According to the Legislative Budget Board (LBB), the fiscal implications of SB 1150 are significant but concentrated within the Railroad Commission of Texas (RRC) and funded through the Oil and Gas Regulation and Cleanup Account (GR-D 5155). The Legislative Budget Board projects no impact to General Revenue-related funds through the 2026–2027 biennium. However, the cost to the RRC for implementing the bill is estimated at over $60 million across five fiscal years, beginning in FY 2026, with the highest annual cost occurring in the initial implementation year due to one-time investments in personnel and technology.

A substantial portion of the cost arises from the need to hire new personnel. The RRC would require 54 full-time employees (FTEs) in FY 2026, rising to 86 FTEs by FY 2028 and beyond. These positions would support a newly formed team responsible for reviewing inactive well compliance plans, conducting field inspections to assess well conditions, and determining bonding requirements based on well-specific plugging cost estimates. Field engineers, compliance analysts, and support staff will all be needed to handle the increased workload, with annual salary and benefits costs rising accordingly.

In addition to staffing, the RRC must undertake significant upgrades to legacy IT systems that manage compliance and well-plugging data. The bill mandates annual reporting on inactive wells and rulemaking around well transfer approvals and administrative penalties, all of which require enhanced data tracking and reporting capabilities. Technology costs are front-loaded, beginning at nearly $5 million in FY 2026 and tapering down to about $1.6 million by FY 2030, reflecting the development and ongoing maintenance of modernized platforms and data integrations.

While the bill includes a provision for administrative penalties, the revenue impact from these penalties is indeterminate. The Legislative Budget Board notes that it cannot estimate how many violations will occur or what penalties will be assessed and collected. No fiscal impact on local governments is anticipated, as the bill applies solely to state-level regulatory operations. In summary, SB 1150 introduces substantial upfront and recurring costs to the state’s oil and gas regulatory framework, but these are targeted, and funding is expected to come from dedicated industry-related accounts unless insufficient, in which case General Revenue funds may be considered.

SB 1150 addresses a serious and persistent problem in Texas: the growing inventory of orphaned oil and gas wells. As of 2024, more than 8,300 wells were orphaned—posing potential hazards to groundwater, air quality, public safety, and private property. The state’s plugging efforts have not kept pace, resulting in a net reduction of only 73 orphaned wells in the past year, despite plugging over 1,700. This backlog threatens to grow, especially under a legal and regulatory framework that currently allows wells to remain inactive indefinitely without a firm deadline for resolution​.

The bill takes important steps to curb this trend. It introduces a new requirement that inactive wells over 15 years old and more than 25 years past their completion date must either be plugged or reactivated. It offers operators reasonable pathways to obtain extensions, including the use of individual performance bonds or compliance plans approved by the Railroad Commission of Texas (RRC). The bill also introduces an annual reporting requirement, tighter oversight over well transfers, and authority for the RRC to impose administrative penalties for noncompliance. These provisions collectively represent a meaningful and responsible approach to shifting the burden of well management back onto operators and away from taxpayers.

However, the bill also significantly expands the size and scope of government. The RRC estimates it will require 86 new full-time employees by FY 2028, along with major upgrades to IT infrastructure, totaling over $60 million across five years. While this funding is projected to come from the Oil and Gas Regulation and Cleanup Fund (Account 5155), that fund is industry-financed and may be insufficient over time, leading to potential draws on General Revenue. Furthermore, the bill places broad discretionary authority in the hands of the RRC regarding bonding amounts and administrative penalties without statutory caps or external oversight. These aspects raise valid concerns about unchecked regulatory growth and long-term fiscal exposure.

There are also concerns regarding the bill’s prohibition on transferring extension eligibility to new operators. While this aims to prevent bad actors from passing on liabilities, it could unintentionally block responsible, well-capitalized operators from acquiring and rehabilitating wells—especially in the case of smaller, independent producers. By outright prohibiting extension transfers, the bill may hinder market-driven solutions that could otherwise help reduce the orphaned well count without state intervention.

To preserve the bill’s strengths while mitigating these concerns, the following amendments are recommended:

• Permit conditional transfer of plugging extensions, contingent on the receiving operator’s compliance certification and provision of a qualifying individual performance bond.
• Impose statutory caps or ranges on administrative penalties and require RRC to publish rulemaking criteria for determining penalty amounts, subject to legislative review.
• Include a sunset provision or performance audit requirement, requiring the Legislature to reevaluate the staffing and budgetary expansion at the RRC after five years.
• Prohibit any draw on General Revenue funds to support implementation unless specifically authorized by a future legislative appropriation, with an accompanying cost-benefit justification.
• Clarify bonding methodology to ensure transparency in how the RRC calculates full-cost plugging obligations and allow operators to appeal the amount.

By adopting these amendments, the bill can better align with the principles of limited government and free enterprise while still ensuring that inactive wells are responsibly managed and plugged. It encourages industry accountability, protects private property and environmental quality, and ultimately reduces the state’s long-term financial and environmental risk.

In conclusion, SB 1150 reflects strong public policy in addressing a critical issue for Texas. As such, Texas Policy Research recommends that lawmakers vote YES on SB 1150 but also strongly recommends amending the bill as described above to ensure that it is implemented in a fiscally disciplined and liberty-conscious manner. With these targeted changes, the bill would be well-positioned to deliver its intended benefits without creating unnecessary burdens or unchecked regulatory growth.

• Individual Liberty: The bill does not directly regulate or limit the freedoms of individual Texans. However, it protects the rights of nearby property owners, land users, and the general public by reducing the risk of environmental hazards—like groundwater contamination or methane leaks—from long-abandoned wells. In this way, it supports indirect individual liberty by preserving a clean and safe environment where individuals can enjoy their property and community without state-managed cleanups or lingering health risks.
• Personal Responsibility: The bill strongly reinforces the principle of personal responsibility. It holds oil and gas operators accountable for the long-term stewardship of their wells. Under current law, companies can allow wells to sit inactive indefinitely, often leading to their abandonment. This bill changes that by requiring operators to either plug or return wells to productive use after a set period—and by requiring bonding or compliance planning to extend those deadlines. It ensures that those who profit from resource extraction also bear the cost of managing the consequences, rather than passing that burden on to taxpayers.
• Free Enterprise: The bill introduces several new regulatory hurdles—such as bonding, mandatory planning, and transfer restrictions—that could impose costs and operational constraints on energy producers. This is particularly challenging for smaller, independent operators who may lack the financial resources to secure individual performance bonds or to meet the RRC’s expanded compliance demands. At the same time, the bill helps safeguard the integrity of the energy market by reducing the externalization of environmental liabilities. However, the outright prohibition on transferring plugging deadline extensions may discourage responsible operators from acquiring and restoring idle wells—creating a chilling effect on certain entrepreneurial opportunities. This provision could be improved to better support free enterprise without compromising accountability.
• Private Property Rights: The bill upholds private property rights by requiring responsible management of wells that could otherwise damage surrounding land or devalue neighboring properties. Orphaned wells often leak contaminants, create safety hazards, or obstruct land development. By ensuring that these wells are either properly plugged or maintained, SB 1150 helps landowners avoid harm that is not of their own making. It limits the state’s need to seize or manage wells due to abandonment and ensures operators maintain stewardship over their own assets.
• Limited Government: This is the area of greatest concern. The bill significantly increases the size and regulatory scope of the Railroad Commission of Texas. The agency will need dozens of new staff and tens of millions in funding for implementation, inspections, rulemaking, reporting, and enforcement. While much of this funding is projected to come from dedicated industry accounts, the potential fallback on General Revenue if those funds are insufficient introduces long-term fiscal risks. Additionally, the bill grants the RRC wide latitude in setting penalties and bonding terms without sufficient statutory guardrails or sunset review—raising questions about the proportionality and restraint of the regulatory expansion.

• HB 2766 (Same As)