1-1     By:  Armbrister                                        S.B. No. 681

 1-2           (In the Senate - Filed February 20, 1997; February 25, 1997,

 1-3     read first time and referred to Committee on State Affairs;

 1-4     March 19, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 12, Nays 0; March 19, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 681               By:  Armbrister

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the alternative fuels program.

1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-12           SECTION 1.  Subdivision (7), Section 382.131, Health and

1-13     Safety Code, is amended to read as follows:

1-14                 (7)  "Fleet vehicle" means a vehicle required to be

1-15     registered under Chapter 502, Transportation Code, except a vehicle

1-16     registered under Section 502.006(c), Transportation Code [88,

1-17     General Laws, Acts of the 41st Legislature, 2nd Called Session,

1-18     1929 (Article 6675a-2, Vernon's Texas Civil Statutes)], and that is

1-19     centrally fueled, capable of being centrally fueled, or fueled at

1-20     facilities serving both business customers and the general public.

1-21     The term does not include:

1-22                       (A)  a [fleet] vehicle that, when not in use, is

1-23     normally parked at the residence of the individual who normally

1-24     [usually] operates it [and that is available to such individual for

1-25     personal use];

1-26                       (B)  [a fleet vehicle that, when not in use, is

1-27     normally parked at the residence of the individual who usually

1-28     operates it and who does not report to a central location; or]

1-29                       [(C)]  a [fleet] vehicle that has a gross vehicle

1-30     weight rating of greater than 26,000 pounds; or

1-31                       (C)  a vehicle used in the maintenance or repair

1-32     of underground mass transit facilities which is required by federal

1-33     law or regulation to operate on diesel fuel [except vehicles owned

1-34     or operated by the state or mass transit authorities].

1-35           SECTION 2.  Section 382.132, Health and Safety Code, is

1-36     amended to read as follows:

1-37           Sec. 382.132.  METROPOLITAN AREAS AFFECTED.  Rules adopted by

1-38     the commission under Sections 382.133 through 382.136 apply only to

1-39     a consolidated metropolitan statistical area or a metropolitan

1-40     statistical area with a population of 350,000 or more that, under

1-41     the federal national ambient air quality standards provided by

1-42     Section 181, federal Clean Air Act, as amended (42 U.S.C. Section

1-43     7511 and Table 1), is a serious, severe, or extreme nonattainment

1-44     area [has not met federal ambient air quality standards for ozone,

1-45     carbon monoxide, oxides of nitrogen, or particulates].

1-46           SECTION 3.  Subsection (b), Section 382.133, Health and

1-47     Safety Code, is amended to read as follows:

1-48           (b)(1)  Rules adopted under this section must require a mass

1-49     transit authority to have 50 percent of the authority's fleet

1-50     vehicles capable of using alternative fuel.

1-51                 (2)  Vehicles converted, purchased, leased, or

1-52     otherwise acquired prior to September 1, 1999, may be counted by

1-53     the commission toward compliance with the fleet percentage

1-54     requirement and rules adopted by the commission pursuant to this

1-55     section if the vehicles are capable of operating on a fuel or power

1-56     source recognized by any State of Texas fleet or mass transit fuel

1-57     program prior to September 1, 1995, and meet the following emission

1-58     standards:

1-59                       (A)  for vehicles under 8,500 pounds gross

1-60     vehicle weight rating (GVWR), the federal Tier I emissions

1-61     standards pursuant to Section 202 of the federal Clean Air Act, as

1-62     amended (42 U.S.C. Section 7521); or

1-63                       (B)  for vehicles over 8,500 pounds gross vehicle

1-64     weight rating (GVWR), the federal emission standards in place at

 2-1     the time of their manufacture.

 2-2                 (3)  The percentage requirement of this section may be

 2-3     met, in whole or in part, through the purchase, lease, or other

 2-4     acquisition of program compliance credits pursuant to Section

 2-5     382.142 or through the purchase, lease, or other acquisition of

 2-6     credits through the Texas Mobile Emissions Reduction Credit (MERC)

 2-7     Program established pursuant to Section 381.143 [its fleet vehicles

 2-8     able to operate on an alternative fuel according to the following

 2-9     schedule:]

2-10                 [(1)  not later than September 1, 1994, at least 30

2-11     percent of the vehicles; and]

2-12                 [(2)  not later than September 1, 1996, at least 50

2-13     percent of the vehicles].

2-14           SECTION 4.  Section 382.134, Health and Safety Code, is

2-15     amended by amending Subsections (c) and (d) and adding Subsection

2-16     (f) to read as follows:

2-17           (c)  Rules adopted by the board must require a local

2-18     government or private person to have a proportion of the person's

2-19     newly purchased fleet vehicles and a proportion of the fleet

2-20     vehicles in the person's total fleet able to operate on an

2-21     alternative fuel according to the following schedule:

2-22                 (1)  30 percent of fleet vehicles purchased after

2-23     September 1, 1998, or at least 10 percent of the fleet vehicles in

2-24     the total fleet as of September 1, 1998;

2-25                 (2)  50 percent of fleet vehicles purchased after

2-26     September 1, 2000[, and at least 20 percent of the fleet vehicles

2-27     in the total fleet as of September 1, 2000]; and

2-28                 (3)  70 [90] percent of light-duty fleet vehicles

2-29     purchased after September 1, 2002, and 50 [at least 45] percent of

2-30     the heavy-duty fleet vehicles purchased after [in the total fleet

2-31     as of] September 1, 2002.

2-32           (d)  Rules adopted by the board may not require a local

2-33     government or private person to purchase a fleet vehicle able to

2-34     operate on an alternative fuel if the person maintains a proportion

2-35     of 70 [90] percent or more alternative fuel vehicles in the

2-36     person's fleet.

2-37           (f)  The requirements imposed by this section may be met by

2-38     the conversion of currently owned or newly purchased

2-39     gasoline-fueled or diesel-fueled vehicles to operate on an

2-40     alternative fuel.  For purposes of this section, the conversion of

2-41     a vehicle to operate on an alternative fuel shall be treated the

2-42     same as the purchase of a vehicle able to operate on an alternative

2-43     fuel.  Nothing in this section shall be construed to require

2-44     conversion.

2-45           SECTION 5.  Subsection (a), Section 382.136, Health and

2-46     Safety Code, is amended to read as follows:

2-47           (a)  The commission may make exceptions to rules adopted

2-48     under Sections 382.133 and 382.134 if:

2-49                 (1)  a firm engaged in fixed price contracts with

2-50     public works agencies can demonstrate that compliance with the

2-51     requirements of those sections would result in substantial economic

2-52     harm to the firm under a contract entered into before September 1,

2-53     1997;

2-54                 (2)  an alternative fuel that meets the normal

2-55     requirements of the principal business of the affected entity is

2-56     not available in the area in which the vehicles are to be operated

2-57     [the commission determines that the affected vehicles will be

2-58     operating primarily in an area that does not have or cannot

2-59     reasonably be expected to establish adequate refueling for the

2-60     fuels required under Sections 382.133 and 382.134];

2-61                 (3)  the affected entity is unable to secure financing

2-62     provided by or arranged through the proposed supplier or suppliers

2-63     of the fuels required under Sections 382.133 and 382.134 sufficient

2-64     to cover the additional costs of such fueling; [or]

2-65                 (4)  the projected net costs attributable to fueling

2-66     for conversion or replacement and operation of conventionally

2-67     fueled vehicles or engines with those capable of operating on the

2-68     fuels required under Sections 382.133 and 382.134 reasonably are

2-69     [is] expected [not] to exceed comparable costs for conventional

 3-1     vehicles [operating on reformulated gasoline and diesel] measured

 3-2     over the expected useful life of such vehicles or engines and after

 3-3     including in such cost calculations any available state or federal

 3-4     funding or incentives for the use of the fuels required under

 3-5     Sections 382.133 and 382.134; or

 3-6                 (5)  original equipment vehicles, or vehicles that may

 3-7     be converted to operate on an alternative fuel, that meet the

 3-8     affected entity's normal requirements and practices of the

 3-9     principal business and have been certified by the United States

3-10     Environmental Protection Agency as a clean fuel vehicle are not

3-11     available.

3-12           SECTION 6.  Section 382.142, Health and Safety Code, is

3-13     amended by amending Subsection (b) and adding Subsections (c)

3-14     through (f) to read as follows:

3-15           (b) [(1)]  Rules adopted under this section shall provide for

3-16     the issuance of appropriate program compliance credits to a vehicle

3-17     owner or operator for one [any of the following] or any combination

3-18     of the following actions [thereof]:

3-19                 (1) [(A)]  the purchase, lease, or acquisition of a

3-20     clean-fuel vehicle which meets more stringent emissions control

3-21     standards than those otherwise required under this Act;

3-22                 (2) [(B)]  the purchase, lease, or acquisition of

3-23     clean-fuel vehicles in greater numbers than otherwise required

3-24     under Sections 382.133 and 382.134;

3-25                 (3) [(C)]  the purchase, lease, or acquisition of a

3-26     clean-fuel vehicle in a category not otherwise required by this

3-27     subchapter; and

3-28                 (4) [(D)]  the purchase, lease, or acquisition of a

3-29     clean-fuel vehicle prior to the dates otherwise required under

3-30     Sections 382.133 and 382.134.

3-31           (c) [(2)]  Program compliance credits shall be awarded based

3-32     upon the emissions certification level of the vehicle generating

3-33     the credit.  Vehicles which provide greater emissions reductions

3-34     levels will be entitled to a greater number of credits as follows:

3-35                 (1) [(A)]  LEVs--one credit;

3-36                 (2) [(B)]  ULEVs--two credits; and

3-37                 (3) [(C)]  ILEVs and ZEVs--three credits.

3-38           (d) [(3)]  Program compliance credits issued for the

3-39     purchase, lease, or other acquisition of a vehicle pursuant to this

3-40     section may be used to demonstrate compliance with the percentage

3-41     requirements of Sections 382.133 and 382.134, they may be banked

3-42     for later use, or they may be traded, sold, or purchased, for use

3-43     by any other person in the same nonattainment area, to demonstrate

3-44     compliance with the percentage requirements of Sections 382.133 and

3-45     382.134.

3-46           (e)  Fleet vehicles [(4)  Vehicles] converted, purchased,

3-47     leased, or otherwise acquired prior to September 1, 1995 [1998],

3-48     may be counted toward compliance with the applicable fleet

3-49     percentage requirements of Section 382.134 if the vehicles[:]

3-50                       [(A)]  are capable of operating on a [an

3-51     alternative] fuel or power source recognized by any State of Texas

3-52     fleet fuel program prior to September 1, 1995[;]

3-53                       [(B)  meet at a minimum the Tier I emissions

3-54     standards pursuant to Section 202 of the federal Clean Air Act, as

3-55     amended (42 U.S.C. Section 7521); and]

3-56                       [(C)  do not exceed 30 percent of the

3-57     owner/operator's fleet on September 1, 1998].

3-58           (f) [(5)]  This section shall not [also] apply to all

3-59     vehicles purchased, leased, or otherwise acquired pursuant to

3-60     Section 2158.001(a), Government Code[:]

3-61                       [(A)  Section 21.174(c)(1), Education Code;]

3-62                       [(B)  Section 14(c)(1), Chapter 141, Acts of the

3-63     63rd Legislature, Regular Session, 1973 (Article 1118x, Vernon's

3-64     Texas Civil Statutes), as added by Section 8, Chapter 1189, Acts of

3-65     the 71st Legislature, Regular Session, 1989, and amended by Section

3-66     13, Chapter 503, Acts of the 72nd Legislature, Regular Session,

3-67     1991;]

3-68                       [(C)  Section 20(e)(1), Chapter 683, Acts of the

3-69     66th Legislature, 1979 (Article 1118y, Vernon's Texas Civil

 4-1     Statutes);]

 4-2                       [(D)  Section 6(k)(1), Article 1118z, Revised

 4-3     Statutes; and]

 4-4                       [(E)  Section 3.29(a), State Purchasing and

 4-5     General Services Act (Article 601b, Vernon's Texas Civil

 4-6     Statutes)].

 4-7           SECTION 7.  Subsection (b), Section 382.143, Health and

 4-8     Safety Code, is amended to read as follows:

 4-9           (b)  Rules adopted under this section shall [comply with the

4-10     United States Environmental Protection Agency's minimum

4-11     requirements for an approvable Mobile Emissions Reduction Credit

4-12     program and shall also] provide for the following program elements:

4-13                 (1)  program participation shall be as follows:

4-14                       (A)  entry into the program is voluntary; and

4-15                       (B)  both fleet owners or operators subject to

4-16     the percentage requirements of Sections 382.133 and 382.134 and

4-17     vehicle owners or operators who are not subject to those percentage

4-18     requirements may generate mobile emissions reduction credits under

4-19     this program, although the board may require a certain minimum

4-20     number of vehicles to participate;

4-21                 (2)  mobile emissions reduction credits shall be

4-22     calculated on a per-pollutant basis and shall be granted to a

4-23     participating vehicle owner or operator for any of the following:

4-24                       (A)  purchase, lease, or acquisition of more or

4-25     cleaner vehicles than otherwise required by law; or

4-26                       (B)  entering into a binding contract with the

4-27     board to purchase, lease, or acquire at some future date more or

4-28     cleaner vehicles than otherwise required by law;

4-29                 (3)  mobile emissions reduction credit values shall be

4-30     determined in accordance with United States Environmental

4-31     Protection Agency rules and guidance;

4-32                 (4)  mobile emissions reduction credits may be used as

4-33     follows:

4-34                       (A)  to demonstrate compliance with any

4-35     applicable mobile source emissions reductions requirements; and

4-36                       (B)  to satisfy Reasonably Available Control

4-37     Technology and Clean Air Act offset requirements, subject to the

4-38     appropriate trading ratios; and

4-39                 (5)  all mobile emissions reduction credits generated

4-40     in accordance with this section may, within the same nonattainment

4-41     area, be sold, traded, or banked for later use among fleet vehicle

4-42     owners or other mobile or stationary sources of emissions without

4-43     discount or depreciation of such credits.

4-44           SECTION 8.  Section 451.301, Transportation Code, is amended

4-45     by amending Subsections (a) and (b) and adding Subsections (d) and

4-46     (e) to read as follows:

4-47           (a)  The board may not purchase or lease a motor vehicle,

4-48     excluding any law enforcement and any emergency vehicle, that is

4-49     not capable of using compressed natural gas or another alternative

4-50     fuel the use of which results in comparably lower emissions of

4-51     oxides of nitrogen, volatile organic compounds, carbon monoxide, or

4-52     particulates or combinations of those materials.

4-53           (b)  Except as provided by Subsection (d), after [After]

4-54     August 31, 1996, at least 50 percent of the fleet vehicles of an

4-55     authority must be capable of using compressed natural gas or other

4-56     alternative fuels.  In this section, "fleet vehicle" has the

4-57     meaning assigned by Section 382.131(7), Health and Safety Code.

4-58           (d)  Vehicles converted, purchased, leased, or otherwise

4-59     acquired prior to September 1, 1999, may be counted toward

4-60     compliance with the fleet percentage requirement of Subsection (b)

4-61     if the vehicles are capable of operating on a fuel or power source

4-62     recognized by any State of Texas fleet or mass transit fuel program

4-63     prior to September 1, 1995, and meet the following emission

4-64     standards:

4-65                 (1)  for vehicles under 8,500 pounds gross vehicle

4-66     weight rating (GVWR), the federal Tier I emissions standards

4-67     pursuant to Section 202 of the federal Clean Air Act, as amended

4-68     (42 U.S.C. Section 7521); or

4-69                 (2)  for vehicles over 8,500 pounds gross vehicle

 5-1     weight rating (GVWR), the federal emission standards in place at

 5-2     the time of their manufacture.

 5-3           (e)  The percentage requirements of Subsection (b) may be

 5-4     met, in whole or in part, through the purchase, lease, or other

 5-5     acquisition of program compliance credits pursuant to Section

 5-6     382.142, Health and Safety Code, or through the purchase, lease, or

 5-7     other acquisition of credits through the Texas Mobile Emissions

 5-8     Reduction Credit (MERC) Program established pursuant to Section

 5-9     382.143, Health and Safety Code.

5-10           SECTION 9.  Subsection (c), Section 451.302, Transportation

5-11     Code, is amended to read as follows:

5-12           (c)  A certification under this section must state that:

5-13                 (1)  the authority's vehicles will be operating

5-14     primarily in an area in which neither the authority nor a supplier

5-15     has or can reasonably be expected to establish a central refueling

5-16     station for compressed natural gas or other alternative fuels; [or]

5-17                 (2)  the authority is unable to acquire or be provided

5-18     equipment or refueling facilities necessary to operate vehicles

5-19     using compressed natural gas or other alternative fuels at a

5-20     projected cost that is reasonably expected to result in no greater

5-21     net cost than the continued use of traditional gasoline or diesel

5-22     fuel measured over the expected useful life of the equipment or

5-23     facilities supplied; or

5-24                 (3)  the authority is unable to acquire or be provided

5-25     vehicles certified as low-emission vehicles (LEV) that meet the

5-26     normal requirements of the authority due to unavailability for

5-27     purchase from an original equipment manufacturer or as a

5-28     conversion.

5-29           SECTION 10.  Section 452.251, Transportation Code, is amended

5-30     by amending Subsections (a) and (b) and adding Subsections (d) and

5-31     (e) to read as follows:

5-32           (a)  An authority may not purchase or lease a motor vehicle,

5-33     excluding any law enforcement and any emergency vehicle, that is

5-34     not capable of using compressed natural gas or another alternative

5-35     fuel the use of which results in comparably lower emissions of

5-36     oxides of nitrogen, volatile organic compounds, carbon monoxide, or

5-37     particulates or combinations of those materials.

5-38           (b)  Except as provided by Subsection (d), after [After]

5-39     August 31, 1996, at least 50 percent of the fleet vehicles operated

5-40     by an authority must be capable of using compressed natural gas or

5-41     another alternative fuel.  In this section, "fleet vehicle" has the

5-42     meaning assigned by Section 382.131(7), Health and Safety Code.

5-43           (d)  Vehicles converted, purchased, leased, or otherwise

5-44     acquired prior to September 1, 1999, may be counted toward

5-45     compliance with the fleet percentage requirement of Subsection (b)

5-46     if the vehicles are capable of operating on a fuel or power source

5-47     recognized by any State of Texas fleet or mass transit fuel program

5-48     prior to September 1, 1995, and meet the following emission

5-49     standards:

5-50                 (1)  for vehicles under 8,500 pounds gross vehicle

5-51     weight rating (GVWR), the federal Tier I emissions standards

5-52     pursuant to Section 202 of the federal Clean Air Act, as amended

5-53     (42 U.S.C. Section 7521); or

5-54                 (2)  for vehicles over 8,500 pounds gross vehicle

5-55     weight rating (GVWR), the federal emission standards in place at

5-56     the time of their manufacture.

5-57           (e)  The percentage requirements of Subsection (b) may be

5-58     met, in whole or in part, through the purchase, lease, or other

5-59     acquisition of program compliance credits pursuant to Section

5-60     382.142, Health and Safety Code, or through the purchase, lease, or

5-61     other acquisition of credits through the Texas Mobile Emissions

5-62     Reduction Credit (MERC) Program established pursuant to Section

5-63     382.143, Health and Safety Code.

5-64           SECTION 11.  Subsection (b), Section 452.252, Transportation

5-65     Code, is amended to read as follows:

5-66           (b)  A certification under this section must state that:

5-67                 (1)  the authority's vehicles will be operating

5-68     primarily in an area in which neither the authority nor a supplier

5-69     has or can reasonably be expected to establish a central refueling

 6-1     station for compressed natural gas or other alternative fuels; [or]

 6-2                 (2)  the authority is unable to acquire or be provided

 6-3     equipment or refueling facilities necessary to operate vehicles

 6-4     using compressed natural gas or other alternative fuels at a

 6-5     projected cost that is reasonably expected to result in no greater

 6-6     net cost than the continued use of traditional gasoline or diesel

 6-7     fuel measured over the expected useful life of the equipment or

 6-8     facilities supplied; or

 6-9                 (3)  the authority is unable to acquire or be provided

6-10     vehicles certified as low-emission vehicles (LEV) that meet the

6-11     normal requirements of the authority due to unavailability for

6-12     purchase from an original equipment manufacturer or as a

6-13     conversion.

6-14           SECTION 12.  Section 453.251, Transportation Code, is amended

6-15     by amending Subsections (a) and (b) and adding Subsections (d) and

6-16     (e) to read as follows:

6-17           (a)  A transit department may not purchase or lease a motor

6-18     vehicle, excluding any law enforcement and any emergency vehicle,

6-19     that is not capable of using compressed natural gas or another

6-20     alternative fuel the use of which results in comparably lower

6-21     emissions of oxides of nitrogen, volatile organic compounds, carbon

6-22     monoxide, or particulates or combinations of those materials.

6-23           (b)  Except as provided by Subsection (d), after [After]

6-24     August 31, 1996, at least 50 percent of the fleet vehicles operated

6-25     by a transit department must be capable of using compressed natural

6-26     gas or another alternative fuel.  In this section, "fleet vehicle"

6-27     has the meaning assigned by Section 382.131(7), Health and Safety

6-28     Code.

6-29           (d)  Vehicles converted, purchased, leased, or otherwise

6-30     acquired prior to September 1, 1999, may be counted toward

6-31     compliance with the fleet percentage requirement of Subsection (b)

6-32     if the vehicles are capable of operating on a fuel or power source

6-33     recognized by any State of Texas fleet or mass transit fuel program

6-34     prior to September 1, 1995, and meet the following emission

6-35     standards:

6-36                 (1)  for vehicles under 8,500 pounds gross vehicle

6-37     weight rating (GVWR), the federal Tier I emissions standards

6-38     pursuant to Section 202 of the federal Clean Air Act, as amended

6-39     (42 U.S.C. Section 7521); or

6-40                 (2)  for vehicles over 8,500 pounds gross vehicle

6-41     weight rating (GVWR), the federal emission standards in place at

6-42     the time of their manufacture.

6-43           (e)  The percentage requirements of Subsection (b) may be

6-44     met, in whole or in part, through the purchase, lease, or other

6-45     acquisition of program compliance credits pursuant to Section

6-46     382.142, Health and Safety Code, or through the purchase, lease, or

6-47     other acquisition of credits through the Texas Mobile Emissions

6-48     Reduction Credit (MERC) Program established pursuant to Section

6-49     382.143, Health and Safety Code.

6-50           SECTION 13.  Subsection (b), Section 453.252, Transportation

6-51     Code, is amended to read as follows:

6-52           (b)  A certification under this section must state that:

6-53                 (1)  the transit department's vehicles will be

6-54     operating primarily in an area in which neither the transit

6-55     department nor a supplier has or can reasonably be expected to

6-56     establish a central refueling station for compressed natural gas or

6-57     other alternative fuels; [or]

6-58                 (2)  the transit department is unable to acquire or be

6-59     provided equipment or refueling facilities necessary to operate

6-60     vehicles using compressed natural gas or other alternative fuels at

6-61     a projected [project] cost that is reasonably expected to result in

6-62     no greater net cost than the continued use of traditional gasoline

6-63     or diesel fuel measured over the expected useful life of the

6-64     equipment or facilities supplied; or

6-65                 (3)  the transit department is unable to acquire or be

6-66     provided vehicles certified as low-emission vehicles (LEV) that

6-67     meet the normal requirements of the authority due to unavailability

6-68     for purchase from an original equipment manufacturer or as a

6-69     conversion.

 7-1           SECTION 14.  This Act takes effect September 1, 1997.

 7-2           SECTION 15.  The importance of this legislation and the

 7-3     crowded condition of the calendars in both houses create an

 7-4     emergency and an imperative public necessity that the

 7-5     constitutional rule requiring bills to be read on three several

 7-6     days in each house be suspended, and this rule is hereby suspended.

 7-7                                  * * * * *