By: Brown, Jackson S.B. No. 5 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the Texas emissions reduction plan; providing a 1-3 penalty. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. (a) It is the intent of the legislature to give 1-6 the Texas Natural Resource Conservation Commission additional tools 1-7 to: 1-8 (1) assure that the air in this state is safe to 1-9 breathe and meets minimum federal standards established under the 1-10 federal Clean Air Act (42 U.S.C. Section 7407); 1-11 (2) develop multipollutant approaches to solving the 1-12 state's environmental problems; and 1-13 (3) adequately fund research and development that will 1-14 make the state a leader in new technologies that can solve the 1-15 state's environmental problems while creating new business and 1-16 industry in the state. 1-17 (b) Subtitle C, Title 5, Health and Safety Code, is amended 1-18 by adding Chapters 386, 387, and 388 to read as follows: 1-19 CHAPTER 386. TEXAS EMISSIONS REDUCTION PLAN 1-20 SUBCHAPTER A. GENERAL PROVISIONS 1-21 Sec. 386.001. DEFINITIONS. In this chapter: 1-22 (1) "Advisory board" means the Texas Emissions 1-23 Reduction Plan Advisory Board. 1-24 (2) "Affected county" includes: 1-25 (A) Bastrop County; 2-1 (B) Bexar County; 2-2 (C) Caldwell County; 2-3 (D) Comal County; 2-4 (E) Ellis County; 2-5 (F) Gregg County; 2-6 (G) Guadalupe County; 2-7 (H) Harrison County; 2-8 (I) Hays County; 2-9 (J) Johnson County; 2-10 (K) Kaufman County; 2-11 (L) Nueces County; 2-12 (M) Parker County; 2-13 (N) Rockwall County; 2-14 (O) Rusk County; 2-15 (P) San Patricio County; 2-16 (Q) Smith County; 2-17 (R) Travis County; 2-18 (S) Upshur County; 2-19 (T) Victoria County; 2-20 (U) Williamson County; and 2-21 (V) Wilson County. 2-22 (3) "Commission" means the Texas Natural Resource 2-23 Conservation Commission. 2-24 (4) "Council" means the Texas Council on Environmental 2-25 Technology. 2-26 (5) "Fund" means the Texas emissions reduction plan 3-1 fund. 3-2 (6) "Incremental cost" means the cost of an 3-3 applicant's project less a baseline cost that would otherwise be 3-4 incurred by an applicant in the normal course of business. 3-5 Incremental costs may include added lease or fuel costs as well as 3-6 additional capital costs. 3-7 (7) "Laboratory" means the Energy Systems Laboratory 3-8 at the Texas Engineering Experiment Station of The Texas A&M 3-9 University System. 3-10 (8) "Motor vehicle" means a self-propelled device 3-11 designed for transporting persons or property on a public highway 3-12 that is required to be registered under Chapter 502, Transportation 3-13 Code. 3-14 (9) "New vehicle" means a motor vehicle that has not 3-15 been the subject of a first sale. 3-16 (10) "Nonattainment area" means an area so designated 3-17 under Section 107(d) of the federal Clean Air Act (42 U.S.C. 3-18 Section 7407). 3-19 (11) "Plan" means the Texas emissions reduction plan. 3-20 (12) "Site" means the total of all stationary sources 3-21 located on one or more contiguous or adjacent properties, which are 3-22 under common control of the same person or persons under common 3-23 control. 3-24 Sec. 386.002. EXPIRATION. This chapter expires August 31, 3-25 2008. 3-26 (Sections 386.003-386.050 reserved for expansion 4-1 SUBCHAPTER B. TEXAS EMISSIONS REDUCTION PLAN 4-2 Sec. 386.051. TEXAS EMISSIONS REDUCTION PLAN. (a) The 4-3 commission, the comptroller, and the council shall establish and 4-4 administer the Texas emissions reduction plan in accordance with 4-5 this chapter. 4-6 (b) Under the plan, the commission, the comptroller, and the 4-7 council shall provide grants or other funding for: 4-8 (1) the diesel emissions reduction incentive program, 4-9 including the infrastructure demonstration projects, established 4-10 under Subchapter C; 4-11 (2) the motor vehicle purchase or lease incentive 4-12 program established under Subchapter D; 4-13 (3) the local government grant program established 4-14 under Subchapter E; and 4-15 (4) the new technology research and development 4-16 program established under Chapter 387. 4-17 (c) Equipment purchased before September 1, 2001, is not 4-18 eligible for a grant or other funding under the plan. 4-19 Sec. 386.052. COMMISSION DUTIES. (a) In administering the 4-20 plan established under this chapter and in accordance with the 4-21 requirements of this chapter, the commission shall: 4-22 (1) manage plan funds and oversee the plan; 4-23 (2) produce guidelines, protocols, and criteria for 4-24 eligible projects; 4-25 (3) develop methodologies for evaluating project 4-26 cost-effectiveness; 5-1 (4) prepare reports regarding the progress and 5-2 effectiveness of the plan; and 5-3 (5) take all appropriate and necessary action so that 5-4 emissions reductions achieved through the plan are credited by the 5-5 United States Environmental Protection Agency to the appropriate 5-6 emissions reduction objectives in the state implementation plan. 5-7 (b) Appropriate commission objectives include: 5-8 (1) achieving maximum reductions in oxides of nitrogen 5-9 to demonstrate compliance with the state implementation plan; 5-10 (2) preventing areas of the state from being in 5-11 violation of national ambient air quality standards; and 5-12 (3) achieving cost-saving and multiple benefits by 5-13 reducing emissions of other pollutants, such as particulates, 5-14 together with reductions in emissions of oxides of nitrogen. 5-15 Sec. 386.053. GUIDELINES AND CRITERIA. (a) The commission 5-16 shall adopt grant guidelines and criteria consistent with the 5-17 requirements of this chapter. The commission shall consider 5-18 examples of similar programs in other states during the development 5-19 of guidelines and criteria. 5-20 (b) Guidelines must include protocols to calculate projected 5-21 emissions reductions, project cost-effectiveness, and safeguards to 5-22 ensure that funded projects generate emissions reductions not 5-23 otherwise required by state or federal law. 5-24 (c) The commission shall make draft guidelines and criteria 5-25 available to the public and the United States Environmental 5-26 Protection Agency before the 45th day preceding the date of final 6-1 adoption and shall hold at least one public meeting to consider 6-2 public comments on the draft guidelines and criteria before final 6-3 adoption. 6-4 (d) The commission may propose revisions to the guidelines 6-5 and criteria adopted under this section as necessary to improve the 6-6 ability of the plan to achieve its goals. Revisions may include, 6-7 among other changes, adding additional pollutants or adjusting 6-8 eligible program categories, as appropriate, to ensure that 6-9 incentives established under this chapter achieve the maximum 6-10 possible emissions reductions. The commission shall make a 6-11 proposed revision available to the public before the 45th day 6-12 preceding the date of final adoption of the revision and shall hold 6-13 at least one public meeting to consider public comments on the 6-14 proposed revision before final adoption. 6-15 (e) Because the legislature finds that the current state of 6-16 air quality in the state creates an imminent peril to the public 6-17 health, safety, and welfare and jeopardizes the state's ability to 6-18 meet federal air quality requirements, the commission and the 6-19 comptroller may adopt emergency rules under Section 2001.034, 6-20 Government Code, with abbreviated notice, to carry out any 6-21 rulemaking necessary to implement this chapter. 6-22 (f) Except as provided by Subsection (e), the rulemaking 6-23 requirements of Chapter 2001, Government Code, do not apply to the 6-24 adoption or revision of guidelines and criteria under this section. 6-25 Sec. 386.054. MONITORING PROCEDURES. (a) The commission 6-26 shall develop procedures for monitoring whether the emissions 7-1 reductions projected for projects awarded grants under this chapter 7-2 are actually achieved. Monitoring procedures may include project 7-3 reviews and contract requirements that the grant recipient provide 7-4 information annually about the project. If the commission requires 7-5 an annual report, the report shall contain a minimum amount of 7-6 information required from a recipient and the report format shall 7-7 be simple and convenient. 7-8 (b) Monitoring and reviewing procedures must be sufficient 7-9 to enable emissions reductions generated by funded projects to be 7-10 fully credited to air quality plans. 7-11 (c) The commission may revise monitoring and review 7-12 procedures from time to time as necessary or appropriate to enhance 7-13 the effectiveness of the plan. 7-14 Sec. 386.055. AVAILABILITY OF EMISSIONS REDUCTION CREDITS 7-15 GENERALLY. (a) A project funded under a program established under 7-16 this chapter may not be used for credit under any state or federal 7-17 emissions reduction credit averaging, banking, or trading program. 7-18 (b) An emissions reduction generated by a program 7-19 established under this chapter may not be used as a marketable 7-20 emissions reduction credit or to offset any emissions reduction 7-21 obligation. 7-22 (c) A project involving a new emissions reduction measure 7-23 that would otherwise generate marketable credits under state or 7-24 federal emissions reduction credit averaging, banking, or trading 7-25 programs is not eligible for funding under a program established 7-26 under this chapter unless the project includes the transfer of the 8-1 marketable credits to the end user and the retirement of the 8-2 credits. 8-3 Sec. 386.056. AVAILABILITY OF EMISSIONS REDUCTION CREDITS IN 8-4 CERTAIN NONATTAINMENT AREAS. (a) An owner or operator of a site 8-5 located in the Houston-Galveston or Dallas-Fort Worth nonattainment 8-6 area may use emissions reductions generated by a program 8-7 established under this chapter to offset the requirements of 8-8 commission rules relating to control of air pollution from oxides 8-9 of nitrogen if: 8-10 (1) the owner or operator of the site contributes to 8-11 the fund $75,000 for each ton of emissions that is used, not to 8-12 exceed 10 tons annually; 8-13 (2) the owner or operator of the site demonstrates to 8-14 the commission's satisfaction that the site will be in full 8-15 compliance with the commission's emissions reduction rules not 8-16 later than the fifth anniversary of the date on which the emissions 8-17 reductions would otherwise be required; 8-18 (3) emissions from the site are reduced by at least 80 8-19 percent from the established baseline; and 8-20 (4) the commission approves a petition by the owner or 8-21 operator that demonstrates that it is technically infeasible to 8-22 comply with the commission's emissions reduction requirements above 8-23 80 percent. 8-24 (b) Funds collected under this section shall be used to 8-25 generate emissions reductions needed to meet the commission's 8-26 attainment demonstration. 9-1 (c) The commission shall verify that emissions reductions 9-2 generated from funds collected under this section occur in the same 9-3 nonattainment area in which the site that purchased the emissions 9-4 credit is located. 9-5 (d) The commission shall assure that the emissions 9-6 reductions funded under the programs authorized by this subchapter 9-7 used to offset commission requirements under this section benefit 9-8 the community in which the site using the emissions reductions is 9-9 located. If there are no eligible emissions reduction projects 9-10 within the community, the commission may authorize projects in an 9-11 adjacent community. In this subsection, "community" means a 9-12 justice of the peace precinct. 9-13 Sec. 386.057. REVIEW AND REPORTING REQUIREMENTS. (a) The 9-14 commission, in consultation with the advisory board, annually shall 9-15 review programs established under the plan, including each project 9-16 funded under the plan, the amount granted for the project, the 9-17 emissions reductions attributable to the project, and the 9-18 cost-effectiveness of the project. 9-19 (b) Not later than December 1, 2002, and not later than 9-20 December 1 of each subsequent second year, the commission, in 9-21 consultation with the advisory board, shall publish and submit to 9-22 the legislature a biennial plan report. The report must include 9-23 the information included in the annual reports prepared under 9-24 Subsection (a) and specific information for individual projects as 9-25 required by Subsection (c). 9-26 (c) For projects funded as part of the infrastructure 10-1 demonstration program under Subchapter C, the report must: 10-2 (1) describe and evaluate: 10-3 (A) the infrastructure facilities funded under 10-4 that subchapter; 10-5 (B) the degree to which the funded facilities 10-6 are supporting covered vehicle projects; 10-7 (C) the amount of fuel or electricity dispensed 10-8 for each facility; and 10-9 (D) associated emissions reductions and 10-10 cost-effectiveness; and 10-11 (2) make a finding regarding the need for additional 10-12 appropriations from the fund to improve the ability of the program 10-13 to achieve its goals. 10-14 (d) The report must: 10-15 (1) account for money received, money disbursed as 10-16 grants, money reserved for grants based on project approvals, and 10-17 any recommended transfer of money between allocations and must 10-18 estimate future demand for grant funds under the plan; 10-19 (2) describe the overall effectiveness of the plan in 10-20 delivering the emissions reductions required by air quality plans, 10-21 including rate-of-progress plans and milestone and conformity 10-22 tests; 10-23 (3) evaluate the effectiveness of the plan in 10-24 soliciting and evaluating project applications, providing awards in 10-25 a timely manner, and monitoring project implementation; 10-26 (4) describe adjustments made to project selection 11-1 criteria and recommend any further needed changes or adjustments to 11-2 the grant programs, including changes in grant award criteria, 11-3 administrative procedures, or statutory provisions that would 11-4 enhance the plan's effectiveness and efficiency; 11-5 (5) describe adjustments made to the maximum 11-6 cost-effectiveness amount and award amount; 11-7 (6) evaluate the benefits of addressing additional 11-8 pollutants as part of the plan; and 11-9 (7) include legislative recommendations necessary to 11-10 improve the effectiveness of this chapter. 11-11 (e) The commission shall request public comment and hold a 11-12 public meeting on each draft biennial report and, in producing a 11-13 final biennial report, shall consider and respond to all 11-14 significant comments received. 11-15 Sec. 386.058. TEXAS EMISSIONS REDUCTION PLAN ADVISORY BOARD. 11-16 (a) The Texas Emissions Reduction Plan Advisory Board consists of 11-17 13 appointed members, five of whom shall be appointed by the 11-18 governor, four by the lieutenant governor, and four by the speaker 11-19 of the house of representatives, and seven ex officio members as 11-20 provided by Subsection (d). 11-21 (b) Appointments to the advisory board must include 11-22 representatives from: 11-23 (1) the fuel industry; 11-24 (2) the engine manufacturing industry; 11-25 (3) the agriculture industry; 11-26 (4) the trucking industry; 12-1 (5) the automobile industry; 12-2 (6) the construction industry; 12-3 (7) the environmental community; 12-4 (8) the marine or port industry; 12-5 (9) regional transportation; 12-6 (10) the fuel cell industry; 12-7 (11) the energy-efficient construction industry; 12-8 (12) the Texas Council on Environmental Technology; 12-9 and 12-10 (13) consumer groups. 12-11 (c) Appointed members of the advisory board serve staggered 12-12 two-year terms. The terms of six appointed members expire February 12-13 1 of each even-numbered year. The terms of seven appointed members 12-14 expire February 1 of each odd-numbered year. An appointed member 12-15 may be reappointed to a subsequent term. 12-16 (d) Ex officio members of the advisory board include: 12-17 (1) the presiding officer of the senate standing 12-18 committee having primary jurisdiction over matters related to 12-19 natural resources; 12-20 (2) the presiding officer of the house standing 12-21 committee having primary jurisdiction over matters related to 12-22 environmental regulation; 12-23 (3) a representative of the commission, designated by 12-24 the executive director; 12-25 (4) a representative of the General Land Office, 12-26 designated by the Commissioner of the General Land Office; 13-1 (5) a representative of the comptroller's office, 13-2 designated by the comptroller; 13-3 (6) a representative of the Railroad Commission of 13-4 Texas, designated by the presiding officer of the agency; and 13-5 (7) a representative of the United States 13-6 Environmental Protection Agency's Region 6 office, designated by 13-7 the United States Environmental Protection Agency Region 6 13-8 administrator. 13-9 (e) The advisory board annually shall elect a presiding 13-10 officer. 13-11 (f) The advisory board shall review the program and shall 13-12 recommend to the commission changes to revenue sources or financial 13-13 incentives or any legislative, regulatory, or budgetary changes 13-14 needed. 13-15 (g) The commission shall provide necessary staff support to 13-16 the advisory board. 13-17 (Sections 386.059-386.100 reserved for expansion 13-18 SUBCHAPTER C. DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM 13-19 Sec. 386.101. DEFINITIONS. In this subchapter: 13-20 (1) "Cost-effectiveness" means the ratio of the total 13-21 dollar amount expended to the total number of tons of oxides of 13-22 nitrogen emissions reduction attributable to that expenditure. 13-23 Cost-effectiveness for the program as a whole and for particular 13-24 projects under the program is calculated as provided by Sections 13-25 386.105 and 386.106. 13-26 (2) "Covered engine" includes any internal combustion 14-1 engine or any electric motor and drive powering a covered source. 14-2 (3) "Covered source" includes the following 14-3 diesel-powered vehicles or engines: 14-4 (A) motor vehicles of 10,000 pounds gross 14-5 vehicle weight rating or more; 14-6 (B) off-road nonrecreational equipment and 14-7 vehicles; 14-8 (C) construction equipment; 14-9 (D) locomotives; 14-10 (E) diesel marine vessels; 14-11 (F) stationary agricultural engines; and 14-12 (G) other high-emitting diesel engine categories 14-13 established by the commission. 14-14 (4) "Covered vehicle" includes any motor vehicle, 14-15 off-road vehicle, or off-road equipment powered by a covered 14-16 engine. 14-17 (5) "Fuel cell" means equipment using an 14-18 electrochemical process to generate electricity and heat. 14-19 (6) "Heavy-duty vehicle" means an on-road motor 14-20 vehicle that has a gross vehicle weight rating of 10,000 pounds or 14-21 more. 14-22 (7) "Off-road engine" means an internal combustion 14-23 engine that is: 14-24 (A) in or on a piece of equipment that is 14-25 self-propelled or that propels itself and performs another 14-26 function, excluding a vehicle that is used solely for competition; 15-1 (B) in or on a piece of equipment that is 15-2 intended to be propelled while performing its function; or 15-3 (C) designed to be and capable of being carried 15-4 or moved from one location to another. 15-5 (8) "Off-road equipment" means equipment that is 15-6 powered by an off-road engine. 15-7 (9) "Off-road vehicle" means a vehicle that is powered 15-8 by an off-road engine. The term does not include a motor vehicle 15-9 or a vehicle used solely for competition. 15-10 (10) "Program" means the diesel emissions reduction 15-11 incentive program established under this subchapter. 15-12 (11) "Qualifying fuel" includes any liquid or gaseous 15-13 fuel or additives registered or verified by the United States 15-14 Environmental Protection Agency, other than standard gasoline or 15-15 diesel, that is ultimately dispensed into a covered vehicle that 15-16 provides reductions of emissions of oxides of nitrogen. 15-17 (12) "Repower" means to replace an old engine powering 15-18 a covered source with: 15-19 (A) a newer engine certified by the United 15-20 States Environmental Protection Agency to more stringent emissions 15-21 standards; or 15-22 (B) electric motors, drives, or fuel cells. 15-23 (13) "Retrofit" means to equip an engine and fuel 15-24 system with new emissions-reducing parts or technology verified by 15-25 the United States Environmental Protection Agency after manufacture 15-26 of the original engine and fuel system. 16-1 (14) "Very-low-emissions vehicle" means a vehicle that 16-2 is equipped with: 16-3 (A) a new engine that emits not more than 70 16-4 percent of the oxides of nitrogen emissions standard required by 16-5 federal regulation for the current model year for that engine; 16-6 (B) an engine 12 years old or less that emits 16-7 not more than 70 percent of the oxides of nitrogen emissions 16-8 standard emitted by a new engine certified to the baseline oxides 16-9 of nitrogen emissions standard for that engine; or 16-10 (C) an engine older than 12 years that emits not 16-11 more than 50 percent of the oxides of nitrogen emissions standard 16-12 emitted by a new engine certified to the baseline oxides of 16-13 nitrogen emissions standard for that engine. 16-14 Sec. 386.102. PROGRAM. (a) The commission shall establish 16-15 and administer a diesel emissions reduction incentive program. 16-16 Under the program, the commission shall provide grants for eligible 16-17 projects to offset the incremental cost of projects that reduce 16-18 emissions of oxides of nitrogen from high-emitting diesel sources 16-19 in nonattainment areas and affected counties of the state. The 16-20 commission shall determine the eligibility of projects. 16-21 (b) Projects that may be considered for a grant under the 16-22 program include: 16-23 (1) purchase or lease of new very-low-emissions 16-24 covered off-road vehicles or covered engines for off-road 16-25 equipment; 16-26 (2) emissions-reducing retrofit of covered engines; 17-1 (3) repower projects; 17-2 (4) purchase and use of emissions-reducing add-on 17-3 equipment for covered vehicles; 17-4 (5) development and demonstration of practical, 17-5 low-emissions retrofit technologies, repower options, and advanced 17-6 technologies for covered engines and vehicles with lower emissions 17-7 of oxides of nitrogen; 17-8 (6) use of qualifying fuel; and 17-9 (7) implementation of infrastructure demonstration 17-10 projects. 17-11 (c) A new purchase, lease, retrofit, repower, or add-on 17-12 equipment project is not eligible for a grant under this subchapter 17-13 if the new purchase, lease, retrofit, repower, or add-on equipment 17-14 is required by any state or federal law, rule or regulation, 17-15 memorandum of agreement, or other legally binding document. This 17-16 subsection does not apply to: 17-17 (1) an otherwise qualified project, regardless of the 17-18 fact that the state implementation plan assumes that the change in 17-19 equipment, vehicles, or operations will occur, if on the date the 17-20 grant is awarded the change is not required by any state or federal 17-21 law, rule or regulation, memorandum of agreement, or other legally 17-22 binding document; or 17-23 (2) the purchase of a low-emissions vehicle or 17-24 equipment required only by local law or regulation or by corporate 17-25 or controlling board policy of a public or private entity. 17-26 Sec. 386.103. APPLICATION FOR GRANT. (a) Any person as 18-1 defined by Section 382.003 that owns one or more covered vehicles 18-2 that operate primarily within a nonattainment area or affected 18-3 county of this state or that otherwise contributes to the state 18-4 inventory of emissions of oxides of nitrogen may apply for a grant 18-5 under the program. 18-6 (b) An application for a grant under this subchapter must be 18-7 made on an application provided by the commission and must contain 18-8 information required by the commission, including: 18-9 (1) a detailed description of the proposed project; 18-10 (2) information necessary for the commission to 18-11 determine whether the project meets eligibility requirements for 18-12 the type of project proposed, including a statement of the amounts 18-13 of any other public financial assistance the project will receive; 18-14 and 18-15 (3) other information the commission may require. 18-16 Sec. 386.104. ELIGIBILITY REQUIREMENTS. (a) The commission 18-17 shall establish criteria for setting priorities for projects 18-18 eligible to receive grants under this chapter. The commission 18-19 shall review and may modify the criteria and priorities as 18-20 appropriate. 18-21 (b) A proposed project as described in Section 386.102 must 18-22 meet the requirements of this section to be eligible for a grant 18-23 under the program. 18-24 (c) For a proposed project as described by Section 18-25 386.102(b), other than a project involving a marine vessel or 18-26 engine, not less than 75 percent of vehicle miles traveled or hours 19-1 of operation projected for the five years immediately following the 19-2 award of a grant must be projected to take place in a nonattainment 19-3 area or affected county of this state. For a proposed project 19-4 involving a marine vessel or engine, the vessel or engine must be 19-5 operated in the intercoastal waterways or bays adjacent to a 19-6 nonattainment area or affected county of this state for a 19-7 sufficient amount of time over the lifetime of the project to meet 19-8 the cost-effectiveness requirements of Section 386.105. 19-9 (d) Each proposed project must meet the cost-effectiveness 19-10 requirements of Sections 386.105 and 386.106. 19-11 (e) A proposed repower project must exceed commission 19-12 requirements relating to baseline emissions levels of the engines 19-13 being replaced under the project. 19-14 (f) A proposed retrofit, repower, or add-on equipment 19-15 project must document, in a manner acceptable to the commission, a 19-16 reduction in emissions of oxides of nitrogen of at least 30 percent 19-17 compared with the baseline emissions adopted by the commission for 19-18 the relevant engine year and application. After study of available 19-19 emissions reduction technologies, after public notice and comment, 19-20 and after consultation with the advisory board, the commission may 19-21 revise the minimum percentage reduction in emissions of oxides of 19-22 nitrogen required by this subsection to improve the ability of the 19-23 program to achieve its goals. 19-24 (g) If a baseline emissions standard does not exist for new 19-25 off-road equipment in a particular category, the commission, for 19-26 purposes of this chapter, shall establish an appropriate baseline 20-1 emissions level for comparison purposes. 20-2 (h) The commission may approve payments to offset the 20-3 incremental cost, over the expected lifetime of the covered 20-4 vehicle, of qualifying fuel used in a covered vehicle if the 20-5 proposed project as a whole, including the incremental fuel cost, 20-6 meets the requirements of this subchapter. The commission shall 20-7 develop an appropriate method for converting incremental fuel costs 20-8 over the covered vehicle's lifetime into an initial cost for 20-9 purposes of determining cost-effectiveness as required by Section 20-10 386.105. 20-11 (i) The owner or operator of a facility as defined by 20-12 Section 382.003 is not eligible to receive a grant under this 20-13 subchapter unless the owner or operator holds a permit for the 20-14 facility under Section 382.0518, 382.0519, 382.05194, 382.05195, or 20-15 382.05196. 20-16 Sec. 386.105. CALCULATION OF COST-EFFECTIVENESS. (a) In 20-17 calculating cost-effectiveness, one-time grants of money at the 20-18 beginning of a project shall be annualized using a time value of 20-19 public funds or discount rate determined for each project by the 20-20 commission, taking into account the interest rate on bonds, 20-21 interest earned by state funds, and other factors the commission 20-22 considers appropriate. 20-23 (b) The commission shall establish reasonable methodologies, 20-24 in consultation with all affected stakeholders, for evaluating 20-25 project cost-effectiveness consistent with Subsection (a) and with 20-26 accepted methods. 21-1 (c) The commission shall develop protocols for calculating 21-2 oxides of nitrogen emissions reductions not otherwise required by 21-3 state or federal law in nonattainment areas and affected counties 21-4 of this state from representative project types over the life of 21-5 the projects. 21-6 (d) The commission may include in cost-effectiveness 21-7 determinations only reductions in oxides of nitrogen emissions that 21-8 are achieved in nonattainment areas and affected counties of this 21-9 state. 21-10 Sec. 386.106. COST-EFFECTIVENESS CRITERIA; DETERMINATION OF 21-11 GRANT AMOUNT. (a) Except as provided by Section 386.107, the 21-12 commission may not award a grant for a proposed project the 21-13 cost-effectiveness of which, calculated in accordance with Section 21-14 386.105 and rules adopted under that section, exceeds $13,000 per 21-15 ton of oxides of nitrogen emissions reduced in the nonattainment 21-16 area or affected county for which the project is proposed. This 21-17 subsection does not restrict commission authority under other law 21-18 to require emissions reductions with a cost-effectiveness that 21-19 exceeds $13,000 per ton. 21-20 (b) The commission may not award a grant that, net of taxes, 21-21 provides an amount that exceeds the incremental cost of the 21-22 proposed project. 21-23 (c) The commission shall adopt guidelines for capitalizing 21-24 incremental lease costs so those costs may be offset by a grant 21-25 under this subchapter. 21-26 (d) In determining the amount of a grant under this 22-1 subchapter, the commission shall reduce the incremental cost of a 22-2 proposed new purchase, lease, retrofit, repower, or add-on 22-3 equipment project by the value of any existing financial incentive 22-4 that directly reduces the cost of the proposed project, including 22-5 tax credits or deductions, other grants, or any other public 22-6 financial assistance. 22-7 (e) The commission may establish maximum grant awards per 22-8 vehicle or engine replaced for projects that propose to repower 22-9 off-road equipment. 22-10 Sec. 386.107. ADJUSTMENT TO MAXIMUM COST-EFFECTIVENESS 22-11 AMOUNT AND AWARD AMOUNT. After study of available emissions 22-12 reduction technologies and costs and after public notice and 22-13 comment, the commission, in consultation with the advisory board, 22-14 may change the values of the maximum grant award criteria 22-15 established in Section 386.106 and any per-project maximum set by 22-16 the commission under Section 386.106(e) to account for inflation or 22-17 to improve the ability of the program to achieve its goals. 22-18 Sec. 386.108. INFRASTRUCTURE DEMONSTRATION PROJECTS. 22-19 (a) The commission shall provide funding under Section 22-20 386.252(a)(1) for infrastructure demonstration projects to provide 22-21 initial support for low-emissions vehicle projects at the start of 22-22 the program. 22-23 (b) To implement the requirement of Subsection (a), the 22-24 commission shall: 22-25 (1) solicit applications for a balanced mix of 22-26 demonstration projects involving fueling and electrification 23-1 infrastructure that is linked to covered vehicle projects and 23-2 consistent with program goals; 23-3 (2) coordinate infrastructure projects with covered 23-4 vehicle projects representing a broad range of fuels, technologies, 23-5 and applications as appropriate and consistent with the goals of 23-6 this chapter; 23-7 (3) adopt guidelines and criteria for infrastructure 23-8 projects to be funded under the program; and 23-9 (4) oversee, monitor, and evaluate the use of grants 23-10 awarded under this program and report on the effectiveness of this 23-11 grant program in relation to the purposes and goals of this 23-12 chapter. 23-13 Sec. 386.109. ELIGIBLE INFRASTRUCTURE DEMONSTRATION 23-14 PROJECTS. The commission may consider for funding under Section 23-15 386.108: 23-16 (1) the purchase and installation at a site of 23-17 equipment that is designed primarily to dispense qualifying fuel or 23-18 the purchase of on-site mobile fueling equipment; and 23-19 (2) infrastructure projects, including auxiliary power 23-20 units, designed to dispense electricity to covered projects. 23-21 Sec. 386.110. APPLICATION PACKAGE FOR INFRASTRUCTURE 23-22 DEMONSTRATION PROJECTS. (a) The commission shall develop a 23-23 simple, standardized application package for infrastructure 23-24 demonstration project grants under this subchapter. The package 23-25 must include: 23-26 (1) an application form; 24-1 (2) a brief description of: 24-2 (A) the program; 24-3 (B) the projects that are eligible for available 24-4 funding; 24-5 (C) the selection criteria and evaluation 24-6 process; and 24-7 (D) the required documentation; 24-8 (3) the name of a person or office to contact for more 24-9 information; 24-10 (4) an example of the contract that an applicant will 24-11 be required to execute before receiving a grant; and 24-12 (5) any other information the commission considers 24-13 useful to inform the applicant and expedite the application 24-14 process. 24-15 (b) The application form shall require as much information 24-16 as the commission determines is necessary to properly evaluate each 24-17 project but shall otherwise minimize the information required. 24-18 (c) The commission may not require an applicant, as part of 24-19 the application process, to calculate tons of emissions reduced or 24-20 cost-effectiveness. 24-21 Sec. 386.111. APPLICATION REVIEW PROCEDURES. (a) The 24-22 commission shall review an application for a grant for a project 24-23 authorized under this subchapter, including an application for a 24-24 grant for an infrastructure demonstration project, immediately on 24-25 receipt of the application. If the commission determines that an 24-26 application is incomplete, the commission shall notify the 25-1 applicant, not later than the 15th working day after the date on 25-2 which the commission received the application, with an explanation 25-3 of what is missing from the application. The commission shall 25-4 record the date and time of receipt of each application the 25-5 commission determines to be complete and shall evaluate the 25-6 completed application according to the appropriate project 25-7 criteria. Subject to available funding, the commission shall make 25-8 a final determination on an application as soon as possible and not 25-9 later than the 60th working day after the date the application is 25-10 determined to be complete. 25-11 (b) The commission shall make every effort to expedite the 25-12 application review process and to award grants to qualified 25-13 projects in a timely manner. To the extent possible, the 25-14 commission shall coordinate project review and approval with any 25-15 timing constraints related to project purchases or installations to 25-16 be made by an applicant. 25-17 (c) The commission may deny an application for a project 25-18 that does not meet the applicable project criteria or that the 25-19 commission determines is not made in good faith, is not credible, 25-20 or is not in compliance with this chapter and the goals of this 25-21 chapter. 25-22 (d) Subject to availability of funds, the commission shall 25-23 award a grant under this subchapter in conjunction with the 25-24 execution of a contract that obligates the commission to make the 25-25 grant and the recipient to perform the actions described in the 25-26 recipient's grant application. The contract must incorporate 26-1 provisions for recapturing grant money in proportion to any loss of 26-2 emissions reductions or underachievement in dispensing qualifying 26-3 fuel compared with the volume of emissions reductions or amount of 26-4 fuel dispensed that was projected in awarding the grant. Grant 26-5 money recaptured under the contract provision shall be deposited in 26-6 the fund and reallocated for other projects under this subchapter. 26-7 (e) An applicant may seek reimbursement for qualifying 26-8 equipment installed after the effective date of this program. 26-9 Sec. 386.112. HEAVY-DUTY MOTOR VEHICLE PURCHASE OR LEASE 26-10 INCENTIVE. (a) The commission shall develop a purchase or lease 26-11 incentive program for heavy-duty motor vehicles and shall adopt 26-12 rules necessary to implement the program and to reimburse a 26-13 purchaser or lessee of a heavy-duty motor vehicle that is eligible 26-14 for reimbursement of incremental costs under this subchapter. 26-15 (b) The program shall authorize statewide incentives for the 26-16 reimbursement of incremental costs for the purchase or lease, 26-17 according to the schedule provided by Section 386.113, of 26-18 heavy-duty motor vehicles that are certified by the United States 26-19 Environmental Protection Agency to an emissions standard provided 26-20 by Section 386.113 if the purchaser or lessee of the vehicle agrees 26-21 to register the vehicle in this state and to operate the vehicle in 26-22 this state for not less than 75 percent of the vehicle's annual 26-23 mileage. 26-24 (c) Only one incentive will be provided for each motor 26-25 vehicle. The incentive shall be provided to the lessee and not to 26-26 the purchaser if the motor vehicle is purchased for the purpose of 27-1 leasing the vehicle to another person. A lease incentive for a 27-2 motor vehicle shall be prorated based on an eight-year lease term. 27-3 Sec. 386.113. HEAVY-DUTY MOTOR VEHICLE PURCHASE OR LEASE 27-4 INCENTIVE SCHEDULE. A heavy-duty motor vehicle is eligible for 27-5 reimbursement of incremental costs according to the following 27-6 schedule: 27-7 Incentive emissions standard Reimbursement amount 27-8 (oxides of nitrogen) 27-9 Date of manufacture Date of manufacture 27-10 (2001) (10/01/02-9/30/06) 27-11 2.5 g/bhp-hr NOx 1.2 g/bhp-hr NOx up to $15,000 27-12 1.5 g/bhp-hr NOx 0.5 g/bhp-hr NOx up to $25,000 27-13 0.0 g/bhp-hr NOx 0.0 g/bhp-hr NOx up to $25,000 27-14 (Sections 386.114-386.150 reserved for expansion 27-15 SUBCHAPTER D. MOTOR VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM 27-16 Sec. 386.151. DEFINITIONS. In this subchapter: 27-17 (1) "Bin" or "emissions bin" means a set of emissions 27-18 standards applicable to exhaust pollutants measured on the Federal 27-19 Test Procedure (FTP) according to 40 C.F.R. Section 86.1811-04. 27-20 (2) "ILEV" means an inherently low-emission vehicle as 27-21 defined by 40 C.F.R. Section 88.302-93, as that section existed on 27-22 September 1, 2001. 27-23 (3) "Light-duty motor vehicle" means a motor vehicle 27-24 with a gross vehicle weight rating of less than 10,000 pounds. 27-25 Sec. 386.152. LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE 27-26 INCENTIVE. (a) The comptroller and the commission shall develop a 28-1 purchase or lease incentive program for light-duty motor vehicles 28-2 and shall adopt rules necessary to implement the program. 28-3 (b) The program shall authorize statewide incentives for the 28-4 purchase or lease, according to the schedule provided by Section 28-5 386.153, of light-duty motor vehicles that are certified by the 28-6 United States Environmental Protection Agency to an emissions 28-7 standard provided by Section 386.153 for a purchaser or lessee who 28-8 agrees to register the vehicle in this state and to operate the 28-9 vehicle in this state for not less than 75 percent of the vehicle's 28-10 annual mileage. 28-11 (c) Only one incentive will be provided for each motor 28-12 vehicle. The incentive shall be provided to the lessee and not to 28-13 the purchaser if the motor vehicle is purchased for the purpose of 28-14 leasing the vehicle to another person. 28-15 Sec. 386.153. LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE 28-16 INCENTIVE SCHEDULE. A light-duty motor vehicle is eligible for an 28-17 incentive according to the following schedule: 28-18 Incentive emissions standard and incentive amount 28-19 Model year 2002-2003 Model year 2004-2007 28-20 0.04 g/mi NOx $1,250 28-21 0.03 g/mi NOx $2,225 Bin 4 $1,250 28-22 ILEV $4,000 Bin 3 $2,225 28-23 0.02 g/mi NOx $3,750 Bin 2 $3,750 28-24 0.00 g/mi NOx $5,000 Bin 1 $5,000 28-25 Sec. 386.154. MODIFICATION OF INCENTIVE EMISSIONS STANDARDS. 28-26 After evaluating new technologies and after public notice and 29-1 comment, the commission, in consultation with the advisory board, 29-2 may change the incentive emissions standards established by Section 29-3 386.153 to improve the ability of the program to achieve its goals. 29-4 Sec. 386.155. MANUFACTURER'S REPORT. At the beginning of 29-5 but not later than July 1 of each year preceding the vehicle model 29-6 year, a manufacturer of motor vehicles shall provide to the 29-7 commission a list of: 29-8 (1) the new vehicle models that the manufacturer 29-9 intends to sell in this state during that model year that meet the 29-10 incentive emissions standards established by the schedules set out 29-11 under Section 386.153; and 29-12 (2) the amount of the incremental cost of the 29-13 vehicles. 29-14 Sec. 386.156. LIST OF ELIGIBLE MOTOR VEHICLES. (a) On 29-15 August 1 each year the commission shall publish and provide to the 29-16 comptroller a list of the new model motor vehicles as listed for 29-17 the commission under Section 386.155. 29-18 (b) The comptroller shall distribute the list of eligible 29-19 motor vehicles to all new motor vehicle dealers and leasing agents 29-20 in this state. 29-21 Sec. 386.157. VEHICLE EMISSIONS INFORMATION LABEL. (a) To 29-22 enable consumers to make informed purchase decisions based on the 29-23 relative amounts of emissions produced by motor vehicles within 29-24 each vehicle class, the motor vehicle manufacturer or distributor 29-25 shall affix on each new light-duty motor vehicle for sale or lease 29-26 in this state a clearly legible label that shows the vehicle's 30-1 class rating under the United States Environmental Protection 30-2 Agency's 5-star Green Vehicle Class Rating System. 30-3 (b) A new motor vehicle dealer or leasing agent shall make 30-4 available to the dealer's or leasing agent's prospective purchasers 30-5 or lessees a copy of the list prepared and published by the 30-6 commission under Section 386.156. 30-7 Sec. 386.158. LOW-EMISSIONS VEHICLE PURCHASE OR LEASE 30-8 INCENTIVE. (a) A person who purchases or leases during the model 30-9 year in which it is first offered for sale or lease a new motor 30-10 vehicle that has been listed under Section 386.155 is eligible for 30-11 an incentive under this subchapter. 30-12 (b) A lease incentive for a motor vehicle shall be prorated 30-13 based on a four-year lease term. 30-14 (c) To receive money under an incentive program provided by 30-15 this subchapter, the purchaser or lessee of a motor vehicle 30-16 eligible for an incentive under this subchapter shall apply for the 30-17 incentive in the manner provided by law or by rule of the 30-18 comptroller. 30-19 Sec. 386.159. PUBLIC INFORMATION. (a) The commission in 30-20 cooperation with the comptroller shall develop and implement a 30-21 program to inform the public and new motor vehicle dealers and 30-22 leasing agents about the motor vehicle purchase or lease incentive 30-23 program. 30-24 (b) The Texas Department of Transportation shall insert a 30-25 notice describing the motor vehicle purchase or lease incentive 30-26 program with each annual vehicle registration renewal notice. 31-1 Sec. 386.160. COMPTROLLER TO ACCOUNT FOR MOTOR VEHICLE 31-2 PURCHASE OR LEASE INCENTIVES. (a) The comptroller by rule shall 31-3 develop a method to administer and account for the motor vehicle 31-4 purchase or lease incentives authorized by this subchapter and to 31-5 pay incentive money to the purchaser or lessee of a new motor 31-6 vehicle, on application of the purchaser or lessee as provided by 31-7 this subchapter. 31-8 (b) The comptroller shall develop and publish forms and 31-9 instructions for the purchaser or lessee of a new motor vehicle to 31-10 use in applying to the comptroller for an incentive payment under 31-11 this subchapter. The comptroller shall make the forms available to 31-12 new motor vehicle dealers and leasing agents. Dealers and leasing 31-13 agents shall make the forms available to their prospective 31-14 purchasers or lessees. 31-15 (c) In addition to other forms developed and published under 31-16 this section, the comptroller shall develop and publish a 31-17 verification form by which, with information provided by the dealer 31-18 or leasing agent, the comptroller can verify the sale of a vehicle 31-19 covered by this subchapter. The verification form shall include at 31-20 least the name of the purchaser, the vehicle identification number 31-21 of the vehicle involved, the date of the purchase, and the name of 31-22 the new motor dealer or leasing agent involved in the transaction. 31-23 At the time of sale or lease of a vehicle eligible for an incentive 31-24 under this subchapter, the dealer or leasing agent shall complete 31-25 the verification form supplied to the dealer by the comptroller. 31-26 The purchaser or lessee shall include the completed verification 32-1 form as part of the purchaser's application for an incentive. The 32-2 dealer shall maintain a copy of the completed verification form for 32-3 at least two years from the date of the transaction. 32-4 Sec. 386.161. REPORT TO COMMISSION; SUSPENSION OF PURCHASE 32-5 OR LEASE INCENTIVES. (a) The comptroller shall report to the 32-6 commission annually regarding motor vehicle purchase or lease 32-7 incentives. 32-8 (b) The comptroller shall inform the commission and all new 32-9 motor vehicle dealers and leasing agents if at any time during a 32-10 fiscal year the balance available in the money allocated in the 32-11 fund for motor vehicle purchase or lease incentives falls below 15 32-12 percent of the total amount allocated for the incentives during 32-13 that fiscal year. 32-14 (c) If the balance available for motor vehicle purchase or 32-15 lease incentives falls below the amount described in Subsection 32-16 (b), the comptroller by order shall suspend the incentives until 32-17 the comptroller can certify that the balance available in the fund 32-18 for incentives is an amount adequate to resume the incentives, but 32-19 not later than the beginning of the next fiscal year. If the 32-20 comptroller suspends the incentives, the comptroller shall 32-21 immediately notify the commission and all new motor vehicle dealers 32-22 and leasing agents that the incentives have been suspended. 32-23 (d) Reliance by a dealer or leasing agent on information 32-24 provided by the comptroller or commission is a complete defense to 32-25 an action involving or based on eligibility of a vehicle for an 32-26 incentive or availability of vehicles eligible for an incentive. 33-1 (Sections 386.162-386.200 reserved for expansion 33-2 SUBCHAPTER E. LOCAL GOVERNMENT GRANT PROGRAM 33-3 Sec. 386.201. GRANT PROGRAM. (a) The commission shall 33-4 develop a competitive grant program to encourage: 33-5 (1) retirement and replacement of inefficient 33-6 residential cooling equipment and other household appliances; 33-7 (2) weatherization of residences; and 33-8 (3) retirement and replacement of high-emitting 33-9 noncommercial lawn and garden equipment. 33-10 (b) The grant program developed under this section may be 33-11 administered by municipalities or counties. 33-12 Sec. 386.202. COST-EFFECTIVENESS REQUIREMENT. The amount of 33-13 an award of a competitive grant under this subchapter must be based 33-14 on the cost-effectiveness of reductions in emissions of oxides of 33-15 nitrogen to be provided by the proposed project. 33-16 Sec. 386.203. GRANT PROJECTS. (a) Grant projects under 33-17 this subchapter may include targeted rebates and revolving loan 33-18 programs for the purposes listed in Section 386.201(a). 33-19 (b) Each award must include a low-income component that 33-20 provides for weatherization of residences and retirement and 33-21 replacement of inefficient cooling equipment and other household 33-22 appliances for low-income households. 33-23 Sec. 386.204. USE OF GRANT MONEY. (a) Grant money may be 33-24 used in conjunction with other energy efficiency programs but may 33-25 not be used to replace other funds from other agencies. 33-26 (b) For the first two years of the program, grants may be 34-1 awarded only in counties in nonattainment areas. In years three 34-2 and four of the program, grants may also be awarded in affected 34-3 counties. In subsequent years, grants may be awarded in all 34-4 counties of the state. 34-5 Sec. 386.205. DISPOSAL OF RETIRED EQUIPMENT. A grant 34-6 recipient must assure that any appliance, residential cooling 34-7 equipment, or lawn or garden equipment retired and replaced under 34-8 this subchapter is recycled or disposed of in accordance with all 34-9 applicable local, state, or federal requirements. 34-10 (Sections 386.206-386.250 reserved for expansion 34-11 SUBCHAPTER F. TEXAS EMISSIONS REDUCTION PLAN FUND 34-12 Sec. 386.251. FUND. (a) The Texas emissions reduction plan 34-13 fund is an account in the state treasury. 34-14 (b) The fund is administered by the comptroller for the 34-15 benefit of the Texas emissions reduction plan established under 34-16 this chapter. 34-17 (c) The fund consists of money from: 34-18 (1) fees and other amounts charged and collected under 34-19 Sections 502.1675 and 548.5055, Transportation Code; 34-20 (2) the surcharge on the sale, lease, or rental of new 34-21 or used construction equipment under Section 151.0515, Tax Code; 34-22 (3) surcharges collected under Sections 152.0215 and 34-23 156.054, Tax Code; 34-24 (4) the surcharge collected under Section 31.0265, 34-25 Parks and Wildlife Code; 34-26 (5) the surcharge collected under Article 9035, 35-1 Revised Statutes; and 35-2 (6) payments made by an owner or operator under 35-3 Section 386.056. 35-4 Sec. 386.252. USE OF FUND. (a) Money in the fund may be 35-5 used only to implement and administer programs established under 35-6 the plan and shall be allocated as follows: 35-7 (1) for the diesel emissions reduction incentive 35-8 program, 66 percent of the money in the fund, of which not more 35-9 than three percent may be used for infrastructure demonstration 35-10 projects and not more than 15 percent may be used for heavy-duty 35-11 motor vehicle purchase or lease incentives; 35-12 (2) for the motor vehicle purchase or lease incentive 35-13 program, 15 percent of the money in the fund; 35-14 (3) for the local government grant program, 7.5 35-15 percent of the money in the fund; 35-16 (4) for the new technology research and development 35-17 program, 7.5 percent of the money in the fund, of which $250,000 is 35-18 allocated for administration, $200,000 is allocated for a health 35-19 effects study, and $200,000 is to be deposited in the state 35-20 treasury to the credit of the clean air account created under 35-21 Section 382.0622 to supplement funding for air quality planning 35-22 activities in affected counties; and 35-23 (5) for administrative costs incurred by the 35-24 commission, the comptroller, and the laboratory, four percent. 35-25 (b) Up to 15 percent of the money allocated under Subsection 35-26 (a) to a particular program and not expended under that program by 36-1 March 1 of the second fiscal year of a fiscal biennium may be used 36-2 for another program under the plan as determined by the commission 36-3 in consultation with the advisory board. 36-4 CHAPTER 387. NEW TECHNOLOGY RESEARCH 36-5 AND DEVELOPMENT PROGRAM 36-6 Sec. 387.001. DEFINITION. In this chapter, "program" means 36-7 the new technology research and development program. 36-8 Sec. 387.002. TEXAS COUNCIL ON ENVIRONMENTAL TECHNOLOGY. 36-9 (a) The Texas Council on Environmental Technology consists of 11 36-10 members appointed by the governor to represent the academic and 36-11 nonprofit communities. The governor shall designate from the 36-12 council members a presiding officer of the council. Members of the 36-13 council serve six-year staggered terms, with the terms of three or 36-14 four members expiring February 1 of each odd-numbered year. 36-15 (b) The Texas Council on Environmental Technology shall work 36-16 to enhance the entrepreneurial and inventive spirit of Texans to 36-17 assist in developing solutions to problems by: 36-18 (1) identifying and evaluating new technologies and 36-19 seeking the approval of the United States Environmental Protection 36-20 Agency for and facilitating the deployment of those technologies; 36-21 and 36-22 (2) assisting the commission and the United States 36-23 Environmental Protection Agency in the process of ensuring 36-24 credit for new, innovative, and creative technological 36-25 advancements. 36-26 (c) Council offices and projects shall be housed at the 37-1 Center for Energy and Environmental Resources at The University of 37-2 Texas at Austin. 37-3 Sec. 387.003. NEW TECHNOLOGY RESEARCH AND DEVELOPMENT 37-4 PROGRAM. (a) The Texas Council on Environmental Technology shall 37-5 establish and administer a new technology research and development 37-6 program as provided by this chapter. 37-7 (b) Under the program, the Texas Council on Environmental 37-8 Technology shall provide grants to be used to support development 37-9 of emissions-reducing technologies that may be used for projects 37-10 eligible for awards under Chapter 386 and other new technologies 37-11 that show promise for commercialization. The primary objective of 37-12 this chapter is to promote the development of commercialization 37-13 technologies that will support projects that may be funded under 37-14 Chapter 386 and this chapter. 37-15 Sec. 387.004. SOLICITATION OF NEW TECHNOLOGY PROPOSALS. The 37-16 Texas Council on Environmental Technology from time to time shall 37-17 issue specific requests for proposals (RFPs) or program opportunity 37-18 notices (PONs) for technology projects to be funded under the new 37-19 technology research and development program. 37-20 Sec. 387.005. ELIGIBLE PROJECTS; PRIORITIES. (a) Grants 37-21 awarded under this chapter shall be directed toward a balanced mix 37-22 of: 37-23 (1) retrofit and add-on technologies to reduce 37-24 emissions from the existing stock of vehicles targeted by the Texas 37-25 emissions reduction plan; 37-26 (2) advanced technologies for new engines and vehicles 38-1 that produce very-low or zero emissions of oxides of nitrogen, 38-2 including stationary and mobile fuel cells; 38-3 (3) studies to improve air quality assessment and 38-4 modeling; 38-5 (4) advanced technologies that promote increased 38-6 building and appliance energy performance; and 38-7 (5) advanced technologies that reduce emissions from 38-8 other significant sources. 38-9 (b) The Texas Council on Environmental Technology shall 38-10 identify and evaluate and may consider making grants for technology 38-11 projects that would allow qualifying fuels to be produced from 38-12 energy resources in this state. In considering projects under this 38-13 subsection, the council shall give preference to projects involving 38-14 otherwise unusable energy resources in this state and producing 38-15 qualifying fuels at prices lower than otherwise available and low 38-16 enough to make the projects to be funded under the program 38-17 economically attractive to local businesses in the area for which 38-18 the project is proposed. 38-19 (c) In soliciting proposals under Section 387.004 and 38-20 determining how to allocate grant money available for projects 38-21 under this chapter, the Texas Council on Environmental Technology 38-22 shall give special consideration to advanced technologies and 38-23 retrofit or add-on projects that provide multiple benefits by 38-24 reducing emissions of particulates and other air pollutants. 38-25 (d) A project that involves a technology that allows an 38-26 on-road covered vehicle to replace with electric power, while the 39-1 vehicle is parked, the power normally supplied by the vehicle's 39-2 internal combustion engine is eligible for funding under this 39-3 chapter if the project meets all applicable criteria. 39-4 (e) A project that involves publicly or privately owned 39-5 vehicles or vessels is eligible for funding under this chapter if 39-6 the project meets all applicable criteria. 39-7 (f) Studies authorized under Subsection (a)(3) shall be 39-8 consistent with air quality research priorities identified by the 39-9 commission. 39-10 Sec. 387.006. EVIDENCE OF COMMERCIALIZATION POTENTIAL 39-11 REQUIRED. (a) An application for a technology grant under this 39-12 chapter must show clear and compelling evidence that: 39-13 (1) the proposed technology project has a strong 39-14 commercialization plan and organization; and 39-15 (2) the technology proposed for funding: 39-16 (A) is likely to be offered for commercial sale 39-17 in this state within five years after the date of the application 39-18 for funding; and 39-19 (B) once commercialized, will offer 39-20 opportunities for projects eligible for funding under Chapter 386. 39-21 (b) The Texas Council on Environmental Technology shall 39-22 consider specifically, for each proposed technology project 39-23 application: 39-24 (1) the projected potential for reduced emissions of 39-25 oxides of nitrogen and the cost-effectiveness of the technology 39-26 once it has been commercialized; 40-1 (2) the potential for the technology to contribute 40-2 significantly to air quality goals; and 40-3 (3) the strength of the commercialization plan. 40-4 Sec. 387.007. COST-SHARING. The Texas Council on 40-5 Environmental Technology may require cost-sharing for technology 40-6 projects funded under this chapter but may not require repayment of 40-7 grant money. 40-8 Sec. 387.008. ENVIRONMENTAL RESEARCH FUND. (a) The 40-9 environmental research fund is an account in the general revenue 40-10 fund. The fund consists of money from gifts, grants, or donations 40-11 to the fund for designated or general use and from any other source 40-12 designated by the legislature. 40-13 (b) Money in the environmental research fund may be used 40-14 only for the operation and projects of the Texas Council on 40-15 Environmental Technology. 40-16 Sec. 387.009. ADVISORY COMMITTEES. The Texas Council on 40-17 Environmental Technology may appoint advisory committees as 40-18 necessary or desirable to assist the council in performing its 40-19 duties. An advisory committee may include representatives of 40-20 industry, environmental groups, consumer groups, local governments, 40-21 agriculture, the commission, the General Land Office, and the 40-22 Railroad Commission of Texas. Any senator or representative 40-23 desiring to do so may participate on any advisory committee 40-24 appointed under this section. 40-25 Sec. 387.010. REPORTS. Not later than December 1, 2002, and 40-26 not later than December 1 of each subsequent second year, the Texas 41-1 Council on Environmental Technology shall report to the legislature 41-2 on projects funded under the new technology research and 41-3 development program, describing the technical objectives and 41-4 accomplishments of the project and the progress of the project 41-5 technology toward commercialization. 41-6 CHAPTER 388. TEXAS BUILDING ENERGY PERFORMANCE STANDARDS 41-7 Sec. 388.001. LEGISLATIVE FINDINGS. (a) The legislature 41-8 finds that an effective building energy code is essential to: 41-9 (1) reducing the air pollutant emissions that are 41-10 affecting the health of residents of this state; 41-11 (2) moderating future peak electric power demand; 41-12 (3) assuring the reliability of the electrical grid; 41-13 and 41-14 (4) controlling energy costs for residents and 41-15 businesses in this state. 41-16 (b) The legislature further finds that this state has a 41-17 number of unique climate types, all of which require more energy 41-18 for cooling than for heating, and that there are many 41-19 cost-effective measures that can reduce peak energy use and reduce 41-20 cooling and other energy costs in buildings. 41-21 (c) The legislature further finds that the health and 41-22 air-quality concerns within nonattainment areas and affected 41-23 counties constitute an emergency and may warrant local measures 41-24 that establish higher standards for building energy efficiency. 41-25 Sec. 388.002. DEFINITIONS. In this chapter: 41-26 (1) "Accredited energy efficiency program" means a 42-1 voluntary set of standards and procedures administered by a 42-2 third-party organization and determined by the laboratory to be 42-3 capable of ensuring that a building meets or exceeds by a relative 42-4 measure the minimum standards for energy-efficient construction 42-5 established in this chapter. 42-6 (2) "Advisory committee" means the Texas building 42-7 energy performance standards advisory committee. 42-8 (3) "Affected county" has the meaning assigned by 42-9 Section 386.001. 42-10 (4) "Building" has the meaning assigned by the 42-11 International Building Code. 42-12 (5) "Code official" means an individual employed by a 42-13 local jurisdiction to review construction plans and other 42-14 documents, inspect construction, or administer and enforce building 42-15 standards under this chapter. 42-16 (6) "Code-certified inspector" means an inspector who 42-17 is certified by the laboratory, the International Code Council, the 42-18 Building Officials and Code Administrators International, Inc., the 42-19 International Conference of Building Officials, or the Southern 42-20 Building Code Congress International to have met minimum standards 42-21 for interpretation and enforcement of requirements of the 42-22 International Energy Conservation Code and the energy efficiency 42-23 chapter of the International Residential Code. 42-24 (7) "Commission" means the Texas Natural Resource 42-25 Conservation Commission. 42-26 (8) "International Building Code" means the 43-1 International Building Code as adopted by the International Code 43-2 Council. 43-3 (9) "International Residential Code" means the 43-4 International Residential Code for One-and Two-Family Dwellings as 43-5 adopted by the International Code Council. 43-6 (10) "International Energy Conservation Code" means 43-7 the International Energy Conservation Code as adopted by the 43-8 International Code Council. 43-9 (11) "Laboratory" means the Energy Systems Laboratory 43-10 at the Texas Engineering Experiment Station of The Texas A&M 43-11 University. 43-12 (12) "Local jurisdiction" means the authority 43-13 responsible for implementation and enforcement of local building 43-14 codes. 43-15 (13) "Municipality" has the meaning assigned by 43-16 Section 1.005, Local Government Code. 43-17 (14) "Single-family residential" means having the 43-18 character of a detached one-or-two-family dwelling or a multiple 43-19 single-family dwelling not more than three stories high with 43-20 separate means of egress, including the accessory structures of the 43-21 dwelling. 43-22 (15) "Structure" has the meaning assigned by the 43-23 International Building Code. 43-24 Sec. 388.003. ADOPTION OF BUILDING ENERGY EFFICIENCY 43-25 PERFORMANCE STANDARDS. (a) To achieve energy conservation in 43-26 single-family residential construction, the energy efficiency 44-1 chapter of the International Residential Code, as it existed on May 44-2 1, 2001, is adopted as the energy code in this state for 44-3 single-family residential construction. 44-4 (b) To achieve energy conservation in all other residential, 44-5 commercial, and industrial construction, the International Energy 44-6 Conservation Code as it existed on May 1, 2001, is adopted as the 44-7 energy code for use in this state. 44-8 (c) A municipality may establish procedures: 44-9 (1) to adopt local amendments to the International 44-10 Energy Conservation Code and the energy efficiency chapter of the 44-11 International Residential Code; 44-12 (2) for the administration and enforcement of the 44-13 codes; and 44-14 (3) to ensure that code-certified inspectors shall 44-15 perform inspections and enforce the code in the inspectors' 44-16 jurisdictions. 44-17 (d) Local amendments may not result in less stringent energy 44-18 efficiency requirements than the energy efficiency chapter of the 44-19 International Residential Code or International Energy Conservation 44-20 Code. The laboratory shall determine, at the request of a 44-21 municipality, the relative impact of proposed local amendments to 44-22 an energy code, including whether proposed amendments are 44-23 substantially equal to or less stringent than the unamended code. 44-24 The laboratory shall: 44-25 (1) report its findings to the municipality, including 44-26 an estimate of any savings potential above the base code from local 45-1 amendments; and 45-2 (2) submit a summary of its findings biennially to the 45-3 commission. 45-4 (e) A municipality shall periodically review and consider 45-5 revisions made by the International Code Council to the 45-6 International Energy Conservation Code and the energy efficiency 45-7 chapter of the International Residential Code adopted after May 1, 45-8 2001. 45-9 (f) The laboratory shall have the authority to set and 45-10 collect fees to perform certain tasks in support of the 45-11 requirements in Sections 388.005, 388.009, and 388.010. 45-12 Sec. 388.004. ENFORCEMENT OF ENERGY STANDARDS OUTSIDE OF 45-13 MUNICIPALITY. For construction outside of the local jurisdiction 45-14 of a municipality: 45-15 (1) a building certified by a national, state, or 45-16 local accredited energy efficiency program shall be considered in 45-17 compliance; 45-18 (2) a building with inspections from private 45-19 code-certified inspectors using the energy efficiency chapter of 45-20 the International Residential Code or International Energy 45-21 Conservation Code shall be considered in compliance; 45-22 (3) a builder who does not have access to either of 45-23 the above methods for a building shall certify compliance using a 45-24 form provided by the laboratory, enumerating the code-compliance 45-25 features of the building; 45-26 (4) a new electric meter may not be installed by the 46-1 utility provider without a certificate of compliance issued by a 46-2 private code-certified inspector or through an accredited energy 46-3 efficiency program unless the utility has made its own 46-4 determination of energy code compliance; and 46-5 (5) the laboratory shall establish training and a 46-6 checklist for utility providers to use in determining energy code 46-7 compliance where no certificate of compliance is available. 46-8 Sec. 388.005. ADDITIONAL ENERGY CONSERVATION PROGRAMS IN 46-9 NONATTAINMENT AREA AND AFFECTED COUNTY. (a) Each municipality in 46-10 a nonattainment area and an affected county and the nonattainment 46-11 area and the affected counties shall develop an energy efficiency 46-12 and weatherization program for existing buildings that would result 46-13 in energy savings equal to or greater than 10 percent of the 46-14 projected energy savings that would result from the adoption of 46-15 energy codes for new construction. By September 1, 2001, the 46-16 laboratory shall develop the energy savings estimates and set 46-17 targets for each municipality and affected county. Each 46-18 municipality and affected county shall develop and implement an 46-19 energy savings and weatherization program to meet the targets 46-20 required by this subsection. The municipality and affected 46-21 counties may use projected savings approved by the Public Utility 46-22 Commission of Texas for certain energy efficiency measures to 46-23 estimate the impact of those measures in local programs. In 46-24 calculating the effect of a program required by this subsection 46-25 toward the additional savings established in this section, a 46-26 municipality or affected county may count measures funded by the 47-1 grant program under Subchapter E, Chapter 386, but may not count 47-2 energy efficient measures funded by other state or federal agencies 47-3 required by Section 39.905, Utilities Code. 47-4 (b) A municipality or county may adopt noncode energy 47-5 performance standards for the sale and installation of replacement 47-6 residential, commercial, and industrial lighting, ballasts, exit 47-7 signs, motors, transformers, roof products, windows, dehumidifiers, 47-8 air conditioning package and split systems, heat pump systems, 47-9 boilers, and thermostats. 47-10 (c) The laboratory shall, on request of a municipality, 47-11 county, or regional government representation, determine the 47-12 additional energy savings potential from noncode energy performance 47-13 programs being considered and advise the requesting entity of its 47-14 determination within 60 days. 47-15 (d) The laboratory may review the specifications adopted by 47-16 the United States Environmental Protection Agency's Energy Star 47-17 program or comparable nationally developed specifications, in 47-18 consultation with the advisory committee, to determine whether 47-19 modifications should be incorporated into the noncode energy 47-20 performance standards available to jurisdictions under this section 47-21 and may modify the Energy Star or comparable nationally developed 47-22 specifications as needed to assure: 47-23 (1) the greatest energy savings to consumers and 47-24 businesses in the state; and 47-25 (2) the effectiveness of the noncode building energy 47-26 performance standards adopted under this section in the various 48-1 regions of the state. 48-2 (e) A municipality or affected county shall submit an annual 48-3 report to the laboratory on the municipality's or county's progress 48-4 under this section. The laboratory shall submit reports received 48-5 under this subsection to the commission for inclusion in the report 48-6 required by Section 386.057. 48-7 Sec. 388.006. GREEN BUILDING PERFORMANCE STANDARDS. As part 48-8 of the green building performance standards developed under this 48-9 chapter, the laboratory shall develop a series of green building 48-10 guidelines that: 48-11 (1) conserve energy and water; 48-12 (2) reduce waste and the use of toxic substances; and 48-13 (3) improve indoor air quality. 48-14 Sec. 388.007. TEXAS BUILDING ENERGY PERFORMANCE STANDARDS 48-15 ADVISORY COMMITTEE. The Texas building energy performance 48-16 standards advisory committee is comprised of the following: 48-17 (1) a registered professional engineer; 48-18 (2) a licensed professional architect; 48-19 (3) an individual representing building owners or 48-20 building managers; 48-21 (4) an individual representing the Texas Department of 48-22 Housing and Community Affairs; 48-23 (5) an individual representing consumers; 48-24 (6) an individual representing environmental issues; 48-25 (7) an individual representing building academia; 48-26 (8) an individual representing business; 49-1 (9) an individual representing the Texas Association 49-2 of Business and Chambers of Commerce; 49-3 (10) an individual representing local building 49-4 officials; 49-5 (11) an individual representing electric utilities; 49-6 (12) an individual representing gas utilities; 49-7 (13) an individual representing HVAC contractors; 49-8 (14) an individual representing window manufacturers; 49-9 (15) an individual representing the commission 49-10 appointed by the commission; 49-11 (16) an individual representing the Public Utilities 49-12 Commission of Texas appointed by that agency; 49-13 (17) an individual representing insulation 49-14 manufacturers; 49-15 (18) an individual representing the Texas Building 49-16 Energy Institute; 49-17 (19) an individual representing the State Energy 49-18 Conservation Office; 49-19 (20) an individual representing the Texas Association 49-20 of Builders; 49-21 (21) an individual representing the Finance Commission 49-22 of Texas; and 49-23 (22) an individual representing the Texas Real Estate 49-24 Commission. 49-25 Sec. 388.008. APPLICATION OF STANDARDS. Except as otherwise 49-26 provided by this chapter, the International Energy Conservation 50-1 Code and the energy efficiency chapter of the International 50-2 Residential Code apply to any building or structure in this state 50-3 for which a building permit application is received by a local 50-4 jurisdiction on or after September 1, 2002. 50-5 Sec. 388.009. DISTRIBUTION OF INFORMATION AND TECHNICAL 50-6 ASSISTANCE. (a) The laboratory shall make available to builders, 50-7 designers, engineers, and architects code implementation materials 50-8 that explain the requirements of the International Energy 50-9 Conservation Code and the energy efficiency chapter of the 50-10 International Residential Code and that describe methods of 50-11 compliance acceptable to code administrators. 50-12 (b) The materials shall include software tools, simplified 50-13 prescriptive options, and other materials as appropriate. The 50-14 simplified materials shall be designed for projects in which a 50-15 design professional is not involved. 50-16 (c) The laboratory shall provide local jurisdictions with 50-17 technical assistance concerning implementation and enforcement of 50-18 the International Energy Conservation Code and the energy 50-19 efficiency chapter of the International Residential Code. 50-20 Sec. 388.010. DEVELOPMENT OF ACCREDITATION PROGRAM FOR HOME 50-21 ENERGY RATING SERVICES. (a) The laboratory, in consultation with 50-22 the advisory committee, mortgage companies, and contractors that 50-23 provide home energy rating services, shall develop an accreditation 50-24 program for energy rating services. 50-25 (b) In establishing standards for the accreditation program, 50-26 the laboratory shall consider available national home energy rating 51-1 system guidelines and shall base the ratings on the International 51-2 Energy Conservation Code and the energy efficiency chapter of the 51-3 International Residential Code. 51-4 (c) The laboratory shall develop procedures for determining 51-5 whether a provider of home energy rating services meets 51-6 accreditation standards developed under this section. 51-7 (d) The laboratory shall develop a standardized report 51-8 format to be used by providers of home energy rating services. The 51-9 form shall be designed to give potential buyers or renters 51-10 information on a structure's energy performance, including: 51-11 (1) insulation; 51-12 (2) types of windows; 51-13 (3) heating and cooling equipment; 51-14 (4) water heating equipment; 51-15 (5) additional energy conserving features, if any; 51-16 (6) results of performance measurements of building 51-17 tightness and forced air distribution; and 51-18 (7) an overall rating of probable energy efficiency 51-19 relative to the minimum requirements of the International Energy 51-20 Conservation Code or the energy efficiency chapter of the 51-21 International Residential Code, as appropriate. 51-22 (e) The laboratory shall establish a public information 51-23 program to inform homeowners, renters, sellers, buyers, and others 51-24 regarding the accreditation requirements for home energy rating 51-25 services. 51-26 (f) The laboratory shall submit its home energy rating 52-1 accreditation program to the advisory committee by September 1, 52-2 2002. 52-3 (g) The home energy rating accreditation program shall be 52-4 implemented by September 1, 2003. 52-5 SECTION 2. Subchapter C, Chapter 151, Tax Code, is amended 52-6 by adding Section 151.0515 to read as follows: 52-7 Sec. 151.0515. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 52-8 (a) In this section, "equipment" includes all off-road, heavy-duty 52-9 diesel equipment classified as construction equipment, including: 52-10 (1) pavers; 52-11 (2) tampers/rammers; 52-12 (3) plate compactors; 52-13 (4) concrete pavers; 52-14 (5) rollers; 52-15 (6) scrapers; 52-16 (7) paving equipment; 52-17 (8) surface equipment; 52-18 (9) signal boards/light plants; 52-19 (10) trenchers; 52-20 (11) bore/drill rigs; 52-21 (12) excavators; 52-22 (13) concrete/industrial saws; 52-23 (14) cement and mortar mixers; 52-24 (15) cranes; 52-25 (16) graders; 52-26 (17) off-highway trucks; 53-1 (18) crushing/processing equipment; 53-2 (19) rough terrain forklifts; 53-3 (20) rubber tire loaders; 53-4 (21) rubber tire tractors/dozers; 53-5 (22) tractors/loaders/backhoes; 53-6 (23) crawler tractors/dozers; 53-7 (24) skid steer loaders; 53-8 (25) off-highway tractors; and 53-9 (26) dumpsters/tenders. 53-10 (b) In each county in this state, a surcharge is imposed on 53-11 the retail sale, lease, or rental of new or used equipment in an 53-12 amount equal to 0.25 percent of the sale price or the lease or 53-13 rental amount. 53-14 (c) The surcharge shall be collected at the same time and in 53-15 the same manner and shall be administered and enforced in the same 53-16 manner as the tax imposed under this subchapter. The comptroller 53-17 shall adopt any additional procedures needed for the collection, 53-18 administration, and enforcement of the surcharge authorized by this 53-19 section and shall deposit all remitted surcharges to the credit of 53-20 the Texas emissions reduction plan fund. 53-21 (d) This section expires September 30, 2008. 53-22 SECTION 3. Subchapter B, Chapter 152, Tax Code, is amended 53-23 by adding Section 152.0215 to read as follows: 53-24 Sec. 152.0215. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 53-25 (a) A surcharge is imposed on every retail sale or lease of every 53-26 on-road diesel motor vehicle over 14,000 pounds sold or leased in 54-1 this state. The amount of the surcharge is one percent of the 54-2 total consideration. 54-3 (b) The surcharge shall be collected at the same time and in 54-4 the same manner and shall be administered and enforced in the same 54-5 manner as the tax imposed under this subchapter. The comptroller 54-6 by rule shall adopt any additional procedures needed for the 54-7 collection, administration, and enforcement of the surcharge 54-8 authorized by this section and shall deposit all remitted 54-9 surcharges to the credit of the Texas emissions reduction plan 54-10 fund. 54-11 (c) This section expires September 30, 2008. 54-12 SECTION 4. Section 153.203, Tax Code, is amended to read as 54-13 follows: 54-14 Sec. 153.203. EXCEPTIONS. (a) The tax imposed by this 54-15 subchapter does not apply to: 54-16 (1) diesel fuel delivered by a permitted supplier to a 54-17 common or contract carrier, oceangoing vessel (including ship, 54-18 tanker, or boat), or barge for export from this state, if the 54-19 diesel fuel is moved forthwith outside this state; 54-20 (2) diesel fuel sold by a permitted supplier to the 54-21 federal government for its exclusive use; 54-22 (3) diesel fuel sold or delivered by a permitted 54-23 supplier to another permitted supplier or to the bulk storage 54-24 facility of an agricultural bonded user, or dyed diesel fuel sold 54-25 or delivered by a permitted supplier to the bulk storage facility 54-26 of a dyed diesel fuel bonded user, to the bulk storage facility of 55-1 a diesel tax prepaid user, or to a purchaser who provides a signed 55-2 statement as provided by Section 153.205 of this code, but not 55-3 including a delivery of tax-free diesel fuel into the fuel supply 55-4 tanks of a motor vehicle, except for a motor vehicle owned by the 55-5 federal government; 55-6 (4) diesel fuel sold or delivered by a permitted 55-7 supplier into the storage facility of a permitted aviation fuel 55-8 dealer, from which diesel fuel will be sold or delivered solely 55-9 into the fuel supply tanks of aircraft or aircraft servicing 55-10 equipment; 55-11 (5) diesel fuel sold or delivered by a permitted 55-12 supplier into fuel supply tanks of railway engines, motorboats, or 55-13 refrigeration units or other stationary equipment powered by a 55-14 separate motor from a separate fuel supply tank; 55-15 (6) kerosene when delivered by a permitted supplier 55-16 into a storage facility at a retail business from which all 55-17 deliveries are exclusively for heating, cooking, lighting, or 55-18 similar nonhighway use; 55-19 (7) diesel fuel sold or delivered by one aviation fuel 55-20 dealer to another aviation fuel dealer who will deliver the diesel 55-21 fuel exclusively into the supply tanks of aircraft or aircraft 55-22 servicing equipment; 55-23 (8) diesel fuel sold by a permitted supplier to a 55-24 public school district in this state for its exclusive use; 55-25 (9) diesel fuel sold by a permitted supplier to a 55-26 commercial transportation company that provides public school 56-1 transportation services to a school district under Section 34.008, 56-2 Education Code, and used by the company exclusively to provide 56-3 those services; or 56-4 (10) diesel fuel sold by a permitted supplier to a 56-5 person, other than a political subdivision, who owns, controls, 56-6 operates, or manages a commercial motor vehicle as defined by 56-7 Section 548.001, Transportation Code, if the fuel: 56-8 (A) is delivered exclusively into the fuel 56-9 supply tank of the commercial motor vehicle; and 56-10 (B) is used exclusively to transport passengers 56-11 for compensation or hire between points in this state on a fixed 56-12 route or schedule. 56-13 (b) The tax imposed by this subchapter does not apply to the 56-14 volume of water that is blended together with taxable diesel fuel 56-15 when the finished product sold or used is clearly identified on the 56-16 retail pump, storage tank, and sales invoice as a combination of 56-17 diesel fuel and water. This subsection expires August 31, 2008. 56-18 SECTION 5. Subchapter B, Chapter 156, Tax Code, is amended 56-19 by adding Section 156.054 to read as follows: 56-20 Sec. 156.054. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 56-21 (a) In this section, "nonattainment area" and "affected county" 56-22 have the meanings assigned by Section 386.001, Health and Safety 56-23 Code. 56-24 (b) A person owning, operating, managing, or controlling a 56-25 hotel located in a nonattainment area or an affected county shall 56-26 collect a surcharge imposed by this section. 57-1 (c) A $1 surcharge is imposed on a person for each day that 57-2 the person has the right to use or possess a room in a hotel that 57-3 is ordinarily used for sleeping. 57-4 (d) Sections 156.101, 156.102, and 156.103 do not apply to 57-5 the surcharge authorized by this section. 57-6 (e) The surcharge shall be collected at the same time and in 57-7 the same manner and shall be administered and enforced in the same 57-8 manner as the tax imposed under this subchapter. The comptroller 57-9 shall adopt any additional procedures needed for the collection, 57-10 administration, and enforcement of the surcharge authorized by this 57-11 section and shall deposit all remitted surcharges to the credit of 57-12 the Texas emissions reduction plan fund. 57-13 (f) This section expires September 30, 2008. 57-14 SECTION 6. Section 224.153, Transportation Code, is amended 57-15 by adding Subsection (c) to read as follows: 57-16 (c) A motor vehicle displaying the "clean vehicle" insignia 57-17 authorized by Section 502.186 is entitled to travel in a 57-18 preferential car pool or high occupancy vehicle lane designated 57-19 under this section regardless of the number of occupants in the 57-20 vehicle. This subsection expires August 31, 2008. 57-21 SECTION 7. Section 431.073, Transportation Code, is amended 57-22 by adding Subsection (d) to read as follows: 57-23 (d) A motor vehicle displaying the "clean vehicle" insignia 57-24 authorized by Section 502.186 is entitled to travel in a high 57-25 occupancy vehicle lane designated under this section regardless of 57-26 the number of occupants in the vehicle. This subsection expires 58-1 August 31, 2008. 58-2 SECTION 8. Subchapter D, Chapter 502, Transportation Code, 58-3 is amended by adding Section 502.1675 to read as follows: 58-4 Sec. 502.1675. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 58-5 (a) In addition to the registration fees charged under Section 58-6 502.167, a surcharge is imposed on the registration of a 58-7 truck-tractor or commercial motor vehicle under that section in an 58-8 amount equal to 10 percent of the total fees due for the 58-9 registration of the truck-tractor or commercial motor vehicle under 58-10 that section. 58-11 (b) The county tax assessor-collector shall remit the 58-12 surcharge collected under this section to the comptroller at the 58-13 time and in the manner prescribed by the comptroller for deposit in 58-14 the Texas emissions reduction plan fund. 58-15 (c) This section expires August 31, 2008. 58-16 SECTION 9. Subchapter D, Chapter 502, Transportation Code, 58-17 is amended by adding Section 502.186 to read as follows: 58-18 Sec. 502.186. "CLEAN VEHICLE" INSIGNIA FOR CERTAIN MOTOR 58-19 VEHICLES. (a) At the time of registration or reregistration of 58-20 the motor vehicle, the department shall issue a specially designed 58-21 "clean vehicle" insignia for a motor vehicle that is eligible for a 58-22 motor vehicle purchase or lease incentive under Subchapter D, 58-23 Chapter 386, Health and Safety Code. 58-24 (b) The insignia issued under this section must include the 58-25 words: "CLEAN VEHICLE". 58-26 (c) The department shall issue a "clean vehicle" insignia 59-1 under this section without the payment of any additional fee to a 59-2 person who: 59-3 (1) applies to the department on a form provided by 59-4 the department; and 59-5 (2) submits proof that the motor vehicle being 59-6 registered is a vehicle described by Subsection (a). 59-7 (d) This section expires August 31, 2008. 59-8 SECTION 10. Subchapter H, Chapter 548, Transportation Code, 59-9 is amended by adding Section 548.5055 to read as follows: 59-10 Sec. 548.5055. TEXAS EMISSIONS REDUCTION PLAN FEE. (a) In 59-11 this section, "nonattainment area" and "affected county" have the 59-12 meanings assigned by Section 386.001, Health and Safety Code. 59-13 (b) In addition to other fees required by this subchapter, 59-14 to fund the Texas emissions reduction plan established under 59-15 Chapter 386, Health and Safety Code, the department shall collect, 59-16 for every motor vehicle required to be inspected under this 59-17 chapter, a fee of: 59-18 (1) $1, if the vehicle being inspected is not 59-19 registered in a nonattainment area or an affected county in this 59-20 state; or 59-21 (2) $5, if the vehicle being inspected is registered 59-22 in a nonattainment area or an affected county in this state. 59-23 (c) The department shall remit fees collected under this 59-24 section to the comptroller at the time and in the manner prescribed 59-25 by the comptroller for deposit in the Texas emissions reduction 59-26 plan fund. 60-1 (d) This section expires August 31, 2008. 60-2 SECTION 11. Section 681.009, Transportation Code, is amended 60-3 by adding Subsection (f) to read as follows: 60-4 (f) In a nonattainment area or an affected county in this 60-5 state, a political subdivision or a person who designates five or 60-6 more parking spaces or a parking area for the exclusive use of 60-7 vehicles transporting persons with disabilities shall designate the 60-8 same number of parking spaces or a parking area for the exclusive 60-9 use of motor vehicles displaying the "clean vehicle" insignia 60-10 authorized by Section 502.186. Parking spaces or a parking area 60-11 designated under this section must be as close to the building or 60-12 area for which the spaces are provided as the parking spaces or 60-13 parking area provided for vehicles transporting persons with 60-14 disabilities. In this subsection, "nonattainment area" and 60-15 "affected county" have the meanings assigned by Section 386.001, 60-16 Health and Safety Code. This subsection expires August 31, 2008. 60-17 SECTION 12. Subchapter B, Chapter 31, Parks and Wildlife 60-18 Code, is amended by adding Section 31.0265 to read as follows: 60-19 Sec. 31.0265. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 60-20 (a) In this section, "nonattainment area" and "affected county" 60-21 have the meanings assigned by Section 386.001, Health and Safety 60-22 Code. 60-23 (b) Each application for an original or renewal certificate 60-24 of number for a motorboat that will be operated primarily in a 60-25 nonattainment area or an affected county in this state shall be 60-26 accompanied by a $3 Texas emissions reduction plan surcharge in 61-1 addition to any other fee required to be paid to the department. 61-2 (c) The department shall collect and remit the surcharge to 61-3 the comptroller at the time and in the manner prescribed by the 61-4 comptroller for deposit in the Texas emissions reduction plan fund. 61-5 (d) This section expires August 31, 2008. 61-6 SECTION 13. Chapter 20, Title 132, Revised Statutes, is 61-7 amended by adding Articles 9035 and 9036 to read as follows: 61-8 Art. 9035. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE ON TAXI 61-9 FARES 61-10 Sec. 1. DEFINITIONS. In this article: 61-11 (1) "Fare" means the compensation paid by a passenger 61-12 in a taxi for transportation by the taxi. 61-13 (2) "Nonattainment area" and "affected county" have 61-14 the meanings assigned by Section 386.001, Health and Safety Code. 61-15 (3) "Subsidized fare for disabled passengers" means a 61-16 fare that is subsidized by any governmental entity for persons with 61-17 disabilities. 61-18 (4) "Taxi" means a fuel-powered passenger vehicle that 61-19 transports passengers for compensation. The term includes a 61-20 limousine, van, or other vehicle that transports passengers for 61-21 compensation. 61-22 (5) "Very-low-emissions vehicle" has the meaning 61-23 assigned by Section 386.101, Health and Safety Code. 61-24 Sec. 2. APPLICATION. This article applies only in a 61-25 nonattainment area or an affected county in this state. 61-26 Sec. 3. IMPOSITION AND COLLECTION OF SURCHARGE. (a) A 62-1 surcharge of $1 is imposed on each fare collected by a taxi driver 62-2 for transportation by a taxi to and from an airport in a 62-3 nonattainment area or affected county. 62-4 (b) The comptroller shall adopt any necessary rules for the 62-5 administration, payment, collection and enforcement of this 62-6 surcharge and shall deposit all surcharges remitted under this 62-7 section to the Texas emissions reduction plan fund. 62-8 Sec. 4. EXEMPTION FROM SURCHARGE. The surcharge imposed by 62-9 this article does not apply if the taxi providing the 62-10 transportation for which the fare is charged: 62-11 (1) is eligible for a motor vehicle purchase or lease 62-12 incentive under Subchapter D, Chapter 386, Health and Safety Code; 62-13 or 62-14 (2) is transporting a passenger who is eligible for a 62-15 subsidized fare for disabled passengers. 62-16 Sec. 5. INTEREST AND PENALTIES. A person is liable for 62-17 penalties and interest on surcharges that are not remitted when due 62-18 in the same manner and at the same rate as provided for delinquent 62-19 taxes by Sections 111.060 and 111.061, Tax Code. 62-20 Sec. 6. CRIMINAL PENALTY. (a) A person who violates this 62-21 article or a rule adopted by the comptroller under this article 62-22 commits an offense. 62-23 (b) An offense under this section is a Class C misdemeanor. 62-24 Sec. 7. EXPIRATION. This article expires August 31, 2008. 62-25 Art. 9036. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE ON THE 62-26 SALE OF BUNKER FUEL 63-1 Sec. 1. DEFINITIONS. In this article: 63-2 (1) "Bunker fuel" means marine bunker fuel sold for 63-3 use in the operation of an ocean-going vessel, ship, tanker, or 63-4 boat. 63-5 (2) "Petroleum refining facility" means an 63-6 establishment primarily engaged in producing gasoline, kerosene, 63-7 distillate fuel oils, residual fuel oils, and lubricants through 63-8 fractionation, straight distillation of crude oil, redistillation 63-9 of unfinished petroleum derivatives, cracking, or other processes. 63-10 (3) "Importer" means a person who imports bunker fuel, 63-11 or causes bunker fuel to be imported, into this state for sale, 63-12 use, or consumption. 63-13 Sec. 2. IMPOSITION OF SURCHARGE. (a) A surcharge of 25 63-14 cents per gallon is imposed on the sale of bunker fuel by a 63-15 petroleum refining facility in this state. 63-16 (b) A person who imports bunker fuel into this state for 63-17 sale or use shall pay to the comptroller a surcharge of 25 cents 63-18 per gallon of bunker fuel imported into this state. 63-19 Sec. 3. EXEMPTIONS. The surcharge imposed by this section 63-20 does not apply to bunker fuel sold by a petroleum refining facility 63-21 or an importer: 63-22 (1) directly to the United States government; 63-23 (2) into the fuel supply tank of a vessel engaged 63-24 exclusively in foreign and interstate commerce; or 63-25 (3) for immediate export from this state. 63-26 Sec. 4. ADMINISTRATION, PAYMENT, COLLECTION, AND 64-1 ENFORCEMENT. Except as provided by this article, Chapters 101 and 64-2 111-113, Tax Code, apply to the administration, payment, 64-3 collection, and enforcement of the surcharge imposed by this 64-4 article in the same manner that those chapters apply to the 64-5 administration, payment, collection, and enforcement of taxes under 64-6 Title 2, Tax Code. The comptroller shall adopt any necessary rules 64-7 for the administration, payment, collection, and enforcement of the 64-8 surcharge and shall deposit all surcharges remitted under this 64-9 article to the Texas emissions reduction plan fund. 64-10 Sec. 5. EXPIRATION. This article expires August 31, 2008. 64-11 SECTION 14. (a) Not later than the 45th day after the 64-12 effective date of this Act, the Texas Natural Resource Conservation 64-13 Commission shall adopt all necessary rules, guidelines, or criteria 64-14 required to implement programs established under this Act. 64-15 (b) Not later than the 45th day after the effective date of 64-16 this Act, the comptroller of public accounts shall adopt all rules 64-17 necessary to enable the comptroller to carry out the comptroller's 64-18 duties under this Act. 64-19 (c) Pending final adoption of rules by the Texas Natural 64-20 Resource Conservation Commission and the comptroller of public 64-21 accounts to implement programs established by this Act, the 64-22 commission shall begin implementation of the programs using 64-23 guidelines developed by a similar program currently operating in 64-24 another state, modified as necessary for application in this state. 64-25 SECTION 15. (a) Except as provided by Subsection (b) of 64-26 this section, not later than August 1, 2001, if this Act takes 65-1 immediate effect, or the effective date of this Act, if this Act 65-2 does not take immediate effect, the Texas Natural Resource 65-3 Conservation Commission and the comptroller of public accounts 65-4 shall adopt rules necessary to implement the diesel emissions 65-5 reduction incentive and the motor vehicle purchase or lease 65-6 incentive programs established under Subchapters C and D, Chapter 65-7 386, Health and Safety Code, as added by this Act. 65-8 (b) Not later than September 1, 2001, the Texas Natural 65-9 Resource Conservation Commission, as required by Section 386.103, 65-10 Health and Safety Code, as added by this Act, shall adopt criteria 65-11 for setting priorities for projects eligible for grants under 65-12 Subchapter C, Chapter 386, Health and Safety Code, as added by this 65-13 Act. 65-14 (c) Not later than the 30th day after the effective date of 65-15 this Act, the Texas Natural Resource Conservation Commission shall 65-16 publish the first annual list of vehicles eligible for motor 65-17 vehicle purchase or lease incentives, as required by Section 65-18 386.156, Health and Safety Code, as added by this Act. 65-19 SECTION 16. The vehicle purchase or lease incentives 65-20 authorized by Sections 386.113 and 386.153, Health and Safety Code, 65-21 as added by this Act, apply only to the sale or lease of a vehicle 65-22 that occurs on or after January 1, 2002. 65-23 SECTION 17. Not later than the 45th day after the effective 65-24 date of this Act, the Texas Department of Transportation shall make 65-25 available to the county tax assessor-collector of each county in 65-26 the state the "clean vehicle" insignia authorized by Section 66-1 502.186, Transportation Code, as added by this Act. The county tax 66-2 assessor-collector of each county in the state shall begin issuing 66-3 the "clean vehicle" insignia to persons who qualify for the 66-4 insignia not later than the 10th working day after the date the 66-5 insignia are available. 66-6 SECTION 18. In making the initial appointments to the Texas 66-7 Emissions Reduction Plan Advisory Board as created by Section 66-8 386.058, Health and Safety Code, as added by this Act, the 66-9 appointing authorities shall designate their appointees so that six 66-10 members' terms expire February 1, 2002, and seven members' terms 66-11 expire February 1, 2003. Appointments to the advisory board shall 66-12 be made not later than July 1, 2001, if this Act takes immediate 66-13 effect, or the effective date of this Act, if this Act does not 66-14 take immediate effect. 66-15 SECTION 19. As soon as practicable after the effective date 66-16 of this Act, the governor shall appoint members to the Texas 66-17 Council on Environmental Technology, as created by Section 387.002, 66-18 Health and Safety Code, as added by this Act. In making the 66-19 initial appointments, the governor shall designate the appointees 66-20 so that three members' terms expire February 1, 2003, four members' 66-21 terms expire February 1, 2005, and four members' terms expire 66-22 February 1, 2007. 66-23 SECTION 20. Not later than the 30th day after the adoption 66-24 of rules governing the new technology research and development 66-25 program established under Chapter 387, Health and Safety Code, as 66-26 added by this Act, the Texas Council on Environmental Technology 67-1 shall issue requests for proposals for projects to be funded under 67-2 the new technology research and development program. 67-3 SECTION 21. On the effective date of this Act, the Texas 67-4 Natural Resource Conservation Commission shall submit to the United 67-5 States Environmental Protection Agency a revision to the state 67-6 implementation plan that deletes the requirements of the 67-7 construction shift and the early purchase of Tier 2 and Tier 3 67-8 equipment and adds the provisions of this Act. 67-9 SECTION 22. (a) Notwithstanding any Act of the 77th 67-10 Legislature, Regular Session, 2001, that purports to abolish all 67-11 funds and accounts created or re-created in the state treasury by 67-12 another Act of the 77th Legislature, Regular Session, 2001, the 67-13 Texas emissions reduction plan fund created by Subchapter F, 67-14 Chapter 386, Health and Safety Code, as added by this Act, and the 67-15 environmental research fund created by Section 387.008, Health and 67-16 Safety Code, as added by this Act, are accounts in the general 67-17 revenue fund and the accounts and money deposited to the accounts 67-18 are exempt from any Act of the 77th Legislature, Regular Session, 67-19 2001, that purports to abolish all funds and accounts created or 67-20 re-created by another Act of the 77th Legislature, Regular Session, 67-21 2001, and to require the deposit of money that would be deposited 67-22 to the credit of a special account or fund be deposited to the 67-23 credit of the unobligated portion of the general revenue fund 67-24 unless the fund, account, or dedication is exempted under that Act. 67-25 (b) This section prevails over any other Act of the 77th 67-26 Legislature, Regular Session, 2001, regardless of the relative 68-1 dates of enactment, that purports to abolish all funds and accounts 68-2 created or re-created in the state treasury by another Act of the 68-3 77th Legislature, Regular Session, 2001, and to require the deposit 68-4 of money that would be deposited to the credit of a special account 68-5 or fund be deposited to the credit of the unobligated portion of 68-6 the general revenue fund unless the fund, account, or dedication is 68-7 exempted under that Act. 68-8 SECTION 23. Section 386.002, Health and Safety Code, as 68-9 added by this Act notwithstanding, the Texas Natural Resource 68-10 Conservation Commission shall submit the final biennial plan report 68-11 required by Section 386.057, Health and Safety Code, as added by 68-12 this Act, to the legislature not later than December 1, 2008. 68-13 SECTION 24. The expiration of Sections 151.0515, 152.0215, 68-14 and 156.054, Tax Code, as added by this Act, and Articles 9035 and 68-15 9036, Revised Statutes, as added by this Act, does not affect an 68-16 obligation that was incurred, a violation that occurred, or an 68-17 offense that was committed under those sections or articles before 68-18 the expiration date of those sections or articles. An obligation 68-19 incurred, a violation that occurred, or an offense committed before 68-20 the expiration date of those sections or articles is governed by 68-21 the law in effect at the time the obligation was incurred, the 68-22 violation occurred, or the offense was committed, and the former 68-23 law is continued in effect after the expiration date for that 68-24 purpose. For purposes of this section, a violation occurs or an 68-25 offense is committed before the expiration date of those sections 68-26 or articles if any element of the violation or offense occurs 69-1 before that date. 69-2 SECTION 25. This Act takes effect immediately if it receives 69-3 a vote of two-thirds of all the members elected to each house, as 69-4 provided by Section 39, Article III, Texas Constitution. If this 69-5 Act does not receive the vote necessary for immediate effect, this 69-6 Act takes effect September 1, 2001.