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  88R21958 JRR-F
 
  By: Landgraf H.B. No. 4885
 
  Substitute the following for H.B. No. 4885:
 
  By:  Landgraf C.S.H.B. No. 4885
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to programs established and funded under the Texas
  emissions reduction plan.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  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 motor vehicle purchase or lease incentive
  program established under Subchapter D;
               (3)  the air quality research support program
  established under Chapter 387;
               (4)  the clean school bus program established under
  Chapter 390;
               (5)  the new technology implementation grant program
  established under Chapter 391;
               (6)  the regional air monitoring program established
  under Section 386.252(a);
               (7)  a health effects study as provided by Section
  386.252(a);
               (8)  air quality planning activities as provided by
  Section 386.252(d);
               (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);
               (10)  the Texas clean fleet program established under
  Chapter 392;
               (11)  the Texas alternative fueling facilities program
  established under Chapter 393;
               (12)  the Texas natural gas vehicle grant 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;
               (15)  the seaport and rail yard areas emissions
  reduction program established under Subchapter D-1;
               (16)  conducting research and other activities
  associated with making any necessary demonstrations to the United
  States Environmental Protection Agency to account for the impact of
  foreign emissions or an exceptional event;
               (17)  studies of or pilot programs for incentives for
  port authorities located in nonattainment areas or affected
  counties as provided by Section 386.252(a);
               (18)  the governmental alternative fuel fleet grant
  program established under Chapter 395; [and]
               (19)  remittance of funds to the state highway fund for
  use by the Texas Department of Transportation for congestion
  mitigation and air quality improvement projects in nonattainment
  areas and affected counties; and
               (20)  the Texas hydrogen infrastructure, vehicle, and
  equipment grant program established under Subchapter G.
         SECTION 2.  Section 386.252(a), Health and Safety Code, is
  amended to read as follows:
         (a)  Money in the fund and account may be used only to
  implement and administer programs established under the plan.
  Subject to the reallocation of funds by the commission under
  Subsection (h) and after remittance to the state highway fund under
  Subsection (a-1), money from the fund and account to be used for the
  programs under Section 386.051(b) shall initially be allocated as
  follows:
               (1)  four percent may be used for the clean school bus
  program under Chapter 390;
               (2)  eight [three] percent total may be used between
  the Texas hydrogen infrastructure, vehicle, and equipment grant
  program established under Subchapter G and [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 and not more than $8 million may be used
  for the Texas hydrogen infrastructure, vehicle, and equipment grant
  program;
               (3)  five percent may be used for the Texas clean fleet
  program under Chapter 392;
               (4)  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)  7.5 [10] percent may be used for the Texas natural
  gas vehicle grant program under Chapter 394;
               (6)  not more than $6 million may be used for the Texas
  alternative fueling facilities program under Chapter 393, of which
  a specified amount may be used for fueling stations to provide
  natural gas fuel, except that money may not be allocated for the
  Texas alternative fueling facilities program for the state fiscal
  year ending August 31, 2019;
               (7)  not more than $750,000 may be used each year to
  support research related to air quality as provided by Chapter 387;
               (8)  not more than $200,000 may be used for a health
  effects study;
               (9)  at least $6 million but not more than 15 percent
  [$16 million] may be used by the commission for administrative
  costs, including all direct and indirect costs for administering
  the plan, costs for conducting outreach and education activities,
  and costs attributable to the review or approval of applications
  for marketable emissions reduction credits;
               (10)  six percent may be used by the commission for the
  seaport and rail yard areas emissions reduction program established
  under Subchapter D-1;
               (11)  2.5 [five] percent may be used for the light-duty
  motor vehicle purchase or lease incentive program established under
  Subchapter D;
               (12)  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;
               (13)  not more than $500,000 may be used for studies of
  or pilot programs for incentives for port authorities located in
  nonattainment areas or affected counties to encourage cargo
  movement that reduces emissions of nitrogen oxides and particulate
  matter; and
               (14)  the balance is to be used by the commission for
  the diesel emissions reduction incentive program under Subchapter C
  as determined by the commission.
         SECTION 3.  Chapter 386, Health and Safety Code, is amended
  by adding Subchapter G to read as follows:
  SUBCHAPTER G. TEXAS HYDROGEN INFRASTRUCTURE, VEHICLE, AND
  EQUIPMENT GRANT PROGRAM
         Sec. 386.301.  DEFINITIONS. In this subchapter:
               (1)  "Hydrogen vehicle or equipment" means a motor
  vehicle or piece of heavy-duty equipment that uses hydrogen to
  operate the vehicle or equipment, including through the use of
  hydrogen fuel cells or an internal combustion engine that runs on
  hydrogen.
               (2)  "Program" means the Texas hydrogen
  infrastructure, vehicle, and equipment grant program established
  under this subchapter.
         Sec. 386.302.  PROGRAM. (a) The commission shall establish
  and administer the Texas hydrogen infrastructure, vehicle, and
  equipment grant program to encourage the adoption of hydrogen
  infrastructure, vehicles, and equipment. Under the program, the
  commission shall provide funding for eligible projects to offset
  the incremental cost of projects that reduce emissions of oxides of
  nitrogen from high-emitting sources in nonattainment areas and
  affected counties of this state. The commission shall determine
  the eligibility of projects.
         (b)  Projects that may be considered for a grant under the
  program include:
               (1)  implementation of hydrogen infrastructure
  projects;
               (2)  purchase or lease of on-road or non-road hydrogen
  vehicles or equipment;
               (3)  replacement of on-road or non-road vehicles or
  heavy-duty equipment with newer on-road or non-road hydrogen
  vehicles or equipment;
               (4)  the repower of on-road or non-road vehicles or
  heavy-duty equipment with engines that run on or are powered by
  hydrogen; and
               (5)  use of hydrogen fuel.
         (c)  A project listed in Subsection (b) is not eligible if it
  is required by any state or federal law, rule or regulation,
  memorandum of agreement, or other legally binding document. This
  subsection does not apply to:
               (1)  an otherwise qualified project, regardless of the
  fact that the state implementation plan assumes that the change in
  vehicles, equipment, or operations will occur, if on the date the
  grant is awarded the change is not required by any state or federal
  law, rule or regulation, memorandum of agreement, or other legally
  binding document; or
               (2)  the purchase of a hydrogen vehicle or equipment or
  facility required only by local law or regulation or by corporate or
  controlling board policy of a public or private entity.
         Sec. 386.303.  APPLICATION PACKAGE. (a) The commission
  shall develop a simple, standardized application package for grants
  under this subchapter. The package must include:
               (1)  an application form;
               (2)  a brief description of:
                     (A)  the program;
                     (B)  the projects that are eligible for available
  funding;
                     (C)  the selection criteria and evaluation
  process; and
                     (D)  the required documentation;
               (3)  the name of a person or office to contact for more
  information;
               (4)  an example of the contract that an applicant will
  be required to execute before receiving a grant; and
               (5)  any other information the commission considers
  useful to inform the applicant and expedite the application
  process.
         (b)  The application form shall require as much information
  as the commission determines is necessary to properly evaluate each
  project but shall otherwise minimize the information required.
         Sec. 386.304.  APPLICATION REVIEW PROCEDURES. (a) The
  commission shall review an application for a grant for a project
  authorized under this subchapter. If the commission determines
  that an application is incomplete, the commission shall notify the
  applicant with an explanation of what is missing from the
  application. The commission shall evaluate the completed
  application according to the appropriate project criteria. Subject
  to available funding, the commission shall make a final
  determination on an application as soon as possible.
         (b)  The commission shall make every effort to expedite the
  application review process and to award grants to qualified
  projects in a timely manner. 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 an application for a project
  that does not meet the applicable project criteria or that the
  commission determines is not made in good faith, is not credible, or
  is not in compliance with this chapter and the goals of this
  chapter.
         (d)  Subject to availability of funds, the commission shall
  award a grant under this subchapter in conjunction with the
  execution of a contract that obligates the commission to make the
  grant and the recipient to perform the actions described in the
  recipient's grant application. The contract must incorporate
  provisions for recapturing grant money in proportion to any loss of
  emissions reductions compared with the volume of emissions
  reductions that was projected in awarding the grant. Grant money
  recaptured under the contract provision shall be deposited in the
  fund and reallocated for other projects under this chapter.
         SECTION 4.  Section 391.002(b), Health and Safety Code, is
  amended to read as follows:
         (b)  Projects that may be considered for a grant under the
  program include:
               (1)  advanced clean energy projects, as defined by
  Section 382.003;
               (2)  new technology projects that reduce emissions of
  regulated pollutants from stationary sources;
               (3)  new technology projects that reduce emissions from
  upstream, [and] midstream, or downstream oil and gas production,
  completions, gathering, storage, processing, or [and] transmission
  activities through:
                     (A)  the replacement, repower, or retrofit of
  stationary compressor engines;
                     (B)  the installation of systems to reduce or
  eliminate the loss of gas, flaring of gas, or burning of gas using
  other combustion control devices; or
                     (C)  the installation of systems that reduce
  flaring emissions and other site emissions; and
               (4)  electricity storage projects related to renewable
  energy, including projects to store electricity produced from wind
  and solar generation that provide efficient means of making the
  stored energy available during periods of peak energy use.
         SECTION 5.  Sections 394.005(a), (b), and (c), Health and
  Safety Code, are amended to read as follows:
         (a)  The commission shall establish criteria for
  prioritizing qualifying vehicles eligible to receive grants under
  this chapter. The commission shall review and revise the criteria
  as appropriate. The criteria must prioritize the awarding of
  grants under this chapter in the following order:
               (1)  qualifying vehicles for which not less than 75
  percent of the annual use of the vehicle, either in terms of mileage
  or fuel use as determined by the commission, will occur in the clean
  transportation zone;
               (2)  qualifying vehicles not described by Subdivision
  (1) for which not less than 75 percent of the annual use of the
  vehicle, either in terms of mileage or fuel use as determined by the
  commission, will occur in:
                     (A)  counties in which an interstate highway is
  located; or
                     (B)  a combination of counties described by
  Paragraph (A) and the clean transportation zone; and
               (3)  qualifying vehicles not described by Subdivision
  (1) or (2) that will produce the greatest emissions reductions.
         (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 qualifying
  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;
                     (B)  replace a heavy-duty or medium-duty motor
  vehicle that:
                           (i)  is owned by the applicant;
                           (ii)  is an on-road vehicle that has been:
                                 (a)  owned, leased, or otherwise
  commercially financed and operated in Texas as a fleet vehicle for
  at least the two years immediately preceding the submission of a
  grant application; and
                                 (b)  registered in Texas [a county
  located in the clean transportation zone] for at least the two years
  immediately preceding the submission of a grant application; and
                           (iii)  otherwise satisfies the mileage,
  usage, and useful life requirements established under Paragraph (A)
  as determined by documentation associated with the vehicle; or
                     (C)  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 or the date
  the vehicle has been in operation for 400,000 miles after the
  activity start date established by the commission.  [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.]
         SECTION 6.  The change in law made by this Act applies only
  to a 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 7.  This Act takes effect September 1, 2023.