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.