By: Hardcastle H.B. No. 2811
A BILL TO BE ENTITLED
AN ACT
relating to the implementation of and incentives for projects
involving the capture, transportation, injection, sequestration,
geologic storage, or abatement of carbon dioxide.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subchapter G, Chapter 490,
Government Code, is amended to read as follows:
SUBCHAPTER G. CLEAN COAL PROJECTS AND ADVANCED CLEAN ENERGY
PROJECTS
SECTION 2. Section 490.301, Government Code, is amended to
read as follows:
Sec. 490.301. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "Advanced clean energy project" has the meaning
assigned by Section 382.003, Health and Safety Code.
(2) "Clean[, "clean] coal project" has the meaning
assigned by Section 5.001, Water Code.
SECTION 2. The heading to Section 490.302, Government Code,
is amended to read as follows:
Sec. 490.302. USE OF MONEY FOR CLEAN COAL PROJECT OR
ADVANCED CLEAN ENERGY PROJECT.
SECTION 3. Section 490.302, Government Code, is amended by
adding Subsection (c) to read as follows:
(c) Notwithstanding Section 490.102:
(1) until September 1, 2010, the governor may allocate
money appropriated to the fund by the legislature to provide
matching money for an advanced clean energy project as described by
Chapter 393, Government Code, that captures not less than 70
percent of any carbon dioxide produced by the combustion of fuel and
sequesters that captured carbon dioxide by geologic storage or
other means; and
(2) beginning September 1, 2010, the governor may
allocate money appropriated to the fund by the legislature to
provide matching money for an advanced clean energy project as
described by Chapter 393, Government Code, if the governor did not
allocate money as provided by Subdivision (1).
SECTION 4. Section 490.303, Government Code, is amended to
read as follows:
Sec. 490.303. ELIGIBILITY OF CLEAN COAL PROJECT OR ADVANCED
CLEAN ENERGY PROJECT FOR MONEY. Notwithstanding any other
provision of this subchapter, a clean coal project or an advanced
clean energy project constitutes an opportunity for emerging
technology suitable for consideration for a grant under Subchapter
C, incentives as provided by Subchapter D, grant matching as
provided by Subchapter E, and acquisition of research superiority
under Subchapter F.
SECTION 5. Section 382.003, Health and Safety Code, is
amended by amending Subdivision (1-a) and adding Subdivision (7-c)
to read as follows:
(1-a) "Advanced clean energy project" means a project
for which an application for a permit under this chapter is received
by the commission on or after January 1, 2008, and before January 1,
2020, and that:
(A) involves the use of coal, biomass, petroleum
coke, solid waste, or fuel cells using hydrogen derived from such
fuels, in the generation of electricity, or the creation of liquid
fuels outside of the existing fuel production infrastructure while
co-generating electricity;
(B) is capable of achieving on an annual basis a
99 percent or greater reduction of sulfur dioxide emissions and [,]
a 95 percent or greater reduction of mercury emissions[,] and an
annual average emission rate for nitrogen oxides of 0.05 pounds or
less per million British thermal units; and
(C) captures not less than 50 percent of any
[renders] carbon dioxide produced by the combustion of fuel and
sequesters that captured carbon dioxide by geologic storage or
other means [capable of capture, sequestration, or abatement if any
carbon dioxide is produced by the project].
(7-c) "Geologic storage" means the underground
storage of carbon dioxide in a suitable geologic formation,
including storage that is accomplished in conjunction with an
enhanced oil recovery project.
SECTION 6. Subtitle C, Title 5, Health and Safety Code, is
amended by adding Chapter 393 to read as follows:
CHAPTER 393. COMMISSION ADVANCED CLEAN ENERGY PROJECT GRANT AND
LOAN PROGRAM.
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 393.001. DEFINITIONS. In this chapter:
(1) "Account" means the commission advanced clean
energy project account established under this section.
(2) "Advanced clean energy project" has the meaning
assigned by Section 382.003, Health and Safety Code.
(3) "Commission" means the Texas Commission on
Environmental Quality.
(4) "Program" means the commission advanced clean
energy project grant and loan program established under this
section.
Sec. 393.002. PROGRAM. (a) The commission advanced clean
energy project grant and loan program is established to encourage
the development of advanced clean energy projects. Under the
program, the commission shall provide grants, or other financial
incentives for eligible projects in order to accelerate the
commercialization of technologies for the control of air
contaminant emissions by electrical power generating facilities,
including technologies to capture, transport, and store carbon
dioxide in an environmentally protective manner.
(b) The commission advanced clean energy project account is
an account in the general revenue fund.
(c) The account consists of:
(1) a sub-account in the account that consists of the
proceeds of bonds issued under Subsection (i);
(2) any amount appropriated by the legislature for the
account;
(3) funds allocated to the account by the governor
under Section 490.302;
(4) gifts, grants, and other donations received for
the account; and
(5) interest earned on the investment of money in the
account.
(d) Money in the account may be appropriated only to the
commission to award grants or service debt associated with the
administration of the loan program established by Section 393.002
and funded by the proceeds of bonds issued under Subsection (i).
(e) Under the program, the commission may award a grant to
the managing entity of an advanced clean energy project to assist in
the funding of the front-end engineering and design portion of the
project. The total amount of grants awarded under this section for
a project may not exceed 50 percent of the total amount invested in
the front-end engineering and design portion of the project by
private industry sources.
(f) Before awarding a grant or making a loan under this
section, the commission shall enter into a written agreement with
the entity to which the grant is to be awarded or the loan is to be
made. The agreement may specify that if, as of a date specified by
the agreement, the entity has not used the grant or loan for the
purposes for which the grant or loan was intended, the entity shall
repay the amount of the grant or the amount of the loan and any
accrued interest, as applicable, under terms specified by the
agreement.
(g) Under the program, the commission may make or guarantee
a loan to the managing entity of an advanced clean energy project in
this state. If the loan or guarantee is to be funded by the proceeds
of bonds issued under Subsection (i), the project must qualify for
the loan or guarantee under Section 49-q, Article III, Texas
Constitution.
(h) A recipient of a grant or loan under this section is
encouraged to purchase goods and services from small businesses and
historically underutilized businesses, as those terms are defined
by Section 481.191, Government Code.
(i) The Texas Public Finance Authority shall issue general
obligation bonds in accordance with and subject to Chapter 1232,
Government Code, for the purposes authorized by Section 49-q,
Article III, Texas Constitution.
(j) This subsection applies only to an advanced clean energy
project described by Section 490.302(c)(1), Government Code. The
other provisions of this section apply to an advanced clean energy
project described by Section 490.302(c)(1), Government Code, only
to the extent they do not conflict with this subsection. If the
governor allocates funds to the account under Section
490.302(c)(1), the commission shall solicit proposals for the
construction in this state of an advanced clean energy project
described by that section, conduct a review of proposals submitted
in conjunction with a review team made up of an equal number of
representatives from the Railroad Commission of Texas, the Public
Utility Commission of Texas, and the comptroller's office, and
distribute to the managing entity of the project selected an amount
equal to 50 percent of the total amount invested in the project by
private industry sources. The limitations provided by Subsection
(e) on the purpose for which a grant under this section may be
awarded and on the amount of a grant do not apply to a grant under
this subsection. The managing entity of the project shall provide
records as considered necessary by the commission to justify grants
under this subsection. Cumulative distributions under this
subsection may not exceed $200 million. The commission shall
develop an application review process to implement this subsection
that specifies the submission deadline, processing time frame, and
award announcement schedule necessary to ensure that applications
are evaluated in time to select a winner and make the initial
distributions of money before September 1, 2010. The commission,
in conjunction with the review team, shall develop application
review criteria that take into consideration the criteria developed
by the commission to evaluate grants or loans for advanced clean
energy projects under the other provisions of this chapter. The
application review criteria must give particular emphasis to the
relative economic benefit of the proposed project to this state.
Sec. 393.003. GUIDELINES, CRITERIA, GRANT APPLICATIONS,
AND PROJECT REQUIREMENTS. (a) The commission shall adopt grant
guidelines and criteria, grant application criteria, and project
requirements consistent with the requirements of Sections
391.003-391.205, except the documentation requirements of Section
391.201(d) shall not relate to baseline emission reductions, but
rather the ability of a project to meet the emissions profile in the
definition of "advanced clean energy project" under Section
382.003.
[Sections 393.004-393.400 reserved for expansion]
SECTION 7. Section 151.318(a), Tax Code, is amended by
adding Subsection (a)(12) to read as follows:
(a) The following items are exempted from the taxes imposed
by this chapter if sold, leased, or rented to, or stored, used, or
consumed by a manufacturer:
. . . (12) components of tangible personal property that are
used, constructed, acquired, or installed to capture carbon dioxide
from an anthropogenic source, transport or inject carbon dioxide
from such a source, or prepare carbon dioxide from such a source for
transportation or injection, if the carbon dioxide is geologically
sequestered, as part of an enhanced oil recovery project or
otherwise, in this state.
SECTION 8. Section 202.0545(a), Tax Code, is amended to
read as follows:
(a) Subject to the limitations provided by this section,
until [the later of] the 10th [seventh] anniversary of the date that
the comptroller first approves an application for a tax rate
reduction under this section [or the effective date of a final rule
adopted by the United States Environmental Protection Agency
regulating carbon dioxide as a pollutant], the producer of oil
recovered through an enhanced oil recovery project that qualifies
under Section 202.054 for the recovered oil tax rate provided by
Section 202.052(b) is entitled to an additional 50 percent
reduction in that tax rate if in the recovery of the oil the
enhanced oil recovery project uses carbon dioxide that:
(1) is captured from an anthropogenic source in this
state;
(2) would otherwise be released into the atmosphere as
industrial emissions;
(3) is measurable at the source of capture; and
(4) is sequestered in one or more geological
formations in this state following the enhanced oil recovery
process.
SECTION 9. Subchapter C, Chapter 312, Tax Code, is amended
by adding Section 312.404 to read as follows:
Sec. 312.404. TAX ABATEMENT AGREEMENT FOR ADVANCED CLEAN
ENERGY PROJECT IN COUNTY REINVESTMENT ZONE. (a) In this section,
"advanced clean energy project" has the meaning assigned by Section
382.003, Health and Safety Code.
(b) An agreement made under this subchapter with the owner
of property that is an advanced clean energy project may include a
provision that defers the effective date of the agreement to a later
date agreed to by the taxing unit and the owner of the property.
(c) If the effective date of an agreement is deferred under
Subsection (b), the agreement may have a term ending not later than
10 years after the effective date of the agreement, notwithstanding
Sections 312.204 and 312.208.
SECTION 10. Section 313.007, Tax Code, is amended to read as
follows:
Sec. 313.007. EXPIRATION. (a) Subchapters B, C, and D
expire December 31, 2020 [2011].
(b) Notwithstanding the other provisions of this chapter, a
school district may approve an application for a limitation on
appraised value under Subchapter B or C on or after December 31,
2011, only if the applicant intends to use the property in
connection with an advanced clean energy project, as defined by
Section 382.003, Health and Safety Code.
SECTION 11. Sections 313.021(1) and (4), Tax Code, are
amended to read as follows:
(1) "Qualified investment" means:
(A) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, and is
described as Section 1245 property by Section 1245(a), Internal
Revenue Code of 1986;
(B) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with the manufacturing,
processing, or fabrication in a cleanroom environment of a
semiconductor product, without regard to whether the property is
actually located in the cleanroom environment, including:
(i) integrated systems, fixtures, and
piping;
(ii) all property necessary or adapted to
reduce contamination or to control airflow, temperature, humidity,
chemical purity, or other environmental conditions or
manufacturing tolerances; and
(iii) production equipment and machinery,
moveable cleanroom partitions, and cleanroom lighting;
(C) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with the operation of a
nuclear electric power generation facility, including:
(i) property, including pressure vessels,
pumps, turbines, generators, and condensers, used to produce
nuclear electric power; and
(ii) property and systems necessary to
control radioactive contamination;
(D) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with operating an
integrated gasification combined cycle electric generation
facility, including:
(i) property used to produce electric power
by means of a combined combustion turbine and steam turbine
application using synthetic gas or another product produced by the
gasification of coal or another carbon-based feedstock; or
(ii) property used in handling materials to
be used as feedstock for gasification or used in the gasification
process to produce synthetic gas or another carbon-based feedstock
for use in the production of electric power in the manner described
by Subparagraph (i); [or]
(E) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2010, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with operating an advanced
clean energy project, as defined by Section 382.003, Health and
Safety Code; or
(F) a building or a permanent, nonremovable
component of a building that is built or constructed during the
applicable qualifying time period that begins on or after January
1, 2002, and that houses tangible personal property described by
Paragraph (A), (B), (C), [or] (D), or (E).
(4) "Qualifying time period" means:
(A) the first two tax years that begin on or after
the date a person's application for a limitation on appraised value
under this subchapter is approved, except as provided by Paragraph
(B) or (C); [or]
(B) in connection with a nuclear electric power
generation facility, the first seven tax years that begin on or
after the third anniversary of the date the school district
approves the property owner's application for a limitation on
appraised value under this subchapter, unless a shorter time period
is agreed to by the governing body of the school district and the
property owner; or
(C) in connection with an advanced clean energy
project, as defined by Section 382.003, Health and Safety Code, the
first five tax years that begin on or after the third anniversary of
the date the school district approves the property owner's
application for a limitation on appraised value under this
subchapter, unless a shorter time period is agreed to by the
governing body of the school district and the property owner.
SECTION 12. Subchapter M, Chapter 5, Water Code, is amended
by adding Section 5.559 to read as follows:
Sec. 5.559. ADVANCED CLEAN ENERGY PROJECT PERMITTING
PROCEDURE. (a) In this section, "advanced clean energy project"
has the meaning assigned by Section 382.003, Health and Safety
Code.
(b) As authorized by federal law, not later than nine months
after the executive director declares an application for a permit
under Chapter 26 for an advanced clean energy project to be
administratively complete, the executive director shall complete
the technical review of the application.
(c) The commission shall issue a final order issuing or
denying the permit not later than nine months after the executive
director declares the application technically complete. The
commission may extend the deadline set out in this subsection up to
three months if it determines that the number of complex pending
applications for permits under this chapter will prevent the
commission from meeting the deadline imposed by this subsection
without creating an extraordinary burden on the resources of the
commission.
(d) The permit process authorized by this section is subject
to the requirements relating to a contested case hearing under this
chapter or Subchapters C-G, Chapter 2001, Government Code, as
applicable.
(e) The commission shall adopt rules to implement this
section.
SECTION 13. Subchapter B, Chapter 27, Water Code, is
amended by amending Section 27.022 to read as follows:
Sec. 27.022. JURISDICTION OVER ANTHROPOGENIC CARBON
DIOXIDE INJECTION. (a) The commission has jurisdiction over the
injection of anthropogenic carbon dioxide except as provided by
Subchapter C-1.
(b) The commission shall adopt rules and procedures
reasonably required for the performance of its powers, duties, and
functions under this section [produced by a clean coal project, to
the extent authorized by federal law, into a zone that is below the
base of usable quality water and that is not productive of oil, gas,
or geothermal resources by a Class II injection well, or by a Class
I injection well if required by federal law].
SECTION 14. Chapter 27, Water Code, is amended by adding
Subchapter C-1 to read as follows:
SUBCHAPTER C-1. INJECTION AND GEOLOGIC STORAGE OF ANTHROPOGENIC
CARBON DIOXIDE
Sec. 27.041. JURISDICTION. (a) The railroad commission
has jurisdiction over injection of anthropogenic carbon dioxide
into a reservoir that is initially productive of oil, gas, or
geothermal resources or a saline formation directly above or below
that reservoir. Any well initially completed under the
jurisdiction of the railroad commission shall remain under the
jurisdiction of the railroad commission, notwithstanding the
well's subsequent use for the injection of anthropogenic carbon
dioxide.
(b) This subchapter does not apply to the injection of fluid
through the use of a Class II injection well as defined by 40 C.F.R.
Section 144.6(b) for the sole purpose of the enhanced recovery of
oil or gas.
SECTION 15. Section 393.002(i), Health and Safety Code, as
added by this Act, takes effect only if the constitutional
amendment proposed by the 81st Legislature, Regular Session, 2009,
authorizing the issuance of general obligation bonds to provide and
guarantee loans to encourage advanced clean energy projects is
approved by the voters. If that amendment is not approved by the
voters, Section 393.002(i), Health and Safety Code, Government
Code, as added by this Act, has no effect.
SECTION 16. Section 27.038, Water Code, is repealed.
SECTION 17. Not later than January 1, 2010, the Texas
Commission on Environmental Quality shall adopt rules as necessary
to implement Section 382.003, Health and Safety Code, as amended by
this Act, Chapter 393, Health and Safety Code, as added by this Act,
Section 5.559, Water Code, as added by this Act, Chapter 27, Water
Code, as mended by this Act.
SECTION 18. The Railroad Commission of Texas may adopt
rules, as necessary, to implement Section 202.0545, Tax Code, as
amended by this Act, and Chapter 27, Water Code, as amended by this
Act.
SECTION 19. The comptroller may adopt rules, as necessary,
to implement Section 202.0545, Tax Code, as amended by this Act.
SECTION 20. The change in law made by this Act to Section
151.318, Tax Code, does not affect taxes imposed before the
effective date of this Act, and the law in effect before the
effective date of this Act is continued in effect for purposes of
the liability for and collection of those taxes.
SECTION 21. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2009.