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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.