By:  Armbrister                                        S.B. No. 681

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to the alternative fuels program.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Section 382.131, Health and Safety Code, is

 1-4     amended by amending Subdivision (7) and adding Subdivision (10) to

 1-5     read as follows:

 1-6                 (7)  "Fleet vehicle" means a vehicle required to be

 1-7     registered under Chapter 502, Transportation Code, except a vehicle

 1-8     registered under Section 502.006(c), Transportation Code [88,

 1-9     General Laws, Acts of the 41st Legislature, 2nd Called Session,

1-10     1929 (Article 6675a-2, Vernon's Texas Civil Statutes)], and that is

1-11     centrally fueled, capable of being centrally fueled, or fueled at

1-12     facilities serving both business customers and the general public.

1-13     The term does not include:

1-14                       (A)  a [fleet] vehicle that, when not in use, is

1-15     normally parked at the residence of the individual who normally

1-16     [usually] operates it [and that is available to such individual for

1-17     personal use];

1-18                       (B)  [a fleet vehicle that, when not in use, is

1-19     normally parked at the residence of the individual who usually

1-20     operates it and who does not report to a central location; or]

1-21                       [(C)]  a [fleet] vehicle that has a gross vehicle

1-22     weight rating of greater than 26,000 pounds, except urban buses;

1-23     or

 2-1                       (C)  a vehicle used in the maintenance or repair

 2-2     of underground mass transit facilities which is required by federal

 2-3     law or regulation to operate on diesel fuel [except vehicles owned

 2-4     or operated by the state or mass transit authorities].

 2-5                 (10)  "Urban bus" means any motor bus or municipal bus

 2-6     required to be registered under Chapter 502, Transportation Code,

 2-7     which is owned or operated by a mass transit authority.

 2-8           SECTION 2.  Section 382.132, Health and Safety Code, is

 2-9     amended to read as follows:

2-10           Sec. 382.132.  METROPOLITAN AREAS AFFECTED.  (a)  Rules

2-11     adopted by the commission under Sections 382.133 through 382.136

2-12     apply only to a consolidated metropolitan statistical area or a

2-13     metropolitan statistical area with a population of 350,000 or more

2-14     that, under the federal national ambient air quality standards

2-15     provided by Section 181, federal Clean Air Act, as amended (42

2-16     U.S.C. Section 7511 and Table 1), is a serious, severe, or extreme

2-17     nonattainment area [has not met federal ambient air quality

2-18     standards for ozone, carbon monoxide, oxides of nitrogen, or

2-19     particulates].

2-20           (b)  Notwithstanding the provisions of Subsection (a), the

2-21     commission may establish a clean fuel vehicle program for covered

2-22     fleets in counties where not otherwise required in response to a

2-23     formal request by resolutions adopted by the county and the most

2-24     populous municipality within the county according to the most

2-25     recent federal decennial census.  Such request may originate from

 3-1     any county or municipality declared to be in violation of or

 3-2     seeking to avoid being declared in violation of federal ambient air

 3-3     quality standards.

 3-4           SECTION 3.  Subsection (b), Section 382.133, Health and

 3-5     Safety Code, is amended to read as follows:

 3-6           (b)(1)  Rules adopted under this section must require a mass

 3-7     transit authority to have 50 percent of the authority's fleet

 3-8     vehicles capable of using alternative fuel.

 3-9                 (2)  Vehicles converted, purchased, leased, or

3-10     otherwise acquired prior to September 1, 1999, may be counted by

3-11     the commission toward compliance with the fleet percentage

3-12     requirement and rules adopted by the commission pursuant to this

3-13     section if the vehicles are capable of operating on a fuel or power

3-14     source recognized by any State of Texas fleet or mass transit fuel

3-15     program prior to September 1, 1995, and meet the following emission

3-16     standards:

3-17                       (A)  for vehicles under 8,500 pounds gross

3-18     vehicle weight rating (GVWR), the federal Tier I emissions

3-19     standards pursuant to Section 202 of the federal Clean Air Act, as

3-20     amended (42 U.S.C. Section 7521); or

3-21                       (B)  for vehicles over 8,500 pounds gross vehicle

3-22     weight rating (GVWR), the federal emission standards in place at

3-23     the time of their manufacture.

3-24                 (3)  The percentage requirement of this section may be

3-25     met, in whole or in part, through the purchase, lease, or other

 4-1     acquisition of program compliance credits pursuant to Section

 4-2     382.142 or through the purchase, lease, or other acquisition of

 4-3     credits through the Texas Mobile Emissions Reduction Credit (MERC)

 4-4     Program established pursuant to Section 381.143 [its fleet vehicles

 4-5     able to operate on an alternative fuel according to the following

 4-6     schedule:]

 4-7                 [(1)  not later than September 1, 1994, at least 30

 4-8     percent of the vehicles; and]

 4-9                 [(2)  not later than September 1, 1996, at least 50

4-10     percent of the vehicles].

4-11           SECTION 4.  Section 382.134, Health and Safety Code, is

4-12     amended by amending Subsections (c) and (d) and adding Subsection

4-13     (f) to read as follows:

4-14           (c)  Rules adopted by the board must require a local

4-15     government or private person to have a proportion of the person's

4-16     newly purchased fleet vehicles and a proportion of the fleet

4-17     vehicles in the person's total fleet able to operate on an

4-18     alternative fuel according to the following schedule:

4-19                 (1)  30 percent of fleet vehicles purchased after

4-20     September 1, 1998, or at least 10 percent of the fleet vehicles in

4-21     the total fleet as of September 1, 1998;

4-22                 (2)  50 percent of fleet vehicles purchased after

4-23     September 1, 2000[, and at least 20 percent of the fleet vehicles

4-24     in the total fleet as of September 1, 2000]; and

4-25                 (3)  70 [90] percent of light-duty fleet vehicles

 5-1     purchased after September 1, 2002, and 50 [at least 45] percent of

 5-2     the heavy-duty fleet vehicles purchased after [in the total fleet

 5-3     as of] September 1, 2002.

 5-4           (d)  Rules adopted by the board may not require a local

 5-5     government or private person to purchase a fleet vehicle able to

 5-6     operate on an alternative fuel if the person maintains a proportion

 5-7     of 70 [90] percent or more alternative fuel vehicles in the

 5-8     person's fleet.

 5-9           (f)  The requirements imposed by this section may be met by

5-10     the conversion of currently owned or newly purchased

5-11     gasoline-fueled or diesel-fueled vehicles to operate on an

5-12     alternative fuel.  For purposes of this section, the conversion of

5-13     a vehicle to operate on an alternative fuel shall be treated the

5-14     same as the purchase of a vehicle able to operate on an alternative

5-15     fuel.  Nothing in this section shall be construed to require

5-16     conversion.

5-17           SECTION 5.  Subsection (a), Section 382.136, Health and

5-18     Safety Code, is amended to read as follows:

5-19           (a)  The commission may make exceptions to rules adopted

5-20     under Sections 382.133 and 382.134 if:

5-21                 (1)  a firm engaged in fixed price contracts with

5-22     public works agencies can demonstrate that compliance with the

5-23     requirements of those sections would result in substantial economic

5-24     harm to the firm under a contract entered into before September 1,

5-25     1997;

 6-1                 (2)  an alternative fuel that meets the normal

 6-2     requirements of the principal business of the affected entity is

 6-3     not available in the area in which the vehicles are to be operated

 6-4     [the commission determines that the affected vehicles will be

 6-5     operating primarily in an area that does not have or cannot

 6-6     reasonably be expected to establish adequate refueling for the

 6-7     fuels required under Sections 382.133 and 382.134];

 6-8                 (3)  the affected entity is unable to secure financing

 6-9     provided by or arranged through the proposed supplier or suppliers

6-10     of the fuels required under Sections 382.133 and 382.134 sufficient

6-11     to cover the additional costs of such fueling; [or]

6-12                 (4)  the projected net costs attributable to fueling

6-13     for conversion or replacement and operation of conventionally

6-14     fueled vehicles or engines with those capable of operating on the

6-15     fuels required under Sections 382.133 and 382.134 reasonably are

6-16     [is] expected [not] to exceed comparable costs for conventional

6-17     vehicles [operating on reformulated gasoline and diesel] measured

6-18     over the expected useful life of such vehicles or engines and after

6-19     including in such cost calculations any available state or federal

6-20     funding or incentives for the use of the fuels required under

6-21     Sections 382.133 and 382.134; or

6-22                 (5)  original equipment vehicles, or vehicles that may

6-23     be converted to operate on an alternative fuel, that meet the

6-24     affected entity's normal requirements and practices of the

6-25     principal business and have been certified by the United States

 7-1     Environmental Protection Agency as a clean fuel vehicle are not

 7-2     available.

 7-3           SECTION 6.  Section 382.142, Health and Safety Code, is

 7-4     amended by amending Subsection (b) and adding Subsections (c)

 7-5     through (f) to read as follows:

 7-6           (b) [(1)]  Rules adopted under this section shall provide for

 7-7     the issuance of appropriate program compliance credits to a vehicle

 7-8     owner or operator for one [any of the following] or any combination

 7-9     of the following actions [thereof]:

7-10                 (1) [(A)]  the purchase, lease, or acquisition of a

7-11     clean-fuel vehicle which meets more stringent emissions control

7-12     standards than those otherwise required under this Act;

7-13                 (2) [(B)]  the purchase, lease, or acquisition of

7-14     clean-fuel vehicles in greater numbers than otherwise required

7-15     under Sections 382.133 and 382.134;

7-16                 (3) [(C)]  the purchase, lease, or acquisition of a

7-17     clean-fuel vehicle in a category not otherwise required by this

7-18     subchapter; and

7-19                 (4) [(D)]  the purchase, lease, or acquisition of a

7-20     clean-fuel vehicle prior to the dates otherwise required under

7-21     Sections 382.133 and 382.134.

7-22           (c) [(2)]  Program compliance credits shall be awarded based

7-23     upon the emissions certification level of the vehicle generating

7-24     the credit.  Vehicles which provide greater emissions reductions

7-25     levels will be entitled to a greater number of credits as follows:

 8-1                 (1) [(A)]  LEVs--one credit;

 8-2                 (2) [(B)]  ULEVs--two credits; and

 8-3                 (3) [(C)]  ILEVs and ZEVs--three credits.

 8-4           (d) [(3)]  Program compliance credits issued for the

 8-5     purchase, lease, or other acquisition of a vehicle pursuant to this

 8-6     section may be used to demonstrate compliance with the percentage

 8-7     requirements of Sections 382.133 and 382.134, they may be banked

 8-8     for later use, or they may be traded, sold, or purchased, for use

 8-9     by any other person in the same nonattainment area, to demonstrate

8-10     compliance with the percentage requirements of Sections 382.133 and

8-11     382.134.

8-12           (e)  Fleet vehicles [(4)  Vehicles] converted, purchased,

8-13     leased, or otherwise acquired prior to September 1, 1995 [1998],

8-14     may be counted toward compliance with the applicable fleet

8-15     percentage requirements of Section 382.134 if the vehicles[:]

8-16                       [(A)]  are capable of operating on a [an

8-17     alternative] fuel or power source recognized by any State of Texas

8-18     fleet fuel program prior to September 1, 1995[;]

8-19                       [(B)  meet at a minimum the Tier I emissions

8-20     standards pursuant to Section 202 of the federal Clean Air Act, as

8-21     amended (42 U.S.C. Section 7521); and]

8-22                       [(C)  do not exceed 30 percent of the

8-23     owner/operator's fleet on September 1, 1998].

8-24           (f) [(5)]  This section shall not [also] apply to all

8-25     vehicles purchased, leased, or otherwise acquired pursuant to

 9-1     Section 2158.001(a), Government Code[:]

 9-2                       [(A)  Section 21.174(c)(1), Education Code;]

 9-3                       [(B)  Section 14(c)(1), Chapter 141, Acts of the

 9-4     63rd Legislature, Regular Session, 1973 (Article 1118x, Vernon's

 9-5     Texas Civil Statutes), as added by Section 8, Chapter 1189, Acts of

 9-6     the 71st Legislature, Regular Session, 1989, and amended by Section

 9-7     13, Chapter 503, Acts of the 72nd Legislature, Regular Session,

 9-8     1991;]

 9-9                       [(C)  Section 20(e)(1), Chapter 683, Acts of the

9-10     66th Legislature, 1979 (Article 1118y, Vernon's Texas Civil

9-11     Statutes);]

9-12                       [(D)  Section 6(k)(1), Article 1118z, Revised

9-13     Statutes; and]

9-14                       [(E)  Section 3.29(a), State Purchasing and

9-15     General Services Act (Article 601b, Vernon's Texas Civil

9-16     Statutes)].

9-17           SECTION 7.  Subsection (b), Section 382.143, Health and

9-18     Safety Code, is amended to read as follows:

9-19           (b)  Rules adopted under this section shall [comply with the

9-20     United States Environmental Protection Agency's minimum

9-21     requirements for an approvable Mobile Emissions Reduction Credit

9-22     program and shall also] provide for the following program elements:

9-23                 (1)  program participation shall be as follows:

9-24                       (A)  entry into the program is voluntary; and

9-25                       (B)  both fleet owners or operators subject to

 10-1    the percentage requirements of Sections 382.133 and 382.134 and

 10-2    vehicle owners or operators who are not subject to those percentage

 10-3    requirements may generate mobile emissions reduction credits under

 10-4    this program, although the board may require a certain minimum

 10-5    number of vehicles to participate;

 10-6                (2)  mobile emissions reduction credits shall be

 10-7    calculated on a per-pollutant basis and shall be granted to a

 10-8    participating vehicle owner or operator for any of the following:

 10-9                      (A)  purchase, lease, or acquisition of more or

10-10    cleaner vehicles than otherwise required by law; or

10-11                      (B)  entering into a binding contract with the

10-12    board to purchase, lease, or acquire at some future date more or

10-13    cleaner vehicles than otherwise required by law;

10-14                (3)  mobile emissions reduction credit values shall be

10-15    determined in accordance with United States Environmental

10-16    Protection Agency rules and guidance;

10-17                (4)  mobile emissions reduction credits may be used as

10-18    follows:

10-19                      (A)  to demonstrate compliance with any

10-20    applicable mobile source emissions reductions requirements; and

10-21                      (B)  to satisfy Reasonably Available Control

10-22    Technology and Clean Air Act offset requirements, subject to the

10-23    appropriate trading ratios; and

10-24                (5)  all mobile emissions reduction credits generated

10-25    in accordance with this section may, within the same nonattainment

 11-1    area, be sold, traded, or banked for later use among fleet vehicle

 11-2    owners or other mobile or stationary sources of emissions without

 11-3    discount or depreciation of such credits.

 11-4          SECTION 8.  Section 451.301, Transportation Code, is amended

 11-5    by amending Subsections (a) and (b) and adding Subsections (d) and

 11-6    (e) to read as follows:

 11-7          (a)  The board may not purchase or lease a motor vehicle,

 11-8    excluding any law enforcement and any emergency vehicle, that is

 11-9    not capable of using compressed natural gas or another alternative

11-10    fuel the use of which results in comparably lower emissions of

11-11    oxides of nitrogen, volatile organic compounds, carbon monoxide, or

11-12    particulates or combinations of those materials.

11-13          (b)  Except as provided by Subsection (d), after [After]

11-14    August 31, 1996, at least 50 percent of the fleet vehicles of an

11-15    authority must be capable of using compressed natural gas or other

11-16    alternative fuels.  In this section, "fleet vehicle" has the

11-17    meaning assigned by Section 382.131(7), Health and Safety Code.

11-18          (d)  Vehicles converted, purchased, leased, or otherwise

11-19    acquired prior to September 1, 1999, may be counted toward

11-20    compliance with the fleet percentage requirement of Subsection (b)

11-21    if the vehicles are capable of operating on a fuel or power source

11-22    recognized by any State of Texas fleet or mass transit fuel program

11-23    prior to September 1, 1995, and meet the following emission

11-24    standards:

11-25                (1)  for vehicles under 8,500 pounds gross vehicle

 12-1    weight rating (GVWR), the federal Tier I emissions standards

 12-2    pursuant to Section 202 of the federal Clean Air Act, as amended

 12-3    (42 U.S.C. Section 7521); or

 12-4                (2)  for vehicles over 8,500 pounds gross vehicle

 12-5    weight rating (GVWR), the federal emission standards in place at

 12-6    the time of their manufacture.

 12-7          (e)  The percentage requirements of Subsection (b) may be

 12-8    met, in whole or in part, through the purchase, lease, or other

 12-9    acquisition of program compliance credits pursuant to Section

12-10    382.142, Health and Safety Code, or through the purchase, lease, or

12-11    other acquisition of credits through the Texas Mobile Emissions

12-12    Reduction Credit (MERC) Program established pursuant to Section

12-13    382.143, Health and Safety Code.

12-14          SECTION 9.  Subsection (c), Section 451.302, Transportation

12-15    Code, is amended to read as follows:

12-16          (c)  A certification under this section must state that:

12-17                (1)  the authority's vehicles will be operating

12-18    primarily in an area in which neither the authority nor a supplier

12-19    has or can reasonably be expected to establish a central refueling

12-20    station for compressed natural gas or other alternative fuels; [or]

12-21                (2)  the authority is unable to acquire or be provided

12-22    equipment or refueling facilities necessary to operate vehicles

12-23    using compressed natural gas or other alternative fuels at a

12-24    projected cost that is reasonably expected to result in no greater

12-25    net cost than the continued use of traditional gasoline or diesel

 13-1    fuel measured over the expected useful life of the equipment or

 13-2    facilities supplied; or

 13-3                (3)  the authority is unable to acquire or be provided

 13-4    vehicles certified as low-emission vehicles (LEV) that meet the

 13-5    normal requirements of the authority due to unavailability for

 13-6    purchase from an original equipment manufacturer or as a

 13-7    conversion.

 13-8          SECTION 10.  Section 452.251, Transportation Code, is amended

 13-9    by amending Subsections (a) and (b) and adding Subsections (d) and

13-10    (e) to read as follows:

13-11          (a)  An authority may not purchase or lease a motor vehicle,

13-12    excluding any law enforcement and any emergency vehicle, that is

13-13    not capable of using compressed natural gas or another alternative

13-14    fuel the use of which results in comparably lower emissions of

13-15    oxides of nitrogen, volatile organic compounds, carbon monoxide, or

13-16    particulates or combinations of those materials.

13-17          (b)  Except as provided by Subsection (d), after [After]

13-18    August 31, 1996, at least 50 percent of the fleet vehicles operated

13-19    by an authority must be capable of using compressed natural gas or

13-20    another alternative fuel.  In this section, "fleet vehicle" has the

13-21    meaning assigned by Section 382.131(7), Health and Safety Code.

13-22          (d)  Vehicles converted, purchased, leased, or otherwise

13-23    acquired prior to September 1, 1999, may be counted toward

13-24    compliance with the fleet percentage requirement of Subsection (b)

13-25    if the vehicles are capable of operating on a fuel or power source

 14-1    recognized by any State of Texas fleet or mass transit fuel program

 14-2    prior to September 1, 1995, and meet the following emission

 14-3    standards:

 14-4                (1)  for vehicles under 8,500 pounds gross vehicle

 14-5    weight rating (GVWR), the federal Tier I emissions standards

 14-6    pursuant to Section 202 of the federal Clean Air Act, as amended

 14-7    (42 U.S.C. Section 7521); or

 14-8                (2)  for vehicles over 8,500 pounds gross vehicle

 14-9    weight rating (GVWR), the federal emission standards in place at

14-10    the time of their manufacture.

14-11          (e)  The percentage requirements of Subsection (b) may be

14-12    met, in whole or in part, through the purchase, lease, or other

14-13    acquisition of program compliance credits pursuant to Section

14-14    382.142, Health and Safety Code, or through the purchase, lease, or

14-15    other acquisition of credits through the Texas Mobile Emissions

14-16    Reduction Credit (MERC) Program established pursuant to Section

14-17    382.143, Health and Safety Code.

14-18          SECTION 11.  Subsection (b), Section 452.252, Transportation

14-19    Code, is amended to read as follows:

14-20          (b)  A certification under this section must state that:

14-21                (1)  the authority's vehicles will be operating

14-22    primarily in an area in which neither the authority nor a supplier

14-23    has or can reasonably be expected to establish a central refueling

14-24    station for compressed natural gas or other alternative fuels; [or]

14-25                (2)  the authority is unable to acquire or be provided

 15-1    equipment or refueling facilities necessary to operate vehicles

 15-2    using compressed natural gas or other alternative fuels at a

 15-3    projected cost that is reasonably expected to result in no greater

 15-4    net cost than the continued use of traditional gasoline or diesel

 15-5    fuel measured over the expected useful life of the equipment or

 15-6    facilities supplied; or

 15-7                (3)  the authority is unable to acquire or be provided

 15-8    vehicles certified as low-emission vehicles (LEV) that meet the

 15-9    normal requirements of the authority due to unavailability for

15-10    purchase from an original equipment manufacturer or as a

15-11    conversion.

15-12          SECTION 12.  Section 453.251, Transportation Code, is amended

15-13    by amending Subsections (a) and (b) and adding Subsections (d) and

15-14    (e) to read as follows:

15-15          (a)  A transit department may not purchase or lease a motor

15-16    vehicle, excluding any law enforcement and any emergency vehicle,

15-17    that is not capable of using compressed natural gas or another

15-18    alternative fuel the use of which results in comparably lower

15-19    emissions of oxides of nitrogen, volatile organic compounds, carbon

15-20    monoxide, or particulates or combinations of those materials.

15-21          (b)  Except as provided by Subsection (d), after [After]

15-22    August 31, 1996, at least 50 percent of the fleet vehicles operated

15-23    by a transit department must be capable of using compressed natural

15-24    gas or another alternative fuel.  In this section, "fleet vehicle"

15-25    has the meaning assigned by Section 382.131(7), Health and Safety

 16-1    Code.

 16-2          (d)  Vehicles converted, purchased, leased, or otherwise

 16-3    acquired prior to September 1, 1999, may be counted toward

 16-4    compliance with the fleet percentage requirement of Subsection (b)

 16-5    if the vehicles are capable of operating on a fuel or power source

 16-6    recognized by any State of Texas fleet or mass transit fuel program

 16-7    prior to September 1, 1995, and meet the following emission

 16-8    standards:

 16-9                (1)  for vehicles under 8,500 pounds gross vehicle

16-10    weight rating (GVWR), the federal Tier I emissions standards

16-11    pursuant to Section 202 of the federal Clean Air Act, as amended

16-12    (42 U.S.C. Section 7521); or

16-13                (2)  for vehicles over 8,500 pounds gross vehicle

16-14    weight rating (GVWR), the federal emission standards in place at

16-15    the time of their manufacture.

16-16          (e)  The percentage requirements of Subsection (b) may be

16-17    met, in whole or in part, through the purchase, lease, or other

16-18    acquisition of program compliance credits pursuant to Section

16-19    382.142, Health and Safety Code, or through the purchase, lease, or

16-20    other acquisition of credits through the Texas Mobile Emissions

16-21    Reduction Credit (MERC) Program established pursuant to Section

16-22    382.143, Health and Safety Code.

16-23          SECTION 13.  Subsection (b), Section 453.252, Transportation

16-24    Code, is amended to read as follows:

16-25          (b)  A certification under this section must state that:

 17-1                (1)  the transit department's vehicles will be

 17-2    operating primarily in an area in which neither the transit

 17-3    department nor a supplier has or can reasonably be expected to

 17-4    establish a central refueling station for compressed natural gas or

 17-5    other alternative fuels; [or]

 17-6                (2)  the transit department is unable to acquire or be

 17-7    provided equipment or refueling facilities necessary to operate

 17-8    vehicles using compressed natural gas or other alternative fuels at

 17-9    a projected [project] cost that is reasonably expected to result in

17-10    no greater net cost than the continued use of traditional gasoline

17-11    or diesel fuel measured over the expected useful life of the

17-12    equipment or facilities supplied; or

17-13                (3)  the transit department is unable to acquire or be

17-14    provided vehicles certified as low-emission vehicles (LEV) that

17-15    meet the normal requirements of the authority due to unavailability

17-16    for purchase from an original equipment manufacturer or as a

17-17    conversion.

17-18          SECTION 14.  This Act takes effect September 1, 1997.

17-19          SECTION 15.  The importance of this legislation and the

17-20    crowded condition of the calendars in both houses create an

17-21    emergency and an imperative public necessity that the

17-22    constitutional rule requiring bills to be read on three several

17-23    days in each house be suspended, and this rule is hereby suspended.