Texas Imposes New Rules on Recyclers of Renewable Energy Components
On September 11, 2026, the Texas Commission on Environmental Quality (TCEQ) issued significant new requirements for facilities that recycle renewable energy components, including components of wind turbine generators, solar energy devices, and battery energy storage systems (BESSs). See 51 Tex. Reg. 6742-6751 (September 25, 2026). The new rules and their authorizing legislation impose reporting, closure, financial assurance, and recordkeeping requirements on the recycling facilities. These requirements are in addition to any other federal, state, or local requirements that may apply, such as the hazardous waste regulations for certain types of batteries and solar panels. The rules take effect on October 1, 2026, but the deadline to submit the first report and related financial assurance documentation is January 15, 2027.
Background and Scope
TCEQ adopted the new rules to implement Texas House Bill 3229 (2025), which added a new chapter to the Texas Health and Safety Code, entitled “Renewable Energy Component Recycling Facilities.” The legislation appears to have been motivated by the discovery of a 30-acre accumulation of wind-turbine blades near Sweetwater, Texas, after a recycling company failed financially and could not perform its recycling obligations. However, the law is not limited to wind-turbine blades; it also covers other renewable energy equipment.
The legislation was enacted together with Texas House Bill 3228 (2025), which imposes decommissioning requirements for wind power facilities and solar power facilities. Notably, this companion bill did not cover BESSs, except those supporting wind power and solar power facilities. Thus, the scope of the bill governing recyclers (House Bill 3229) and the associated new regulations extends beyond that of the bill governing decommissioning (House Bill 3228). This distinction may be significant, especially in Texas, where only about one-third of all BESSs are co-located with wind or solar power generation (though a larger percentage might be deemed to be “supporting” such generation).
Importantly, the covered components are not limited to the core renewable energy equipment, such as wind-turbine blades, solar panels, and batteries. Other covered components include racks, towers, cables, transformers, inverters, junction boxes, magnets, electronics, and cooling and fire suppression systems.
TCEQ proposed the new regulations on March 27, 2026, and adopted the final rules with only modest revisions in response to public comments. One potentially important change is that the final rule limited the definition of BESS to systems with a capacity of 1 megawatt-hour or greater, so that it covers only utility-scale battery systems.
Both the Texas legislation and its implementing rules appear to have no counterparts in other states. However, Oklahoma has a similar law and regulations focused only on components of wind energy facilities.
Key Requirements
Reporting. Covered recyclers are required to submit by January 15 of each year a report that includes (i) an inventory of all unrecycled components, (ii) an estimated timeline for recycling or disposing of such components, and (iii) a cost estimate (prepared by a third-party Texas licensed professional engineer) for hiring a third party to transport and recycle or dispose of the unrecycled components. The report and cost estimate must include not only the unrecycled components present onsite, but also any offsite components that the recycling facility has taken title to or assumed control over. The regulations do not explicitly address whether the cost estimate may account for any credits that might be received due to the value of materials recovered from the components.
Financial Assurance. Recyclers must also maintain adequate financial assurance that meets certain requirements to cover the full amount of the cost estimate (as may be updated each year) and submit evidence of such financial assurance with each annual report. TCEQ will review and approve the cost estimates and financial assurance mechanisms and may require revisions as needed.
Closure. The regulations state that owners or operators of recycling facilities must “perform closure” if the unrecycled components create a nuisance, endanger public health, cause or threaten to cause a discharge of contaminants to water, or are “speculatively accumulated.” For these purposes, closure is somewhat confusingly defined as “[t]he act, outside of daily operations, of collecting … and properly recycling or disposing of the components” (emphasis added). The regulations also refer to two materially different definitions of speculative accumulation, which may cause uncertainty about when closure is triggered.
Recordkeeping. The regulations require recyclers to maintain for at least 3 years various records, including manifests, bills of lading, records of the quantities of components recycled on or off site, records of waste disposal, and any other documents used to support the annual reports mentioned above.
Publication of List of Compliant Recyclers. Under the statute, TCEQ must publish and maintain on its website a list of recycling facilities that have complied with the reporting and financial assurance requirements. TCEQ must update the list by March 1 each year.
Penalties. The law authorizes TCEQ to issue administrative penalties of $500 per day for each violation.
Compliance with Other Laws. The regulations explicitly state that compliance does not exclude or exempt the recyclers from other requirements of federal, state, or local laws or regulations. In the preamble to the proposed rule, TCEQ noted that some of the components may be classified as hazardous wastes, in which case they may be subject to full hazardous waste management requirements or streamlined “universal waste” requirements, if applicable. For example, the U.S. Environmental Protection Agency (EPA) has indicated that lithium-ion batteries are generally hazardous wastes eligible for management as universal wastes, and some solar panels may also qualify as hazardous wastes.
Special Issues for BESSs
The focus of the new rules and the underlying legislation on recyclers of utility-scale BESSs is somewhat unusual and creates some practical anomalies. The key components of most BESSs are lithium-ion batteries (although, as noted above, the law and new rules also cover BESS components other than batteries, and battery chemistries other than lithium-ion are increasingly being deployed). Only about 7% of the lithium-ion battery scrap currently being recycled in North America is estimated to be from end-of-life BESSs. The remainder comes from lithium-ion battery production, used electric vehicles, and used portable electronics. The percentage from end-of-life BESSs is expected to increase over time, but may only reach 24% by 2040.
Recyclers that exclusively process lithium-ion batteries from non-utility sources will not be subject to the law or its implementing regulations. Moreover, if a recycler processes both utility-scale BESS batteries and lithium-ion batteries from non-utility sources, it will apparently need to report and maintain financial assurances only for the small fraction of batteries from utilities.
Related Developments
EPA is expected to soon issue a proposed rule under the Resource Conservation and Recovery Act (RCRA) to (a) modify the existing universal waste requirements for lithium batteries and (b) expand the universal waste rule to cover waste photovoltaic (PV) solar panels. The latest federal Regulatory Agenda indicates that EPA expected to issue the proposed rule in August 2026. However, EPA does not appear to have submitted the proposal to the Office of Management and Budget for review. Thus, the agency may not issue the proposal until early 2027 or later.
The U.S. Congress is also getting involved. On September 15, 2026, the House of Representatives passed the Battery Recycling for America's Competitive Economy (BRACE) Act, which would modify certain RCRA rules for recyclers of lithium-ion batteries on an interim basis and require EPA to issue a final rule within 18 months establishing specially tailored universal waste standards for lithium-ion batteries to promote recovery of critical minerals while addressing fire and other risks. The bill has now advanced to the Senate, where it has been referred to the Environment and Public Works Committee. Principal Aaron Goldberg (Washington, DC, and Austin) testified in his personal capacity on the BRACE Act before the House Committee on Energy and Commerce, Subcommittee on Environment, on June 24, 2026, and worked behind the scenes with House counsel to help formulate the legislation.
The critical-mineral-rich product from recycling lithium-ion batteries, known as “black mass,” is the subject of a new rule from the Bureau of Industry and Security (BIS) within the U.S. Department of Commerce. The rule, which took effect on August 27, 2026, prohibits exports of black mass identified with certain “Schedule B” codes without a license, adjustment, or exception issued by BIS. The Bureau may expand the prohibition to cover black mass identified with other Schedule B codes and potentially even lithium-ion batteries themselves.
For more information about the new TCEQ rule and related developments, please contact Aaron Goldberg. He and other Beveridge & Diamond attorneys have extensive experience with a full range of environmental and related regulatory issues associated with recycling of batteries and renewable energy components, including requirements for management of hazardous wastes, transboundary movement of such wastes, transport of dangerous goods, extended producer responsibility, toxic substances control, and hazard communication. Our work includes representing industry groups in negotiations under the Basel Convention and at the Organization for Economic Cooperation and Development on issues related to the classification and control of wastes managed for recovery. The firm has hosted a series of webinars addressing these and other issues in the specific context of batteries. We advise companies across the entire battery supply chain, including miners/processors of battery materials, manufacturers of batteries and battery-containing products (e.g., consumer electronics and electric vehicles), distributors/retailers, logistics providers, large-scale users, companies engaged in “second-life” battery use, collectors/recyclers of end-of-life batteries, black mass brokers, and developers of innovative battery technologies.
