Environmental regulation in Texas is pervasive. Texas has been delegated authority to implement most major federal programmes, including the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act. In many instances, however, Texas’ regulatory programmes contain unique state-specific requirements. For example, Texas’ Solid Waste Disposal Act (SWDA) goes beyond the liability framework for hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and extends to other solid wastes.

In Texas, the Texas Commission on Environmental Quality (TCEQ) oversees various environmental programs and regulations; however, certain environmental activities within the oil and gas industry fall under the jurisdiction of the Texas Railroad Commission (RRC). A memorandum of understanding (MOU) exists between the two agencies, outlining the general divisions of jurisdiction over the environmental regulation of various oil and gas activities. The MOU resides in the Texas Administrative Code. Thus, when doing business in Texas, compliance considerations must go beyond mere compliance with federal programmes.

Texas’ regulatory programmes are prescriptive, and enforcement allows for assessment of per diem, per-violation penalties. In addition to federal and state environmental programmes, certain larger local jurisdictions, including Harris County and the cities of Houston and Dallas, have enacted robust environmental ordinances and have strong independent enforcement arms.

Myriad agencies administer environmental regulation in Texas. The TCEQ has jurisdiction over most traditional environmental programmes. The RRC, however, administers certain environmental regulatory programmes involving the oil and gas industry. The MOU between TCEQ and RRC sets forth specific requirements for oil and gas activities related to waste management, water quality, injection wells, and incident reporting within each agency’s respective jurisdiction. Other Texas agencies have jurisdiction over specific programmes, including the Texas General Land Office (GLO), the Texas Parks and Wildlife Department (TPWD), and the Texas Department of State Health Services (DSHS).

Texas’ regulatory programmes are generally prescriptive in nature and its environmental agencies have active enforcement arms. Despite this, agency personnel are generally available, knowledgeable, and open to discussing compliance issues in a blind or site-specific context. Moreover, Texas has implemented effective programmes that foster compliance. For example, the TCEQ promulgated rules creating what is known as the Voluntary Clean-up Programme or VCP. This programme allows parties to self-implement site clean-up under agency supervision, which, when complete, can afford immunity from clean-up liability to both the landowner and the transferee.

A further example of co-operative compliance is the state’s Environmental, Health, and Safety Audit Privilege Act (Audit Act), pursuant to which a regulated entity can secure immunity for certain violations identified by an environmental audit conducted in accordance with the Audit Act.

Both the TCEQ and RRC administer the Audit Act. While certain exceptions exist, immunity can be conferred when disclosure and corrective actions are completed in a timely manner, provided disclosures are submitted via certified mail. To qualify, operators must submit a Notice of Audit (NOA) before evaluating the compliance of existing operations (and before any enforcement is initiated), as the Audit Act’s immunity only applies to violations discovered during an environmental audit conducted after filing the NOA. The audit must generally be completed within six months, and disclosures must be made promptly, with corrections generally made within six months of the disclosure. The Audit Act can also be used in connection with pre-acquisition due diligence to mitigate post-closing liability for pre-closing discoveries.

Texas protects the environment through detailed statutes and regulations. Important statutes include the Texas Clean Air Act, the Texas Water Code, and the Texas SWDA, which respectively govern the environmental media of air, water, and waste management. Texas has detailed air, water, and waste-permitting programmes, as well as detailed licensing programmes relating to naturally occurring radioactive materials and low-level radioactive waste. Due to the nature of the oil and gas industry, injection well regulation often necessitates additional attention. In Texas, underground injection control regulations are primarily managed by the RRC for oil and gas-related injection wells, and by the TCEQ for other well types. RRC and TCEQ regulations set forth detailed permitting, construction, and closure requirements for various injection well classes within their respective jurisdictions.

Texas has its own endangered species and wetlands programs in addition to federal initiatives. While there is no direct equivalent to the federal National Environmental Policy Act (NEPA) at the state level, projects regulated by the state must adhere to a similar process. Texas employs a framework of state laws, which are overseen by the TCEQ and the TPWD. For example, TPWD collaborates with pipeline operators to adjust routes by proposing alternative routes that minimise environmental harm to specific properties, particularly state-owned wildlife management areas (WMAs) and other environmentally sensitive areas.

Non-compliance in Texas can lead to serious consequences. Enforcement is multi-layered, involving state, federal, and in some cases, local authorities. Texas has statutory authority for civil, administrative, and criminal enforcement. The law allows for per diem and per-violation penalties, and injunctive relief may also be available. In addition to state authorities, Region 6 of the US Environmental Protection Agency (EPA) actively enforces environmental programmes in Texas. Many federal environmental statutes provide for direct “citizen suits” to enforce permit requirements in federal court. In recent years, Region 6 has been particularly aggressive in enforcing air emissions regulations, with a focus on the oil and gas industry.

Generally, Texas’ statutory authorities confer broad investigative authority. When potential violations are found, there is usually prompt notice and an opportunity to discuss before formal enforcement begins. In some instances, resolution may occur without formal enforcement. It is good practice for regulated entities to respond promptly in writing to any notice and document compliance efforts.

Texas has a wide and varied permitting programme. Virtually all air emissions, as well as discharges to state waters and waste management activities, must be authorised. Texas has one of the most comprehensive air permitting programmes in the US and industrial companies should consult with technical consultants and counsel familiar with the state’s labyrinthine rules before and during facility planning.

In many instances, permitting will entail public notice, pursuant to which “affected persons” may object to the issuance of a permit. Such “protesters” may even have the right to a hearing before the State Office of Administrative Hearings to determine if a draft permit should be finalised and issued. This is tantamount to a mini-trial and may involve technical experts and legal counsel. Recent litigation has granted contested case hearing standing to protesters well beyond TCEQ’s prior default threshold of a one-mile geographic radius from the facility.

Texas permitting often involves providing notice to affected parties and local officials, as well as posting site-specific notices and advertisements in local publications, including those in alternative languages. The process has specific timelines. Certain permit actions require the applicant to prepare a Public Involvement Plan, including disclosure of community and demographic information. If a permit is denied and administrative remedies are exhausted, the decision can be appealed to a state court. The Texas legislature’s business courts initiative recently formed the Fifteenth Court of Appeals, which now has statewide exclusive jurisdiction over permitting challenges and enforcement actions involving industries regulated by TCEQ and RRC, rather than Austin’s Third Court of Appeals. 

The TCEQ-RRC MOU identifies specific requirements applicable to waste generated from oil and gas activities, including drilling, production, completions, treatment, and other field operations, as well as associated disposal activities, such as recycling, on-site waste treatment, and commercial disposal operations. The RRC recently adopted new comprehensive regulations, effective 1 July 2025, governing the handling, storage, treatment, and disposal of oil and gas waste. The new RRC rules update the requirements for oil and gas pits by requiring registration for common pits. The RRC imposes pit liner requirements if groundwater is present within 50 feet, the pit holds fluids with a high solids concentration, or the pit is used to treat and recycle produced water.

Commercial waste management facilities, including oil and gas waste landfills, must comply with updated siting, design, and operational requirements, provide increased financial security, and implement groundwater monitoring programmes, in addition to record-keeping and reporting requirements. 

State agencies and the EPA each have detailed enforcement policies and/or matrices that can be reviewed to understand the basis for potential penalties. Generally, permitting liability is considered strict, meaning liability can be conferred without fault or intent to violate. While EPA Region 6 typically does not share penalty calculations, Texas agencies, including the TCEQ, will typically provide the basis for their penalty calculations. Texas penalty assessments take into account the degree of environmental harm; however, the duration of the violation and other specific factors are implicated. Finally, in Texas, a regulated entity’s compliance history can be considered in penalty assessment and permit renewal applications, which may subject facilities to higher enforcement penalties and stricter permit conditions. Compliance scores are publicly available.

Whether an environmental permit is transferable is programme-specific. In many instances, air permits can be transferred, while other permits cannot. Each environmental permit should be reviewed for specific conditions that could affect transfer, and of course, statutory and regulatory provisions should also be carefully reviewed. Sale or merger transactions involving changes in ownership, operation, or identity often trigger permit transfer obligations. Permit transfers may have time restrictions related to agency approvals that are relevant to closing date requirements.

Breaching permit terms or operating without a permit can have significant consequences. It is important to understand that facilities must operate as represented in a permit application. Thus, changes to equipment or operations will typically be considered a violation. Federal and state statutes authorise per-violation fines and penalties, and the cost of challenging assessments that are not negotiated can be significant. In certain circumstances, criminal enforcement can be sought, as can injunctive relief.

Regarding liability, operators generally face strict liability for permit and other programmatic violations. In 2023, the Texas legislature approved penalties of up to USD40,000 per day for certain violations related to the release of pollutants, an increase from its previous maximum of USD25,000 per day. Fines and penalties vary depending on the nature of the violation, and criminal liability can generally be imposed for knowingly violating the law. In certain cases, the amount of a penalty may depend on the size and profitability of the violator. Regarding clean-up, Texas typically enforces strict joint and several liability starting from “status.” That is, clean-up liability exists for owners and operators, based upon that status. Under federal law, arranger and transporter liability also exists. The Texas SWDA, however, specifically authorises liability apportionment. Regarding liability for environmental contamination, plaintiffs may also seek common law recovery of property damages by alleging private causes of action such as negligence, nuisance and trespass. Personal injury claims may also seek recovery based on alleged exposure to environmental contaminants.

In Texas, current landowners and operators can be held liable for historical contamination based upon their status as current owners or operators. Prior owners and operators may be held liable if a release occurred during their tenure at the facility. The Texas SWDA specifically recognises liability apportionment if a release is “divisible.” Divisibility generally assesses whether the waste released can be managed separately under a remedial action plan.

Clean-up liability can also exist under other Texas statutes, depending on the nature of the substance or source of material released. Statutes to consider include the Texas Water Code, the Texas Natural Resources Code, and the Oil Spill Prevention and Response Act, among others.

Texas provides for clean-up and incident response liability, as well as potential civil liability for injured parties. Enforcement liability exists for non-compliance and releases. Defences are fact-specific and may, among other things, focus on causation, the party with a duty to comply, and the divisibility of the harm. The SWDA incorporates defences that are similar, but not identical to those found in the federal CERCLA statute.

In Texas, an innocent operator defence to contamination liability requires the property owner to provide evidence, usually in the form of environmental site assessments, demonstrating that the contamination came from an off-site source. The Texas Innocent Operator Programme (IOP) provides an avenue for an innocent owner or operator to receive an IOP certificate if their property is contaminated because of a release or migration of contaminants from a source not located on the property, provided the owner or operator did not cause or contribute to the source of contamination. The IOP serves as a defence to state clean-up liability. The TCEQ also has specific procedures for entities claiming affirmative defences to unauthorised air emission events.

Generally, statutory laws in Texas do not differentiate liability based on corporate status. Regarding penalties, some differentiation exists under Texas statutory law, and it is a factor that may be considered in agency penalty policies. For instance, corporations that are “repeat violators” with “unsatisfactory” compliance history scores may receive increased penalty adjustments.

Texas does not impose a specific environmental tax (for example, there is no carbon or greenhouse gas (GHG) tax in Texas). Although these are not technically classified as “taxes,” the state does collect substantial fees related to air emissions and air inspections. Annual air emission fees apply to major sources, based on tons of pollution emitted. Air investigation fees are based on the Standard Industrial Classification (SIC) code of a regulated entity. Other activity-specific environmental fees, which relate to other environmental programmes, are also assessed by the TCEQ.

While Texas does not impose material environmental taxes, it does offer broad incentives for the utilisation of property or equipment for pollution control. Under Texas law, a tax exemption may be obtained for real or personal property used wholly or partly as a facility, device, or method for controlling air, water, or land pollution, based on a “positive use determination.” The nature of “qualifying property” is listed by rule. Other important property tax exemptions are available for certain renewable projects.

Texas generally follows traditional corporate standards for piercing the corporate veil. Regarding statutory liability, the degree of control exercised by officers, directors, shareholders, parents, or affiliates can affect their risk for being deemed an “operator”. The US Supreme Court case of US v Best Foods provides sound legal guidance on this issue.

At this time, there is no mandatory ESG reporting in Texas. Rather, reporting is market-driven. Many public and private companies, however, prepare and publish ESG or sustainability reports. Companies should not overstate, but rather be specific, consistent, and use data to substantiate assertions related to recycling, climate change, sustainability, and similar issues, thereby avoiding the risk and potential uncertainty of defending “greenwashing” claims.

Generally, there are no mandatory self-auditing requirements. Various environmental programmes, however, require inspection, reporting, and corrective action. Similar provisions are also included within facility authorisations. The Audit Act (discussed above) enables a prospective buyer to assess a target company’s environmental liabilities and compliance systems prior to a merger or acquisition, thereby allowing the buyer to better understand potential financial risks and identify any required corrective actions to avoid future liabilities that may be detrimental to the acquired asset’s value.

Regarding statutory liability, the degree of control exercised by officers, directors, and shareholders can affect their risk for being deemed an “operator.” The US Supreme Court case of US v Best Foods also provides legal guidance on this issue.

Reasonable insurance products are generally available in Texas on a site-specific basis. Pollution Legal Liability (PLL) policies are offered by a number of underwriters. These policies, among other things, offer insurance protection against the discovery of pollution conditions. In some instances, coverage for pre-existing conditions may be available. Such PLL policies often have a “voluntary investigation exclusion,” which precludes coverage for sampling conducted outside of an agency’s directive.

Furthermore, in a transactional context, representation and warranty insurance may be available in some instances. Each of these coverages will typically require diligence and disclosure to underwriters, usually with exclusions for known conditions. Other exclusions often include intentional acts, underground storage tanks (USTs), prior knowledge, assumed contractual liability of third parties, lead, asbestos, contamination from per- and poly-fluorinated substances (PFAS), failure to maintain controls, changed use, and others.

In some instances, a well-designed environmental liability insurance programme can address D&O liability for pollution events, typically in those situations where corporate liability could exist. Environmental insurance coverage is not static, and policies may often be manuscripted.

Lender liability for contaminated assets is governed by federal and state legislation. Under both federal and state law, a key touchstone is whether the lender constitutes an “owner” or “operator” of the secured collateral. The federal CERCLA statute has an established liability carve-out for lenders who hold indications of ownership (eg, a mortgage) to protect a security interest, without participating in the management of the secured asset. Texas has adopted specific protections from liability arising under state clean-up regimes, which are largely consistent with the federal safe harbour. Texas, however, has certain defined criteria to ensure the safe harbour is met. First, the lender must sell, lease or undertake a government-approved clean-up within a “commercially reasonable time” after the foreclosure (or similar event). A presumption of divestiture exists if the asset is listed or advertised within 12 months after the title is acquired. The Texas safe harbour can be lost if pollution conditions arise after foreclosure.

Touchstones exist to mitigate the potential for lender liability. First, there must be an awareness of the safe harbour. Second, due diligence is critical not only of the asset to be taken as collateral, but also of the borrower’s environmental management team. Third, it is important to maintain an ongoing understanding of the asset during the loan term, as well as ensuring that the loan documentation provides protections and assurances appropriate for the asset. Finally, experienced post-foreclosure staffing should have operational experience in the relevant industry to avoid environmental liability that could arise post-foreclosure and avert the Texas safe harbour.

Civil claims may be brought under several Texas environmental statutes, depending on the relevant facts. Additionally, claims at common law may be brought under traditional common law theories, including nuisance, negligence, and trespass. Suits may also be brought in a transactional context based upon common law or statutory fraud, as well as breach of applicable contractual provisions.

These damages can be waived by contract, but otherwise may be available in cases where the plaintiff seeks recovery for damages resulting from “fraud, malice, or gross negligence.” The basis for these damages must be proven by “clear and convincing evidence.” Under certain circumstances, these damages may be available in a statutory fraud case.

Class actions or multi-plaintiff cases may be brought in Texas, including those involving alleged environmental harm.

Texas has been home to several landmark environmental cases. For example, Cooper Industries, Inc. v Aviall Services, Inc. addressed the circumstances under which CERCLA claims for cost recovery may be available. Upon remand to the federal district court in Texas, it addressed the relationship between certain Texas statutory and contractual claims. Furthermore, the Matter of Bell Petroleum, Inc. was a Fifth Circuit Court of Appeals holding and allowed for apportionment of CERCLA liability, utilising theories derived from the Restatement (Second) of Torts. Certain recent cases decided outside of Texas courts will certainly affect business in Texas. For example, in Sackett v EPA, the US Supreme Court recently held that jurisdictional “waters of the United States” must generally be relatively permanent or continuously flowing bodies of water.

Further, in 2024, the US Supreme Court overruled the Chevron deference doctrine in Loper Bright Enterprises v Raimondo, which had provided a judicial review framework for statutory interpretations by federal agencies for 40 years. In 2025, following Loper Bright, the US Supreme Court in Seven County Infrastructure Coalition v Eagle County Colorado upheld the US Surface Transportation Board’s decision to approve an application to construct a railroad line after the Board analysed an Environmental Impact Statement prepared under NEPA. Seven County addressed judicial deference post-Loper Bright, emphasising that the “central principle” of judicial review is deference in NEPA cases. In other words, agencies must be afforded “substantial deference,” and courts should not “micromanage” agency decisions, provided such decisions “fall within the broad zone of reasonableness.”

In Texas, liability for environmental matters may generally be allocated between the parties to a transaction. Allocation mechanisms may include indemnities, assumptions of liability and/or releases or covenants not to sue. The parties’ allocation framework is not binding upon the regulatory authorities. Regarding indemnities for strict liability and similar provisions, it is good practice for the language to be conspicuous and expressly state the scope of the risk allocated. Oil and gas transactions often include reference to a relatively unique concept called an “environmental defect,” for which a seller may retain responsibility, provide indemnity, or a price adjustment. “Environmental defects” in oil and gas transactions commonly include matters related to soil and groundwater contamination and regulatory non-compliance relating to contamination, in addition to unique historical concepts related to orphan wells and liabilities associated with the presence of improperly plugged or abandoned wells. It is important, however, to review this language carefully to determine whether it would include air permitting and emissions regulation, as well as other regulatory programs that can impose significant liabilities on oil and gas assets. Further attention should be paid to monetary caps and aggregation of costs associated with similar environmental defects.

The SWDA and its implementing regulations serve as the starting point in Texas for addressing site clean-up and responsibility. The Texas Natural Resources Code and its regulations govern contamination resulting from oil and gas operations. Texas rules allow risk-based closures based on site-specific factors and consider the actual risks caused by contaminants.

The persons responsible for clean-up generally mirror federal law:

• current owners and operators;
• prior owners and operators during periods where a release occurred;
• generators of waste; and
• persons transporting waste to the site in question.

Parties can contractually delegate these responsibilities, but contractual arrangements are not binding on regulatory authorities.

Statutory clean-up liability is generally strict and joint and several, but the Texas SWDA allows for apportionment. Liability apportionment is fact-specific and the party seeking apportionment bears the burden of proof.

Regarding contaminated properties, the state is authorised under statutory authority to assert claims for clean-up liability against the four general classes of responsible parties under federal law. Texas law also gives responsible parties the right of contribution. Other Texas statutes authorise causes of action to address clean-up and are programme and/or fact-specific.

Releases of regulated materials are subject to detailed release reporting and response obligations. The TCEQ-RRC MOU outlines notification and clean-up requirements for certain oil and gas activities. Under certain circumstances, Texas rules permit self-implementation of clean-ups. The state has a vibrant Voluntary Clean-up Programme (VCP) that allows parties to obtain a release upon site closure. The VCP may also serve as a tool to protect property buyers of a contaminated site, depending on the situation. Texas also has a state Superfund Program.

Currently, there are no specific laws addressing the issue of climate change. Local initiatives do exist, however, and many of Texas’ major cities have established initiatives that should be considered in legal and business analyses relating to facility development and operations. In 2023, the Texas legislature passed a law providing that the state of Texas, not local governments, has exclusive jurisdiction over the regulation of GHG emissions, to the extent not pre-empted by federal law. This law prohibits cities and counties from creating or enforcing ordinances that directly regulate GHGs.

Texas currently does not have mandatory GHG emission reduction targets. Policy and emission reduction targets are largely being set at the local level by larger cities.

Texas has not established formal carbon emission targets. However, starting 1 September 2023, the Texas legislature made changes to the Natural Resources Code, which now prohibits state agencies from assisting with or enforcing federal laws that attempt to regulate oil and gas operations in Texas, where the state has already enacted its own legislation. The effect of this legislation on federal GHG reduction efforts is unclear. Texas entities operating in California should also be aware of a new California law with disclosure requirements for entities making claims regarding achievements of “net zero emissions,” “carbon neutrality,” or “significant reductions” in GHG emissions. By 1 January 2025, entities making these claims must post accurate information supporting their basis for these assertions. Reporting entities are required to update their disclosures at least annually under this California law.

The Texas DSHS has the responsibility to administer federal asbestos regulations and enforce the asbestos NESHAP in Texas. The DSHS also implements the Texas Asbestos Health Protection Rules, which require licensing and registration for asbestos abatement workers or workers in any asbestos-related regulated activity:

• abatement practices and procedures;
• operations and maintenance requirements;
• notification and record-keeping standards; and
• training requirements.

The TCEQ administers the industrial solid waste regulatory programme that governs PCB waste generated by industrial activity in Texas. Further, the RRC governs PCB waste from oil and gas activities.

The SWDA and the Texas Water Code create a framework that aligns closely with federal environmental laws. Although the requirements do not perfectly align with federal waste regulations, Texas offers a more detailed classification of waste streams.

Waste generators are generally liable for their waste, even after it is legally disposed of or transferred to another party.

Texas requires television and computer equipment manufacturers to offer consumers a used equipment collection and recycling programme under the Computer Recycling and TV Recycling Programmes. Television and computer equipment retailers are also subject to these rules. Retailers may only sell labelled equipment and must order and sell equipment from manufacturers that are on TCEQ’s list of manufacturers with an approved recycling programme.

Waste generators and waste facility operators generally bear responsibility consistent with federal law. Texas, however, has a detailed waste classification system, which expands regulation to wastes based on differing classifications, other than merely hazardous or non-hazardous.

Texas law includes numerous spill, release, and incident reporting to environmental media, including ambient air. Specific reporting requirements depend on the substance released and the nature of the source. In most instances, release reporting will be to the TCEQ. If, however, the source in question is an oil and gas facility, reporting will likely fall under the jurisdiction of the RRC. There are notable exceptions, including that the TCEQ permits and regulates certain discharges from oil and gas activities associated with produced water, hydrostatic test water, and gas plant effluent. The RRC, however, maintains authority over the disposal of oil and gas wastewater through methods that do not discharge into state waters. Likewise, spills involving crude oil and gas at exploration and production sites must be reported to the RRC.

However, certain spills must be reported to the TCEQ, including those involving hazardous substances, solid waste, and refined petroleum products during transportation. Reporting requirements will vary depending on the media impacted as well as the nature of the material released (eg, hazardous substance, crude oil, other petroleum product, etc).

Texas law contains broad and complex reporting requirements for releases of regulated materials. Regarding releases to state waters, the Texas Water Code stipulates that if a release causes or may cause pollution, the person in charge of the facility or activity must provide notice within 24 hours.

Jurisdiction for release reporting is not limited to a single agency. The general reporting requirements are outlined below. Facilities should have a thorough understanding of agency jurisdiction. These reporting requirements are to the TCEQ and are within 24 hours, unless separately noted:

• petroleum/used oil products to state waters – existence of a sheen;
• petroleum products/used oil (not UST) – 25 gallons;
• crude oil to inland waters – existence of a sheen;
• crude oil to land – five barrels;
• hazardous substance to land – governed by federal reportable quantity (RQ);
• hazardous substance to state waters – lesser of 100 pounds or the federal RQ;
• industrial solid waste to inland waters – 100 pounds;
• oil to coastal waters – actual or threatened discharge (immediate reporting, within one hour, to the Texas GLO);
• petroleum products from tanks onto the surface (UST/AST) – generally > 25 gallons; and
• petroleum products into the subsurface from underground tanks – generally any amount.

The RRC has specific reporting requirements for oil and gas facilities under its jurisdiction. Generally, facilities must immediately report any incidents of fire, leak, spill, or break. However, notice is not required for releases of less than five barrels of crude oil. Notice is typically followed by a letter giving a full description of the event, including the volume of materials lost. General RRC reporting includes:

• crude oil to state waters – existence of a sheen;
• crude oil to land – five barrels;
• produced water to inland water – any amount; and
• hazardous substance – federal RQ.

The Texas GLO also requires reporting of certain releases:

• oil to coastal waters – actual or threatened discharge (immediate reporting, within one hour).

Additionally, TCEQ air emissions rules contain broad provisions requiring reporting of specific air emission events, and RRC rules also require reporting for certain venting events. TCEQ requires operators to report certain air emission events, including:

• unscheduled, unplanned, or unavoidable events leading to unauthorised emissions exceeding a reportable quantity;
• scheduled maintenance, startup, and shutdown activities that result in unauthorised emissions or are deemed reportable; and
• excess opacity events where a facility’s emissions of visible particulate matter exceed regulatory standards.

Texas provides a litany of resources where the public can obtain environmental information on regulated operations. State environmental agencies maintain an online database of relevant permitting and other documentation by site or operator. These databases are developing, however, and do not always include all the relevant documents. State environmental agencies are also subject to the Texas Public Information Act, which acts like a state version of the FOIA process.

Publicly traded entities are required to disclose environmental information in accordance with the rules established by the US Securities and Exchange Commission (SEC).

Texas does not have traditional state-led “green financing”, but does have programmes such as the Clean Water State Revolving Fund (authorised by the Texas Clean Water Act), which seeks to provide lower-cost financial assistance for the planning, acquisition, design, and construction of wastewater, wastewater reuse, and stormwater infrastructure.

Environmental due diligence has a heightened focus in Texas because the state is home to so many industrial concerns. Phase I and Phase II assessments are common. Moreover, because so many transactions involve industrial concerns and Texas has very detailed regulatory programmes, it is especially important to conduct additional diligence relating to permitting and regulatory compliance. Furthermore, Texas is home to myriad endangered species, as well as wetlands, and in some areas, coastal-specific issues. These issues are important to consider, particularly regarding project development.

Texas law requires disclosure of certain environmental conditions, depending on the nature of the transaction. Disclosures required by statute include:

• the presence of underground storage tanks; as well as
• the presence of a current or prior municipal solid waste landfill.

Other, broader disclosures may include information about asbestos, flood zone status, lead paint, soil stability, methamphetamine use, and other risks, depending on the nature of the transaction. In addition to statutory obligations, disclosure obligations should be considered to avert potential fraud claims. Texas has a specific statutory provision authorising statutory fraud claims specifically in stock and real estate transactions. The statute is broad and allows for fraud to be alleged in situations where a failure to disclose exists, in addition to a misrepresentation.

The most common environmental legal issues arising in transactions in Texas involve:

• potential on-site liabilities associated with various pollution programmes and statutes, including the presence of hazardous substances, solid waste, petroleum contaminants, PFAS, asbestos, PCBs, and USTs; and
• issues relating to compliance with permits authorising air emissions, discharges to state water, and waste management activities.

Texas has a robust oil and gas exploration and production industry, particularly in West Texas. Despite the division of authority between the RRC and TCEQ, some operators should place additional focus on TCEQ-related obligations for air emissions.