New Decommissioning Obligations on Developers and Operators, including Ground Lease Requirements
Texas has enacted a new statutory framework governing the decommissioning of battery energy storage systems (BESS) not owned by an electric utility. On May 29, 2025, Governor Greg Abbott signed House Bill 3809 (H.B. 3809) into law, creating Chapter 303 of the Texas Utilities Code. The bill sets forth detailed decommissioning provisions, which, while closely mirroring the decommissioning requirements for solar energy projects in Chapter 302 of the Texas Utilities Code, includes new recycling and disposal responsibilities and financial assurance requirements specific to BESS projects that cannot be waived by contract. The law will take effect on September 1, 2025, and applies to BESS lease agreements executed on or after that date. Wind or solar power facility leases that authorize the operation of a BESS facility must also comply with the new requirements.
Decommissioning & Recycling Requirements
H.B. 3809 requires that BESS leases and wind and solar leases which permit BESS facilities include provisions obligating the lessee to remove all BESS infrastructure, including the battery units themselves, transformers, substations, overhead lines, and buried cables. In addition to physical removal, the lease must also include a provision that requires the lessee to dispose of and recycle project components in a safe and lawful manner. The new recycling requirement includes reusing or recycling, or shipping for reuse or recycling, all components capable of being reused or recycled, and properly disposing of all other components which cannot be reused or recycled. This is a notable development, as it imposes an affirmative obligation on operators not only to decommission the site but also to address the environmental handling of battery materials at the end of life.
H.B. 3809 also mandates that these leases give landowners certain restoration rights upon request, including the removal of roads, extraction of rocks 12 inches or larger in diameter, refilling excavations, restoring the grade, and returning the land to a tillable state, provided that such request is made by the landowner within 180 days of notice of the intent to permanently cease operations or decommission the project.
Financial Assurance Requirements
To secure compliance with these decommissioning and recycling obligations, H.B. 3809 requires BESS lessees to provide financial assurance to the landowner before the earlier of the lease's termination date or the 15th anniversary of the battery operation date (versus the 20th anniversary for solar leases and 10th anniversary for wind leases). Acceptable forms of financial assurance include a parent company guaranty, a letter of credit, a bond, or another form of assurance reasonably acceptable by the landowner.
One important change to the security requirement for BESS leases compared to solar and wind leases is that the amount of the financial assurance must equal the estimated costs of recycling and reuse (in addition to facility removal and land restoration) which exceed the salvage value of the facility, less any portion of the facility pledged as debt collateral. An independent, Texas-licensed professional engineer must calculate these estimated costs. Lessees are required to produce an initial cost estimate by the 10th anniversary of operations and must update the estimate every five years thereafter.
Prohibition on Waiver and Enforcement Rights
Any lease provision that attempts to waive Chapter 303 obligations is void and unenforceable. H.B. 3809 provides that landowners may seek injunctive relief to enforce the decommissioning and financial assurance obligations, in addition to all other remedies available by law.
Practical Considerations
H.B. 3809 marks a significant shift in how BESS projects will be structured and financed in Texas. By extending decommissioning and financial responsibility requirements to battery storage projects specifically, this law imposes new compliance and contracting burdens on developers and operators. We recommend that clients review any upcoming or planned projects for BESS facilities to ensure compliance with the new Chapter 303 requirements if execution is expected on or after September 1, 2025.
Our team is available to assist with updating lease agreements, drafting compliant financial assurance instruments, and advising on recycling protocols in anticipation of this new legal framework.
A link to the full text of H.B. 3809 is included here.
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