By: Pickett H.B. No. 3479

A BILL TO BE ENTITLED

AN ACT

relating to the Texas emissions reduction plan and other related programs and measures to reduce emissions.

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

SECTION 1. Section 386.001(3), Health and Safety Code, is amended to read as follows:

(3) "Commission" means the Texas [Natural Resource Conservation] Commission on Environmental Quality.

SECTION 2. Section 386.002, Health and Safety Code, is amended to read as follows:

Sec. 386.002. EXPIRATION. This chapter expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2019].

SECTION 3. Section 386.051(b), Health and Safety Code, is amended to read as follows:

(b) Under the plan, the commission [and the comptroller] shall provide grants or other funding for:

(1) the diesel emissions reduction incentive program established under Subchapter C, including for infrastructure projects established under that subchapter;

(2) the seaport and rail yard areas emissions reduction program established under Subchapter D-1 [the motor vehicle purchase or lease incentive program established under Subchapter D];

(3) the new technology implementation grant program established under Chapter 391 [the air quality research support program established under Chapter 387];

(4) the clean fleet program established under Chapter 392 [the clean school bus program established under Chapter 390];

(5) the natural gas vehicle grant program established under Chapter 394 [the new technology implementation grant program established under Chapter 391];

(6) a contract with the Energy Systems Laboratory at the Texas A&M Engineering Experiment Station for computation of creditable statewide emissions reductions as provided by Section 386.252(a) [the regional air monitoring program established under Section 386.252(a)];

(7) other programs the commission may develop that lead to reduced emissions of nitrogen oxides, particulate matter, or volatile organic compounds in a nonattainment area or affected county [a health effects study as provided by Section 386.252(a)]; and

(8) other programs the commission may develop that support congestion mitigation to reduce mobile source ozone precursor emissions [air quality planning activities as provided by Section 386.252(a);

(9) a contract with the Energy Systems Laboratory at the Texas A&M Engineering Experiment Station for computation of creditable statewide emissions reductions as provided by Section 386.252(a)(14);

(10) the clean fleet program established under Chapter 392;

(11) the alternative fueling facilities program established under Chapter 393;

(12) the natural gas vehicle grant program and clean transportation triangle program established under Chapter 394;

(13) other programs the commission may develop that lead to reduced emissions of nitrogen oxides, particulate matter, or volatile organic compounds in a nonattainment area or affected county;

(14) other programs the commission may develop that support congestion mitigation to reduce mobile source ozone precursor emissions; and

(15) the drayage truck incentive program established under Subchapter D-1].

SECTION 4. Sections 386.0515(a) and (c), Health and Safety Code, are amended to read as follows:

(a) In this section:

(1) "Agricultural[, "agricultural] product transportation" means the transportation of a raw agricultural product from the place of production using a heavy-duty truck to:

(A) [(1)] a nonattainment area;

(B) [(2)] an affected county;

(C) [(3)] a destination inside the clean transportation zone [triangle]; or

(D) [(4)] a county adjacent to a county described by Paragraph (B) [Subdivision (2)] or that contains an area described by Paragraph (A) or (C) [Subdivision (1) or (3)].

(2) "Clean transportation zone" has the meaning assigned by Section 394.001.

(c) The determining factor for eligibility for participation in a program established under Chapter 392 or [Chapter] 394[, as added by Chapter 892 (Senate Bill No. 385), Acts of the 82nd Legislature, Regular Session, 2011,] for a project relating to agricultural product transportation is the overall accumulative net reduction in emissions of oxides of nitrogen in a nonattainment area, an affected county, or the clean transportation zone [triangle].

SECTION 5. Section 386.104(j), Health and Safety Code, is amended to read as follows:

(j) The executive director may [shall] waive any eligibility requirements established under this section on a finding of good cause, which may include a waiver for short lapses in registration or operation attributable to economic conditions, seasonal work, or other circumstances.

SECTION 6. Section 386.116(a), Health and Safety Code, is amended to read as follows:

Sec. 386.116. SMALL BUSINESS INCENTIVES. (a) In this section, "small business" means a business owned by a person who:

(1) owns and operates not more than two vehicles, one of which is:

(A) an on-road diesel [with a pre-1994 engine model]; or

(B) a non-road diesel [with an engine with uncontrolled emissions]; and

(2) has owned the vehicle described by Subdivision (1)(A) or (B) for more than two years [one year].

SECTION 7. Subchapter D-1, Chapter 386, Health and Safety Code, is retitled as follows:

SUBCHAPTER D-1. SEAPORT AND RAIL YARD AREAS EMISSIONS REDUCTION

PROGRAM [DRAYAGE TRUCK INCENTIVE PROGRAM]

SECTION 8. Section 386.181(a), Health and Safety Code, is amended to read as follows:

(a) In this subchapter[,]:

(1) "cargo handling equipment" means any heavy-duty non-road, self-propelled vehicle or land based equipment used at a seaport or rail yard to lift or move cargo, such as containerized, bulk, or break-bulk goods; and

(2) "drayage truck" means a heavy-duty on-road or non-road vehicle used for drayage activities and that operates or transgresses through a seaport or rail yard for the purpose of loading, unloading, or transporting cargo, including transporting empty containers and chassis [truck that transports a load to or from a seaport or rail yard].

SECTION 9. Section 386.182, Health and Safety Code, is amended to amend Subsections (a) and (b) to read as follows:

(a) The commission shall develop a purchase incentive program to encourage owners to replace older drayage trucks and cargo handling equipment [with pre-2007 model year engines] with newer drayage trucks and cargo handling equipment and shall adopt guidelines necessary to implement the program.

(b) The commission by rule and guideline shall establish criteria for the models of drayage trucks and cargo handling equipment that are eligible for inclusion in an incentive program under this subchapter. [The guidelines must provide that a drayage truck owner is not eligible for an incentive payment under this subchapter unless the truck being replaced contains a pre-2007 model year engine and the replacement truck's engine is from model year 2010 or later as determined by the commission and that the truck operates at a seaport or rail yard.]

SECTION 10. Section 386.183, Health and Safety Code, is amended to amend the section title and subsections (a), (b), (c), (d), and (e), and to add new subsections (a-1) and (a-2) as follows:

Sec. 386.183. DRAYAGE TRUCK AND CARGO HANDLING EQUIPMENT PURCHASE INCENTIVE. (a) To be eligible for an incentive under this subchapter, a person must:

(1) purchase a replacement drayage truck or cargo handling equipment that under the guidelines adopted by the commission under Section 386.182 is eligible for inclusion in the program for an incentive under this subchapter; and

(2) agree to:

(A) register the drayage truck in this state, if the truck is an on-road vehicle;

(B) operate the drayage truck or cargo handling equipment in and within a maximum distance established by the commission of a seaport or rail yard in a nonattainment area of this state for not less than 50 percent of the vehicle's annual mileage or hours of operation, as determined by the commission; and

(C) permanently remove the drayage truck or cargo handling equipment [a pre-2007 drayage truck containing a pre-2007 engine] replaced under the program [owned by the person] from operation in a nonattainment area of this state by destroying the engine and scrapping the truck or equipment after the purchase of the replacement [new] truck or equipment in accordance with guidelines established by the commission.

(a-1) To be eligible for replacement under this program a drayage truck or cargo handling equipment must contain an engine of a model year or certified to a federal emissions standard established by the commission sufficient to ensure that the project will achieve at least a 25 percent reduction in nitrogen oxides emissions.

(a-2) To be eligible for purchase under this program a drayage truck or cargo handling equipment must be powered by an electric motor or contain an engine certified to the current federal emission standards applicable to that type of engine, as determined by the commission.

(b) To receive money under an incentive program provided by this subchapter, the purchaser of a drayage truck or cargo handling equipment eligible for inclusion in the program must apply for the incentive in the manner provided by law, rule, or guideline of the commission.

(c) Not more than one incentive may be provided for each drayage truck or cargo handling equipment purchased.

(d) An incentive provided under this subchapter may be used to fund not more than 80 percent of the purchase price of the drayage truck or cargo handling equipment.

(e) The commission shall establish procedures to verify that a person who receives an incentive:

(1) has operated in a seaport or rail yard and owned or leased the drayage truck or cargo handling equipment to be replaced for at least two years prior to receiving the grant; and

(2) permanently destroys the engine and scraps the drayage truck or cargo handling equipment replaced under the program [that contained the pre-2007 engine owned or leased by the person,] in accordance with guidelines established by the commission, after the purchase of the replacement [new] truck or equipment.

(f) The commission may modify this program to improve its effectiveness or further the goals of Subchapter B.

SECTION 11. Section 386.251(c), Health and Safety Code, is amended to read as follows:

(c) The fund consists of:

(1) the amount of money deposited to the credit of the fund under:

(A) Section 386.056;

(B) Sections 151.0515 and 152.0215, Tax Code; and

(C) Sections [501.138,] 502.358[,] and 548.5055, Transportation Code; and

(2) grant money recaptured under Section 386.111(d) and Chapter 391.

SECTION 12. Section 386.252, Health and Safety Code, is amended to read as follows:

Sec. 386.252. USE OF FUND. (a) Money in the fund may be used only to implement and administer programs established under the plan. Subject to the reallocation of funds by the commission under Subsection (f), money [Money] appropriated to the commission to be used for the programs under Section 386.051(b) shall be allocated as follows:

(1) five percent may be used for the clean fleet program under Chapter 392 [not more than four percent may be used for the clean school bus program under Chapter 390];

(2) 10 percent may be used for the Texas natural gas vehicle grant program under Chapter 394 [not more than three percent may be used for the new technology implementation grant program under Chapter 391, from which at least $1 million will be set aside for electricity storage projects related to renewable energy];

(3) two percent may be used for the seaport and rail yard areas emissions reduction program established under Subchapter D-1 [five percent shall be used for the clean fleet program under Chapter 392];

(4) at least $4 million and up to four percent to a maximum of $7 million, whichever is greater, may be used by the commission for administrative costs and costs for conducting outreach and education activities to promote participation in the programs funded under this section [not more than $3 million may be used by the commission to fund a regional air monitoring program in commission Regions 3 and 4 to be implemented under the commission's oversight, including direction regarding the type, number, location, and operation of, and data validation practices for, monitors funded by the program through a regional nonprofit entity located in North Texas having representation from counties, municipalities, higher education institutions, and private sector interests across the area];

(5) not more than $216,000 may be used by the commission to contract with the Energy Systems Laboratory at the Texas A&M Engineering Experiment Station annually for the development and annual computation of creditable statewide emissions reductions obtained through wind and other renewable energy resources for the state implementation plan [not less than 16 percent shall be used for the Texas natural gas vehicle grant program under Chapter 394]; and

(6) the balance may be used by the commission for the diesel emissions reduction incentive program under Subchapter C as determined by the commission [not more than five percent may be used [to provide grants for natural gas fueling stations under the clean transportation triangle program under Section 394.010;

(7) not more than five percent may be used for the Texas alternative fueling facilities program under Chapter 393;

(8) a specified amount may be used each year to support research related to air quality as provided by Chapter 387;

(9) not more than $200,000 may be used for a health effects study[;

(10) $500,000 is to be deposited in the state treasury to the credit of the clean air account created under Section 382.0622 to supplement funding for air quality planning activities in affected counties;

(11) at least $4 million and up to four percent to a maximum of $7 million, whichever is greater, is allocated to the commission for administrative costs;

(12) at least two percent and up to five percent of the fund is to be used by the commission for the drayage truck incentive program established under Subchapter D-1;

(13) not more than five percent may be used for the light-duty motor vehicle purchase or lease incentive program established under Subchapter D;

(14) not more than $216,000 is allocated to the commission to contract with the Energy Systems Laboratory at the Texas A&M Engineering Experiment Station annually for the development and annual computation of creditable statewide emissions reductions obtained through wind and other renewable energy resources for the state implementation plan;

(15) 1.5 percent of the money in the fund is allocated for administrative costs incurred by the laboratory; and

(16) the balance is to be used by the commission for the diesel emissions reduction incentive program under Subchapter C as determined by the commission].

(b) Money in the fund may be used by the commission for programs under Sections 386.051(b)(7), (b)(8), and (b-1) as may be appropriated for those programs [The commission may allocate unexpended money designated for the clean fleet program under Chapter 392 to other programs described under Subsection (a) after the commission allocates money to recipients under the clean fleet program].

(c) If the legislature does not specify amounts or percentages from the total appropriation to the commission to be allocated under Subsection (a) or (b), the commission shall determine the amounts of the total appropriation to be allocated under each of those subsections, such that the total appropriation is expended while maximizing emissions reductions [The commission may allocate unexpended money designated for the Texas alternative fueling facilities program under Chapter 393 to other programs described under Subsection (a) after the commission allocates money to recipients under the alternative fueling facilities program].

(d) To supplement funding for air quality planning activities in affected counties, $500,000 from the fund is to be deposited annually in the state treasury to the credit of the clean air account created under Section 382.0622 [The commission may reallocate money designated for the Texas natural gas vehicle grant program under Chapter 394 to other programs described under Subsection (a) if:

(1) the commission, in consultation with the governor and the advisory board, determines that the use of the money in the fund for that program will cause the state to be in noncompliance with the state implementation plan to the extent that federal actions is likely; and

(2) the commission finds that the reallocation of some or all of the funding for the program would resolve the noncompliance].

(e) Money in the fund may be allocated for administrative costs incurred by the Energy Systems Laboratory at the Texas A&M Engineering Experiment Station as may be appropriated by the legislature [Under Subsection (d), the commission may not reallocate more than the minimum amount of money necessary to resolve the noncompliance].

[(e-1) Money allocated under Subsection (a) to a particular program may be used for another program under the plan as determined by the commission.

(f) Subject to the limitations outlined in this section and any additional limitations placed on the use of the appropriated funds, money allocated under this section to a particular program may be used for another program under the plan as determined by the commission, based on demand for grants for eligible projects under particular programs after the commission solicits projects to which to award grants according to the initial allocation provisions of this section [Money in the fund may be used by the commission for programs under Sections 386.051(b)(13), (b)(14), and (b-1) as may be appropriated for those programs].

[(g) If the legislature does not specify amounts or percentages from the total appropriation to the commission to be allocated under Subsection (a) or (b) [(f)], the commission shall determine the amounts of the total appropriation to be allocated under each of those subsections, such that the total appropriation is expended while maximizing emissions reductions.]

SECTION 13. Section 390.006, Health and Safety Code, is amended to read as follows:

Sec. 390.006. EXPIRATION. This chapter expires August 31, 2017 [2019].

SECTION 14. Section 391.304, Health and Safety Code, is amended to read as follows:

Sec. 391.304. EXPIRATION. This chapter expires August 31, 2017 [2019].

SECTION 15. Section 392.001(1), Health and Safety Code, is amended to read as follows:

(1) "Alternative fuel" means a fuel other than gasoline or diesel fuel, including electricity, compressed natural gas, liquefied [liquified] natural gas, hydrogen, propane, or a mixture of fuels containing at least 85 percent methanol by volume.

SECTION 16. Section 392.003(a), Health and Safety Code, is amended to read as follows:

(a) A vehicle is a qualifying vehicle that may be considered for a grant under the program if during the eligibility period established by the commission [calendar year] the entity purchases a new on-road vehicle that:

(1) is certified to the appropriate current federal emissions standards as determined by the commission;

(2) replaces a diesel-powered on-road vehicle of the same weight classification and use; and

(3) is a hybrid vehicle or fueled by an alternative fuel.

SECTION 17. Section 392.004(d), Health and Safety Code, is amended to read as follows:

(d) The commission shall minimize, to the maximum extent possible, the amount of paperwork required for an application. [An applicant may be required to submit a photograph or other documentation of a vehicle identification number, registration information, inspection information, tire condition, or engine block identification only if the photograph or documentation is requested by the commission after the commission has decided to award a grant to the applicant under this chapter.]

SECTION 18. Section 392.005, Health and Safety Code, is amended by amending Subsections (c) and (i) and adding Subsection (c-1) to read as follows:

(c) As a condition of receiving a grant, the qualifying vehicle must be continuously owned, registered, and operated in the state by the grant recipient until the earlier of the fifth anniversary of the activity start date established by the commission [the date of reimbursement of the grant-funded expenses] or [until] the date the vehicle has been in operation for 400,000 miles after the activity start date established by the commission [of reimbursement]. Not less than 75 percent of the annual use of the qualifying vehicle, either mileage or fuel use as determined by the commission, must occur in the state.

(c-1) For purposes of Subsection (c), the commission may establish the activity start date based on the date the commission accepts verification of the disposition of the vehicle being replaced.

(i) The executive director may [shall] waive the requirements of Subsection (b)(2)(A) on a finding of good cause, which may include a waiver for short lapses in registration or operation attributable to economic conditions, seasonal work, or other circumstances.

SECTION 19. Section 392.008, Health and Safety Code, is amended to read as follows:

Sec. 392.008. EXPIRATION. This chapter expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2017].

SECTION 20. Section 393.007, Health and Safety Code, is amended to read as follows:

Sec. 393.007. EXPIRATION. This chapter expires August 31, 2017 [2018].

SECTION 21. Section 394.001, Health and Safety Code, is amended by amending Subdivisions (1), (4), (5), and (8) and adding Subdivision (7-a) to read as follows:

(1) "Clean transportation zone" means:

(A) counties containing or intersected by a portion of an interstate highway connecting the cities of Houston, San Antonio, Dallas, and Fort Worth;

(B) counties located within the area bounded by the interstate highways described by Paragraph (A);

(C) counties containing or intersected by a portion of:

(i) an interstate highway connecting San Antonio to Corpus Christi or Laredo; or

(ii) highways connecting Corpus Christi and Laredo;

(D) counties located within the area bounded by the highways described by Paragraph (C);

(E) counties in this state all or part of which are included in a nonattainment area designated under Section 107(d) of the federal Clean Air Act (42 U.S.C. Section 7407); and

(F) counties designated as affected counties under Section 386.001 ["Advisory board" means the Texas Emissions Reduction Plan Advisory Board].

(4) "Heavy-duty motor vehicle" means a motor vehicle that [with]:

(A) has a gross vehicle weight rating of more than 8,500 pounds; and

(B) is certified to or has an engine certified to the United States Environmental Protection Agency's emissions standards for heavy-duty vehicles or engines.

(5) "Incremental cost" has the meaning assigned by Section 386.001 [means the difference between the manufacturer's suggested retail price of a baseline vehicle, the documented dealer price of a baseline vehicle, cost to lease or otherwise commercially finance a baseline vehicle, cost to repower with a baseline engine, or other appropriate baseline cost established by the commission, and the actual cost of the natural gas vehicle purchase, lease, or other commercial financing, or repower].

(7-a) "Natural gas engine" means an engine that operates:

(A) solely on compressed or liquefied natural gas; or

(B) receives not less than 75 percent of its power from compressed or liquefied natural gas.

(8) "Natural gas vehicle" means a motor vehicle that is powered by a natural gas engine [receives not less than 75 percent of its power from compressed or liquefied natural gas].

SECTION 22. Section 394.003(a), Health and Safety Code, is amended to read as follows:

(a) A vehicle is a qualifying vehicle that may be considered for a grant under the program if during the eligibility period established by the commission [calendar year] the entity:

(1) purchased, leased, or otherwise commercially financed the vehicle as a new on-road heavy-duty or medium-duty motor vehicle that:

(A) is a natural gas vehicle;

(B) is certified to the appropriate current federal emissions standards as determined by the commission; and

(C) replaces an on-road heavy-duty or medium-duty motor vehicle of the same weight classification and use; [and

[(D) is powered by an engine certified to:

[(i) emit not more than 0.2 grams of nitrogen oxides per brake horsepower hour; or

[(ii) meet or exceed the United States Environmental Protection Agency's Bin 5 standard for light-duty engines when powering the vehicle;] or

(2) repowered the on-road motor vehicle to a natural gas vehicle powered by a natural gas engine that[:

[(A)] is certified to the appropriate current federal emissions standards as determined by the commission[; and

[(B) is:

[(i) a heavy-duty engine that is certified to emit not more than 0.2 grams of nitrogen oxides per brake horsepower hour; or

[(ii) certified to meet or exceed the United States Environmental Protection Agency's Bin 5 standard for light-duty engines when powering the vehicle].

SECTION 23. Section 394.005, Health and Safety Code, is amended by amending Subsections (a), (b), (c), (f), (g), and (i) and adding Subsection (c-1) to read as follows:

(a) The commission [by rule] shall establish criteria for prioritizing qualifying vehicles eligible to receive grants under this chapter. The commission shall review and revise the criteria as appropriate [after consultation with the advisory board].

(b) To be eligible for a grant under the program:

(1) the use of the qualifying vehicle must be projected to result in a reduction in emissions of nitrogen oxides of at least 25 percent as compared to the motor vehicle or engine being replaced, based on:

(A) the baseline emission level set by the commission under Subsection (g); and

(B) the certified emission rate of the new vehicle; and

(2) the qualifying vehicle must:

(A) replace a heavy-duty or medium-duty motor vehicle that:

(i) is an on-road vehicle that has been owned, leased, or otherwise commercially financed and registered and operated by the applicant in Texas for at least the two years immediately preceding the submission of a grant application;

(ii) satisfies any minimum average annual mileage or fuel usage requirements established by the commission;

(iii) satisfies any minimum percentage of annual usage requirements established by the commission; and

(iv) is in operating condition and has at least two years of remaining useful life, as determined in accordance with criteria established by the commission; [or]

(B) be a heavy-duty or medium-duty motor vehicle repowered with a natural gas engine that:

(i) is installed in an on-road vehicle that has been owned, leased, or otherwise commercially financed and registered and operated by the applicant in Texas for at least the two years immediately preceding the submission of a grant application;

(ii) satisfies any minimum average annual mileage or fuel usage requirements established by the commission;

(iii) satisfies any minimum percentage of annual usage requirements established by the commission; and

(iv) is installed in an on-road vehicle that, at the time of the vehicle's repowering, was in operating condition and had at least two years of remaining useful life, as determined in accordance with criteria established by the commission.

(c) As a condition of receiving a grant, the qualifying vehicle must be continuously owned, leased, or otherwise commercially financed and registered and operated in the state by the grant recipient until the earlier of the fourth anniversary of the activity start date established by the commission [the date of reimbursement of the grant-funded expenses] or [until] the date the vehicle has been in operation for 400,000 miles after the activity start date established by the commission [of reimbursement]. Not less than 75 percent of the annual use of the qualifying vehicle, either mileage or fuel use as determined by the commission, must occur in the clean transportation zone [:

[(1) the counties any part of which are included in the area described by Section 394.010(a); or

[(2) counties designated as nonattainment areas within the meaning of Section 107(d) of the federal Clean Air Act (42 U.S.C. Section 7407)].

(c-1) For purposes of Subsection (c), the commission may establish the activity start date based on the date the commission accepts verification of the disposition of the vehicle or engine.

(f) A heavy-duty or medium-duty motor vehicle replaced under this program must be rendered permanently inoperable by crushing the vehicle, by making a hole in the engine block and permanently destroying the frame of the vehicle, or by another method approved by the commission that permanently removes the vehicle from operation in this state. The commission shall establish criteria for ensuring the permanent destruction of the engine or vehicle. The commission shall enforce the destruction requirements.

(g) The commission shall establish baseline emission levels for emissions of nitrogen oxides for on-road heavy-duty or medium-duty motor vehicles being replaced or repowered by using the emission certification for the engine or vehicle being replaced. The commission may consider deterioration of the emission performance of the engine of the vehicle being replaced in establishing the baseline emission level. The commission may consider and establish baseline emission rates for additional pollutants of concern[, as determined by the commission after consultation with the advisory board].

(i) The executive director may [shall] waive the requirements of Subsection (b)(2)(A)(i) on a finding of good cause, which may include short lapses in registration or operation due to economic conditions, seasonal work, or other circumstances.

SECTION 24. Section 394.006, Health and Safety Code, is amended to read as follows:

Sec. 394.006. RESTRICTION ON USE OF GRANT. A recipient of a grant under this chapter shall use the grant to pay the incremental costs of the replacement or vehicle repower for which the grant is made, which may include a portion of the initial cost of the natural gas vehicle or natural gas engine, including the cost of the natural gas fuel system and installation [and the reasonable and necessary expenses incurred for the labor needed to install emissions-reducing equipment]. The recipient may not use the grant to pay the recipient's administrative expenses.

SECTION 25. Section 394.007(c), Health and Safety Code, is amended to read as follows:

(c) A person may not receive a grant under this chapter that, when combined with any other grant, tax credit, or other governmental incentive, exceeds the incremental cost of the vehicle or vehicle repower for which the grant is awarded. A person shall return to the commission the amount of a grant awarded under this chapter that, when combined with any other grant, tax credit, or other governmental incentive, exceeds the incremental cost of the vehicle or vehicle repower for which the grant is awarded.

SECTION 26. Sections 394.008(a) and (b), Health and Safety Code, are amended to read as follows:

(a) The commission shall establish [adopt] procedures for:

(1) awarding grants under this chapter to reimburse eligible costs [in the form of rebates]; and

(2) streamlining the grant application, contracting, reimbursement, and reporting process for qualifying natural gas vehicle purchases or repowers.

(b) Procedures established [adopted] under this section must:

(1) provide for the commission to compile and regularly update a listing of potentially eligible [preapproved] natural gas vehicles and engines powered by natural gas that are certified to the appropriate current federal emissions standards as determined by the commission[:

[(A) powered by natural gas engines certified to emit not more than 0.2 grams of nitrogen oxides per brake horsepower hour; or

[(B) certified to the United States Environmental Protection Agency's light-duty Bin 5 standard or better];

(2) if a federal standard for the calculation of emissions reductions exists, provide a method to calculate the reduction in emissions of nitrogen oxides, volatile organic compounds, carbon monoxide, particulate matter, and sulfur compounds for each replacement or repowering;

(3) assign a standardized grant [rebate] amount for each qualifying vehicle or engine repower under Section 394.007;

(4) allow for processing applications [rebates] on an ongoing first-come, first-served basis;

(5) [provide for contracts between the commission and participating dealers under Section 394.009;

[(6) allow grant recipients to assign their grant funds to participating dealers to offset the purchase or lease price;

[(7)] require grant applicants to identify natural gas fueling stations that are available to fuel the qualifying vehicle in the area of its use;

(6) [(8)] provide for payment not later than the 30th day after the date the request for reimbursement for an approved grant is received;

(7) [(9)] provide for application submission and application status checks, which may include procedures for application submission and status checks to be made over the Internet; and

(8) [(10)] consolidate, simplify, and reduce the administrative work for applicants and the commission associated with grant application, contracting, reimbursement, and reporting requirements.

SECTION 27. Section 394.012, Health and Safety Code, is amended to read as follows:

Sec. 394.012. EXPIRATION. This chapter expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2017].

SECTION 28. Section 151.0515, Tax Code, is amended to add Subsection (c-1) and to amend Subsection (d) to read as follows:

(c-1) (1) Collection of the surcharge imposed by this section shall be suspended for a period beginning September 1, 2017, and ending August 31, 2025, with collections to resume September 1, 2025, provided that this section has not expired prior to that date.

(2) During the period of suspension in (1), should the Texas commission on environmental quality estimate a balance in the fund at an amount that the appropriations and estimated transfers and other deductions out of the fund for the following state fiscal biennium will cause the balance in the fund to fall below $500 million during that biennium, the commission shall notify the comptroller that the fund is estimated to be below the desired base level. If the comptroller concurs with that estimate, the suspension period will terminate early, and the comptroller shall cause collection of the surcharge to resume beginning September 1 of the following state fiscal biennium or as soon thereafter as is feasible, provided that this section has not expired prior to that date.

(d) This section expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2019].

SECTION 29. Section 152.0215, Tax Code, is amended to add Subsection (b-1) and to amend Subsection (c) to read as follows:

(b-1) (1) Collection of the surcharge imposed by this section shall be suspended for a period beginning September 1, 2017, and ending August 31, 2025, with collections to resume September 1, 2025, provided that this section has not expired prior to that date.

(2) During the period of suspension in (1), should the Texas commission on environmental quality estimate a balance in the Texas emissions reduction plan fund at an amount that the appropriations and estimated transfers and other deductions out of the fund for the following state fiscal biennium will cause the balance in the fund to fall below $500 million during that biennium, the commission shall notify the comptroller that the fund is estimated to be below the desired base level. If the comptroller concurs with that estimate, the suspension period will terminate early, and the comptroller shall cause collection of the surcharge to resume beginning September 1 of the following state fiscal biennium or as soon thereafter as is feasible, provided that this section has not expired prior to that date.

(c) This section expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2019].

SECTION 30. Section 501.138, Transportation Code, is amended to amend Subsections (b-1) and (b-3) to read as follows:

(b-1) Fees collected under Subsection (b) to be sent to the comptroller shall be deposited to the credit of the Texas Mobility Fund[, except that $5 of each fee imposed under Subsection (a)(1) and deposited on or after September 1, 2008, and before September 1, 2015, shall be deposited to the credit of the Texas emissions reduction plan fund].

(b-3) This subsection and Subsection (b-2) expire August 31, 2017 [2019].

SECTION 31. Section 502.358, Transportation Code, is amended to add Subsection (b-1) and to amend Subsection (c) to read as follows:

(b-1) (1) Collection of the surcharge imposed by this section shall be suspended for a period beginning September 1, 2017, and ending August 31, 2025, with collections to resume September 1, 2025, provided that this section has not expired prior to that date.

(2) During the period of suspension in (1), should the Texas commission on environmental quality estimate a balance in the Texas emissions reduction plan fund at an amount that the appropriations and estimated transfers and other deductions out of the fund for the following state fiscal biennium will cause the balance in the fund to fall below $500 million during that biennium, the commission shall notify the comptroller that the fund is estimated to be below the desired base level. If the comptroller concurs with that estimate, the suspension period will terminate early, and the comptroller shall cause collection of the surcharge to resume beginning September 1 of the following state fiscal biennium or as soon thereafter as is feasible, provided that this section has not expired prior to that date.

(c) This section expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2019].

SECTION 32. The heading to Section 548.5055, Transportation Code, is amended to read as follows:

Sec. 548.5055. TEXAS EMISSIONS [EMISSION] REDUCTION PLAN FEE.

SECTION 33. Section 548.5055, Transportation Code, is amended to add Subsection (b-1) and to amend Subsections (b) and (c) to read as follows:

(b) The department shall remit fees collected under this section to the comptroller at the time and in the manner prescribed by the comptroller for deposit in the Texas emissions [emission] reduction plan fund.

(b-1) Collection of the fee imposed by this section shall be suspended for a period beginning September 1, 2017, and ending August 31, 2025, with collections to resume September 1, 2025, provided that this section has not expired prior to that date.

(2) During the period of suspension in (1), should the Texas commission on environmental quality estimate a balance in the Texas emissions reduction plan fund at an amount that the appropriations and estimated transfers and other deductions out of the fund for the following state fiscal biennium will cause the balance in the fund to fall below $500 million during that biennium, the commission shall notify the comptroller and the department that the fund is estimated to be below the desired base level. If the comptroller agrees with that estimate, the comptroller shall notify the department and the suspension period will terminate early. Upon notification, the department shall cause collection of the fee to resume beginning September 1 of the following state fiscal biennium or as soon thereafter as is feasible, provided that this section has not expired prior to that date.

(c) This section expires on the last day of the state fiscal biennium containing the date marking five years from the United States Environmental Protection Agency publication of certification in the Federal Register that, with respect to each national ambient air quality standard for ozone under 40 C.F.R. Section 81.344, the United States Environmental Protection Agency has, for each designated area in Texas under that section:

(1) designated the area as attainment or unclassifiable; or

(2) approved a redesignation substitute making a finding of attainment for the area [August 31, 2019].

SECTION 34. Sections 394.009, 394.010, and 394.011, Health and Safety Code, are repealed.

SECTION 35. The changes in law made by this Act apply only to a Texas emissions reduction plan grant awarded on or after the effective date of this Act. A grant awarded before the effective date of this Act is governed by the law in effect on the date the award was made, and the former law is continued in effect for that purpose.

SECTION 36. The changes in law made by this Act apply only to a fee or surcharge collected on or after the effective date of this Act. A fee or surcharge collected before the effective date of this Act is governed by the law in effect when the fee or surcharge was collected, and the former law is continued in effect for that purpose.

SECTION 37. This Act takes effect August 30, 2017.