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                                 * * * * *