1-1 By: Brown, Jackson S.B. No. 5 1-2 (In the Senate - Filed March 7, 2001; March 8, 2001, read 1-3 first time and referred to Committee on Natural Resources; 1-4 April 9, 2001, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 4, Nays 0; April 9, 2001, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 5 By: Brown 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the Texas emissions reduction plan; providing a 1-11 penalty. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. (a) It is the intent of the legislature to give 1-14 the Texas Natural Resource Conservation Commission additional tools 1-15 to: 1-16 (1) assure that the air in this state is safe to 1-17 breathe and meets minimum federal standards established under the 1-18 federal Clean Air Act (42 U.S.C. Section 7407); 1-19 (2) develop multipollutant approaches to solving the 1-20 state's environmental problems; and 1-21 (3) adequately fund research and development that will 1-22 make the state a leader in new technologies that can solve the 1-23 state's environmental problems while creating new business and 1-24 industry in the state. 1-25 (b) Subtitle C, Title 5, Health and Safety Code, is amended 1-26 by adding Chapters 386, 387, and 388 to read as follows: 1-27 CHAPTER 386. TEXAS EMISSIONS REDUCTION PLAN 1-28 SUBCHAPTER A. GENERAL PROVISIONS 1-29 Sec. 386.001. DEFINITIONS. In this chapter: 1-30 (1) "Advisory board" means the Texas Emissions 1-31 Reduction Plan Advisory Board. 1-32 (2) "Affected county" includes: 1-33 (A) Bastrop County; 1-34 (B) Bexar County; 1-35 (C) Caldwell County; 1-36 (D) Comal County; 1-37 (E) Ellis County; 1-38 (F) Gregg County; 1-39 (G) Guadalupe County; 1-40 (H) Harrison County; 1-41 (I) Hays County; 1-42 (J) Johnson County; 1-43 (K) Kaufman County; 1-44 (L) Nueces County; 1-45 (M) Parker County; 1-46 (N) Rockwall County; 1-47 (O) Rusk County; 1-48 (P) San Patricio County; 1-49 (Q) Smith County; 1-50 (R) Travis County; 1-51 (S) Upshur County; 1-52 (T) Victoria County; 1-53 (U) Williamson County; and 1-54 (V) Wilson County. 1-55 (3) "Commission" means the Texas Natural Resource 1-56 Conservation Commission. 1-57 (4) "Council" means the Texas Council on Environmental 1-58 Technology. 1-59 (5) "Fund" means the Texas emissions reduction plan 1-60 fund. 1-61 (6) "Incremental cost" means the cost of an 1-62 applicant's project less a baseline cost that would otherwise be 1-63 incurred by an applicant in the normal course of business. 1-64 Incremental costs may include added lease or fuel costs as well as 2-1 additional capital costs. 2-2 (7) "Motor vehicle" means a self-propelled device 2-3 designed for transporting persons or property on a public highway 2-4 that is required to be registered under Chapter 502, Transportation 2-5 Code. 2-6 (8) "New vehicle" means a motor vehicle that has not 2-7 been the subject of a first sale. 2-8 (9) "Nonattainment area" means an area so designated 2-9 under Section 107(d) of the federal Clean Air Act (42 U.S.C. 2-10 Section 7407). 2-11 (10) "Plan" means the Texas emissions reduction plan. 2-12 (11) "Site" means the total of all stationary sources 2-13 located on one or more contiguous or adjacent properties, which are 2-14 under common control of the same person or persons under common 2-15 control. 2-16 Sec. 386.002. EXPIRATION. This chapter expires August 31, 2-17 2008. 2-18 (Sections 386.003-386.050 reserved for expansion 2-19 SUBCHAPTER B. TEXAS EMISSIONS REDUCTION PLAN 2-20 Sec. 386.051. TEXAS EMISSIONS REDUCTION PLAN. (a) The 2-21 commission, the comptroller, and the council shall establish and 2-22 administer the Texas emissions reduction plan in accordance with 2-23 this chapter. 2-24 (b) Under the plan, the commission, the comptroller, and the 2-25 council shall provide grants or other funding for: 2-26 (1) the diesel emissions reduction incentive program, 2-27 including the infrastructure demonstration projects, established 2-28 under Subchapter C; 2-29 (2) the motor vehicle purchase or lease incentive 2-30 program established under Subchapter D; 2-31 (3) the local government grant program established 2-32 under Subchapter E; and 2-33 (4) the new technology research and development 2-34 program established under Chapter 387. 2-35 (c) Equipment purchased before September 1, 2001, is not 2-36 eligible for a grant or other funding under the plan. 2-37 Sec. 386.052. COMMISSION DUTIES. (a) In administering the 2-38 plan established under this chapter and in accordance with the 2-39 requirements of this chapter, the commission shall: 2-40 (1) manage plan funds and oversee the plan; 2-41 (2) produce guidelines, protocols, and criteria for 2-42 eligible projects; 2-43 (3) develop methodologies for evaluating project 2-44 cost-effectiveness; 2-45 (4) prepare reports regarding the progress and 2-46 effectiveness of the plan; and 2-47 (5) take all appropriate and necessary action so that 2-48 emissions reductions achieved through the plan are credited by the 2-49 United States Environmental Protection Agency to the appropriate 2-50 emissions reduction objectives in the state implementation plan. 2-51 (b) Appropriate commission objectives include: 2-52 (1) achieving maximum reductions in oxides of nitrogen 2-53 to demonstrate compliance with the state implementation plan; 2-54 (2) preventing areas of the state from being in 2-55 violation of national ambient air quality standards; and 2-56 (3) achieving cost-saving and multiple benefits by 2-57 reducing emissions of other pollutants, such as particulates, 2-58 together with reductions in emissions of oxides of nitrogen. 2-59 Sec. 386.053. GUIDELINES AND CRITERIA. (a) The commission 2-60 shall adopt grant guidelines and criteria consistent with the 2-61 requirements of this chapter. The commission shall consider 2-62 examples of similar programs in other states during the development 2-63 of guidelines and criteria. 2-64 (b) Guidelines must include protocols to calculate projected 2-65 emissions reductions, project cost-effectiveness, and safeguards to 2-66 ensure that funded projects generate emissions reductions not 2-67 otherwise required by state or federal law. 2-68 (c) The commission shall make draft guidelines and criteria 2-69 available to the public and the United States Environmental 3-1 Protection Agency before the 45th day preceding the date of final 3-2 adoption and shall hold at least one public meeting to consider 3-3 public comments on the draft guidelines and criteria before final 3-4 adoption. 3-5 (d) The commission may propose revisions to the guidelines 3-6 and criteria adopted under this section as necessary to improve the 3-7 ability of the plan to achieve its goals. Revisions may include, 3-8 among other changes, adding additional pollutants or adjusting 3-9 eligible program categories, as appropriate, to ensure that 3-10 incentives established under this chapter achieve the maximum 3-11 possible emissions reductions. The commission shall make a 3-12 proposed revision available to the public before the 45th day 3-13 preceding the date of final adoption of the revision and shall hold 3-14 at least one public meeting to consider public comments on the 3-15 proposed revision before final adoption. 3-16 (e) Because the legislature finds that the current state of 3-17 air quality in the state creates an imminent peril to the public 3-18 health, safety, and welfare and jeopardizes the state's ability to 3-19 meet federal air quality requirements, the commission and the 3-20 comptroller may adopt emergency rules under Section 2001.034, 3-21 Government Code, with abbreviated notice, to carry out any 3-22 rulemaking necessary to implement this chapter. 3-23 (f) Except as provided by Subsection (e), the rulemaking 3-24 requirements of Chapter 2001, Government Code, do not apply to the 3-25 adoption or revision of guidelines and criteria under this section. 3-26 Sec. 386.054. MONITORING PROCEDURES. (a) The commission 3-27 shall develop procedures for monitoring whether the emissions 3-28 reductions projected for projects awarded grants under this chapter 3-29 are actually achieved. Monitoring procedures may include project 3-30 reviews and contract requirements that the grant recipient provide 3-31 information annually about the project. If the commission requires 3-32 an annual report, the report shall contain a minimum amount of 3-33 information required from a recipient and the report format shall 3-34 be simple and convenient. 3-35 (b) Monitoring and reviewing procedures must be sufficient 3-36 to enable emissions reductions generated by funded projects to be 3-37 fully credited to air quality plans. 3-38 (c) The commission may revise monitoring and review 3-39 procedures from time to time as necessary or appropriate to enhance 3-40 the effectiveness of the plan. 3-41 Sec. 386.055. AVAILABILITY OF EMISSIONS REDUCTION CREDITS 3-42 GENERALLY. (a) A project funded under a program established under 3-43 this chapter may not be used for credit under any state or federal 3-44 emissions reduction credit averaging, banking, or trading program. 3-45 (b) An emissions reduction generated by a program 3-46 established under this chapter may not be used as a marketable 3-47 emissions reduction credit or to offset any emissions reduction 3-48 obligation. 3-49 (c) A project involving a new emissions reduction measure 3-50 that would otherwise generate marketable credits under state or 3-51 federal emissions reduction credit averaging, banking, or trading 3-52 programs is not eligible for funding under a program established 3-53 under this chapter unless the project includes the transfer of the 3-54 marketable credits to the end user and the retirement of the 3-55 credits. 3-56 Sec. 386.056. AVAILABILITY OF EMISSIONS REDUCTION CREDITS IN 3-57 CERTAIN NONATTAINMENT AREAS. (a) An owner or operator of a site 3-58 located in the Houston-Galveston or Dallas-Fort Worth nonattainment 3-59 area may use emissions reductions generated by a program 3-60 established under this chapter to offset the requirements of 3-61 commission rules relating to control of air pollution from oxides 3-62 of nitrogen if: 3-63 (1) the owner or operator of the site contributes to 3-64 the fund $75,000 for each ton of emissions that is used, not to 3-65 exceed 10 tons annually; 3-66 (2) the owner or operator of the site demonstrates to 3-67 the commission's satisfaction that the site will be in full 3-68 compliance with the commission's emissions reduction rules not 3-69 later than the fifth anniversary of the date on which the emissions 4-1 reductions would otherwise be required; 4-2 (3) emissions from the site are reduced by at least 80 4-3 percent from the established baseline; and 4-4 (4) the commission approves a petition by the owner or 4-5 operator that demonstrates that it is technically infeasible to 4-6 comply with the commission's emissions reduction requirements above 4-7 80 percent. 4-8 (b) Funds collected under this section shall be used to 4-9 generate emissions reductions needed to meet the commission's 4-10 attainment demonstration. 4-11 (c) The commission shall verify that emissions reductions 4-12 generated from funds collected under this section occur in the same 4-13 nonattainment area in which the site that purchased the emissions 4-14 credit is located. 4-15 (d) To the extent practicable, the commission shall assure 4-16 that emissions reductions funded under programs authorized by this 4-17 chapter used to offset commission requirements under this section 4-18 benefit the community in which the site using the emissions 4-19 reductions is located. If there are no eligible emissions 4-20 reduction projects within the community, the commission may 4-21 authorize projects in an adjacent community. In this subsection, 4-22 "community" means a justice of the peace precinct. 4-23 Sec. 386.057. REVIEW AND REPORTING REQUIREMENTS. (a) The 4-24 commission, in consultation with the advisory board, annually shall 4-25 review programs established under the plan, including each project 4-26 funded under the plan, the amount granted for the project, the 4-27 emissions reductions attributable to the project, and the 4-28 cost-effectiveness of the project. 4-29 (b) Not later than December 1, 2002, and not later than 4-30 December 1 of each subsequent second year, the commission, in 4-31 consultation with the advisory board, shall publish and submit to 4-32 the legislature a biennial plan report. The report must include 4-33 the information included in the annual reports prepared under 4-34 Subsection (a) and specific information for individual projects as 4-35 required by Subsection (c). 4-36 (c) For projects funded as part of the infrastructure 4-37 demonstration program under Subchapter C, the report must: 4-38 (1) describe and evaluate: 4-39 (A) the infrastructure facilities funded under 4-40 that subchapter; 4-41 (B) the degree to which the funded facilities 4-42 are supporting covered vehicle projects; 4-43 (C) the amount of fuel or electricity dispensed 4-44 for each facility; and 4-45 (D) associated emissions reductions and 4-46 cost-effectiveness; and 4-47 (2) make a finding regarding the need for additional 4-48 appropriations from the fund to improve the ability of the program 4-49 to achieve its goals. 4-50 (d) The report must: 4-51 (1) account for money received, money disbursed as 4-52 grants, money reserved for grants based on project approvals, and 4-53 any recommended transfer of money between allocations and must 4-54 estimate future demand for grant funds under the plan; 4-55 (2) describe the overall effectiveness of the plan in 4-56 delivering the emissions reductions required by air quality plans, 4-57 including rate-of-progress plans and milestone and conformity 4-58 tests; 4-59 (3) evaluate the effectiveness of the plan in 4-60 soliciting and evaluating project applications, providing awards in 4-61 a timely manner, and monitoring project implementation; 4-62 (4) describe adjustments made to project selection 4-63 criteria and recommend any further needed changes or adjustments to 4-64 the grant programs, including changes in grant award criteria, 4-65 administrative procedures, or statutory provisions that would 4-66 enhance the plan's effectiveness and efficiency; 4-67 (5) describe adjustments made to the maximum 4-68 cost-effectiveness amount and award amount; 4-69 (6) evaluate the benefits of addressing additional 5-1 pollutants as part of the plan; and 5-2 (7) include legislative recommendations necessary to 5-3 improve the effectiveness of this chapter. 5-4 (e) The commission shall request public comment and hold a 5-5 public meeting on each draft biennial report and, in producing a 5-6 final biennial report, shall consider and respond to all 5-7 significant comments received. 5-8 Sec. 386.058. TEXAS EMISSIONS REDUCTION PLAN ADVISORY BOARD. 5-9 (a) The Texas Emissions Reduction Plan Advisory Board consists of 5-10 13 appointed members, five of whom shall be appointed by the 5-11 governor, four by the lieutenant governor, and four by the speaker 5-12 of the house of representatives, and seven ex officio members as 5-13 provided by Subsection (d). 5-14 (b) Appointments to the advisory board must include 5-15 representatives from: 5-16 (1) the fuel industry; 5-17 (2) the engine manufacturing industry; 5-18 (3) the agriculture industry; 5-19 (4) the trucking industry; 5-20 (5) the automobile industry; 5-21 (6) the construction industry; 5-22 (7) the environmental community; 5-23 (8) the marine or port industry; 5-24 (9) regional transportation; 5-25 (10) the fuel cell industry; 5-26 (11) the energy-efficient construction industry; 5-27 (12) the Texas Council on Environmental Technology; 5-28 and 5-29 (13) consumer groups. 5-30 (c) Appointed members of the advisory board serve staggered 5-31 two-year terms. The terms of six appointed members expire February 5-32 1 of each even-numbered year. The terms of seven appointed members 5-33 expire February 1 of each odd-numbered year. An appointed member 5-34 may be reappointed to a subsequent term. 5-35 (d) Ex officio members of the advisory board include: 5-36 (1) the presiding officer of the senate standing 5-37 committee having primary jurisdiction over matters related to 5-38 natural resources; 5-39 (2) the presiding officer of the house standing 5-40 committee having primary jurisdiction over matters related to 5-41 environmental regulation; 5-42 (3) a representative of the commission, designated by 5-43 the executive director; 5-44 (4) a representative of the General Land Office, 5-45 designated by the Commissioner of the General Land Office; 5-46 (5) a representative of the comptroller's office, 5-47 designated by the comptroller; 5-48 (6) a representative of the Railroad Commission of 5-49 Texas, designated by the presiding officer of the agency; and 5-50 (7) a representative of the United States 5-51 Environmental Protection Agency's Region 6 office, designated by 5-52 the United States Environmental Protection Agency Region 6 5-53 administrator. 5-54 (e) The advisory board annually shall elect a presiding 5-55 officer. 5-56 (f) The advisory board shall review the program and shall 5-57 recommend to the commission changes to revenue sources or financial 5-58 incentives or any legislative, regulatory, or budgetary changes 5-59 needed. 5-60 (g) The commission shall provide necessary staff support to 5-61 the advisory board. 5-62 (Sections 386.059-386.100 reserved for expansion 5-63 SUBCHAPTER C. DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM 5-64 Sec. 386.101. DEFINITIONS. In this subchapter: 5-65 (1) "Cost-effectiveness" means the ratio of the total 5-66 dollar amount expended to the total number of tons of oxides of 5-67 nitrogen emissions reduction attributable to that expenditure. 5-68 Cost-effectiveness for the program as a whole and for particular 5-69 projects under the program is calculated as provided by Sections 6-1 386.105 and 386.106. 6-2 (2) "Covered engine" includes any internal combustion 6-3 engine or any electric motor and drive powering a covered source. 6-4 (3) "Covered source" includes the following 6-5 diesel-powered vehicles or engines: 6-6 (A) motor vehicles of 10,000 pounds gross 6-7 vehicle weight rating or more; 6-8 (B) off-road nonrecreational equipment and 6-9 vehicles; 6-10 (C) construction equipment; 6-11 (D) locomotives; 6-12 (E) diesel marine vessels; 6-13 (F) stationary agricultural engines; and 6-14 (G) other high-emitting diesel engine categories 6-15 established by the commission. 6-16 (4) "Covered vehicle" includes any motor vehicle, 6-17 off-road vehicle, or off-road equipment powered by a covered 6-18 engine. 6-19 (5) "Fuel cell" means equipment using an 6-20 electrochemical process to generate electricity and heat. 6-21 (6) "Heavy-duty vehicle" means an on-road motor 6-22 vehicle that has a gross vehicle weight rating of 10,000 pounds or 6-23 more. 6-24 (7) "Off-road engine" means an internal combustion 6-25 engine that is: 6-26 (A) in or on a piece of equipment that is 6-27 self-propelled or that propels itself and performs another 6-28 function, excluding a vehicle that is used solely for competition; 6-29 (B) in or on a piece of equipment that is 6-30 intended to be propelled while performing its function; or 6-31 (C) designed to be and capable of being carried 6-32 or moved from one location to another. 6-33 (8) "Off-road equipment" means equipment that is 6-34 powered by an off-road engine. 6-35 (9) "Off-road vehicle" means a vehicle that is powered 6-36 by an off-road engine. The term does not include a motor vehicle 6-37 or a vehicle used solely for competition. 6-38 (10) "Program" means the diesel emissions reduction 6-39 incentive program established under this subchapter. 6-40 (11) "Qualifying fuel" includes any liquid or gaseous 6-41 fuel or additives registered or verified by the United States 6-42 Environmental Protection Agency, other than standard gasoline or 6-43 diesel, that is ultimately dispensed into a covered vehicle that 6-44 provides reductions of emissions of oxides of nitrogen. 6-45 (12) "Repower" means to replace an old engine powering 6-46 a covered source with: 6-47 (A) a newer engine certified by the United 6-48 States Environmental Protection Agency to more stringent emissions 6-49 standards; or 6-50 (B) electric motors, drives, or fuel cells. 6-51 (13) "Retrofit" means to equip an engine and fuel 6-52 system with new emissions-reducing parts or technology verified by 6-53 the United States Environmental Protection Agency after manufacture 6-54 of the original engine and fuel system. 6-55 (14) "Very-low-emissions vehicle" means a vehicle that 6-56 is equipped with: 6-57 (A) a new engine that emits not more than 70 6-58 percent of the oxides of nitrogen emissions standard required by 6-59 federal regulation for the current model year for that engine; 6-60 (B) an engine 12 years old or less that emits 6-61 not more than 70 percent of the oxides of nitrogen emissions 6-62 standard emitted by a new engine certified to the baseline oxides 6-63 of nitrogen emissions standard for that engine; or 6-64 (C) an engine older than 12 years that emits not 6-65 more than 50 percent of the oxides of nitrogen emissions standard 6-66 emitted by a new engine certified to the baseline oxides of 6-67 nitrogen emissions standard for that engine. 6-68 Sec. 386.102. PROGRAM. (a) The commission shall establish 6-69 and administer a diesel emissions reduction incentive program. 7-1 Under the program, the commission shall provide grants for eligible 7-2 projects to offset the incremental cost of projects that reduce 7-3 emissions of oxides of nitrogen from high-emitting diesel sources 7-4 in nonattainment areas and affected counties of the state. The 7-5 commission shall determine the eligibility of projects. 7-6 (b) Projects that may be considered for a grant under the 7-7 program include: 7-8 (1) purchase or lease of new very-low-emissions 7-9 covered off-road vehicles or covered engines for off-road 7-10 equipment; 7-11 (2) emissions-reducing retrofit of covered engines; 7-12 (3) repower projects; 7-13 (4) purchase and use of emissions-reducing add-on 7-14 equipment for covered vehicles; 7-15 (5) development and demonstration of practical, 7-16 low-emissions retrofit technologies, repower options, and advanced 7-17 technologies for covered engines and vehicles with lower emissions 7-18 of oxides of nitrogen; 7-19 (6) use of qualifying fuel; and 7-20 (7) implementation of infrastructure demonstration 7-21 projects. 7-22 (c) A new purchase, lease, retrofit, repower, or add-on 7-23 equipment project is not eligible for a grant under this subchapter 7-24 if the new purchase, lease, retrofit, repower, or add-on equipment 7-25 is required by any state or federal law, rule or regulation, 7-26 memorandum of agreement, or other legally binding document. This 7-27 subsection does not apply to: 7-28 (1) an otherwise qualified project, regardless of the 7-29 fact that the state implementation plan assumes that the change in 7-30 equipment, vehicles, or operations will occur, if on the date the 7-31 grant is awarded the change is not required by any state or federal 7-32 law, rule or regulation, memorandum of agreement, or other legally 7-33 binding document; or 7-34 (2) the purchase of a low-emissions vehicle or 7-35 equipment required only by local law or regulation or by corporate 7-36 or controlling board policy of a public or private entity. 7-37 Sec. 386.103. APPLICATION FOR GRANT. (a) Any person as 7-38 defined by Section 382.003 that owns one or more covered vehicles 7-39 that operate primarily within a nonattainment area or affected 7-40 county of this state or that otherwise contributes to the state 7-41 inventory of emissions of oxides of nitrogen may apply for a grant 7-42 under the program. 7-43 (b) An application for a grant under this subchapter must be 7-44 made on an application provided by the commission and must contain 7-45 information required by the commission, including: 7-46 (1) a detailed description of the proposed project; 7-47 (2) information necessary for the commission to 7-48 determine whether the project meets eligibility requirements for 7-49 the type of project proposed, including a statement of the amounts 7-50 of any other public financial assistance the project will receive; 7-51 and 7-52 (3) other information the commission may require. 7-53 Sec. 386.104. ELIGIBILITY REQUIREMENTS. (a) The commission 7-54 shall establish criteria for setting priorities for projects 7-55 eligible to receive grants under this chapter. The commission 7-56 shall review and may modify the criteria and priorities as 7-57 appropriate. 7-58 (b) A proposed project as described in Section 386.102 must 7-59 meet the requirements of this section to be eligible for a grant 7-60 under the program. 7-61 (c) For a proposed project as described by Section 7-62 386.102(b), other than a project involving a marine vessel or 7-63 engine, not less than 75 percent of vehicle miles traveled or hours 7-64 of operation projected for the five years immediately following the 7-65 award of a grant must be projected to take place in a nonattainment 7-66 area or affected county of this state. For a proposed project 7-67 involving a marine vessel or engine, the vessel or engine must be 7-68 operated in the intercoastal waterways or bays adjacent to a 7-69 nonattainment area or affected county of this state for a 8-1 sufficient amount of time over the lifetime of the project to meet 8-2 the cost-effectiveness requirements of Section 386.105. 8-3 (d) Each proposed project must meet the cost-effectiveness 8-4 requirements of Sections 386.105 and 386.106. 8-5 (e) A proposed repower project must exceed commission 8-6 requirements relating to baseline emissions levels of the engines 8-7 being replaced under the project. 8-8 (f) A proposed retrofit, repower, or add-on equipment 8-9 project must document, in a manner acceptable to the commission, a 8-10 reduction in emissions of oxides of nitrogen of at least 30 percent 8-11 compared with the baseline emissions adopted by the commission for 8-12 the relevant engine year and application. After study of available 8-13 emissions reduction technologies, after public notice and comment, 8-14 and after consultation with the advisory board, the commission may 8-15 revise the minimum percentage reduction in emissions of oxides of 8-16 nitrogen required by this subsection to improve the ability of the 8-17 program to achieve its goals. 8-18 (g) If a baseline emissions standard does not exist for new 8-19 off-road equipment in a particular category, the commission, for 8-20 purposes of this chapter, shall establish an appropriate baseline 8-21 emissions level for comparison purposes. 8-22 (h) The commission may approve payments to offset the 8-23 incremental cost, over the expected lifetime of the covered 8-24 vehicle, of qualifying fuel used in a covered vehicle if the 8-25 proposed project as a whole, including the incremental fuel cost, 8-26 meets the requirements of this subchapter. The commission shall 8-27 develop an appropriate method for converting incremental fuel costs 8-28 over the covered vehicle's lifetime into an initial cost for 8-29 purposes of determining cost-effectiveness as required by Section 8-30 386.105. 8-31 (i) The owner or operator of a facility as defined by 8-32 Section 382.003 is not eligible to receive a grant under this 8-33 subchapter unless the owner or operator holds a permit for the 8-34 facility under Section 382.0518, 382.0519, 382.05194, 382.05195, or 8-35 382.05196. 8-36 Sec. 386.105. CALCULATION OF COST-EFFECTIVENESS. (a) In 8-37 calculating cost-effectiveness, one-time grants of money at the 8-38 beginning of a project shall be annualized using a time value of 8-39 public funds or discount rate determined for each project by the 8-40 commission, taking into account the interest rate on bonds, 8-41 interest earned by state funds, and other factors the commission 8-42 considers appropriate. 8-43 (b) The commission shall establish reasonable methodologies, 8-44 in consultation with all affected stakeholders, for evaluating 8-45 project cost-effectiveness consistent with Subsection (a) and with 8-46 accepted methods. 8-47 (c) The commission shall develop protocols for calculating 8-48 oxides of nitrogen emissions reductions not otherwise required by 8-49 state or federal law in nonattainment areas and affected counties 8-50 of this state from representative project types over the life of 8-51 the projects. 8-52 (d) The commission may include in cost-effectiveness 8-53 determinations only reductions in oxides of nitrogen emissions that 8-54 are achieved in nonattainment areas and affected counties of this 8-55 state. 8-56 Sec. 386.106. COST-EFFECTIVENESS CRITERIA; DETERMINATION OF 8-57 GRANT AMOUNT. (a) Except as provided by Section 386.107, the 8-58 commission may not award a grant for a proposed project the 8-59 cost-effectiveness of which, calculated in accordance with Section 8-60 386.105 and rules adopted under that section, exceeds $13,000 per 8-61 ton of oxides of nitrogen emissions reduced in the nonattainment 8-62 area or affected county for which the project is proposed. This 8-63 subsection does not restrict commission authority under other law 8-64 to require emissions reductions with a cost-effectiveness that 8-65 exceeds $13,000 per ton. 8-66 (b) The commission may not award a grant that, net of taxes, 8-67 provides an amount that exceeds the incremental cost of the 8-68 proposed project. 8-69 (c) The commission shall adopt guidelines for capitalizing 9-1 incremental lease costs so those costs may be offset by a grant 9-2 under this subchapter. 9-3 (d) In determining the amount of a grant under this 9-4 subchapter, the commission shall reduce the incremental cost of a 9-5 proposed new purchase, lease, retrofit, repower, or add-on 9-6 equipment project by the value of any existing financial incentive 9-7 that directly reduces the cost of the proposed project, including 9-8 tax credits or deductions, other grants, or any other public 9-9 financial assistance. 9-10 (e) The commission may establish maximum grant awards per 9-11 vehicle or engine replaced for projects that propose to repower 9-12 off-road equipment. 9-13 Sec. 386.107. ADJUSTMENT TO MAXIMUM COST-EFFECTIVENESS 9-14 AMOUNT AND AWARD AMOUNT. After study of available emissions 9-15 reduction technologies and costs and after public notice and 9-16 comment, the commission, in consultation with the advisory board, 9-17 may change the values of the maximum grant award criteria 9-18 established in Section 386.106 and any per-project maximum set by 9-19 the commission under Section 386.106(e) to account for inflation or 9-20 to improve the ability of the program to achieve its goals. 9-21 Sec. 386.108. INFRASTRUCTURE DEMONSTRATION PROJECTS. 9-22 (a) The commission shall provide funding under Section 9-23 386.252(a)(1) for infrastructure demonstration projects to provide 9-24 initial support for low-emissions vehicle projects at the start of 9-25 the program. 9-26 (b) To implement the requirement of Subsection (a), the 9-27 commission shall: 9-28 (1) solicit applications for a balanced mix of 9-29 demonstration projects involving fueling and electrification 9-30 infrastructure that is linked to covered vehicle projects and 9-31 consistent with program goals; 9-32 (2) coordinate infrastructure projects with covered 9-33 vehicle projects representing a broad range of fuels, technologies, 9-34 and applications as appropriate and consistent with the goals of 9-35 this chapter; 9-36 (3) adopt guidelines and criteria for infrastructure 9-37 projects to be funded under the program; and 9-38 (4) oversee, monitor, and evaluate the use of grants 9-39 awarded under this program and report on the effectiveness of this 9-40 grant program in relation to the purposes and goals of this 9-41 chapter. 9-42 Sec. 386.109. ELIGIBLE INFRASTRUCTURE DEMONSTRATION 9-43 PROJECTS. The commission may consider for funding under Section 9-44 386.108: 9-45 (1) the purchase and installation at a site of 9-46 equipment that is designed primarily to dispense qualifying fuel or 9-47 the purchase of on-site mobile fueling equipment; and 9-48 (2) infrastructure projects, including auxiliary power 9-49 units, designed to dispense electricity to covered projects. 9-50 Sec. 386.110. APPLICATION PACKAGE FOR INFRASTRUCTURE 9-51 DEMONSTRATION PROJECTS. (a) The commission shall develop a 9-52 simple, standardized application package for infrastructure 9-53 demonstration project grants under this subchapter. The package 9-54 must include: 9-55 (1) an application form; 9-56 (2) a brief description of: 9-57 (A) the program; 9-58 (B) the projects that are eligible for available 9-59 funding; 9-60 (C) the selection criteria and evaluation 9-61 process; and 9-62 (D) the required documentation; 9-63 (3) the name of a person or office to contact for more 9-64 information; 9-65 (4) an example of the contract that an applicant will 9-66 be required to execute before receiving a grant; and 9-67 (5) any other information the commission considers 9-68 useful to inform the applicant and expedite the application 9-69 process. 10-1 (b) The application form shall require as much information 10-2 as the commission determines is necessary to properly evaluate each 10-3 project but shall otherwise minimize the information required. 10-4 (c) The commission may not require an applicant, as part of 10-5 the application process, to calculate tons of emissions reduced or 10-6 cost-effectiveness. 10-7 Sec. 386.111. APPLICATION REVIEW PROCEDURES. (a) The 10-8 commission shall review an application for a grant for a project 10-9 authorized under this subchapter, including an application for a 10-10 grant for an infrastructure demonstration project, immediately on 10-11 receipt of the application. If the commission determines that an 10-12 application is incomplete, the commission shall notify the 10-13 applicant, not later than the 15th working day after the date on 10-14 which the commission received the application, with an explanation 10-15 of what is missing from the application. The commission shall 10-16 record the date and time of receipt of each application the 10-17 commission determines to be complete and shall evaluate the 10-18 completed application according to the appropriate project 10-19 criteria. Subject to available funding, the commission shall make 10-20 a final determination on an application as soon as possible and not 10-21 later than the 60th working day after the date the application is 10-22 determined to be complete. 10-23 (b) The commission shall make every effort to expedite the 10-24 application review process and to award grants to qualified 10-25 projects in a timely manner. To the extent possible, the 10-26 commission shall coordinate project review and approval with any 10-27 timing constraints related to project purchases or installations to 10-28 be made by an applicant. 10-29 (c) The commission may deny an application for a project 10-30 that does not meet the applicable project criteria or that the 10-31 commission determines is not made in good faith, is not credible, 10-32 or is not in compliance with this chapter and the goals of this 10-33 chapter. 10-34 (d) Subject to availability of funds, the commission shall 10-35 award a grant under this subchapter in conjunction with the 10-36 execution of a contract that obligates the commission to make the 10-37 grant and the recipient to perform the actions described in the 10-38 recipient's grant application. The contract must incorporate 10-39 provisions for recapturing grant money in proportion to any loss of 10-40 emissions reductions or underachievement in dispensing qualifying 10-41 fuel compared with the volume of emissions reductions or amount of 10-42 fuel dispensed that was projected in awarding the grant. Grant 10-43 money recaptured under the contract provision shall be deposited in 10-44 the fund and reallocated for other projects under this subchapter. 10-45 (e) An applicant may seek reimbursement for qualifying 10-46 equipment installed after the effective date of this program. 10-47 Sec. 386.112. HEAVY-DUTY MOTOR VEHICLE PURCHASE OR LEASE 10-48 INCENTIVE. (a) The commission shall develop a purchase or lease 10-49 incentive program for heavy-duty motor vehicles and shall adopt 10-50 rules necessary to implement the program and to reimburse a 10-51 purchaser or lessee of a heavy-duty motor vehicle that is eligible 10-52 for reimbursement of incremental costs under this subchapter. 10-53 (b) The program shall authorize statewide incentives for the 10-54 reimbursement of incremental costs for the purchase or lease, 10-55 according to the schedule provided by Section 386.113, of 10-56 heavy-duty motor vehicles that are certified by the United States 10-57 Environmental Protection Agency to an emissions standard provided 10-58 by Section 386.113 if the purchaser or lessee of the vehicle agrees 10-59 to register the vehicle in this state and to operate the vehicle in 10-60 this state for not less than 75 percent of the vehicle's annual 10-61 mileage. 10-62 (c) Only one incentive will be provided for each motor 10-63 vehicle. The incentive shall be provided to the lessee and not to 10-64 the purchaser if the motor vehicle is purchased for the purpose of 10-65 leasing the vehicle to another person. A lease incentive for a 10-66 motor vehicle shall be prorated based on an eight-year lease term. 10-67 Sec. 386.113. HEAVY-DUTY MOTOR VEHICLE PURCHASE OR LEASE 10-68 INCENTIVE SCHEDULE. A heavy-duty motor vehicle is eligible for 10-69 reimbursement of incremental costs according to the following 11-1 schedule: 11-2 Incentive emissions standard Reimbursement amount 11-3 (oxides of nitrogen) 11-4 Date of manufacture Date of manufacture 11-5 (2001) (10/01/02-9/30/06) 11-6 2.5 g/bhp-hr NOx 1.2 g/bhp-hr NOx up to $15,000 11-7 1.5 g/bhp-hr NOx 0.5 g/bhp-hr NOx up to $25,000 11-8 0.0 g/bhp-hr NOx 0.0 g/bhp-hr NOx up to $25,000 11-9 (Sections 386.114-386.150 reserved for expansion 11-10 SUBCHAPTER D. MOTOR VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM 11-11 Sec. 386.151. DEFINITIONS. In this subchapter: 11-12 (1) "Bin" or "emissions bin" means a set of emissions 11-13 standards applicable to exhaust pollutants measured on the Federal 11-14 Test Procedure (FTP) according to 40 C.F.R. Section 86.1811-04. 11-15 (2) "ILEV" means an inherently low-emission vehicle as 11-16 defined by 40 C.F.R. Section 88.302-93, as that section existed on 11-17 September 1, 2001. 11-18 (3) "Light-duty motor vehicle" means a motor vehicle 11-19 with a gross vehicle weight rating of less than 10,000 pounds. 11-20 Sec. 386.152. LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE 11-21 INCENTIVE. (a) The comptroller and the commission shall develop a 11-22 purchase or lease incentive program for light-duty motor vehicles 11-23 and shall adopt rules necessary to implement the program. 11-24 (b) The program shall authorize statewide incentives for the 11-25 purchase or lease, according to the schedule provided by Section 11-26 386.153, to be implemented at the point of sale or lease, of 11-27 light-duty motor vehicles that are certified by the United States 11-28 Environmental Protection Agency to an emissions standard provided 11-29 by Section 386.153 for a purchaser or lessee who agrees to register 11-30 the vehicle in this state and to operate the vehicle in this state 11-31 for not less than 75 percent of the vehicle's annual mileage. 11-32 (c) Only one incentive will be provided for each motor 11-33 vehicle. The incentive shall be provided to the lessee and not to 11-34 the purchaser if the motor vehicle is purchased for the purpose of 11-35 leasing the vehicle to another person. 11-36 Sec. 386.153. LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE 11-37 INCENTIVE SCHEDULE. A light-duty motor vehicle is eligible for an 11-38 incentive according to the following schedule: 11-39 Incentive emissions standard and incentive amount 11-40 Model year 2002-2003 Model year 2004-2007 11-41 0.04 g/mi NOx $1,250 11-42 0.03 g/mi NOx $2,225 Bin 4 $1,250 11-43 ILEV $2,500 Bin 3 $2,225 11-44 0.02 g/mi NOx $3,750 Bin 2 $3,750 11-45 0.00 g/mi NOx $5,000 Bin 1 $5,000 11-46 Sec. 386.154. MODIFICATION OF INCENTIVE EMISSIONS STANDARDS. 11-47 After evaluating new technologies and after public notice and 11-48 comment, the commission, in consultation with the advisory board, 11-49 may change the incentive emissions standards established by Section 11-50 386.153 to improve the ability of the program to achieve its goals. 11-51 Sec. 386.155. MANUFACTURER'S REPORT. At the beginning of 11-52 but not later than July 1 of each year preceding the vehicle model 11-53 year, a manufacturer of motor vehicles shall provide to the 11-54 commission a list of: 11-55 (1) the new vehicle models that the manufacturer 11-56 intends to sell in this state during that model year that meet the 11-57 incentive emissions standards established by the schedules set out 11-58 under Section 386.153; and 11-59 (2) the amount of the incremental cost of the 11-60 vehicles. 11-61 Sec. 386.156. LIST OF ELIGIBLE MOTOR VEHICLES. (a) On 11-62 August 1 each year the commission shall publish and provide to the 11-63 comptroller a list of the new model motor vehicles as listed for 11-64 the commission under Section 386.155. 11-65 (b) The comptroller shall distribute the list of eligible 11-66 motor vehicles to all new motor vehicle dealers and leasing agents 11-67 in this state. 11-68 Sec. 386.157. VEHICLE EMISSIONS INFORMATION LABEL. (a) To 11-69 enable consumers to make informed purchase decisions based on the 12-1 relative amounts of emissions produced by motor vehicles within 12-2 each vehicle class, the motor vehicle distributor shall affix on 12-3 each new light-duty motor vehicle for sale or lease in this state a 12-4 clearly legible label that shows the vehicle's class rating under 12-5 the United States Environmental Protection Agency's 5-star Green 12-6 Vehicle Class Rating System. The commission shall design the label 12-7 and have it available on the commission website. 12-8 (b) The label must also contain information regarding: 12-9 (1) the availability of motor vehicle purchase or 12-10 lease incentives on new motor vehicles sold or leased in this 12-11 state; 12-12 (2) the eligibility of the particular vehicle for the 12-13 motor vehicle purchase or lease incentive; and 12-14 (3) the incentive amount. 12-15 Sec. 386.158. POINT-OF-SALE OR POINT-OF-LEASE INCENTIVE; 12-16 REPORT TO COMPTROLLER; PENALTY. (a) A person who purchases or 12-17 leases during the model year in which it is first offered for sale 12-18 or lease a new motor vehicle that has been listed under Section 12-19 386.155 is eligible for an incentive under this subchapter. 12-20 (b) A new motor vehicle dealer or leasing agent shall credit 12-21 a purchaser or lessee described under Subsection (a) with the 12-22 appropriate incentive as part of the sales or lease transaction 12-23 after the assessment of all applicable taxes. The dealer or agent 12-24 shall report to the comptroller, at the beginning of each calendar 12-25 month and in the manner prescribed by the comptroller, the amount 12-26 of incentives credited by the dealer or agent during the preceding 12-27 calendar month. 12-28 (c) A new motor vehicle dealer or leasing agent may not 12-29 increase the price of a motor vehicle that qualifies for an 12-30 incentive under this subchapter by an amount that exceeds the 12-31 incremental cost to the dealer or leasing agent. A violation of 12-32 this subsection is punishable as a violation of the Deceptive Trade 12-33 Practices-Consumer Protection Act (Subchapter E, Chapter 17, 12-34 Business & Commerce Code). 12-35 (d) A lease incentive for a motor vehicle shall be prorated 12-36 based on a four-year lease term. 12-37 Sec. 386.159. PUBLIC INFORMATION. (a) The commission in 12-38 cooperation with the comptroller shall develop and implement a 12-39 program to inform the public and new motor vehicle dealers and 12-40 leasing agents about the motor vehicle purchase or lease incentive 12-41 program. 12-42 (b) The Texas Department of Transportation shall insert a 12-43 notice describing the motor vehicle purchase or lease incentive 12-44 program with each annual vehicle registration renewal notice. 12-45 Sec. 386.160. COMPTROLLER TO ACCOUNT FOR MOTOR VEHICLE 12-46 PURCHASE OR LEASE INCENTIVES. (a) The comptroller by rule shall 12-47 develop a method to administer and account for the motor vehicle 12-48 purchase or lease incentives authorized by this subchapter, and to 12-49 administer the fund to reimburse new motor vehicle dealers or 12-50 leasing agents within 20 days after the invoice date for incentive 12-51 amounts credited by the dealer. 12-52 (b) The comptroller may develop forms and instructions for 12-53 new motor vehicle dealers and leasing agents to use in accounting 12-54 for and reporting motor vehicle purchase and lease incentives and 12-55 shall provide new motor vehicle dealers and leasing agents with 12-56 information to assist them in accounting for and reporting the 12-57 incentives. 12-58 (c) The comptroller shall add two percent of the total 12-59 dollar amount due to a new motor vehicle dealer or leasing agent 12-60 each month to the amount due that dealer or agent. 12-61 Sec. 386.161. REPORT TO COMMISSION; SUSPENSION OF PURCHASE 12-62 OR LEASE INCENTIVES. (a) The comptroller shall report to the 12-63 commission annually regarding motor vehicle purchase or lease 12-64 incentives. 12-65 (b) The comptroller shall inform the commission and all new 12-66 motor vehicle dealers and leasing agents if at any time during a 12-67 fiscal year the balance available in the money allocated in the 12-68 fund for motor vehicle purchase or lease incentives falls below 15 12-69 percent of the total amount allocated for the incentives during 13-1 that fiscal year. 13-2 (c) If the balance available for motor vehicle purchase or 13-3 lease incentives falls below the amount described in Subsection 13-4 (b), the comptroller by order shall suspend the incentives until 13-5 the comptroller can certify that the balance available in the fund 13-6 for incentives is an amount adequate to resume the incentives, but 13-7 not later than the beginning of the next fiscal year. If the 13-8 comptroller suspends the incentives, the comptroller shall 13-9 immediately notify the commission and all new motor vehicle dealers 13-10 and leasing agents that the incentives have been suspended. 13-11 (d) New motor vehicle dealers and leasing agents shall 13-12 suspend incentives on the 15th day after the date of the 13-13 comptroller's notification of suspension of incentives. 13-14 (Sections 386.162-386.200 reserved for expansion 13-15 SUBCHAPTER E. LOCAL GOVERNMENT GRANT PROGRAM 13-16 Sec. 386.201. GRANT PROGRAM. (a) The commission shall 13-17 develop a competitive grant program to encourage: 13-18 (1) retirement and replacement of inefficient 13-19 residential cooling equipment and other household appliances; 13-20 (2) weatherization of residences; and 13-21 (3) retirement and replacement of high-emitting 13-22 noncommercial lawn and garden equipment. 13-23 (b) The grant program developed under this section may be 13-24 administered by municipalities or counties. 13-25 Sec. 386.202. COST-EFFECTIVENESS REQUIREMENT. The amount of 13-26 an award of a competitive grant under this subchapter must be based 13-27 on the cost-effectiveness of reductions in emissions of oxides of 13-28 nitrogen to be provided by the proposed project. 13-29 Sec. 386.203. GRANT PROJECTS. (a) Grant projects under 13-30 this subchapter may include targeted rebates and revolving loan 13-31 programs for the purposes listed in Section 386.201(a). 13-32 (b) Each award must include a low-income component that 13-33 provides for weatherization of residences and retirement and 13-34 replacement of inefficient cooling equipment and other household 13-35 appliances for low-income households. 13-36 Sec. 386.204. USE OF GRANT MONEY. (a) Grant money may be 13-37 used in conjunction with other energy efficiency programs but may 13-38 not be used to replace other funds from other agencies. 13-39 (b) For the first two years of the program, grants may be 13-40 awarded only in counties in nonattainment areas. In years three 13-41 and four of the program, grants may also be awarded in affected 13-42 counties. In subsequent years, grants may be awarded in all 13-43 counties of the state. 13-44 Sec. 386.205. DISPOSAL OF RETIRED EQUIPMENT. A grant 13-45 recipient must assure that any appliance, residential cooling 13-46 equipment, or lawn or garden equipment retired and replaced under 13-47 this subchapter is recycled or disposed of in accordance with all 13-48 applicable local, state, or federal requirements. 13-49 Sec. 386.206. PRICE INCREASE PROHIBITED; PENALTY. The 13-50 seller of an appliance, residential cooling equipment, or lawn or 13-51 garden equipment or a provider of weatherization services may not 13-52 increase the price of an appliance, residential cooling equipment, 13-53 lawn or garden equipment, or weatherization services that is sold 13-54 under a grant program authorized and developed under this 13-55 subchapter by an amount that exceeds the incremental cost to the 13-56 seller or provider. A violation of this section is punishable as a 13-57 violation of the Deceptive Trade Practices-Consumer Protection Act 13-58 (Subchapter E, Chapter 17, Business & Commerce Code). 13-59 (Sections 386.207-386.250 reserved for expansion 13-60 SUBCHAPTER F. TEXAS EMISSIONS REDUCTION PLAN FUND 13-61 Sec. 386.251. FUND. (a) The Texas emissions reduction plan 13-62 fund is an account in the state treasury. 13-63 (b) The fund is administered by the comptroller for the 13-64 benefit of the Texas emissions reduction plan established under 13-65 this chapter. 13-66 (c) The fund consists of money from: 13-67 (1) fees and other amounts charged and collected under 13-68 Sections 502.1675 and 548.5055, Transportation Code; 13-69 (2) the surcharge on the sale, lease, or rental of new 14-1 or used construction equipment under Section 151.0515, Tax Code; 14-2 (3) surcharges collected under Sections 152.0215 and 14-3 156.054, Tax Code; 14-4 (4) the surcharge collected under Section 31.0265, 14-5 Parks and Wildlife Code; 14-6 (5) the surcharge collected under Article 9035, 14-7 Revised Statutes; and 14-8 (6) payments made by an owner or operator under 14-9 Section 386.056. 14-10 Sec. 386.252. USE OF FUND. (a) Money in the fund may be 14-11 used only to implement and administer programs established under 14-12 the plan and shall be allocated as follows: 14-13 (1) for the diesel emissions reduction incentive 14-14 program, 67.5 percent of the money in the fund, of which not more 14-15 than three percent may be used for infrastructure demonstration 14-16 projects and not more than 15 percent may be used for heavy-duty 14-17 motor vehicle purchase or lease incentives; 14-18 (2) for the motor vehicle purchase or lease incentive 14-19 program, 15 percent of the money in the fund; 14-20 (3) for the local government grant program, 7.5 14-21 percent of the money in the fund; 14-22 (4) for the new technology research and development 14-23 program, 7.5 percent of the money in the fund, of which $250,000 is 14-24 allocated for administration, $200,000 is allocated for a health 14-25 effects study, and $200,000 is to be deposited in the state 14-26 treasury to the credit of the clean air account created under 14-27 Section 382.0622 to supplement funding for air quality planning 14-28 activities in affected counties; and 14-29 (5) for administrative costs incurred by the 14-30 commission and the comptroller, 2.5 percent. 14-31 (b) Up to 15 percent of the money allocated under Subsection 14-32 (a) to a particular program and not expended under that program by 14-33 March 1 of the second fiscal year of a fiscal biennium may be used 14-34 for another program under the Texas emissions reduction plan as 14-35 determined by the commission in consultation with the advisory 14-36 board. 14-37 CHAPTER 387. NEW TECHNOLOGY RESEARCH 14-38 AND DEVELOPMENT PROGRAM 14-39 Sec. 387.001. DEFINITION. In this chapter, "program" means 14-40 the new technology research and development program. 14-41 Sec. 387.002. TEXAS COUNCIL ON ENVIRONMENTAL TECHNOLOGY. 14-42 (a) The Texas Council on Environmental Technology consists of 11 14-43 members appointed by the governor to represent the academic and 14-44 nonprofit communities. The governor shall designate from the 14-45 council members a presiding officer of the council. Members of the 14-46 council serve six-year staggered terms, with the terms of three or 14-47 four members expiring February 1 of each odd-numbered year. 14-48 (b) The Texas Council on Environmental Technology shall work 14-49 to enhance the entrepreneurial and inventive spirit of Texans to 14-50 assist in developing solutions to problems by: 14-51 (1) identifying and evaluating new technologies and 14-52 seeking the approval of the United States Environmental Protection 14-53 Agency for and facilitating the deployment of those technologies; 14-54 and 14-55 (2) assisting the commission and the United States 14-56 Environmental Protection Agency in the process of ensuring credit 14-57 for new, innovative, and creative technological advancements. 14-58 (c) Council offices and projects shall be housed at the 14-59 Center for Energy and Environmental Resources at The University of 14-60 Texas at Austin. 14-61 Sec. 387.003. NEW TECHNOLOGY RESEARCH AND DEVELOPMENT 14-62 PROGRAM. (a) The Texas Council on Environmental Technology shall 14-63 establish and administer a new technology research and development 14-64 program as provided by this chapter. 14-65 (b) Under the program, the Texas Council on Environmental 14-66 Technology shall provide grants to be used to support development 14-67 of emissions-reducing technologies that may be used for projects 14-68 eligible for awards under Chapter 386 and other new technologies 14-69 that show promise for commercialization. The primary objective of 15-1 this chapter is to promote the development of commercialization 15-2 technologies that will support projects that may be funded under 15-3 Chapter 386 and this chapter. 15-4 Sec. 387.004. SOLICITATION OF NEW TECHNOLOGY PROPOSALS. The 15-5 Texas Council on Environmental Technology from time to time shall 15-6 issue specific requests for proposals (RFPs) or program opportunity 15-7 notices (PONs) for technology projects to be funded under the new 15-8 technology research and development program. 15-9 Sec. 387.005. ELIGIBLE PROJECTS; PRIORITIES. (a) Grants 15-10 awarded under this chapter shall be directed toward a balanced mix 15-11 of: 15-12 (1) retrofit and add-on technologies to reduce 15-13 emissions from the existing stock of vehicles targeted by the Texas 15-14 emissions reduction plan; 15-15 (2) advanced technologies for new engines and vehicles 15-16 that produce very-low or zero emissions of oxides of nitrogen, 15-17 including stationary and mobile fuel cells; 15-18 (3) studies to improve air quality assessment and 15-19 modeling; 15-20 (4) advanced technologies that promote increased 15-21 building and appliance energy performance; and 15-22 (5) advanced technologies that reduce emissions from 15-23 other significant sources. 15-24 (b) The Texas Council on Environmental Technology shall 15-25 identify and evaluate and may consider making grants for technology 15-26 projects that would allow qualifying fuels to be produced from 15-27 energy resources in this state. In considering projects under this 15-28 subsection, the council shall give preference to projects involving 15-29 otherwise unusable energy resources in this state and producing 15-30 qualifying fuels at prices lower than otherwise available and low 15-31 enough to make the projects to be funded under the program 15-32 economically attractive to local businesses in the area for which 15-33 the project is proposed. 15-34 (c) In soliciting proposals under Section 387.004 and 15-35 determining how to allocate grant money available for projects 15-36 under this chapter, the Texas Council on Environmental Technology 15-37 shall give special consideration to advanced technologies and 15-38 retrofit or add-on projects that provide multiple benefits by 15-39 reducing emissions of particulates and other air pollutants. 15-40 (d) A project that involves a technology that allows an 15-41 on-road covered vehicle to replace with electric power, while the 15-42 vehicle is parked, the power normally supplied by the vehicle's 15-43 internal combustion engine is eligible for funding under this 15-44 chapter if the project meets all applicable criteria. 15-45 (e) A project that involves publicly or privately owned 15-46 vehicles or vessels is eligible for funding under this chapter if 15-47 the project meets all applicable criteria. 15-48 Sec. 387.006. EVIDENCE OF COMMERCIALIZATION POTENTIAL 15-49 REQUIRED. (a) An application for a technology grant under this 15-50 chapter must show clear and compelling evidence that: 15-51 (1) the proposed technology project has a strong 15-52 commercialization plan and organization; and 15-53 (2) the technology proposed for funding: 15-54 (A) is likely to be offered for commercial sale 15-55 in this state within five years after the date of the application 15-56 for funding; and 15-57 (B) once commercialized, will offer 15-58 opportunities for projects eligible for funding under Chapter 386. 15-59 (b) The Texas Council on Environmental Technology shall 15-60 consider specifically, for each proposed technology project 15-61 application: 15-62 (1) the projected potential for reduced emissions of 15-63 oxides of nitrogen and the cost-effectiveness of the technology 15-64 once it has been commercialized; 15-65 (2) the potential for the technology to contribute 15-66 significantly to air quality goals; and 15-67 (3) the strength of the commercialization plan. 15-68 Sec. 387.007. COST-SHARING. The Texas Council on 15-69 Environmental Technology may require cost-sharing for technology 16-1 projects funded under this chapter but may not require repayment of 16-2 grant money. 16-3 Sec. 387.008. ENVIRONMENTAL RESEARCH FUND. (a) The 16-4 environmental research fund is an account in the general revenue 16-5 fund. The fund consists of money from gifts, grants, or donations 16-6 to the fund for designated or general use and from any other source 16-7 designated by the legislature. 16-8 (b) Money in the environmental research fund may be used 16-9 only for the operation and projects of the Texas Council on 16-10 Environmental Technology. 16-11 Sec. 387.009. ADVISORY COMMITTEES. The Texas Council on 16-12 Environmental Technology may appoint advisory committees as 16-13 necessary or desirable to assist the council in performing its 16-14 duties. An advisory committee may include representatives of 16-15 industry, environmental groups, consumer groups, local governments, 16-16 agriculture, the commission, the General Land Office, and the 16-17 Railroad Commission of Texas. Any senator or representative 16-18 desiring to do so may participate on any advisory committee 16-19 appointed under this section. 16-20 Sec. 387.010. REPORTS. Not later than December 1, 2002, and 16-21 not later than December 1 of each subsequent second year, the Texas 16-22 Council on Environmental Technology shall report to the legislature 16-23 on projects funded under the new technology research and 16-24 development program, describing the technical objectives and 16-25 accomplishments of the project and the progress of the project 16-26 technology toward commercialization. 16-27 CHAPTER 388. TEXAS BUILDING ENERGY PERFORMANCE STANDARDS 16-28 Sec. 388.001. LEGISLATIVE FINDINGS. (a) The legislature 16-29 finds that an effective building energy code is essential to: 16-30 (1) reducing the air pollutant emissions that are 16-31 affecting the health of residents of this state; 16-32 (2) moderating future peak electric power demand; 16-33 (3) assuring the reliability of the electrical grid; 16-34 and 16-35 (4) controlling energy costs for residents and 16-36 businesses in this state. 16-37 (b) The legislature further finds that this state has a 16-38 number of unique climate types, all of which require more energy 16-39 for cooling than for heating, and that there are many 16-40 cost-effective measures that can reduce peak energy use and reduce 16-41 cooling and other energy costs in buildings. 16-42 (c) The legislature further finds that the health, 16-43 air-quality, and electric-reliability concerns within affected 16-44 counties constitute an emergency and may warrant local measures 16-45 that establish higher standards for energy efficiency than 16-46 otherwise preemptive federal or state standards. 16-47 Sec. 388.002. DEFINITIONS. In this chapter: 16-48 (1) "Accredited energy efficiency program" means a 16-49 voluntary set of standards and procedures administered by a 16-50 third-party organization and determined by the laboratory to be 16-51 capable of ensuring that a building meets or exceeds by a relative 16-52 measure the minimum standards for energy-efficient construction 16-53 established in this chapter. 16-54 (2) "Advisory committee" means the Texas building 16-55 energy performance standards advisory committee. 16-56 (3) "Affected county" has the meaning assigned by 16-57 Section 386.001. 16-58 (4) "Building" has the meaning assigned by the 16-59 International Building Code. 16-60 (5) "Code administrator" means an individual employed 16-61 by a local jurisdiction to review construction plans and other 16-62 documents, inspect construction, or administer and enforce building 16-63 standards under this chapter. 16-64 (6) "Code-certified inspector" means an inspector who 16-65 is certified by the International Code Council, the Building 16-66 Officials and Code Administrators International, Inc., the 16-67 International Conference of Building Officials, or the Southern 16-68 Building Code Congress International to have met minimum standards 16-69 for interpretation and enforcement of requirements of the 17-1 International Energy Conservation Code and the energy chapter of 17-2 the International Residential Code. 17-3 (7) "Commission" means the Texas Natural Resource 17-4 Conservation Commission. 17-5 (8) "International Building Code" means the 17-6 International Building Code as adopted by the International Code 17-7 Council. 17-8 (9) "International Residential Code" means the 17-9 International Residential Code for One-and Two-Family Dwellings as 17-10 adopted by the International Code Council. 17-11 (10) "International Energy Conservation Code" means 17-12 the International Energy Conservation Code as adopted by the 17-13 International Code Council. 17-14 (11) "Laboratory" means the Energy Systems Laboratory 17-15 at Texas A&M University. 17-16 (12) "Local jurisdiction" means the authority 17-17 responsible for implementation and enforcement of local building 17-18 codes. 17-19 (13) "Municipality" has the meaning assigned by 17-20 Section 1.005, Local Government Code. 17-21 (14) "Single-family residential" means having the 17-22 character of a detached one-or-two-family dwelling or a multiple 17-23 single-family dwelling not more than three stories high with 17-24 separate means of egress, including the accessory structures of the 17-25 dwelling. 17-26 (15) "Structure" has the meaning assigned by the 17-27 International Building Code. 17-28 Sec. 388.003. ADOPTION OF BUILDING ENERGY PERFORMANCE 17-29 STANDARDS. (a) To achieve energy conservation in single-family 17-30 residential construction, the energy chapter of the International 17-31 Residential Code, as it existed on May 1, 2001, is adopted as the 17-32 energy code in this state for single-family residential 17-33 construction. 17-34 (b) To achieve energy conservation in all other residential, 17-35 commercial, and industrial construction, the International Energy 17-36 Conservation Code as it existed on May 1, 2001, is adopted as the 17-37 energy code for use in this state. 17-38 (c) A municipality may establish procedures: 17-39 (1) to adopt local amendments to the International 17-40 Energy Conservation Code and the energy chapter of the 17-41 International Residential Code; 17-42 (2) for the administration and enforcement of the 17-43 codes; and 17-44 (3) to ensure that code-certified inspectors shall 17-45 perform inspections and enforce the code in the inspectors' 17-46 jurisdictions. 17-47 (d) Local amendments may not result in less stringent energy 17-48 efficiency requirements than the energy chapter of the 17-49 International Residential Code or International Energy Conservation 17-50 Code. The laboratory shall determine, at the request of a 17-51 municipality, the relative impact of proposed local amendments to 17-52 an energy code, including whether proposed amendments are 17-53 substantially equal to or less stringent than the unamended code. 17-54 The laboratory shall: 17-55 (1) report its findings to the municipality, including 17-56 an estimate of any savings potential above the base code from local 17-57 amendments; and 17-58 (2) submit a summary of its findings biennially to the 17-59 commission. 17-60 (e) A municipality shall periodically review and consider 17-61 amendments made by the International Code Council to the 17-62 International Energy Conservation Code and the energy chapter of 17-63 the International Residential Code adopted after May 1, 2001. 17-64 Sec. 388.004. ENFORCEMENT OF ENERGY STANDARDS OUTSIDE OF 17-65 MUNICIPALITY. For construction outside of the local jurisdiction 17-66 of a municipality: 17-67 (1) a building certified by a national, state, or 17-68 local accredited energy efficiency program shall be considered in 17-69 compliance; 18-1 (2) a building with inspections from private 18-2 code-certified inspectors using the energy chapter of the 18-3 International Residential Code or International Energy Conservation 18-4 Code shall be considered in compliance; 18-5 (3) a builder who does not have access to either of 18-6 the above methods for a building shall certify compliance using a 18-7 form provided by the laboratory, enumerating the code-compliance 18-8 features of the building; 18-9 (4) a new electric meter may not be installed by the 18-10 utility provider without a certificate of compliance issued by a 18-11 private code-certified inspector or through an accredited energy 18-12 efficiency program unless the utility has made its own 18-13 determination of energy code compliance; and 18-14 (5) the laboratory shall establish training and a 18-15 checklist for utility providers to use in determining energy code 18-16 compliance where no certificate of compliance is available. 18-17 Sec. 388.005. ADDITIONAL ENERGY CONSERVATION PROGRAMS IN 18-18 NONATTAINMENT AREA AND AFFECTED COUNTY. (a) Each municipality in 18-19 an affected county and the affected counties shall develop an 18-20 energy efficiency and weatherization program for existing buildings 18-21 that would result in energy savings equal to or greater than 10 18-22 percent of the projected energy savings that would result from the 18-23 adoption of energy codes for new construction. By September 1, 18-24 2001, the laboratory shall develop the energy savings estimates and 18-25 set targets for each municipality and affected county. Each 18-26 municipality and affected county shall develop and implement an 18-27 energy savings and weatherization program to meet the targets 18-28 required by this subsection. The municipality and affected 18-29 counties may use projected savings approved by the Public Utility 18-30 Commission of Texas for certain energy efficiency measures to 18-31 estimate the impact of those measures in local programs. In 18-32 calculating the effect of a program required by this subsection 18-33 toward the additional savings established in this section, a 18-34 municipality or affected county may count measures funded by the 18-35 grant program under Subchapter E, Chapter 386, but may not count 18-36 energy efficient measures funded by other state or federal agencies 18-37 required by Section 39.905, Utilities Code. 18-38 (b) A municipality or county may adopt noncode energy 18-39 performance standards for the sale and installation of replacement 18-40 residential, commercial, and industrial lighting, ballasts, exit 18-41 signs, motors, transformers, roof products, windows, dehumidifiers, 18-42 air conditioning package and split systems, heat pump systems, 18-43 boilers, and thermostats. 18-44 (c) The laboratory shall, on request of a municipality, 18-45 county, or regional government representation, determine the 18-46 additional energy savings potential from noncode energy performance 18-47 programs being considered and advise the requesting entity of its 18-48 determination within 60 days. 18-49 (d) The laboratory may review the specifications adopted by 18-50 the United States Environmental Protection Agency's Energy Star 18-51 program or comparable nationally developed specifications, in 18-52 consultation with the advisory committee, to determine whether 18-53 modifications should be incorporated into the noncode energy 18-54 performance standards available to jurisdictions under this section 18-55 and may modify the Energy Star or comparable nationally developed 18-56 specifications as needed to assure: 18-57 (1) the greatest energy savings to consumers and 18-58 businesses in the state; and 18-59 (2) the effectiveness of the noncode building energy 18-60 performance standards adopted under this section in the various 18-61 regions of the state. 18-62 (e) A municipality or affected county shall submit an annual 18-63 report to the laboratory on the municipality's or county's progress 18-64 under this section. The laboratory shall submit reports received 18-65 under this subsection to the commission for inclusion in the report 18-66 required by Section 386.057. 18-67 Sec. 388.006. GREEN BUILDING PERFORMANCE STANDARDS. As part 18-68 of the green building performance standards developed under this 18-69 chapter, the laboratory shall develop a series of green building 19-1 guidelines that: 19-2 (1) conserve energy and water; 19-3 (2) reduce waste and the use of toxic substances; and 19-4 (3) improve indoor air quality. 19-5 Sec. 388.007. TEXAS BUILDING ENERGY PERFORMANCE STANDARDS 19-6 ADVISORY COMMITTEE. The Texas building energy performance 19-7 standards advisory committee is comprised of the following: 19-8 (1) a registered professional engineer; 19-9 (2) a licensed professional architect; 19-10 (3) an individual representing building owners or 19-11 building managers; 19-12 (4) an individual representing the Texas Department of 19-13 Housing and Community Affairs; 19-14 (5) an individual representing consumers; 19-15 (6) an individual representing environmental issues; 19-16 (7) an individual representing building academia; 19-17 (8) an individual representing business; 19-18 (9) an individual representing the Texas Association 19-19 of Business and Chambers of Commerce; 19-20 (10) an individual representing local building 19-21 officials; 19-22 (11) an individual representing electric utilities; 19-23 (12) an individual representing gas utilities; 19-24 (13) an individual representing HVAC contractors; 19-25 (14) an individual representing window manufacturers; 19-26 (15) an individual representing the commission 19-27 appointed by the commission; 19-28 (16) an individual representing the Public Utilities 19-29 Commission of Texas appointed by that agency; 19-30 (17) an individual representing insulation 19-31 manufacturers; 19-32 (18) an individual representing the Texas Building 19-33 Energy Institute; 19-34 (19) an individual representing the State Energy 19-35 Conservation Office; 19-36 (20) an individual representing the Texas Association 19-37 of Builders; 19-38 (21) an individual representing the Finance Commission 19-39 of Texas; and 19-40 (22) an individual representing the Texas Real Estate 19-41 Commission. 19-42 Sec. 388.008. APPLICATION OF STANDARDS. Except as otherwise 19-43 provided by this chapter, the International Energy Conservation 19-44 Code and the energy chapter of the International Residential Code 19-45 apply to any building or structure in this state for which a 19-46 building permit application is received by a local jurisdiction on 19-47 or after September 1, 2002. 19-48 Sec. 388.009. DISTRIBUTION OF INFORMATION AND TECHNICAL 19-49 ASSISTANCE. (a) The laboratory shall make available to builders, 19-50 designers, engineers, and architects code implementation materials 19-51 that explain the requirements of the International Energy 19-52 Conservation Code and the energy chapter of the International 19-53 Residential Code and that describe methods of compliance acceptable 19-54 to code administrators. 19-55 (b) The materials shall include software tools, simplified 19-56 prescriptive options, and other materials as appropriate. The 19-57 simplified materials shall be designed for projects in which a 19-58 design professional is not involved. 19-59 (c) The laboratory shall provide local jurisdictions with 19-60 technical assistance concerning implementation and enforcement of 19-61 the International Energy Conservation Code and the energy chapter 19-62 of the International Residential Code. 19-63 Sec. 388.010. DEVELOPMENT OF ACCREDITATION PROGRAM FOR HOME 19-64 ENERGY RATING SERVICES. (a) The laboratory, in consultation with 19-65 the advisory committee, mortgage companies, and contractors that 19-66 provide home energy rating services, shall develop an accreditation 19-67 program for energy rating services. 19-68 (b) In establishing standards for the accreditation program, 19-69 the laboratory shall consider available national home energy rating 20-1 system guidelines and shall base the ratings on the International 20-2 Energy Conservation Code and the energy chapter of the 20-3 International Residential Code. 20-4 (c) The laboratory shall develop procedures for determining 20-5 whether a provider of home energy rating services meets 20-6 accreditation standards developed under this section. 20-7 (d) The laboratory shall develop a standardized report 20-8 format to be used by providers of home energy rating services. The 20-9 form shall be designed to give potential buyers or renters 20-10 information on a structure's energy performance, including: 20-11 (1) insulation; 20-12 (2) types of windows; 20-13 (3) heating and cooling equipment; 20-14 (4) water heating equipment; 20-15 (5) additional energy conserving features, if any; 20-16 (6) results of performance measurements of building 20-17 tightness and forced air distribution; and 20-18 (7) an overall rating of probable energy efficiency 20-19 relative to the minimum requirements of the International Energy 20-20 Conservation Code or the energy chapter of the International 20-21 Residential Code, as appropriate. 20-22 (e) The laboratory shall establish a public information 20-23 program to inform homeowners, renters, sellers, buyers, and others 20-24 regarding the accreditation requirements for home energy rating 20-25 services. 20-26 (f) The laboratory shall submit its home energy rating 20-27 accreditation program to the advisory committee by September 1, 20-28 2002. 20-29 (g) The home energy rating accreditation program shall be 20-30 implemented by September 1, 2003. 20-31 SECTION 2. Subchapter C, Chapter 151, Tax Code, is amended 20-32 by adding Section 151.0515 to read as follows: 20-33 Sec. 151.0515. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 20-34 (a) In this section, "equipment" includes all off-road, heavy-duty 20-35 diesel equipment classified as construction equipment, including: 20-36 (1) pavers; 20-37 (2) tampers/rammers; 20-38 (3) plate compactors; 20-39 (4) concrete pavers; 20-40 (5) rollers; 20-41 (6) scrapers; 20-42 (7) paving equipment; 20-43 (8) surface equipment; 20-44 (9) signal boards/light plants; 20-45 (10) trenchers; 20-46 (11) bore/drill rigs; 20-47 (12) excavators; 20-48 (13) concrete/industrial saws; 20-49 (14) cement and mortar mixers; 20-50 (15) cranes; 20-51 (16) graders; 20-52 (17) off-highway trucks; 20-53 (18) crushing/processing equipment; 20-54 (19) rough terrain forklifts; 20-55 (20) rubber tire loaders; 20-56 (21) rubber tire tractors/dozers; 20-57 (22) tractors/loaders/backhoes; 20-58 (23) crawler tractors/dozers; 20-59 (24) skid steer loaders; 20-60 (25) off-highway tractors; and 20-61 (26) dumpsters/tenders. 20-62 (b) In each county in this state, a surcharge is imposed on 20-63 the retail sale, lease, or rental of new or used equipment in an 20-64 amount equal to 0.25 percent of the sale price or the lease or 20-65 rental amount, not to exceed a total amount of $750 for each 20-66 surcharge. 20-67 (c) The surcharge shall be collected at the same time and in 20-68 the same manner and shall be administered and enforced in the same 20-69 manner as the tax imposed under this subchapter. The comptroller 21-1 shall adopt any additional procedures needed for the collection, 21-2 administration, and enforcement of the surcharge authorized by this 21-3 section and shall deposit all remitted surcharges to the credit of 21-4 the Texas emissions reduction plan fund. 21-5 (d) This section expires September 30, 2008. 21-6 SECTION 3. Subchapter B, Chapter 152, Tax Code, is amended 21-7 by adding Section 152.0215 to read as follows: 21-8 Sec. 152.0215. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 21-9 (a) A surcharge is imposed on every retail sale or lease of every 21-10 on-road diesel motor vehicle over 14,000 pounds sold or leased in 21-11 this state. The amount of the surcharge is one percent of the 21-12 total consideration. 21-13 (b) The surcharge shall be collected at the same time and in 21-14 the same manner and shall be administered and enforced in the same 21-15 manner as the tax imposed under this subchapter. The comptroller 21-16 by rule shall adopt any additional procedures needed for the 21-17 collection, administration, and enforcement of the surcharge 21-18 authorized by this section and shall deposit all remitted 21-19 surcharges to the credit of the Texas emissions reduction plan 21-20 fund. 21-21 (c) This section expires September 30, 2008. 21-22 SECTION 4. Section 153.203, Tax Code, is amended to read as 21-23 follows: 21-24 Sec. 153.203. EXCEPTIONS. (a) The tax imposed by this 21-25 subchapter does not apply to: 21-26 (1) diesel fuel delivered by a permitted supplier to a 21-27 common or contract carrier, oceangoing vessel (including ship, 21-28 tanker, or boat), or barge for export from this state, if the 21-29 diesel fuel is moved forthwith outside this state; 21-30 (2) diesel fuel sold by a permitted supplier to the 21-31 federal government for its exclusive use; 21-32 (3) diesel fuel sold or delivered by a permitted 21-33 supplier to another permitted supplier or to the bulk storage 21-34 facility of an agricultural bonded user, or dyed diesel fuel sold 21-35 or delivered by a permitted supplier to the bulk storage facility 21-36 of a dyed diesel fuel bonded user, to the bulk storage facility of 21-37 a diesel tax prepaid user, or to a purchaser who provides a signed 21-38 statement as provided by Section 153.205 of this code, but not 21-39 including a delivery of tax-free diesel fuel into the fuel supply 21-40 tanks of a motor vehicle, except for a motor vehicle owned by the 21-41 federal government; 21-42 (4) diesel fuel sold or delivered by a permitted 21-43 supplier into the storage facility of a permitted aviation fuel 21-44 dealer, from which diesel fuel will be sold or delivered solely 21-45 into the fuel supply tanks of aircraft or aircraft servicing 21-46 equipment; 21-47 (5) diesel fuel sold or delivered by a permitted 21-48 supplier into fuel supply tanks of railway engines, motorboats, or 21-49 refrigeration units or other stationary equipment powered by a 21-50 separate motor from a separate fuel supply tank; 21-51 (6) kerosene when delivered by a permitted supplier 21-52 into a storage facility at a retail business from which all 21-53 deliveries are exclusively for heating, cooking, lighting, or 21-54 similar nonhighway use; 21-55 (7) diesel fuel sold or delivered by one aviation fuel 21-56 dealer to another aviation fuel dealer who will deliver the diesel 21-57 fuel exclusively into the supply tanks of aircraft or aircraft 21-58 servicing equipment; 21-59 (8) diesel fuel sold by a permitted supplier to a 21-60 public school district in this state for its exclusive use; 21-61 (9) diesel fuel sold by a permitted supplier to a 21-62 commercial transportation company that provides public school 21-63 transportation services to a school district under Section 34.008, 21-64 Education Code, and used by the company exclusively to provide 21-65 those services; or 21-66 (10) diesel fuel sold by a permitted supplier to a 21-67 person, other than a political subdivision, who owns, controls, 21-68 operates, or manages a commercial motor vehicle as defined by 21-69 Section 548.001, Transportation Code, if the fuel: 22-1 (A) is delivered exclusively into the fuel 22-2 supply tank of the commercial motor vehicle; and 22-3 (B) is used exclusively to transport passengers 22-4 for compensation or hire between points in this state on a fixed 22-5 route or schedule. 22-6 (b) The tax imposed by this subchapter does not apply to the 22-7 volume of water that is blended together with taxable diesel fuel 22-8 when the finished product sold or used is clearly identified on the 22-9 retail pump, storage tank, and sales invoice as a combination of 22-10 diesel fuel and water. This subsection expires August 31, 2008. 22-11 SECTION 5. Subchapter B, Chapter 156, Tax Code, is amended 22-12 by adding Section 156.054 to read as follows: 22-13 Sec. 156.054. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 22-14 (a) In this section, "nonattainment area" and "affected county" 22-15 have the meanings assigned by Section 386.001, Health and Safety 22-16 Code. 22-17 (b) A person owning, operating, managing, or controlling a 22-18 hotel located in a nonattainment area or an affected county shall 22-19 collect a surcharge imposed by this section. 22-20 (c) A $1 surcharge is imposed on a person for each day that 22-21 the person has the right to use or possess a room in a hotel that 22-22 is ordinarily used for sleeping. 22-23 (d) Sections 156.101, 156.102, and 156.103 do not apply to 22-24 the surcharge authorized by this section. 22-25 (e) The surcharge shall be collected at the same time and in 22-26 the same manner and shall be administered and enforced in the same 22-27 manner as the tax imposed under this subchapter. The comptroller 22-28 shall adopt any additional procedures needed for the collection, 22-29 administration, and enforcement of the surcharge authorized by this 22-30 section and shall deposit all remitted surcharges to the credit of 22-31 the Texas emissions reduction plan fund. 22-32 (f) This section expires September 30, 2008. 22-33 SECTION 6. Section 224.153, Transportation Code, is amended 22-34 by adding Subsection (c) to read as follows: 22-35 (c) A motor vehicle displaying the "clean vehicle" insignia 22-36 authorized by Section 502.186 is entitled to travel in a 22-37 preferential car pool or high occupancy vehicle lane designated 22-38 under this section regardless of the number of occupants in the 22-39 vehicle. This subsection expires August 31, 2008. 22-40 SECTION 7. Section 431.073, Transportation Code, is amended 22-41 by adding Subsection (d) to read as follows: 22-42 (d) A motor vehicle displaying the "clean vehicle" insignia 22-43 authorized by Section 502.186 is entitled to travel in a high 22-44 occupancy vehicle lane designated under this section regardless of 22-45 the number of occupants in the vehicle. This subsection expires 22-46 August 31, 2008. 22-47 SECTION 8. Subchapter D, Chapter 502, Transportation Code, 22-48 is amended by adding Section 502.1675 to read as follows: 22-49 Sec. 502.1675. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 22-50 (a) In addition to the registration fees charged under Section 22-51 502.167, a surcharge is imposed on the registration of a 22-52 truck-tractor or commercial motor vehicle under that section in an 22-53 amount equal to 10 percent of the total fees due for the 22-54 registration of the truck-tractor or commercial motor vehicle under 22-55 that section. 22-56 (b) The county tax assessor-collector shall remit the 22-57 surcharge collected under this section to the comptroller at the 22-58 time and in the manner prescribed by the comptroller for deposit in 22-59 the Texas emissions reduction plan fund. 22-60 (c) This section expires August 31, 2008. 22-61 SECTION 9. Subchapter D, Chapter 502, Transportation Code, 22-62 is amended by adding Section 502.186 to read as follows: 22-63 Sec. 502.186. "CLEAN VEHICLE" INSIGNIA FOR CERTAIN MOTOR 22-64 VEHICLES. (a) At the time of registration or reregistration of 22-65 the motor vehicle, the department shall issue a specially designed 22-66 "clean vehicle" insignia for a motor vehicle that is eligible for a 22-67 motor vehicle purchase or lease incentive under Subchapter D, 22-68 Chapter 386, Health and Safety Code. 22-69 (b) The insignia issued under this section must include the 23-1 words: "CLEAN VEHICLE". 23-2 (c) The department shall issue a "clean vehicle" insignia 23-3 under this section without the payment of any additional fee to a 23-4 person who: 23-5 (1) applies to the department on a form provided by 23-6 the department; and 23-7 (2) submits proof that the motor vehicle being 23-8 registered is a vehicle described by Subsection (a). 23-9 (d) This section expires August 31, 2008. 23-10 SECTION 10. Subchapter H, Chapter 548, Transportation Code, 23-11 is amended by adding Section 548.5055 to read as follows: 23-12 Sec. 548.5055. TEXAS EMISSIONS REDUCTION PLAN FEE. (a) In 23-13 this section, "nonattainment area" and "affected county" have the 23-14 meanings assigned by Section 386.001, Health and Safety Code. 23-15 (b) In addition to other fees required by this subchapter, 23-16 to fund the Texas emissions reduction plan established under 23-17 Chapter 386, Health and Safety Code, the department shall collect, 23-18 for every motor vehicle required to be inspected under this 23-19 chapter, a fee of: 23-20 (1) $1, if the vehicle being inspected is not 23-21 registered in a nonattainment area or an affected county in this 23-22 state; or 23-23 (2) $5, if the vehicle being inspected is registered 23-24 in a nonattainment area or an affected county in this state. 23-25 (c) The department shall remit fees collected under this 23-26 section to the comptroller at the time and in the manner prescribed 23-27 by the comptroller for deposit in the Texas emissions reduction 23-28 plan fund. 23-29 (d) This section expires August 31, 2008. 23-30 SECTION 11. Section 681.009, Transportation Code, is amended 23-31 by adding Subsection (f) to read as follows: 23-32 (f) In a nonattainment area or an affected county in this 23-33 state, a political subdivision or a person who designates five or 23-34 more parking spaces or a parking area for the exclusive use of 23-35 vehicles transporting persons with disabilities shall designate the 23-36 same number of parking spaces or a parking area for the exclusive 23-37 use of motor vehicles displaying the "clean vehicle" insignia 23-38 authorized by Section 502.186. Parking spaces or a parking area 23-39 designated under this section must be as close to the building or 23-40 area for which the spaces are provided as the parking spaces or 23-41 parking area provided for vehicles transporting persons with 23-42 disabilities. In this subsection, "nonattainment area" and 23-43 "affected county" have the meanings assigned by Section 386.001, 23-44 Health and Safety Code. This subsection expires August 31, 2008. 23-45 SECTION 12. Subchapter B, Chapter 31, Parks and Wildlife 23-46 Code, is amended by adding Section 31.0265 to read as follows: 23-47 Sec. 31.0265. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE. 23-48 (a) In this section, "nonattainment area" and "affected county" 23-49 have the meanings assigned by Section 386.001, Health and Safety 23-50 Code. 23-51 (b) Each application for an original or renewal certificate 23-52 of number for a motorboat that will be operated primarily in a 23-53 nonattainment area or an affected county in this state shall be 23-54 accompanied by a $3 Texas emissions reduction plan surcharge in 23-55 addition to any other fee required to be paid to the department. 23-56 (c) The department shall collect and remit the surcharge to 23-57 the comptroller at the time and in the manner prescribed by the 23-58 comptroller for deposit in the Texas emissions reduction plan fund. 23-59 (d) This section expires August 31, 2008. 23-60 SECTION 13. Chapter 20, Title 132, Revised Statutes, is 23-61 amended by adding Articles 9035 and 9036 to read as follows: 23-62 Art. 9035. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE ON TAXI 23-63 FARES 23-64 Sec. 1. DEFINITIONS. In this article: 23-65 (1) "Fare" means the compensation paid by a passenger 23-66 in a taxi for transportation by the taxi. 23-67 (2) "Nonattainment area" and "affected county" have 23-68 the meanings assigned by Section 386.001, Health and Safety Code. 23-69 (3) "Subsidized fare for disabled passengers" means a 24-1 fare that is subsidized by any governmental entity for persons with 24-2 disabilities. 24-3 (4) "Taxi" means a fuel-powered passenger vehicle that 24-4 transports passengers for compensation. The term includes a 24-5 limousine, van, or other vehicle that transports passengers for 24-6 compensation. 24-7 (5) "Very-low-emissions vehicle" has the meaning 24-8 assigned by Section 386.101, Health and Safety Code. 24-9 Sec. 2. APPLICATION. This article applies only in a 24-10 nonattainment area or an affected county in this state. 24-11 Sec. 3. IMPOSITION AND COLLECTION OF SURCHARGE. (a) A 24-12 surcharge of 50 cents is imposed on each fare collected by the taxi 24-13 driver for transportation by a taxi. 24-14 (b) A taxi driver who is employed by or under contract with 24-15 a taxi company shall remit to the company at the end of each month 24-16 the total amount of surcharges collected by the driver during that 24-17 month, less five percent of the total to be retained by the driver. 24-18 The taxi company shall remit to the comptroller at the end of each 24-19 month the total amount of surcharges collected by drivers employed 24-20 by the company, less five percent of the total to be retained by 24-21 the company. 24-22 (c) An independent taxi driver shall submit to the 24-23 comptroller at the end of each month the total amount of surcharges 24-24 collected by the driver during that month, less five percent of the 24-25 total to be retained by the driver. 24-26 (d) The person required to remit the surcharge shall 24-27 maintain records of the surcharge in the manner prescribed by the 24-28 comptroller and shall remit the surcharge, less five percent, to 24-29 the comptroller each month in the manner prescribed by the 24-30 comptroller for deposit to the credit of the Texas emissions 24-31 reduction plan fund. 24-32 Sec. 4. EXEMPTION FROM SURCHARGE. The surcharge imposed by 24-33 this article does not apply if the taxi providing the 24-34 transportation for which the fare is charged: 24-35 (1) is eligible for a motor vehicle purchase or lease 24-36 incentive under Subchapter D, Chapter 386, Health and Safety Code; 24-37 or 24-38 (2) is transporting a passenger who is eligible for a 24-39 subsidized fare for disabled passengers. 24-40 Sec. 5. INTEREST AND PENALTIES. A person is liable for 24-41 penalties and interest on surcharges that are not remitted when due 24-42 in the same manner and at the same rate as provided for delinquent 24-43 taxes by Sections 111.060 and 111.061, Tax Code. 24-44 Sec. 6. CRIMINAL PENALTY. (a) A person who violates this 24-45 article or a rule adopted by the comptroller under this article 24-46 commits an offense. 24-47 (b) An offense under this section is a Class C misdemeanor. 24-48 Sec. 7. EXPIRATION. This article expires August 31, 2008. 24-49 Art. 9036. TEXAS EMISSIONS REDUCTION PLAN SURCHARGE ON THE 24-50 SALE OF BUNKER FUEL 24-51 Sec. 1. DEFINITIONS. In this article: 24-52 (1) "Bunker fuel" means marine bunker fuel sold for 24-53 use in the operation of an ocean-going vessel, ship, tanker, or 24-54 boat. 24-55 (2) "Petroleum refining facility" means an 24-56 establishment primarily engaged in producing gasoline, kerosene, 24-57 distillate fuel oils, residual fuel oils, and lubricants through 24-58 fractionation, straight distillation of crude oil, redistillation 24-59 of unfinished petroleum derivatives, cracking, or other processes. 24-60 (3) "Importer" means a person who imports bunker fuel, 24-61 or causes bunker fuel to be imported, into this state for sale, 24-62 use, or consumption. 24-63 Sec. 2. IMPOSITION OF SURCHARGE. (a) A surcharge of 25 24-64 cents per gallon is imposed on the sale of bunker fuel by a 24-65 petroleum refining facility in this state. 24-66 (b) A person who imports bunker fuel into this state for 24-67 sale or use shall pay to the comptroller a surcharge of 25 cents 24-68 per gallon of bunker fuel imported into this state. 24-69 Sec. 3. EXEMPTIONS. The surcharge imposed by this section 25-1 does not apply to bunker fuel sold by a petroleum refining facility 25-2 or an importer: 25-3 (1) directly to the United States government; 25-4 (2) into the fuel supply tank of a vessel engaged 25-5 exclusively in foreign and interstate commerce; or 25-6 (3) for immediate export from this state. 25-7 Sec. 4. ADMINISTRATION, PAYMENT, COLLECTION, AND 25-8 ENFORCEMENT. Except as provided by this article, Chapters 101 and 25-9 111-113, Tax Code, apply to the administration, payment, 25-10 collection, and enforcement of the surcharge imposed by this 25-11 article in the same manner that those chapters apply to the 25-12 administration, payment, collection, and enforcement of taxes under 25-13 Title 2, Tax Code. The comptroller shall adopt any necessary rules 25-14 for the administration, payment, collection, and enforcement of the 25-15 surcharge and shall deposit all surcharges remitted under this 25-16 article to the Texas emissions reduction plan fund. 25-17 Sec. 5. EXPIRATION. This article expires August 31, 2008. 25-18 SECTION 14. (a) Not later than the 45th day after the 25-19 effective date of this Act, the Texas Natural Resource Conservation 25-20 Commission shall adopt all necessary rules, guidelines, or criteria 25-21 required to implement programs established under this Act. 25-22 (b) Not later than the 45th day after the effective date of 25-23 this Act, the comptroller of public accounts shall adopt all rules 25-24 necessary to enable the comptroller to carry out the comptroller's 25-25 duties under this Act. 25-26 (c) Pending final adoption of rules by the Texas Natural 25-27 Resource Conservation Commission and the comptroller of public 25-28 accounts to implement programs established by this Act, the 25-29 commission shall begin implementation of the programs using 25-30 guidelines developed by a similar program currently operating in 25-31 another state, modified as necessary for application in this state. 25-32 SECTION 15. (a) Except as provided by Subsection (b) of 25-33 this section, not later than August 1, 2001, if this Act takes 25-34 immediate effect, or the effective date of this Act, if this Act 25-35 does not take immediate effect, the Texas Natural Resource 25-36 Conservation Commission and the comptroller of public accounts 25-37 shall adopt rules necessary to implement the diesel emissions 25-38 reduction incentive and the motor vehicle purchase or lease 25-39 incentive programs established under Subchapters C and D, Chapter 25-40 386, Health and Safety Code, as added by this Act. 25-41 (b) Not later than September 1, 2001, the Texas Natural 25-42 Resource Conservation Commission, as required by Section 386.103, 25-43 Health and Safety Code, as added by this Act, shall adopt criteria 25-44 for setting priorities for projects eligible for grants under 25-45 Subchapter C, Chapter 386, Health and Safety Code, as added by this 25-46 Act. 25-47 (c) Not later than the 30th day after the effective date of 25-48 this Act, the Texas Natural Resource Conservation Commission shall 25-49 publish the first annual list of vehicles eligible for motor 25-50 vehicle purchase or lease incentives, as required by Section 25-51 386.156, Health and Safety Code, as added by this Act. 25-52 SECTION 16. The vehicle purchase or lease incentives 25-53 authorized by Sections 386.113 and 386.153, Health and Safety Code, 25-54 as added by this Act, apply only to the sale or lease of a vehicle 25-55 that occurs on or after January 1, 2002. 25-56 SECTION 17. Not later than the 45th day after the effective 25-57 date of this Act, the Texas Department of Transportation shall make 25-58 available to the county tax assessor-collector of each county in 25-59 the state the "clean vehicle" insignia authorized by Section 25-60 502.186, Transportation Code, as added by this Act. The county tax 25-61 assessor-collector of each county in the state shall begin issuing 25-62 the "clean vehicle" insignia to persons who qualify for the 25-63 insignia not later than the 10th working day after the date the 25-64 insignia are available. 25-65 SECTION 18. In making the initial appointments to the Texas 25-66 Emissions Reduction Plan Advisory Board as created by Section 25-67 386.058, Health and Safety Code, as added by this Act, the 25-68 appointing authorities shall designate their appointees so that six 25-69 members' terms expire February 1, 2002, and seven members' terms 26-1 expire February 1, 2003. Appointments to the advisory board shall 26-2 be made not later than July 1, 2001, if this Act takes immediate 26-3 effect, or the effective date of this Act, if this Act does not 26-4 take immediate effect. 26-5 SECTION 19. As soon as practicable after the effective date 26-6 of this Act, the governor shall appoint members to the Texas 26-7 Council on Environmental Technology, as created by Section 387.002, 26-8 Health and Safety Code, as added by this Act. In making the 26-9 initial appointments, the governor shall designate the appointees 26-10 so that three members' terms expire February 1, 2003, four members' 26-11 terms expire February 1, 2005, and four members' terms expire 26-12 February 1, 2007. 26-13 SECTION 20. Not later than the 30th day after the adoption 26-14 of rules governing the new technology research and development 26-15 program established under Chapter 387, Health and Safety Code, as 26-16 added by this Act, the Texas Council on Environmental Technology 26-17 shall issue requests for proposals for projects to be funded under 26-18 the new technology research and development program. 26-19 SECTION 21. On the effective date of this Act, the Texas 26-20 Natural Resource Conservation Commission shall submit to the United 26-21 States Environmental Protection Agency a revision to the state 26-22 implementation plan that deletes the requirements of the 26-23 construction shift and the early purchase of Tier 2 and Tier 3 26-24 equipment and adds the provisions of this Act. 26-25 SECTION 22. (a) Notwithstanding any Act of the 77th 26-26 Legislature, Regular Session, 2001, that purports to abolish all 26-27 funds and accounts created or re-created in the state treasury by 26-28 another Act of the 77th Legislature, Regular Session, 2001, the 26-29 Texas emissions reduction plan fund created by Subchapter F, 26-30 Chapter 386, Health and Safety Code, as added by this Act, and the 26-31 environmental research fund created by Section 387.008, Health and 26-32 Safety Code, as added by this Act, are accounts in the general 26-33 revenue fund and the accounts and money deposited to the accounts 26-34 are exempt from any Act of the 77th Legislature, Regular Session, 26-35 2001, that purports to abolish all funds and accounts created or 26-36 re-created by another Act of the 77th Legislature, Regular Session, 26-37 2001, and to require the deposit of money that would be deposited 26-38 to the credit of a special account or fund be deposited to the 26-39 credit of the unobligated portion of the general revenue fund 26-40 unless the fund, account, or dedication is exempted under that Act. 26-41 (b) This section prevails over any other Act of the 77th 26-42 Legislature, Regular Session, 2001, regardless of the relative 26-43 dates of enactment, that purports to abolish all funds and accounts 26-44 created or re-created in the state treasury by another Act of the 26-45 77th Legislature, Regular Session, 2001, and to require the deposit 26-46 of money that would be deposited to the credit of a special account 26-47 or fund be deposited to the credit of the unobligated portion of 26-48 the general revenue fund unless the fund, account, or dedication is 26-49 exempted under that Act. 26-50 SECTION 23. Section 386.002, Health and Safety Code, as 26-51 added by this Act notwithstanding, the Texas Natural Resource 26-52 Conservation Commission shall submit the final biennial plan report 26-53 required by Section 386.057, Health and Safety Code, as added by 26-54 this Act, to the legislature not later than December 1, 2008. 26-55 SECTION 24. The expiration of Sections 151.0515, 152.0215, 26-56 and 156.054, Tax Code, as added by this Act, and Articles 9035 and 26-57 9036, Revised Statutes, as added by this Act, does not affect an 26-58 obligation that was incurred, a violation that occurred, or an 26-59 offense that was committed under those sections or articles before 26-60 the expiration date of those sections or articles. An obligation 26-61 incurred, a violation that occurred, or an offense committed before 26-62 the expiration date of those sections or articles is governed by 26-63 the law in effect at the time the obligation was incurred, the 26-64 violation occurred, or the offense was committed, and the former 26-65 law is continued in effect after the expiration date for that 26-66 purpose. For purposes of this section, a violation occurs or an 26-67 offense is committed before the expiration date of those sections 26-68 or articles if any element of the violation or offense occurs 26-69 before that date. 27-1 SECTION 25. This Act takes effect immediately if it receives 27-2 a vote of two-thirds of all the members elected to each house, as 27-3 provided by Section 39, Article III, Texas Constitution. If this 27-4 Act does not receive the vote necessary for immediate effect, this 27-5 Act takes effect September 1, 2001. 27-6 * * * * *