85R34364 AAF-D     By: Birdwell S.R. No. 939     R E S O L U T I O N            BE IT RESOLVED by the Senate of the State of Texas, 85th   Legislature, Regular Session, 2017, That Senate Rule 12.03 be   suspended in part as provided by Senate Rule 12.08 to enable the   conference committee appointed to resolve the differences on Senate   Bill 1731 (the repeal of laws governing certain state entities,   including the functions of those entities) to consider and take   action on the following matters:          (1)  Senate Rule 12.03(4) is suspended to permit the   committee to add text on a matter not included in either the house   or senate version of the bill by adding the following text in   proposed SECTION 8 of the bill:          SECTION 8.  TEXAS EMISSIONS REDUCTION PLAN ADVISORY BOARD.           . . .          (b)  To the extent of a conflict between Subsection (a-2) of   this section and any change in law made by another provision of this   section, the change in law made by the other provision of this   section controls.          (b-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Subchapter B, Chapter 382, Health and Safety Code, is   amended by adding Section 382.037 to read as follows:          Sec. 382.037.  NOTICE IN TEXAS REGISTER REGARDING NATIONAL   AMBIENT AIR QUALITY STANDARDS FOR OZONE. (a) This section applies   only if:                (1)  with respect to each active or revoked national   ambient air quality standard for ozone referenced in 40 C.F.R.   Section 81.344, the United States Environmental Protection Agency   has, for each designated area referenced in that section:                      (A)  designated the area as attainment or   unclassifiable/attainment; or                      (B)  approved a redesignation substitute making a   finding of attainment for the area; and                (2)  for each designated area described by Subdivision   (1), with respect to an action of the United States Environmental   Protection Agency described by Subdivision (1)(A) or (B):                      (A)  the action has been fully and finally upheld   following judicial review or the limitations period to seek   judicial review of the action has expired; and                      (B)  the rules under which the action was approved   by the agency have been fully and finally upheld following judicial   review or the limitations period to seek judicial review of those   rules has expired.          (b)  Not later than the 30th day after the date the   conditions described by Subsection (a) have been met, the   commission shall publish notice in the Texas Register that, with   respect to each active or revoked national ambient air quality   standard for ozone referenced in 40 C.F.R. Section 81.344, the   United States Environmental Protection Agency has, for each   designated area referenced in that section:                (1)  designated the area as attainment or   unclassifiable/attainment; or                (2)  approved a redesignation substitute making a   finding of attainment for the area.          (b-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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.          (c)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, 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 during which the commission   publishes in the Texas Register the notice required by Section   382.037 [August 31, 2019].          (c-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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) [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) [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 seaport and rail yard areas emissions   reduction [drayage truck incentive] 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); and                (18)  the governmental alternative fuel fleet grant   program established under Chapter 395.          (c-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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 393.001.          (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].           . . .          (d-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 386.103, Health and Safety Code, is amended   by adding Subsection (c) to read as follows:          (c)  To reduce the administrative burden for the commission   and applicants, the commission may streamline the application   process by:                (1)  reducing data entry and the copying and recopying   of applications; and                (2)  developing, maintaining, and periodically   updating a system to accept applications electronically through the   commission's Internet website.          (d-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Sections 386.104(f) and (j), Health and Safety Code,   are 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.           . . .          (e-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Sections 386.116(a), (b), and (c), Health and Safety   Code, are amended to read as follows:          (a)  In this section, "small business" means a business owned   by a person who:                (1)  owns and operates not more than five [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].          (b)  The commission [by rule] shall develop a method of   providing fast and simple access to grants under this subchapter   for a small business. The method must:                (1)  create a separate small business grant program; or                (2)  require the commission to give special   consideration to small businesses when implementing another   program established under this subchapter.          (c)  The commission shall publicize and promote the   availability of grants under this subchapter for small businesses   [section] to encourage the use of vehicles that produce fewer   emissions.          (e-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Chapter 386, Health and Safety Code, is amended by   adding Subchapter D to read as follows:   SUBCHAPTER D.  MOTOR VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM          Sec. 386.151.  DEFINITIONS. In this subchapter:                (1)  "Light-duty motor vehicle" means a motor vehicle   with a gross vehicle weight rating of less than 10,000 pounds.                (2)  "Motor vehicle" means a self-propelled device   designed for transporting persons or property on a public highway   that is required to be registered under Chapter 502, Transportation   Code.          Sec. 386.152.  APPLICABILITY. The provisions of this   subchapter relating to a lessee do not apply to a person who rents   or leases a light-duty motor vehicle for a term of 30 days or less.          Sec. 386.153.  COMMISSION DUTIES REGARDING LIGHT-DUTY MOTOR   VEHICLE PURCHASE OR LEASE INCENTIVE PROGRAM. (a)  The commission   shall develop a purchase or lease incentive program for new   light-duty motor vehicles and shall adopt rules necessary to   implement the program.          (b)  The program shall authorize statewide incentives for   the purchase or lease of new light-duty motor vehicles powered by   compressed natural gas, liquefied petroleum gas, or hydrogen fuel   cell or other electric drives for a purchaser or lessee who agrees   to register and operate the vehicle in this state for a minimum   period of time to be established by the commission.          (c)  Only one incentive will be provided for each new   light-duty motor vehicle. The incentive shall be provided to the   lessee and not to the purchaser if the motor vehicle is purchased   for the purpose of leasing the vehicle to another person.          (d)  The commission by rule may revise the standards for the   maximum unloaded vehicle weight rating and gross vehicle weight   rating of an eligible vehicle to ensure that all of the vehicle   weight configurations available under one general vehicle model may   be eligible for an incentive.          Sec. 386.154.  LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE   INCENTIVE REQUIREMENTS. (a)  A new light-duty motor vehicle   powered by compressed natural gas or liquefied petroleum gas is   eligible for a $5,000 incentive if the vehicle:                (1)  has four wheels;                (2)  was originally manufactured to comply with and has   been certified by an original equipment manufacturer or   intermediate or final state vehicle manufacturer as complying with,   or has been altered to comply with, federal motor vehicle safety   standards, state emissions regulations, and any additional federal   or state regulations applicable to vehicles powered by compressed   natural gas or liquefied petroleum gas;                (3)  was manufactured for use primarily on public   streets, roads, and highways;                (4)  has a dedicated or bi-fuel compressed natural gas   or liquefied petroleum gas fuel system:                      (A)  installed prior to first sale or within 500   miles of operation of the vehicle following first sale; and                      (B)  with a range of at least 125 miles as   estimated, published, and updated by the United States   Environmental Protection Agency;                (5)  has, as applicable, a:                      (A)  compressed natural gas fuel system that   complies with the:                            (i)  2013 NFPA 52 Vehicular Gaseous Fuel   Systems Code; and                            (ii)  American National Standard for Basic   Requirements for Compressed Natural Gas Vehicle (NGV) Fuel   Containers, commonly cited as "ANSI/CSA NGV2"; or                      (B)  liquefied petroleum gas fuel system that   complies with:                            (i)  the 2011 NFPA 58 Liquefied Petroleum   Gas Code; and                            (ii)  Section VII of the 2013 ASME Boiler and   Pressure Vessel Code; and                (6)  was acquired on or after September 1, 2013, or a   later date established by the commission, by the person applying   for the incentive under this subsection and for use or lease by that   person and not for resale.          (b)  If the commission determines that an updated version of   a code or standard described by Subsection (a)(5) is more stringent   than the version of the code or standard described by Subsection   (a)(5), the commission by rule may provide that a vehicle for which   a person applies for an incentive under Subsection (a) is eligible   for the incentive only if the vehicle complies with the updated   version of the code or standard.          (c)  The incentive under Subsection (a) is limited to 1,000   vehicles for each state fiscal biennium.          (d)  A new light-duty motor vehicle powered by an electric   drive is eligible for a $2,500 incentive if the vehicle:                (1)  has four wheels;                (2)  was manufactured for use primarily on public   streets, roads, and highways;                (3)  has not been modified from the original   manufacturer's specifications;                (4)  has a maximum speed capability of at least 55 miles   per hour;                (5)  is propelled to a significant extent by an   electric motor that draws electricity from a hydrogen fuel cell or   from a battery that:                      (A)  has a capacity of not less than four kilowatt   hours; and                      (B)  is capable of being recharged from an   external source of electricity; and                (6)  was acquired on or after September 1, 2013, or a   later date as established by the commission, by the person applying   for the incentive under this subsection and for use or lease by that   person and not for resale.          (e)  The incentive under Subsection (d) is limited to 2,000   vehicles for each state fiscal biennium.          Sec. 386.155.  MANUFACTURER'S REPORT. (a)  At the beginning   of but not later than July 1 of each year preceding the vehicle   model year, a manufacturer of motor vehicles, an intermediate or   final state vehicle manufacturer, or a manufacturer of compressed   natural gas or liquefied petroleum gas systems shall provide to the   commission a list of the new vehicle or natural gas or liquefied   petroleum gas systems models that the manufacturer intends to sell   in this state during that model year that meet the incentive   requirements established under Section 386.154. The manufacturer   or installer may supplement the list provided to the commission   under this section as necessary to include additional new vehicle   models the manufacturer intends to sell in this state during the   model year.          (b)  The commission may supplement the information provided   under Subsection (a) with additional information on available   vehicle models, including information provided by manufacturers or   installers of systems to convert new motor vehicles to operate on   natural gas or liquefied petroleum gas before sale as a new vehicle   or within 500 miles of operation of the vehicle following first   sale.          Sec. 386.156.  LIST OF ELIGIBLE MOTOR VEHICLES. (a)  On   August 1 of each year the commission shall publish a list of new   motor vehicle models eligible for inclusion in an incentive under   this subchapter. The commission shall publish supplements to that   list as necessary to include additional new vehicle models.          (b)  The commission shall publish the list of eligible motor   vehicle models on the commission's Internet website.          Sec. 386.157.  LIGHT-DUTY MOTOR VEHICLE PURCHASE OR LEASE   INCENTIVE. (a)  A person who purchases or leases a new light-duty   motor vehicle described by Section 386.154 and listed under Section   386.156(a) is eligible to apply for an incentive under this   subchapter.          (b)  A lease incentive for a new light-duty motor vehicle   shall be prorated based on a three-year lease term.          (c)  To receive money under an incentive program provided by   this subchapter, the purchaser or lessee of a new light-duty motor   vehicle who is eligible to apply for an incentive under this   subchapter shall apply for the incentive in the manner provided by   law or by rule of the commission.          Sec. 386.158.  COMMISSION TO ACCOUNT FOR MOTOR VEHICLE   PURCHASE OR LEASE INCENTIVES. (a)  The commission by rule shall   develop a method to administer and account for the motor vehicle   purchase or lease incentives authorized by this subchapter and to   pay incentive money to the purchaser or lessee of a new motor   vehicle, on application of the purchaser or lessee as provided by   this subchapter.          (b)  The commission shall develop and publish forms and   instructions for the purchaser or lessee of a new motor vehicle to   use in applying to the commission for an incentive payment under   this subchapter. The commission shall make the forms available to   new motor vehicle dealers and leasing agents. Dealers and leasing   agents shall make the forms available to their prospective   purchasers or lessees.          (c)  The commission may require the submission of forms and   documentation as needed to verify eligibility for an incentive   under this subchapter.          Sec. 386.159.  PURCHASE OR LEASE INCENTIVES INFORMATION.   (a)  The commission shall establish a toll-free telephone number   available to motor vehicle dealers and leasing agents for the   dealers and agents to call to verify that incentives are available.   The commission may provide for issuing verification numbers over   the telephone line.          (b)  Reliance by a dealer or leasing agent on information   provided by the commission is a complete defense to an action   involving or based on eligibility of a vehicle for an incentive or   availability of vehicles eligible for an incentive.          Sec. 386.160.  RESERVATION OF INCENTIVES. The commission   may provide for dealers and leasing agents to reserve for a limited   time period incentives for vehicles that are not readily available   and must be ordered, if the dealer or leasing agent has a purchase   or lease order signed by an identified customer.          (f)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, the heading to Subchapter D-1, Chapter 386, Health and   Safety Code, is amended to read as follows:   SUBCHAPTER D-1. SEAPORT AND RAIL YARD AREAS EMISSIONS REDUCTION   [DRAYAGE TRUCK INCENTIVE] PROGRAM          (f-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, the heading to Section 386.181, Health and Safety   Code, is amended to read as follows:          Sec. 386.181.  DEFINITIONS [DEFINITION]; RULES.          (f-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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.                (2)  "Drayage [, "drayage] truck" means a heavy-duty   on-road or non-road vehicle that is used for drayage activities and   that operates in or transgresses through [truck that transports a   load to or from] a seaport or rail yard for the purpose of loading,   unloading, or transporting cargo, including transporting empty   containers and chassis.                (3)  "Repower" means to replace an old engine powering   a vehicle with a new engine, a used engine, a remanufactured engine,   or electric motors, drives, or fuel cells.          (g)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Section 386.182, Health and Safety Code, is amended to   read as follows:          Sec. 386.182.  COMMISSION DUTIES. (a)  The commission   shall:                (1)  develop a purchase incentive program to encourage   owners to:                      (A)  replace older drayage trucks and cargo   handling equipment [with pre-2007 model year engines] with newer   drayage trucks and cargo handling equipment; or                      (B)  repower drayage trucks and cargo handling   equipment; and                (2)  [shall] adopt guidelines necessary to implement   the program described by Subdivision (1).          (b)  The commission by rule and guideline shall establish   criteria for the engines and 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.]          (g-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, the heading to Section 386.183, Health and Safety   Code, is amended to read as follows:          Sec. 386.183.  DRAYAGE TRUCK AND CARGO HANDLING EQUIPMENT   PURCHASE INCENTIVE.          (g-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 386.183, Health and Safety Code, is amended   by amending Subsections (a), (b), (c), (d), and (e) and adding   Subsection (a-1) to read as follows:          (a)  To be eligible for an incentive under this subchapter, a   person must:                (1)  purchase a replacement drayage truck, piece of   cargo handling equipment, or engine that under Subsection   (a-1)(1)(A) or (2)(A), as applicable, and 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 replacement or repowered vehicle is an on-road drayage truck;                      (B)  operate the replacement or repowered 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   truck's or equipment's [vehicle's] annual mileage or hours of   operation, as determined by the commission; and                      (C)  permanently remove the [a pre-2007] drayage   truck, cargo handling equipment, or engine replaced under the   program [containing a pre-2007 engine owned by the person] from   operation in a nonattainment area of this state by destroying the   engine in accordance with guidelines established by the commission   and, if the incentive is for a replacement drayage truck or cargo   handling equipment, 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 purchase under this program:                (1)  a drayage truck or cargo handling equipment must:                      (A)  be powered by an electric motor or contain an   engine certified to the current federal emissions standards   applicable to that type of engine, as determined by the commission;   and                      (B)  emit oxides of nitrogen at a rate that is at   least 25 percent less than the rate at which the truck or equipment   being replaced under the program emits such pollutants; and                (2)  an engine repowering a drayage truck or cargo   handling equipment must:                      (A)  be an electric motor or an engine certified   to the current federal emissions standards applicable to that type   of engine, as determined by the commission; and                      (B)  emit oxides of nitrogen at a rate that is at   least 25 percent less than the rate at which the former engine in   the truck or equipment being repowered under the program emits such   pollutants.          (b)  To receive money under an incentive program provided by   this subchapter, the purchaser of a drayage truck, piece of cargo   handling equipment, or engine 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 piece of cargo handling equipment purchased or   repowered.          (d)  An incentive provided under this subchapter may be used   to fund not more than 80 percent of, as applicable, the purchase   price of:                (1)  the drayage truck or cargo handling equipment; or                (2)  the engine and any other eligible costs associated   with repowering the drayage truck or cargo handling equipment, as   determined by the commission.          (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   or repowered for at least two years prior to receiving the grant;   and                (2)  as applicable:                      (A)  after purchase of the replacement drayage   truck or cargo handling equipment, permanently destroys the engine   and scraps the [drayage] truck or 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; or                      (B)  after repowering the drayage truck or cargo   handling equipment, permanently destroys the engine that was   contained in the truck or equipment in accordance with guidelines   established by the commission [, after the purchase of the new   truck].          (h)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, 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 (h), money [Money] appropriated to the commission   to be used for the programs under Section 386.051(b) shall   initially be allocated as follows:                (1)  [not more than] four percent may be used for the   clean school bus program under Chapter 390;                (2)  [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)  five percent may [shall] be used for the 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)  10 [not less than 16] percent may [shall] be used   for the Texas natural gas vehicle grant program under Chapter 394;                (6)  not more than $6 million [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, 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) [(8)]  not more than $750,000 [a specified amount]   may be used each year to support research related to air quality as   provided by Chapter 387;                (8) [(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];                (9) [(11)]  at least $6 [$4] million but not more than   $8 [and up to four percent to a maximum of $7] million[, whichever   is greater,] is allocated to 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 [(12)  at least two] percent may [and up to   five percent of the fund is to] be used by the commission for the   seaport and rail yard areas emissions reduction [drayage truck   incentive] program established under Subchapter D-1;                (11) [(13)  not more than] five percent may be used for   the light-duty motor vehicle purchase or lease incentive program   established under Subchapter D;                (12) [(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;                (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 [(15)     1.5 percent of the money in the fund is allocated for   administrative costs incurred by the laboratory]; and                (14) [(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)  [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)     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)     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   action 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)     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)]  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.          (c) [(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.          (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.          (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.          (f)  To the extent that money is appropriated from the fund   for that purpose, not more than $2.5 million may be used by the   commission to conduct 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.          (g)  To the extent that money is appropriated from the fund   for that purpose, the commission may use that money to award grants   under the governmental alternative fuel fleet grant program   established under Chapter 395, except that the commission may not   use for that purpose more than three percent of the balance of the   fund as of September 1 of each state fiscal year of the biennium for   the governmental alternative fuel fleet grant program in that   fiscal year.          (h)  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.          (h-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 390.001, Health and Safety Code, is amended   by amending Subdivision (1) and adding Subdivision (1-a) to read as   follows:                (1)  "Commission" means the Texas Commission on   Environmental Quality.                (1-a) "Diesel exhaust" means one or more of the air   pollutants emitted from an engine by the combustion of diesel fuel,   including particulate matter, nitrogen oxides, volatile organic   compounds, air toxics, and carbon monoxide.          (h-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 390.002(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)  diesel oxidation catalysts for school buses built   before 1994;                (2)  diesel particulate filters for school buses built   from 1994 to 1998;                (3)  the purchase and use of emission-reducing add-on   equipment for school buses, including devices that reduce crankcase   emissions;                (4)  the use of qualifying fuel; [and]                (5)  other technologies that the commission finds will   bring about significant emissions reductions; and                (6)  replacement of a pre-2007 model year school bus.          (i)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Section 390.004, Health and Safety Code, is amended by   adding Subsections (c) and (d) to read as follows:          (c)  A school bus proposed for replacement must:                (1)  be of model year 2006 or earlier;                (2)  have been owned and operated by the applicant for   at least the two years before submission of the grant application;                 (3)  be in good operational condition; and                (4)  be currently used on a regular, daily route to and   from a school.          (d)  A school bus proposed for purchase to replace a pre-2007   model year school bus must be of the current model year or the year   before the current model year at the time of submission of the grant   application.          (i-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 390.005, Health and Safety Code, is amended   to read as follows:          Sec. 390.005.  RESTRICTION ON USE OF GRANT. (a)  A   recipient of a grant under this chapter shall use the grant to pay   the incremental costs of the project for which the grant is made,   which may include 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.          (b)  A school bus acquired to replace an existing school bus   must be purchased and the grant recipient must agree to own and   operate the school bus on a regular, daily route to and from a   school for at least five years after a start date established by the   commission, based on the date the commission accepts documentation   of the permanent destruction or permanent removal of the school bus   being replaced.          (c)  A school bus replaced under this program must be   rendered permanently inoperable by crushing the bus, by making a   hole in the engine block and permanently destroying the frame of the   bus, or by another method approved by the commission, or be   permanently removed from operation in this state.  The commission   shall establish criteria for ensuring the permanent destruction or   permanent removal of the engine or bus.  The commission shall   enforce the destruction and removal requirements.          (d)  In this section, "permanent removal" means the   permanent export of a school bus or the engine of a school bus to a   destination outside of the United States, Canada, or the United   Mexican States.          (i-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 390.006, Health and Safety Code, is amended   to read as follows:          Sec. 390.006.  EXPIRATION. This chapter expires on the last   day of the state fiscal biennium during which the commission   publishes in the Texas Register the notice required by Section   382.037 [August 31, 2019].          (j)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, 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 [point] sources;                (3)  new technology projects that reduce emissions from   upstream and midstream oil and gas production, completions,   gathering, storage, processing, 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 by capturing waste heat   to generate electricity solely for on-site service; and                (4) [(3)]  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.          (j-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 391.102(f), Health and Safety Code, is   amended to read as follows:          (f)  In reviewing a grant application under this chapter   [coordinating interagency application review procedures], the   commission may [shall]:                (1)  solicit review and comments from:                      (A)  the comptroller to assess:                            (i)  the financial stability of the   applicant;                            (ii)  the economic benefits and job creation   potential associated with the project; and                            (iii)  any other information related to the   duties of that office;                      (B)  the Public Utility Commission of Texas to   assess:                            (i)  the reliability of the proposed   technology;                            (ii)  the feasibility and   cost-effectiveness of electric transmission associated with the   project; and                            (iii)  any other information related to the   duties of that agency; and                      (C)  the Railroad Commission of Texas to assess:                            (i)  the availability and cost of the fuel   involved with the project; and                            (ii)  any other information related to the   duties of that agency; and                (2)  consider the comments received under Subdivision   (1) in the commission's grant award decision process[; and                [(3) as part of the report required by Section 391.104,   justify awards made to projects that have been negatively reviewed   by agencies under Subdivision (1)].          (j-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 391.104, Health and Safety Code, is amended   to read as follows:          Sec. 391.104.  REPORTING REQUIREMENTS. The commission   [annually] shall include in the biennial plan report required by   Section 386.057(b) information [prepare a report] that summarizes   the applications received and grants awarded in the preceding   biennium [year]. Preparation of the information for the report may   [must] include the participation of any [the] state agency   [agencies] involved in the review of applications under Section   391.102, if the commission determines participation of the agency   is needed.          (k)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Section 391.205(a), Health and Safety Code, is amended to   read as follows:          (a)  Except as provided by Subsection (c), in awarding grants   under this chapter the commission shall give preference to projects   that:                (1)  involve the transport, use, recovery for use, or   prevention of the loss of natural resources originating or produced   in this state;                (2)  contain an energy efficiency component; [or]                (3)  include the use of solar, wind, or other renewable   energy sources; or                (4)  recover waste heat from the combustion of natural   resources and use the heat to generate electricity.          (k-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 391.304, Health and Safety Code, is amended   to read as follows:          Sec. 391.304.  EXPIRATION. This chapter expires on the last   day of the state fiscal biennium during which the commission   publishes in the Texas Register the notice required by Section   382.037 [August 31, 2019].          (k-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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.          (l)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Sections 392.002(b) and (c), Health and Safety Code, are   amended to read as follows:          (b)  An entity that places 10 [20] or more qualifying   vehicles in service for use entirely in this state during a calendar   year is eligible to participate in the program.          (c)  Notwithstanding Subsection (b), an entity that submits   a grant application for 10 [20] or more qualifying vehicles is   eligible to participate in the program even if the commission   denies approval for one or more of the vehicles during the   application process.          (l-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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.          (l-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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.]          (m)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, 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 shall   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.          (m-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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 during which the commission   publishes in the Texas Register the notice required by Section   382.037 [August 31, 2017].          (m-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 393.001, Health and Safety Code, is amended   by amending Subdivision (1) and adding Subdivision (1-a) to read as   follows:                (1)  "Alternative fuel" means a fuel other than   gasoline or diesel fuel, other than biodiesel 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.                (1-a)  "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;                            (ii)  the most direct route using highways   in the state highway system connecting Corpus Christi and Laredo;   or                            (iii)  a highway corridor connecting Corpus   Christi and Houston;                      (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.          (n)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Section 393.002, Health and Safety Code, is amended to   read as follows:          Sec. 393.002.  PROGRAM. (a)  The commission shall establish   and administer the Texas alternative fueling facilities program to   provide fueling facilities for alternative fuel in the clean   transportation zone [nonattainment areas].  Under the program, the   commission shall provide a grant for each eligible facility to   offset the cost of those facilities.          (b)  An entity that constructs or[,] reconstructs[, or   acquires] an alternative fueling facility is eligible to   participate in the program.          (c)  To ensure that alternative fuel vehicles have access to   fuel and to build the foundation for a self-sustaining market for   alternative fuels in Texas, the commission shall provide for   strategically placed fueling facilities in the clean   transportation zone to enable an alternative fuel vehicle to travel   in those areas relying solely on the alternative fuel.          (d)  The commission shall maintain a listing to be made   available to the public online of all vehicle fueling facilities   that have received grant funding, including location and hours of   operation.          (n-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 393.003, Health and Safety Code, is amended   by amending Subsections (a) and (b) and adding Subsections (d) and   (e) to read as follows:          (a)  An entity operating in this state that constructs or[,]   reconstructs[, or acquires] a facility to [store, compress, or]   dispense alternative fuels may apply for and receive a grant under   the program.          (b)  The commission may [adopt guidelines to] allow a   regional planning commission, council of governments, or similar   regional planning agency created under Chapter 391, Local   Government Code, or a private nonprofit organization to apply for   and receive a grant to improve the ability of the program to achieve   its goals.          (d)  An application for a grant under the program must   include a certification that the applicant complies with laws,   rules, guidelines, and requirements applicable to taxation of fuel   provided by the applicant at each fueling facility owned or   operated by the applicant. The commission may terminate a grant   awarded under this section without further obligation to the grant   recipient if the commission determines that the recipient did not   comply with a law, rule, guideline, or requirement described by   this subsection. This subsection does not create a cause of action   to contest an application or award of a grant.          (e)  The commission shall disburse grants under the program   through a competitive application selection process to offset a   portion of the eligible costs.          (n-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 393.004, Health and Safety Code, is amended   to read as follows:          Sec. 393.004.  ELIGIBILITY OF FACILITIES FOR GRANTS.   (a)  In addition to the requirements of this chapter, the   commission shall establish additional eligibility and   prioritization criteria as needed to implement the program [The   commission by rule shall establish criteria for prioritizing   facilities eligible to receive grants under this chapter.   The   commission shall review and revise the criteria as appropriate].          (b)  The prioritization criteria established under   Subsection (a) must provide that, for each grant round, the   commission may not award a grant to an entity that does not [To be   eligible for a grant under the program, the entity receiving the   grant must] agree to make the alternative fueling facility   accessible and available to the public [persons not associated with   the entity] at times designated by the grant contract until each   eligible entity that does agree to those terms has been awarded a   grant [agreement].          (c)  The commission may not award more than one grant for   each facility.          (d)  The commission may give preference to or otherwise limit   grant selections to:                (1)  fueling facilities providing specific types of   alternative fuels;                (2)  fueling facilities in a specified area or   location; and                (3)  fueling facilities meeting other specified   prioritization criteria established by the commission.          (e)  For fueling facilities to provide natural gas, the   commission shall give preference to:                (1)  facilities providing both liquefied natural gas   and compressed natural gas at a single location;                (2)  facilities located not more than one mile from an   interstate highway system;                (3)  facilities located in the area in and between the   Houston, San Antonio, and Dallas-Fort Worth areas; and                (4)  facilities located in the area in and between the   Corpus Christi, Laredo, and San Antonio areas [A recipient of a   grant under this chapter is not eligible to receive a second grant   under this chapter for the same facility].          (o)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Section 393.005, Health and Safety Code, is amended to   read as follows:          Sec. 393.005.  RESTRICTION ON USE OF GRANT.  (a)  A   recipient of a grant under this chapter shall use the grant only to   pay the costs of the facility for which the grant is made.  The   recipient may not use the grant to pay the recipient's:                (1)  administrative expenses;                (2)  expenses for the purchase of land or an interest in   land; or                (3)  expenses for equipment or facility improvements   that are not directly related to the delivery, storage,   compression, or dispensing of the alternative fuel at the facility.          (b)  Each grant must be awarded using a contract that   requires the recipient to meet operational, maintenance, and   reporting requirements as specified by the commission.          (o-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 393.006, Health and Safety Code, is amended   to read as follows:          Sec. 393.006.  AMOUNT OF GRANT.  (a)  Grants awarded under   this chapter for a facility to provide alternative fuels other than   natural gas may not exceed [For each eligible facility for which a   recipient is awarded a grant under the program, the commission   shall award the grant in an amount equal to] the lesser of:                (1)  50 percent of the sum of the actual eligible costs   incurred by the grant recipient within deadlines established by the   commission [to construct, reconstruct, or acquire the facility]; or                (2)  $600,000.          (b)  Grants awarded under this chapter for a facility to   provide natural gas may not exceed:                (1)  $400,000 for a compressed natural gas facility;                (2)  $400,000 for a liquefied natural gas facility; or                (3)  $600,000 for a facility providing both liquefied   and compressed natural gas.          (o-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Section 393.007, Health and Safety Code, is amended   to read as follows:          Sec. 393.007.  EXPIRATION.  This chapter expires on the last   day of the state fiscal biennium during which the commission   publishes in the Texas Register the notice required by Section   382.037 [August 31, 2018].          (p)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, Section 394.001, Health and Safety Code, is amended by   amending Subdivisions (1), (4), (5), and (8) and adding   Subdivisions (1-a) and (7-a) to read as follows:                (1)  "Certified" includes:                      (A)  new vehicle or new engine certification by   the United States Environmental Protection Agency; or                      (B)  certification or approval by the United   States Environmental Protection Agency of a system to convert a   vehicle or engine to operate on an alternative fuel and a   demonstration by the emissions data used to certify or approve the   vehicle or engine, if the commission determines the testing used to   obtain the emissions data is consistent with the testing required   for approval of an alternative fuel conversion system for new and   relatively new vehicles or engines under 40 C.F.R. Part 85   ["Advisory board" means the Texas Emissions Reduction Plan Advisory   Board].                (1-a)  "Clean transportation zone" has the meaning   assigned by Section 393.001.                (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 natural gas, including compressed   natural gas, liquefied natural gas, or liquefied petroleum gas; or                       (B)  on a combination of diesel fuel and natural   gas, including compressed natural gas, liquefied natural gas, or   liquefied petroleum gas, and is capable of achieving at least 60   percent displacement of diesel fuel with 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].          (p-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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].          (p-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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)  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 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 [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 shall   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, or be [that] permanently removed    [removes the vehicle] from operation in this state.  The commission   shall establish criteria for ensuring the permanent destruction or   permanent removal of the engine or vehicle.  The commission shall   enforce the destruction and removal requirements.  For purposes of   this subsection, "permanent removal" means the permanent export of   the vehicle or engine to a destination outside of the United States,   Canada, or the United Mexican States.          (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 . . . .          (i)  The executive director may [shall] waive the   requirements of Subsection (b)(2)(A)(i) or (B)(ii) on a finding of   good cause, which may include short lapses in registration or   operation due to economic conditions, seasonal work, or other   circumstances.          (q)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, 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.          (q-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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.          (q-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, 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; and                (3)  preapproving the award of grants to applicants who   propose to purchase and replace motor vehicles described by Section   394.005(b)(2)(B).          (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 natural gas engines 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 using procedures established by the   commission, which may include 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.          (r)  Effective on the date that the Texas Emissions Reduction   Plan Advisory Board is abolished under Subsection (a) of this   section, 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 during which the commission   publishes in the Texas Register the notice required by Section   382.037 [August 31, 2017].          (r-1)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, Subtitle C, Title 5, Health and Safety Code, is   amended by adding Chapter 395 to read as follows:   CHAPTER 395.  GOVERNMENTAL ALTERNATIVE FUEL FLEET GRANT PROGRAM          Sec. 395.001.  DEFINITIONS. In this chapter:                (1)  "Alternative fuel" means compressed natural gas,   liquefied natural gas, liquefied petroleum gas, hydrogen fuel   cells, or electricity, including electricity to power fully   electric motor vehicles and plug-in hybrid motor vehicles.                (2)  "Commission" means the Texas Commission on   Environmental Quality.                (3)  "Incremental cost" has the meaning assigned by   Section 386.001.                (4)  "Motor vehicle" means a self-propelled device   designed for transporting persons or property on a public highway   that is required to be registered under Chapter 502, Transportation   Code.                (5)  "Plug-in hybrid motor vehicle" has the meaning   assigned by Section 2158.001, Government Code.                (6)  "Political subdivision" means a county,   municipality, school district, junior college district, river   authority, water district or other special district, or other   political subdivision created under the constitution or a statute   of this state.                (7)  "Program" means the governmental alternative fuel   fleet grant program established under this chapter.                (8)  "State agency" has the meaning assigned by Section   2151.002, Government Code, and includes the commission.          Sec. 395.002.  PROGRAM. (a) The commission shall establish   and administer a governmental alternative fuel fleet grant program   to assist an eligible applicant described by Section 395.003 in   purchasing or leasing new motor vehicles that operate primarily on   an alternative fuel.          (b)  The program may provide a grant to an applicant   described by Section 395.003 to:                (1)  purchase or lease a new motor vehicle described by   Section 395.004; or                (2)  purchase, lease, or install refueling   infrastructure or equipment or procure refueling services as   described by Section 395.005 to store and dispense alternative fuel   needed for a motor vehicle described by Subdivision (1) of this   subsection.          Sec. 395.003.  ELIGIBLE APPLICANTS. (a)  A state agency or   political subdivision is eligible to apply for a grant under the   program if the entity operates a fleet of more than 15 motor   vehicles, excluding motor vehicles that are owned and operated by a   private company or other third party under a contract with the   entity.          (b)  A mass transit or school transportation provider or   other public entity established to provide public or school   transportation services is eligible for a grant under the program.          Sec. 395.004.  MOTOR VEHICLE REQUIREMENTS. (a)  A grant   recipient may purchase or lease with money from a grant under the   program a new motor vehicle that is originally manufactured to   operate using one or more alternative fuels or is converted to   operate using one or more alternative fuels before the first retail   sale of the vehicle, and that:                (1)  has a dedicated system, dual-fuel system, or   bi-fuel system; and                (2)  if the motor vehicle is a fully electric motor   vehicle or plug-in hybrid motor vehicle, has a United States   Environmental Protection Agency rating of at least 75 miles per   gallon equivalent or a 75-mile combined city and highway range.          (b)  A grant recipient may not use money from a grant under   the program to replace a motor vehicle, transit bus, or school bus   that operates on an alternative fuel unless the replacement vehicle   produces fewer emissions and has greater fuel efficiency than the   vehicle being replaced.          Sec. 395.005.  REFUELING INFRASTRUCTURE, EQUIPMENT, AND   SERVICES. A grant recipient may purchase, lease, or install   refueling infrastructure or equipment or procure refueling   services with money from a grant under the program if:                (1)  the purchase, lease, installation, or procurement   is made in conjunction with the purchase or lease of a motor vehicle   as described by Section 395.004 or the conversion of a motor vehicle   to operate primarily on an alternative fuel;                (2)  the grant recipient demonstrates that a refueling   station that meets the needs of the recipient is not available   within five miles of the location at which the recipient's vehicles   are stored or primarily used; and                (3)  for the purchase or installation of refueling   infrastructure or equipment, the infrastructure or equipment will   be owned and operated by the grant recipient, and for the lease of   refueling infrastructure or equipment or the procurement of   refueling services, a third-party service provider engaged by the   grant recipient will provide the infrastructure, equipment, or   services.          Sec. 395.006.  ELIGIBLE COSTS. (a)  A motor vehicle lease   agreement paid for with money from a grant under the program must   have a term of at least three years.          (b)  Refueling infrastructure or equipment purchased or   installed with money from a grant under the program must be used   specifically to store or dispense alternative fuel, as determined   by the commission.          (c)  A lease of or service agreement for refueling   infrastructure, equipment, or services paid for with money from a   grant under the program must have a term of at least three years.          Sec. 395.007.  GRANT AMOUNTS. (a)  The commission may   establish standardized grant amounts based on the incremental costs   associated with the purchase or lease of different categories of   motor vehicles, including the type of fuel used, vehicle class, and   other categories the commission considers appropriate.          (b)  In determining the incremental costs and setting the   standardized grant amounts, the commission may consider the   difference in cost between a new motor vehicle operated using   conventional gasoline or diesel fuel and a new motor vehicle   operated using alternative fuel.          (c)  The amount of a grant for the purchase or lease of a   motor vehicle may not exceed the amount of the incremental cost of   the purchase or lease.          (d)  The commission may establish grant amounts to reimburse   the full cost of the purchase, lease, installation, or procurement   of refueling infrastructure, equipment, or services or may   establish criteria for reimbursing a percentage of the cost.          (e)  A grant under the program may be combined with funding   from other sources, including other grant programs, except that a   grant may not be combined with other funding or grants from the   Texas emissions reduction plan. When combined with other funding   sources, a grant may not exceed the total cost to the grant   recipient.          (f)  In providing a grant for the lease of a motor vehicle   under this chapter, the commission shall establish criteria:                (1)  to offset incremental costs through an up-front   payment to lower the cost basis of the lease; or                 (2)  if determined appropriate by the commission, to   provide for reimbursement of lease payments over no more than the   period of availability of the contracted funds under applicable   state law and regulation, which may be less than the required   three-year lease term.          (g)  In providing a grant for the lease of refueling   infrastructure, equipment, or services, the commission shall   establish criteria:                (1)  to offset incremental costs through an up-front   payment to lower the cost basis of the lease; or                (2)  if determined appropriate by the commission, to   provide for reimbursement of lease payments over no more than the   period of availability of the contracted funds under applicable   state law and regulation, which may be less than the required   three-year lease term.          (h)  Notwithstanding Subsection (d), the commission is not   obligated to fund the full cost of the purchase, lease,   installation, or procurement of refueling infrastructure,   equipment, or services if those costs cannot be incurred and   reimbursed over the period of availability of the funds under   applicable state law and regulation.          Sec. 395.008.  AVAILABILITY OF EMISSIONS REDUCTION CREDITS.   (a)  A project that is funded from a grant under the program and   that would generate marketable emissions reduction credits under a   state or federal emissions reduction credit averaging, banking, or   trading program is not eligible for funding under the program   unless:                (1)  the project includes the transfer of the credits,   or the reductions that would otherwise be marketable credits, to   the commission and, if applicable, the state implementation plan;   and                (2)  the credits or reductions, as applicable, are   permanently retired.          (b)  An emissions reduction generated by a purchase or lease   under this chapter may be used to demonstrate conformity with the   state implementation plan.          Sec. 395.009.  USE OF GRANT MONEY. A grant recipient when   using money from a grant under the program shall prioritize:                (1)  the purchase or lease of new motor vehicles,   including new motor vehicles that are converted to operate on an   alternative fuel, when replacing vehicles or adding vehicles to the   fleet;                (2)  the purchase of new motor vehicles, including new   motor vehicles that are converted to operate on an alternative   fuel, to replace vehicles that have the highest total mileage and do   not use an alternative fuel; and                (3)  to the extent feasible, obtaining, whether by   purchase, purchase and conversion, or lease, motor vehicles that   use compressed natural gas, liquefied natural gas, or liquefied   petroleum gas.          Sec. 395.010.  GRANT PROCEDURES AND CRITERIA. (a)  The   commission shall establish specific criteria and procedures in   order to implement and administer the program, including the   creation and provision of application forms and guidance on the   application process.          (b)  The commission shall award a grant through a contract   between the commission and the grant recipient.          (c)  The commission shall provide an online application   process for the submission of all required application documents.          (d)  The commission may limit funding for a particular period   according to priorities established by the commission, including   limiting the availability of grants to specific entities, for   certain types of vehicles and infrastructure, or to certain   geographic areas to ensure equitable distribution of grant funds   across the state.          (e)  In awarding grants under the program, the commission   shall prioritize projects in the following order:                (1)  projects that are proposed by a state agency;                (2)  projects that are in or near a nonattainment area;                (3)  projects that are in an affected county, as that   term is defined by Section 386.001; and                (4)  projects that will produce the greatest emissions   reductions.          (f)  In addition to the requirements under Subsection (e), in   awarding grants under the program, the commission shall consider:                (1)  the total amount of the emissions reduction that   would be achieved from the project;                (2)  the type and number of vehicles purchased or   leased;                (3)  the location of the fleet and the refueling   infrastructure or equipment;                (4)  the number of vehicles served and the rate at which   vehicles are served by the refueling infrastructure or equipment;                (5)  the amount of any matching funds committed by the   applicant; and                (6)  the schedule for project completion.          (g)  The commission may not award more than 10 percent of the   total amount awarded under the program in any fiscal year for   purchasing, leasing, installing, or procuring refueling   infrastructure, equipment, or services.          Sec. 395.011.  FUNDING. The legislature may appropriate   money to the commission from the Texas emissions reduction plan   fund established under Section 386.251 to administer the program.          Sec. 395.012.  ADMINISTRATIVE COSTS.  In each fiscal year,   the commission may use up to 1.5 percent of the total amount of   money allocated to the program in that fiscal year, but not more   than $1 million, for the administrative costs of the program.          Sec. 395.013.  RULES. The commission may adopt rules as   necessary to implement this chapter.          Sec. 395.014.  REPORT REQUIRED.  On or before November 1 of   each even-numbered year, the commission shall submit to the   governor, lieutenant governor, and members of the legislature a   report that includes the following information regarding awards   made under the program during the preceding state fiscal biennium:                (1)  the number of grants awarded under the program;                (2)  the recipient of each grant awarded;                (3)  the number of vehicles replaced;                (4)  the number, type, and location of any refueling   infrastructure, equipment, or services funded under the program;                (5)  the total emissions reductions achieved under the   program; and                (6)  any other information the commission considers   relevant.          Sec. 395.015.  EXPIRATION. This chapter expires on the last   day of the state fiscal biennium during which the commission   publishes in the Texas Register the notice required by Section   382.037.          (r-2)  Effective on the date that the Texas Emissions   Reduction Plan Advisory Board is abolished under Subsection (a) of   this section, the following provisions of the Health and Safety   Code are repealed:                 . . .                (4)  Section 394.009;                (5)  Section 394.010; and                (6)  Section 394.011.          (s)  This subsection takes effect on the date that the Texas   Emissions Reduction Plan Advisory Board is abolished under   Subsection (a) of this section.  As soon as practicable after the   effective date of this subsection, the Texas Commission on   Environmental Quality shall implement the online application   process required by Section 395.010(c), Health and Safety Code, as   added by this section.  Prior to the implementation of the online   application process, the commission may accept applications for a   grant under Chapter 395, Health and Safety Code, as added by this   section, in any manner provided by the commission.          (s-1)  This subsection takes effect on the date that the   Texas Emissions Reduction Plan Advisory Board is abolished under   Subsection (a) of this section.  The changes in law made by this   section apply only to a Texas emissions reduction plan grant   awarded on or after the effective date of this section.  A grant   awarded before the effective date of this section 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.          (t)  This section takes effect August 30, 2017.          Explanation: The addition of text is necessary to ensure   that the Texas Commission on Environmental Quality is able to carry   out the commission's duties, responsibilities, and functions in the   implementation of the Texas Emissions Reduction Plan after the   abolishment of the Texas Emissions Reduction Plan Advisory Board.          (2)  Senate Rule 12.03(1) is suspended to permit the   committee to change, alter, or amend text which is not in   disagreement in proposed SECTION 18 of the bill, the effective date   provision of the bill, to read as follows:          SECTION 18.  Except as otherwise provided by this Act, this   Act takes effect September 1, 2017.          Explanation: The change in the effective date provision is   necessary to provide an exception for provisions of the bill that   take effect on a date other than September 1, 2017.