Texas 2009 - 81st Regular

Texas House Bill HB2811 Compare Versions

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1	1	By: Hardcastle H.B. No. 2811
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the implementation of and incentives for projects
7	7	involving the capture, transportation, injection, sequestration,
8	8	geologic storage, or abatement of carbon dioxide.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. The heading to Subchapter G, Chapter 490,
11	11	Government Code, is amended to read as follows:
12	12	SUBCHAPTER G. CLEAN COAL PROJECTS AND ADVANCED CLEAN ENERGY
13	13	PROJECTS
14	14	SECTION 2. Section 490.301, Government Code, is amended to
15	15	read as follows:
16	16	Sec. 490.301. DEFINITIONS [DEFINITION]. In this
17	17	subchapter:
18	18	(1) "Advanced clean energy project" has the meaning
19	19	assigned by Section 382.003, Health and Safety Code.
20	20	(2) "Clean[, "clean] coal project" has the meaning
21	21	assigned by Section 5.001, Water Code.
22	22	SECTION 2. The heading to Section 490.302, Government Code,
23	23	is amended to read as follows:
24	24	Sec. 490.302. USE OF MONEY FOR CLEAN COAL PROJECT OR
25	25	ADVANCED CLEAN ENERGY PROJECT.
26	26	SECTION 3. Section 490.302, Government Code, is amended by
27	27	adding Subsection (c) to read as follows:
28	28	(c) Notwithstanding Section 490.102:
29	29	(1) until September 1, 2010, the governor may allocate
30	30	money appropriated to the fund by the legislature to provide
31	31	matching money for an advanced clean energy project as described by
32	32	Chapter 393, Government Code, that captures not less than 70
33	33	percent of any carbon dioxide produced by the combustion of fuel and
34	34	sequesters that captured carbon dioxide by geologic storage or
35	35	other means; and
36	36	(2) beginning September 1, 2010, the governor may
37	37	allocate money appropriated to the fund by the legislature to
38	38	provide matching money for an advanced clean energy project as
39	39	described by Chapter 393, Government Code, if the governor did not
40	40	allocate money as provided by Subdivision (1).
41	41	SECTION 4. Section 490.303, Government Code, is amended to
42	42	read as follows:
43	43	Sec. 490.303. ELIGIBILITY OF CLEAN COAL PROJECT OR ADVANCED
44	44	CLEAN ENERGY PROJECT FOR MONEY. Notwithstanding any other
45	45	provision of this subchapter, a clean coal project or an advanced
46	46	clean energy project constitutes an opportunity for emerging
47	47	technology suitable for consideration for a grant under Subchapter
48	48	C, incentives as provided by Subchapter D, grant matching as
49	49	provided by Subchapter E, and acquisition of research superiority
50	50	under Subchapter F.
51	51	SECTION 5. Section 382.003, Health and Safety Code, is
52	52	amended by amending Subdivision (1-a) and adding Subdivision (7-c)
53	53	to read as follows:
54	54	(1-a) "Advanced clean energy project" means a project
55	55	for which an application for a permit under this chapter is received
56	56	by the commission on or after January 1, 2008, and before January 1,
57	57	2020, and that:
58	58	(A) involves the use of coal, biomass, petroleum
59	59	coke, solid waste, or fuel cells using hydrogen derived from such
60	60	fuels, in the generation of electricity, or the creation of liquid
61	61	fuels outside of the existing fuel production infrastructure while
62	62	co-generating electricity;
63	63	(B) is capable of achieving on an annual basis a
64	64	99 percent or greater reduction of sulfur dioxide emissions and [,]
65	65	a 95 percent or greater reduction of mercury emissions[,] and an
66	66	annual average emission rate for nitrogen oxides of 0.05 pounds or
67	67	less per million British thermal units; and
68	68	(C) captures not less than 50 percent of any
69	69	[renders] carbon dioxide produced by the combustion of fuel and
70	70	sequesters that captured carbon dioxide by geologic storage or
71	71	other means [capable of capture, sequestration, or abatement if any
72	72	carbon dioxide is produced by the project].
73	73	(7-c) "Geologic storage" means the underground
74	74	storage of carbon dioxide in a suitable geologic formation,
75	75	including storage that is accomplished in conjunction with an
76	76	enhanced oil recovery project.
77	77	SECTION 6. Subtitle C, Title 5, Health and Safety Code, is
78	78	amended by adding Chapter 393 to read as follows:
79	79	CHAPTER 393. COMMISSION ADVANCED CLEAN ENERGY PROJECT GRANT AND
80	80	LOAN PROGRAM.
81	81	SUBCHAPTER A. GENERAL PROVISIONS
82	82	Sec. 393.001. DEFINITIONS. In this chapter:
83	83	(1) "Account" means the commission advanced clean
84	84	energy project account established under this section.
85	85	(2) "Advanced clean energy project" has the meaning
86	86	assigned by Section 382.003, Health and Safety Code.
87	87	(3) "Commission" means the Texas Commission on
88	88	Environmental Quality.
89	89	(4) "Program" means the commission advanced clean
90	90	energy project grant and loan program established under this
91	91	section.
92	92	Sec. 393.002. PROGRAM. (a) The commission advanced clean
93	93	energy project grant and loan program is established to encourage
94	94	the development of advanced clean energy projects. Under the
95	95	program, the commission shall provide grants, or other financial
96	96	incentives for eligible projects in order to accelerate the
97	97	commercialization of technologies for the control of air
98	98	contaminant emissions by electrical power generating facilities,
99	99	including technologies to capture, transport, and store carbon
100	100	dioxide in an environmentally protective manner.
101	101	(b) The commission advanced clean energy project account is
102	102	an account in the general revenue fund.
103	103	(c) The account consists of:
104	104	(1) a sub-account in the account that consists of the
105	105	proceeds of bonds issued under Subsection (i);
106	106	(2) any amount appropriated by the legislature for the
107	107	account;
108	108	(3) funds allocated to the account by the governor
109	109	under Section 490.302;
110	110	(4) gifts, grants, and other donations received for
111	111	the account; and
112	112	(5) interest earned on the investment of money in the
113	113	account.
114	114	(d) Money in the account may be appropriated only to the
115	115	commission to award grants or service debt associated with the
116	116	administration of the loan program established by Section 393.002
117	117	and funded by the proceeds of bonds issued under Subsection (i).
118	118	(e) Under the program, the commission may award a grant to
119	119	the managing entity of an advanced clean energy project to assist in
120	120	the funding of the front-end engineering and design portion of the
121	121	project. The total amount of grants awarded under this section for
122	122	a project may not exceed 50 percent of the total amount invested in
123	123	the front-end engineering and design portion of the project by
124	124	private industry sources.
125	125	(f) Before awarding a grant or making a loan under this
126	126	section, the commission shall enter into a written agreement with
127	127	the entity to which the grant is to be awarded or the loan is to be
128	128	made. The agreement may specify that if, as of a date specified by
129	129	the agreement, the entity has not used the grant or loan for the
130	130	purposes for which the grant or loan was intended, the entity shall
131	131	repay the amount of the grant or the amount of the loan and any
132	132	accrued interest, as applicable, under terms specified by the
133	133	agreement.
134	134	(g) Under the program, the commission may make or guarantee
135	135	a loan to the managing entity of an advanced clean energy project in
136	136	this state. If the loan or guarantee is to be funded by the proceeds
137	137	of bonds issued under Subsection (i), the project must qualify for
138	138	the loan or guarantee under Section 49-q, Article III, Texas
139	139	Constitution.
140	140	(h) A recipient of a grant or loan under this section is
141	141	encouraged to purchase goods and services from small businesses and
142	142	historically underutilized businesses, as those terms are defined
143	143	by Section 481.191, Government Code.
144	144	(i) The Texas Public Finance Authority shall issue general
145	145	obligation bonds in accordance with and subject to Chapter 1232,
146	146	Government Code, for the purposes authorized by Section 49-q,
147	147	Article III, Texas Constitution.
148	148	(j) This subsection applies only to an advanced clean energy
149	149	project described by Section 490.302(c)(1), Government Code. The
150	150	other provisions of this section apply to an advanced clean energy
151	151	project described by Section 490.302(c)(1), Government Code, only
152	152	to the extent they do not conflict with this subsection. If the
153	153	governor allocates funds to the account under Section
154	154	490.302(c)(1), the commission shall solicit proposals for the
155	155	construction in this state of an advanced clean energy project
156	156	described by that section, conduct a review of proposals submitted
157	157	in conjunction with a review team made up of an equal number of
158	158	representatives from the Railroad Commission of Texas, the Public
159	159	Utility Commission of Texas, and the comptroller's office, and
160	160	distribute to the managing entity of the project selected an amount
161	161	equal to 50 percent of the total amount invested in the project by
162	162	private industry sources. The limitations provided by Subsection
163	163	(e) on the purpose for which a grant under this section may be
164	164	awarded and on the amount of a grant do not apply to a grant under
165	165	this subsection. The managing entity of the project shall provide
166	166	records as considered necessary by the commission to justify grants
167	167	under this subsection. Cumulative distributions under this
168	168	subsection may not exceed $200 million. The commission shall
169	169	develop an application review process to implement this subsection
170	170	that specifies the submission deadline, processing time frame, and
171	171	award announcement schedule necessary to ensure that applications
172	172	are evaluated in time to select a winner and make the initial
173	173	distributions of money before September 1, 2010. The commission,
174	174	in conjunction with the review team, shall develop application
175	175	review criteria that take into consideration the criteria developed
176	176	by the commission to evaluate grants or loans for advanced clean
177	177	energy projects under the other provisions of this chapter. The
178	178	application review criteria must give particular emphasis to the
179	179	relative economic benefit of the proposed project to this state.
180	180	Sec. 393.003. GUIDELINES, CRITERIA, GRANT APPLICATIONS,
181	181	AND PROJECT REQUIREMENTS. (a) The commission shall adopt grant
182	182	guidelines and criteria, grant application criteria, and project
183	183	requirements consistent with the requirements of Sections
184	184	391.003-391.205, except the documentation requirements of Section
185	185	391.201(d) shall not relate to baseline emission reductions, but
186	186	rather the ability of a project to meet the emissions profile in the
187	187	definition of "advanced clean energy project" under Section
188	188	382.003.
189	189	[Sections 393.004-393.400 reserved for expansion]
190	190	SECTION 7. Section 151.318(a), Tax Code, is amended by
191	191	adding Subsection (a)(12) to read as follows:
192	192	(a) The following items are exempted from the taxes imposed
193	193	by this chapter if sold, leased, or rented to, or stored, used, or
194	194	consumed by a manufacturer:
195	195	. . . (12) components of tangible personal property that are
196	196	used, constructed, acquired, or installed to capture carbon dioxide
197	197	from an anthropogenic source, transport or inject carbon dioxide
198	198	from such a source, or prepare carbon dioxide from such a source for
199	199	transportation or injection, if the carbon dioxide is geologically
200	200	sequestered, as part of an enhanced oil recovery project or
201	201	otherwise, in this state.
202	202	SECTION 8. Section 202.0545(a), Tax Code, is amended to
203	203	read as follows:
204	204	(a) Subject to the limitations provided by this section,
205	205	until [the later of] the 10th [seventh] anniversary of the date that
206	206	the comptroller first approves an application for a tax rate
207	207	reduction under this section [or the effective date of a final rule
208	208	adopted by the United States Environmental Protection Agency
209	209	regulating carbon dioxide as a pollutant], the producer of oil
210	210	recovered through an enhanced oil recovery project that qualifies
211	211	under Section 202.054 for the recovered oil tax rate provided by
212	212	Section 202.052(b) is entitled to an additional 50 percent
213	213	reduction in that tax rate if in the recovery of the oil the
214	214	enhanced oil recovery project uses carbon dioxide that:
215	215	(1) is captured from an anthropogenic source in this
216	216	state;
217	217	(2) would otherwise be released into the atmosphere as
218	218	industrial emissions;
219	219	(3) is measurable at the source of capture; and
220	220	(4) is sequestered in one or more geological
221	221	formations in this state following the enhanced oil recovery
222	222	process.
223	223	SECTION 9. Subchapter C, Chapter 312, Tax Code, is amended
224	224	by adding Section 312.404 to read as follows:
225	225	Sec. 312.404. TAX ABATEMENT AGREEMENT FOR ADVANCED CLEAN
226	226	ENERGY PROJECT IN COUNTY REINVESTMENT ZONE. (a) In this section,
227	227	"advanced clean energy project" has the meaning assigned by Section
228	228	382.003, Health and Safety Code.
229	229	(b) An agreement made under this subchapter with the owner
230	230	of property that is an advanced clean energy project may include a
231	231	provision that defers the effective date of the agreement to a later
232	232	date agreed to by the taxing unit and the owner of the property.
233	233	(c) If the effective date of an agreement is deferred under
234	234	Subsection (b), the agreement may have a term ending not later than
235	235	10 years after the effective date of the agreement, notwithstanding
236	236	Sections 312.204 and 312.208.
237	237	SECTION 10. Section 313.007, Tax Code, is amended to read as
238	238	follows:
239	239	Sec. 313.007. EXPIRATION. (a) Subchapters B, C, and D
240	240	expire December 31, 2020 [2011].
241	241	(b) Notwithstanding the other provisions of this chapter, a
242	242	school district may approve an application for a limitation on
243	243	appraised value under Subchapter B or C on or after December 31,
244	244	2011, only if the applicant intends to use the property in
245	245	connection with an advanced clean energy project, as defined by
246	246	Section 382.003, Health and Safety Code.
247	247	SECTION 11. Sections 313.021(1) and (4), Tax Code, are
248	248	amended to read as follows:
249	249	(1) "Qualified investment" means:
250	250	(A) tangible personal property that is first
251	251	placed in service in this state during the applicable qualifying
252	252	time period that begins on or after January 1, 2002, and is
253	253	described as Section 1245 property by Section 1245(a), Internal
254	254	Revenue Code of 1986;
255	255	(B) tangible personal property that is first
256	256	placed in service in this state during the applicable qualifying
257	257	time period that begins on or after January 1, 2002, without regard
258	258	to whether the property is affixed to or incorporated into real
259	259	property, and that is used in connection with the manufacturing,
260	260	processing, or fabrication in a cleanroom environment of a
261	261	semiconductor product, without regard to whether the property is
262	262	actually located in the cleanroom environment, including:
263	263	(i) integrated systems, fixtures, and
264	264	piping;
265	265	(ii) all property necessary or adapted to
266	266	reduce contamination or to control airflow, temperature, humidity,
267	267	chemical purity, or other environmental conditions or
268	268	manufacturing tolerances; and
269	269	(iii) production equipment and machinery,
270	270	moveable cleanroom partitions, and cleanroom lighting;
271	271	(C) tangible personal property that is first
272	272	placed in service in this state during the applicable qualifying
273	273	time period that begins on or after January 1, 2002, without regard
274	274	to whether the property is affixed to or incorporated into real
275	275	property, and that is used in connection with the operation of a
276	276	nuclear electric power generation facility, including:
277	277	(i) property, including pressure vessels,
278	278	pumps, turbines, generators, and condensers, used to produce
279	279	nuclear electric power; and
280	280	(ii) property and systems necessary to
281	281	control radioactive contamination;
282	282	(D) tangible personal property that is first
283	283	placed in service in this state during the applicable qualifying
284	284	time period that begins on or after January 1, 2002, without regard
285	285	to whether the property is affixed to or incorporated into real
286	286	property, and that is used in connection with operating an
287	287	integrated gasification combined cycle electric generation
288	288	facility, including:
289	289	(i) property used to produce electric power
290	290	by means of a combined combustion turbine and steam turbine
291	291	application using synthetic gas or another product produced by the
292	292	gasification of coal or another carbon-based feedstock; or
293	293	(ii) property used in handling materials to
294	294	be used as feedstock for gasification or used in the gasification
295	295	process to produce synthetic gas or another carbon-based feedstock
296	296	for use in the production of electric power in the manner described
297	297	by Subparagraph (i); [or]
298	298	(E) tangible personal property that is first
299	299	placed in service in this state during the applicable qualifying
300	300	time period that begins on or after January 1, 2010, without regard
301	301	to whether the property is affixed to or incorporated into real
302	302	property, and that is used in connection with operating an advanced
303	303	clean energy project, as defined by Section 382.003, Health and
304	304	Safety Code; or
305	305	(F) a building or a permanent, nonremovable
306	306	component of a building that is built or constructed during the
307	307	applicable qualifying time period that begins on or after January
308	308	1, 2002, and that houses tangible personal property described by
309	309	Paragraph (A), (B), (C), [or] (D), or (E).
310	310	(4) "Qualifying time period" means:
311	311	(A) the first two tax years that begin on or after
312	312	the date a person's application for a limitation on appraised value
313	313	under this subchapter is approved, except as provided by Paragraph
314	314	(B) or (C); [or]
315	315	(B) in connection with a nuclear electric power
316	316	generation facility, the first seven tax years that begin on or
317	317	after the third anniversary of the date the school district
318	318	approves the property owner's application for a limitation on
319	319	appraised value under this subchapter, unless a shorter time period
320	320	is agreed to by the governing body of the school district and the
321	321	property owner; or
322	322	(C) in connection with an advanced clean energy
323	323	project, as defined by Section 382.003, Health and Safety Code, the
324	324	first five tax years that begin on or after the third anniversary of
325	325	the date the school district approves the property owner's
326	326	application for a limitation on appraised value under this
327	327	subchapter, unless a shorter time period is agreed to by the
328	328	governing body of the school district and the property owner.
329	329	SECTION 12. Subchapter M, Chapter 5, Water Code, is amended
330	330	by adding Section 5.559 to read as follows:
331	331	Sec. 5.559. ADVANCED CLEAN ENERGY PROJECT PERMITTING
332	332	PROCEDURE. (a) In this section, "advanced clean energy project"
333	333	has the meaning assigned by Section 382.003, Health and Safety
334	334	Code.
335	335	(b) As authorized by federal law, not later than nine months
336	336	after the executive director declares an application for a permit
337	337	under Chapter 26 for an advanced clean energy project to be
338	338	administratively complete, the executive director shall complete
339	339	the technical review of the application.
340	340	(c) The commission shall issue a final order issuing or
341	341	denying the permit not later than nine months after the executive
342	342	director declares the application technically complete. The
343	343	commission may extend the deadline set out in this subsection up to
344	344	three months if it determines that the number of complex pending
345	345	applications for permits under this chapter will prevent the
346	346	commission from meeting the deadline imposed by this subsection
347	347	without creating an extraordinary burden on the resources of the
348	348	commission.
349	349	(d) The permit process authorized by this section is subject
350	350	to the requirements relating to a contested case hearing under this
351	351	chapter or Subchapters C-G, Chapter 2001, Government Code, as
352	352	applicable.
353	353	(e) The commission shall adopt rules to implement this
354	354	section.
355	355	SECTION 13. Subchapter B, Chapter 27, Water Code, is
356	356	amended by amending Section 27.022 to read as follows:
357	357	Sec. 27.022. JURISDICTION OVER ANTHROPOGENIC CARBON
358	358	DIOXIDE INJECTION. (a) The commission has jurisdiction over the
359	359	injection of anthropogenic carbon dioxide except as provided by
360	360	Subchapter C-1.
361	361	(b) The commission shall adopt rules and procedures
362	362	reasonably required for the performance of its powers, duties, and
363	363	functions under this section [produced by a clean coal project, to
364	364	the extent authorized by federal law, into a zone that is below the
365	365	base of usable quality water and that is not productive of oil, gas,
366	366	or geothermal resources by a Class II injection well, or by a Class
367	367	I injection well if required by federal law].
368	368	SECTION 14. Chapter 27, Water Code, is amended by adding
369	369	Subchapter C-1 to read as follows:
370	370	SUBCHAPTER C-1. INJECTION AND GEOLOGIC STORAGE OF ANTHROPOGENIC
371	371	CARBON DIOXIDE
372	372	Sec. 27.041. JURISDICTION. (a) The railroad commission
373	373	has jurisdiction over injection of anthropogenic carbon dioxide
374	374	into a reservoir that is initially productive of oil, gas, or
375	375	geothermal resources or a saline formation directly above or below
376	376	that reservoir. Any well initially completed under the
377	377	jurisdiction of the railroad commission shall remain under the
378	378	jurisdiction of the railroad commission, notwithstanding the
379	379	well's subsequent use for the injection of anthropogenic carbon
380	380	dioxide.
381	381	(b) This subchapter does not apply to the injection of fluid
382	382	through the use of a Class II injection well as defined by 40 C.F.R.
383	383	Section 144.6(b) for the sole purpose of the enhanced recovery of
384	384	oil or gas.
385	385	SECTION 15. Section 393.002(i), Health and Safety Code, as
386	386	added by this Act, takes effect only if the constitutional
387	387	amendment proposed by the 81st Legislature, Regular Session, 2009,
388	388	authorizing the issuance of general obligation bonds to provide and
389	389	guarantee loans to encourage advanced clean energy projects is
390	390	approved by the voters. If that amendment is not approved by the
391	391	voters, Section 393.002(i), Health and Safety Code, Government
392	392	Code, as added by this Act, has no effect.
393	393	SECTION 16. Section 27.038, Water Code, is repealed.
394	394	SECTION 17. Not later than January 1, 2010, the Texas
395	395	Commission on Environmental Quality shall adopt rules as necessary
396	396	to implement Section 382.003, Health and Safety Code, as amended by
397	397	this Act, Chapter 393, Health and Safety Code, as added by this Act,
398	398	Section 5.559, Water Code, as added by this Act, Chapter 27, Water
399	399	Code, as mended by this Act.
400	400	SECTION 18. The Railroad Commission of Texas may adopt
401	401	rules, as necessary, to implement Section 202.0545, Tax Code, as
402	402	amended by this Act, and Chapter 27, Water Code, as amended by this
403	403	Act.
404	404	SECTION 19. The comptroller may adopt rules, as necessary,
405	405	to implement Section 202.0545, Tax Code, as amended by this Act.
406	406	SECTION 20. The change in law made by this Act to Section
407	407	151.318, Tax Code, does not affect taxes imposed before the
408	408	effective date of this Act, and the law in effect before the
409	409	effective date of this Act is continued in effect for purposes of
410	410	the liability for and collection of those taxes.
411	411	SECTION 21. This Act takes effect immediately if it
412	412	receives a vote of two-thirds of all the members elected to each
413	413	house, as provided by Section 39, Article III, Texas Constitution.
414	414	If this Act does not receive the vote necessary for immediate
415	415	effect, this Act takes effect September 1, 2009.