By: Strama H.B. No. 3582

A BILL TO BE ENTITLED

AN ACT

relating to emission and water reduction in permitted generation facilities.

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

SECTION 1. Section 382.003, Health and Safety Code, is amended by adding (1-b) to read as follows:

(1-b) "Emission and Water Reduction Project" means a project in which a generation facility has a valid permit under this chapter and which applies for a modified permit under this chapter before January 1, 2020, in order to achieve:

(A) a 50% reduction in the annual average emission rate for nitrogen oxides;

(B) a 25% reduction in the rate of water consumption; and

(C) to maintain or exceed the previous rated capacity of the facility.

SECTION 2. The Health and Safety Code is amended by adding Chapter 395 to read as follows:

CHAPTER 395. EMISSION AND WATER REDUCTION INITIATIVE FOR

PERMITTED GENERATION FACILITIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 395.001. DEFINITIONS. In this chapter:

(1) "Best available control technology" has the meaning assigned by Section 169 of the federal Clean Air Act (42 U.S.C. Section 7479(3)).

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

(3) "Facility" has the meaning assigned by Section 382.003.

(4) "Incremental cost" has the meaning assigned by Section 386.001.

(5) "New technology" means emissions control technology that results in emissions reductions that exceed state or federal requirements in effect at the time of submission of a new technology implementation grant application.

(6) "Stationary source" has the meaning assigned by Section 302 of the federal Clean Air Act (42 U.S.C. Section 7602(z)).

Sec. 395.002. EMISSION AND WATER REDUCTION INITIATIVE. (a) The commission shall establish and administer an emission and water reduction initiative to assist with the re-powering of electric generation facilities as a means of reducing emissions and water consumption in this state. Under the initiative, the commission shall provide loan guarantees or other financial incentives for eligible projects to facilitate the re-powering and modification needed to reduce emissions and water consumption.

(b) Emission and Water Reduction Projects as defined by Section 382.003 may be considered eligible projects.

Sec. 395.003. GUIDELINES AND CRITERIA. (a) The commission shall adopt loan guaranty guidelines and criteria consistent with the requirements of this chapter.

(b) The guidelines must include:

(1) protocols to compute projected emissions and water reductions;

(2) safeguards to ensure that the projects funded result in emissions reductions not otherwise required by state or federal law;

(3) rules to establish loan guarantees not to exceed 85% of the direct cost of the project with the total cost of installed capacity not to exceed $1000 per KW; and

(4) rules to ensure the loan guaranty will expire upon the earlier of:

(A) three years after the Public Utility Commission implements a forward capacity market; or

(B) the loan to value of the clean energy project falls at or below 50%; or

(C) 18 years from the date of approval.

(c) The commission may propose revisions to the guidelines and criteria adopted under this section as necessary to improve the ability of the initiative to achieve the its goals.

(d) The commission may adopt emergency rules under Section 2001.034, Government Code, with abbreviated notice, to carry out any rulemaking necessary to implement this chapter.

(e) Except as provided by Subsection (d), the rulemaking requirements of Chapter 2001, Government Code, do not apply to the adoption or revision of guidelines and criteria under this section.

Sec. 395.004. AVAILABILITY OF EMISSIONS REDUCTION CREDITS IN CERTAIN NONATTAINMENT AREAS. A project funded under this chapter must comply with Sections 386.055 and 386.056, as applicable.

SUBCHAPTER B. INITIATIVE APPLICATIONS AND REVIEW

Sec. 395.101. APPLICATION FOR LOAN GUARANTY. (a) The owner of a facility located in this state may apply for a loan guaranty under the initiative established under Section 395.002. To improve the ability of the initiative to achieve its goals, the commission may adopt guidelines to allow a person other than the owner to apply for and receive a loan guaranty.

(b) An application for a loan guaranty under this chapter must be made on a form provided by the commission and must contain information required by the commission, including:

(1) a detailed description of the proposed project;

(2) information necessary for the commission to determine whether the project meets the commission's eligibility requirements, including a statement of the amounts of any other public financial assistance the project will receive; and

(3) other information the commission may require.

Sec. 395.102. LOAN GUARANTY APPLICATION REVIEW PROCEDURES. (a) The commission shall review an application for a loan guaranty for a project authorized under this chapter according to dates specified in a request for grant applications. If the commission determines that an application is incomplete, the commission shall notify the applicant and provide an explanation of the information missing from the application. The commission shall evaluate the completed application according to the guidelines and criteria adopted under Section 395.003.

(b) To the extent possible, the commission shall coordinate project review and approval with any timing constraints related to project purchases or installations to be made by an applicant.

(c) The commission may deny a loan guaranty application for a project that does not meet the applicable criteria or that the commission determines is not made in good faith, is not credible, or is not in compliance with this chapter or the goals of this chapter.

(d) Subject to the availability of funding, the commission shall award a loan guaranty under this chapter in conjunction with the execution of a contract that obligates the commission to make the loan guaranty and the recipient to perform the actions described by the recipient's application.

Sec. 395.103. EVIDENCE OF EMISSIONS REDUCTION POTENTIAL REQUIRED. (a) An application for a emissions and water reduction project under this chapter must show reasonable evidence that the proposed project is capable of providing a significant reduction in emissions and water consumption.

(b) The commission shall consider specifically, for each application:

(1) the projected potential for reduced emissions; and

(2) the projected potential for reduced water consumption

Sec. 395.104. REPORTING REQUIREMENTS. The commission annually shall prepare a report that summarizes the applications received and loan guarantees awarded in the preceding year.

SUBCHAPTER C. PROJECT REQUIREMENTS

Sec. 391.201. ELIGIBILITY OF PROJECTS FOR LOAN GUARANTEES. (a) The commission shall establish criteria for prioritizing projects eligible to receive loan guarantees under this chapter. The commission shall review and may modify the criteria and priorities as appropriate.

(b) A proposed project must meet the requirements of this section to be eligible for a loan guarantee under the initiative established under Section 391.002.

(d) An emissions and water reduction project must document, in a manner acceptable to the commission, an achieved reduction from the baseline emissions adopted by the commission for the relevant facility or stationary source.

(e) If a baseline emissions standard does not exist for a facility, the commission, for purposes of this subchapter, shall adopt an appropriate baseline emissions level for comparison purposes.

(f) An emissions and water reduction project must document, in a manner acceptable to the commission, an achieved reduction in water consumption. Planned water usage for proposed projects must be consistent with the state water plan.

(g) Upon completion of the project, the installed capacity must meet or exceed the previous rated capacity of the facility.

Sec. 395.203. DETERMINATION OF LOAN GUARANTY AMOUNT AND DURATION OF LOAN GUARANTY.

(a) The commission may not award a loan guaranty that, net of taxes, exceeds 85% of the project cost with the total project cost not to exceed $1000 per KW of installed capacity.

(b) The loan guaranty will expire upon the earlier of :

(1) 18 years from the date of approval;

(2) three years after the Public Utility Commission implements a forward capacity market; or

(3) at any such time that the loan to value of the emission and water reduction project falls at or below 50%.

Sec. 395.205. PREFERENCES. (a) On awarding grants under this chapter the commission shall give preference to projects that are located in non-attainment or near non-attainment areas of Texas.

SUBCHAPTER D. FUNDING; EXPIRATION

Sec. 395.302. COMPTROLLER REVIEW OF USE OF GRANT FUNDS. (a) The comptroller annually shall conduct a review of each recipient of a emission and water reduction project loan guaranty under this chapter to ensure that the recipient's use of the loan complies with state law and the terms of the award.

(b) To assist with a review under this section, the commission shall provide the comptroller with all monitoring reports received from loan guaranty recipients and any other documentation requested by the comptroller.

(c) On a finding of any misuse of loan money or other noncompliance with grant requirements, the comptroller shall provide a report to the commission with recommendations for subsequent action.

(d) The comptroller shall notify the Commission and the applicant when the loan to value of the emission and water reduction project falls at or below %50 and the loan guarantee is withdrawn.

(d) The comptroller may adopt rules to implement this section.

Sec. 391.304. EXPIRATION. This chapter expires August 31, 2019.

SECTION 3: 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, 2013.