79R12385 SMH-F
By: Hughes, Hopson, Cook of Colorado, Homer, H.B. No. 2201
et al.
Substitute the following for H.B. No. 2201:
By: Hunter C.S.H.B. No. 2201
A BILL TO BE ENTITLED
AN ACT
relating to implementing a clean coal project in this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) this state produces the most energy in the country
and is the largest consumer of coal in the country;
(2) the generation of electric energy in this state by
coal-powered generation is estimated to be 37 percent of the
electric energy generation in this state;
(3) affordable electric energy in this state is
founded on low-cost coal-powered generation;
(4) energy production has a significant role in
providing permanent, well-paid employment in this state for this
state's growing population, and the energy production industry
provides income and revenue that ensures this state may continue to
provide a high standard of services to this state's residences and
businesses;
(5) the United States Department of Energy's proposed
FutureGen research into integrated carbon sequestration and
hydrogen research provides for $800 million in federal funding and
$200 million in funding by private industry and other countries;
(6) it is a priority for this state to secure funding
under the United States Department of Energy's proposed FutureGen
programs because to do so will help this state to become a world
leader in innovative energy technologies and is expected to:
(A) create more than 11,000 new jobs in this
state;
(B) provide compensation for workers of more than
$374.3 million;
(C) generate $98 million in tax revenue; and
(D) result in a total economic benefit to this
state of $1.2042 billion;
(7) FutureGen projects will provide this state with an
opportunity to meet this state's energy demands and lower emissions
of air contaminants, so the FutureGen technologies should be
encouraged for use in electric energy generation;
(8) this state is in a unique position to secure
funding under FutureGen projects since this state has:
(A) a ready source of coal and lignite to fuel
FutureGen projects;
(B) appropriate geological features for storing
carbon dioxide;
(C) a market for energy produced; and
(D) electric energy transmission resources
capable of carrying the resulting power loads;
(9) this state has 31 billion barrels of oil in
depleted oil fields that could be recovered by means of carbon
dioxide enhanced recovery;
(10) carbon dioxide from FutureGen projects could be
used to recover three billion barrels of oil and generate $4 billion
in tax revenue for this state;
(11) hydrogen produced by FutureGen projects could be
used to fuel fuel cells and for this state's petrochemical industry
to manufacture products;
(12) to facilitate construction of one or more
components of the FutureGen projects at a new or existing electric
generating, steam production, or industrial products facility is in
the best interest of all of this state's residents; and
(13) streamlining procedural processes as necessary
to ensure predictability in this state's regulatory scheme will
improve this state's position for obtaining federal funding and
will preserve the environmental protection obtained by present
substantive regulatory standards.
SECTION 2. Section 2305.037, Government Code, is amended to
read as follows:
Sec. 2305.037. INNOVATIVE [RENEWABLE] ENERGY DEMONSTRATION
PROGRAM. (a) The energy office is the supervising state agency of
the innovative [renewable] energy demonstration program and shall
distribute grant money under the program for demonstration projects
that develop sustainable and innovative [renewable] energy
resources, including:
(1) a clean coal project, as defined by Section 5.001,
Water Code;
(2) photovoltaic, biomass, wind, and solar
applications; and
(3) [(2)] other appropriate low-emission, renewable,
and sustainable energy applications.
(b) Contingent on the selection of a Texas site for the
location of the coal-based integrated sequestration and hydrogen
project to be built in partnership with the United States
Department of Energy, commonly referred to as the FutureGen
project, and to the extent that funds are appropriated for this
purpose, the energy office shall distribute to the managing entity
of the FutureGen project an amount equal to 50 percent of the total
amount invested in the project by private industry sources. The
managing entity of the FutureGen project shall provide records as
considered necessary by the energy office to justify grants under
this subsection. Cumulative distributions under this subsection
may not exceed $20 million.
(c) The energy office may require a grant recipient under
the program to match a grant in a ratio determined by the energy
office.
SECTION 3. Subchapter C, Chapter 171, Tax Code, is amended
by adding Section 171.108 to read as follows:
Sec. 171.108. DEDUCTION OF COST OF CLEAN COAL PROJECT FROM
TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS
STATE. (a) A corporation may deduct from its apportioned taxable
capital the amortized cost of equipment or from its apportioned
taxable earned surplus 10 percent of the amortized cost of
equipment:
(1) that is used in a clean coal project, as defined by
Section 5.001, Water Code;
(2) that is acquired by the corporation for use in
generation of electricity, production of process steam, or
industrial production;
(3) that the corporation uses in this state; and
(4) the cost of which is amortized in accordance with
Subsection (b).
(b) The amortization of the cost of capital used in a clean
coal project, as defined by Section 5.001, Water Code, must:
(1) be for a period of at least 60 months;
(2) provide for equal monthly amounts;
(3) begin on the month during which the equipment is
placed in service in this state; and
(4) cover only a period during which the equipment is
used in this state.
(c) A corporation that makes a deduction under this section
shall file with the comptroller an amortization schedule showing
the period for which the deduction is to be made. On the request of
the comptroller, the corporation shall file with the comptroller
proof of the cost of the equipment or proof of the equipment's
operation in this state.
(d) A corporation may elect to make the deduction authorized
by this section from apportioned taxable capital or apportioned
taxable earned surplus, but not from both, for each separate
regular annual period. An election for an initial period applies to
the second tax period and to the first regular annual period.
SECTION 4. Section 313.024(b), Tax Code, is amended to read
as follows:
(b) To be eligible for a limitation on appraised value under
this subchapter, the corporation or limited liability company must
use the property in connection with:
(1) manufacturing;
(2) research and development;
(3) a clean coal project, as defined by Section 5.001,
Water Code; or
(4) [(3)] renewable energy electric generation.
SECTION 5. Section 5.001, Water Code, is amended by
amending Subdivisions (2) and (3) and adding Subdivisions (4), (5),
(6), and (7) to read as follows:
(2) "Commission" means the Texas [Natural Resource
Conservation] Commission on Environmental Quality.
(3) "Executive director" means the executive director
of the Texas [Natural Resource Conservation] Commission on
Environmental Quality.
(4) "Clean coal project" means the installation of one
or more components of the coal-based integrated sequestration and
hydrogen research project to be built in partnership with the
United States Department of Energy, commonly referred to as the
FutureGen project. The term includes the construction or
modification of a facility for electric generation, industrial
production, or the production of steam as a byproduct of coal
gasification to the extent that the facility installs one or more
components of the FutureGen project.
(5) "Coal" has the meaning assigned by Section
134.004, Natural Resources Code.
(6) "Component of the FutureGen project" means a
process, technology, or piece of equipment that:
(A) is designed to employ coal gasification
technology to generate electricity, hydrogen, or steam in a manner
that meets the FutureGen project profile;
(B) is designed to employ fuel cells to generate
electricity in a manner that meets the FutureGen project profile;
(C) is designed to employ a hydrogen-fueled
turbine to generate electricity where the hydrogen is derived from
coal in a manner that meets the FutureGen profile;
(D) is designed to demonstrate the efficacy at an
electric generation or industrial production facility of a carbon
dioxide capture technology;
(E) is designed to sequester a portion of the
carbon dioxide captured from an electric generation or industrial
production facility in conjunction with appropriate remediation
plans and appropriate techniques for reservoir characterization,
injection control, and monitoring;
(F) is designed to sequester carbon dioxide as
part of enhanced oil recovery, in conjunction with appropriate
techniques for reservoir characterization, injection control, and
monitoring;
(G) qualifies for federal funds designated for
the FutureGen project;
(H) is required in order to complete a proposal
to the United States Department of Energy for the FutureGen
project; or
(I) is required in a final United States
Department of Energy request for proposals for the FutureGen
project or is described in a final United States Department of
Energy request for proposals as a desirable element to be
considered in the awarding of the project.
(7) "FutureGen project profile" means a standard or
standards relevant to a component of the FutureGen project, as
provided in a final or amended United States Department of Energy
request for proposals or contract.
SECTION 6. Subchapter M, Chapter 5, Water Code, is amended
by adding Section 5.558 to read as follows:
Sec. 5.558. CLEAN COAL PROJECT PERMITTING. (a) As
authorized by federal law, the commission by rule shall implement
reasonably streamlined processes for issuing permits required to
construct a clean coal project.
(b) When acting pursuant to a rule under this section, the
commission shall make use of public meetings, informal conferences,
or advisory committees in order to obtain the opinions and advice of
interested persons.
(c) The permit processes authorized by this section are not
subject to the requirements relating to a contested case hearing
under this chapter, Chapter 382, Health and Safety Code, or
Subchapters C-G, Chapter 2001, Government Code.
SECTION 7. Section 16.053, Water Code, is amended by adding
Subsection (r) to read as follows:
(r) The board by rule shall provide for the maximum
flexibility possible to allow for a timely amendment of a regional
water plan, the board's approval of an amended regional water plan,
and the amendment of the state water plan, to facilitate planning
for water supplies, including water supplies necessary for the
demands of a clean coal project. The rules must allow for amending
a regional water plan without providing notice and without a public
meeting or hearing under Subsection (h) if the amendment does not:
(1) significantly change the regional water plan, as
determined by the board; or
(2) adversely affect other water management
strategies in the regional water plan.
SECTION 8. The heading to Subchapter C, Chapter 27, Water
Code, is amended to read as follows:
SUBCHAPTER C. OIL AND GAS WASTE; INJECTION WELLS
SECTION 9. Subchapter C, Chapter 27, Water Code, is amended
by adding Section 27.038 to read as follows:
Sec. 27.038. JURISDICTION OVER CARBON DIOXIDE INJECTION.
The railroad commission has jurisdiction over injection of carbon
dioxide produced by a clean coal project, to the extent authorized
by federal law, into:
(1) a reservoir productive of oil, gas, or geothermal
resources by a Class II injection well, or by a Class I injection
well if required by federal law; or
(2) a zone that is below the base of usable quality
water and that is not productive of oil, gas, or geothermal
resources by a Class II injection well, or by a Class I injection
well if required by federal law.
SECTION 10. Not later than September 1, 2006:
(1) the Texas Water Development Board shall adopt
rules under Section 16.053, Water Code, as amended by this Act;
(2) the Texas Commission on Environmental Quality
shall adopt rules under Section 5.558, Water Code, as added by this
Act; and
(3) the Railroad Commission of Texas shall adopt rules
under Section 27.038, Water Code, as added by this Act.
SECTION 11. 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, 2005.