77R16337 JJT-D By Brown, et al. S.B. No. 5 Substitute the following for S.B. No. 5: By Geren C.S.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, 388, and 389 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: 2-1 (A) Bastrop County; 2-2 (B) Bexar County; 2-3 (C) Caldwell County; 2-4 (D) Comal County; 2-5 (E) Ellis County; 2-6 (F) Gregg County; 2-7 (G) Guadalupe County; 2-8 (H) Harrison County; 2-9 (I) Hays County; 2-10 (J) Johnson County; 2-11 (K) Kaufman County; 2-12 (L) Nueces County; 2-13 (M) Parker County; 2-14 (N) Rockwall County; 2-15 (O) Rusk County; 2-16 (P) San Patricio County; 2-17 (Q) Smith County; 2-18 (R) Travis County; 2-19 (S) Upshur County; 2-20 (T) Victoria County; 2-21 (U) Williamson County; and 2-22 (V) Wilson County. 2-23 (3) "Commission" means the Texas Natural Resource 2-24 Conservation Commission. 2-25 (4) "Council" means the Texas Council on Environmental 2-26 Technology. 2-27 (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) "Nonattainment area" means an area so designated 3-11 under Section 107(d) of the federal Clean Air Act (42 U.S.C. 3-12 Section 7407), as amended. 3-13 (9) "Plan" means the Texas emissions reduction plan. 3-14 (10) "Site" means the total of all stationary sources 3-15 located on one or more contiguous or adjacent properties, which are 3-16 under common control of the same person or persons under common 3-17 control. 3-18 (11) "Utility commission" means the Public Utility 3-19 Commission of Texas. 3-20 Sec. 386.002. EXPIRATION. This chapter expires August 31, 3-21 2008. 3-22 (Sections 386.003-386.050 reserved for expansion 3-23 SUBCHAPTER B. TEXAS EMISSIONS REDUCTION PLAN 3-24 Sec. 386.051. TEXAS EMISSIONS REDUCTION PLAN. (a) The 3-25 utility commission, the commission, the comptroller, and the 3-26 council shall establish and administer the Texas emissions 3-27 reduction plan in accordance with this chapter. 4-1 (b) Under the plan, the commission, the comptroller, and the 4-2 council shall provide grants or other funding for: 4-3 (1) the diesel emissions reduction incentive program 4-4 established under Subchapter C, including for infrastructure 4-5 projects established under that subchapter; 4-6 (2) the motor vehicle purchase or lease incentive 4-7 program established under Subchapter D; and 4-8 (3) the new technology research and development 4-9 program established under Chapter 387. 4-10 (c) Under the plan, the utility commission shall provide 4-11 grants or other funding for the energy efficiency grant program 4-12 established under Subchapter E. 4-13 (d) Equipment purchased before September 1, 2001, is not 4-14 eligible for a grant or other funding under the plan. 4-15 Sec. 386.052. COMMISSION DUTIES. (a) In administering the 4-16 plan established under this chapter and in accordance with the 4-17 requirements of this chapter, the commission shall: 4-18 (1) manage plan funds and oversee the plan; 4-19 (2) produce guidelines, protocols, and criteria for 4-20 eligible projects; 4-21 (3) develop methodologies for evaluating project 4-22 cost-effectiveness; 4-23 (4) prepare reports regarding the progress and 4-24 effectiveness of the plan; and 4-25 (5) take all appropriate and necessary actions so that 4-26 emissions reductions achieved through the plan are credited by the 4-27 United States Environmental Protection Agency to the appropriate 5-1 emissions reduction objectives in the state implementation plan. 5-2 (b) Appropriate commission objectives include: 5-3 (1) achieving maximum reductions in oxides of nitrogen 5-4 to demonstrate compliance with the state implementation plan; 5-5 (2) preventing areas of the state from being in 5-6 violation of national ambient air quality standards; and 5-7 (3) achieving cost-saving and multiple benefits by 5-8 reducing emissions of other pollutants. 5-9 Sec. 386.053. GUIDELINES AND CRITERIA. (a) The commission 5-10 shall adopt grant guidelines and criteria consistent with the 5-11 requirements of this chapter. 5-12 (b) Guidelines must include protocols to calculate projected 5-13 emissions reductions, project cost-effectiveness, and safeguards to 5-14 ensure that funded projects generate emissions reductions not 5-15 otherwise required by state or federal law. 5-16 (c) The commission shall make draft guidelines and criteria 5-17 available to the public and the United States Environmental 5-18 Protection Agency before the 45th day preceding the date of final 5-19 adoption and shall hold at least one public meeting to consider 5-20 public comments on the draft guidelines and criteria before final 5-21 adoption. 5-22 (d) The commission may propose revisions to the guidelines 5-23 and criteria adopted under this section as necessary to improve the 5-24 ability of the plan to achieve its goals. Revisions may include, 5-25 among other changes, adding additional pollutants or adjusting 5-26 eligible program categories, as appropriate, to ensure that 5-27 incentives established under this chapter achieve the maximum 6-1 possible emissions reductions. The commission shall make a 6-2 proposed revision available to the public before the 45th day 6-3 preceding the date of final adoption of the revision and shall hold 6-4 at least one public meeting to consider public comments on the 6-5 proposed revision before final adoption. 6-6 (e) Because the legislature finds that the current state of 6-7 air quality in the state jeopardizes the state's ability to meet 6-8 federal air quality requirements, the commission and the 6-9 comptroller may adopt emergency rules under Section 2001.034, 6-10 Government Code, with abbreviated notice, to carry out any 6-11 rulemaking necessary to implement this chapter. 6-12 (f) Except as provided by Subsection (e), the rulemaking 6-13 requirements of Chapter 2001, Government Code, do not apply to the 6-14 adoption or revision of guidelines and criteria under this section. 6-15 Sec. 386.054. MONITORING PROCEDURES. (a) The commission 6-16 shall develop procedures for monitoring whether the emissions 6-17 reductions projected for projects awarded grants under this chapter 6-18 are actually achieved. Monitoring procedures may include project 6-19 reviews and contract requirements that the grant recipient provide 6-20 information annually about the project. If the commission requires 6-21 an annual report, the report shall contain a minimum amount of 6-22 information required from a recipient and the report format shall 6-23 be simple and convenient. 6-24 (b) Monitoring and reviewing procedures must be sufficient 6-25 to enable emissions reductions generated by funded projects to be 6-26 fully credited to air quality plans. 6-27 (c) The commission may revise monitoring and review 7-1 procedures from time to time as necessary or appropriate to enhance 7-2 the effectiveness of the plan. 7-3 Sec. 386.055. AVAILABILITY OF EMISSIONS REDUCTION CREDITS 7-4 GENERALLY. (a) A project funded under a program established under 7-5 this chapter may not be used for credit under any state or federal 7-6 emissions reduction credit averaging, banking, or trading program. 7-7 (b) An emissions reduction generated by a program 7-8 established under this chapter: 7-9 (1) may not be used as a marketable emissions 7-10 reduction credit or, except as provided by Section 386.056, to 7-11 offset any emissions reduction obligation; and 7-12 (2) may be used to demonstrate conformity with the 7-13 state implementation plan. 7-14 (c) A project involving a new emissions reduction measure 7-15 that would otherwise generate marketable credits under state or 7-16 federal emissions reduction credit averaging, banking, or trading 7-17 programs is not eligible for funding under a program established 7-18 under this chapter unless: 7-19 (1) the project includes the transfer of the 7-20 reductions that would otherwise be marketable credits to the state 7-21 implementation plan or the owner or operator as provided by Section 7-22 386.056; and 7-23 (2) the reductions are permanently retired. 7-24 Sec. 386.056. AVAILABILITY OF EMISSIONS REDUCTIONS IN 7-25 CERTAIN NONATTAINMENT AREAS. (a) An owner or operator of a site 7-26 located in the Houston-Galveston or Dallas-Fort Worth nonattainment 7-27 area may use emissions reductions generated by a program 8-1 established under this chapter to offset the requirements of 8-2 commission rules relating to control of air pollution from oxides 8-3 of nitrogen if: 8-4 (1) the owner or operator of the site contributes to 8-5 the fund $75,000 for each ton of emissions that is used, not to 8-6 exceed 25 tons annually and not to exceed one-half ton per day; 8-7 (2) the owner or operator of the site demonstrates to 8-8 the commission's satisfaction that the site will be in full 8-9 compliance with the commission's emissions reduction rules not 8-10 later than the fifth anniversary of the date on which the emissions 8-11 reductions would otherwise be required; 8-12 (3) emissions from the site are reduced by at least 80 8-13 percent from the established baseline; and 8-14 (4) the commission approves a petition by the owner or 8-15 operator that demonstrates that it is technically infeasible to 8-16 comply with the commission's emissions reduction requirements above 8-17 80 percent. 8-18 (b) Funds collected under this section shall be used to 8-19 generate emissions reductions needed to meet the commission's 8-20 attainment demonstration. 8-21 (c) The commission shall verify that emissions reductions 8-22 generated from funds collected under this section occur in the same 8-23 nonattainment area in which the site that purchased the emissions 8-24 reductions is located. 8-25 (d) The commission shall assure that the emissions 8-26 reductions funded under the programs authorized by this subchapter 8-27 used to offset commission requirements under this section benefit 9-1 the community in which the site using the emissions reductions is 9-2 located. If there are no eligible emissions reduction projects 9-3 within the community, the commission may authorize projects in an 9-4 adjacent community. In this subsection, "community" means a 9-5 justice of the peace precinct. 9-6 Sec. 386.057. REVIEW AND REPORTING REQUIREMENTS. (a) The 9-7 commission, in consultation with the advisory board, annually shall 9-8 review programs established under the plan, including each project 9-9 funded under the plan, the amount granted for the project, the 9-10 emissions reductions attributable to the project, and the 9-11 cost-effectiveness of the project. 9-12 (b) Not later than December 1, 2002, and not later than 9-13 December 1 of each subsequent second year, the commission, in 9-14 consultation with the advisory board, shall publish and submit to 9-15 the legislature a biennial plan report. The report must include: 9-16 (1) the information included in the annual reviews 9-17 conducted under Subsection (a); 9-18 (2) specific information for individual projects as 9-19 required by Subsection (c); 9-20 (3) information contained in reports received under 9-21 Sections 386.205, 388.003(e), and 388.006; and 9-22 (4) a summary of the commission's activities under 9-23 Section 386.052. 9-24 (c) For projects funded as part of the infrastructure 9-25 program under Subchapter C, the report must: 9-26 (1) describe and evaluate: 9-27 (A) the infrastructure facilities funded under 10-1 that subchapter; 10-2 (B) the degree to which the funded facilities 10-3 are supporting on-road or non-road diesel projects; 10-4 (C) the amount of fuel or electricity dispensed 10-5 for each facility; and 10-6 (D) associated emissions reductions and 10-7 cost-effectiveness; and 10-8 (2) make a finding regarding the need for additional 10-9 appropriations from the fund to improve the ability of the program 10-10 to achieve its goals. 10-11 (d) The report must: 10-12 (1) account for money received, money disbursed as 10-13 grants, money reserved for grants based on project approvals, and 10-14 any recommended transfer of money between allocations and must 10-15 estimate future demand for grant funds under the plan; 10-16 (2) describe the overall effectiveness of the plan in 10-17 delivering the emissions reductions that may be credited to air 10-18 quality plans; 10-19 (3) evaluate the effectiveness of the plan in 10-20 soliciting and evaluating project applications, providing awards in 10-21 a timely manner, and monitoring project implementation; 10-22 (4) describe adjustments made to project selection 10-23 criteria and recommend any further needed changes or adjustments to 10-24 the grant programs, including changes in grant award criteria, 10-25 administrative procedures, or statutory provisions that would 10-26 enhance the plan's effectiveness and efficiency; 10-27 (5) describe adjustments made to the maximum 11-1 cost-effectiveness amount and award amount; 11-2 (6) evaluate the benefits of addressing additional 11-3 pollutants as part of the plan; and 11-4 (7) include legislative recommendations necessary to 11-5 improve the effectiveness of the plan. 11-6 (e) The commission shall request public comment and hold a 11-7 public meeting on each draft biennial report and, in producing a 11-8 final biennial report, shall consider and respond to all 11-9 significant comments received. 11-10 Sec. 386.058. TEXAS EMISSIONS REDUCTION PLAN ADVISORY BOARD. 11-11 (a) The Texas Emissions Reduction Plan Advisory Board consists of 11-12 15 members appointed as provided by this section and seven ex 11-13 officio members as provided by this section. 11-14 (b) The governor shall appoint to the advisory board: 11-15 (1) a representative of the trucking industry; 11-16 (2) a representative of the air conditioning 11-17 manufacturing industry; 11-18 (3) a representative of the electric utility industry; 11-19 (4) a representative of regional transportation; and 11-20 (5) a representative of the Texas Council on 11-21 Environmental Technology. 11-22 (c) The lieutenant governor shall appoint to the advisory 11-23 board: 11-24 (1) a representative of the engine manufacturing 11-25 industry; 11-26 (2) a representative of the air transportation 11-27 industry; 12-1 (3) a representative of the environmental community; 12-2 (4) a representative of the fuel cell industry; and 12-3 (5) a representative of the energy-efficient 12-4 construction industry. 12-5 (d) The speaker of the house of representatives shall 12-6 appoint to the advisory board: 12-7 (1) a representative of consumer groups; 12-8 (2) a representative of the construction industry; 12-9 (3) a representative of the automobile industry; 12-10 (4) a representative of the agriculture industry; and 12-11 (5) a representative of the fuel industry. 12-12 (e) Appointed members of the advisory board serve staggered 12-13 two-year terms. The terms of seven appointed members expire 12-14 February 1 of each even-numbered year. The terms of eight 12-15 appointed members expire February 1 of each odd-numbered year. An 12-16 appointed member may be reappointed to a subsequent term. 12-17 (f) Ex officio members of the advisory board are: 12-18 (1) the presiding officer of the senate standing 12-19 committee having primary jurisdiction over matters related to 12-20 natural resources; 12-21 (2) the presiding officer of the house standing 12-22 committee having primary jurisdiction over matters related to 12-23 environmental regulation; 12-24 (3) a representative of the commission, designated by 12-25 the executive director; 12-26 (4) a representative of the General Land Office, 12-27 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 (g) The advisory board annually shall elect a presiding 13-10 officer. 13-11 (h) The advisory board shall review the plan 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 (i) 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 total dollar amount 13-21 expended divided by the total number of tons of oxides of nitrogen 13-22 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) "Fuel cell" means an electrochemical device that 13-27 uses fuel and oxidant to continuously generate electricity. 14-1 (3) "Motor vehicle" means a self-propelled device 14-2 designed for transporting persons or property on a public highway 14-3 that is required to be registered under Chapter 502, Transportation 14-4 Code. 14-5 (4) "Non-road diesel" means a vehicle or piece of 14-6 equipment, excluding a motor vehicle or on-road diesel or an 14-7 implement of husbandry that is used exclusively for agricultural 14-8 purposes, that is powered by a non-road engine, including: 14-9 (A) non-road nonrecreational equipment and 14-10 vehicles; 14-11 (B) construction equipment; 14-12 (C) locomotives; 14-13 (D) marine vessels; and 14-14 (E) other high-emitting diesel engine categories 14-15 established by the commission. 14-16 (5) "Non-road engine" means an internal combustion 14-17 engine that is: 14-18 (A) in or on a piece of equipment that is 14-19 self-propelled or that propels itself and performs another 14-20 function, excluding a vehicle that is used solely for competition; 14-21 (B) in or on a piece of equipment that is 14-22 intended to be propelled while performing its function; or 14-23 (C) designed to be and capable of being carried 14-24 or moved from one location to another. 14-25 (6) "On-road diesel" means an on-road diesel-powered 14-26 motor vehicle that has a gross vehicle weight rating of 10,000 14-27 pounds or more. 15-1 (7) "Program" means the diesel emissions reduction 15-2 incentive program established under this subchapter. 15-3 (8) "Qualifying fuel" includes any liquid or gaseous 15-4 fuel or additives registered or verified by the United States 15-5 Environmental Protection Agency that is ultimately dispensed into a 15-6 motor vehicle or on-road or non-road diesel that provides 15-7 reductions of emissions of oxides of nitrogen beyond reductions 15-8 required by state or federal law. 15-9 (9) "Repower" means to replace an old engine powering 15-10 an on-road or non-road diesel with: 15-11 (A) a new engine that emits at least 30 percent 15-12 less than the oxides of nitrogen emissions standard required by 15-13 federal regulation for the current model year for that engine; 15-14 (B) an engine manufactured later than 1987 that 15-15 emits at least 30 percent less than the oxides of nitrogen 15-16 emissions standard emitted by a new engine certified to the 15-17 baseline oxides of nitrogen emissions standard for that engine; 15-18 (C) an engine manufactured before 1988 that 15-19 emits not more than 50 percent of the oxides of nitrogen emissions 15-20 standard emitted by a new engine certified to the baseline oxides 15-21 of nitrogen emissions standard for that engine; or 15-22 (D) electric motors, drives, or fuel cells. 15-23 (10) "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. 15-27 Sec. 386.102. PROGRAM. (a) The commission shall establish 16-1 and administer a diesel emissions reduction incentive program. 16-2 Under the program, the commission shall provide grants for eligible 16-3 projects to offset the incremental cost of projects that reduce 16-4 emissions of oxides of nitrogen from high-emitting diesel sources 16-5 in nonattainment areas and affected counties of the state. The 16-6 commission shall determine the eligibility of projects. 16-7 (b) Projects that may be considered for a grant under the 16-8 program include: 16-9 (1) purchase or lease of non-road diesels; 16-10 (2) emissions-reducing retrofit projects for on-road 16-11 or non-road diesels; 16-12 (3) emissions-reducing repower projects for on-road or 16-13 non-road diesels; 16-14 (4) purchase and use of emissions-reducing add-on 16-15 equipment for on-road or non-road diesels; 16-16 (5) development and demonstration of practical, 16-17 low-emissions retrofit technologies, repower options, and advanced 16-18 technologies for on-road or non-road diesels with lower emissions 16-19 of oxides of nitrogen; 16-20 (6) use of qualifying fuel; and 16-21 (7) implementation of infrastructure projects. 16-22 (c) A project listed in Subsection (b) is not eligible if it 16-23 is required by any state or federal law, rule or regulation, 16-24 memorandum of agreement, or other legally binding document. This 16-25 subsection does not apply to: 16-26 (1) an otherwise qualified project, regardless of the 16-27 fact that the state implementation plan assumes that the change in 17-1 equipment, vehicles, or operations will occur, if on the date the 17-2 grant is awarded the change is not required by any state or federal 17-3 law, rule or regulation, memorandum of agreement, or other legally 17-4 binding document; or 17-5 (2) the purchase of an on-road diesel or equipment 17-6 required only by local law or regulation or by corporate or 17-7 controlling board policy of a public or private entity. 17-8 Sec. 386.103. APPLICATION FOR GRANT. (a) Any person as 17-9 defined by Section 382.003 that owns one or more on-road or 17-10 non-road diesels that operate primarily within a nonattainment area 17-11 or affected county of this state or that otherwise contributes to 17-12 the state inventory of emissions of oxides of nitrogen may apply 17-13 for a grant under the program. 17-14 (b) An application for a grant under this subchapter must be 17-15 made on an application provided by the commission and must contain 17-16 information required by the commission, including: 17-17 (1) a detailed description of the proposed project; 17-18 (2) information necessary for the commission to 17-19 determine whether the project meets eligibility requirements for 17-20 the type of project proposed, including a statement of the amounts 17-21 of any other public financial assistance the project will receive; 17-22 and 17-23 (3) other information the commission may require. 17-24 Sec. 386.104. ELIGIBILITY REQUIREMENTS. (a) The commission 17-25 shall establish criteria for setting priorities for projects 17-26 eligible to receive grants under this subchapter. The commission 17-27 shall review and may modify the criteria and priorities as 18-1 appropriate. 18-2 (b) A proposed project as described in Section 386.102 must 18-3 meet the requirements of this section to be eligible for a grant 18-4 under the program. 18-5 (c) For a proposed project as described by Section 18-6 386.102(b), other than a project involving a marine vessel or 18-7 engine, not less than 75 percent of vehicle miles traveled or hours 18-8 of operation projected for the five years immediately following the 18-9 award of a grant must be projected to take place in a nonattainment 18-10 area or affected county of this state. For a proposed project 18-11 involving a marine vessel or engine, the vessel or engine must be 18-12 operated in the intercoastal waterways or bays adjacent to a 18-13 nonattainment area or affected county of this state for a 18-14 sufficient amount of time over the lifetime of the project, as 18-15 determined by the commission, to meet the cost-effectiveness 18-16 requirements of Section 386.105. 18-17 (d) Each proposed project must meet the cost-effectiveness 18-18 requirements of Sections 386.105 and 386.106. 18-19 (e) A proposed repower project must exceed commission 18-20 requirements relating to baseline emissions levels of the engines 18-21 being replaced under the project. 18-22 (f) A proposed retrofit, repower, or add-on equipment 18-23 project must document, in a manner acceptable to the commission, a 18-24 reduction in emissions of oxides of nitrogen of at least 30 percent 18-25 compared with the baseline emissions adopted by the commission for 18-26 the relevant engine year and application. After study of available 18-27 emissions reduction technologies, after public notice and comment, 19-1 and after consultation with the advisory board, the commission may 19-2 revise the minimum percentage reduction in emissions of oxides of 19-3 nitrogen required by this subsection to improve the ability of the 19-4 program to achieve its goals. 19-5 (g) If a baseline emissions standard does not exist for 19-6 on-road or non-road diesels in a particular category, the 19-7 commission, for purposes of this subchapter, shall establish an 19-8 appropriate baseline emissions level for comparison purposes. 19-9 (h) The commission may approve payments to offset the 19-10 incremental cost, over the expected lifetime of the motor vehicle 19-11 or on-road or non-road diesel, of the use of qualifying fuel in a 19-12 motor vehicle or on-road or non-road diesel if the proposed project 19-13 as a whole, including the incremental fuel cost, meets the 19-14 requirements of this subchapter. The commission shall develop an 19-15 appropriate method for converting incremental fuel costs over the 19-16 lifetime of the motor vehicle or on-road or non-road diesel into an 19-17 initial cost for purposes of determining cost-effectiveness as 19-18 required by Section 386.105. 19-19 Sec. 386.105. CALCULATION OF COST-EFFECTIVENESS. (a) In 19-20 calculating cost-effectiveness, one-time grants of money at the 19-21 beginning of a project shall be annualized using a time value of 19-22 public funds or discount rate determined for each project by the 19-23 commission, taking into account the interest rate on bonds, 19-24 interest earned by state funds, and other factors the commission 19-25 considers appropriate. 19-26 (b) The commission shall establish reasonable methodologies 19-27 for evaluating project cost-effectiveness consistent with 20-1 Subsection (a) and with accepted methods. 20-2 (c) The commission shall develop protocols for calculating 20-3 oxides of nitrogen emissions reductions not otherwise required by 20-4 state or federal law in nonattainment areas and affected counties 20-5 of this state from representative project types over the life of 20-6 the projects. 20-7 (d) The commission may include in cost-effectiveness 20-8 determinations only reductions in oxides of nitrogen emissions that 20-9 are achieved in nonattainment areas and affected counties of this 20-10 state. 20-11 Sec. 386.106. COST-EFFECTIVENESS CRITERIA; DETERMINATION OF 20-12 GRANT AMOUNT. (a) Except as provided by Section 386.107, the 20-13 commission may not award a grant for a proposed project the 20-14 cost-effectiveness of which, calculated in accordance with Section 20-15 386.105 and criteria developed under that section, exceeds $13,000 20-16 per ton of oxides of nitrogen emissions reduced in the 20-17 nonattainment area or affected county for which the project is 20-18 proposed. This subsection does not restrict commission authority 20-19 under other law to require emissions reductions with a 20-20 cost-effectiveness that exceeds $13,000 per ton. 20-21 (b) The commission may not award a grant that, net of taxes, 20-22 provides an amount that exceeds the incremental cost of the 20-23 proposed project. 20-24 (c) The commission shall adopt guidelines for capitalizing 20-25 incremental lease costs so those costs may be offset by a grant 20-26 under this subchapter. 20-27 (d) In determining the amount of a grant under this 21-1 subchapter, the commission shall reduce the incremental cost of a 21-2 proposed new purchase, lease, retrofit, repower, or add-on 21-3 equipment project by the value of any existing financial incentive 21-4 that directly reduces the cost of the proposed project, including 21-5 tax credits or deductions, other grants, or any other public 21-6 financial assistance. 21-7 Sec. 386.107. ADJUSTMENT TO MAXIMUM COST-EFFECTIVENESS 21-8 AMOUNT AND AWARD AMOUNT. After study of available emissions 21-9 reduction technologies and costs and after public notice and 21-10 comment, the commission, in consultation with the advisory board, 21-11 may change the values of the maximum grant award criteria 21-12 established in Section 386.106 to account for inflation or to 21-13 improve the ability of the program to achieve its goals. 21-14 Sec. 386.108. INFRASTRUCTURE PROJECTS. (a) The commission 21-15 shall provide funding under Section 386.252(a)(1) for 21-16 infrastructure projects. 21-17 (b) To implement the requirement of Subsection (a), the 21-18 commission shall: 21-19 (1) solicit applications for a balanced mix of 21-20 projects involving fueling and electrification infrastructure that 21-21 is linked to motor vehicle and on-road and non-road diesel projects 21-22 and consistent with program goals; 21-23 (2) coordinate infrastructure projects with motor 21-24 vehicle and on-road and non-road diesel projects representing a 21-25 broad range of fuels, technologies, and applications as appropriate 21-26 and consistent with the goals of this chapter; 21-27 (3) adopt guidelines and criteria for infrastructure 22-1 projects to be funded under the program; and 22-2 (4) oversee, monitor, and evaluate the use of grants 22-3 awarded under this program and report on the effectiveness of this 22-4 grant program in relation to the purposes and goals of this 22-5 chapter. 22-6 Sec. 386.109. ELIGIBLE INFRASTRUCTURE PROJECTS. The 22-7 commission may consider for funding under Section 386.108: 22-8 (1) the purchase and installation at a site of 22-9 equipment that is designed primarily to dispense qualifying fuel, 22-10 other than standard gasoline or diesel, or the purchase of on-site 22-11 mobile fueling equipment; 22-12 (2) infrastructure projects, including auxiliary power 22-13 units, designed to dispense electricity to motor vehicles and 22-14 on-road and non-road diesels; and 22-15 (3) a project that involves a technology that allows a 22-16 vehicle to replace with electric power, while the vehicle is 22-17 parked, the power normally supplied by the vehicle's internal 22-18 combustion engine. 22-19 Sec. 386.110. APPLICATION PACKAGE FOR INFRASTRUCTURE 22-20 PROJECTS. (a) The commission shall develop a simple, standardized 22-21 application package for infrastructure project grants under this 22-22 subchapter. The package must include: 22-23 (1) an application form; 22-24 (2) a brief description of: 22-25 (A) the program; 22-26 (B) the projects that are eligible for available 22-27 funding; 23-1 (C) the selection criteria and evaluation 23-2 process; and 23-3 (D) the required documentation; 23-4 (3) the name of a person or office to contact for more 23-5 information; 23-6 (4) an example of the contract that an applicant will 23-7 be required to execute before receiving a grant; and 23-8 (5) any other information the commission considers 23-9 useful to inform the applicant and expedite the application 23-10 process. 23-11 (b) The application form shall require as much information 23-12 as the commission determines is necessary to properly evaluate each 23-13 project but shall otherwise minimize the information required. 23-14 (c) The commission may not require an applicant, as part of 23-15 the application process, to calculate tons of emissions reduced or 23-16 cost-effectiveness. 23-17 Sec. 386.111. APPLICATION REVIEW PROCEDURES. (a) The 23-18 commission shall review an application for a grant for a project 23-19 authorized under this subchapter, including an application for a 23-20 grant for an infrastructure project, immediately on receipt of the 23-21 application. If the commission determines that an application is 23-22 incomplete, the commission shall notify the applicant, not later 23-23 than the 15th working day after the date on which the commission 23-24 received the application, with an explanation of what is missing 23-25 from the application. The commission shall record the date and 23-26 time of receipt of each application the commission determines to be 23-27 complete and shall evaluate the completed application according to 24-1 the appropriate project criteria. Subject to available funding, 24-2 the commission shall make a final determination on an application 24-3 as soon as possible and not later than the 60th working day after 24-4 the date the application is determined to be complete. 24-5 (b) The commission shall make every effort to expedite the 24-6 application review process and to award grants to qualified 24-7 projects in a timely manner. To the extent possible, the 24-8 commission shall coordinate project review and approval with any 24-9 timing constraints related to project purchases or installations to 24-10 be made by an applicant. 24-11 (c) The commission may deny an application for a project 24-12 that does not meet the applicable project criteria or that the 24-13 commission determines is not made in good faith, is not credible, 24-14 or is not in compliance with this chapter and the goals of this 24-15 chapter. 24-16 (d) Subject to availability of funds, the commission shall 24-17 award a grant under this subchapter in conjunction with the 24-18 execution of a contract that obligates the commission to make the 24-19 grant and the recipient to perform the actions described in the 24-20 recipient's grant application. The contract must incorporate 24-21 provisions for recapturing grant money in proportion to any loss of 24-22 emissions reductions or underachievement in dispensing qualifying 24-23 fuel compared with the volume of emissions reductions or amount of 24-24 fuel dispensed that was projected in awarding the grant. Grant 24-25 money recaptured under the contract provision shall be deposited in 24-26 the fund and reallocated for other projects under this subchapter. 24-27 (e) An applicant may seek reimbursement for qualifying 25-1 equipment installed after the effective date of this program. 25-2 Sec. 386.112. ON-ROAD DIESEL PURCHASE OR LEASE INCENTIVE. 25-3 (a) The commission shall develop a purchase or lease incentive 25-4 program for new on-road diesels and shall adopt rules necessary to 25-5 implement the program and to reimburse a purchaser or lessee of a 25-6 new on-road diesel that is eligible for reimbursement of 25-7 incremental costs under this subchapter. 25-8 (b) The program shall authorize statewide incentives for the 25-9 reimbursement of incremental costs for the purchase or lease, 25-10 according to the schedule provided by Section 386.113, of new 25-11 on-road diesels that are certified by the United States 25-12 Environmental Protection Agency to an emissions standard provided 25-13 by Section 386.113 if the purchaser or lessee of the on-road diesel 25-14 agrees to register the vehicle in this state and to operate the 25-15 on-road diesel in this state for not less than 75 percent of the 25-16 on-road diesel's annual mileage. 25-17 (c) Only one incentive will be provided for each new on-road 25-18 diesel. The incentive shall be provided to the purchaser if the 25-19 on-road diesel is not purchased for the purpose of leasing the 25-20 on-road diesel to another person, or to the lessee and not to the 25-21 purchaser if the on-road diesel is purchased for the purpose of 25-22 leasing the on-road diesel to another person. A lease incentive 25-23 for a new on-road diesel shall be prorated based on an eight-year 25-24 lease term. 25-25 Sec. 386.113. ON-ROAD DIESEL PURCHASE OR LEASE INCENTIVE 25-26 SCHEDULE. A new on-road diesel is eligible for reimbursement of 25-27 incremental costs according to the following schedule: 26-1 Incentive emissions standard Reimbursement amount 26-2 (oxides of nitrogen) 26-3 Date of manufacture Date of manufacture 26-4 (2001) (10/01/02-9/30/06) 26-5 2.5 g/bhp-hr NOx 1.2 g/bhp-hr NOx up to $15,000 26-6 1.5 g/bhp-hr NOx 0.5 g/bhp-hr NOx up to $25,000 26-7 0.0 g/bhp-hr NOx 0.0 g/bhp-hr NOx up to $25,000 26-8 Sec. 386.114. MODIFICATION OF INCENTIVE EMISSIONS STANDARDS. 26-9 After evaluating new technologies and after public notice and 26-10 comment, the commission, in consultation with the advisory board, 26-11 may change the incentive emissions standards established by Section 26-12 386.113 to improve the ability of the program to achieve its goals. 26-13 (Sections 386.115-386.150 reserved for expansion 26-14 SUBCHAPTER D. MOTOR VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM 26-15 Sec. 386.151. DEFINITIONS. In this subchapter: 26-16 (1) "Bin" or "emissions bin" means a set of emissions 26-17 standards applicable to exhaust pollutants measured on the Federal 26-18 Test Procedure (FTP) according to 40 C.F.R. Section 86.1811-04. 26-19 (2) "Light-duty motor vehicle" means a motor vehicle 26-20 with a gross vehicle weight rating of less than 10,000 pounds. 26-21 (3) "Motor vehicle" means a self-propelled device 26-22 designed for transporting persons or property on a public highway 26-23 that is required to be registered under Chapter 502, Transportation 26-24 Code. 26-25 Sec. 386.152. COMPTROLLER AND COMMISSION DUTIES REGARDING 26-26 LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM. (a) 26-27 The comptroller and the commission shall develop a purchase or 27-1 lease incentive program for new light-duty motor vehicles and shall 27-2 adopt rules necessary to implement the program. 27-3 (b) The program shall authorize statewide incentives for the 27-4 purchase or lease, according to the schedule provided by Section 27-5 386.153, of new light-duty motor vehicles that are certified by the 27-6 United States Environmental Protection Agency to meet an emissions 27-7 standard that is at least as stringent as those provided by Section 27-8 386.153 for a purchaser or lessee who agrees to register the 27-9 vehicle in this state and to operate the vehicle in this state for 27-10 not less than 75 percent of the vehicle's annual mileage. 27-11 (c) Only one incentive will be provided for each new 27-12 light-duty motor vehicle. The incentive shall be provided to the 27-13 lessee and not to the purchaser if the motor vehicle is purchased 27-14 for the purpose of leasing the vehicle to another person. 27-15 Sec. 386.153. LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE 27-16 INCENTIVE SCHEDULE. A new light-duty motor vehicle is eligible for 27-17 an incentive according to the following schedule: 27-18 Incentive emissions standard and incentive amount 27-19 Model year 2003-2007 27-20 Bin 4 $1,250 27-21 Bin 3 $2,225 27-22 Bin 2 $3,750 27-23 Bin 1 $5,000 27-24 Sec. 386.154. MODIFICATION OF INCENTIVE EMISSIONS STANDARDS. 27-25 After evaluating new technologies and after public notice and 27-26 comment, the commission, in consultation with the advisory board, 27-27 may change the incentive emissions standards established by Section 28-1 386.153 to improve the ability of the program to achieve its goals. 28-2 Sec. 386.155. MANUFACTURER'S REPORT. At the beginning of 28-3 but not later than July 1 of each year preceding the vehicle model 28-4 year, a manufacturer of motor vehicles shall provide to the 28-5 commission a list of the new vehicle models that the manufacturer 28-6 intends to sell in this state during that model year that meet the 28-7 incentive emissions standards established by the schedules set out 28-8 under Section 386.153. 28-9 Sec. 386.156. LIST OF ELIGIBLE MOTOR VEHICLES. (a) On 28-10 August 1 each year the commission shall publish and provide to the 28-11 comptroller a list of the new model motor vehicles as listed for 28-12 the commission under Section 386.155. 28-13 (b) The comptroller shall distribute the list of eligible 28-14 motor vehicles to all new motor vehicle dealers and leasing agents 28-15 in this state. 28-16 Sec. 386.157. VEHICLE EMISSIONS INFORMATION LABEL. (a) To 28-17 enable consumers to make informed purchase decisions based on the 28-18 relative amounts of emissions produced by motor vehicles within 28-19 each vehicle class, the motor vehicle manufacturer or distributor 28-20 shall affix on each new light-duty motor vehicle for sale or lease 28-21 in this state a clearly legible label that shows the vehicle's 28-22 class rating under the United States Environmental Protection 28-23 Agency's vehicle class rating system. If the United States 28-24 Environmental Protection Agency develops another vehicle emissions 28-25 rating system that gives consumers similar emissions information by 28-26 vehicle class, the commission by rule may designate that vehicle 28-27 rating system. 29-1 (b) A new motor vehicle dealer or leasing agent shall make 29-2 available to the dealer's or leasing agent's prospective purchasers 29-3 or lessees a copy of the list prepared and published by the 29-4 commission under Section 386.156. 29-5 Sec. 386.158. LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE 29-6 INCENTIVE. (a) A person who purchases or leases a new light-duty 29-7 motor vehicle that has been listed under Section 386.155 is 29-8 eligible for an incentive under this subchapter. 29-9 (b) A lease incentive for a new light-duty motor vehicle 29-10 shall be prorated based on a four-year lease term. 29-11 (c) To receive money under an incentive program provided by 29-12 this subchapter, the purchaser or lessee of a new light-duty motor 29-13 vehicle eligible for an incentive under this subchapter shall apply 29-14 for the incentive in the manner provided by law or by rule of the 29-15 comptroller. 29-16 Sec. 386.159. PUBLIC INFORMATION. (a) The commission in 29-17 cooperation with the comptroller shall develop and implement a 29-18 program to inform the public and new motor vehicle dealers and 29-19 leasing agents about the motor vehicle purchase or lease incentive 29-20 program. 29-21 (b) The Texas Department of Transportation shall insert a 29-22 notice describing the light-duty motor vehicle purchase or lease 29-23 incentive program with each annual vehicle registration renewal 29-24 notice. 29-25 Sec. 386.160. COMPTROLLER TO ACCOUNT FOR MOTOR VEHICLE 29-26 PURCHASE OR LEASE INCENTIVES. (a) The comptroller by rule shall 29-27 develop a method to administer and account for the motor vehicle 30-1 purchase or lease incentives authorized by this subchapter and to 30-2 pay incentive money to the purchaser or lessee of a new motor 30-3 vehicle, on application of the purchaser or lessee as provided by 30-4 this subchapter. 30-5 (b) The comptroller shall develop and publish forms and 30-6 instructions for the purchaser or lessee of a new motor vehicle to 30-7 use in applying to the comptroller for an incentive payment under 30-8 this subchapter. The comptroller shall make the forms available to 30-9 new motor vehicle dealers and leasing agents. Dealers and leasing 30-10 agents shall make the forms available to their prospective 30-11 purchasers or lessees. 30-12 (c) In addition to other forms developed and published under 30-13 this section, the comptroller shall develop and publish a 30-14 verification form by which, with information provided by the dealer 30-15 or leasing agent, the comptroller can verify the sale of a vehicle 30-16 covered by this subchapter. The verification form shall include at 30-17 least the name of the purchaser, the vehicle identification number 30-18 of the vehicle involved, the date of the purchase, and the name of 30-19 the new motor dealer or leasing agent involved in the transaction. 30-20 At the time of sale or lease of a vehicle eligible for an incentive 30-21 under this subchapter, the dealer or leasing agent shall complete 30-22 the verification form supplied to the dealer by the comptroller. 30-23 The purchaser or lessee shall include the completed verification 30-24 form as part of the purchaser's application for an incentive. The 30-25 dealer shall maintain a copy of the completed verification form for 30-26 at least two years from the date of the transaction. 30-27 Sec. 386.161. REPORT TO COMMISSION; SUSPENSION OF PURCHASE 31-1 OR LEASE INCENTIVES. (a) The comptroller shall report to the 31-2 commission annually regarding motor vehicle purchase or lease 31-3 incentives. 31-4 (b) If the balance available for motor vehicle purchase or 31-5 lease incentives falls below 15 percent of the total allocated for 31-6 the incentives during that fiscal year, the comptroller by order 31-7 shall suspend the incentives until the date the comptroller can 31-8 certify that the balance available in the fund for incentives is an 31-9 amount adequate to resume the incentives or the beginning of the 31-10 next fiscal year, whichever is earlier. If the comptroller 31-11 suspends the incentives, the comptroller shall immediately notify 31-12 the commission and all new motor vehicle dealers and leasing agents 31-13 that the incentives have been suspended. 31-14 (c) The comptroller shall establish a toll-free telephone 31-15 number available to motor vehicle dealers and leasing agents for 31-16 the dealers and agents to call to verify that incentives are 31-17 available. The comptroller may provide for issuing verification 31-18 numbers over the telephone line. 31-19 (d) Reliance by a dealer or leasing agent on information 31-20 provided by the comptroller or commission is a complete defense to 31-21 an action involving or based on eligibility of a vehicle for an 31-22 incentive or availability of vehicles eligible for an incentive. 31-23 (Sections 386.162-386.200 reserved for expansion 31-24 SUBCHAPTER E. ENERGY EFFICIENCY GRANT PROGRAM 31-25 Sec. 386.201. DEFINITIONS. In this subchapter: 31-26 (1) "Electric cooperative" has the meaning assigned by 31-27 Section 11.003, Utilities Code. 32-1 (2) "Electric utility" has the meaning assigned by 32-2 Section 31.002, Utilities Code. 32-3 (3) "Municipally owned utility" has the meaning 32-4 assigned by Section 11.003, Utilities Code. 32-5 Sec. 386.202. GRANT PROGRAM. (a) The utility commission 32-6 shall develop an energy efficiency grant program using program 32-7 templates that are consistent with rules of the utility commission 32-8 adopted under Section 39.905, Utilities Code. 32-9 (b) Programs approved under this subchapter must include the 32-10 retirement, replacement, and recycling of materials and appliances 32-11 that contribute to peak energy demand to ensure the reduction of 32-12 energy demand, peak loads, and associated emissions of air 32-13 contaminants. 32-14 Sec. 386.203. ADMINISTRATION OF GRANTS. Money allocated by 32-15 the utility commission under the grant program developed under this 32-16 subchapter shall be administered by electric utilities, electric 32-17 cooperatives, and municipally owned utilities. A participating 32-18 electric utility, electric cooperative, or municipally owned 32-19 utility shall be reimbursed from the fund for costs incurred by the 32-20 utility in administering the energy efficiency grant program 32-21 established under this subchapter. Reimbursable administrative 32-22 costs of a participating entity may not exceed 10 percent of the 32-23 entity's total program budget before January 1, 2003, and may not 32-24 exceed five percent of the entity's total program budget on or 32-25 after that date. 32-26 Sec. 386.204. LIMITATION ON DUTY OF PARTICIPATING UTILITY. 32-27 (a) This subchapter obligates an electric utility, electric 33-1 cooperative, or municipally owned utility only to administer the 33-2 funding allocated to the entity by the utility commission in 33-3 accordance with this subchapter. 33-4 (b) The obligation of an electric utility under this 33-5 subchapter is separate and apart from, and does not affect an 33-6 obligation of the electric utility under, Section 39.905, Utilities 33-7 Code, or a rule adopted under that section. 33-8 (c) Emissions reductions achieved by a program implemented 33-9 under this subchapter may not be used by an electric utility, 33-10 electric cooperative, or municipally owned utility to satisfy an 33-11 obligation to reduce air contaminant emissions under state or 33-12 federal law or a state or federal regulatory program. 33-13 Sec. 386.205. EVALUATION OF STATE ENERGY EFFICIENCY 33-14 PROGRAMS. In cooperation with the laboratory, the utility 33-15 commission shall provide an annual report to the commission that, 33-16 by county, quantifies the reductions of energy demand, peak loads, 33-17 and associated emissions of air contaminants achieved from the 33-18 programs implemented under this subchapter and from those 33-19 implemented under Section 39.905, Utilities Code. 33-20 (Sections 386.206-386.250 reserved for expansion 33-21 SUBCHAPTER F. TEXAS EMISSIONS REDUCTION PLAN FUND 33-22 Sec. 386.251. FUND. (a) The Texas emissions reduction plan 33-23 fund is an account in the state treasury. 33-24 (b) The fund is administered by the comptroller for the 33-25 benefit of the Texas emissions reduction plan established under 33-26 this chapter. 33-27 (c) The fund consists of money from: 34-1 (1) fees and other amounts charged and collected under 34-2 Sections 502.1675 and 548.5055, Transportation Code; 34-3 (2) the surcharge on the sale, lease, or rental of new 34-4 or used construction equipment under Section 151.0515, Tax Code; 34-5 and 34-6 (3) surcharges collected under Sections 152.0215 and 34-7 156.054, Tax Code. 34-8 Sec. 386.252. USE OF FUND. (a) Money in the fund may be 34-9 used only to implement and administer programs established under 34-10 the plan and shall be allocated as follows: 34-11 (1) for the diesel emissions reduction incentive 34-12 program, 67 percent of the money in the fund, of which not more 34-13 than three percent may be used for infrastructure projects and not 34-14 more than 15 percent may be used for on-road diesel purchase or 34-15 lease incentives; 34-16 (2) for the motor vehicle purchase or lease incentive 34-17 program, 15 percent of the money in the fund; 34-18 (3) for the energy efficiency grant program, 7.5 34-19 percent of the money in the fund; 34-20 (4) for the new technology research and development 34-21 program, 7.5 percent of the money in the fund, of which up to 34-22 $250,000 is allocated for administration, up to $200,000 is 34-23 allocated for a health effects study, and $500,000 is to be 34-24 deposited in the state treasury to the credit of the clean air 34-25 account created under Section 382.0622 to supplement funding for 34-26 air quality planning activities in affected counties; and 34-27 (5) for administrative costs incurred by the utility 35-1 commission, the commission, the comptroller, and the laboratory, 35-2 three percent. 35-3 (b) Up to 15 percent of the money allocated under Subsection 35-4 (a) to a particular program and not expended under that program by 35-5 March 1 of the second fiscal year of a fiscal biennium may be used 35-6 for another program under the plan as determined by the commission 35-7 in consultation with the advisory board. 35-8 CHAPTER 387. NEW TECHNOLOGY RESEARCH 35-9 AND DEVELOPMENT PROGRAM 35-10 Sec. 387.001. DEFINITION. In this chapter, "program" means 35-11 the new technology research and development program. 35-12 Sec. 387.002. TEXAS COUNCIL ON ENVIRONMENTAL TECHNOLOGY. 35-13 (a) The Texas Council on Environmental Technology consists of 11 35-14 members appointed by the governor to represent the academic and 35-15 nonprofit communities. The governor shall designate from the 35-16 council members a presiding officer of the council. Members of the 35-17 council serve six-year staggered terms, with the terms of three or 35-18 four members expiring February 1 of each odd-numbered year. 35-19 (b) The Texas Council on Environmental Technology shall work 35-20 to enhance the entrepreneurial and inventive spirit of Texans to 35-21 assist in developing solutions to air, water, and waste problems 35-22 by: 35-23 (1) identifying and evaluating new technologies and 35-24 seeking the approval of the United States Environmental Protection 35-25 Agency for and facilitating the deployment of those technologies; 35-26 and 35-27 (2) assisting the commission and the United States 36-1 Environmental Protection Agency in the process of ensuring 36-2 credit for new, innovative, and creative technological 36-3 advancements. 36-4 (c) Council offices and projects shall be housed at the 36-5 Center for Energy and Environmental Resources at The University of 36-6 Texas at Austin. 36-7 Sec. 387.003. NEW TECHNOLOGY RESEARCH AND DEVELOPMENT 36-8 PROGRAM. (a) The Texas Council on Environmental Technology shall 36-9 establish and administer a new technology research and development 36-10 program as provided by this chapter. 36-11 (b) Under the program, the Texas Council on Environmental 36-12 Technology shall provide grants to be used to support development 36-13 of emissions-reducing technologies that may be used for projects 36-14 eligible for awards under Chapter 386 and other new technologies 36-15 that show promise for commercialization. The primary objective of 36-16 this chapter is to promote the development of commercialization 36-17 technologies that will support projects that may be funded under 36-18 Chapter 386 and this chapter. 36-19 Sec. 387.004. SOLICITATION OF NEW TECHNOLOGY PROPOSALS. The 36-20 Texas Council on Environmental Technology from time to time shall 36-21 issue specific requests for proposals (RFPs) or program opportunity 36-22 notices (PONs) for technology projects to be funded under the 36-23 program. 36-24 Sec. 387.005. ELIGIBLE PROJECTS; PRIORITIES. (a) Grants 36-25 awarded under this chapter shall be directed toward a balanced mix 36-26 of: 36-27 (1) retrofit and add-on technologies to reduce 37-1 emissions from the existing stock of vehicles targeted by the Texas 37-2 emissions reduction plan; 37-3 (2) advanced technologies for new engines and vehicles 37-4 that produce very-low or zero emissions of oxides of nitrogen, 37-5 including stationary and mobile fuel cells; 37-6 (3) studies to improve air quality assessment and 37-7 modeling; 37-8 (4) advanced technologies that promote increased 37-9 building and appliance energy performance; and 37-10 (5) advanced technologies that reduce emissions from 37-11 other significant sources. 37-12 (b) The Texas Council on Environmental Technology shall 37-13 identify and evaluate and may consider making grants for technology 37-14 projects that would allow qualifying fuels to be produced from 37-15 energy resources in this state. In considering projects under this 37-16 subsection, the council shall give preference to projects involving 37-17 otherwise unusable energy resources in this state and producing 37-18 qualifying fuels at prices lower than otherwise available and low 37-19 enough to make the projects to be funded under the program 37-20 economically attractive to local businesses in the area for which 37-21 the project is proposed. 37-22 (c) In soliciting proposals under Section 387.004 and 37-23 determining how to allocate grant money available for projects 37-24 under this chapter, the Texas Council on Environmental Technology 37-25 shall give special consideration to advanced technologies and 37-26 retrofit or add-on projects that provide multiple benefits by 37-27 reducing emissions of particulates and other air pollutants. 38-1 (d) A project that involves publicly or privately owned 38-2 vehicles or vessels is eligible for funding under this chapter if 38-3 the project meets all applicable criteria. 38-4 (e) Studies authorized under Subsection (a)(3) shall be 38-5 consistent with air quality research priorities identified by the 38-6 commission. 38-7 Sec. 387.006. EVIDENCE OF COMMERCIALIZATION POTENTIAL 38-8 REQUIRED. (a) An application for a technology grant under this 38-9 chapter must show clear and compelling evidence that: 38-10 (1) the proposed technology project has a strong 38-11 commercialization plan and organization; and 38-12 (2) the technology proposed for funding: 38-13 (A) is likely to be offered for commercial sale 38-14 in this state within five years after the date of the application 38-15 for funding; and 38-16 (B) once commercialized, will offer 38-17 opportunities for projects eligible for funding under Chapter 386. 38-18 (b) The Texas Council on Environmental Technology shall 38-19 consider specifically, for each proposed technology project 38-20 application: 38-21 (1) the projected potential for reduced emissions of 38-22 oxides of nitrogen and the cost-effectiveness of the technology 38-23 once it has been commercialized; 38-24 (2) the potential for the technology to contribute 38-25 significantly to air quality goals; and 38-26 (3) the strength of the commercialization plan. 38-27 Sec. 387.007. COST-SHARING. The Texas Council on 39-1 Environmental Technology may require cost-sharing for technology 39-2 projects funded under this chapter but may not require repayment of 39-3 grant money. 39-4 Sec. 387.008. ENVIRONMENTAL RESEARCH FUND. (a) The 39-5 environmental research fund is an account in the general revenue 39-6 fund. The fund consists of money from gifts, grants, or donations 39-7 to the fund for designated or general use and from any other source 39-8 designated by the legislature. 39-9 (b) Money in the environmental research fund may be used 39-10 only for the operation and projects of the Texas Council on 39-11 Environmental Technology. 39-12 Sec. 387.009. ADVISORY COMMITTEES. The Texas Council on 39-13 Environmental Technology may appoint advisory committees as 39-14 necessary or desirable to assist the council in performing its 39-15 duties. An advisory committee may include representatives of 39-16 industry, environmental groups, consumer groups, local governments, 39-17 agriculture, the commission, the General Land Office, and the 39-18 Railroad Commission of Texas. Any senator or representative 39-19 desiring to do so may participate on any advisory committee 39-20 appointed under this section. Members of an advisory committee are 39-21 not entitled to compensation. 39-22 Sec. 387.010. REPORTS. Not later than December 1, 2002, and 39-23 not later than December 1 of each subsequent second year, the Texas 39-24 Council on Environmental Technology shall report to the legislature 39-25 on projects funded under the new technology research and 39-26 development program, describing the technical objectives and 39-27 accomplishments of the project and the progress of the project 40-1 technology toward commercialization. 40-2 CHAPTER 388. TEXAS BUILDING ENERGY PERFORMANCE STANDARDS 40-3 Sec. 388.001. LEGISLATIVE FINDINGS. (a) The legislature 40-4 finds that an effective building energy code is essential to: 40-5 (1) reducing the air pollutant emissions that are 40-6 affecting the health of residents of this state; 40-7 (2) moderating future peak electric power demand; 40-8 (3) assuring the reliability of the electrical grid; 40-9 and 40-10 (4) controlling energy costs for residents and 40-11 businesses in this state. 40-12 (b) The legislature further finds that this state has a 40-13 number of unique climate types, all of which require more energy 40-14 for cooling than for heating, and that there are many 40-15 cost-effective measures that can reduce peak energy use and reduce 40-16 cooling and other energy costs in buildings. 40-17 Sec. 388.002. DEFINITIONS. In this chapter: 40-18 (1) "Affected county" has the meaning assigned by 40-19 Section 386.001. 40-20 (2) "Building" has the meaning assigned by the 40-21 International Building Code. 40-22 (3) "Code official" means an individual employed by a 40-23 local jurisdiction to review construction plans and other 40-24 documents, inspect construction, or administer and enforce building 40-25 standards under this chapter. 40-26 (4) "Code-certified inspector" means an inspector who 40-27 is certified by the International Code Council, the Building 41-1 Officials and Code Administrators International, Inc., the 41-2 International Conference of Building Officials, or the Southern 41-3 Building Code Congress International to have met minimum standards 41-4 for interpretation and enforcement of requirements of the 41-5 International Energy Conservation Code and the energy efficiency 41-6 chapter of the International Residential Code. 41-7 (5) "Commission" means the Texas Natural Resource 41-8 Conservation Commission. 41-9 (6) "International Residential Code" means the 41-10 International Residential Code for One- and Two-Family Dwellings as 41-11 adopted by the International Code Council. 41-12 (7) "International Energy Conservation Code" means the 41-13 International Energy Conservation Code as adopted by the 41-14 International Code Council. 41-15 (8) "Laboratory" means the Energy Systems Laboratory 41-16 at the Texas Engineering Experiment Station of The Texas A&M 41-17 University System. 41-18 (9) "Local jurisdiction" means the authority 41-19 responsible for implementation and enforcement of local building 41-20 codes. 41-21 (10) "Municipality" has the meaning assigned by 41-22 Section 1.005, Local Government Code. 41-23 (11) "Nonattainment area" has the meaning assigned by 41-24 Section 386.001. 41-25 (12) "Single-family residential" means having the 41-26 character of a detached one- or two-family dwelling or a multiple 41-27 single-family dwelling not more than three stories high with 42-1 separate means of egress, including the accessory structures of the 42-2 dwelling. 42-3 Sec. 388.003. ADOPTION OF BUILDING ENERGY EFFICIENCY 42-4 PERFORMANCE STANDARDS. (a) To achieve energy conservation in 42-5 single-family residential construction, the energy efficiency 42-6 chapter of the International Residential Code, as it existed on May 42-7 1, 2001, is adopted as the energy code in this state for 42-8 single-family residential construction. 42-9 (b) To achieve energy conservation in all other residential, 42-10 commercial, and industrial construction, the International Energy 42-11 Conservation Code as it existed on May 1, 2001, is adopted as the 42-12 energy code for use in this state for all other residential, 42-13 commercial, and industrial construction. 42-14 (c) A municipality or county shall establish procedures: 42-15 (1) for the administration and enforcement of the 42-16 codes; and 42-17 (2) to ensure that code-certified inspectors shall 42-18 perform inspections and enforce the code in the inspectors' 42-19 jurisdictions. 42-20 (d) A municipality or county may establish procedures to 42-21 adopt local amendments to the International Energy Conservation 42-22 Code and the energy efficiency chapter of the International 42-23 Residential Code. 42-24 (e) Local amendments may not result in less stringent energy 42-25 efficiency requirements in nonattainment areas and in affected 42-26 counties than the energy efficiency chapter of the International 42-27 Residential Code or International Energy Conservation Code. Local 43-1 amendments must comply with the National Appliance Energy 43-2 Conservation Act of 1987 (42 U.S.C. Sections 6291-6309), as 43-3 amended. The laboratory, at the request of a municipality or 43-4 county, shall determine the relative impact of proposed local 43-5 amendments to an energy code, including whether proposed amendments 43-6 are substantially equal to or less stringent than the unamended 43-7 code. For the purpose of establishing uniform requirements 43-8 throughout a region, and on request of a council of governments, a 43-9 county, or a municipality, the laboratory may recommend a 43-10 climatically appropriate modification or a climate zone designation 43-11 for a county or group of counties that is different from the 43-12 climate zone designation in the unamended code. The laboratory 43-13 shall: 43-14 (1) report its findings to the council, county, or 43-15 municipality, including an estimate of any energy savings potential 43-16 above the base code from local amendments; and 43-17 (2) annually submit a report to the commission: 43-18 (A) identifying the municipalities and counties 43-19 whose codes are more stringent than the unamended code, and whose 43-20 codes are equally stringent or less stringent than the unamended 43-21 code; and 43-22 (B) quantifying energy savings from this 43-23 program. 43-24 (f) Each municipality and county shall periodically review 43-25 and consider revisions made by the International Code Council to 43-26 the International Energy Conservation Code and the energy 43-27 efficiency chapter of the International Residential Code adopted 44-1 after May 1, 2001. 44-2 (g) The laboratory shall have the authority to set and 44-3 collect fees to perform certain tasks in support of the 44-4 requirements in Sections 388.004, 388.007, and 388.008. 44-5 (h) Within the boundaries of an airport operated by a joint 44-6 board created under Subchapter D, Chapter 22, Transportation Code, 44-7 the constituent agencies of which are populous home-rule 44-8 municipalities, the powers of a municipality under this section are 44-9 exclusively the powers of the joint board. 44-10 Sec. 388.004. ENFORCEMENT OF ENERGY STANDARDS OUTSIDE OF 44-11 MUNICIPALITY. For construction outside of the local jurisdiction 44-12 of a municipality: 44-13 (1) a building certified by a national, state, or 44-14 local accredited energy efficiency program shall be considered in 44-15 compliance; 44-16 (2) a building with inspections from private 44-17 code-certified inspectors using the energy efficiency chapter of 44-18 the International Residential Code or International Energy 44-19 Conservation Code shall be considered in compliance; and 44-20 (3) a builder who does not have access to either of 44-21 the above methods for a building shall certify compliance using a 44-22 form provided by the laboratory, enumerating the code-compliance 44-23 features of the building. 44-24 Sec. 388.005. ENERGY EFFICIENCY PROGRAMS IN CERTAIN 44-25 POLITICAL SUBDIVISIONS. (a) In this section, "political 44-26 subdivision" means: 44-27 (1) an affected county; or 45-1 (2) any political subdivision other than a school 45-2 district in a nonattainment area or in an affected county. 45-3 (b) Each political subdivision shall implement all energy 45-4 efficiency measures that meet the standards established for a 45-5 contract for energy conservation measures under Section 302.004(b), 45-6 Local Government Code, in order to reduce electricity consumption 45-7 by the existing facilities of the political subdivision. 45-8 (c) Each political subdivision shall establish a goal to 45-9 reduce the electric consumption by the political subdivision by 45-10 five percent each year for five years, beginning January 1, 2002. 45-11 (d) A political subdivision that does not attain the goals 45-12 under Subsection (c) must include in the report required by 45-13 Subsection (e) justification that the political subdivision has 45-14 already implemented all available measures. 45-15 (e) A political subdivision annually shall report to the 45-16 State Energy Conservation Office, on forms provided by that office, 45-17 regarding the political subdivision's efforts and progress under 45-18 this section. The State Energy Conservation Office shall provide 45-19 assistance and information to political subdivisions to help the 45-20 political subdivisions meet the goals set under this section. 45-21 Sec. 388.006. STATE ENERGY CONSERVATION OFFICE EVALUATION. 45-22 The State Energy Conservation Office annually shall provide the 45-23 commission with an evaluation of the effectiveness of state and 45-24 political subdivision energy efficiency programs, including 45-25 programs under this chapter. 45-26 Sec. 388.007. DISTRIBUTION OF INFORMATION AND TECHNICAL 45-27 ASSISTANCE. (a) The laboratory shall make available to builders, 46-1 designers, engineers, and architects code implementation materials 46-2 that explain the requirements of the International Energy 46-3 Conservation Code and the energy efficiency chapter of the 46-4 International Residential Code and that describe methods of 46-5 compliance acceptable to code officials. 46-6 (b) The materials may include software tools, simplified 46-7 prescriptive options, and other materials as appropriate. The 46-8 simplified materials may be designed for projects in which a design 46-9 professional is not involved. 46-10 (c) The laboratory may provide local jurisdictions with 46-11 technical assistance concerning implementation and enforcement of 46-12 the International Energy Conservation Code and the energy 46-13 efficiency chapter of the International Residential Code. 46-14 Sec. 388.008. DEVELOPMENT OF HOME ENERGY RATINGS. (a) The 46-15 laboratory shall develop a standardized report format to be used by 46-16 providers of home energy ratings. The form must be designed to 46-17 give potential buyers information on a structure's energy 46-18 performance, including: 46-19 (1) insulation; 46-20 (2) types of windows; 46-21 (3) heating and cooling equipment; 46-22 (4) water heating equipment; 46-23 (5) additional energy conserving features, if any; 46-24 (6) results of performance measurements of building 46-25 tightness and forced air distribution; and 46-26 (7) an overall rating of probable energy efficiency 46-27 relative to the minimum requirements of the International Energy 47-1 Conservation Code or the energy efficiency chapter of the 47-2 International Residential Code, as appropriate. 47-3 (b) The laboratory shall establish a public information 47-4 program to inform homeowners, sellers, buyers, and others regarding 47-5 home energy ratings. 47-6 (c) The home energy ratings program shall be implemented by 47-7 September 1, 2002. 47-8 CHAPTER 389. EMISSIONS REDUCTION RECOGNITION EFFORTS 47-9 Sec. 389.001. DEFINITION. In this chapter, "commission" 47-10 means the Texas Natural Resource Conservation Commission. 47-11 Sec. 389.002. USE OF CERTAIN INFORMATION FOR FEDERAL 47-12 RECOGNITION OF EMISSIONS REDUCTIONS. The commission, using 47-13 information derived from the reports to the commission under 47-14 Sections 386.205, 388.003(e), and 388.006, shall take all 47-15 appropriate and necessary actions so that emissions reductions 47-16 achieved by means of activities under Chapters 386 and 388 are 47-17 credited by the United States Environmental Protection Agency to 47-18 the appropriate emissions reduction objectives in the state 47-19 implementation plan. 47-20 SECTION 2. Subchapter C, Chapter 151, Tax Code, is amended 47-21 by adding Section 151.0515 to read as follows: 47-22 Sec. 151.0515. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 47-23 (a) In this section, "equipment" includes all off-road, heavy-duty 47-24 diesel equipment classified as construction equipment, other than 47-25 implements of husbandry used solely for agricultural purposes, 47-26 including: 47-27 (1) pavers; 48-1 (2) tampers/rammers; 48-2 (3) plate compactors; 48-3 (4) concrete pavers; 48-4 (5) rollers; 48-5 (6) scrapers; 48-6 (7) paving equipment; 48-7 (8) surface equipment; 48-8 (9) signal boards/light plants; 48-9 (10) trenchers; 48-10 (11) bore/drill rigs; 48-11 (12) excavators; 48-12 (13) concrete/industrial saws; 48-13 (14) cement and mortar mixers; 48-14 (15) cranes; 48-15 (16) graders; 48-16 (17) off-highway trucks; 48-17 (18) crushing/processing equipment; 48-18 (19) rough terrain forklifts; 48-19 (20) rubber tire loaders; 48-20 (21) rubber tire tractors/dozers; 48-21 (22) tractors/loaders/backhoes; 48-22 (23) crawler tractors/dozers; 48-23 (24) skid steer loaders; 48-24 (25) off-highway tractors; and 48-25 (26) Dumpsters/tenders. 48-26 (b) In each county in this state, a surcharge is imposed on 48-27 the retail sale, lease, or rental of new or used equipment in an 49-1 amount equal to 0.5 percent of the sale price or the lease or 49-2 rental amount. 49-3 (c) The surcharge shall be collected at the same time and in 49-4 the same manner and shall be administered and enforced in the same 49-5 manner as the tax imposed under this subchapter. The comptroller 49-6 shall adopt any additional procedures needed for the collection, 49-7 administration, and enforcement of the surcharge authorized by this 49-8 section and shall deposit all remitted surcharges to the credit of 49-9 the Texas emissions reduction plan fund. 49-10 (d) This section expires September 30, 2008. 49-11 SECTION 3. Subchapter B, Chapter 152, Tax Code, is amended 49-12 by adding Section 152.0215 to read as follows: 49-13 Sec. 152.0215. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 49-14 (a) A surcharge is imposed on every retail sale or lease of every 49-15 on-road diesel motor vehicle that is over 14,000 pounds and is of a 49-16 model year 1996 or earlier and that is sold or leased in this 49-17 state. The amount of the surcharge is five percent of the total 49-18 consideration. 49-19 (b) The surcharge shall be collected at the same time and in 49-20 the same manner and shall be administered and enforced in the same 49-21 manner as the tax imposed under this chapter. The comptroller by 49-22 rule shall adopt any additional procedures needed for the 49-23 collection, administration, and enforcement of the surcharge 49-24 authorized by this section and shall deposit all remitted 49-25 surcharges to the credit of the Texas emissions reduction plan 49-26 fund. 49-27 (c) This section expires September 30, 2008. 50-1 SECTION 4. Section 153.203, Tax Code, is amended to read as 50-2 follows: 50-3 Sec. 153.203. EXCEPTIONS. (a) The tax imposed by this 50-4 subchapter does not apply to: 50-5 (1) diesel fuel delivered by a permitted supplier to a 50-6 common or contract carrier, oceangoing vessel (including ship, 50-7 tanker, or boat), or barge for export from this state, if the 50-8 diesel fuel is moved forthwith outside this state; 50-9 (2) diesel fuel sold by a permitted supplier to the 50-10 federal government for its exclusive use; 50-11 (3) diesel fuel sold or delivered by a permitted 50-12 supplier to another permitted supplier or to the bulk storage 50-13 facility of an agricultural bonded user, or dyed diesel fuel sold 50-14 or delivered by a permitted supplier to the bulk storage facility 50-15 of a dyed diesel fuel bonded user, to the bulk storage facility of 50-16 a diesel tax prepaid user, or to a purchaser who provides a signed 50-17 statement as provided by Section 153.205 of this code, but not 50-18 including a delivery of tax-free diesel fuel into the fuel supply 50-19 tanks of a motor vehicle, except for a motor vehicle owned by the 50-20 federal government; 50-21 (4) diesel fuel sold or delivered by a permitted 50-22 supplier into the storage facility of a permitted aviation fuel 50-23 dealer, from which diesel fuel will be sold or delivered solely 50-24 into the fuel supply tanks of aircraft or aircraft servicing 50-25 equipment; 50-26 (5) diesel fuel sold or delivered by a permitted 50-27 supplier into fuel supply tanks of railway engines, motorboats, or 51-1 refrigeration units or other stationary equipment powered by a 51-2 separate motor from a separate fuel supply tank; 51-3 (6) kerosene when delivered by a permitted supplier 51-4 into a storage facility at a retail business from which all 51-5 deliveries are exclusively for heating, cooking, lighting, or 51-6 similar nonhighway use; 51-7 (7) diesel fuel sold or delivered by one aviation fuel 51-8 dealer to another aviation fuel dealer who will deliver the diesel 51-9 fuel exclusively into the supply tanks of aircraft or aircraft 51-10 servicing equipment; 51-11 (8) diesel fuel sold by a permitted supplier to a 51-12 public school district in this state for its exclusive use; 51-13 (9) diesel fuel sold by a permitted supplier to a 51-14 commercial transportation company that provides public school 51-15 transportation services to a school district under Section 34.008, 51-16 Education Code, and used by the company exclusively to provide 51-17 those services; or 51-18 (10) diesel fuel sold by a permitted supplier to a 51-19 person, other than a political subdivision, who owns, controls, 51-20 operates, or manages a commercial motor vehicle as defined by 51-21 Section 548.001, Transportation Code, if the fuel: 51-22 (A) is delivered exclusively into the fuel 51-23 supply tank of the commercial motor vehicle; and 51-24 (B) is used exclusively to transport passengers 51-25 for compensation or hire between points in this state on a fixed 51-26 route or schedule. 51-27 (b) The tax imposed by this subchapter does not apply to the 52-1 volume of water that is blended together with taxable diesel fuel 52-2 when the finished product sold or used is clearly identified on the 52-3 retail pump, storage tank, and sales invoice as a combination of 52-4 diesel fuel and water. 52-5 SECTION 5. Subchapter B, Chapter 156, Tax Code, is amended 52-6 by adding Section 156.054 to read as follows: 52-7 Sec. 156.054. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 52-8 (a) In this section, "nonattainment area" and "affected county" 52-9 have the meanings assigned by Section 386.001, Health and Safety 52-10 Code. 52-11 (b) A person owning, operating, managing, or controlling a 52-12 hotel located in a nonattainment area or an affected county shall 52-13 collect a surcharge imposed by this section. 52-14 (c) A $1 surcharge is imposed on a person for each day that 52-15 the person has the right to use or possess a room in a hotel that 52-16 is ordinarily used for sleeping. 52-17 (d) Sections 156.101, 156.102, and 156.103 do not apply to 52-18 the surcharge authorized by this section. 52-19 (e) The surcharge shall be collected at the same time and in 52-20 the same manner and shall be administered and enforced in the same 52-21 manner as the tax imposed under this subchapter. The comptroller 52-22 shall adopt any additional procedures needed for the collection, 52-23 administration, and enforcement of the surcharge authorized by this 52-24 section and shall deposit all remitted surcharges to the credit of 52-25 the Texas emissions reduction plan fund. 52-26 (f) This section expires September 30, 2008. 52-27 SECTION 6. Section 224.153, Transportation Code, is amended 53-1 by adding Subsection (c) to read as follows: 53-2 (c) A motor vehicle displaying the "low-emissions vehicle" 53-3 insignia authorized by Section 502.186 in an easily readable 53-4 location on the back of the vehicle is entitled to travel in a 53-5 preferential car pool or high occupancy vehicle lane designated 53-6 under this section regardless of the number of occupants in the 53-7 vehicle. This subsection expires August 31, 2008. 53-8 SECTION 7. Section 431.073, Transportation Code, is amended 53-9 by adding Subsection (d) to read as follows: 53-10 (d) A motor vehicle displaying the "low-emissions vehicle" 53-11 insignia authorized by Section 502.186 in an easily readable 53-12 location on the back of the vehicle is entitled to travel in a high 53-13 occupancy vehicle lane designated under this section regardless of 53-14 the number of occupants in the vehicle. This subsection expires 53-15 August 31, 2008. 53-16 SECTION 8. Subchapter D, Chapter 502, Transportation Code, 53-17 is amended by adding Section 502.1675 to read as follows: 53-18 Sec. 502.1675. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 53-19 (a) In addition to the registration fees charged under Section 53-20 502.167, a surcharge is imposed on the registration of a 53-21 truck-tractor or commercial motor vehicle under that section in an 53-22 amount equal to 10 percent of the total fees due for the 53-23 registration of the truck-tractor or commercial motor vehicle under 53-24 that section. 53-25 (b) The county tax assessor-collector shall remit the 53-26 surcharge collected under this section to the comptroller at the 53-27 time and in the manner prescribed by the comptroller for deposit in 54-1 the Texas emissions reduction plan fund. 54-2 (c) This section expires August 31, 2008. 54-3 SECTION 9. Subchapter D, Chapter 502, Transportation Code, 54-4 is amended by adding Section 502.186 to read as follows: 54-5 Sec. 502.186. "LOW-EMISSIONS VEHICLE" INSIGNIA FOR CERTAIN 54-6 MOTOR VEHICLES. (a) At the time of registration or reregistration 54-7 of the motor vehicle, the department shall issue a specially 54-8 designed "low-emissions vehicle" insignia for a motor vehicle that 54-9 meets qualifications for the light-duty motor vehicle purchase or 54-10 lease incentives under Subchapter D, Chapter 386, Health and Safety 54-11 Code. 54-12 (b) The department shall issue a "low-emissions vehicle" 54-13 insignia under this section without the payment of any additional 54-14 fee to a person who: 54-15 (1) applies to the department on a form provided by 54-16 the department; and 54-17 (2) submits proof that the motor vehicle being 54-18 registered is a vehicle described by Subsection (a). 54-19 (c) This section expires August 31, 2008. 54-20 SECTION 10. Section 548.256, Transportation Code, is amended 54-21 by adding Subsection (c) to read as follows: 54-22 (c) The inspection station shall collect a fee of $60 for 54-23 each inspection performed under this section and remit the fee to 54-24 the department. The department shall remit all fees collected 54-25 under this subsection to the comptroller for deposit in the Texas 54-26 emissions reduction plan fund. 54-27 SECTION 11. Subchapter H, Chapter 548, Transportation Code, 55-1 is amended by adding Section 548.5055 to read as follows: 55-2 Sec. 548.5055. TEXAS EMISSIONS REDUCTION PLAN FEE. (a) In 55-3 this section, "nonattainment area" and "affected county" have the 55-4 meanings assigned by Section 386.001, Health and Safety Code. 55-5 (b) In addition to other fees required by this subchapter, 55-6 to fund the Texas emissions reduction plan established under 55-7 Chapter 386, Health and Safety Code, the department shall collect, 55-8 for every motor vehicle required to be inspected under this 55-9 chapter, a fee of: 55-10 (1) $1, if the vehicle being inspected is not 55-11 registered in a nonattainment area or an affected county in this 55-12 state; or 55-13 (2) $5, if the vehicle being inspected is registered 55-14 in a nonattainment area or an affected county in this state. 55-15 (c) The department shall remit fees collected under this 55-16 section to the comptroller at the time and in the manner prescribed 55-17 by the comptroller for deposit in the Texas emissions reduction 55-18 plan fund. 55-19 (d) This section expires August 31, 2008. 55-20 SECTION 12. (a) Not later than the 45th day after the 55-21 effective date of this Act, the Texas Natural Resource Conservation 55-22 Commission shall adopt all necessary rules required to implement 55-23 programs established under this Act. 55-24 (b) Not later than the 45th day after the effective date of 55-25 this Act, the comptroller of public accounts shall adopt all rules 55-26 necessary to enable the comptroller to carry out the comptroller's 55-27 duties under this Act. 56-1 (c) Not later than the 45th day after the effective date of 56-2 this Act, the Public Utility Commission of Texas shall adopt all 56-3 rules necessary to carry out its duties under this Act. 56-4 (d) A municipality or county required to establish 56-5 procedures under Section 388.003(c), Health and Safety Code, as 56-6 added by this Act, shall establish the procedures not later than 56-7 September 1, 2002. 56-8 SECTION 13. (a) Except as provided by Subsection (b) of 56-9 this section, not later than August 1, 2001, if this Act takes 56-10 immediate effect, or the effective date of this Act if this Act 56-11 does not take immediate effect, the Texas Natural Resource 56-12 Conservation Commission and the comptroller of public accounts 56-13 shall adopt rules necessary to implement the diesel emissions 56-14 reduction incentive program established under Subchapter C, Chapter 56-15 386, Health and Safety Code, as added by this Act. 56-16 (b) Not later than September 1, 2001, the Texas Natural 56-17 Resource Conservation Commission, as required by Section 386.103, 56-18 Health and Safety Code, as added by this Act, shall adopt criteria 56-19 for setting priorities for projects eligible for grants under 56-20 Subchapter C, Chapter 386, Health and Safety Code, as added by this 56-21 Act. 56-22 (c) Not later than August 1, 2002, the Texas Natural 56-23 Resource Conservation Commission and the comptroller of public 56-24 accounts shall adopt rules necessary to implement the motor vehicle 56-25 purchase or lease incentive program established under Subchapter D, 56-26 Chapter 386, Health and Safety Code, as added by this Act. 56-27 (d) Not later than August 1, 2002, the Texas Natural 57-1 Resource Conservation Commission shall publish the first annual 57-2 list of vehicles eligible for light-duty motor vehicle purchase or 57-3 lease incentives, as required by Section 386.156, Health and Safety 57-4 Code, as added by this Act. 57-5 SECTION 14. The vehicle purchase or lease incentives 57-6 authorized by Sections 386.113 and 386.153, Health and Safety Code, 57-7 as added by this Act, apply only to the sale or lease of a vehicle 57-8 that occurs on or after January 1, 2002. 57-9 SECTION 15. (a) The Texas Natural Resource Conservation 57-10 Commission shall develop and sponsor a contest in the state's 57-11 public schools to select the best student design for the 57-12 "low-emissions vehicle" insignia authorized by Section 502.186, 57-13 Transportation Code, as added by this Act. Not later than January 57-14 1, 2002, the commission shall provide to each public school in the 57-15 state a contest packet containing rules and procedures for 57-16 participating in the contest, an explanation of the criteria the 57-17 commission will use in selecting the best design, and a deadline 57-18 for the submission of student designs. The commission shall select 57-19 and announce the winner of the contest not later than the 30th day 57-20 after the contest submission deadline. The commission may 57-21 publicize and otherwise promote the contest and the winning design. 57-22 (b) The Texas Natural Resource Conservation Commission shall 57-23 make the "low-emissions vehicle" insignia available to the county 57-24 tax assessor-collector of each county in the state not later than 57-25 the 45th day after the date on which the winning design is selected 57-26 and announced. The county tax assessor-collector of each county in 57-27 the state shall begin issuing the "low-emissions vehicle" insignia 58-1 to persons who qualify for the insignia not later than the 10th 58-2 working day after the date the insignia are available. 58-3 SECTION 16. (a) In making the initial appointments to the 58-4 Texas Emissions Reduction Plan Advisory Board as created by Section 58-5 386.058, Health and Safety Code, as added by this Act, the 58-6 appointing authorities, by mutual agreement, shall designate their 58-7 appointees so that seven members' terms expire February 1, 2002, 58-8 and eight members' terms expire February 1, 2003. 58-9 (b) Appointments to the advisory board shall be made not 58-10 later than July 1, 2001, if this Act takes immediate effect, or not 58-11 later than the effective date of this Act, if this Act does not 58-12 take immediate effect. 58-13 SECTION 17. As soon as practicable after the effective date 58-14 of this Act, the governor shall appoint members to the Texas 58-15 Council on Environmental Technology, as created by Section 387.002, 58-16 Health and Safety Code, as added by this Act. In making the 58-17 initial appointments, the governor shall designate the appointees 58-18 so that three members' terms expire February 1, 2003, four members' 58-19 terms expire February 1, 2005, and four members' terms expire 58-20 February 1, 2007. 58-21 SECTION 18. Not later than the 30th day after the adoption 58-22 of rules governing the new technology research and development 58-23 program established under Chapter 387, Health and Safety Code, as 58-24 added by this Act, the Texas Council on Environmental Technology 58-25 shall issue requests for proposals for projects to be funded under 58-26 the new technology research and development program. 58-27 SECTION 19. On the effective date of this Act, the Texas 59-1 Natural Resource Conservation Commission shall submit to the United 59-2 States Environmental Protection Agency a revision to the state 59-3 implementation plan that deletes the requirements of the 59-4 construction shift and the early purchase of Tier 2 and Tier 3 59-5 equipment and adds the provisions of this Act. 59-6 SECTION 20. (a) Notwithstanding any Act of the 77th 59-7 Legislature, Regular Session, 2001, that purports to abolish all 59-8 funds and accounts created or re-created in the state treasury by 59-9 another Act of the 77th Legislature, Regular Session, 2001, the 59-10 Texas emissions reduction plan fund created by Subchapter F, 59-11 Chapter 386, Health and Safety Code, as added by this Act, and the 59-12 environmental research fund created by Section 387.008, Health and 59-13 Safety Code, as added by this Act, are accounts in the general 59-14 revenue fund and the accounts and money deposited to the accounts 59-15 are exempt from any Act of the 77th Legislature, Regular Session, 59-16 2001, that purports to abolish all funds and accounts created or 59-17 re-created by another Act of the 77th Legislature, Regular Session, 59-18 2001, and to require the deposit of money that would be deposited 59-19 to the credit of a special account or fund be deposited to the 59-20 credit of the unobligated portion of the general revenue fund 59-21 unless the fund, account, or dedication is exempted under that Act. 59-22 (b) This section prevails over any other Act of the 77th 59-23 Legislature, Regular Session, 2001, regardless of the relative 59-24 dates of enactment, that purports to abolish all funds and accounts 59-25 created or re-created in the state treasury by another Act of the 59-26 77th Legislature, Regular Session, 2001, and to require the deposit 59-27 of money that would be deposited to the credit of a special account 60-1 or fund be deposited to the credit of the unobligated portion of 60-2 the general revenue fund unless the fund, account, or dedication is 60-3 exempted under that Act. 60-4 SECTION 21. Section 386.002, Health and Safety Code, as 60-5 added by this Act notwithstanding, the Texas Natural Resource 60-6 Conservation Commission shall submit the final biennial plan report 60-7 required by Section 386.057, Health and Safety Code, as added by 60-8 this Act, to the legislature not later than December 1, 2008. 60-9 SECTION 22. The expiration of Sections 151.0515, 152.0215, 60-10 and 156.054, Tax Code, as added by this Act, does not affect an 60-11 obligation that was incurred, a violation that occurred, or an 60-12 offense that was committed under those sections before the 60-13 expiration date of those sections. An obligation incurred, a 60-14 violation that occurred, or an offense committed before the 60-15 expiration date of those sections is governed by the law in effect 60-16 at the time the obligation was incurred, the violation occurred, or 60-17 the offense was committed, and the former law is continued in 60-18 effect after the expiration date for that purpose. For purposes of 60-19 this section, a violation occurs or an offense is committed before 60-20 the expiration date of those sections if any element of the 60-21 violation or offense occurs before that date. 60-22 SECTION 23. This Act takes effect immediately if it receives 60-23 a vote of two-thirds of all the members elected to each house, as 60-24 provided by Section 39, Article III, Texas Constitution. If this 60-25 Act does not receive the vote necessary for immediate effect, this 60-26 Act takes effect September 1, 2001.