As a result of the 89^th Texas legislative session, 2025 was a year of notable change for water resources in Texas. One recent development includes new liability protections for produced water, or water that is produced as a byproduct of the oil and gas extraction process. This topic is one of the developments covered in the interim update supplementing the eighth edition of the Essentials of Texas Water Resources, originally released in 2024.

Texas House Bill 49 - New Liability Protections for Produced Water

On September 1, 2025, Texas House Bill 49 officially went into effect, fundamentally changing the legal framework for handling tort liability of produced water.[1]

Since 2013, the Texas Legislature has encouraged the oil and gas industry to recycle the fluid waste produced through drilling operations rather than store it in disposal injection wells.[2]  However, as recycling efforts expanded into new beneficial uses beyond traditional fracking producers encountered a roadblock under the original legislation: the threat of downstream liability.[3]  Under the regulations prior to H.B. 49, if produced wastewater was treated and passed on, there remained a possibility of civil lawsuit action based on other further use of the treated material downstream.[4]

H.B. 49 seeks to remove that hurdle by incentivizing both recycling and environmental stewardship, but the change has not arrived without controversy and pushback.

The Issues with Produced Water

During the oil and gas extraction process, wells generate massive volumes of byproduct fluid from the subsurface known as produced water. This is a prevalent occurrence in the great state of Texas, especially in the Permian Basin in West Texas. According to the U.S. Department of Energy, this region accounts for roughly half of all U.S. domestic oil production, and as a result generates a proportional share of the nation’s produced water.[5]

Produced water often carries a heavy chemical and mineral load, including salts, organic compounds, and heavy metals from deep within the subsurface that may contain various contaminants, some of which can be toxic. When spills or leaks happen during handling of produced water, the environmental and health exposure risks can be significant.

H.B. 49 - Foundational Liability Shield

H.B. 49 amends the Texas Natural Resources Code to protect the entities taking on the risk of handling such produced water.[6]  The new law provides broad tort liability protection for landowners, oil treatment companies, and transporters. Specifically, if a person takes possession of fluid oil or gas waste, treats it, and either puts it to beneficial use or transfers it to someone else, that person is no longer liable for torts that result from the downstream use of that treated waste.[7]

The law also extends protections to surface estate owners, shielding them from liability for personal injury, death, or property damage that arises from exposure to such waste on their land.

Where Liability Remains

Although H.B. 49 extends a robust shield for non-negligent actors, it is not a free pass. The bill explicitly bars punitive (exemplary) damages in lawsuits based solely on simple negligence or regulatory noncompliance. However, bad actors can still be taken to court.  Liability is still maintained for intentional acts of gross negligence, wrongful acts, intentional omissions, and failures to comply with Texas Commission on Environmental Quality or Texas Railroad Commission regulations, as well as traditional property-based claims (generators are still liable to landowners).[8]

Expanded Oversight and Environmental Pushback

To ensure that these new changes in liability protection do not lead to abuse and negative impacts for Texans, H.B. 49 modifies section 122.004 of the Texas Natural Resources Code to expand the Railroad Commission’s authority.[9]  The Texas Railroad Commission is now explicitly authorized to adopt new rules governing both treated water and the byproducts of the treatment process, ensuring regulatory oversight over the entire reuse lifecycle of produced water.

Despite these regulatory support mechanisms, the bill faced stern opposition from environmental groups such as the Sierra Club, which argue that any grant of broad liability protection for the oil and gas industry will have the unintended consequence of inviting or even incentivizing careless or poor management standards of produced waters, posing a direct threat to Texas waterways, the environment, and public health.[10]

The Bottom Line

Ultimately, the Texas legislature passed H.B. 49 to balance two competing interests: keeping the public and environment safe while removing the excessive litigation risks that were inhibiting industrial innovation.[11]  By protecting companies that follow the rules, Texas is betting that it can turn a massive waste problem into a sustainable, beneficial resource that is never in lack of demand across the state.

For more information about produced water, and other updates from the 89^th legislative session, visit the Essentials of Texas Water Resources product page.

[1] H.B. 49, 2025 Gen. Assem., 89th Sess. (Tex. 2025).

[2] Senate Research Center, Bill Analysis, H.B. 49.

[3] Senate Research Center, Bill Analysis, H.B. 49.

[4] Texas Policy Research, 89th HB 4, (Accessed June 17, 2026), https://www.texaspolicyresearch.com/bills/89th-legislature-hb-49/.

[5] U.S. Department of Energy, Produced Water From Oil and Gas Development and Critical Minerals, (Accessed June 6, 2026), https://www.energy.gov/sites/default/files/2024-06/Produced%20Water%20from%20Oil%20and%20Gas%
20Development%20and%20Critical%20Minerals%20Fact%20Sheet_6.18.24.pdf.

[6] H.B. 49, 2025 Gen. Assem., 89th Sess. (Tex. 2025).

[7] H.B. 49, 2025 Gen. Assem., 89th Sess. (Tex. 2025).

[8] H.B. 49, 2025 Gen. Assem., 89th Sess. (Tex. 2025).

[9] H.B. 49, 2025 Gen. Assem., 89th Sess. (Tex. 2025).

[10] Sierra Club Lone Start Chapter, Regarding HB 49 Relating to Fluid Oil and Gas Waste and Byproducts of that Waste, (Accessed June 17, 2026 https://www.sierraclub.org/sites/default/files/2025-03/sc-opposition-hb-49.pdf).

[11] Texas Policy Research, 89th HB 49 (Accessed June 17, 2026), https://www.texaspolicyresearch.com/bills/89th-legislature-hb-49/