79R6993 JJT-F
By: Estes S.B. No. 1366
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 382.05195, Health and Safety Code, is
amended by adding Subsections (j), (k), (l), and (m) to read as
follows:
(j) For purposes of Subsections (k), (l), and (m):
(1) "Clean coal project" has the meaning assigned by
Section 5.001, Water Code.
(2) "Significant net increase in emissions" means:
(A) an increase in emissions resulting solely
from the installation of clean coal technology that is equal to or
greater than the major modification threshold under commission
rules for pollutants for which the area is designated nonattainment
or for precursor to those pollutants; or
(B) an increase in emissions that is significant,
as defined by 40 C.F.R. Section 52.21(b)(23), for pollutants for
which the area is designated nonattainment or for precursor to
those pollutants.
(k) The commission shall issue a standard permit for
construction or modification of electric generating, steam
production, or industrial production facilities that constitute a
clean coal project and facilities ancillary to those facilities.
The standard permit's requirements must comply with and be no more
stringent than requirements of federal law and must be consistent
with streamlined permitting requirements applicable to a clean coal
project. If a clean coal project would result in a significant net
increase in emissions of any criteria pollutant, a person claiming
authorization under the standard permit shall submit with the
registration for the standard permit information sufficient to
demonstrate that the increased emissions would not cause or
contribute to the violation of a national ambient air quality
standard, cause or contribute to the violation of a prevention of
significant deterioration increment, or cause or contribute to a
violation of a prevention of significant deterioration visibility
limitation.
(l) Subsection (k) does not limit a person seeking
authorization under a standard permit issued under that subsection
from relying on a provision of the federal Clean Air Act (42 U.S.C.
Section 7401 et seq.) or on a regulation adopted under that Act to
demonstrate that a clean coal project does not constitute a new
major source or a major modification under federal law.
(m) A clean coal project that constitutes a new major source
or a major modification under federal new source review
requirements is eligible to use the standard permit issued under
Subsection (k) but is also subject to additional applicable federal
requirements. The public participation procedures applicable to
the authorization of a new major source or a major modification
under the standard permit issued under Subsection (k) must consist
of notice and comment procedures that are functionally equivalent
to those required by the federal Clean Air Act and regulations
adopted under that federal Act, but Chapter 2001, Government Code,
does not apply to the public participation procedures. In
determining whether a clean coal project constitutes a
"modification of existing facility," the commission shall apply all
exclusions recognized by the United States Environmental
Protection Agency for physical changes.
SECTION 3. Section 382.0541, Health and Safety Code, is
amended by adding Subsection (f) to read as follows:
(f) The commission shall issue a general permit authorized
by 40 C.F.R. Section 70.6(d) for the construction or modification
of electric generating, steam production, or industrial production
facilities that constitute a clean coal project, as defined by
Section 5.001, Water Code, and ancillary facilities associated with
a clean coal project.
SECTION 4. 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) For a grant awarded by the energy office for a clean coal
project, as defined by Section 5.001, Water Code, the energy office
shall award out of the innovative energy technology account an
amount that equals half of the amount invested in the project by
private persons, but not more than $20 million. The innovative
energy technology account is an account in the general revenue fund
that may be appropriated only for issuing and administering grants
under this section. Interest earned on money in the account shall
be credited to the account. The account is not subject to Section
403.095.
(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 5. 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
earned surplus 10 percent of the amortized cost of equipment:
(1) that is acquired by the corporation for use in
generation of electricity, production of process steam, or
industrial production;
(2) that the corporation uses in this state; and
(3) 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 6. 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 7. Section 5.001, Water Code, is amended by
amending Subdivisions (2) and (3) and adding Subdivisions (4) and
(5) 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 in partnership with the United States
Department of Energy, commonly referred to as the FutureGen
project, including the construction or modification of an electric
generation, steam production, or industrial production facility.
(5) "Coal" has the meaning assigned by Section
134.004, Natural Resources Code.
SECTION 8. Subchapter M, Chapter 5, Water Code, is amended
by adding Section 5.558 to read as follows:
Sec. 5.558. STREAMLINED PERMITTING PROCEDURES FOR CLEAN
COAL PROJECTS. (a) The commission, to the extent authorized by
federal law, shall adopt and implement streamlined procedures for
issuing permits as required to construct a clean coal project.
(b) Chapter 2001, Government Code, does not apply to
permitting procedures adopted under this section.
SECTION 9. 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 10. The heading to Subchapter C, Chapter 27, Water
Code, is amended to read as follows:
SUBCHAPTER C. OIL AND GAS WASTE; INJECTION WELLS
SECTION 11. 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 12. 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 issue a standard permit under Section 382.05195(k), Health
and Safety Code, as added by this Act; and
(3) the Texas Commission on Environmental Quality
shall issue a general permit under Section 382.0541(f), Health and
Safety Code, as added by this Act.
SECTION 13. 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.