SRC-MWN S.B. 5 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 5
77R9252 MI-DBy: Brown, J. E. "Buster"
Natural Resources
3/19/2001
As Filed


DIGEST AND PURPOSE 

The federal Clean Air Act authorizes the United States Environmental
Protection Agency (EPA) to establish the maximum allowable concentrations
of pollutants that can endanger human health, harm the environment, and
cause property damage. A significant portion of Texas currently does not
meet these standards and is facing severe sanctions if attainment is not
reached by 2007. While the Texas Natural Resource Conservation Commission
(commission) has submitted a proposed State Implementation Plan (SIP)
requiring emissions reductions of sources under their control, there are
significant areas of potential emission reductions the commission cannot
regulate but which may be realized through incentive programs. As proposed,
S.B. 5 establishes programs to encourage emissions reductions. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Natural Resource
Conservation Commission in SECTION 1 (Sections 386.104, 386.152, and
386.159, Health and Safety Code),   and in SECTIONS 24 and 25; and to the
comptroller of public accounts in SECTION 1 (Section 386.162, Health and
Safety Code), and SECTION 24 and 25 of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 5C, Health and Safety Code, by adding Chapter 386,
as follows: 

CHAPTER 386. TEXAS EMISSIONS REDUCTION PLAN

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 386.001. DEFINITIONS. Defines "advisory board," "alternative fuel,"
"alternative fuel vehicle," "commission," "fund," "incremental cost," "near
nonattainment area," "nonattainment area," and "plan." 

[Sections 386.002-386.050 reserved for expansion]

SUBCHAPTER B. TEXAS EMISSIONS REDUCTION PLAN

Sec. 386.051. TEXAS EMISSIONS REDUCTION PLAN. Requires the Texas Natural
Resource Conservation Commission (commission) to establish and administer
the Texas emissions reduction plan in accordance with this chapter.
Requires the commission, under the plan, to provide grants or other funding
for certain purposes. Provides that a project begun before September 1,
2001, is not eligible for a grant or other funding under the plan. 

Sec. 386.052. COMMISSION DUTIES. Requires the commission, in administering
the plan established under this chapter and in accordance with the
requirements of this chapter, to perform certain procedures. Requires
appropriate commission objectives for the HoustonGalveston and Dallas-Fort
Worth state implementation plans to first ensure that affected entities are
able to achieve the required emissions reductions to comply with the
alternative plan  requirements to meet the construction shift and the
accelerated purchase rules of the respective implementation plans. 

Sec. 386.053. GUIDELINES AND CRITERIA. Requires the commission to adopt
grant guidelines and criteria consistent with the requirements of this
chapter. Requires the commission to consider examples of similar programs
in other states during the development of guidelines and criteria. Requires
the guidelines to include protocols to calculate project cost-effectiveness
and safeguards to ensure that funded projects generate surplus emissions
reductions. Requires the commission to make draft guidelines and criteria
available to the public before the 45th day preceding the date of final
adoption and hold at least one public meeting to consider public comments
on the draft guidelines and criteria before final adoption. Authorizes the
commission to propose revisions to the guidelines and criteria adopted
under this section as necessary to improve the ability of the plan to
achieve its goals. Authorizes the revisions to include adding new eligible
categories, as appropriate, for the diesel emissions reduction incentive
program established under Subchapter C. Requires the commission to make a
proposed revision available to the public before the 45th day preceding the
date of final adoption of the revision and to hold at least one public
meeting to consider public comments on the proposed revision before the
final adoption. Provides that the rulemaking requirements of Chapter 2001
(Administrative Procedure), Government Code, do not apply to the adoption
or revision of guidelines and criteria under this section. 

Sec. 386.054. MONITORING PROCEDURES. Requires the commission to develop
procedures for monitoring whether the emissions reductions projected for
projects awarded grants under this chapter are actually achieved.
Authorizes monitoring procedures to include project audits and contract
requirements that the grant recipient provide information annually about
the project. Provides that if the commission requires annual reports, it is
required to keep to a minimum the amount of information required from a
recipient and to keep the report format simple and convenient. Requires
monitoring and auditing procedures to be sufficient to enable emissions
reductions generated by funded projects to be fully credited to air quality
plans. Authorizes the commission to revise monitoring and audit procedures
from time to time as necessary or appropriate to enhance the effectiveness
of the plan. 

Sec. 386.055. STAFF AND TECHNICAL SUPPORT. Requires the commission to
provide staff or technical support as needed within available budgetary
resources to assist projects awarded grants or other funding under this
chapter. 

Sec. 386.056. REPORTING REQUIREMENTS. Requires the commission, in
consultation with the advisory board, to annually review programs
established under the plan to publish a report that describes each project
funded under the plan, the amount granted for the project, the emissions
reductions attributable to the project, and the cost-effectiveness of the
project. Requires the commission, not later than December 1, 2002, and not
later than December 1 of each subsequent second year through December 1,
2008, to publish and submit to the legislature a biennial plan report.
Requires the report to include the information included in the annual
reports and specific information for individual programs. Requires the
report, for projects funded as part of the fueling infrastructure
demonstration program under Subchapter C, to meet certain criteria.
Requires the report, for projects funded under the new technology
development and research program under Subchapter E, to describe the
technical objectives and accomplishments of the project and the progress of
the project technology toward commercialization. Requires the report to
describe certain information. Requires the commission to request public
comment and hold public meetings on each draft biennial report and, in
producing a final biennial report, to consider and respond to all
significant comments received. 

Sec. 386.057. TEXAS EMISSIONS REDUCTION PLAN ADVISORY BOARD. Provides that
the Texas Emissions Plan Advisory Board consists of certain persons.
Requires  appointments to the advisory board to include representatives
from certain industries or entities. Provides that members of the advisory
board serve staggered two-year terms. Provides that the terms of six
members expire February 1 of each even-numbered year. Provides that the
terms of seven members expire February 1 of each odd-numbered year.
Authorizes a member to be reappointed to a subsequent term. Requires the
advisory board to annually elect a presiding officer. Requires the advisory
board to review the first biennial report prepared by the commission under
Section 386.056 on the implementation of the plan, hold a public hearing on
the need for a continuing plan, and prepare and submit a report to certain
persons, on or before September 1, 2002, on the desirability of a
continuing plan, similar to the plan established under this chapter, that
will significantly contribute toward attaining air quality standards in
Texas. Requires the advisory board, in the report, to recommend changes to
revenue sources for funding financial incentives and any legislative or
budget action needed to implement a continuing plan. 
 
Sec. 386.058. EXPIRATION OF CONSTRUCTION SHIFT. Authorizes that part of the
state implementation plan that restricts the hours during which
construction equipment may be operated in nonattainment or near
nonattainment areas expires on the date the commission certifies the
achievement of sufficient emissions reductions in nonattainment areas and
near nonattainment areas of this state. 

[Sections 386.059-386.100 reserved for expansion]

SUBCHAPTER C. DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM

Sec. 386.101. DEFINITIONS. Defines "cost-effectiveness," "covered engine,"
"covered  source,"  "covered vehicle," "offroad engine," "offroad
equipment," "offroad vehicle," "program," "new vehicle," "qualifying fuel,"
"repower," "retrofit," "very-low-emissions vehicle,"
"super-ultra-low-emissions vehicle ," "ultra-low-emissions vehicle," and
"zero-emissions vehicle." 

Sec. 386.102. PROGRAM. Requires the commission to establish and administer
a diesel emissions reduction incentive program. Requires the commission,
under the program, to provide grants for eligible projects to offset the
incremental cost of projects that reduce emissions of oxides of nitrogen
from high-emitting diesel sources in nonattainment and near nonattainment
areas of the state. Requires the commission to determine the eligibility of
projects. Authorizes projects that are to be considered for a grant under
the program to include certain factors. Provides that a new purchase,
lease, retrofit, repower, or add-on equipment project is not eligible for a
grant under this subchapter if the new purchase, lease, retrofit, repower,
or add-on equipment is required by any local, state, or federal law, rule
or regulation, memorandum of agreement, or other legally binding document.
Provides that this subsection does not apply to certain projects and
purchases. 

Sec. 386.103. APPLICATION FOR GRANT. Authorizes any individual, corporate
entity, or public agency that owns one or more covered vehicles that
operate primarily within a nonattainment area or near nonattainment area of
this state or that otherwise contribute substantially to the state
inventory of emissions of oxides of nitrogen to apply for a grant under the
program. Requires an application for a grant under this subchapter to be
made on an application provided by the commission and to contain
information required by the commission, including certain other factors. 

Sec. 386.104. ELIGIBILITY REQUIREMENTS. Requires a proposed project to meet
the requirements of this section to be eligible for a grant under the
program. Requires, for a proposed project other than a project involving a
marine vessel or engine, not less than 75 percent of vehicle miles traveled
or hours of operation projected for the five years immediately following
the award of a grant to be projected to take place in a nonattainment area
or near  nonattainment area of this state. Requires the vessel or engine,
for a proposed project involving a marine vessel or engine, to be operated
in the intercoastal waterways or bays of a nonattainment area or near
nonattainment area of this state for a sufficient amount of time over the
lifetime of the project to meet the cost-effectiveness requirements of
Section 386.105. Requires each proposed project to meet the
cost-effectiveness requirements of Section 386.105 and 386.106. Requires a
proposed repower project to meet commission requirements relating to
baseline emissions levels of the engines being replaced under the project.
Requires a proposed retrofit, repower, or add-on equipment project to
document, in a manner acceptable to the commission, a reduction in
emissions of oxides of nitrogen of at least 30 percent compared with the
baseline emissions adopted by the commission for the relevant engine year
and application. Authorizes the commission, after study of available
emissions reduction technologies, public notice and comment, and
consultation with the advisory board, to revise the minimum percentage
reduction in emissions of oxides of nitrogen required by this subsection to
improve the ability of the program to achieve its goals. Requires the
engines, for a proposed project involving the purchase of new
very-low-emissions or zero-emissions offroad equipment, to be certified to
an optional low oxides of nitrogen emissions standard established by the
commission, except as otherwise provided by this subsection. Requires the
project proponent, for a proposed project involving the purchase of a new
very-low-emissions or zero-emissions offroad equipment for which the
described standard is not available, to document, to the commission's
satisfaction, that the very-low-emissions or zero-emissions engine emits
not more than 70 percent of the oxides of nitrogen emitted by a new engine
certified to the baseline oxides of nitrogen emissions standard for that
engine. Requires the commission by rule, if a baseline emissions standard
does not exist for new offroad equipment in a particular category, to
establish an appropriate baseline emissions level for comparison purposes.
Authorizes the commission to approve payments to offset the incremental
cost, over the expected lifetime of the vehicle, of alternative fuel used
in a vehicle if the proposed project as a whole, including incremental fuel
cost, meets the requirements of this subchapter. Requires the commission to
develop an appropriate method for converting incremental fuel costs into an
initial cost for purposes of determining cost-effectiveness as required by
Section 386.105. 
 
Sec. 386.105. CALCULATION OF COST-EFFECTIVENESS. Requires one-time grants
of money at the beginning of a project, in calculating cost-effectiveness,
to be annualized using a time value of public funds or discount rate
determined for each project by the commission, taking into account the
interest rate on bonds, interest earned by state funds, and other factors
the commission considers appropriate. Requires cost-effectiveness to be
calculated by dividing annualized costs by average annual emissions
reductions of oxides of nitrogen in the affected area. Requires the
commission to establish reasonable methodologies for evaluating project
cost-effectiveness consistent with this section and with accepted methods.
Requires the commission to develop protocols for calculating surplus oxides
of nitrogen emissions reductions in nonattainment and near nonattainment
areas of this state from representative project types over the life of the
projects. 

Sec. 386.106. COST-EFFECTIVENESS CRITERIA; DETERMINATION OF GRANT AMOUNT.
Prohibits the commission from awarding a grant for a proposed project the
costeffectiveness of which, calculated in accordance with Section 386.105
and rules adopted under that section, exceeds $13,000 per ton of oxides of
nitrogen emissions reduced in the nonattainment or near nonattainment area
for which the project is proposed. Prohibits the commission from awarding a
grant that, net of taxes, provides an amount that exceeds the incremental
cost of the proposed project. Requires the commission to adopt guidelines
for capitalizing incremental lease costs so those costs may be offset by a
grant under this subchapter. Requires the commission, in determining the
amount of a grant under this subchapter, to reduce the incremental cost of
a proposed new purchase, lease, retrofit, repower, or add-on equipment
project by the value of any existing financial incentive that directly
reduces the cost of the proposed project, including tax credits or
deductions, other grants, or any other public financial assistance.
Authorizes the commission to establish maximum  grant awards per vehicle or
engine replaced for projects that propose to repower offroad equipment. 

Sec. 386.107. ADJUSTMENT TO MAXIMUM COST-EFFECTIVENESS AMOUNT AND AWARD
AMOUNT. Authorizes the commission, in consultation with the advisory board,
after study of available emissions reduction technologies and costs and
after public notice and comment, to reduce the values of the maximum grant
award criteria established in Section 386.106 to improve the ability of the
program to achieve its goals. Authorizes the commission, in consultation
with the advisory board, to annually adjust the maximum costeffectiveness
amount established in Section 386.106(a) and any per-project maximum set by
the commission under Section 386.106(e), to account for inflation. 

Sec. 386.108. AVAILABILITY OF EMISSIONS REDUCTION CREDITS. Prohibits a
project funded under this program from being used for credit under any
state or federal emissions reduction credit averaging, banking, or trading
program. Prohibits an emissions reduction generated by the program, except
as provided by Section 386.058, from being used as a marketable emissions
reduction credit or to offset any emissions reduction obligation. Provides
that a project involving a new emissions reduction measure that would
otherwise generate marketable credits under state or federal emissions
reduction credit averaging, banking, or trading programs is not eligible
for funding under the program unless the project includes the transfer of
the marketable credits to the end user and the retirement of the credits.
Authorizes an industrial point source located in the Houston-Galveston
nonattainment area to use emissions reductions generated by the program to
offset the requirements of commission rules relating to control of air
pollution from nitrogen compounds if certain conditions are met. 

Sec. 386.109. FUELING INFRASTRUCTURE DEMONSTRATION PROJECTS. Requires the
commission to provide limited funding from money available for the diesel
emissions reduction incentive program for fueling infrastructure
demonstration projects to meet certain conditions. Requires the commission,
in implementing the requirement of this section, to perform certain
procedures. 

Sec. 386.110. ELIGIBLE FUELING INFRASTRUCTURE DEMONSTRATION PROJECTS.
Authorizes the commission to consider for funding under Section 386.109
certain equipment or projects. 

Sec. 386.111. APPLICATION PACKAGE FOR FUELING INFRASTRUCTURE DEMONSTRATION
PROJECTS. Requires the commission to develop a simple, standardized
application package for fueling infrastructure demonstration project grants
under this subchapter. Requires the package to include certain information.
Requires the application form to require as much information as the
commission determines is necessary to properly evaluate each project but to
otherwise minimize the information required. Prohibits the commission from
requiring an applicant, as part of the application process, to calculate
tons of emissions reduced or cost-effectiveness. 

Sec. 386.112. APPLICATION REVIEW PROCEDURES. Requires the commission to
review an application for a grant for a project authorized under this
subchapter, including an application for a grant for a fueling
infrastructure demonstration project, immediately on receipt of the
application. Requires the commission, if the commission determines that an
application is incomplete, to notify the applicant, not later than the 15th
working day after the date of the determination, with an explanation of
what is missing from the application. Requires the commission to record the
date and time of receipt of each application the commission determines to
be complete and evaluate the completed application according to the
appropriate project criteria. Requires the commission to approve, as soon
as possible and not later than the 60th working day after the date the
complete application is received, an application that meets the appropriate
project criteria. Requires the commission to make every effort to expedite
the  application review process and to award grants to qualified projects
in a timely manner. Requires the commission, to the extent possible, to
coordinate project review and approval with any timing constraints related
to project purchases or instalments to be made by an applicant. Authorizes
the commission to deny an application for a project that does not meet the
applicable project criteria or that the commission determines is not made
in good faith, is not credible, or is not in compliance with this chapter
and the goals of this chapter. Requires the commission to award a grant
under this subchapter in conjunction with the execution of a contract that
obligates the commission to make the grant and the recipient to perform the
actions described in the recipient's grant application. Requires the
contract to incorporate provisions for recapturing grant money in
proportion to any loss of emissions reductions or underachievement in
dispensing qualifying fuel compared with the volume of emissions reductions
or amount of fuel dispensed that was projected in the grant application.
Requires grant money recaptured under the contract provision to be
deposited in the fund and reallocated for other projects under this
subchapter. 

Sec. 386.113. STAFF AND TECHNICAL SUPPORT. Requires the commission to
provide staff or technical support as needed within available budgetary
resources to assist infrastructure project proponents in addressing issues
common to eligible infrastructure projects, including permitting and safety
requirements. 

Sec. 386.114. TOTAL COST-EFFECTIVENESS CALCULATION. Requires the commission
to calculate the total cost-effectiveness of oxides of nitrogen emissions
reductions resulting from the use of vehicles that fuel at facilities
funded under the fueling infrastructure demonstration program. Requires the
total cost-effectiveness calculation to include program funding provided to
vehicles and funding provided under the fueling infrastructure
demonstration program. 

[Section 386.115-386.150 reserved for expansion]

SUBCHAPTER D. LOW-EMISSIONS VEHICLE PURCHASE  OR LEASE INCENTIVE PROGRAM

Sec. 386.151. DEFINITIONS. Defines "heavy light-duty truck," "heavy-duty
engine," "heavyduty vehicle," "light light-duty truck," "light-duty truck,"
"light-duty vehicle," "medium-duty passenger vehicle," and "open-cargo
area." 

Sec. 386.152. LOW-EMISSIONS VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM.
Requires the commission to develop a low-emission vehicle purchase or lease
program in accordance with this subchapter and to adopt rules necessary to
implement the program. Requires the program to authorize incentives for the
purchase or lease of new lowemissions vehicles according to the schedules
provided by Sections 386.153-386.155 and to Section 386.156, to be
implemented at the point of sale or lease. 
 
Sec. 386.153. LOW-EMISSIONS VEHICLE PURCHASE OR LEASE INCENTIVE SCHEDULE:
LIGHT-DUTY VEHICLES. Provides that a light-duty vehicle or a light
lightduty truck is eligible for a low-emissions vehicle purchase or lease
incentive according to certain schedules. Provides that a heavy light-duty
truck is eligible for a low-emissions vehicle purchase or lease incentive
according to certain schedules.  

Sec. 386.154. LOW-EMISSIONS VEHICLE PURCHASE OR LEASE INCENTIVE SCHEDULE:
MEDIUM-DUTY PASSENGER VEHICLES. Provides that a medium-duty passenger
vehicle is eligible for a low-emissions vehicle purchase or lease incentive
according to certain schedules. 

Sec. 386.155. LOW-EMISSIONS VEHICLE PURCHASE OR LEASE INCENTIVE  SCHEDULE:
HEAVY-DUTY VEHICLES. Provides that a heavy-duty vehicle is eligible for a
low-emissions vehicle purchase or lease incentive according to certain
schedules. 

Sec. 386.156. ALTERNATIVE FUEL VEHICLES. Provides that an alternative fuel
vehicle purchased or leased for new as a fleet vehicle is eligible under
this subchapter for a lowemissions vehicle purchase or lease incentive.
Provides that an alternative fuel vehicle purchased or leased wholly or in
part with grant money or another incentive awarded under this chapter is
not eligible for an incentive under this subchapter. Requires the owner of
a dual fuel vehicle that receives a low-emissions vehicle purchase or lease
incentive under this section to certify to the commission each year for the
first five years following the purchase or lease of the vehicle that the
vehicle used an alternative fuel for at least 75 percent of the vehicle
miles traveled during the preceding year. Provides that the owner is liable
to the commission, for any year in which the certification cannot be made,
for an amount equal to the amount of the incentive prorated for the period
of time the vehicle could not be certified. 

Sec. 386.157. MANUFACTURER'S CERTIFICATION OF LOW-EMISSIONS VEHICLES.
Requires a manufacturer of motor vehicles that intends to sell motor
vehicles in this state during that model year, at the beginning of but not
later than July 1 of each vehicle model year, to certify to the commission
the new vehicle models that the manufacturer intends to sell in this state
during that model year that meet the incentive emissions standards
established by the schedules set out under Sections 386.153-386.155.  

Sec. 386.158. LIST OF ELIGIBLE VEHICLES. Provides that on August 1 each
year the commission is required to publish a list of the new model
low-emissions vehicles that are certified by the manufacturer to meet the
incentive emissions standards and are qualified for a low-emissions vehicle
purchase or lease incentive under this subchapter on purchases or leases
during that model year. Requires the comptroller to distribute the list of
certified vehicles to new vehicle dealerships. 

Sec. 386.159. VEHICLE EMISSIONS INFORMATION LABEL. Requires the commission
by rule, to enable consumers to make informed purchase decisions based on
the relative amounts of emissions produced by vehicles within each vehicle
class, to require that each new passenger car, light-duty truck, and
medium-duty passenger vehicle for sale or lease in this state display a
clearly legible label that shows the vehicle's 5-Star Green Vehicle Class
Rating under the United States Environmental Protection Agency's 5-star
green vehicle class rating system. Requires the label to also contain
certain information. 

Sec. 386.160. POINT-OF-SALE OR POINT-OF-LEASE INCENTIVE; REPORT TO
COMPTROLLER. Provides that a person who purchases or leases during the
model year in which it is first offered for sale or lease a new
low-emissions vehicle that has been certified under Section 386.157 as
eligible for an incentive under this subchapter or an alternative fuel
vehicle for use as a fleet vehicle is eligible to receive the incentive at
the time and point of sale or lease according to the applicable incentive
schedule. Requires a new motor vehicle dealer or leasing agent to credit a
purchaser or leassee with the appropriate incentive as part of the sales or
lease transaction. Requires the dealer or agent to report to the
comptroller, at the beginning of each calender month and in the manner
prescribed by the comptroller, the amount of incentives credited by the
dealer or agent during the preceding calender month. 

Sec. 386.161. PUBLIC INFORMATION. Requires the commission in cooperation
with the comptroller to develop and implement a program to inform the
public about the low-emissions vehicle purchase or lease incentive program.
Requires county tax assessor-collectors to insert a notice describing the
low-emissions vehicle purchase or lease incentive program with each annual
vehicle registration renewal notice. Authorizes a new motor vehicle dealer
or leasing agent to retain from the amounts reimbursed by the commission an
amount equal to two percent of the amount the dealer or agent invoices to
the commission each month. 
 
Sec. 386.162. COMPTROLLER TO ACCOUNT FOR LOW-EMISSIONS VEHICLE PURCHASE OR
LEASE INCENTIVES. Requires the comptroller by rule to develop a method to
administer and account for the low-emissions vehicle purchase or lease
incentives authorized by this subchapter, and to administer the fund to
timely reimburse new motor vehicle dealers or leasing agents for incentive
amounts credited by the dealer. Authorizes the comptroller to develop forms
and instructions for new motor vehicle dealers and leasing agents to use in
accounting for and reporting low-emissions vehicle purchase and lease
incentives and requires the comptroller to provide new motor vehicle
dealers and leasing agents with information to assist them in accounting
for and reporting the incentives. 

Sec. 386.163. REPORT TO COMMISSION; SUSPENSION OF LEASE INCENTIVES.
Requires the comptroller to report to the commission periodically regarding
low-emissions vehicle purchase or lease incentives. Requires the
comptroller to inform the commission if at any time during a fiscal year
the balance available in the money allocated in the fund for lowemissions
vehicle purchase or lease incentives falls below 15 percent of the total
amount allocated for the incentives during that fiscal year. Requires the
comptroller by order, if the balance available for low-emissions vehicle
purchase or lease incentives falls below that amount, to suspend the
incentives until the comptroller can certify that the balance available in
the fund for incentives is an amount adequate to resume the incentives, but
not later than the beginning of the next fiscal year. Requires the
comptroller, if the comptroller suspends the incentives, to immediately
notify the commission and all new motor vehicle dealers and leasing agents
that the incentives have been suspended. 

[Sections 386.164-386.200 reserved for expansion]

SUBCHAPTER E. NEW TECHNOLOGY DEVELOPMENT AND RESEARCH PROGRAM

 Sec. 386.201. DEFINITIONS. Defines "council" and "program."

Sec. 386.202. TEXAS COUNCIL ON ENVIRONMENTAL TECHNOLOGY. Provides that the
Texas Council on Environmental Technology consists of 11 members appointed
by the governor to represent the academic and nonprofit communities.
Requires the governor to designate from the council members a presiding
officer of the council. Provides that members of the council serve six-year
staggered terms, with the terms of three or four members expiring February
1 of each odd-numbered year. Requires the council to work to enhance the
entrepreneurial and inventive spirit of Texans to assist in developing
solutions to problems by performing certain criteria. Requires the council
offices and projects to be housed at The University of Texas at Austin. 

Sec. 386.203. NEW TECHNOLOGY RESEARCH PROGRAM. Requires the council to
establish and administer a new technology research program as provided by
this subchapter. Requires the council, under the program, to provide grants
to be used to support developmental of emissions-reducing technologies that
are to be used for projects eligible for awards under other provisions of
this chapter. Provides that the primary objective of this subchapter is to
promote the development of commercialization technologies that will support
projects that are authorized to be funded under this chapter. 

Sec. 386.204. SOLICITATION OF NEW TECHNOLOGY PROPOSALS. Requires the
council from time to time to issue specific requests for proposals (RFPs)
or program opportunity notices (PONs) for technology projects to be funded
under the new technology research program. 

Sec. 386.205. ELIGIBLE PROJECTS; PRIORITIES. Requires grants awarded under
this subchapter to be directed toward a balanced mix of certain
technologies. Requires the council to identify and evaluate and the
commission to consider making grants for technology projects  that would
allow qualifying fuels to be produced from energy resources in this state.
Requires the council, in considering projects under this subsection, to
give preference to projects involving otherwise unusable energy resources
in this state and producing qualifying fuels at prices lower than otherwise
available and low enough to make the projects to be funded under the
program economically attractive to local businesses in the area for which
the project is proposed. Requires the council, in soliciting proposals
under Section 386.204 and determining how to allocate grant money available
for projects under this subchapter, to give special consideration to
advanced technologies and retrofit or add-on projects that provide multiple
benefits by reducing emissions or particulates and other air pollutants.
Provides that a project that involves a technology that allows an onroad
covered vehicle to replace with electric power, while the vehicle is
parked, the power normally supplied to the vehicle's internal combustion
engine is eligible for funding under this subchapter if the project meets
all applicable criteria. Provides that a project that involves publicly or
privately owned vehicles or vessels is eligible for funding under this
subchapter if the project meets all applicable criteria. 

Sec. 386.206. EVIDENCE OF COMMERCIALIZATION POTENTIAL REQUIRED. Requires an
application for a technology grant under this subchapter to show clear and
compelling evidence that certain conditions will be met. Requires the
council to consider specifically, for each proposed technology project
application, certain factors. 

Sec. 386.207. COST-SHARING. Authorizes the council to require cost-sharing
for technology projects funded under this subchapter but prohibits the
council from requiring repayment of grant money. 

Sec. 386.208. ENVIRONMENTAL RESEARCH FUND. Provides that the environmental
research fund is an account in the general revenue fund. Provides that the
fund consists of money from gifts, grants, or donations to the fund for
designated or general use and from any other source designated by the
legislature. Authorizes money in the fund to be used only for the operation
and projects of the council. 

Sec. 386.209. ADVISORY COMMITTEES. Authorizes the council to appoint
advisory committees as necessary or desirable to assist the council in
performing its duties. Authorizes an advisory committee to include
representatives from various fields and entities. Authorizes any senator or
representative desiring to do so to participate on any advisory committee
appointed under this section. 

[Sections 386.210-386.250 reserved for expansion]

SUBCHAPTER F. TEXAS EMISSIONS REDUCTION PLAN FUND

Sec. 386.251. FUND. Provides that the Texas emissions reduction plan fund
is an account in the state treasury. Provides that the fund is administered
by the comptroller for the benefit of the Texas emissions reduction plan
established under this chapter. Provides that the fund consists of certain
fees, surcharges, and payments. 

Sec. 386.252. USE OF FUND. Authorizes money in the fund to be used only to
implement and administer programs established under the Texas emissions
reduction plan and requires it to be allocated for certain purposes.
Authorizes up to 15 percent of the money allocated under Subsection (a) to
a particular program and not expended under that program by March 1 of the
second fiscal year of a fiscal biennium to be used for another program
under the Texas emissions reduction plan as determined by the commission in
consultation with the advisory board. 

SECTION 2. Amends Chapter 151C, Tax Code, by adding Section 151.0515, as
follows: 

 Sec. 151.0515. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. Defines
"construction equipment." Provides that in each county in this state, a
surcharge is imposed on the sale, lease, or rental of new or used
construction equipment in an amount equal to 0.25 percent of the sale price
or the lease or rental amount, not to exceed a total amount of $750 for
each surcharge. Requires the surcharge to be collected at the same time and
in the same manner and be administered and enforced in the same manner as
the tax imposed under this subchapter. Requires the comptroller to adopt
any additional procedures needed for the collection, administration, and
enforcement of the surcharge authorized by this section and deposit all
remitted surcharges to the credit of the Texas emissions reduction plan
fund. 

SECTION 3. Amends Chapter 151H, Tax Code, by adding Sections
151.355-151.357, as follows: 

Sec. 151.355. ENERGY-EFFICIENT APPLIANCES. Provides that the sale of a
refrigerator, clothes washer, clothes dryer, dishwater, or room air
conditioner is exempt from the tax imposed by this chapter if the
refrigerator, clothes washer, clothes dryer, dishwasher, or room air
conditioner qualifies under federal law for the "Energy Star" label. 

Sec. 151.356. CERTAIN HIGH-EFFICIENT HEATING, COOLING, AND WATER HEATING
EQUIPMENT. Provides that the sale of certain heating, cooling, and water
heating equipment is exempt from the tax imposed by this chapter. 

Sec. 151.357. FUEL-CELL ELECTRIC GENERATING EQUIPMENT. Defines "fuel cell."
Provides that the sale of a new fuel cell is exempt from the tax imposed by
this chapter if the fuel cell meets certain criteria. 

SECTION 4. Amends Chapter 152B, Tax Code, by adding Section 152.0215, as
follows: 

Sec. 152.0215. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. Provides that a
surcharge is imposed on every retail sale or lease of every onroad diesel
motor vehicle sold or leased in this state. Provides that the amount of the
surcharge is one percent of the total consideration. Requires the surcharge
to be collected at the same time and in the same manner and be administered
and enforced in the same manner as the tax imposed under this subchapter.
Requires the comptroller to adopt any additional procedures needed for the
collection, administration, and enforcement of the surcharge authorized by
this section and deposit all remitted surcharges to the credit of the Texas
emissions reduction plan fund. 

SECTION 5. Amends Section 153.001(5), Tax Code, to redefine "diesel fuel."

SECTION 6. Amends Chapter 156B, Tax Code, by adding Section 156.054, as
follows: 

Sec. 156.054. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. Provides that in
this section, "nonattainment area" and "near nonattainment area" have the
meanings assigned by Section 386.001, Health and Safety Code. Provides that
in a nonattainment area or a near nonattainment area in this state, a $1
surcharge is added to the tax imposed on a person under this chapter.
Requires the comptroller to adopt procedures for the collection,
administration, and enforcement of the surcharge authorized by this section
and to deposit all surcharges remitted under this section to the Texas
emissions reduction plan fund. 

SECTION 7. Amends Chapter 171, Tax Code, by adding Subchapter S, as follows:

SUBCHAPTER S. TAX CREDIT FOR USE OF LIQUIFIED GAS TO FUEL MOTOR VEHICLES

 Sec. 171.851. DEFINITIONS. Defines "incremental cost" and "liquefied gas."

 Sec. 171.852. ELIGIBILITY. Provides that a corporation is eligible for a
credit against the tax imposed under this chapter in the amount and under
the conditions and limitation as provided by this subchapter. 

Sec. 171.853. CREDIT FOR INCREMENTAL COST OF USING LIQUEFIED GAS TO FUEL
MOTOR VEHICLES. Authorizes a corporation to claim a credit under this
subchapter only for the incremental cost of using liquefied gas to fuel
motor vehicles. 

Sec. 171.854. AMOUNTS; LIMITATIONS. Provides that the amount of the credit
is equal to the total incremental cost of using liquefied gas to fuel motor
vehicles. Prohibits the total credit under this section from exceeding
[amount to be supplied]. Prohibits the total credit claimed under this
subchapter for a period from exceeding the amount of franchise tax due for
the report after another applicable tax credits. Authorizes a corporation
to claim a credit under this subchapter for an expenditure made during an
accounting period only against the tax owed for the corresponding reporting
period. 

Sec. 171.855. APPLICATION FOR CREDIT. Requires a corporation to apply for a
credit under this subchapter on or with the tax report for the period for
which the credit is claimed. Requires the comptroller to adopt a form for
the application for the credit. Requires a corporation to use this form in
applying for the credit. 

Sec. 171.856. ASSIGNMENT PROHIBITED. Prohibits a corporation from
conveying, assigning, or transferring the credit allowed under this
subchapter to another entity unless all of the assets of the corporation
are conveyed, assigned, or transferred in the same transaction. 

Sec. 171.857. REIMBURSEMENT TO STATE FROM TEXAS EMISSIONS REDUCTION PLAN
FUND. Requires the comptroller to reimburse the state for revenue lost
through tax credits authorized under this subchapter in the manner provided
by Chapter 386, Health and Safety Code. 

SECTION 8. Amends Section 224.153, Transportation Code, by adding
Subsection (c), to provide that a vehicle displaying the license plate
authorized by Section 502.2665 for low-emissions or alternative fuel
vehicles is entitled to travel in a professional car pool or high occupancy
vehicle lane designated under this section regardless of the number of
occupants in the vehicle. 

SECTION 9. Amends Section 224.155, Transportation Code, as follows:

Sec. 224.155. New heading: FAILURE OR REFUSAL TO PAY TOLL CHARGES;
EXEMPTION FOR LOW-EMISSIONS AND ALTERNATIVE FUEL VEHICLES. Provides that a
vehicle displaying the license plate authorized by Section 502.2665 for
lowemissions or alternative fuel vehicles is not required to pay a toll
under this section. 

SECTION 10. Amends Section 361.179, Transportation Code, by adding
Subsection (h), to provide that a vehicle displaying the license plate
authorized by Section 502.2665 for low-emissions or alternative fuel
vehicles is not required to pay a toll imposed by an authority under this
section. 

SECTION 11. Amends Section 366.173, Transportation Code, by adding
Subsection (h), to make a conforming change. 

SECTION 12. Amends Section 431.073, Transportation Code, by adding
Subsection (d), to provide that a vehicle displaying the license plate
authorized by Section 502.2665 for low-emissions or alternative fuel
vehicles is entitled to travel in a preferential car pool or high occupancy
vehicle lane designated under this section regardless of the number of
occupants in the vehicle and without paying a toll. 

 SECTION 13. Amends Chapter 502D, Transportation Code, by adding Section
502.1675, as follows: 

Sec. 502.1675. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. Provides that in
addition to the registration fees charged under Section 502.167, a
surcharge is imposed on the registration of a truck-tractor or commercial
motor vehicle under that section in an amount to 10 percent of the total
fees due for the registration of the truck-tractor or commercial motor
vehicle under that section. Requires the county tax assessor-collector to
remit the surcharge collected under this section to the comptroller at the
time and in the manner prescribed by the comptroller for deposit in the
Texas emissions reduction plan fund. 
 
SECTION 14. Amends Chapter 502D, Transportation Code, by adding Section
502.1715, as follows: 

Sec. 502.1715. ADDITIONAL FEE FOR TEXAS EMISSIONS REDUCTION PLAN. Requires
the Texas Department of Transportation (department), in addition to other
registration fees for a license plate, set of license plates or other
device used as the registration insignia, to collect a $1 fee for each
motor vehicle registered in a nonattainment area or near nonattainment area
in this state. Requires the county tax assessor-collector to remit fees
collected under this section to the comptroller for deposit in the Texas
emissions reduction plan find. Provides that in this subsection,
"nonattainment area" and "near nonattainment area" have the meanings
assigned by Section 386.001, Health and Safety Code. 

SECTION 15. Amends Chapter 502F, Transportation Code, by adding Section
502.2665, as follows: 

Sec. 502.2665. LOW-EMISSIONS AND ALTERNATIVE FUEL VEHICLES. Requires the
department to issue specially designed license plate for a motor vehicle
that meets certain criteria. Requires license plates issued under this
section to include certain words and be consecutively numbered. Requires
the department to issue a license plate under this section without payment
of any additional fee to a person who meets certain criteria. Requires the
comptroller to reimburse the county treasurer of the county in which the
applicant resides a reasonable amount from the Texas emissions reduction
plan fund to pay for the costs to the county of administering this section. 
 
SECTION 16. Amends Section 521.421, Transportation Code, by adding
Subsection (h), to require the department to collect an additional fee of
$1 in an area of the state that is not a nonattainment area or near
nonattainment area and an additional fee of $3 in a nonattainment area or
near nonattainment area in this state to fund the Texas emissions reduction
plan established under Chapter 386, Health and Safety Code. Makes
conforming changes. 

SECTION 17. Amends Chapter 548H, Transportation Code, by adding Section
548.5055, as follows: 

Sec. 548.5055. TEXAS EMISSIONS REDUCTION PLAN FEE. Requires the department,
in addition to other fees required by this subchapter, to fund the Texas
emissions reduction plan established under Chapter 386, Health and Safety
Code, to collect, motor vehicles required to be inspected under this
chapter, of certain fees. Makes conforming changes. 

SECTION 18. Amends Section 643.053, Transportation Code, to require the
application, in addition to other fees required by this section, to be
accompanied by a Texas emissions reduction plan surcharge in the amount of
$2 per vehicle for an annual registration and $4 per vehicle for a two-year
registration. Makes a conforming change. 

SECTION 19. Amends Section 681.009, Transportation Code, by adding
Subsection (f), to require a political subdivision or a person who
designates five or more parking spaces or a parking area for the exclusive
use of vehicles transporting persons with disabilities, in a nonattainment
area or near nonattainment area of this state, to designate the same number
of parking spaces or a parking area for the exclusive use of vehicles
displaying the license plate authorized by Section 502.2665 for a
lowemissions and alternative fuel vehicles. Makes a conforming change. 

SECTION 20. Amends Chapter 31B, Parks and Wildlife Code, by adding Section
31.0265, to require each application for an original or renewal certificate
of number for a motorboat that will be operated primarily in a
nonattainment or near nonattainment area of this state, to be accompanied
by a $3 Texas emissions reduction plan surcharge in addition to any other
fee required to be paid to the department. Makes conforming changes. 

SECTION 21. Amends Title 132, Revised Statutes, by adding Article 9035, as
follows: 

 Art. 9035. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE ON TAXI FARES

Sec. 1. DEFINITIONS. Defines "alternative fuel," "alternative fuel
vehicle," "fare," "nonattainment area," "taxi," and "very-low-emissions
vehicle." 

 Sec. 2. APPLICATION. Provides that this article applies only in a county
that is in a nonattainment area or a near nonattainment area of this state. 

Sec. 3. IMPOSITION AND COLLECTION OF SURCHARGE. Provides that a surcharge
of 50 cents is imposed on each fare collected by the taxi driver for
transportation by a taxi. Requires the person who owns the taxi or rents or
leases the taxi for the purpose of using the taxi to provide transportation
services to others to pay the surcharge imposed by this article. Requires
the person required to pay the surcharge to maintain records of the
surcharge in the manner prescribed by the comptroller and remit the
surcharge to the comptroller at the time in the manner prescribed by the
comptroller for deposit to the credit of the Texas emissions reduction plan
fund. 

Sec. 4. EXEMPTION FROM SURCHARGE. Provides that the surcharge imposed by
this article does not apply if the taxi providing the transportation for
which the fare is charged is a very-low-emissions vehicle or an alternative
fuel vehicle. 

Sec. 5. INTEREST AND PENALTIES. Provides that a person is liable for
penalties and interest on surcharges that are not remitted when due in the
same manner and at the same rate as provided for delinquent taxes by
Section 111.060 (Interest on Delinquent Tax) and 111.061 (Penalty on
Delinqunet Tax or Tax Reports), Tax Code. 

Sec. 6. CRIMINAL PENALTY. Provides that a person who violates this article
or a rule adopted by the comptroller under this article commits an offense.
Provides that an offense under this section is a Class C misdemeanor. 

SECTION 22. Requires all new residential and commercial construction begun
on or after the effective date of this Act to comply with energy-efficient
standards. 

SECTION 23. Provides that a Texas emissions reduction plan surcharge is
imposed on the sale of fuel to marine vessels moored for an extended or
permanently in harbor. 

SECTION 24. Requires the commission, not later than the 45th day after the
effective date of this Act, to adopt rules establishing the guidelines and
criteria required to implement programs established under this Act.
Requires the comptroller, not later than the 45th day after the effective
date of this Act, to adopt all rules necessary to enable the comptroller to
carry out the comptroller's duties under this Act. Requires the commission,
pending final adoption of rules by the commission and the comptroller to
implement programs established by this Act, to begin implementation of the
programs using guidelines developed by a similar program currently
operating in another state, modified as necessary for application in this
state. 

 SECTION 25. Requires the commission and the comptroller, not later than
the 45th day after the effective date of this Act, to adopt rules necessary
to implement the low-emissions vehicle purchase or lease incentive program
established under Chapter 386D, Health and Safety Code, as added by this
Act. Requires the commission, not later than the 45th day after the
effective date of this Act, to publish the first annual list of vehicles
eligible for low-emissions vehicle purchase or lease incentives, as
required by Section 386.158, Health and Safety Code, as added by this Act. 

SECTION 26. Requires the Texas Department of Public Safety, not 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 special
license plates authorized by Section 502.2665, Transportation Code, as
added by this Act. Requires the county tax assessor-collector of each
county in the state to begin issuing the special license plates to persons
who qualify for the plates not later than the 10th working day after the
date the plates are available. 

SECTION 27. Requires the commission, not later than the 30th day after the
adoption of rules governing the new technology development and research
program established under Chapter 386E, Health and Safety Code, as added by
this Act, to issue requests for proposals for projects to be funded under
the new technology development and research program. 

SECTION 28. Provides that the change in law made by Chapter 171S, Tax Code,
as added by this Act, takes effect January 1, 2002. 

SECTION 29. Provides that the change in law made by Sections
151.355-151.357, Tax Code, as added by this Act, does not affect tax
liability accruing before the effective date of this Act. Provides that
liability continues in effect as if the Act had not been enacted, and the
former law is continued in effect for the collection of taxes due and for
civil and criminal enforcement of the liability for those taxes. 

SECTION 30. Requires the appointing authorities, in making the initial
appointments to the Texas Emissions Reduction Plan Advisory Board, as
created by Section 386.057, Health and Safety Code, as added by this Act,
to designate their appointees so that six members' terms expire February 1,
2002, and seven members' terms expire February 1, 2003. 

SECTION 31. Requires the governor, in making the initial appointments to
the Texas Council on Environmental Technology, as created by Section
386.202, Health and Safety Code, as added by this Act, to designate the
appointees so that three members' terms expire February 1, 2003, four
members' terms expire February 1, 2005, and four members' terms expire
February 1, 2007. 

SECTION 32. Effective date: upon passage or September 1, 2001.