By: Ellis S.B. No. 136

A BILL TO BE ENTITLED

AN ACT

relating to the Texas Global Warming Solutions Act; imposing a fee and providing a penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle C, Title 5, Health and Safety Code, is amended by adding Chapter 391 to read as follows:

CHAPTER 391. TEXAS GLOBAL WARMING SOLUTIONS ACT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 391.001. SHORT TITLE. This chapter may be cited as the Texas Global Warming Solutions Act.

Sec. 391.002. DEFINITIONS. In this chapter:

(1) "Allowance" means an authorization to emit, during a specified year, up to one ton of carbon dioxide equivalent.

(2) "Alternative compliance mechanism" means an action undertaken by a greenhouse gas emission source that achieves the equivalent reduction of greenhouse gas emissions over the same period as a direct emission reduction and that is approved by the commission. The term includes a flexible compliance schedule, alternative control technology, process change, or product substitution.

(3) "Carbon dioxide equivalent" means the amount of carbon dioxide by weight that would produce the same global warming effect as a given weight of another greenhouse gas, based on the best available science, including that available from the Intergovernmental Panel on Climate Change.

(4) "Commission" means the Texas Commission on Environmental Quality.

(5) "Cost-effective" means economical, in terms of cost per unit of reduced emissions of greenhouse gases relative to the global warming potential of those emissions.

(6) "Direct emission reduction" means a greenhouse gas emission reduction made by an action taken by a greenhouse gas emission source at that source.

(7) "Electric utility" has the meaning assigned by Section 31.002, Utilities Code.

(8) "Emissions reduction measure" means a program, measure, standard, or alternative compliance mechanism applicable to a source that is designed to reduce emissions of greenhouse gases and that is authorized under this chapter.

(9) "Greenhouse gas" includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

(10) "Greenhouse gas emissions limit" means an authorization during a specified year to emit greenhouse gases specified by the commission not to exceed a specified amount, expressed in tons of carbon dioxide equivalents.

(11) "Greenhouse gas emission source" or "source" means any source or category of sources of greenhouse gas emissions whose emissions are at such a level of significance, as determined by the commission, that participation of the source or category of sources in the program established under this chapter will enable the commission to effectively reduce greenhouse gas emissions and monitor compliance with the statewide greenhouse gas emissions limit.

(12) "Market-based compliance mechanism" means either:

(A) a system of market-based declining annual aggregate emissions limitations for sources that emit greenhouse gases; or

(B) greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the commission, that result in the same greenhouse gas emission reduction over the same period as direct compliance with a greenhouse gas emissions limit or emissions reduction measure adopted by the commission under this chapter.

(13) "Municipally owned utility" has the meaning assigned by Section 11.003, Utilities Code.

(14) "Retail electric provider" has the meaning assigned by Section 31.002, Utilities Code.

(15) "Statewide greenhouse gas emissions" means the total annual emissions of greenhouse gases in this state, expressed in tons of carbon dioxide equivalents, including all emissions of greenhouse gases from the generation of electricity delivered to and consumed in this state, accounting for transmission and distribution line losses, whether the electricity is generated in this state or imported.

(16) "Statewide greenhouse gas emissions limit" or "statewide emissions limit" means the maximum allowable level of statewide greenhouse gas emissions in 2023, as determined by the commission under Subchapter C.

Sec. 391.003. ROLE OF COMMISSION. The commission shall monitor and regulate greenhouse gas emission sources that cause global warming in order to reduce those emissions.

Sec. 391.004. ROLE OF OTHER STATE AGENCIES. Each state agency shall consider and implement strategies to reduce greenhouse gas emissions generated by the agency.

Sec. 391.005. AUTHORITY OF PUBLIC UTILITY COMMISSION; OBLIGATION OF ELECTRIC UTILITIES. This chapter does not affect:

(1) the authority of the Public Utility Commission of Texas; or

(2) the obligation of an electric utility to provide customers with safe and reliable electric service.

Sec. 391.006. CONSTRUCTION OF CHAPTER. This chapter does not:

(1) relieve a person from complying with other applicable federal, state, or local laws or regulations, including state air and water quality requirements and other requirements designed to protect public health or the environment;

(2) preclude, prohibit, or restrict the construction of a new facility, as defined by Section 382.003, or the expansion of an existing facility subject to regulation under this chapter if the facility:

(A) meets all applicable requirements; and

(B) is in compliance with rules adopted under this chapter;

(3) limit the existing authority of a state entity to adopt and implement greenhouse gas emissions reduction measures; or

(4) relieve any state entity of its legal obligation to comply with an existing law, rule, or regulation.

Sec. 391.007. EFFECT OF CHAPTER ON OTHER PROGRAMS. This chapter does not confer authority on the commission to alter programs administered by other state agencies for the reduction of greenhouse gas emissions.

Sec. 391.008. ADJUSTMENT OF DEADLINES. (a) In the event of extraordinary circumstances, a catastrophic event, or the threat of significant economic harm, the governor may adjust a deadline established under this chapter to the earliest feasible date after that deadline.

(b) The deadline adjustment period may not exceed one year unless the governor makes an additional deadline adjustment under Subsection (a).

(c) Not later than the 10th day after the date the governor invokes a deadline adjustment under Subsection (a), the governor shall provide written notification to each member of the legislature of the adjustment.

(d) This section does not affect the powers and duties established under Chapter 418, Government Code.

Sec. 391.009. CONSULTATION WITH OTHER GOVERNMENTAL ENTITIES. In developing its plans to reduce greenhouse gas emissions under this chapter, the commission shall consult with other states, the federal government, and other nations to identify the most effective strategies and methods for reducing greenhouse gases, managing greenhouse gas control programs, and facilitating the development of integrated and cost-effective regional, national, and international greenhouse gas reduction programs.

Sec. 391.010. ALTERNATIVE RULES TO CONTROL CERTAIN GREENHOUSE GAS EMISSIONS. If Chapter 386 is repealed or expires, the commission by rule shall implement alternative rules for controlling mobile sources of greenhouse gas emissions in order to achieve equivalent or greater reductions compared to those achieved under that chapter.

[Sections 391.011-391.050 reserved for expansion]

SUBCHAPTER B. GREENHOUSE GAS EMISSIONS REPORTING

Sec. 391.051. RULES FOR REPORTING AND VERIFICATION OF GREENHOUSE GAS EMISSIONS. (a) Not later than January 1, 2011, the commission by rule shall:

(1) require the reporting and verification of statewide greenhouse gas emissions; and

(2) begin to monitor and enforce compliance with this section.

(b) The commission shall adopt rules that:

(1) beginning with the greenhouse gas emission sources that contribute the most to statewide emissions, require the owner or operator of a greenhouse gas emission source to monitor and annually report greenhouse gas emissions;

(2) account for greenhouse gas emissions from all electricity consumed in the state, including:

(A) electricity consumed by transmission and distribution line losses of electricity generated inside the state or generated outside the state; and

(B) electricity generated by retail sellers of electricity, including retail electric providers and municipally owned utilities;

(3) ensure rigorous and consistent accounting of emissions and provide reporting tools and formats to ensure collection of necessary data;

(4) ensure that the owners or operators of greenhouse gas emission sources maintain comprehensive records of all reported greenhouse gas emissions; and

(5) include notification of any person subject to rules under this section.

Sec. 391.052. REVIEW AND UPDATE OF REPORTING REQUIREMENTS. The commission shall:

(1) as necessary, periodically review and update the emissions reporting requirements described by this subchapter;

(2) review existing and proposed international, federal, and state greenhouse gas emissions reporting programs and make reasonable efforts to promote consistency among the programs established under this subchapter and other programs; and

(3) streamline reporting requirements on greenhouse gas emission sources.

[Sections 391.053-391.100 reserved for expansion]

SUBCHAPTER C. STATEWIDE GREENHOUSE GAS EMISSIONS LIMIT

Sec. 391.101. PROCEDURE FOR ESTABLISHING GREENHOUSE GAS EMISSIONS LIMIT. (a) Not later than January 1, 2011, the commission shall determine the amount of greenhouse gas emissions in this state in 1990 and approve a statewide greenhouse gas emissions limit that is equivalent to that amount. The limit must be achieved by 2023.

(b) The commission shall hold at least one public workshop and provide an opportunity for all interested parties to comment on the determinations made by the commission under Subsection (a). The commission shall approve the statewide greenhouse gas emissions limit at a public hearing. The commission shall provide public notice of the public workshop and hearing.

(c) To ensure the most accurate determinations feasible under Subsection (a), the commission shall evaluate the best available scientific, technological, and economic information on greenhouse gas emissions to determine the 1990 amount of greenhouse gas emissions.

Sec. 391.102. USE OF STATEWIDE LIMIT. The commission shall use the statewide greenhouse gas emissions limit to maintain and continue reductions in emissions of greenhouse gases after 2023.

Sec. 391.103. RECOMMENDATIONS. The commission shall periodically make recommendations to the governor and the legislature on how to continue reducing greenhouse gas emissions after 2023.

[Sections 391.104-391.150 reserved for expansion]

SUBCHAPTER D. GREENHOUSE GAS EMISSIONS REDUCTIONS

Sec. 391.151. MAXIMUM GREENHOUSE GAS EMISSIONS REDUCTIONS. Subject to the criteria and schedules established under this subchapter, the commission in an open public process shall adopt rules that facilitate achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from sources.

Sec. 391.152. EARLY ACTIONS TO REDUCE GREENHOUSE GAS EMISSIONS. (a) Not later than June 30, 2010, the commission shall publish and make available to the public a list of early actions that can be implemented to reduce greenhouse gas emissions before the measures and limits adopted under Section 391.154 are implemented.

(b) Before January 1, 2013, the commission shall adopt rules to implement the actions identified on the list under Subsection (a).

(c) The rules adopted by the commission under this section must make it possible to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from sources in furtherance of achieving the statewide greenhouse gas emissions limit established under Section 391.101.

(d) Not later than January 1, 2013, the commission shall begin enforcing the rules adopted under this section.

Sec. 391.153. COMPREHENSIVE PLAN. (a) Not later than January 1, 2012, the commission shall prepare and approve a comprehensive plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from sources by 2023.

(b) The commission shall consult with each state agency having jurisdiction over sources, including the Public Utility Commission of Texas, on all elements of the comprehensive plan that pertain to energy-related matters, including electrical generation, alternative pollution standards or requirements, the provision of reliable and affordable electrical service, petroleum refining, and statewide fuel supplies, to ensure that the greenhouse gas emissions reduction activities to be adopted and implemented by the commission are complementary, nonduplicative, and capable of being implemented in an efficient and cost-effective manner.

(c) The comprehensive plan must identify and make recommendations on direct emission reduction measures, alternative compliance mechanisms, market-based compliance mechanisms, and potential monetary and nonmonetary incentives for sources that the commission finds are necessary or desirable to facilitate the achievement of the maximum feasible and cost-effective reductions of greenhouse gas emissions by 2023.

(d) In making the determinations required by Subsection (c), the commission shall consider all relevant information pertaining to greenhouse gas emissions reduction programs in other states, localities, and nations, including the northeastern states of the United States, Canada, and the European Union.

(e) The commission shall evaluate the total potential costs and total potential economic and noneconomic benefits of the comprehensive plan for reducing greenhouse gases to this state's economy, environment, and public health, using the best available economic models, emission estimation techniques, and other scientific methods.

(f) In developing the comprehensive plan, the commission shall:

(1) take into account the relative contribution of each source or source category to statewide greenhouse gas emissions and the potential for adverse effects on small businesses;

(2) recommend a de minimis threshold of greenhouse gas emissions below which emissions reduction requirements will not apply; and

(3) identify opportunities for emissions reduction measures from all verifiable and enforceable voluntary actions, including carbon sequestration projects that capture and store or reuse carbon from emissions and best management practices.

(g) The commission shall conduct a series of public workshops to give interested parties an opportunity to comment on the comprehensive plan. The commission shall conduct some of the workshops in regions of the state that have the most significant exposure to air pollutants, including communities with large minority and low-income populations.

(h) At least once every five years, the commission shall update the comprehensive plan in order to achieve the maximum technologically feasible and cost-effective reductions of greenhouse gas emissions.

Sec. 391.154. SOURCE GREENHOUSE GAS EMISSIONS LIMITS AND EMISSIONS REDUCTION MEASURES. (a) Not later than January 1, 2014, the commission by rule shall adopt greenhouse gas emissions limits and emissions reduction measures for sources or categories of sources to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions in furtherance of achieving the statewide greenhouse gas emissions limit established under Section 391.101.

(b) To the extent feasible, in adopting rules under this section and Subchapter E, the commission shall:

(1) design the rules, including rules concerning the distribution of emissions allowances where appropriate, in a manner that is equitable, seeks to minimize costs and maximize the total benefits to this state, and encourages early action to reduce greenhouse gas emissions;

(2) ensure that activities undertaken to comply with the rules do not disproportionately impact low-income communities in a negative manner;

(3) ensure that an entity that has voluntarily reduced its greenhouse gas emissions before the implementation of rules adopted under this section receives appropriate credit for early voluntary reductions;

(4) ensure that activities undertaken pursuant to the rules complement and do not interfere with efforts to achieve and maintain federal and state ambient air quality standards and to reduce toxic air contaminant emissions;

(5) consider the cost-effectiveness of the rules;

(6) consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health;

(7) minimize the administrative burden of implementing and complying with the rules;

(8) minimize reductions in emissions of greenhouse gases in this state that are offset by increases in emissions of greenhouse gases outside this state; and

(9) consider the significance of the contribution of each source to statewide emissions of greenhouse gases.

(c) The commission by rule may establish a system of market-based declining annual aggregate emissions limits for greenhouse gas emission sources, applicable from January 1, 2015, to December 31, 2023, that the commission determines will aggregately achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from those sources. The initial adoption of rules under this subsection must be completed on or before January 1, 2014.

(d) Any rule adopted under this subchapter or Subchapter E must ensure that:

(1) the greenhouse gas emissions reductions achieved are permanent, quantifiable, verifiable, and enforceable by the commission;

(2) for rules adopted under Subchapter E, the reduction is in addition to:

(A) any greenhouse gas emissions reduction otherwise required by law or regulation; and

(B) any other greenhouse gas emissions reduction that otherwise would occur; and

(3) if applicable, the greenhouse gas emissions reduction occurs over the same period and is equivalent in amount to any direct emission reduction required under this chapter.

(e) The commission shall rely upon the best available economic and scientific information and the commission's assessment of existing and projected technological capabilities when adopting the rules required by this section.

(f) The commission shall consult with the Public Utility Commission of Texas in the development of the rules as they affect electricity and natural gas providers in order to minimize duplicative or inconsistent regulatory requirements.

(g) After January 1, 2014, the commission may revise rules adopted under this section and adopt additional rules to further the provisions of this chapter.

(h) A rule adopted under this section on or before January 1, 2014, takes effect January 1, 2015.

Sec. 391.155. EARLY IMPLEMENTATION OF CHAPTER. This chapter does not restrict the commission from:

(1) adopting greenhouse gas emissions limits or emissions reduction measures for sources or categories of sources before January 1, 2014;

(2) enforcing those limits or measures before January 1, 2013; or

(3) providing early reduction credit where appropriate.

Sec. 391.156. PUBLIC AND PRIVATE INVESTING. To the extent feasible and applicable, the commission shall ensure that the greenhouse gas emissions reduction rules, programs, mechanisms, and incentives under its jurisdiction:

(1) direct public and private investment toward the most disadvantaged communities in this state; and

(2) provide an opportunity for small businesses, schools, affordable housing associations, and other community institutions to participate in and benefit from statewide efforts to reduce greenhouse gas emissions.

[Sections 391.157-391.200 reserved for expansion]

SUBCHAPTER E. MARKET-BASED COMPLIANCE MECHANISMS

Sec. 391.201. OPTIONAL RULES FOR MARKET-BASED COMPLIANCE MECHANISMS. (a) The commission may include the use of market-based compliance mechanisms in the rules adopted under Section 391.154.

(b) Before including market-based compliance mechanisms in the rules adopted under Section 391.154, to the extent feasible and in furtherance of achieving the statewide greenhouse gas emissions limit established under Section 391.101, the commission shall:

(1) consider the potential for direct, indirect, and cumulative emission effects from these mechanisms, including localized effects in communities that are already adversely affected by air pollution;

(2) design any market-based compliance mechanism to prevent an increase in the emissions of toxic air contaminants or criteria air pollutants (ozone, carbon monoxide, particulate matter, sulfur dioxide, lead, and nitrogen dioxide) for which the United States Environmental Protection Agency sets standards; and

(3) maximize additional environmental and economic benefits for this state, as appropriate.

(c) The commission shall adopt rules governing how regulated entities subject to greenhouse gas emissions limits and mandatory emissions reporting requirements may use market-based compliance mechanisms to achieve compliance with greenhouse gas emissions limits.

Sec. 391.202. ADOPTION OF METHODOLOGIES. (a) The commission shall adopt:

(1) methodologies for the quantification of voluntary greenhouse gas emissions reductions; and

(2) rules to verify any voluntary greenhouse gas emissions reductions that are authorized by the commission for use in complying with greenhouse gas emissions limits established by the commission.

(b) Chapter 2001, Government Code, does not apply to the adoption of the methodologies described by Subsection (a).

[Sections 391.203-391.250 reserved for expansion]

SUBCHAPTER F. ENFORCEMENT

Sec. 391.251. MONITORING AND ENFORCEMENT. The commission shall monitor compliance with and enforce any rule, order, emissions limitation, emissions reduction measure, or market-based compliance mechanism adopted by the commission under this chapter.

[Sections 391.252-391.300 reserved for expansion]

SUBCHAPTER G. GREENHOUSE GAS EMISSIONS CONTROL ACCOUNT; FEES

Sec. 391.301. GREENHOUSE GAS EMISSIONS CONTROL ACCOUNT. (a) The greenhouse gas emissions control account is a separate account in the general revenue fund.

(b) The account consists of:

(1) transfers to the account;

(2) interest earned on the account;

(3) fees collected under this subchapter;

(4) penalties paid under this chapter; and

(5) grants and donations accepted for the account.

(c) Money in the account may be used only to administer programs under this chapter.

(d) Any money in the account not used in a fiscal year remains in the account. The account is exempt from the application of Section 403.095, Government Code.

Sec. 391.302. FEES. (a) Not later than June 30, 2011, the commission shall impose on the owner of a greenhouse gas emission source an annual fee.

(b) The commission by rule shall determine the amount of the fee, which may not exceed the source's fair share of the annual cost to implement programs under this chapter, including:

(1) the cost of monitoring compliance with rules under this chapter; and

(2) the cost of enforcing those rules.

[Sections 391.303-391.350 reserved for expansion]

SUBCHAPTER H. ADVISORY COMMITTEES

Sec. 391.351. ENVIRONMENTAL JUSTICE ADVISORY COMMITTEE. (a) Not later than January 1, 2010, the commission shall convene an Environmental Justice Advisory Committee to advise the commission in developing the comprehensive plan under Section 391.153 and in implementing this chapter.

(b) The Environmental Justice Advisory Committee must consist of at least three members who represent communities in the state with the most significant exposure to air pollution caused by the emission of greenhouse gases, including communities with large minority or low-income populations.

(c) The commission shall appoint the Environmental Justice Advisory Committee members from nominations received from environmental justice organizations and community groups.

(d) The commission shall provide a reasonable per diem for attendance at Environmental Justice Advisory Committee meetings by advisory committee members from nonprofit organizations.

Sec. 391.352. ECONOMIC AND TECHNOLOGICAL ADVANCEMENT ADVISORY COMMITTEE. (a) The commission shall appoint an Economic and Technological Advancement Advisory Committee to advise the commission on activities that will facilitate investment in and implementation of technological research and development opportunities for the purpose of assisting in the reduction of greenhouse gas emissions, including:

(1) identifying new technologies, research, demonstration projects, and funding opportunities;

(2) developing state, national, and international partnerships and technology transfer opportunities; and

(3) identifying and assessing research and advanced technology investment and incentive opportunities.

(b) The Economic and Technological Advancement Advisory Committee may advise the commission on state, regional, national, and international economic and technological developments related to greenhouse gas emissions reductions.

SECTION 2. This Act takes effect September 1, 2009.