SRC-TJG H.B. 638 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 638
78R12442 MI-FBy: Chisum (Armbrister)
Natural Resources
5/14/2003
Engrossed


DIGEST AND PURPOSE 

In 2001, the Texas Legislature adopted a program for the mandatory
permitting of all grandfathered facilities in Texas.   Generally,
grandfathered facilities are required to file applications for permits and
install pollution abatement equipment by certain dates depending on
whether the facility is located in east or west Texas.  Should owners and
operators of grandfathered reciprocating internal combustion engines that
are connected to a pipeline have to comply with these general permitting
standards, they will loose a significant amount of their pipeline capacity
and deliverability of natural gas will be dramatically impaired.   

Accordingly, the legislature adopted a special permit called the Pipeline
Facilities Permit applicable to grandfathered reciprocating internal
combustion engines that are a part of processing, treating, compression,
or pumping facilities connected to or a part of a gathering or
transmission pipeline. Under that permit a grandfathered reciprocating
internal combustion engine is required to achieve up to a 20 percent
reduction in its hourly emissions of nitrogen oxides, expressed in terms
of grams per brake horsepower-hour, if the engine is located in west
Texas, and a 50 percent reduction of its hourly emissions of nitrogen
oxides, expressed in terms of grams per brake horsepower-hour, if the
engine is located in east Texas.  In this manner the legislature protects
the pipeline's capacity, permits the engine and achieves a reduction in
the engine's hourly emissions rate. 

To help defray the costs of achieving emissions reductions for east Texas
grandfathered pipeline engines and in the context of a settlement of a
lawsuit over the provisions of the Houston-Galveston state implementation
plan, the legislature created an emissions reductions incentives program
and a related account, the proceeds from which will be used to provide a
partial reimbursement for the cost of achieving reductions of emissions of
nitrogen oxides that exceed 30 percent but do not exceed 50 percent of the
engine's hourly emissions before modification.   

The Texas Commission on Environmental Quality (TCEQ) was given the
authority to develop the remaining criteria for eligibility for
reimbursement from the Account.  The TCEQ rules developed  included a
concept that was considered and rejected by the legislature in the
development of the Pipeline Facilities Permit.  H.B. 638 would clarify
legislative intent. 

The account will be funded in three separate installments.  Because those
installments will not be made in the same biennium, this bill also
dedicates the proceeds and interest in the account to its statutory
purpose and protects it from being put to use for some other purpose.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 382.051865(a), (c), and (d), Health and Safety
Code, as follows: 

(a) Requires, rather than authorizes, the Texas Commission on
Environmental Quality (TCEQ), by rule, to develop a program for the
reduction of emissions of nitrogen oxides  from reciprocating internal
combustion engines associated with pipelines that are required by this
subchapter to reduce the hourly emissions rate of nitrogen oxides,
expressed in terms of grams per brake horsepower-hour, by at least 50
percent.  

(c) Requires, rather than authorizes, the emissions reduction program to
include incentives as developed by TCEQ for nitrogen oxides emissions
reduction projects for reciprocating internal combustion engines described
by Subsection (a), including a partial reimbursement for the capital cost
of installing technology to reduce the emissions. Makes conforming
changes. 

(d) Prohibits rules adopted under this section from requiring more
stringent emissions reduction criteria than those specified in this
subsection for determining eligibility for an emissions reduction project
incentive under the program.  Requires a facility, to be eligible under
the criteria, to meet certain conditions.  Deletes existing text relating
to requiring rules adopted under this section to include certain criteria.
Makes a nonsubstantive change. 

SECTION 2.  Amends Section 78(b), Chapter 1158, Acts of the 77th
Legislature, Regular Session, 2001, by transferring it to Subchapter C,
Chapter 382, Health and Safety Code, and redesignating it as Section
382.051866, as follows: 

Sec. 382.051866.  EMISSIONS REDUCTIONS INCENTIVES ACCOUNT.  (a) Defines
"affiliate." 

(b) Requires the comptroller of public accounts to establish an account
within the clean air account, rather than the clean air account no. 151,
to be known as the emissions reductions incentives account. 

(c) Created from existing text.  Provides that the emissions reductions
incentives account consists of money from certain sources.  

(d) Created from existing text.  Authorizes money in the emissions
reductions incentives account to be appropriated only to pay for emissions
reduction project incentives under a program developed under Section
382.051865 and administrative expenses associated with providing the
incentives or the incentive program established under that section.
Deletes existing text relating to authorizing TCEQ to use money in the
emissions reductions incentives account for certain purposes.  Makes a
nonsubstantive change. 

(e) Provides that a person or an affiliate of a person who pays or
contributes money to the emissions reductions incentives account is
ineligible to receive money from the account under a program developed
under Section 382.051865. 

(f) Created from existing text.  

SECTION 3.  Amends Section 382.05186, Health and Safety Code, by adding
Subsection (j) to provide that a reciprocating internal combustion engine
that is subject to this section and to a mass emissions cap as established
by TCEQ rule is considered permitted under this section with respect to
all air contaminants if the facility meets certain conditions. 

SECTION 4.  Effective date: upon passage or September 1, 2003.