87R23716 TYPED     By: Landgraf H.B. No. 4472     Substitute the following for H.B. No. 4472:     By:  Dominguez C.S.H.B. No. 4472       A BILL TO BE ENTITLED   AN ACT   relating to the Texas emissions reduction plan.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 386.051(b), Health and Safety Code, is   amended to read as follows:          (b)  Under the plan, the commission and the comptroller shall   provide grants or other funding for:                (1)  the diesel emissions reduction incentive program   established under Subchapter C, including for infrastructure   projects established under that subchapter;                (2)  the motor vehicle purchase or lease incentive   program established under Subchapter D;                (3)  the air quality research support program   established under Chapter 387;                (4)  the clean school bus program established under   Chapter 390;                (5)  the new technology implementation grant program   established under Chapter 391;                (6)  the regional air monitoring program established   under Section 386.252(a);                (7)  a health effects study as provided by Section   386.252(a);                (8)  air quality planning activities as provided by   Section 386.252(d);                (9)  a contract with the Energy Systems Laboratory at   the Texas A&M Engineering Experiment Station for computation of   creditable statewide emissions reductions as provided by Section   386.252(a);                (10)  the Texas clean fleet program established under   Chapter 392;                (11)  the Texas alternative fueling facilities program   established under Chapter 393;                (12)  the Texas natural gas vehicle grant program   established under Chapter 394;                (13)  other programs the commission may develop that   lead to reduced emissions of nitrogen oxides, particulate matter,   or volatile organic compounds in a nonattainment area or affected   county;                (14)  other programs the commission may develop that   support congestion mitigation to reduce mobile source ozone   precursor emissions;                (15)  the seaport and rail yard areas emissions   reduction program established under Subchapter D-1;                (16)  conducting research and other activities   associated with making any necessary demonstrations to the United   States Environmental Protection Agency to account for the impact of   foreign emissions or an exceptional event;                (17)  studies of or pilot programs for incentives for   port authorities located in nonattainment areas or affected   counties as provided by Section 386.252(a); [and]                (18)  the governmental alternative fuel fleet grant   program established under Chapter 395;                (19)  the purchase, maintenance, upgrade, and   operation of air monitoring equipment as provided by Section   386.252(a);                (20)  fee-based contracts entered into under the   program established under Section 386.058; and                (21)  the energy efficiency loan guarantee program   established under Section 388.013.          SECTION 2.  Subchapter B, Chapter 386, Health and Safety   Code, is amended by adding Section 386.058 to read as follows:          Sec. 386.058.  FEE-BASED CONTRACTS FOR PURCHASE OF   REDUCTIONS IN EMISSIONS OF NITROGEN OXIDES. (a) The commission by   rule shall establish a program authorizing the commission to enter   into fee-based contracts for the purchase of reductions in   emissions of nitrogen oxides.          (b)  The program established under this section must:                (1)  specify the types of projects that are eligible   for fee-based contracts under the program, such as marine emission   capture systems;                (2)  measure nitrogen oxides emissions input and output   on a continuous basis;                (3)  require nitrogen oxides emissions reduced under   the contract to be verified and certified by the commission;                (4)  assign a dollar per ton fee based solely on the   dollar per ton cost of the reduction in emissions of nitrogen   oxides;                (5)  require payments under the contract to be made   only for actual reductions in nitrogen oxides emissions that are   verified by the commission; and                (6)  authorize the commission to enter into multiyear   contracts under the program.          (c)  Notwithstanding Section 386.055:                (1)  the commission may enter into a fee-based contract   under the program established under this section for a project   involving a new emissions reduction measure that would otherwise   generate marketable credits under a state or federal emissions   reduction credit averaging, banking, or trading program if, during   the term of the contract, the project is not used for credit under   any state or federal emissions reduction credit averaging, banking,   or trading program; and                (2)  a project that was subject to a fee-based contract   under the program established under this section may be used for   credit under a state or federal emissions reduction credit   averaging, banking, or trading program if:                      (A)  the contract has expired or otherwise   terminated and the project is not subject to any other fee-based   contract entered into under the program established under this   section; and                      (B)  the project otherwise meets the requirements   of the applicable state or federal emissions reduction credit   averaging, banking, or trading program.          SECTION 3.  Sections 386.104(c) and (c-1), Health and Safety   Code, are amended to read as follows:          (c)  Except as otherwise provided by this subsection, for a   proposed project as described by Section 386.102(b), [other than a   project involving a marine vessel or engine,] not less than 75   percent of vehicle miles traveled or hours of operation projected   for the five years immediately following the award of a grant must   be projected to take place in a nonattainment area or affected   county of this state. The commission may set the minimum percentage   of vehicle miles traveled or hours of operation required to take   place in a nonattainment area or affected county at a percentage and   for a period that is different from the percentage and period   specified by this subsection, provided that the commission may not   set the minimum percentage at a level that is less than 55 percent.   The commission may allow vehicle travel on highways and roadways,   or portions of a highway or roadway, designated by the commission   and located outside a nonattainment area or affected county to   count towards the percentage of use requirement in this subsection.          (c-1)  For a proposed project involving a marine vessel or   engine, the vessel or engine must be operated in the intercoastal   waterways or bays adjacent to a nonattainment area or affected   county of this state for a sufficient percentage [amount] of time   over the lifetime of the project, as determined by the commission,   to meet the cost-effectiveness requirements of Section 386.105.   The percentage determined by the commission under this subsection   may not be less than 55 percent.          SECTION 4.  Section 386.154(d), Health and Safety Code, is   amended to read as follows:          (f)  A new light-duty motor vehicle powered by an electric   drive is eligible for a $750 incentive if the vehicle:                (1)  is a motorcycle as defined by Section 541.201,   Transportation Code;                (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;                (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; and                (7)  is not a motor-assisted scooter or pocket bike or   minimotorbike as those terms are defined by Section 551.351,   Transportation Code.          (g)  The incentive under Subsection (g) is limited to 500   vehicles for each state fiscal biennium.          SECTION 5.  Sections 386.252(a) and (f), Health and Safety   Code, as effective September 1, 2021, are amended to read as   follows:          (a)  Money in the fund and account may be used only to   implement and administer programs established under the plan.   Subject to the reallocation of funds by the commission under   Subsection (h), money from the fund and account to be used for the   programs under Section 386.051(b) shall initially be allocated per   fiscal year as follows:                (1)  $3 million [four percent] may be used for the clean   school bus program under Chapter 390;                (2)  $5 million [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)  $4 million [five percent] may be used for the Texas   clean fleet program under Chapter 392;                (4)  not more than $3 million may be used by the   commission to fund a regional air monitoring program in commission   Regions 3 and 4 to be implemented under the commission's oversight,   including direction regarding the type, number, location, and   operation of, and data validation practices for, monitors funded by   the program through a regional nonprofit entity located in North   Texas having representation from counties, municipalities, higher   education institutions, and private sector interests across the   area;                (5)  $8 million [10 percent] may be used for the Texas   natural gas vehicle grant program under Chapter 394;                (6)  not more than $6 million may be used for the Texas   alternative fueling facilities program under Chapter 393, of which   a specified amount may be used for fueling stations to provide   natural gas fuel, except that money may not be allocated for the   Texas alternative fueling facilities program for the state fiscal   year ending August 31, 2019;                (7)  not more than $1 million [$750,000] may be used   each year to support research related to air quality as provided by   Chapter 387;                (8)  not more than $200,000 may be used for a health   effects study;                (9)  at least $6 million but not more than $16 million   may be used by the commission for administrative costs, including   all direct and indirect costs for administering the plan, costs for   conducting outreach and education activities, and costs   attributable to the review or approval of applications for   marketable emissions reduction credits;                (10)  $5 million [six percent] may be used by the   commission for the seaport and rail yard areas emissions reduction   program established under Subchapter D-1;                (11)  $4 million [five percent] may be used for the   light-duty motor vehicle purchase or lease incentive program   established under Subchapter D;                (12)  not more than $216,000 may be used by the   commission to contract with the Energy Systems Laboratory at the   Texas A&M Engineering Experiment Station annually for the   development and annual computation of creditable statewide   emissions reductions obtained through wind and other renewable   energy resources for the state implementation plan;                (13)  not more than $500,000 may be used for studies of   or pilot programs for incentives for port authorities located in   nonattainment areas or affected counties to encourage cargo   movement that reduces emissions of nitrogen oxides and particulate   matter; [and]                (14)  not more than $10 million may be used by the   commission for the purchase, maintenance, upgrade, and operation of   air monitoring equipment, including data analysis, to be used in   nonattainment areas and affected counties;                (15)  not more than $10 million may be used by the   commission for fee-based contracts entered into under the program   established under Section 386.058                (16)  not more than $5 million may be allocated for the   energy efficiency loan guarantee program established under Section   388.013; and                (17)  the balance is to be used by the commission for:                      (A)  the diesel emissions reduction incentive   program under Subchapter C as determined by the commission; and                      (B)  funding research at the Texas A&M   Transportation Institute to determine:                (1)  the cost effectiveness of existing emissions   reduction programs; and                (2)  cost effective programs not currently authorized   to receive program funding that would improve the emissions   reduction capabilities of the program          (f)  Not more than $5 [$2.5] million from the fund and   account 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.          (h)  Subject to the limitations outlined in this section,   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.]          SECTION 6.  Chapter 388, Health and Safety Code, is amended   by adding Section 388.013 to read as follows:          Sec. 388.013.  ENERGY EFFICIENCY LOAN GUARANTEE PROGRAM.   (a) The comptroller and the State Energy Conservation Office by   rule shall establish and administer a program that issues or   guarantees loans to be used for improvements that increase the   energy efficiency of residences that are not newly constructed.          (b)  Rules adopted under this section must establish   eligibility requirements for receipt of a loan issued or guaranteed   under this section, including emissions reduction   cost-effectiveness criteria with preference given to nonattainment   areas or affected counties.          (c)  The State Energy Conservation Office annually shall   submit to the commission and the laboratory a report that:                (1)  evaluates the effectiveness of the program   established under this section; and                (2)  quantifies energy savings and emissions   reductions as a result of this program for consideration in the   state implementation plan for emissions reduction credit.          SECTION 7.  Section 389.002, Health and Safety Code, is   amended to read as follows:          Sec. 389.002.  USE OF CERTAIN INFORMATION FOR FEDERAL   RECOGNITION OF EMISSIONS REDUCTIONS. The commission, using   information derived from the reports to the commission under   Sections 386.205, 388.003(e), [and] 388.006, and 388.013, shall   take all appropriate and necessary actions so that emissions   reductions achieved by means of activities under Chapters 386 and   388 are credited by the United States Environmental Protection   Agency to the appropriate emissions reduction objectives in the   state implementation plan.          SECTION 8.  Section 391.002(b), Health and Safety Code, is   amended to read as follows:          (b)  Projects that may be considered for a grant under the   program include:                (1)  advanced clean energy projects, as defined by   Section 382.003;                (2)  new technology projects that reduce emissions of   regulated pollutants from stationary sources;                (3)  new technology projects that reduce emissions from   upstream and midstream 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)  electricity storage projects related to renewable   energy, including projects to store electricity produced from wind   and solar generation that provide efficient means of making the   stored energy available during periods of peak energy use.          SECTION 9.  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;                (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; or                (5)  reduce flaring emissions and other site emissions.          SECTION 10.  Section 391.301, Health and Safety Code, is   amended to read as follows:          Sec. 391.301.  RESTRICTION ON USE OF GRANT. A recipient of a   grant under this chapter must use the grant to pay the incremental   costs of the purchase, lease, or [and] installation of the project   for which the grant is made, which may include reasonable and   necessary expenses for the labor needed to install   emissions-reducing equipment. The recipient may [not] use the   grant for the costs of operating and maintaining the   emissions-reducing equipment.          SECTION 11.  Section 394.003, Health and Safety Code, is   amended by amending Subsection (a) and adding Subsection (c) 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 the entity:                (1)  purchased, leased, or otherwise commercially   financed the vehicle as an [a new] on-road heavy-duty or   medium-duty motor vehicle that:                      (A)  is a new natural gas vehicle or, subject to   Subsection (c), a used 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; or                (2)  repowered the on-road motor vehicle to a natural   gas vehicle powered by a natural gas engine that is certified to the   appropriate current federal emissions standards as determined by   the commission.          (c)  A used natural gas vehicle that is proposed to replace   an on-road heavy-duty or medium-duty motor vehicle must be of model   year 2017 or later, provided that the model year may not be more   than six years older than the current model year at the time of the   submission of the grant application.          SECTION 12.  Section 394.005(b), Health and Safety Code, is   amended to read as follows:          (b)  To be eligible for a grant under the program:                (1)  the use of the qualifying vehicle must be   projected to result in a reduction in emissions of nitrogen oxides   of at least 25 percent as compared to the motor vehicle or engine   being replaced, based on:                      (A)  the baseline emission level set by the   commission under Subsection (g); and                      (B)  the certified emission rate of the qualifying   [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;                      (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.          SECTION 13.  Section 501.138, Transportation Code, is   amended by amending Subsections (b-1), (b-2), and (b-3) and adding   Subsection (b-4) to read as follows:          (b-1)  Except as provided by Subsection (b-4), fees [Fees]   collected under Subsection (b) to be sent to the comptroller shall   be deposited to the credit of the Texas [Mobility Fund, except that   $5 of each fee imposed under Subsection (a)(1) and deposited on or   after September 1, 2008, and before September 1, 2015, shall be   deposited to the credit of the Texas] emissions reduction plan   fund.          (b-2)  The comptroller shall establish a record of the amount   of the fees deposited to the credit of the Texas emissions reduction   plan fund [Mobility Fund] under Subsection (b-1). On or before the   fifth workday of each month, the Texas Department of Transportation   shall remit to the comptroller for deposit to the credit of the   Texas Mobility Fund [emissions reduction plan fund] an amount of   money equal to the amount of the fees deposited by the comptroller   to the credit of the Texas emissions reduction plan fund [Mobility   Fund] under Subsection (b-1) in the preceding month.  The Texas   Department of Transportation shall use for remittance to the   comptroller as required by this subsection money in the state   highway fund that is not required to be used for a purpose specified   by Section 7-a, Article VIII, Texas Constitution, and may not use   for that remittance money received by this state under the   congestion mitigation and air quality improvement program   established under 23 U.S.C. Section 149.          (b-3)  This subsection and Subsections (b-1) and   [Subsection] (b-2) expire on the last day of the state fiscal   biennium during which the Texas Commission on Environmental Quality   publishes in the Texas Register the notice required by Section   382.037, Health and Safety Code.          (b-4)  Fees collected under Subsection (b) to be sent to the   comptroller shall be deposited to the credit of the Texas Mobility   Fund if the fees are collected on or after the last day of the state   fiscal biennium during which the Texas Commission on Environmental   Quality publishes in the Texas Register the notice required by   Section 382.037, Health and Safety Code.          SECTION 14.  The changes in law made by this Act apply only   to a Texas emissions reduction plan grant awarded on or after the   effective date of this Act. A grant awarded before the effective   date of this Act is governed by the law in effect on the date the   award was made, and the former law is continued in effect for that   purpose.          SECTION 15.  The change in law made by this Act to Section   501.138, Transportation Code, applies only to a fee collected on or   after the effective date of this Act. A fee collected before the   effective date of this Act is governed by the law in effect when the   fee was collected, and the former law is continued in effect for   that purpose.          SECTION 16.  This Act takes effect September 1, 2021.