Alert 06.05.25
Alert
Alert
By Ashleigh Myers,
06.09.25
The Texas Legislature passed a series of bills aimed at modernizing the legal and regulatory landscape for the handling and reuse of produced water—a byproduct of oil and gas operations. These developments address permitting, liability and inspection processes, with a focus on clarifying the respective roles and responsibilities among operators and regulators. The following update outlines key enacted and pending measures that are expected to influence compliance obligations, operational planning and strategic decisions related to produced water management across the state. Further, by promoting reuse, the legislation also supports efforts to ease pressure on Texas’s strained water supply, particularly in drought-prone and energy-intensive regions. However, legislation that would have clarified ownership of brine minerals failed to advance, leaving unresolved questions over who owns both brine minerals and produced water—an issue with growing importance as interest increases in extracting critical minerals like lithium from these resources.
SB 1763: No Clarification over Ownership Rights for Brine Minerals
SB 1763 represented an important attempt to clarify subsurface mineral rights in Texas, but ultimately did not advance during the 2025 legislative session after stalling in the Senate Natural Resources Committee. The bill sought to resolve ambiguity around the ownership of brine minerals—those dissolved or suspended in subterranean brine solutions—by establishing that such minerals are part of the mineral estate. If enacted, the bill would have explicitly provided that the holder of the mineral estate also owns the minerals contained within brine, potentially shaping future commercial uses tied to mineral extraction from brine.
The bill proposed amending the Natural Resources Code to define “brine minerals” as:
interstitial particles and solutes suspended, dissolved, or otherwise contained in brine, including minerals, chemical elements, compounds, or products produced with or extracted from brine.
It also would have revised the Texas Water Code to define “brine” as a subterranean liquid or semiliquid of varying salinities, along with the particles and solutes contained within it. Brine would not include groundwater, surface water, fluid oil and gas waste (produced water), oil, gas, or a product of oil or gas.
The ownership clarifications proposed by SB 1763 were seen as especially significant in light of growing interest in the Smackover Formation, a geologic unit spanning parts of East Texas and Arkansas that is drawing attention for its lithium-rich brine deposits. The bill author highlighted this formation in the legislative analysis as a key driver for the proposed changes. Lithium is also present in produced water, a byproduct of oil and gas production, positioning the oil and gas industry to potentially play a central role in lithium recovery efforts. However, the legal status of produced water remains unsettled, rendering significant uncertainty for investors and market participants. The Texas Supreme Court is currently considering this issue in Cactus Water Service v. COG Operating, a case expected to determine whether ownership of produced water rests with the mineral estate owner, the surface owner or the operator. The ruling could carry major implications for future mineral development and water reuse strategies in Texas.
HB 49: Liability Protection for the Beneficial Use of Produced Water
HB 49 marks a significant step toward expanding the reuse of treated produced water by providing new liability protections for entities involved in its beneficial use. The legislation aims to encourage broader adoption of water reuse practices in the oil and gas sector while balancing environmental and public health safeguards.
This bill amends the Natural Resources Code to shield individuals or entities that possess, treat and subsequently use, or transfer produced water for a beneficial use from liability in tort for:
- consequences of the treatment or subsequent use of treated water;
- exposure to the produced water or any byproduct generated in the treatment process; and
- personal injury, death or property damage arising from exposure to produced water, treated water or any byproduct of treatment.
These protections, however, are not absolute. Two key exceptions limit the scope of immunity:
HB 49 also bars exemplary (punitive) damages in lawsuits based solely on negligence and regulatory noncompliance, establishing a narrower path for high-dollar claims under this limited exception.
Importantly, HB 49 does not affect the liability of produced water generators to landowners, meaning traditional property-based claims remain intact. Additionally, the bill authorizes the Railroad Commission of Texas (RRC) to adopt rules governing both the treated water itself and any byproducts of the treatment process, ensuring regulatory oversight of the entire reuse process.
HB 49 is currently awaiting Governor Abbott’s signature, which is expected.
HB 4426: Changes to Permit Duration and Renewal Processes for Commercial Surface Disposal Facilities
Expanding Texas’s broader legislative focus on water management challenges, HB 4426 introduces targeted reforms to the permitting process for commercial surface disposal facilities, which handle both solid and fluid waste from oil and gas operations.
This bill amends the Natural Resources Code to establish clearer guidelines for the term length and renewal procedures for permits issued by the RRC for Commercial Surface Disposal Facilities—addressing a prior lack of specificity that led to inconsistencies in permit durations and unnecessary administrative burdens for well-performing facilities. HB 4426 amends the code to explicitly provide that permits will be valid for a maximum of 10 years, unless otherwise stated by law. But permit holders will retain the right to apply for successive renewals, provided the facility remains within its originally permitted boundaries.
Significantly, the bill allows the RRC to consider an operator’s compliance history when issuing, amending or renewing permits. The history can include results from previous inspections, quarterly reports and other documented performance evidence. These changes only apply to permits issued or renewed after the bill’s effective date of September 1, 2025.
HB 4426 is currently awaiting Gov. Abbott’s signature, which is expected.
SB 1145: New Permitting and Standards for Produced Water Land Use Applications
SB 1145 marks a significant development in Texas’s regulatory framework for produced water management. The bill authorizes the RRC to issue permits for the land application of produced water—a notable shift from the traditional reliance on underground injection as the primary disposal method.
Under SB 1145, the RRC is tasked with establishing clear regulatory standards to govern this use, with specific safeguards aimed at protecting both surface and subsurface water sources. These forthcoming standards are expected to address application methods, water quality thresholds, monitoring protocols and site-specific environmental conditions. Industry stakeholders should be on the lookout for proposed rules and be prepared to engage in the public comment process, as these regulations will shape the practical viability of land application as a produced water management strategy.
This legislation creates a new regulatory pathway for beneficial reuse, potentially enabling treated produced water to be applied to land in certain non-agricultural or industrial settings. For operators and service providers, this opens the door to expanded reuse and treatment business models, particularly in water-scarce regions where alternative disposal or reuse strategies are of growing interest.
This bill was signed by Gov. Abbott and will take effect on September 1, 2025.
SB 2122: A New Fee Structure and Definitions for Produced Water Facilities
SB 2122 introduces notable changes to Texas’s regulatory landscape for oil and gas waste management, including new application fees and statutory definitions that directly affect produced water operations. The bill amends the Natural Resources Code to establish nonrefundable application fees for various permit and permit amendments related to the disposal of oil and gas waste and adds three key definitions affecting produced water management operations.
The bill reinstates a $200 nonrefundable fee for fluid injection well permits and introduces the following updated fee structure:
- $500 for landfarm, land treatment or land application permits or amendments;
- $2,000 for a new commercial oil and gas waste separation facility permit;
- $1,000 for an amendment to a commercial separation facility permit;
- $3,000 for a new commercial surface disposal facility permit; and
- $1,000 for an amendment to a commercial surface disposal facility permit.
This legislative change aims to bolster the RRC capacity to manage and oversee waste disposal activities by generating additional funding for its environmental permitting and compliance programs. These fees apply to applications submitted on or after the effective date.
New Definitions Added
SB 2122 also introduces three statutory definitions that clarify regulatory obligations for facilities handling produced water and related oilfield waste:
- Commercial Oil and Gas Waste Separation Facility. A facility that manages, but does not dispose of, oil and gas waste on site and is operated for compensation by a business specializing in oilfield fluid or waste management.
- Commercial Surface Oil and Gas Waste Disposal Facility. A facility that disposes of oil and gas waste on site and is similarly operated for compensation.
- Fluid Injection Well. A well used to inject fluid or gas into the ground for oil and gas exploration or production, excluding disposal wells regulated under Chapter 27 of the Water Code.
These definitional updates and fee adjustments may impact how facilities are classified, permitted and operated, particularly for commercial operators. This in turn may affect facility classification, planning and compliance strategies to conform with the new classification scheme.
This bill was signed by Gov. Abbott and will take effect on September 1, 2025.
HB 1238: Updated Inspection Requirements for Class I Injection Wells
HB 1238 introduces a more efficient inspection protocol for Class I injection wells, which are utilized for the deep underground disposal of industrial and municipal waste, including treated produced water.
Effective September 1, 2025, the Texas Commission on Environmental Quality (TCEQ) is authorized to accept inspection reports prepared by licensed Texas engineers or geoscientists in lieu of conducting its own on-site inspections. These professionals can perform inspections either in person or virtually, using tools such as satellite imagery and mapping software. The submitted reports must assess local conditions, evaluate potential impacts of the proposed well and determine appropriate casing requirements. TCEQ retains the discretion to mandate an in-person inspection if the virtual assessment raises concerns.
This legislative change is particularly relevant to the oil and gas sector, where produced water is typically disposed of via Class II injection wells regulated by the RRC. However, if produced water undergoes sufficient treatment to meet industrial standards, it could potentially be managed through Class I wells regulated by TCEQ. By streamlining inspection procedures for these facilities, HB 1238 supports more efficient permitting processes for treated waste streams—aligning with broader legislative efforts to improve water reuse and resource management across Texas.
HB 1238 was signed by Gov. Abbott and will take effect on September 1, 2025.
Takeaways
Taken together, these bills represent a major shift in Texas’s produced water regulatory framework—encouraging reuse and improved oversight while streamlining permitting and inspection. However, the failure to resolve ownership of produced water and brine minerals leaves legal uncertainty that may hamper investment and innovation. Stakeholders should prepare for regulatory implementation by September 1, 2025, and closely monitor litigation and future legislative efforts to clarify ownership rights.
(This alert is the second in our Texas Legislative Session 2025 in Review series, where we explore and unpack the most significant developments in the most recent session.)