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78R8140 MI-D
By: Chisum H.B. No. 1960
A BILL TO BE ENTITLED
AN ACT
relating to authorizing the Texas Commission on Environmental
Quality to enter into voluntary emissions reduction agreements with
owners of stationary sources or groups of stationary sources.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 382, Health and Safety Code, is amended
by adding Subchapter H to read as follows:
SUBCHAPTER H. VOLUNTARY EMISSIONS REDUCTION AGREEMENTS
Sec. 382.251. DEFINITION. In this subchapter, "voluntary
agreement" means a voluntary emissions reduction agreement.
Sec. 382.252. VOLUNTARY EMISSIONS REDUCTION AGREEMENTS.
(a) The commission may enter into a voluntary emissions reduction
agreement with the owner of a stationary source or group of
stationary sources under which the owner agrees to reduce emissions
or emission rates at the source or group of sources according to an
emissions reduction plan and the commission grants the owner a
regulatory assurance period for the source or group of sources. The
emissions reduction plan and the regulatory assurance period are
part of the agreement.
(b) The commission shall evaluate the regulatory assurance
period according to:
(1) the environmental benefits of the proposed
voluntary agreement and their significance;
(2) the time necessary to achieve the proposed
emissions reductions;
(3) the capital, operating, and other costs associated
with achieving the emissions reductions; and
(4) the proposal's energy and environmental impacts
not associated with air quality.
(c) The commission shall structure a voluntary agreement to
minimize the costs and maximize the flexibility available to the
owner of a stationary source or group of stationary sources who
seeks to enter into the voluntary agreement by using methods that
include the use of:
(1) numeric emissions limits;
(2) annual emissions limits; or
(3) emissions averaging across several stationary
sources or groups of stationary sources.
(d) The commission shall evaluate a proposed voluntary
agreement to ensure that the agreement will:
(1) result in:
(A) reductions in emissions or emission rates;
and
(B) substantially greater emissions reductions
than required by law; and
(2) protect human health and the environment.
(e) The commission shall conduct and shall include as
attachments to an approved voluntary agreement the commission's
analysis of:
(1) the proposed emissions reduction plan; and
(2) the agreement's compliance with the requirements
of this section and Sections 382.253 and 382.254.
Sec. 382.253. EMISSIONS REDUCTION PLAN. An emissions
reduction plan must include for the stationary source or group of
stationary sources that is the subject of the plan:
(1) each air pollutant emissions of which are to be
reduced under the plan;
(2) a description of planned emissions reduction
projects to be used to implement the plan;
(3) activities and schedules associated with each
project;
(4) the amount of emissions reductions estimated to be
achieved for each pollutant under the plan;
(5) the estimated date on which the source or group of
sources that is the subject of the plan will achieve compliance with
the terms of the plan; and
(6) any other information the commission by rule may
require.
Sec. 382.254. REGULATORY ASSURANCE PERIOD. (a) The
commission shall grant an owner of a stationary source or group of
stationary sources who enters into a voluntary agreement a
regulatory assurance period as provided by this section. The
period begins on the date that the source or group of sources
achieves compliance with the voluntary agreement and ends not later
than the 15th anniversary of that date.
(b) During a regulatory assurance period, the commission
may not require the owner of a stationary source or group of
stationary sources that is the subject of the voluntary agreement
to install pollution control equipment or to implement pollution
control strategies at the source or group of sources in addition to
equipment or strategies that are part of the voluntary agreement if
the purpose of the equipment or strategies is to further reduce
emissions of an air pollutant emissions of which are to be reduced
under the voluntary agreement in order to comply with a:
(1) state regulatory requirement that:
(A) is based exclusively on state authority; and
(B) directly or indirectly requires reductions
in the air pollutant emissions of which are to be reduced under the
voluntary agreement; or
(2) federal regulatory requirement that:
(A) directly or indirectly requires reductions
in the air pollutant emissions of which are to be reduced under the
voluntary agreement;
(B) establishes generally applicable goals for
the reduction in ambient concentrations of:
(i) the air pollutant emissions of which
are to be reduced under the voluntary agreement; or
(ii) the products of chemical reactions of
that pollutant in the atmosphere; and
(C) does not apply specifically to the stationary
source or group of stationary sources that is the subject of the
voluntary agreement.
(c) Notwithstanding Subsection (b), the stationary source
or group of stationary sources may be required to comply with a
federal regulatory requirement described by Subsection (b) if:
(1) the owner of the stationary source or group of
stationary sources agrees in writing to comply with the federal
requirement; or
(2) the commission by rule:
(A) adopts the federal requirement; and
(B) requires all other sources of the air
pollutant emissions of which are to be reduced under the voluntary
agreement, including mobile sources, in the affected region to
implement all available cost-effective measures to reduce
emissions of the air pollutant before requiring the stationary
source or group of stationary sources to comply.
Sec. 382.255. NOTICE AND HEARING. The commission may not
approve a voluntary agreement unless the commission has first
provided the public notice and the opportunity to comment on the
proposed agreement.
Sec. 382.256. DECISION ON AGREEMENT. (a) The commission
shall consider any public comment on the agreement in deciding to
approve or reject a proposed voluntary agreement.
(b) The commission shall approve a proposed voluntary
agreement unless it determines that the agreement does not meet the
requirements of this subchapter or rules adopted under this
subchapter.
Sec. 382.257. ENFORCEMENT. The commission may enforce a
voluntary agreement in the same manner as it enforces a statute
under its jurisdiction or a rule adopted or an order or permit
issued under such a statute.
Sec. 382.258. RULES. The commission shall adopt rules
necessary to implement this subchapter.
SECTION 2. Subchapter E, Chapter 36, Utilities Code, is
amended by adding Section 36.2025 to read as follows:
Sec. 36.2025. RECOVERY OF AIR QUALITY IMPROVEMENT COSTS.
(a) In this section, "air quality improvement costs" means the
incremental life cycle costs, including capital, operating,
maintenance, fuel, and financing costs, incurred in implementing an
approved voluntary emissions reduction agreement under Subchapter
H, Chapter 382, Health and Safety Code.
(b) This section applies only to an investor-owned electric
utility operating solely outside of the Electric Reliability
Council of Texas region.
(c) The commission on petition of an electric utility shall
provide for a cost recovery rider to the utility's rates to recover
all air quality improvement costs incurred by the utility.
(d) A petition to the commission under this section must
include:
(1) a copy of the approved voluntary emissions
reduction agreement between the electric utility and the Texas
Commission on Environmental Quality;
(2) a description of the planned emissions reduction
projects that will be used to comply with the voluntary agreement;
(3) the activities and schedule associated with the
project; and
(4) the proposed cost recovery rider.
(e) The commission shall approve a proposed cost recovery
rider that:
(1) allows the electric utility to recover all its air
quality improvement costs;
(2) allows an appropriate return on investment
consistent with the level established in the electric utility's
last general rate case; and
(3) allocates air quality improvement costs
appropriately between wholesale customers, retail customers in the
state, and retail customers outside the state.
(f) The commission shall apportion pro rata to each type and
class of service provided by the utility the air quality
improvement costs under this section. The cost recovery rider
remains in effect until all air quality improvement costs have been
recovered or are included in base rates in a general rate case or
until the commission alters the rider under Subsection (g).
(g) Each year after the date the original cost recovery
rider takes effect, the commission may review the cost recovery
rider in light of the electric utility's performance in complying
with the voluntary emissions reduction agreement and may alter the
rider as appropriate.
(h) A proceeding under this section is not a rate case under
Subchapter C.
SECTION 3. Not later than the 90th day after the effective
date of this Act, the Texas Commission on Environmental Quality and
the Public Utility Commission of Texas shall adopt rules necessary
to implement this Act.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.