HBA-LJP S.B. 5 77(R)BILL ANALYSIS


Office of House Bill AnalysisS.B. 5
By: Brown, J. E. "Buster"
Environmental Regulation
4/25/2001
Engrossed


BACKGROUND AND PURPOSE 

The federal Clean Air Act authorizes the United States Environmental
Protection Agency (EPA) to establish maximum allowable concentrations of
pollutants because these pollutants in excess can endanger human health,
harm the environment, and cause property damage.  Areas where pollutants
exceed EPA standards may be designated as nonattainment areas and if these
areas do not meet EPA standards by 2007, all non-complying states face
severe sanctions.  Texas has four nonattainment and three near
nonattainment areas, comprising 37 counties.  These areas represent 70
percent of the state's population, 76 percent of aggregate employment, 82
percent of personal income, and 83 percent of gross state product. Because
of Texas' integrated economy, all parts of the state have a stake in
bringing these areas into compliance. 

The Texas Natural Resource Conservation Commission (TNRCC) has submitted a
state implementation plan to regulate emissions in nonattainment areas.
However, there are significant areas of potential emissions reductions the
TNRCC cannot regulate but which may be realized through an incentive
program. Senate Bill 5 establishes the Texas emissions reduction plan to
reduce emissions in the state. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Natural Resource Conservation
Commission in SECTION 1 (Sections 386.053, 386.112, and 386.152, Health and
Safety Code), SECTION 14, and SECTION 15, and to the Comptroller of Public
Accounts in SECTION 1 (Sections 386.152 and 386.160, Health and Safety
Code), (Articles 9035 and 9036, V.T.C.S.), SECTION 3 (Section 152.0215, Tax
Code), SECTION  13, SECTION 14, and SECTION 15 of this bill. 

ANALYSIS

Texas Emissions Reduction Plan

Senate Bill 5 amends the Health and Safety Code to require the Texas
Natural Resource Conservation Commission (TNRCC), the comptroller of public
accounts (comptroller), and the Texas Council on Environmental Technology
(council) to establish and administer the Texas emissions reduction plan
(plan). The bill requires TNRCC, the comptroller, and the council to
provide grants or funding under the plan for the diesel emissions reduction
incentive program, the motor vehicle purchase or lease incentive program,
the local government grant program, and the new technology research and
development program.  The bill provides that equipment purchased before
September 1, 2001 is not eligible for a grant or other funding under the
plan (Sec. 386.051).  The bill establishes the Texas emissions reduction
plan fund (fund) as an account in the state treasury that is administered
by the comptroller and sets forth provisions relating to the fees,
surcharges, and payments that compose the fund, and the use and allocation
of the fund for programs implemented and administered under the plan (Secs.
386.251 and 386.252). 

The bill sets forth provisions regarding the administration of the plan by
TNRCC, including the duties, objectives, guidelines and criteria for
awarding grants under the plan, monitoring procedures of the achievements
of projects awarded grants, the general availability of emission reduction
credits, the  availability of emissions reduction credits in certain
nonattainment areas, and the review and reporting requirements of TNRCC
(Secs. 386.052-386.057 and SECTION 23). 

The bill establishes the Texas Emissions Reduction Plan Advisory Board
(advisory board) consisting of 13 appointed members and sets forth
provisions relating to the appointment, composition, terms, and the
presiding officer of the members of the advisory board.  The bill requires
the advisory board to review the program and recommend to TNRCC changes to
revenue sources or financial incentives or any legislative, regulatory, or
budgetary changes needed.  The bill requires TNRCC to provide necessary
staff support to the advisory board (Sec. 386.058 and SECTION 18). 

The bill provides for the expiration of provisions relating to the Texas
emissions reduction plan, the diesel emissions reduction incentive program,
the motor vehicle purchase or lease incentive program, the local government
grant program, and the Texas emissions reduction plan fund on August 31,
2008 (Sec. 386.002). 

Diesel Emissions Reduction Incentive Program

The bill requires TNRCC to establish and administer a diesel emissions
reduction incentive program, under which TNRCC is required to provide
grants to eligible projects to offset the incremental cost of projects that
reduce emissions of oxides of nitrogen from high-emitting diesel sources in
nonattainment or affected counties of the state.  The bill sets forth
provisions relating to the eligibility, considerations, and applications of
projects to receive grants under the diesel emissions reduction incentive
program.  The bill requires TNRCC to adopt criteria for setting priorities
for projects eligible for grants no later than September 1, 2001 (Secs.
386.102-386.104 and SECTION 15). 

The bill sets forth provisions relating to TNRCC's calculations of
cost-effectiveness, the criteria of costeffectiveness regarding the
determination of grant money, and adjustments to maximum cost-effectiveness
amount and award amount (Secs. 386.105-386.107, Health and Safety Code). 

The bill requires TNRCC to provide funding from the fund for infrastructure
demonstration projects and sets forth provisions relating to the
implementation of these projects.  The bill also sets forth provisions
relating to eligibility, the application package, and procedures for
reviewing an application for infrastructure demonstration projects (Secs.
386.108-386.111). 

The bill requires TNRCC to develop a purchase or lease incentive program
for heavy-duty motor vehicles and to adopt rules necessary to implement the
program and to reimburse an eligible person who purchases or leases a
heavy-duty motor vehicle on or after January 1, 2002.  The bill sets forth
provisions relating to the statewide incentives for the reimbursement of
incremental costs for the purchase or lease and the incentive schedule of a
heavy-duty vehicle under the program (Secs. 386.112 and 386.113, and
SECTION 16). 

Motor Vehicle Purchase or Lease Incentive Program

The bill requires TNRCC and the comptroller to develop a purchase or lease
incentive program to authorize incentives for the purchase or lease of
light-duty motor vehicles and to adopt rules necessary to implement the
program.  The bill sets forth provisions relating to the eligibility
schedule of a light-duty motor vehicle for the motor vehicle purchase or
lease incentive program and the authorization of TNRCC to modify the
incentive emissions standards of a light-duty motor vehicle to improve the
ability of the program to achieve its goals (Secs. 386.151-386.154). 

At the beginning but not later than July 1 of each year preceding the
vehicle model year, manufacturers of motor vehicles are required to provide
a list of the new vehicle models that the manufacturer intends to sell in
this state during that model year that meet certain incentive emissions
standards and provide the amount of the incremental cost of the vehicles to
TNRCC.  The bill also sets forth provisions regarding the publication and
the distribution of these lists by the comptroller (Secs. 386.155 and
386.156). 
 
To enable consumers to make informed decisions, the bill requires the motor
vehicle manufacturer or distributor to affix on each new light-duty motor
vehicle for sale or lease in this state a clearly legible label that shows
the vehicle's class rating under the United States Environmental Protection
Agency's (EPA) 5Star Green Vehicle Class Rating System and make the list of
eligible motor vehicles available to the prospective purchaser or lessee.
The bill provides that a person who purchases or leases a motor vehicle
during the first year the model is offered for sale or lease is eligible
for low-emissions vehicle purchase or lease incentive that is prorated
based on a four-year lease term.  To receive an incentive under a motor
vehicle purchase or lease incentive program, the purchaser or lessee of an
eligible motor vehicle is required to apply for the incentive in the manner
provided by law or by rule of the comptroller (Secs. 386.157 and 386.158). 

The bill sets forth provisions relating to the public information program
for the motor vehicle purchase or lease incentive program and the report of
the program by the comptroller to TNRCC (Secs. 386.159 and 386.161).  The
bill requires the comptroller, by rule, to develop a method to administer
and account for the motor vehicle purchase or lease incentives, and sets
forth provisions relating to the comptroller prescribing the accounting,
reporting, and verification  procedures for motor vehicle purchase or lease
incentives to new motor vehicle dealers and leasing agents (Sec. 386.160).
The bill requires TNRCC no later than the 30th day after the effective date
of this Act to publish the first annual list of vehicles eligible for motor
vehicle purchase or lease incentives (SECTION 15). 

Local Government Grant Program

The bill requires TNRCC to develop a competitive grant program to encourage
the retirement and replacement of inefficient residential cooling
equipment, household appliances and high-emitting noncommercial lawn and
garden equipment, and the weatherization of residences.  The bill
authorizes the administration of the program by municipalities or counties,
and sets forth provisions relating to the costeffectiveness requirement of
a grant, projects conducted under a grant, the use of grant money, and the
required disposal of retired equipment by a grant recipient (Secs. 386.201-
386.205). 

Texas Building Energy Performance Standards

The bill provides for the adoption of the energy efficiency chapter of the
International Residential Code, as it existed on May 1, 2001, as the energy
code in this state for single-family residential construction.  To achieve
energy conservation in all other residential, commercial, and industrial
construction, the bill provides for the adoption of the International
Energy Conservation Code as it existed on May 1, 2001 for use in this
state.  The bill sets forth procedures regarding the authorization of a
municipality to adopt local amendments to these codes, the administration
and enforcement of the adopted codes, and the  ensurance of inspections and
enforcement of the codes (Secs. 388.003).  The bill also provides for the
enforcement of energy standards for construction outside of a municipality
(Sec. 388.004). 

The bill requires a municipality in a nonattainment area and an affected
county, the nonattainment area, and the affected county to develop an
energy efficiency and weatherization program for existing buildings that
would result in certain energy savings, and sets forth provisions relating
to the development, implementation, energy saving estimates, the adoption
of noncode energy performance standards, and the required annual progress
report by a municipality or affected county.  The bill requires the Energy
Systems Laboratory at the Texas Engineering Experiment Station of The Texas
A&M University (laboratory) to develop a series of green building
guidelines as part of the green building performance standards (Secs.
386.005 and 386.006). 

The bill sets forth provisions regarding the creation and composition of
the Texas building energy performance standards advisory committee and the
application of the adopted codes to any building or structure in this state
for which a building permit application is received by a local jurisdiction
on or after September 1, 2002 (Secs. 388.007 and 388.008). 

The bill requires that the laboratory have the authority to set and collect
fees to perform certain tasks in  support of the additional energy
conservation programs, the distribution of information and technical
assistance, and the development of an accreditation program for home energy
rating services to be implemented by September 1, 2003 (Secs.
388.003-388.005, 388.009, and 388.010) 

New Technology Research and Development Program

The bill establishes the Texas Council on Environmental Technology
(council) to identify, evaluate, and deploy new technologies and assist
TNRCC and the EPA in the process of ensuring credit for technological
advancements.  The bill provides that the council is composed of 11 members
and sets forth provisions relating to the appointment and terms of the
members, and the council offices and projects location (Sec. 387.002 and
SECTION 19).  The bill requires the council to establish and administer a
new technology research program to provide grants to be used to support
development of emissions-reducing and technologies with the designated
monies from the environmental research fund contained within the general
revenue fund (Secs. 387.003 and 387.008). The bill also authorizes the
council to appoint advisory committees to assist the council in performing
its duties and sets forth provisions relating to the composition of the
advisory committees.  The bill requires the council, no later than December
1, 2002, and not later than December 1 of each subsequent year, to report
to the legislature on projects funded under the new technology research and
development program (Secs. 387.009 and 387.010). 

The bill requires the council to issue a request no later than the 30th day
after the adoption of rules governing the new technology research and
development program, for proposals for projects to be funded under the
program and sets forth provisions relating to the specific request of the
council for proposals or program opportunity notices for technology
projects (Sec. 387.004 and SECTION 20).  The bill also sets forth
provisions regarding the priorities and considerations of eligibility, the
application process, and costsharing of projects for a grant under the new
technology research program (Secs. 387.005-387.007). 

Clean Vehicles Insignia for Motor Vehicles

The bill amends the Transportation Code to require the Department of Public
Safety (DPS) to issue at the time of registration or reregistration of a
motor vehicle a specially designed "clean vehicle" insignia for a motor
vehicle that is eligible for a motor vehicle purchase and lease incentive.
The bill also sets forth provisions relating to the contents and the fee
for the insignia and the distribution of the funds under the plan to pay
for the cost to the county for administrating the insignia.  The bill
provides for the expiration of provisions relating to the insignia on
August 31, 2008 (Sec. 502.186).  The bill also requires the Texas
Department of Transportation no later than the 45th day after the effective
date of this Act to make available to the county tax assessor-collector of
each county in the state the insignia and sets forth provisions relating to
the issuance of the insignias (SECTION 17). 

Exemptions for Motor Fuel Vehicles with a Clean Vehicle Insignia

The bill entitles motor vehicles with a "clean vehicle" insignia to travel
in a preferential car pool or  high occupancy vehicle lanes, regardless of
the number of occupants in the motor vehicle, and privileged parking spaces
of a political subdivision or private property owner.  The bill provides
for the expiration of provisions relating to the above entitlements on
August 31, 2008 (Secs. 224.153, 431.073, and 681.009). 

Fees

The bill provides for the imposition of a surcharge on the registration of
a truck-tractor or commercial motor vehicle in an amount equal to 10
percent of the total fees due for the registration of the truck-tractor or
commercial motor vehicle and sets forth provisions relating to the
remittance and deposit of such surcharges.  The bill also requires DPS to
collect a $1 fee for the inspection of a motor vehicle in an area of the
state that is not a nonattainment or affected county and a $5 fee if the
inspection is in a nonattainment or affected county.  The bill also sets
forth provisions relating to the remittance and deposit of these fees on
the inspection of a motor vehicle.  The bill provides for the expiration of
the provisions regarding inspection fees and surcharges on August 31, 2008
(Sec. 502.1675 and 548.5055). 
 
The bill amends the Tax Code to provide for a surcharge equal to 0.25
percent of the price on lease or rental amount on the retail sale, lease,
or rental, of new or used equipment and sets forth provisions relating to
the collection, administration, enforcement, and deposit into the Texas
emissions reduction plan fund of the surcharge.  The bill provides for the
imposition of a surcharge that is one percent of the total consideration on
every retail sale or lease of every on-road diesel motor vehicle over 14,
000 pounds sold or leased in this state.  The bill requires the comptroller
by rule to adopt any additional procedures for the collection,
administration, and enforcement of the on-road diesel motor vehicle
surcharge and sets forth provisions for the deposit of these remitted
surcharges.  The bill provides for the expiration of the above provisions
regarding surcharges on September 30, 2008 (Secs. 151.0515 and 152.0215,
Tax Code). Provisions imposing a diesel fuel tax do not apply to the volume
of water that is blended together with taxable diesel fuel that is clearly
labeled.  The provision relating to diesel fuel tax expires August 31, 2008
(Sec. 153.203).  The bill also provides for the imposition of a $1
surcharge on a person, except specified persons, for each day that the
person has the right to use or possess a room in a hotel that is ordinarily
used for sleeping in a nonattainment or affected county and sets forth
provisions relating to the collection, administration, and enforcement of
such a surcharge, and the deposit of all the remitted surcharges. The bill
provides for the expiration of the provisions relating to the surcharge on
certain persons on September 30, 2008 (Sec. 156.054). 

The bill amends the Parks and Wildlife Code to provide for a surcharge for
each application for an original or renewal certificate of number for a
motorboat that will be operated primarily in a nonattainment or affected
county of this state and sets forth provisions relating to the collection
and remittance of the surcharge as well as for the expiration of this
provision on August 31, 2008 (Sec. 31.0265). 

The bill amends V.T.C.S. to provide for a surcharge of $1 imposed on each
fare collected by a taxi driver for transportation by taxi to and from an
airport in a county that is in a nonattainment or affected county. The bill
requires the comptroller to adopt any necessary rules for the
administration, payment, collection, and enforcement of the surcharge, and
sets forth provisions relating to the deposit of the surcharges and the
payment, records, exemption, and the liability of unremitted taxi
surcharges.  The bill provides that a person who violates a rule adopted by
the comptroller or provisions regarding a taxi surcharge under the plan
commits a Class C misdemeanor.  The bill provides for a surcharge of 25
cents per gallon imposed on the sale of bunker fuel by a petroleum refining
facility in this state.  The bill requires the comptroller to adopt any
necessary rules for the administration, payment, collection, and
enforcement of the surcharge, and sets forth provisions relating to the
deposit, administration, payment, collection, enforcement, and exemptions
of the surcharge.  The bill provides for the expiration of the above
provisions on August 31, 2008 (Articles 9035 and 9036, V.T.C.S.). 

The bill amends law to require TNRCC to adopt rules establishing the
guidelines and criteria required to implement the programs established
under this Act and to require the comptroller to adopt all rules necessary
to carry out the duties delegated to the comptroller under this Act.
Pending the adoption of these rules, the bill requires TNRCC to begin the
implementation of the programs established under this Act using guidelines
developed by a similar operating program in another state that is modified
for application in this state (SECTION 14).  The bill requires TNRCC and
the comptroller to adopt rules necessary to implement the diesel emissions
reduction and motor vehicle purchase or lease incentive programs within a
specified time period (SECTION 15). 

The bill requires TNRCC to submit to the United States Environmental
Protection Agency on the effective date of this Act a revision of the state
implementation plan that deletes the requirements of the construction shift
and the early purchase of Tier 2 and Tier 3 equipment and adds this Act
(SECTION 21).  The bill sets forth provisions for the continuance of this
Act when certain other Acts of the 77th Legislature, Regular Session, 2001
purport to abolish certain funds and accounts (SECTION 22). 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.