JD Key Consulting Logo
HB4042

Regular Session

Relating to the applicability of certain safety provisions and regulatory fees administered by the Railroad Commission of Texas to gas distribution pipelines.

Critical
Low Cost
Effective:2025-06-22
HB4042
Relating to the applicability of certain safety provisions and regulatory fees administered by the Railroad Commission of Texas to gas distribution pi...
Critical Urgency
Heavily Contested
House Vote105 - 38
YEA
NAY
73% in favor143 voting
Senate Vote28 - 3
YEA
90% in favor31 voting
41
Total Opposition Votes
Cost Impact
Low
Effective
2025-06-22
Enforcing Agencies
RRC
Primary Author: Rep. Eddie Morales
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 22, 2025 (Immediate effect due to supermajority vote).
  • Compliance Deadline: June 30, 2025 for Master Metered System operators to pay annual fees; March 15, 2026 for Distribution System operators to file annual reports and pay service line fees.
  • Agency Rulemaking: The RRC must update administrative codes and payment portals to recognize non-natural gas operators. A "regulatory gray zone" exists between June 22 and June 30, 2025, where the legal obligation to pay exists, but the agency's digital infrastructure may not yet be ready to receive it.

Immediate Action Plan

  • Immediate: Conduct a census of all master meters and service lines to determine fee liability.
  • Immediate: Update billing software to include the "RRC Safety & Regulatory Fee" line item for the next billing cycle.
  • By June 25, 2025: Contact RRC Oversight and Safety Division to establish an account number if you are a Master Meter operator.
  • Q3 2025: Review liability insurance policies to ensure coverage extends to RRC-regulated operations and administrative penalties.

Operational Changes Required

Contracts

  • Customer Service Agreements: Review "Taxes and Fees" clauses. You must ensure language permits the pass-through of "regulatory surcharges mandated by state law."
  • Fixed-Rate Contracts: Invoke "Change in Law" provisions to apply the new RRC safety fee surcharge.

Hiring/Training

  • Safety Standards: Staff must be trained on 49 CFR Part 192 (federal pipeline safety standards adopted by Texas), as the statutory change implies RRC safety enforcement now extends fully to these systems. Compliance with NFPA 58 alone may no longer be sufficient for liability protection.

Reporting & Record-Keeping

  • Service Line Census: Operators must maintain an auditable count of all service lines to calculate the Distribution System fee.
  • Annual Filing: Prepare to file the Distribution Annual Report (Form RSPA F7100.1-1) annually by March 15.
  • Tax Accounting: Configure accounting software to segregate the RRC surcharge. This revenue is legally exempt from municipal franchise fees, state gross receipts taxes, and sales tax; commingling these funds will result in tax overpayment.

Fees & Costs

  • Distribution Systems: A fee not to exceed $1.00 per service line, due annually.
  • Master Metered Systems: A fee not to exceed $100.00 per system, due annually.
  • Mandatory Recovery: The law requires that operators *shall* recover these fees from customers via a surcharge. This is a mandatory pass-through, not an optional operating expense absorption.

Strategic Ambiguities & Considerations

  • The "Gap" Week: With the law effective June 22 and Master Meter fees due June 30, the RRC portal may not be updated to accept payments from non-natural gas entities. Operators should document attempts to pay to avoid penalties.
  • Definition of "Gas": By removing "natural," the statute technically applies to *any* gas distribution via pipeline (e.g., hydrogen blends, biogas). Operators of alternative fuel micro-grids should assume jurisdiction applies until the RRC issues narrowing rules.
  • Enforcement Rigor: It is unclear if RRC inspectors will immediately apply natural gas audit standards to propane systems. However, payment of the fee establishes jurisdiction, making non-compliance with safety standards *negligence per se* in civil litigation.

Need Help Understanding Implementation?

Our government affairs experts can walk you through this bill's specific impact on your operations.

Schedule Consultation

Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 7, 2025
Passed House
May 1, 2025
Passed Senate
May 23, 2025
Signed
Jun 22, 2025
TopicsFees & Other Nontax RevenueFees & Other Nontax Revenue--stateSafetyUtilitiesUtilities--generalUtilities--natural GasPipeline SafetyRailroad Commission
03

House Authors

Rep. Eddie MoralesDemocrat · Primary Author

Senate Sponsor

Sen. Judith ZaffiriniDemocrat · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Rep. Eddie Morales

View all bills by Rep. Eddie Morales

Related by Topic

View more Fees & Other Nontax Revenue legislation
Quick Reference

Frequently Asked Questions

Common questions about HB4042

Q

What does Texas HB4042 do?

HB4042 expands the Railroad Commission of Texas (RRC) jurisdiction by removing the "natural" gas qualifier from the Utilities Code, effectively subjecting propane and other non-natural gas distribution systems to state safety fees and reporting requirements. Operators of propane distribution pipelines and master-metered systems (e. g.

Q

Who authored HB4042?

HB4042 was authored by Texas Representative Eddie Morales during the Regular Session.

Q

When was HB4042 signed into law?

HB4042 was signed into law by Governor Greg Abbott on June 22, 2025.

Q

Which agencies enforce HB4042?

HB4042 is enforced by Railroad Commission of Texas (RRC).

Q

How urgent is compliance with HB4042?

The compliance urgency for HB4042 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

Q

What is the cost impact of HB4042?

The cost impact of HB4042 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB4042 address?

HB4042 addresses topics including fees & other nontax revenue, fees & other nontax revenue--state, safety, utilities and utilities--general.

Legislative data provided by LegiScanLast updated: November 25, 2025

Need Strategic Guidance on This Bill?

Need help with Government Relations, Lobbying, or compliance? JD Key Consulting has the expertise you're looking for.