage (BESS) facilities that are not owned by electric utilities. It also requires financial assurance to ensure compliance with these decommissioning obligations and introduces non-waivable provisions in facility leases that incorporate these requirements. In essence, this bill aligns the decommissioning and financial assurance responsibilities for BESS projects with those already established for wind and solar energy projects.

### Key Provisions of H.B. 3809

The most significant changes brought about by H.B. 3809 include mandatory decommissioning and financial assurance provisions in BESS leases that are not entered into by electric utilities. These provisions aim to protect landowners and the environment by placing additional obligations on BESS storage lessees regarding the removal of their facilities.

#### 1. Mandatory Decommissioning Provisions in Lease Agreements

H.B. 3809 amends the Texas Utilities Code to require facility removal provisions in battery energy storage leases. The lease must stipulate that the lessee is responsible for safely removing the facility and any associated storage resources, such as transformers and substations. Furthermore, the lessee must ensure the removal of foundations, buried cables, and overhead lines. The lease must also include provisions requiring the lessee to dispose of and recycle components appropriately. Additionally, the amendments mandate that lessees fulfill landowner-requested obligations, such as maintaining and removing roads, filling in holes, removing large rocks, returning the land to a tillable state, and restoring the surface.

#### 2. Financial Assurance Requirements

H.B. 3809 requires BESS lessees, who are not electric utilities, to provide financial assurance to guarantee the performance of the newly established decommissioning obligations. Lessees must deliver this financial assurance to the landowner before the earlier of the facility lease termination date or the facility’s 15th anniversary. Acceptable forms of financial assurance include a parent company guaranty from a company with a minimum investment-grade credit rating, a letter of credit, a bond, or another form of financial assurance that the landowner finds reasonable. The amount of financial assurance must cover the costs of facility removal, component recycling, and surface restoration, minus the facility’s salvage value and the value of any part already pledged as collateral for existing debt. A Texas-licensed engineer will determine the costs and salvage value. The lessee must also provide an initial estimated cost of removal and recycling or disposal by the 10th anniversary of the facility’s battery operation date and update this estimate at least once every five years throughout the lease’s duration.

### Enforcement Provisions

H.B. 3809 establishes a series of legal and procedural safeguards to enforce its new decommissioning and financial assurance requirements. The bill includes a non-waiver clause that prohibits any contractual waiver of its provisions. It also grants the landowner the right to seek injunctive relief and other remedies in the event that their lessee violates the stipulations of H.B. 3809.

Special thanks to Chance Fraser, a summer associate in Foley’s Houston office, for his contributions to this article.