H.B. 9 78(2)    BILL ANALYSIS

H.B. 9
By: Swinford
Government Reform
Committee Report (Unamended)


In 2001 and 2002 Texas agencies spent $37.6 million and $31.9 million on
fuel. 2003 average fuel prices are similar to 2001 levels, so total fuel
expenditures are expected to be higher.  In recent years many government
organizations and private businesses have begun using fuel savings
technologies with the primary objective of reducing overall fuel costs.
In some cases, these technologies are also being used for their emissions
reducing benefits.  The most cost-effective of these technologies are fuel
additives or devices that improve the combustion of the fuel which leads
to improved fuel economy, lower emissions, and improved engine
performance.  There is an added benefit of reduced engine oil
contamination that extends the engine oil change cycle and results in
added cost savings.   

The fuel savings section of House Bill 9 is intended to result in state
vehicle and non-road equipment fuel savings of 7% to greater than 15%
which could save the state more than $5 million per year. To obtain these
savings a field demonstration would be completed; then, the agencies would
be required to reduce their fuel use using technologies whose savings
exceed their costs.  

The State Energy Conservation Office is directed to lead a low cost field
demonstration of at least four technologies with TxDOT to verify different
technologies' real world effectiveness and determine which technologies
are best for state vehicles and equipment. No highway funds will be used
for purchasing technologies for the demonstration.  It is expected that
the fuel cost savings of using the technologies will cover the cost of the
field demonstration.  The State Energy Conservation Office will
consolidate the findings and make them public.     

After the field demonstration, state expenditures on vehicle and non-road
diesel fuel is intended to be reduced by directing state agencies with
more than 10 motor vehicles or off-road diesel powered machines to reduce
their total fuel consumption by at least 5 percent from fiscal year 2002
consumption levels through the use of cost-effective fuel saving
technologies.  For a technology to be cost-effective and be required, its
projected fuel cost savings over nine months must exceed the costs of
using and, if applicable, installing the technology.  The most
cost-effective device technologies pay for themselves within 3 months or
less, and cost-effective fuel additives technologies begin reducing fuel
costs immediately. After the fuel savings pay for the technology, the
State is expected to save more than $5 million each year depending on fuel
costs and the technologies selected. 

Texas is also leading the nation in overall energy consumption and
industrial electric consumption. New technologies can help reduce the
amount of energy the state needs by improving energy efficiency.  Many
governments and large private companies have discovered that one of the
best strategies for reducing energy use involves entering into energy
saving performance contracts. During the 77th Legislative Session, HB 2277
was passed to make it easier for agencies to enter into these contracts.
House Bill 9 encourages agencies to look at how to maximize the savings to
the state and minimize capital expenditures by utilizing the money
generated by utility cost savings contracts. 


It is the committee's opinion that this bill does not expressly grant any
rulemaking authority to a state officer, department, agency, or

SECTION I:  Amends Chapter 447 of the Government Code by adding Section


Provides definitions for "cost-effective", "fuel-saving technology", and
"proven fuel-saving technologies" for both Section 447.010 and Section

Requires a state agency with 10 or more vehicles or non-road diesels to
reduce their total fuel consumption by at least five percent through
cost-effective fuel-saving technologies. 

Allows a state agency to delay reducing fuel use until a list of proven
fuel-saving technologies is available from the state energy conservation
office's field demonstrations. 

Mandates a state agency may not purchase/use a fuel-saving technology that
is known to increase specified air pollutants, degrade human health, or
negatively impact the environment. 

Provides for the refund of fuel-saving technologies that prove to be
ineffective at reducing fuel use by five percent. 

Allows state agencies to establish a program for employees to voluntarily
purchase fuel-saving technologies and document reductions. 

Requires each state agency to annually report to the state energy
conservation office, on forms provided by that office, the efforts and
progress of reducing fuel use. 


Requires the Texas Department of Transportation, under direction of the
state energy conservation office, to demonstrate the effectiveness of at
least four fuel-saving technologies using a total of 100 motor vehicles or
non-road diesels of varying ages and types with preference given to
high-use vehicles.  The technology's performance in the normal course of
operation and in controlled field tests will be assessed. 

In selecting technologies to evaluate, requires the state energy
conservation office to consult with other entities using fuel-saving
technologies, consider technologies already proven to demonstrate benefits
of five % or more and determine the potential cost-effectiveness. 

Fuel-saving technologies are to be disqualified if it reduces engine
performance, requires additional maintenance or degrades air quality. 

Allows TCET, UT Center for Transportation Research, UH Diesel Emissions
Center, or other agencies to assist in the field trials. 

Requires the state energy conservation office to rank the technologies,
list recommendations, document positive and negative effects, and prepare
a report of these findings.  The agency is required to provide the report
to each state agency with 10 or more motor vehicles or non-road diesels
and to the Legislative Budget Board by September 1, 2004.  The agency will
make the results of the demonstration public on its website and is
required to update the list of proven fuel-saving technologies quarterly
on its website. 

The Texas Council on Environmental Technology is to obtain information on
specific fuel-saving technology and can use this information to fund EPA

Mandates that money from the state highway fund can not be used to
purchasing, installing, maintaining, or operating fuel-saving technologies
being assessed or tested.  Repairs resulting from demonstrations must be
paid from the same funds used to implement this section. 

SECTION 2:  Amends Chapter 2113 of the Government Code by adding


 Provides definitions for "state facility purpose"and "utility cost
savings contract". 

Requires a state agency before making a capital expenditure with
appropriated money to determine if the expenditure could be financed by
money generated through reducing energy or water consumption or operating

Requires a state agency, if able, to use money saved through a utility
cost savings contract to finance a capital expenditure for a state
facility purpose instead of using appropriated money.  If the agency is
not able to do so, justification must be provided to the LBB for the
capital expenditure.  The agency must take into account when determining
if a utility cost savings contract can finance the capital expenditure,
whether utility cost savings in a department can be used to finance
capital expenditures for any other department of the agency. 

SECTION 3: Effective date. 


December 1, 2003.