By: Ellis, Parker S.B. No. 513 A BILL TO BE ENTITLED AN ACT 1-1 relating to regional organizations to promote the coexistence of 1-2 air quality improvement and economic development in nonattainment 1-3 areas of the state. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle C, Title 5, Health and Safety Code, is 1-6 amended by adding Chapter 384 to read as follows: 1-7 CHAPTER 384. AREA EMISSION REDUCTION CREDIT ORGANIZATIONS 1-8 Sec. 384.001. DEFINITIONS. In this chapter: 1-9 (1) "Board" means the Texas Air Control Board or its 1-10 successor agency. 1-11 (2) "Emission reduction credit" means a credit 1-12 recognized by the Texas Air Control Board and the United States 1-13 Environmental Protection Agency for reductions in emissions of air 1-14 pollutants. 1-15 (3) "Nonattainment area" means an area so designated 1-16 within the meaning of Section 7407(d) of the federal Clean Air Act 1-17 (42 U.S.C. Section 7407). 1-18 (4) "Organization" means an area emission reduction 1-19 credit organization. 1-20 (5) "Regional council of governments" means a regional 1-21 planning commission established under Chapter 391, Local Government 1-22 Code. 1-23 Sec. 384.002. PURPOSE. The purpose of an area emission 2-1 reduction credit organization shall be to promote the coexistence 2-2 of the improvement of air quality and economic development within 2-3 the region through the acquisition and distribution of emission 2-4 reduction credits. Its activities may include the use of emission 2-5 reduction credits to help meet federal reasonable further progress 2-6 requirements as well as using emission reduction credits to 2-7 facilitate the issuance of permits. 2-8 Sec. 384.003. ESTABLISHMENT OF ORGANIZATION. A regional 2-9 council of governments whose area of jurisdiction contains a 2-10 nonattainment area may establish an organization on approval by the 2-11 board of its creation petition as provided by Section 384.015. 2-12 Sec. 384.004. FUNCTIONS; ORGANIZATION. An organization 2-13 created under this chapter shall: 2-14 (1) represent all counties within a nonattainment 2-15 area; 2-16 (2) have a board of directors appointed in accordance 2-17 with the provisions of this chapter; 2-18 (3) have the power, authority, and limitations 2-19 provided by this chapter; and 2-20 (4) have bylaws setting forth its organization and 2-21 procedures, including provisions for conflicts of interest. 2-22 Sec. 384.005. OFFSET REQUIREMENTS. All transactions of an 2-23 organization involving emission reduction credits shall be subject 2-24 to the offset requirements of the federal Clean Air Act (42 U.S.C. 2-25 Section 7401 et seq.). 3-1 Sec. 384.006. LOCATION RESTRICTION. There shall not be more 3-2 than one organization within a metropolitan statistical area or 3-3 consolidated metropolitan statistical area. 3-4 Sec. 384.007. STAFF. The regional council of governments 3-5 may provide staff to an organization created under this chapter. 3-6 Sec. 384.008. BOARD OF DIRECTORS. (a) The board of 3-7 directors of an organization shall consist of not less than six and 3-8 not more than 21 appointed members, provided, however, that the 3-9 number of appointed members is divisible by three. The appointed 3-10 members are appointed by and may be removed for cause by the 3-11 governing body of the regional council of governments. The 3-12 appointed members serve three-year terms, with one-third of the 3-13 members' terms expiring each year. In order to stagger the terms, 3-14 the initial appointees of a board of directors shall draw lots to 3-15 determine which one-third serves for one year, which one-third 3-16 serves for two years, and which one-third serves for three years. 3-17 In addition, the board of directors shall have one ex officio 3-18 nonvoting member from the board, designated by the executive 3-19 director of the board to act as a liaison between the board and the 3-20 area emission reduction credit organization. 3-21 (b) The appointed members of the board of directors shall 3-22 represent the general public, large industrial sources of 3-23 emissions, small regulated businesses, and environmental and 3-24 economic development interests. Each county in the nonattainment 3-25 area shall be represented on the board of directors, and other 4-1 areas in the region shall be represented in a manner that reflects 4-2 the relative contributions of each area to total emissions or 4-3 potential emission reductions. 4-4 Sec. 384.009. REMOVAL FOR CAUSE. The regional council of 4-5 governments appointing a member of the board of directors of an 4-6 organization may remove such member for cause if the member: 4-7 (1) cannot discharge the member's duties for a 4-8 substantial portion of the term for which the member is appointed 4-9 because of illness or disability; or 4-10 (2) is absent from more than half of the regularly 4-11 scheduled meetings that the member is eligible to attend during a 4-12 calendar year unless the absence is excused by a majority vote of 4-13 the board of directors. 4-14 Sec. 384.010. CONFLICT OF INTEREST. A member of a board of 4-15 directors may not vote on a matter in which the member or the 4-16 member's employer has a direct financial interest. 4-17 Sec. 384.011. AUTHORITY. The board of directors of an 4-18 organization shall have independent decision-making authority and 4-19 shall not be required to have its decisions reviewed by the 4-20 governing body of the regional council of governments. A regional 4-21 council of governments shall not have any liability under any 4-22 contracts entered into by an organization. 4-23 Sec. 384.012. POWERS AND DUTIES. An organization shall have 4-24 the authority to: 4-25 (1) receive and use funds; 5-1 (2) have an account at the Texas Air Control Board Air 5-2 Emission Reduction Credit Bank; 5-3 (3) acquire emission reduction credits through 5-4 purchase, donation, or other means; 5-5 (4) transfer emission reduction credits by sale or 5-6 other means; 5-7 (5) identify, evaluate, promote, initiate, and 5-8 facilitate potential projects and strategies to generate emission 5-9 reduction credits; 5-10 (6) provide financial assistance for projects to 5-11 generate emission reduction credits; 5-12 (7) employ staff; 5-13 (8) enter into contracts; and 5-14 (9) consider sustainability of projects. 5-15 Sec. 384.013. PROHIBITIONS. An organization created under 5-16 this chapter shall have no regulatory or taxing authority. 5-17 Sec. 384.014. ANNUAL REPORT. By March 1 of each year each 5-18 area organization shall file with the board and the regional 5-19 council of governments an annual report for the preceding calendar 5-20 year. The annual report shall contain a financial accounting, an 5-21 accounting of emission reduction credits, and a listing of all 5-22 emission reduction credit transactions entered into by the 5-23 organization. 5-24 Sec. 384.015. PROCEDURE FOR FILING AND APPROVAL OF PETITION. 5-25 (a) A regional council of governments may authorize by resolution 6-1 the submission of a petition to the board requesting the creation 6-2 of an organization under this chapter. 6-3 (b) The petition shall contain sufficient information to 6-4 permit a determination of compliance with the provisions of this 6-5 chapter and shall include a copy of the proposed bylaws and a plan 6-6 for ensuring compliance with the requirements of this chapter. 6-7 (c) The board shall review the petition for compliance with 6-8 this chapter and hold a hearing in the region to obtain public 6-9 comment on the petition. 6-10 (d) The board shall approve the petition and creation of the 6-11 organization if, after hearing, it finds that the requirements of 6-12 this chapter are met and that such creation would be in the public 6-13 interest. 6-14 Sec. 384.016. AUDIT. The board shall have the authority to 6-15 audit any organization created under this chapter. 6-16 Sec. 384.017. WITHDRAWAL OF APPROVAL. The board shall have 6-17 the authority to withdraw its approval of an organization created 6-18 under this chapter and to dissolve such organization if it finds, 6-19 after notice and hearing, that the organization has failed to 6-20 comply with the provisions of this chapter. 6-21 Sec. 384.018. DISSOLUTION. An organization created under 6-22 this chapter shall be dissolved by the board 12 years after its 6-23 creation unless the board approves a petition, submitted and 6-24 approved in accordance with Section 384.015, for an additional 6-25 12-year term. The board may continue to approve successive 12-year 7-1 terms for the organization as long as the need for the organization 7-2 exists. 7-3 SECTION 2. The importance of this legislation and the 7-4 crowded condition of the calendars in both houses create an 7-5 emergency and an imperative public necessity that the 7-6 constitutional rule requiring bills to be read on three several 7-7 days in each house be suspended, and this rule is hereby suspended, 7-8 and that this Act take effect and be in force from and after its 7-9 passage, and it is so enacted.