By: Averitt S.B. No. 2111
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the implementation of and incentives for projects
  involving the capture, transportation, injection, sequestration,
  geologic storage, or abatement of carbon dioxide; providing for the
  issuance of bonds.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 382.003, Health and Safety Code, is
  amended by amending Subdivision (1-a) and adding Subdivision (7-c)
  to read as follows:
               (1-a)  "Advanced clean energy project" means a project
  for which an application for a permit or for an authorization to use
  a standard permit under this chapter is received by the commission
  on or after January 1, 2008, and before January 1, 2020, and that:
                     (A)  involves the use of coal, biomass, petroleum
  coke, solid waste, or fuel cells using hydrogen derived from such
  fuels, in the generation of electricity, or the creation of liquid
  fuels outside of the existing fuel production infrastructure while
  co-generating electricity, whether the project is implemented in
  connection with the construction of a new facility or in connection
  with the modification of an existing facility and whether the
  project involves the entire emissions stream from the facility or
  only a portion of the emissions stream from the facility;
                     (B)  with regard to the portion of the emissions
  stream from the facility that is associated with the project, is
  capable of achieving on an annual basis a 99 percent or greater
  reduction of sulfur dioxide emissions and[,] a 95 percent or
  greater reduction of mercury emissions[,] and achieving an annual
  average emission rate for nitrogen oxides of 0.05 pounds or less per
  million British thermal units; and
                     (C)  captures not less than 50 percent of the
  [renders] carbon dioxide in the portion of the emissions stream
  from the facility that is associated with the project and
  sequesters that captured carbon dioxide by geologic storage or
  other means [capable of capture, sequestration, or abatement if any
  carbon dioxide is produced by the project].
               (7-c)  "Geologic storage" means the underground
  storage of carbon dioxide in a suitable geologic formation,
  including storage that is accomplished in conjunction with an
  enhanced oil recovery project.
         SECTION 2.  Subtitle C, Title 5, Health and Safety Code, is
  amended by adding Chapter 393 to read as follows:
  CHAPTER 393. COMMISSION ADVANCED CLEAN ENERGY PROJECT GRANT AND
  LOAN PROGRAM
         Sec. 393.001.  DEFINITIONS. In this chapter:
               (1)  "Account" means the commission advanced clean
  energy project account established under this chapter.
               (2)  "Advanced clean energy project" has the meaning
  assigned by Section 382.003.
               (3)  "Commission" means the Texas Commission on
  Environmental Quality.
               (4)  "Program" means the commission advanced clean
  energy project grant and loan program established under this
  chapter.
         Sec. 393.002.  PROGRAM. The commission advanced clean
  energy project grant and loan program is established to encourage
  the development of advanced clean energy projects. Under the
  program, the commission shall provide grants or other financial
  incentives for eligible projects to accelerate the
  commercialization of technologies for the control of air
  contaminant emissions by electrical power generating facilities,
  including technologies to capture, transport, and store carbon
  dioxide in an environmentally protective manner.
         Sec. 393.003.  ACCOUNT. (a)  The commission advanced clean
  energy project account is an account in the general revenue fund.
         (b)  The account consists of:
               (1)  a subaccount in the account that consists of the
  proceeds of bonds issued under Section 393.008;
               (2)  any amount appropriated by the legislature for the
  account;
               (3)  gifts, grants, and other donations received for
  the account; and
               (4)  interest earned on the investment of money in the
  account.
         (c)  Money in the account may be appropriated only to the
  commission to award grants or make or guarantee loans under this
  chapter.
         Sec. 393.004.  GRANTS. (a)  Under the program, the
  commission may award a grant to the managing entity of an advanced
  clean energy project to assist in the funding of the front-end
  engineering and design portion of the project.
         (b)  The total amount of grants awarded under this section
  for a project may not exceed 50 percent of the total amount invested
  in the front-end engineering and design portion of the project by
  private industry sources.
         Sec. 393.005.  LOANS AND LOAN GUARANTEES. (a)  Under the
  program, the commission may make or guarantee a loan to the managing
  entity of an advanced clean energy project in this state.
         (b)  If a loan or loan guarantee is to be funded by the
  proceeds of bonds issued under Section 393.008, the project must
  qualify for the loan or guarantee under Section 49-q, Article III,
  Texas Constitution.
         Sec. 393.006.  WRITTEN AGREEMENT. Before awarding a grant
  or making a loan under this chapter, the commission shall enter into
  a written agreement with the entity to which the grant is to be
  awarded or the loan is to be made. The agreement may specify that
  if, as of a date specified by the agreement, the entity has not used
  the grant or loan for the purposes for which the grant or loan was
  intended, the entity shall repay the amount of the grant or the
  amount of the loan and any accrued interest, as applicable, under
  terms specified by the agreement.
         Sec. 393.007.  PURCHASE OF GOODS AND SERVICES FROM SMALL AND
  HISTORICALLY UNDERUTILIZED BUSINESSES. A recipient of a grant,
  loan, or loan guarantee under this chapter is encouraged to
  purchase goods and services from small businesses and historically
  underutilized businesses, as those terms are defined by Section
  481.191, Government Code.
         Sec. 393.008.  ISSUANCE OF BONDS. The Texas Public Finance
  Authority shall issue general obligation bonds in accordance with
  and subject to Chapter 1232, Government Code, for the purposes
  authorized by Section 49-q, Article III, Texas Constitution.
         Sec. 393.009.  GUIDELINES AND CRITERIA, GRANT APPLICATION
  REQUIREMENTS, AND PROJECT REQUIREMENTS. The commission by rule
  shall adopt guidelines and criteria, grant application
  requirements, and project requirements that are consistent with the
  requirements of Section 391.003 and Subchapters B and C, Chapter
  391, to the extent those provisions can be made applicable, except
  that rules adopted under this section in accordance with Section
  391.201(d) must require a project to document the ability of the
  project to meet the emissions profile in the definition of
  "advanced clean energy project" under Section 382.003.
         SECTION 3.  Subchapter H, Chapter 151, Tax Code, is amended
  by adding Section 151.334 to read as follows:
         Sec. 151.334.  COMPONENTS OF TANGIBLE PERSONAL PROPERTY USED
  IN CONNECTION WITH GEOLOGIC SEQUESTRATION OF CARBON DIOXIDE.
  Components of tangible personal property are exempted from the
  taxes imposed by this chapter if:
               (1)  the components are used, constructed, acquired, or
  installed to capture carbon dioxide from an anthropogenic source,
  transport or inject carbon dioxide from such a source, or prepare
  carbon dioxide from such a source for transportation or injection;
  and
               (2)  the carbon dioxide is geologically sequestered, as
  part of an enhanced oil recovery project or otherwise, in this
  state.
         SECTION 4.  Subsection (a), Section 202.0545, Tax Code, is
  amended to read as follows:
         (a)  Subject to the limitations provided by this section,
  until [the later of] the 30th [seventh] anniversary of the date that
  the comptroller first approves an application for a tax rate
  reduction under this section [or the effective date of a final rule
  adopted by the United States Environmental Protection Agency
  regulating carbon dioxide as a pollutant], the producer of oil
  recovered through an enhanced oil recovery project that qualifies
  under Section 202.054 for the recovered oil tax rate provided by
  Section 202.052(b) is entitled to an additional 50 percent
  reduction in that tax rate if in the recovery of the oil the
  enhanced oil recovery project uses carbon dioxide that:
               (1)  is captured from an anthropogenic source in this
  state;
               (2)  would otherwise be released into the atmosphere as
  industrial emissions;
               (3)  is measurable at the source of capture; and
               (4)  is sequestered in one or more geological
  formations in this state following the enhanced oil recovery
  process.
         SECTION 5.  Subdivisions (1) and (4), Section 313.021, Tax
  Code, are amended to read as follows:
               (1)  "Qualified investment" means:
                     (A)  tangible personal property that is first
  placed in service in this state during the applicable qualifying
  time period that begins on or after January 1, 2002, and is
  described as Section 1245 property by Section 1245(a), Internal
  Revenue Code of 1986;
                     (B)  tangible personal property that is first
  placed in service in this state during the applicable qualifying
  time period that begins on or after January 1, 2002, without regard
  to whether the property is affixed to or incorporated into real
  property, and that is used in connection with the manufacturing,
  processing, or fabrication in a cleanroom environment of a
  semiconductor product, without regard to whether the property is
  actually located in the cleanroom environment, including:
                           (i)  integrated systems, fixtures, and
  piping;
                           (ii)  all property necessary or adapted to
  reduce contamination or to control airflow, temperature, humidity,
  chemical purity, or other environmental conditions or
  manufacturing tolerances; and
                           (iii)  production equipment and machinery,
  moveable cleanroom partitions, and cleanroom lighting;
                     (C)  tangible personal property that is first
  placed in service in this state during the applicable qualifying
  time period that begins on or after January 1, 2002, without regard
  to whether the property is affixed to or incorporated into real
  property, and that is used in connection with the operation of a
  nuclear electric power generation facility, including:
                           (i)  property, including pressure vessels,
  pumps, turbines, generators, and condensers, used to produce
  nuclear electric power; and
                           (ii)  property and systems necessary to
  control radioactive contamination;
                     (D)  tangible personal property that is first
  placed in service in this state during the applicable qualifying
  time period that begins on or after January 1, 2002, without regard
  to whether the property is affixed to or incorporated into real
  property, and that is used in connection with operating an
  integrated gasification combined cycle electric generation
  facility, including:
                           (i)  property used to produce electric power
  by means of a combined combustion turbine and steam turbine
  application using synthetic gas or another product produced by the
  gasification of coal or another carbon-based feedstock; or
                           (ii)  property used in handling materials to
  be used as feedstock for gasification or used in the gasification
  process to produce synthetic gas or another carbon-based feedstock
  for use in the production of electric power in the manner described
  by Subparagraph (i); [or]
                     (E)  tangible personal property that is first
  placed in service in this state during the applicable qualifying
  time period that begins on or after January 1, 2010, without regard
  to whether the property is affixed to or incorporated into real
  property, and that is used in connection with operating an advanced
  clean energy project, as defined by Section 382.003, Health and
  Safety Code; or
                     (F)  a building or a permanent, nonremovable
  component of a building that is built or constructed during the
  applicable qualifying time period that begins on or after January
  1, 2002, and that houses tangible personal property described by
  Paragraph (A), (B), (C), [or] (D), or (E).
               (4)  "Qualifying time period" means:
                     (A)  the first two tax years that begin on or after
  the date a person's application for a limitation on appraised value
  under this subchapter is approved, except as provided by Paragraph
  (B) or (C); [or]
                     (B)  in connection with a nuclear electric power
  generation facility, the first seven tax years that begin on or
  after the third anniversary of the date the school district
  approves the property owner's application for a limitation on
  appraised value under this subchapter, unless a shorter time period
  is agreed to by the governing body of the school district and the
  property owner; or
                     (C)  in connection with an advanced clean energy
  project, as defined by Section 382.003, Health and Safety Code, the
  first five tax years that begin on or after the third anniversary of
  the date the school district approves the property owner's
  application for a limitation on appraised value under this
  subchapter, unless a shorter time period is agreed to by the
  governing body of the school district and the property owner.
         SECTION 6.  Subchapter M, Chapter 5, Water Code, is amended
  by adding Section 5.559 to read as follows:
         Sec. 5.559.  ADVANCED CLEAN ENERGY PROJECT PERMITTING
  PROCEDURE. (a)  In this section, "advanced clean energy project" 
  has the meaning assigned by Section 382.003, Health and Safety
  Code.
         (b)  As authorized by federal law, not later than nine months
  after the executive director declares an application for a permit
  under Chapter 26 for an advanced clean energy project to be
  administratively complete, the executive director shall complete
  the technical review of the application.
         (c)  The commission shall issue a final order issuing or
  denying the permit not later than nine months after the executive
  director declares the application technically complete. The
  commission may extend the deadline set out in this subsection up to
  three months if it determines that the number of complex pending
  applications for permits under this chapter will prevent the
  commission from meeting the deadline imposed by this subsection
  without creating an extraordinary burden on the resources of the
  commission.
         (d)  The permit process authorized by this section is subject
  to the requirements relating to a contested case hearing under this
  chapter or Subchapters C-G, Chapter 2001, Government Code, as
  applicable.
         (e)  The commission shall adopt rules to implement this
  section.
         SECTION 7.  Chapter 27, Water Code, is amended by adding
  Subchapter C-1 to read as follows:
  SUBCHAPTER C-1. INJECTION AND GEOLOGIC STORAGE OF ANTHROPOGENIC
  CARBON DIOXIDE
         Sec. 27.041.  JURISDICTION. (a)  Except as provided by
  Subsection (b), the railroad commission has jurisdiction over the
  geologic storage of carbon dioxide in, and the injection of carbon
  dioxide into, a reservoir that is initially or may be productive of
  oil, gas, or geothermal resources or a saline formation directly
  above or below such a reservoir.
         (b)  The jurisdiction of the railroad commission over the
  geologic storage of carbon dioxide in, and the injection of carbon
  dioxide into, a saline formation described by Subsection (a) is
  subject to the review of the legislature based on the
  recommendations made in the preliminary report described by Section
  9, S.B. No. 2111, Acts of the 81st Legislature, Regular Session,
  2009.
         (c)  Except as provided by Subsection (b), the railroad
  commission has jurisdiction over a well used for the purpose
  provided by Subsection (a) regardless of whether the well was
  initially completed for that purpose or was initially completed for
  another purpose and is converted to the purpose provided by
  Subsection (a).
         SECTION 8.  Section 27.038, Water Code, is repealed.
         SECTION 9.  (a)  Not later than December 1, 2010, the Texas
  Commission on Environmental Quality and the Railroad Commission of
  Texas, in consultation with the Bureau of Economic Geology of The
  University of Texas at Austin, shall prepare and file with the
  legislature a joint preliminary report that:
               (1)  analyzes the requirements for the injection and
  geologic storage of anthropogenic carbon dioxide into saline
  formations that are not productive of oil, gas, or geothermal
  resources;
               (2)  recommends a permitting process for anthropogenic
  carbon dioxide injection wells and geologic storage facilities that
  are used for the injection and storage of anthropogenic carbon
  dioxide in saline formations not productive of oil, gas, or
  geothermal resources;
               (3)  recommends the agency or agencies that should have
  jurisdiction over permitting described by Subdivision (2) of this
  subsection or any other permitting of geologic storage facilities
  not subject to Subchapter C-1, Chapter 27, Water Code, as added by
  this Act; and
               (4)  assesses the status of compliance with any federal
  rules regulating the geologic storage and associated injection of
  anthropogenic carbon dioxide.
         (b)  The preliminary report shall include:
               (1)  recommended criteria for identifying candidate
  geologic storage sites in each of the following types of geological
  settings:
                     (A)  operating oil and gas fields;
                     (B)  depleted oil and gas fields;
                     (C)  unmineable coal seams;
                     (D)  saline formations;
                     (E)  geological systems that may be used as
  engineered reservoirs to extract economical quantities of heat from
  geothermal resources of low permeability or porosity;
                     (F)  geological systems containing igneous
  formations; and
                     (G)  coalbeds being used for methane recovery;
               (2)  a proposed procedure for:
                     (A)  providing an opportunity for public review
  of, and the presentation of comments by interested persons
  regarding, any activities related to geologic storage; and
                     (B)  ensuring that the quality of the natural and
  cultural resources of land overlying the site of a geologic storage
  facility are protected from any geologic storage activities at the
  site;
               (3)  a description of the status of leasehold or
  mineral estate liability issues related to the geological
  subsurface trespass of, or caused by, anthropogenic carbon dioxide
  stored in private or state-owned land, including any relevant
  experience from enhanced recovery operations using carbon dioxide;
               (4)  an analysis of and recommendations to address:
                     (A)  the attributes of the subsurface area of
  operations for geologic storage facilities; and
                     (B)  the methods of financial assurance and the
  allocation of long-term liability for the post-operational phases
  of geologic storage projects;
               (5)  the status of any applications for permits that
  have been received before the report is prepared;
               (6)  the status of any request for primary enforcement
  authority for the underground injection and geologic storage of
  anthropogenic carbon dioxide under the underground injection
  control program; and
               (7)  any recommendations for additional legislation,
  modifications to the memorandum of understanding between the Texas
  Commission on Environmental Quality and the Railroad Commission of
  Texas recorded in 16 T.A.C. Section 3.30, or new rules for
  regulating geologic storage facilities and associated
  anthropogenic carbon dioxide injection wells.
         SECTION 10.  Section 151.334, Tax Code, as added by this Act,
  does not affect taxes imposed before the effective date of this Act,
  and the law in effect before the effective date of this Act is
  continued in effect for purposes of the liability for and
  collection of those taxes.
         SECTION 11.  Not later than January 1, 2010, the Texas
  Commission on Environmental Quality shall adopt rules as necessary
  to implement Section 382.003, Health and Safety Code, as amended by
  this Act, Chapter 393, Health and Safety Code, as added by this Act,
  and Section 5.559, Water Code, as added by this Act.
         SECTION 12.  The Railroad Commission of Texas may adopt
  rules as necessary to implement Section 202.0545, Tax Code, as
  amended by this Act, and Subchapter C-1, Chapter 27, Water Code, as
  added by this Act.
         SECTION 13.  The comptroller of public accounts may adopt
  rules as necessary to implement Section 202.0545, Tax Code, as
  amended by this Act.
         SECTION 14.  This Act does not make an appropriation.  This
  Act takes effect only if a specific appropriation for the
  implementation of the Act is provided in a general appropriations
  act of the 81st Legislature.
         SECTION 15.  (a)  Except as provided by Section 14 of this
  Act and Subsections (b) and (c) of this section:
               (1)  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; and
               (2)  if this Act does not receive the vote necessary for
  immediate effect, this Act takes effect September 1, 2009.
         (b)  Section 393.008, Health and Safety Code, as added by
  this Act, takes effect on the date on which the constitutional
  amendment proposed by the 81st Legislature, Regular Session, 2009,
  authorizing the issuance of general obligation bonds to provide and
  guarantee loans to encourage advanced clean energy projects takes
  effect. If that amendment is not approved by the voters, Section
  393.008, Health and Safety Code, as added by this Act, has no
  effect.
         (c)  Section 393.009, Health and Safety Code, as added by
  this Act, takes effect September 1, 2009, but only if Senate Bill
  16, Acts of the 81st Legislature, Regular Session, 2009, becomes
  law. If that bill does not become law, Section 393.009, Health and
  Safety Code, as added by this Act, has no effect.