Texas Wind Law: Regulatory Update

It is common knowledge that for the past decade, Texas has been a leader in the wind energy industry. Today, about $42 billion in wind systems has been invested in the state, amounting to about three times the installed capacity and under-construction capacity of any other state. None other than Netflix has taken note, featuring the rural, wind-farm metropolis of Sweetwater, Texas—population 10,579—in one of its upcoming David Attenborough-narrated documentaries.

Texas’s prominence in wind energy development can at least in part be attributed to its relaxed attitude towards renewables. Because 90 percent of the Texas energy grid is not regulated by the Federal Energy Regulatory Commission, rulemaking authority largely falls on the state. Besides adopting renewable portfolio standards that help set minimum requirements for the amount of wind energy produced, Texas has taken a hands-off regulatory approach.

This approach is reflected in an abundance of pro-wind policies at the state level. For example, reviewing or permitting new projects does not require federal oversite or approval by the Department of Texas Parks and Wildlife. Where a wind project is sited also is left up to individual landowners and developers. And there are also tax exemptions available for qualifying parties—investments into wind energy producers with operations in Texas may be met with state franchise tax exemptions, wind energy devices can warrant franchise tax deductions, and property owners utilizing wind power for on-site energy may receive property tax exemptions.

As billions in federal tax subsidies for wind development expire in 2019, Texas has capitalized on the state’s lax regulatory environment and hurried to expand this industry. Some argue, however, that this expansionist free-for-all comes at the expense of adequate regulation. Recent bills passing through the Texas legislature reflect such a stance.

Wind Energy Bills Taking the Texas Legislature by Storm

Symbolizing one of the first instances of wind energy regulation approved by the Texas Legislature, in 2017 a bill was passed that exempted all wind farms within thirty nautical miles of a military base from tax incentives. The impetus for this legislation is a fear that wind turbines interfere with military radar signals. But evidence proving such interference is mixed and therefore hard to definitively prove.

HB 4554: Allowing Parks and Wildlife to Have a Say

This legislative session, similar bills are floating around the Capitol. Representative Cyrier’s HB 4554 gives the Department of Parks and Wildlife authority over the siting locations of wind-powered energy devices on or near certain lands, such as state land or military aviation facilities. Filed March 8th, this bill has not yet seen much movement through the legislative process, but like any piece of proposed legislation midway through the session, there is no telling where it could end up over the coming months.

SB 1372: Encouraging Proper Decommissioning Techniques

Going another regulatory route and perhaps gaining a little more traction, Senator Campbell’s SB 1372 attempts to impose some state standards on the decommissioning of wind facilities. This bill acknowledges that though the average life of a wind turbine is between 20 to 25 years, Texas currently has no requirements for taking down old or incomplete wind projects. Rod Wetsel, co-author of one of the nation’s leading Wind Law treatises and owner of an energy law firm in Sweetwater, has expressed his support for the bill, viewing it as a pro-industry endeavor to foster responsible energy development.

Although in the last two years more interest groups have called for a statewide decommissioning process such as this, it is important to note that a similar bill passed the House Energy Resources Committee but died before making it to the House floor last legislative session. As of March 14th, SB 1372 was referred to the Senate’s Business & Commerce committee, and it sits there today.

Legislative Solutions Blowing in the Wind

Texas has long been known as an energy behemoth. It has carried this title through a careful mixture of promoting free-market principles while still putting forth occasional, necessary regulations. Up to this point, whether Texas legislators embrace or rail against this session’s proposed laws remains uncertain, and the fate of this session’s legislation seems to hang in the balance.

Siting a Wind Facility in Texas

If you are looking to construct a wind facility, you should be advised of relevant state law. Though getting a wind site permitted is typically a relatively easy process, it is important that you comply with the Texas Administrative Code’s permitting guidelines. If you intend to interconnect with ERCOT, the provider of 90% of the state’s electricity, you also will need to be certain that you are meeting certain requirements provided by ERCOT and the Public Utility Regulatory Act.