Relating to programs established and funded under the Texas emissions reduction plan.

89(R) HB 3868 - House Committee Report version - Bill Text

By: Landgraf

H.B. No. 3868

Substitute the following for H.B. No. 3868:

By: Anchía

C.S.H.B. No. 3868

A BILL TO BE ENTITLED

AN ACT

relating to programs established and funded under the Texas

emissions reduction plan.

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

SECTION 1. Section 386.051(b), Health and Safety Code, is

amended to read as follows:

(b) Under the plan, the commission and the comptroller shall

provide grants or other funding for:

(1) the diesel emissions reduction incentive program

established under Subchapter C, including for infrastructure

projects established under that subchapter;

(2) the motor vehicle purchase or lease incentive

program established under Subchapter D;

(3) the air quality research support program

established under Chapter 387;

(4) the clean school bus program established under

Chapter 390;

(5) the new technology implementation grant program

established under Chapter 391;

(6) the regional air monitoring program established

under Section 386.252(a);

(7) a health effects study as provided by Section

386.252(a);

(8) air quality planning activities as provided by

Section 386.252(d);

(9) a contract with the Energy Systems Laboratory at

the Texas A&M Engineering Experiment Station for computation of

creditable statewide emissions reductions as provided by Section

386.252(a);

(10) the Texas clean fleet program established under

Chapter
392A
[
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;

(12)
[
(14)
] other programs the commission may develop

that support congestion mitigation to reduce mobile source ozone

precursor emissions;

(13)
[
(15)
] the seaport and rail yard areas emissions

reduction program established under Subchapter D-1;

(14)
[
(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;

(15)
[
(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

(16)
[
(18)

the governmental alternative fuel fleet

grant program established under Chapter 395;

[
(19)
] remittance of funds to the state highway fund

for use by the Texas Department of Transportation for congestion

mitigation and air quality improvement projects in nonattainment

areas and affected counties[
; and

[
(20)

the Texas hydrogen infrastructure, vehicle, and

equipment grant program established under Subchapter G
].

SECTION 2. Subchapter B, Chapter 386, Health and Safety

Code, is amended by adding Section 386.058 to read as follows:

Sec.

386.058.

DATABASE AND PUBLIC OUTREACH INITIATIVE TO

FACILITATE REPLACEMENT OF CERTAIN DIESEL-POWERED VEHICLES. (a)

The commission shall administer a program designed to facilitate

the replacement of pre-2009 model year diesel-powered vehicles by

connecting applicants for a grant or other funding with owners of

those diesel-powered vehicles to enable the applicant to partner

with the vehicle owner for purposes of satisfying the requirements

established under the plan.

(b) In administering the program, the commission shall:

(1)

develop and maintain a database of owners of

pre-2009 model year diesel-powered vehicles who are willing to

partner with applicants for a state or local clean vehicle program

as described by Subsection (a); and

(2)

conduct a public outreach initiative to promote

awareness of and participation in the program and in applicable

state and local clean vehicle programs.

(c) The database developed under Subsection (b)(1) must:

(1)

include owner contact information, vehicle

information, and other relevant information as determined by the

commission; and

(2)

require applicants described by Subsection (a) to

register with the commission in order to access the database.

(d)

In conducting the public outreach initiative under

Subsection (b)(2), the commission:

(1)

shall include educational materials and

information on the program on the commission's Internet website;

and

(2)

may collaborate with local governments, regional

councils of government, port authorities, and other appropriate

entities and stakeholders to recruit participants in the database

and to encourage applications for state and local clean vehicle

programs.

SECTION 3. Section 386.252(a), Health and Safety Code, is

amended to read as follows:

(a) Money in the fund and account may be used only to

implement and administer programs established under the plan.

Subject to the reallocation of funds by the commission under

Subsection (h) and after remittance to the state highway fund under

Subsection (a-1), money from the fund and account to be used for the

programs under Section 386.051(b) shall initially be allocated as

follows:

(1) four percent may be used for the clean school bus

program under Chapter 390;

(2)
three
[
eight
] percent [
total
] may be used
for

[
between the Texas hydrogen infrastructure, vehicle, and equipment

grant program established under Subchapter G and
] the new

technology implementation grant program under Chapter 391, from

which at least $1 million will be set aside for electricity storage

projects related to renewable energy [
and not more than $8 million

may be used for the Texas hydrogen infrastructure, vehicle, and

equipment grant program
];

(3)
21
[
five
] percent may be used for the Texas clean

fleet program under Chapter
392A
[
392
];

(4) not more than $3 million may be used by the

commission to fund a regional air monitoring program in commission

Regions 3 and 4 to be implemented under the commission's oversight,

including direction regarding the type, number, location, and

operation of, and data validation practices for, monitors funded by

the program through a regional nonprofit entity located in North

Texas having representation from counties, municipalities, higher

education institutions, and private sector interests across the

area;

(5) [
7.5 percent may be used for the Texas natural gas

vehicle grant program under Chapter 394;

[
(6)

not more than $6 million may be used for the Texas

alternative fueling facilities program under Chapter 393, of which

a specified amount may be used for fueling stations to provide

natural gas fuel, except that money may not be allocated for the

Texas alternative fueling facilities program for the state fiscal

year ending August 31, 2019;

[
(7)
] not more than $750,000 may be used each year to

support research related to air quality as provided by Chapter 387;

(6)
[
(8)
] not more than $200,000 may be used for a

health effects study;

(7)
[
(9)
] at least $6 million but not more than 15

percent 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;

(8)
[
(10)
] six percent may be used by the commission

for the seaport and rail yard areas emissions reduction program

established under Subchapter D-1;

(9)
[
(11)
] 2.5 percent may be used for the light-duty

motor vehicle purchase or lease incentive program established under

Subchapter D;

(10)
[
(12)
] not more than $500,000 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 for the state implementation plan that are

obtained through:

(A) wind and other renewable energy resources;

(B) energy efficiency programs administered by

the Public Utility Commission of Texas or the State Energy

Conservation Office; or

(C) the implementation of advanced building

energy codes;

(11)
[
(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

(12)
[
(14)
] the balance is to be used by the

commission for the diesel emissions reduction incentive program

under Subchapter C as determined by the commission.

SECTION 4. Chapter 390, Health and Safety Code, is amended

by adding Section 390.0045 to read as follows:

Sec.

390.0045.

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 replacement of a school bus as

described by Section 390.004;

(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 school

buses 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.

SECTION 5. Subtitle C, Title 5, Health and Safety Code, is

amended by adding Chapter 392A to read as follows:

CHAPTER 392A.

TEXAS CLEAN FLEET PROGRAM

SUBCHAPTER A.

GENERAL PROVISIONS

Sec. 392A.001. DEFINITIONS. In this chapter:

(1)

"Alternative fuel" means a fuel other than

gasoline or diesel fuel, including electricity, compressed natural

gas, liquefied natural gas, hydrogen, renewable diesel, propane, or

a mixture of fuels containing at least 85 percent methanol by

volume.

(2) "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.

(3) "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.

(4)

"Commission" means the Texas Commission on

Environmental Quality.

(5)

"Executive director" means the executive director

of the commission.

(6)

"Golf cart" has the meaning assigned by Section

551.401, Transportation Code.

(7)

"Heavy-duty motor vehicle" means a motor vehicle

that:

(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 motor vehicles or engines.

(8)

"Hybrid vehicle" means a vehicle with at least two

different energy converters and two different energy storage

systems on board the vehicle for the purpose of propelling the

vehicle.

(9)

"Hydrogen vehicle" means a heavy-duty motor

vehicle that uses hydrogen to operate the vehicle, including

through the use of hydrogen fuel cells or an internal combustion

engine that runs on hydrogen.

(10)

"Incremental cost" has the meaning assigned by

Section 386.001.

(11)

"Medium-duty motor vehicle" means a motor vehicle

with a gross vehicle weight rating of more than 8,500 pounds that:

(A)

is certified to the United States

Environmental Protection Agency's light-duty emissions standard;

or

(B)

has an engine certified to the United States

Environmental Protection Agency's light-duty emissions standard.

(12)

"Motor vehicle" has the meaning assigned by

Section 386.151.

(13)

"Natural gas engine" means an engine that

operates:

(A)

solely an 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.

(14)

"Natural gas vehicle" means a motor vehicle that

is powered by a natural gas engine.

(15)

"Neighborhood electric vehicle" means a motor

vehicle that:

(A)

is originally manufactured to meet, and does

meet, the equipment requirements and safety standards established

for "low-speed vehicles" in federal Motor Vehicle Safety Standard

No. 500 (49 C.F.R. Section 571.500);

(B)

is a slow-moving vehicle, as defined by

Section 547.001, Transportation Code, that is able to attain a

speed of more than 20 miles per hour but not more than 25 miles per

hour in one mile on a paved, level surface;

(C) is a four-wheeled motor vehicle;

(D)

is powered by electricity or alternative

power sources;

(E)

has a gross vehicle weight rating of less

than 3,000 pounds; and

(F) is not a golf cart.

(16)

"Political subdivision" means a county,

municipality, school district, junior college di, river authority,

water district or other special district, or other political

subdivision created under the constitution or a statute of this

state.

(17)

"Program" means the Texas clean fleet program

established under this chapter.

(18)

"Program project" means any of the following

projects under the program:

(A)

natural gas vehicle grant projects, as

described by Section 392A.152(a);

(B)

large fleet grant projects, as described by

Section 392A.153(a);

(C)

hydrogen infrastructure and vehicle grant

projects, as described by Section 392A.154(a); and

(D)

alternative fueling facilities grant

projects, as described by Section 392A.155(a)(1).

(19)

"Qualifying fuel" includes any liquid or gaseous

fuel or additive registered or verified by the United States

Environmental Protection Agency that is ultimately dispensed into a

motor vehicle or a diesel-powered on-road or non-road vehicle that

provides reductions of emissions of oxides of nitrogen beyond

reductions required by state or federal law.

(20)

"Renewable diesel means" a diesel fuel substitute

produced from non-petroleum renewable source and refined from at

least ninety-nine percent renewable feedstock.

(21)

"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.

Sec.

392A.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.

SUBCHAPTER B.

ESTABLISHMENT AND ADMINISTRATION OF PROGRAM

Sec.

392A.051.

TEXAS CLEAN FLEET PROGRAM. (a) The

commission shall establish and administer the Texas clean fleet

program to encourage a person that has diesel-powered vehicles to

purchase or replace them with alternative fuel or hybrid vehicles,

as described in Subsection (b).

Under the program, the commission

shall provide grants for eligible projects to offset the

incremental cost of projects that reduce emissions of oxides of

nitrogen from high-emitting sources in designated areas in the

clean transportation zone.

(b)

Projects that may be considered for a grant under the

program include:

(1)

purchase or lease of on-road or non-road

alternative fuel or hybrid vehicles powered by an alternative fuel

engine certified to the current federal emissions standards

applicable to that type of engine;

(2)

replacement or repowering of diesel-powered

on-road or non-road vehicles with alternative fuel or hybrid

vehicles powered by an alternative fuel engine certified to the

current federal emissions standards applicable to that type of

engine;

(3) use of qualifying fuel; and

(4) implementation of infrastructure projects.

(c)

A project listed in Subsection (b) is not eligible if it

is required by any state or federal law, rule or regulation,

memorandum of agreement, or other legally binding document.

This

subsection does not apply to:

(1)

an otherwise qualified project, regardless of the

fact that the state implementation plan assumes that the change in

vehicles, equipment, or operations will occur, if on the date the

grant is awarded the change is not required by any state or federal

law, rule or regulation, memorandum of agreement, or other legally

binding document; or

(2)

the purchase of an alternative fuel or hybrid

vehicle or infrastructure required only by local law or regulation

or by corporate or controlling board policy of a public or private

entity.

Sec.

392A.052.

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 qualifying

vehicle as described by Section 392A.102;

(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.

392A.053.

PROJECT PRIORITIZATION CRITERIA. The

commission shall establish criteria for prioritizing projects

eligible to receive grants under the program.

The commission shall

review and revise the criteria as appropriate.

Sec.

392A.054.

APPLICATION FOR GRANT. (a) The commission

shall develop a simple, standardized application package for grants

under the program. The package must include:

(1) an application form;

(2) a brief description of:

(A) the program;

(B)

the projects that are eligible for available

funding;

(C)

the selection criteria and evaluation

process; and

(D) the required documentation;

(3)

the name of a person or office to contact for more

information;

(4)

an example of the contract that an applicant will

be required to execute before receiving a grant; and

(5)

any other information the commission considers

useful to inform the applicant and expedite the application

process.

(b)

The application form shall require as much information

as the commission determines is necessary to properly evaluate each

project but shall otherwise minimize the information required.

(c)

The commission may allow an applicant to seek funds for

multiple program projects through a single application, provided

that an applicant follows all requirements specified by this

chapter and all criteria established by the commission for any

specific program project.

(d)

The opening date, key requirements, and as much of the

application form as the agency deems possible shall be made

publicly available no later than 30 days prior to the opening of the

application period.

(e)

All applications submitted under this chapter shall be

considered on a competitive basis.

(f)

The commission may adopt guidelines to allow a political

subdivision, 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.

Sec.

392A.055.

APPLICATION REVIEW PROCEDURES. (a) The

commission shall review an application for a grant for a project

authorized under this chapter.

If the commission determines that

an application is incomplete, the commission shall notify the

applicant with an explanation of what is missing from the

application.

The commission shall evaluate the completed

application according to the appropriate project criteria.

Subject

to available funding, the commission shall make a final

determination on an application as soon as possible.

(b)

The commission shall make every effort to expedite the

application review process and to award grants to qualified

projects in a timely manner. To the extent possible, the commission

shall coordinate project review and approval with any timing

constraints related to project purchases or installations to be

made by an applicant.

(c)

The commission may deny an application for a grant that

does not meet the applicable project criteria or that the

commission determines is not made in good faith, is not credible, or

is not in compliance with this chapter and the goals of this

chapter.

(d)

Subject to availability of funds, the commission shall

award a grant under the program in conjunction with the execution of

a contract that obligates the commission to make the grant and the

recipient to perform the actions described in the recipient's grant

application. The contract must incorporate provisions for

recapturing grant money in proportion to any loss of emissions

reductions compared with the volume of emissions reductions that

was projected in awarding the grant.

Grant money recaptured under

the contract provision shall be deposited in the Texas emissions

reduction plan fund and reallocated for other projects under this

chapter.

(e)

The commission shall provide for application submission

and application status checks using procedures established by the

commission, which may include application submission and

application status checks to be made over the Internet.

Sec.

392A.056.

ADDITIONAL GRANT PROCEDURES. (a) The

commission, or its designee, shall oversee the grant process and is

responsible for final approval of any grant under the program.

(b)

The commission shall ensure payment for awards under the

program is made not later than the 30th day after the date the

request for reimbursement for an approved grant is approved by the

commission.

SUBCHAPTER C.

GENERAL GRANT CONDITIONS AND ELIGIBILITY

REQUIREMENTS

Sec.

392A.101.

DUTY OF GRANT RECIPIENT TO MEET GRANT

CONDITIONS. A grant recipient under this chapter is responsible

for meeting all grant conditions, including reporting and

monitoring as required by the commission through the grant

contract.

Sec.

392A.102.

QUALIFYING VEHICLES. (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 person purchases, leases, or otherwise commercially

finances a new on-road or non-road vehicle or, subject to

Subsection (c), a used alternative fuel vehicle, that:

(1)

is certified to the appropriate current federal

emissions standards as determined by the commission;

(2)

replaces or repowers a diesel-powered on-road or

non-road vehicle of the same use;

(3)

is a hybrid vehicle or fueled by an alternative

fuel; and

(4)

emits oxides of nitrogen at a rate that is at least

25 percent less than the rate at which the engine in the vehicle

being replaced or repowered under the program emits such

pollutants.

(b) A vehicle is not a qualifying vehicle if the vehicle:

(1) is a neighborhood electric vehicle;

(2)

has been used as a qualifying vehicle to qualify

for a grant under the program for a previous reporting period or by

another person; or

(3)

has qualified for a similar grant in another

jurisdiction if that grant is relied on for credit in the state

implementation plan.

(c)

A used alternative fuel vehicle that is proposed to

replace an on-road or non-road heavy-duty or medium-duty motor

vehicle must be of a model year that is not more than six years older

than the current model year at the time of the submission of the

grant application.

Sec.

392A.103.

GRANT ELIGIBILITY FOR QUALIFYING VEHICLE

REPLACEMENT OR REPOWERING PROJECT. (a) To be eligible for a grant

for the replacement or repowering of a qualifying vehicle under the

program, a project must:

(1)

result in a reduction in emissions of nitrogen

oxides or other pollutants, as established by the commission, of at

least 25 percent, 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) replace or repower a vehicle that:

(A)

is an on-road or non-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;

(B)

satisfies any minimum average annual mileage

or fuel usage requirements established by the commission;

(C)

satisfies any minimum percentage of annual

usage requirements established by the commission; and

(D)

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)

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 or the date the vehicle has been in operation for 400,000

miles after the activity start date established by the commission.

Not less than 75 percent of the annual use of the qualifying

vehicle, either mileage or fuel use as determined by the

commission, must occur in the state.

(c)

For purposes of Subsection (b), the commission shall

establish the activity start date based on the date the commission

accepts verification of the disposition of the vehicle being

replaced.

(d)

The commission shall include and enforce the usage

provisions in the grant contracts.

The commission shall monitor

compliance with the contract requirements, including submission of

reports on at least an annual basis, or more frequently as

determined by the commission.

(e)

The commission by contract may require the return of all

or a portion of grant funds for a grant recipient's noncompliance

with the usage and percentage of use requirements under this

section.

(f)

A vehicle or engine replaced under this program must be

rendered permanently inoperable by crushing the vehicle, by making

a hole in the engine block and permanently destroying the frame of

the vehicle, or by another method approved by the commission that

permanently removes the vehicle from operation in this state. The

commission shall provide a means for an applicant to propose an

alternative method of complying with the requirements of this

subsection.

The commission shall enforce the requirements of this

subsection.

(g)

The commission shall establish baseline emission levels

for emissions of nitrogen oxides for on-road or non-road vehicles

being replaced.

The commission may consider and establish baseline

emission rates for additional pollutants of concern, as determined

by the commission.

(h)

Mileage requirements established by the commission

under Subsection (a)(2)(B) may differ by vehicle weight categories

and type of use.

(i)

On a finding of good cause, the executive director may

waive the requirements of:

(1)

Subsection (a)(2)(A), which may include a waiver

for short lapses in registration or operation attributable to

economic conditions, seasonal work, or other circumstances; or

(2) Subsection (f).

Sec.

392A.104.

GRANT ELIGIBILITY FOR PROJECT RELATING TO

AGRICULTURAL PRODUCT TRANSPORTATION. (a) In this section,

"agricultural product transportation" means the transportation of

a raw agricultural product from the place of production using a

heavy-duty truck to:

(1)

a nonattainment area, as defined by Section

386.001;

(2) an affected county, as defined by Section 386.001;

(3)

a destination inside the clean transportation

zone; or

(4)

a county adjacent to a county described by

Subdivision (2) or that contains an area described by Subdivision

(1) or (3).

(b)

Notwithstanding any other provision of this chapter,

the determining factor for eligibility for participation in the

program with respect to a grant 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.

Sec.

392A.105.

RESTRICTION ON USE OF GRANT. Subject to

Section 392A.152(c), a recipient of a grant under the program shall

use the grant to pay the incremental costs of any purchase,

replacement, or repowering project for which the grant is made,

which may include the initial cost of the alternative fuel or hybrid

vehicle, 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.

SUBCHAPTER D. PROGRAM PROJECTS

Sec.

392A.151.

ALLOCATION OF FUNDS. (a) Money initially

allocated to the program under Section 386.252(a)(3) shall be

allocated to the program projects as follows:

(1)

35.5 percent for natural gas vehicle grant

projects, as described by Section 392A.152(a);

(2)

24 percent for large fleet grant projects, as

described by Section 392A.153(a);

(3)

23.5 percent for hydrogen infrastructure and

vehicle grant projects, as described by Section 392A.154(a); and

(4)

17 percent for the alternative fueling facilities

grant projects, as described by Section 392A.155(a)(1).

(b)

Subject to the limitations outlined in this subsection,

money allocated under this section to a particular program project

may be used for another program project as determined by the

commission, based on demand for grants for eligible projects after

the commission solicits projects to which to award grants according

to the initial allocation provisions of this section.

If the

commission determines there is insufficient demand for the program

projects described by Subsection (a), the commission may redirect

funds to other programs under the Texas emissions reduction plan,

as provided by Section 386.252(h).

Sec.

392A.152.

NATURAL GAS VEHICLE GRANT PROJECTS. (a)

This section applies only to a grant under the program involving:

(1)

the replacement of a motor vehicle with a natural

gas vehicle; or

(2)

the repowering of a motor vehicle with a natural

gas engine.

(b)

As a condition of receiving a grant to which this

section applies and in addition to the requirements of Section

392A.103(b), not less than 75 percent of the annual use of the

qualifying natural gas vehicle, either mileage or fuel use as

determined by the commission, must occur in the clean

transportation zone.

(c)

For purposes of Section 392A.105, the incremental costs

of the replacement or repower of a motor vehicle for which a grant

to which this section applies 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.

(d)

The commission shall develop a grant schedule for grants

to which this section applies that:

(1)

assigns a standardized grant in an amount up to 90

percent of the incremental cost of a natural gas vehicle purchase,

lease, other commercial finance, or repowering;

(2) is based on:

(A)

the certified emission level of nitrogen

oxides, or other pollutants as determined by the commission, of the

engine powering the natural gas vehicle; and

(B) the usage of the natural gas vehicle; and

(3)

may take into account the overall emissions

reduction achieved by the natural gas vehicle.

(e)

Not less than 60 percent of the total amount of grants to

which this section applies that are awarded for the purchase and

repowering of motor vehicles must be awarded to motor vehicles with

a gross vehicle weight rating of at least 33,001 pounds. The

minimum grant requirement under this subsection does not apply if

the commission does not receive enough grant applications to

satisfy the requirement for motor vehicles described by this

subsection that are eligible to receive a grant to which this

section applies.

(f)

A person may not receive a grant to which this section

applies 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

the program 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.

(g)

The commission shall reduce the amount of a grant to

which this section applies as necessary to keep the combined

incentive total at or below the incremental cost of the vehicle for

which the grant is awarded if the grant recipient is eligible to

receive an automatic incentive at or before the time a grant is

awarded under the program.

(h) The commission shall establish criteria for:

(1)

awarding grants to which this section applies to

reimburse eligible costs;

(2)

the commission to compile and regularly update a

listing of potentially eligible natural gas vehicles and natural

gas engines that are certified to the appropriate current federal

emissions standards as determined by the commission;

(3)

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;

(4)

assigning a standardized grant amount for each

qualifying vehicle or engine repower for grants to which this

section applies; and

(5)

requiring applicants for grants to which this

section applies to identify natural gas fueling stations that are

available to fuel the qualifying vehicle in the area of its use.

Sec.

392A.153.

LARGE FLEET GRANT PROJECTS. (a) This

section applies only to a grant under the program for an entity

operating in this state that:

(1) operates a fleet of at least 75 vehicles; and

(2)

places 10 or more qualifying vehicles in service

for use entirely in this state during a calendar year.

(b)

Notwithstanding Subsection (a)(2), an entity that

submits a grant application for 10 or more qualifying vehicles is

eligible to participate in the program with respect to a grant to

which this section applies even if the commission denies approval

for one or more of the vehicles during the application process.

(c)

The amount the commission shall award for each vehicle

being replaced or repowered is up to 90 percent, as determined by

the commission, of the incremental cost for replacement or

repowering of a heavy-duty vehicle.

The commission may revise the

standards for determining grant amounts as needed to reflect

changes to federal emission standards and decisions on pollutants

of concern.

Sec.

392A.154.

HYDROGEN INFRASTRUCTURE AND VEHICLE GRANT

PROJECTS. (a) This section applies only to a grant under the

program involving a hydrogen project described by Subsection (b).

(b)

The commission shall prioritize the awarding of grants

to which this section applies in the following order:

(1)

projects to replace on-road heavy-duty motor

vehicles with newer on-road hydrogen vehicles;

(2)

projects to purchase, lease, or repower on-road

heavy-duty motor vehicles with a powertrain that runs on or is

powered by hydrogen;

(3)

projects to implement hydrogen refueling

infrastructure that will be accessible and available to the public

at times designated by the grant contract;

(4)

projects to replace non-road heavy-duty motor

vehicles with newer non-road hydrogen vehicles; and

(5)

projects to purchase, lease, or repower non-road

heavy-duty motor vehicles with a powertrain that runs on or is

powered by hydrogen.

(c)

Subject to Subsection (b), in awarding grants to which

this section applies, the commission shall give preference to the

most cost-effective projects that will result in the greatest

reduction in emissions of oxides of nitrogen.

(d)

The amount the commission shall award for each vehicle

being replaced or repowered is up to 90 percent, as determined by

the commission, of the incremental cost for replacement of a

heavy-duty or light-duty vehicle. The commission may revise the

standards for determining grant amounts as needed to reflect

changes to federal emission standards and decisions on pollutants

of concern.

(e)

In addition to the requirements of this chapter, the

commission shall establish additional eligibility and

prioritization criteria as needed to implement the program with

respect to grants to which this section applies.

Sec.

392A.155.

ALTERNATIVE FUELING FACILITIES GRANT

PROJECTS. (a)

This section:

(1)

applies only to a grant issued under the program to

provide fueling facilities for alternative fuel in the clean

transportation zone; and

(2)

does not apply to the use of grant money under the

program that is used pursuant to Section 392A.052 for the purchase,

lease, or installation of refueling infrastructure or equipment or

the procurement of refueling services.

(b)

Under the program, the commission shall provide a grant

to which this section applies for each eligible alternative fueling

facility to offset the cost of those facilities.

(c)

An entity that constructs or reconstructs an

alternative fueling facility is eligible to participate in the

program with respect to a grant to which this section applies.

(d)

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.

(e)

The commission shall maintain a listing to be made

available to the public online of all vehicle fueling facilities

that have received funding through a grant to which this section

applies, including location and hours of operation.

(f)

An entity operating in this state that constructs or

reconstructs a facility to dispense alternative fuels may apply for

and receive a grant under the program with respect to a grant to

which this section applies.

(g)

In addition to the requirements of this chapter, the

commission shall establish additional eligibility and

prioritization criteria as needed to implement the program with

respect to grants to which this section applies.

(h)

The prioritization criteria established under

Subsection (g) must provide that, for each grant round, the

commission may not award a grant to an entity that does not agree to

make the alternative fueling facility accessible and available to

the public at times designated by the grant contract until each

eligible entity that does agree to those terms has been awarded a

grant.

(i)

The commission may not award more than one grant to

which this section applies for each facility.

(j)

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.

(k)

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.

(l)

A recipient of a grant to which this section applies

shall use the grant only to pay the costs of the facility for which

the grant is made.

In addition to any other limitation provided by

this chapter, the recipient may not use the grant to pay the

recipient's:

(1)

expenses for the purchase of land or an interest in

land; or

(2)

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.

(m)

Each grant to which this section applies must be awarded

using a contract that requires the recipient to meet operational,

maintenance, and reporting requirements as specified by the

commission.

(n)

A grant to which this section applies that is awarded

for a facility to provide an alternative fuel other than natural gas

may not exceed 50 percent of the sum of the actual eligible costs

incurred by the grant recipient within deadlines established by the

commission.

(o)

A grant to which this section applies that is awarded

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.

(p)

The requirements of Sections 392A.052 and 392A.103 do

not apply to an applicant that is only seeking funding through a

grant to which this section applies.

SECTION 6. The following provisions of the Health and

Safety Code are repealed:

(1) Section 386.0515;

(2) Subchapter G, Chapter 386;

(3) Section 386.252(g);

(4) Chapter 392;

(5) Chapter 393;

(6) Chapter 394; and

(7) Chapter 395.

SECTION 7. This Act takes effect September 1, 2025.