Meeting Summary - 05/13/2025 Senate Business & Commerce

▶️1 - HB431 Cortez et al. SP: Johnson

• Senator Johnson introduced HB431, expanding language from HB362 to include solar tiles.
• The bill aims to close a loophole exploited by homeowners associations, ensuring solar tiles are also permitted— not just solar panels.
• HB431 was discussed to help Texans reduce energy costs by using solar tiles.
• No questions were raised by members regarding the bill.
• No public testimony was provided, and discussion on HB431 was left pending.

▶️6 - HB3228 Lambert et al. SP: Perry

• Senator Perry introduced the committee substitute for HB3228, focusing on wind and solar recycling, financial assurance, and landowner agreements.
• The bill aims to prevent financial mishandling by ensuring resources for recycling wind and solar components.
• The committee substitute adds one word for language conformity with another bill, HB3809.
• Members were asked if they had questions, but none were raised.
• Public testimony was opened, with Cyrus Reed being called to testify, along with a resource from TCEQ.

▶️Cyrus Reed, Sierra Club - HB3228

• Cyrus Reed from the Lone Star chapter of the Sierra Club expressed support for HB3228.
• Currently, 65,000 megawatt hours are assisting the ERCOT grid.
• Emphasized the importance of agreements to reduce, reuse, and recycle unused energy products.
• Highlighted good business practices similar to those for electronics, TVs, and suggested applying them to solar and wind energy.
• Expressed appreciation for senators Perry and representative Lambert for advancing the bill.
• Public testimony for HB3228 was closed and the bill was left pending.

▶️7 - HB3229 Lambert et al. SP: Perry

• Senator Perry introduced HB3229, which focuses on ensuring the financial solvency of recycling processes for electric utility projects.
• HB3229 is a follow up to HB3228.
• The bill requires recycling companies to demonstrate financial resources through a letter of credit or bonding.
• The aim is to ensure these companies can handle the disposal of wind blades and  other components effectively.
• Senator Kolkhorst supported the idea of requiring financial assurances for recycling facilities.
• HB3228, a related bill, includes contract provisions for disposal in wind and solar projects initiated in the last fifteen years.
• The bills seek to protect landowners and ensure that recycling companies and project developers fulfill their responsibilities.
• No public testimony was provided during the meeting.

▶️8 - HB3306 Dean SP: Schwertner

• Chair lays out HB3306 and recognizes Senate Sponsor, Chairman Schwertner, to explain the bill.
• Current insurance code provisions in construction contracts are deemed invalid if they require one party to indemnify another for claims due to the indemnified party's negligence.
• Exceptions currently exist for residential developments and public work projects.
• HB3306 aims to extend these exceptions to construction contracts related to electric infrastructure construction maintenance or vegetation management for electric or transmission utilities.
• The bill intends to make parties accountable for their own actions, reducing lawsuits and insurance costs, ultimately benefiting rate payers.
• No questions were posed by members, leading to opening public testimony.
• Public testimony begins with Fred Wilshusen and Scott Seamster, with Fred indicating he is against the bill.

▶️Fred Wilshusen, TCA - HB3306

• Fred Wilshusen is general counsel for the Texas Construction Association.
• Testifying against HB3306, referring to an issue with the current system.
• Subcontractors currently sign limited indemnity agreements, taking responsibility only for damages that are their fault.
• The current system, established in 2011, fairly allocates risk among involved parties.
• HB3306 would shift all damages to subcontractors even if they are not at fault, leading to contracts of adhesion.
• The current system allows for fair risk allocation and should not be changed.
• Wilshusen suggests alternatives to address concerns such as arbitration clauses or waiving jury trials.
• Warns that every legislative session could introduce new and unfair risk allocations for different industries if the current system is changed.
• Offers to answer questions and intends to hold further discussions during the full panel session.

▶️Scott Seamster, TNMP - HB3306

• Scott Seamster, associate general counsel for Texas New Mexico Power, spoke in support of HB3306.
• HB3306 would allow utilities, electric cooperatives, and municipal utilities to make arrangements where a contractor fully indemnifies the utility for the contractor's work.
• The proposed amendments to HB3306 pertain to simpler engagements than those originally addressed by the statute.
• Consolidated insurance programs are not suitable for TNMP, as the work involves setting up wires, poles, and substations rather than constructing large buildings.
• Seamster noted the challenge with current statutes requiring TNMP to cover costs when injuries occur to third parties, which ultimately affects ratepayers.
• The bill would enable contractors to assume full indemnity agreements, maintaining the current level of insurance since contractors are already insured for the full risk.
• Seamster was open to questions, but none were asked by the members.

▶️Senator Campbell to Panel, HB3306 - Clarification on Disagreement

• Fred Wilshusen raised concerns about subcontractors being held 100% liable for damages in situations where they are 0% at fault.
• The concept of broad form indemnity was discussed, and it was noted that many states prohibit these practices.
• Texas has had a prohibition against broad form indemnity since February 2011.
• There was a reference to previous experience of dealing with this system for twenty-five years.
• Scott Seamster highlighted that dealings involve sophisticated parties who already agree to such terms in multiple states.
• The question of potential advantage over small contractors in small towns was addressed, with an assurance that the dealings are with sophisticated businesses.

▶️Senator King to Panel, HB3306 - Clarification of Bill's Impact on Indemnity Agreements

• The bill mainly applies to electrical construction, specifically transmission projects.
• Discussion centered around liability and indemnity agreements related to subcontractors.
• Fred Wilshusen explained that under current law, if a subcontractor causes damage (e.g., starting a fire), the project manager (e.g., Oncor) may tender the indemnity to the subcontractors who would be responsible for defense if at fault.
• Current legislation could leave subcontractors financially responsible beyond their insurance if at fault, with no change in accountability for non-fault scenarios unless recruited by the main contractor.
• The proposed bill could require subcontractors to defend against claims even if they're remotely or not connected to the incident.
• Disagreement on project management: the current practice does not utilize multiple subcontractors but hires one party for tasks like vegetation management.
• Plaintiffs typically sue all parties involved; the insurance won't cover indemnity if the main party is alleged to be negligent until adjudicated otherwise.
• The bill would shift negotiation power, allowing hiring parties to ensure subcontractors assume liability, keeping costs predictable and minimal for end customers.
• Historical context: injury to employees of their own contractor was exempt from broad form indemnity.
• Debate over the ethics of who should bear liability: private vs. public construction projects.
• Senator Nichols highlighted that parties with deeper pockets are often targeted in lawsuits and discussed the economic implications for project managers.
• The panel concluded without further questions, and the next witness, Jennifer Fagan, was called to testify.

▶️Jennifer Fagan, TCA - HB3306

• Jennifer Fagan represented the Texas Construction Association and opposed HB3306.
• Fagan mentioned that HB3306 is broad and not limited to vegetation management.
• The bill covers construction, transmission, and distribution lines for electric utility infrastructure.
• Highlighted the upcoming $60 billion investment in transmission lines and the associated risks for contractors.
• Expressed concerns about broad form indemnity pushing liability from companies to smaller contractors or sole proprietors.
• Potential risk to personal assets for sole proprietorships due to broad liability coverage.
• No questions were posed by the committee members after Fagan's presentation.
• Public testimony on HB3306 was closed, and the bill remains pending.