HBA-LJP H.B. 2841 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2841 By: Wolens Environmental Regulation 3/29/2001 Introduced BACKGROUND AND PURPOSE The federal Clean Air Act authorizes the United States Environmental Protection Agency (EPA) to establish the maximum allowable concentrations of pollutants that can endanger human health, harm the environment, and cause property damage. Areas where pollution exceeds the EPA standards may be designated as nonattainment areas and if these areas do not meet the EPA standards by 2007, all noncomplying states face severe sanctions. Texas has four current and three near nonattainment areas, comprising 37 counties. These areas represent 70 percent of the state's population, 76 percent of aggregate employment, 82 percent of personal income, and 83 percent of gross state product. Because of Texas' integrated economy, all parts of the state have a stake in bringing these areas into compliance. The Texas Natural Resource Conservation Commission (TNRCC) has submitted a state implementation plan to regulate emissions in nonattainment areas. However, there are significant areas of potential emissions reductions the TNRCC cannot regulate but which may be realized through an incentive program. House Bill 2841 establishes the Texas emissions reduction plan to reduce emissions in the state. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Natural Resource Conservation Commission in SECTION 1 (Section 386.152 and 386.159, Health and Safety Code), SECTION 24, and SECTION 25, and the Comptroller of Public Accounts in SECTION 1 (Sec. 386.162, Health and Safety Code), SECTION 24 and SECTION 25 of this bill. ANALYSIS Texas Emissions Reduction Plan House Bill 2841 amends the Health and Safety Code to require the Texas Natural Resource Conservation Commission (TNRCC) to establish and administer the Texas emissions reduction plan (plan). The bill requires TNRCC to provide grants or funding under the plan for the diesel emissions reduction incentive program, the low-emissions vehicle purchase or lease incentive program, the alternative fuel incentive program, the energy efficient appliance program and sales tax exemption, and the new technology development and research program. The bill provides that a project begun before September 1, 2001 is not eligible for a grant or other funding under the plan (Sec. 386.051, Health and Safety Code). The bill establishes the Texas emissions reduction plan fund as an account in the state treasury that is administered by the comptroller and sets forth provisions relating to the fees, surcharges, and payments that compose the fund, and the use and allocation of the fund for programs implemented and administered under the plan (Secs. 386.251 and 386.252, Health and Safety Code). The bill sets forth provisions regarding the administration of the plan by TNRCC, including the duties, objectives, guidelines and criteria for awarding grants under the plan, monitoring procedures of the achievements of projects awarded grants, staff and technical support, and reporting requirements of TNRCC (Secs. 386.052 - 386.056, Health and Safety Code). The bill establishes the Texas Emissions Reduction Plan Advisory Board (advisory board) consisting of 13 members and sets forth provisions relating to the appointment, composition, terms, and the presiding officer of the members of the advisory board. The bill requires the advisory board to review the first biennial report by TNRCC, hold a public meeting on the need to continue the plan, and prepare and submit a report with specified contents to the governor and legislature, on or before September 1, 2002, on the continuation of the plan (Sec. 386.057, Health and Safety Code and SECTION 30). The bill also authorizes the expiration of any part of a state implementation plan (SIP) that restricts the hours of operation for construction equipment in nonattainment or near nonattainment areas on the date TNRCC certifies that those areas achieved sufficient emissions reductions (Sec. 386.058, Health and Safety Code). Diesel Emissions Reduction Incentive Program The bill requires TNRCC to establish and administer a diesel emissions reduction incentive program, under which TNRCC is required to provide grants to eligible projects to offset the incremental cost of projects that reduce emissions of oxides of nitrogen from high-emitting diesel sources in nonattainment or near nonattainment areas of the state. The bill sets forth provisions relating to the eligibility, considerations, and applications of projects to receive grants under the diesel emissions reduction incentive program (Secs. 386.102 - 386.104, Health and Safety Code). The bill sets forth provisions relating to TNRCC's calculations of cost-effectiveness, the criteria of costeffectiveness regarding the determination of grant money, adjustments to maximum cost-effectiveness amount and award amount, and the availability of emissions reduction credits for the eligibility of projects for the diesel emissions reduction incentive program (Secs. 386.105 - 386.108, Health and Safety Code). The bill requires TNRCC to provide limited funding from available money of the diesel emissions reduction incentive program for fueling infrastructure demonstration projects and sets forth provisions relating to the implementation of these projects. The bill provides that fueling infrastructure demonstration projects are to provide initial support for low-emissions vehicle projects at the start of the program and to assess whether the funding for infrastructures is an appropriate and cost-effective use of public funds. The bill also sets forth provisions relating to eligibility, the application package of grants, procedures for reviewing an application, staff and technical support, and the total cost-effectiveness for fueling infrastructure demonstration projects (Secs. 386.109 - 386.114, Health and Safety Code). Low-Emissions Vehicle Purchase or Lease Incentive Program The bill requires TNRCC to develop a low-emissions vehicle purchase or lease incentive program to authorize incentives for the purchase or lease of new low-emissions vehicles and to adopt rules necessary to implement the program. The bill sets forth provisions relating to the eligibility schedule of a light-duty vehicle, a light light-duty truck, a heavy light-duty truck, a medium-duty passenger vehicle, and a heavyduty vehicle for the low-emissions vehicle purchase or lease incentive program (Secs. 386.152 - 386.155, Health and Safety Code). The bill sets forth provisions relating to the eligibility of an alternative fuel vehicle purchased or leased for use as a fleet vehicle and a list of eligible vehicles for an incentive under the low-emissions vehicle purchase or lease incentive program. The bill sets forth provisions relating to the certification to TNRCC by the owner of an alternative fuel vehicle that is a duel fuel vehicle and the certification of low-emissions vehicles by the manufacturer (Secs. 386.156 - 386.158, Health and Safety Code). To enable consumers to make informed decisions, TNRCC shall require, by rule, that each specified vehicle for sale or lease in this state display a clearly legible label that shows the vehicle's 5-Star Green Vehicle Class Rating under the United States Environmental Protection Agency's (EPA) system and sets forth provisions relating to the label. The bill sets forth provisions relating to the incentive at the time and point-of-sale or point-of-lease of a certified low- emissions vehicle or certain alternative fuel vehicles, the public information program for the low-emissions vehicle purchase or lease incentive program, and the lowemissions vehicle or certain alternative fuel vehicle report of the comptroller to TNRCC (Secs. 386.159 386.161, and 386.163, Health and Safety Code). The bill requires the comptroller, by rule, to develop a method to administer and account for the lowemissions vehicle purchase or lease incentives fund, and sets forth provisions relating to the comptroller prescribing the accounting and reporting procedures for low-emissions vehicle purchase or lease incentives to new motor vehicle dealers and leasing agents (Sec. 386.162, Health and Safety Code). The bill requires TNRCC no later than the 45th day after the effective date of this Act to publish the first annual list of vehicles eligible for low-emissions vehicle purchase or lease incentives (SECTION 25). New Technology Development and Research Program The bill establishes the Texas Council on Environmental Technology (council) to identify, evaluate, and deploy new technologies and streamline the credit process for technological advancements from TNRCC and the EPA. The bill provides that the council is composed of 11 members and sets forth provisions relating to the appointment and terms of the members, and the council offices and projects location (Sec. 386.202, Health and Safety Code and SECTION 31). The bill requires the council to establish and administer a new technology research program to provide grants to be used to support development of emissions-reducing and commercialization technologies through projects under the new technology research program with the designated monies from the environmental research fund contained within the general revenue fund (Secs. 386.203 and 386.208, Health and Safety Code). The bill also authorizes the council to appoint advisory committees to assist the council in performing its duties and sets forth provisions relating to the composition of the advisory committees (Sec. 386.209, Health and Safety Code). The bill requires TNRCC to issue a request no later than the 30th day after the adoption of rules governing the new technology development and research program, for proposals for projects to be funded under the program and sets forth provisions relating to the specific request of the council for proposals or program opportunity notices for technology projects (Sec. 386.204, Health and Safety Code and SECTION 27). The bill also sets forth provisions regarding the priorities and considerations of eligibility, the application process, and cost-sharing of projects for a grant under the new technology research program (Secs. 386.204 - 386.207, Health and Safety Code). The bill amends the Tax Code to provide for a surcharge on the sale, lease, or rental, of new or used construction equipment in a stipulated amount and sets forth provisions relating to the collection, administration, enforcement, and deposit of the surcharge (Sec. 151.0515, Tax Code). The bill sets forth provisions relating to the exemption from certain sales, excise, and use taxes of: an item that qualifies under the federal law for the "Energy Star" label as an energy-efficient appliance; the sale of specified heating, cooling, and water heating equipment; and certain new fuel cells with a specified generating capacity and electricity-only generation efficiency (Secs. 151.355 - 151.357, Tax Code). The bill provides for the imposition of a surcharge that is one percent of the total consideration on every retail sale or lease of every onroad diesel motor vehicle sold or leased in this state and sets forth provisions for the collection, administration, and enforcement of the onroad diesel motor vehicle surcharge and the deposit of these remitted surcharges (Sec. 152.0215, Tax Code). The bill also provides for the imposition of a $1 surcharge on each person in a nonattainment or near nonattainment area and sets forth provisions relating to the collection, administration, and enforcement of such a surcharge, and the deposit of all the remitted surcharges (Sec. 156.054, Tax Code). Tax Credit for Use of Liquified Gas to Fuel Motor Vehicles The bill provides for a credit against a franchise tax and authorizes a corporation to claim a credit only for the incremental cost of using liquefied gas to fuel motor vehicles. The bill sets forth provisions relating to the limitations on the amount, the eligibility, the application, and the reimbursement to the state from the plan's fund of such credit, and the conveyance, assignment, or transfer of the credit to other entities (Secs. 171.852 - 171.857, Tax Code). The bill establishes that provisions relating to the franchise tax credit are effective January 1, 2002 (SECTION 28). License Plates for Low-Emissions and Alternative Fuel Vehicles The bill amends the Transportation Code to require the Department of Public Safety (DPS) to issue a specially designed license plate for a motor vehicle that is eligible for a low-emissions vehicle purchase and lease incentive or powered by alternative fuel. The bill also sets forth provisions relating to the contents and the fee for the license plate and the distribution of the funds under the plan to pay for the cost to the county for administrating the license plates (Sec. 502.2665, Transportation Code). The bill also requires DPS no later than the 45th day after the effective date of this Act to make available to the county tax assessorcollector of each county in the state the special license plate and sets forth provisions relating the issuance of those plates (SECTION 26). Exemptions for Low-Emissions and Alternative Fuel Vehicles The bill provides for the application of the entitlement or exemption from fees to motor vehicles with the special license plates under provisions relating to high occupancy vehicle lanes of DPS or a corporation under the Texas Transportation Corporation Act, the toll for towing or driving a vehicle through a toll collection, fees collected by the Texas Turnpike Authority division of the Texas Department of Transportation (TxDOT) to finance turnpike projects, fees collected by a regional authority to finance certain operations of turnpike projects, and privileged parking spaces of a political subdivision or private property owner (Secs. 224.153, 224.155, 361.179, 366.173, 431.073, and 681.009, Transportation Code). Fees The bill provides for the imposition of a surcharge on the registration of a truck-tractor or commercial motor vehicle in an amount equal to 10 percent of the total fees due for the registration of the truck-tractor or commercial motor vehicle and sets forth provisions relating to the remittance and deposit of such surcharges (Sec. 502.1675, Transportation Code). The bill requires TxDOT to collect a $1 fee for each motor vehicle registered in a nonattainment or near nonattainment area in this state and sets forth provisions relating to the remittance and deposit of such fees (Sec. 502.1715, Transportation Code). The bill also requires DPS to collect a $1 fee for the renewal or issuance of a driver's license or certificate or the inspection of a motor vehicle in an area of the state that is not a nonattainment or near nonattainment area and a $3 fee if the issuance, renewal, or inspection is in a nonattainment or near nonattainment area. The bill also sets forth provisions relating to the remittance and deposit of these fees on the issuance or renewal of a driver's license or certificate or inspection of a motor vehicle (Secs. 521.421 and 548.5055, Transportation Code). The bill provides for a surcharge to accompany an application for registration of a motor carrier in the amount of $2 per vehicle for annual registration and $4 per vehicle for two-year registration and sets forth provisions relating to the collection, remittance, and deposit of such fees (Sec. 643.053, Transportation Code). The bill also imposes a surcharge on the sale of fuel to marine vessels moored for an extended period or permanently in a harbor (SECTION 23). The bill amends the Parks and Wildlife Code to provide for a surcharge for each application for an original or renewal certificate of number for a motorboat that will be operated primarily in a nonattainment or near nonattainment area of this state and sets forth provisions relating to the collection and remittance of the surcharge (Sec. 31.0265, Parks and Wildlife Code). The bill amends the V.T.C.S. to provide for a surcharge of 50 cents imposed on each fare collected by a taxi driver for transportation by taxi in a county that is in a nonattainment or near nonattainment area of this state. The bill sets forth provisions relating to the payment, records, exemption, and the liability of unremitted taxi surcharges. The bill provides that a person who violates a rule adopted by the comptroller or provisions regarding a taxi surcharge under the plan commits a Class C misdemeanor (Article 9035, V.T.C.S.). The bill amends law to require TNRCC to adopt rules establishing the guidelines and criteria required to implement the programs established under this Act and to require the comptroller to adopt all rules necessary to carry out the duties delegated to the comptroller under this Act. Pending the adoption of these rules, the bill requires TNRCC to begin the implementation of these programs using guidelines developed by a similar operating program in another state that is modified for application in this state (SECTION 24). EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.