BILL ANALYSIS C.S.H.B. 3036 By: Chisum April 11, 1995 Committee Report (Substituted) BACKGROUND The federal Clean Air Act (CAA) mandates that areas which exceed set ozone thresholds are in nonattainment and must implement measures to reduce air emissions. Currently in Texas, Dallas/Tarrant County, Houston/Galveston, Beaumont/Port Arthur, and El Paso are the only designated nonattainment areas in the state. Federal statutes expressly require each nonattainment area to have in place an Inspection & Maintenance (I&M) Program in which gasoline powered vehicles must be pass an emissions test or be repaired before they will be allowed to operate. If the nonattainment areas fail to implement an I&M program, the CAA requires sanctions against the state, including the withholding of up to $800 million in federal highway funds and the federal government directly controlling the program. If the Environmental Protection Agency fails to enforce the CAA, a citizens suit will likely result in federal court intervention. Faced with strong public disapproval of the I&M program, which started on January 1, 1995, the 74th Legislature approved a 90 day delay of I&M which ends on May 1, 1995. PURPOSE To provide the legislative guidance regarding how to operate the vehicle emissions testing program in nonattainment areas of Texas as required by Congress under the federal Clean Air Act and enforced by EPA. RULEMAKING AUTHORITY It is the committee's opinion that this bill expressly grants rulemaking authority to the following state agencies in the following sections of the bill: the Texas Natural Resource Conservation Commission (TNRCC), the Public Safety Commission, and the Texas Department of Transportation (TxDOT) jointly in SECTION 3 [Sections 382.0371(d) and (i), and 382.0734(a), Health and Safety Code]. The rulemaking authority granted in Section 382.0371(i) is referenced in SECTION 4 [Subsection (a-2) of Article 6675a-2, Section 2, V.T.C.S.) and SECTION 6 (Subsection (a-2) of Article 6701s, Section 141, V.T.C.S.]; the TNRCC and TxDOT jointly in SECTION 3 [Section 382.0371(e), Health and Safety Code]; and the TNRCC in SECTION 3 [Sections 382.0371(f), (h), (j), and 382.0374(g), Health and Safety Code] and in SECTION 9(b). The rulemaking authority granted in Section 382.0371(j) is referenced in SECTION 3 [Sections 382.0372(b) and (c), Health and Safety Code]. It is also the committee's opinion that the bill does not expressly grant rulemaking authority but amends existing rulemaking authority of the following agencies in the following sections of the bill: the TNRCC in SECTION 2 [Section 382.037(d), Health and Safety Code]; and the TxDOT in SECTION 2 [Section 382.037(h), Health and Safety Code]. SECTION BY SECTION ANALYSIS SECTION 1. The purpose of this Act is to create the least stringent vehicle emissions inspection and maintenance program which will achieve 100% compliance with the federal Clean Air Act. SECTION 2. Amends Sections 382.037 (d) and (h), Health and Safety Code as follows: (d) Allows the TNRCC to require vehicles to be tested at an appropriate interval under the vehicle emissions inspection and maintenance program (I&M) rather than only annually or biennially; requires the TNRCC and the TxDOT to accept alternative verification or proof of payment of a mitigation fee from a vehicle owner rather than proof the vehicle passed an emissions test before registration. (h) Requires the TxDOT to accept alternatives to prove that a vehicle has passed an emissions test in order to register the vehicle; deletes requirement that a vehicle owner in an area where an annual test is mandated to prove the vehicle passed the test 90 days prior to registration. SECTION 3. Adds Sections 382.0371-382.0734 to Subchapter B, Chapter 382, Health and Safety Code as follows: Sec. 382.0371. HYBRID VEHICLE EMISSIONS INSPECTION AND MAINTENANCE PROGRAM. (a) Allows vehicles less than 6 years old to be tested at a decentralized test and repair facility with approved technology. (b) Requires vehicles 6 years old or older to be tested at a centralized facility which is licensed and uses approved technology and if the vehicle fails the test, the retest may be conducted at a licensed decentralized test and repair facility using approved technology; any vehicle which fails the initial inspection for 2 consecutive cycles must be retested at a centralized facility after repairs. (c) Prohibits a waiver of the testing requirement unless a mitigation fee for a vehicle newer than 6 years old has been paid. (d) Allows an exemption if a vehicle is newer than 6 years old if the owner pays a $10 mitigation fee each time the vehicle is registered; any rental vehicles less than 6 years old which is only registered in an affected area for a partial year may pay a prorated mitigation fee; the mitigation fees are to be deposited in the county treasury in a separate account, which shall be deposited in the Clean Air Fund, unless the county chooses to implement a repair assistance and scrappage program; if an inspection facility is allowed to renew registrations, then the facility shall account for the mitigation fees and remit the fees to the county for the same purpose as all other mitigation fees. (e) Requires the TNRCC and the TxDOT to adopt joint rules whereby vehicle I&M and certification are a condition of registering a vehicle if the vehicle: (1) is registered outside a nonattainment area but driven inside a nonattainment area more than 3 times per week; (2) when a vehicle is used and will be registered in a nonattainment area, but has not been registered in a nonattainment area at any time before or for the preceding year. (f) Allows the TNRCC by rule to require repair technicians at a centralized or decentralized facility to be certified, and require that the facility be licensed. (g) Allows the TNRCC to purchase or lease remote sensing equipment to identify grossly emitting vehicles if it will be cost-effective in obtaining credits. (h) Requires the TNRCC by rule to set a uniform fee for the initial I&M test for all nonattainment areas; prohibits a facility to charge a fee for an initial re-test, but allows a fee to be charged for any other subsequent tests. (i) Requires the TNRCC, the TXDOT, and the DPS by joint rule to allow a centralized facility to perform safety inspections. (j) Prohibits TNRCC from implementing an I&M program more stringent than federal requirements: (1) allows the TNRCC by rule to remove a county from the I&M program if it is not required by federal law or regulation and the county will maintain full credit and required emissions reductions; (2) allows the TNRCC by emergency rule to take any action necessary to conform the I&M program to the state or federal clean air programs. (3) requires the TNRCC by emergency rule to adopt a decentralized program if it is compatible with federal law or regulations or guidelines or enforcement policies. (k) The following are applicable definitions: (1) "Affected County" is a county included in an I&M program under applicable law. (2) "Approved Technology" is a technology certified by the TNRCC as capable of significantly contributing to the state implementation plan. (3) "Fleet vehicle" is a vehicle that is one of 10 or more owned and operated by a single entity other than a household. (4) "Vehicle" includes fleet vehicle. Sec. 382.0732. HYBRID PROGRAM: TRANSITION PERIOD. (a) Until January 1, 1998, the I&M program must operate according to this section. (b) beginning May 2, 1995 the I&M program applies to all fleet vehicles in Tarrant, Dallas, Harris, Galveston, Brazoria, Fort Bend, Montgomery, and El Paso counties. (c) beginning June 1, 1995, the I&M program applies to all vehicles in Tarrant, Dallas, Harris, Galveston, Brazoria, Fort Bend, Montgomery, and El Paso counties. (d) BAR90 technology is acceptable for a decentralized test and repair until January 1, 1996. (e) BAR84 technology is acceptable for a decentralized test and repair facility in El Paso County until January 1, 1996. (f) The I&M program applies in Jefferson, Orange, Collin, and Denton counties beginning January 1, 1996. Sec. 382.0373. VEHICLE EMISSIONS INSPECTION AND MAINTENANCE ADVISORY PANEL. (a) Establishes a 9 member advisory panel appointed by the governor, lieutenant governor, and speaker of the house, one member appointed by each official from the automotive repair industry, the public, and locally affected governments. (b) Each advisory panel member serves at the will of the official which appointed them. (c) The governor appoints the chair. (d) The advisory panel meets quarterly and at the call of the chair. (e) Requires the advisory panel to review federal I&M requirements, state agency rules, and I&M programs in other states and shall inform and advise the TNRCC regarding requirements and alternative I&M methods. (f) Entitles an advisory panel member compensation and travel expenses as provided by the General Appropriations Act, to be made from existing TNRCC funds. (g) The advisory panel is not subject to other advisory panel requirements other than enumerated in this Act. Sec. 382.0374. VEHICLE REPAIR ASSISTANCE AND SCRAPPAGE PROGRAM. (a) Requires the TNRCC, the TxDOT, and the DPS to authorize a vehicle repair assistance and scrappage program to be implemented by the commissioners court of an affected county, subject to appropriate oversight including periodic audits. (b) Requires the TNRCC to adopt guidelines for counties implementing a program providing for minimum and maximum amounts of repair assistance or for the purchase price of a qualified vehicle, and criteria for determining the eligibility for assistance. (c) Requires a participating county to maintain mitigation fees in a separate account, to be used only for implementing and administering a repair assistance and scrappage program; if the program is discontinued by a county or the state, then the excess balance remains in the county to be used only for clean air programs; the county is not liable to provide funds for the program. (d) Allows a participating county to contract with an appropriate entity or another county to implement a program, and may pool mitigation fees with other participating counties. (e) Allows a participating county to appoint a local advisory panel to advise the county regarding a repair assistance and scrappage program. (f) Fleet, governmental, and commercial vehicles are not eligible for participation in a repair assistance and scrappage program. (g) Allows a private commercial or business entity to participate in a repair assistance and scrappage program in accordance with TNRCC rules, which shall be adopted to provide for the following: assignment of emissions reduction credit to an entity if the entity purchases a vehicle under the scrappage program, the transferability of such credit, and the use of the credit against any emissions requirements owned or operated by the holder of the credit. (h) Requires that a vehicle purchased under a repair assistance and scrappage to be destroyed. (i) "affected county," "fleet vehicle," and "vehicle" have the meaning previously assigned, and "commercial vehicle" means a vehicle owned or leased for business or commercial purposes. SECTION 4. Adds Subsection (a-2) and amends Subsections (i) and (j) of Section 2, Chapter 88, General Laws, Acts of the 41st Legislature, 2nd Called Session, 1929 (Article 6675a-2, Vernon's Texas Civil Statutes) as follows: (a-2) If the TNRCC, the TxDOT, and the DPS allow an I&M inspection facility to renew vehicle registrations and perform safety inspections, then the facility will be allowed to perform the duties of the county tax assessor collector in registering vehicles. (i) Allows payment or proof of payment of a mitigation fee to be submitted instead of proof that a vehicle has passed a required emissions test in registering the vehicle, and deletes references to any waiver allowed for vehicle registration. (j) Adds language requiring the county tax assessor-collector to handle mitigation fees and include such in the report already required, and deletes references to any waiver allowed for vehicle registration. SECTION 5. Amends Section 3(j), Chapter 88, General Laws, Acts of the 41st Legislature, 2nd Called Session, 1929 (Article 6675a-3, Vernon's Texas Civil Statutes) by providing for proof of a mitigation fee payment as adequate before issuing a vehicle registration in place of accepting proof that the vehicle passed an emissions test. SECTION 6. Section 141, Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes) is amended by allowing inspection certificates to be provided at decentralized as well as centralized testing facilities, and provides for the uniform inspection fees to be included with other inspection fees; (a-2) is added as follows: If the TNRCC, the TxDOT, and the DPS allow an I&M inspection facility to renew vehicle registrations and perform safety inspections, then the I&M facilities may be allowed to perform safety inspections. SECTION 7. Amends Section 4.202(a-1), County Road and Bridge Act (Article 6702-1, Vernon's Texas Civil Statutes) by requiring a county tax assessor-collector to collect the mitigation fee or accept a waiver for proof of compliance with the I&M program; prohibits the county tax assessor-collector from collecting any additional fee for the administrative costs of handling the mitigation fee. SECTION 8. Repeals the 90 day delay of the I&M approved by the 74th Legislature. SECTION 9. Requires the TNRCC, TxDOT, and DPS to resume operations and implementation of the I&M program on May 2, 1995, and requires the TNRCC to develop emergency rules, and final rules as soon as practicable. SECTION 10. Emergency clause and immediate effective date. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute contains the following which are not included in the original: a purpose clause; a requirement that if a vehicle fails an emissions test for two consecutive cycles, then the vehicle must be reinspected at a centralized facility before it can be certified as passing the test; the substitute requires rental vehicles newer than 6 years old to be tested or pay a prorated mitigation fee if the vehicle is registered in an affected county for a partial year; provides for an advisory panel to be appointed by the governor, lieutenant governor, and speaker of the house to monitor the I&M program in Texas and other states as well as the federal requirements and make recommendations on implementation of the I&M program; requires the TNRCC by emergency rule to implement the most convenient method that complies with state and federal law, and if a decentralized approval is allowed, then emergency rules shall provide for a decentralized program; provdes that private industry may participate in a scrappage program, if established, by purchasing qualified vehicles and receiveing reduction credit at the private facility; expressly allows I&M facilities to issue vehicle registrations. The following are differences between the original and the substitute: the substitute allows vehicles newer than 6 years to be exempt from emissions testing if a mitigation fee is paid, but exemption applies to vehicles newer than 4 years in the original; the substitute requires any testing technology used to be approved by the TNRCC as substantially contributing to the goals in the state implementation plan, but the original expressly names specific technologies; the substitute prohibits waivers from passing a test if the owner spends a set amount, but the original provides for such waivers; the substitute only prohibits an I&M facility from charging a fee for reinspection after an initial emissions testing failure of a vehicle, but the original prohibits any facilities from charging a fee for any retest; the substitute allows the TNRCC to lease or purchase remote sensing equipment if it is cost-effective, but the original only states that remote sensing may be used; the substitute provides for an option of allowing county governments in affected areas to implement a repair assistance and scrappage program and allows a local advisory panel to be formed, but the original requires TNRCC to implement such a program; the substitute clarifies that BAR90 and BAR84 technology already in use will be acceptable until January 1, 1996, at which time any technology used must be approved by TNRCC. SUMMARY OF COMMITTEE ACTION HB 3036 was considered by the House Committee on Environmental Regulation in a public hearing on March 28, 1995. The following persons testified neutrally on the bill: Stan Meiburg, representing the U.S. Environmental Protection Agency, Region 6. James Davis, representing the U.S. Environmental Protection Agency. Eugene J. Tierny, representing himself and the U.S. Environmental Protection Agency, Office of Mobil Sources. Phillip A. Lorang, representing the U.S. Environmental Protection Agency. John Hall, representing the Texas Natural Resource Conservation Commission. John Steib, representing the Texas Natural Resource Conservation Commission. Dan Pearson, the Texas Natural Resource Conservation Commission. William T. Johnstone, representing the United States Postal Service. Wayne Corey, representing the Untied States Postal Service. William D. Hayden, representing the United States Postal Service. Candice Garrett, representing the Texas Natural Resource Conservation Commission. The following persons testified in favor of the bill: Darrell David, representing Tejas Testing Technology. Bernie Allen, representing Texas Chemical Council (Dow Chemical). Mark Daniels, an auto repair service owner, representing himself. Rick Sharbrough, auto repair shop owner, representing himself and the Automotive Service Association. Glen Young, automotive repair, representing himself and the Automotive Service Association. Mary Miksa, Vice President of Government Affairs, representing herself and Texas Association of Business and Chambers of Commerce. Mark Sherrill, an operating Contractor, representing himself and all other operating contractors. David Harris, operating contractor, representing himself. Anthony Jean, operating contractor, representing himself. Jerry Carter, President and CEO of Marta Technologies, Inc., representing himself. William Watson, representing Environmental Systems Products. The following persons testified against the bill: Michael Nowels, Inspection Station Owner, representing himself and the Texas State Inspection Association. C.E. "Ed" Martin, auto service owner, representing himself and the Texas State Inspection Association. Bill Ligon, representing Texas Service Station Association. Norma Chavez, representing the Community Board of Businesses Organizations for Clean Air. Without objection, HB 3036 was left pending business. HB 3036 was considered by the House Committee on Environmental Regulation in a public hearing on April 11, 1995. The committee considered a complete substitute for the bill. The substitute was adopted without objection. HB 3036 was reported favorably as substituted with the recommendation that it do pass and be printed, by a record vote of seven (7) ayes, two (2) nays, no (0) present not voting, and no (0) absent.