BILL ANALYSIS

Senate Research Center	S.B. 2037
	By: Sparks
	Natural Resources
	6/12/2025
	Enrolled

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The liquefied natural gas (LNG) industry is vital to Texas' energy sector, supported by natural gas reserves and infrastructure. In response to the Biden Administration's January 2024 pause on LNG export approvals to non-FTA countries, the House Select Committee on Protecting Texas LNG Exports recommended streamlining state permitting and reducing delays. Currently, LNG companies must navigate both federal and state permitting, including air-quality permits from the Texas Commission on Environmental Quality (TCEQ). As global demand for LNG grows, clear and efficient permitting timelines are essential for Texas' economic growth.

Texas exported over 1.3 billion cubic feet of LNG in 2023, representing 31 percent of U.S. exports. With four LNG facilities under construction and two approved but not yet built, delays in air permitting processes have led to approval timelines of up to three years for minor amendments. This contested case process unique to Texas adds six to 12 months compared to states like Louisiana.

As the global demand for LNG continues to expand rapidly, reasonable and defined permitting timelines are necessary for the industry to continue to add to Texas' economy. S.B. 2037 seeks to streamline and accelerate the permitting process by establishing clear procedures for contested case hearings and implementing additional fees for expedited applications.  

S.B. 2037 amends current law relating to permit application review and contested case procedures for environmental permits involving a project to construct or modify a liquefied natural gas export terminal and authorizes a fee.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Commission on Environmental Quality in SECTION 2 (Section 5.559, Water Code) and SECTION 3 (Section 382.056, Health and Safety Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 5.555, Water Code, by adding Subsection (a-1), as follows:

(a-1) Requires the executive director of the Texas Commission on Environmental Quality (executive director; TCEQ), with respect to a permit application filed with TCEQ for a project to construct or modify a liquefied natural gas export terminal or a renewal of that permit, to provide each response required by Subsection (a) (relating to requiring the executive director to file with the chief clerk a response to each relevant and material public comment) not later than the 120th day after the close of the public comment period.

SECTION 2. Amends Subchapter M, Chapter 5, Water Code, by adding Section 5.559, as follows:

Sec. 5.559. PROCEDURES FOR PERMIT APPLICATION REVIEW AND CONTESTED CASES INVOLVING PROJECT TO CONSTRUCT OR MODIFY LIQUEFIED NATURAL GAS EXPORT TERMINAL. (a) Provides that this section applies only to a permit application filed with the TCEQ for a project to construct or modify a liquefied natural gas export terminal.

(b) Requires TCEQ by rule to establish an expedited permit application review process for permit applications described by Subsection (a). Requires that rules adopted under this subsection require an applicant who elects the expedited permit application review process to pay an additional fee in an amount TCEQ determines is necessary to cover the costs of the expedited review. Provides that the additional fee collected pursuant to this subsection is considered part of the application fee and is required to be deposited and used in the manner provided for the application fee.

(c) Authorizes TCEQ to authorize the use of overtime, full-time equivalent TCEQ employees to support the expedited processing of permit applications under Subsection (b), or contract labor to process those expedited applications. Provides that the overtime, full-time equivalent TCEQ employees, or contract labor authorized under this subsection is not included in the calculation of the number of full-time equivalent TCEQ employees allotted under other law.

(d) Authorizes TCEQ to pay for compensatory time, overtime, full-time equivalent TCEQ employees supporting the expedited processing of permit applications under Subsection (b), or contract labor used to implement that subsection. Provides that TCEQ is authorized to set the rate for overtime compensation for full-time equivalent TCEQ employees supporting the expedited processing of permit applications under Subsection (b).

(e) Requires the party requesting a contested hearing case involving a permit application described by Subsection (a), in a request for a contested hearing, to specify each reason the party is an affected period as defined by Section 5.115(a) (relating to defining "affected person," "person affected," or "person who may be affected").

(f) Requires an administrative law judge, in a contested case involving a permit application described by Subsection (a), to conduct a preliminary hearing not later than the 60th day after the date the executive director refers the application to the State Office of Administrative Hearings, provided that the judge is authorized to grant one extension of the time, not to exceed 15 days, on request of any party.

(g) Requires TCEQ to adopt rules as necessary to implement this section.

SECTION 3. Amends Section 382.056, Health and Safety Code, by amending Subsection (n) and adding Subsection (n-1), as follows:

(n) Requires TCEQ, except as provided by Section 382.0561 (Federal Operating Permit; Hearing), to consider a request that TCEQ reconsider the executive director's decision or hold a contested case hearing, rather than a public hearing, in accordance with the procedures provided by Sections 5.556 (Request for Reconsideration or Contested Case Hearing) and 5.557 (Direct Referral to Contested Case Hearing), Water Code.

(n-1) Provides that, with respect to a permit application filed with TCEQ under Section 382.0518 (Preconstruction Permit) for a project to construct or modify a liquefied natural gas export terminal or for renewal of a permit issued to a liquefied natural gas export terminal under Section 382.055 (Review and Renewal of Preconstruction Permit):

(1) the requirements of Section 5.559, Water Code, apply;

(2) TCEQ is required to adopt rules as necessary to implement Subdivision (1); and

(3) the executive director is required to provide each response required by Subsection (l) (relating to requiring the executive director to file with the chief clerk a response to each relevant and material public comment) not later than the 120th day after the close of the public comment period.

SECTION 4. Makes application of this Act prospective.

SECTION 5. Effective date: September 1, 2025. �