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H.B. No. 2201

H.B. No. 2201

AN ACT Relating to implementing a clean coal project in this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) this state produces the most energy in the country
and is the largest consumer of coal in the country;
(2) the generation of electric energy in this state by
coal-powered generation is estimated to be 37 percent of the
electric energy generation in this state;
(3) affordable electric energy in this state is
founded on low-cost coal-powered generation;
(4) energy production has a significant role in
providing permanent, well-paid employment in this state for this
state’s growing population, and the energy production industry
provides income and revenue that ensures this state may continue to
provide a high standard of services to this state’s residences and
businesses;
(5) the United States Department of Energy’s proposed
FutureGen research into integrated carbon sequestration and
hydrogen research provides for $800 million in federal funding and
$200 million in funding by private industry and other countries;
(6) it is a priority for this state to secure funding
under the United States Department of Energy’s proposed FutureGen
programs because to do so will help this state to become a world
leader in innovative energy technologies and is expected to:
(A) create more than 11,000 new jobs in this
state;
(B) provide compensation for workers of more than
$374.3 million;
(C) generate $98 million in tax revenue; and
(D) result in a total economic benefit to this
state of $1.2042 billion;
(7) FutureGen projects will provide this state with an
opportunity to meet this state’s energy demands and lower emissions
of air contaminants, so the FutureGen technologies should be
encouraged for use in electric energy generation;
(8) this state is in a unique position to secure
funding under FutureGen projects since this state has:
(A) a ready source of coal and lignite to fuel
FutureGen projects;
(B) appropriate geological features for storing
carbon dioxide;
(C) a market for energy produced; and
(D) electric energy transmission resources
capable of carrying the resulting power loads;
(9) this state has 31 billion barrels of oil in
depleted oil fields that could be recovered by means of carbon
dioxide enhanced recovery;
(10) carbon dioxide from FutureGen projects could be
used to recover three billion barrels of oil and generate $4 billion
in tax revenue for this state;
(11) hydrogen produced by FutureGen projects could be
used to fuel fuel cells and for this state’s petrochemical industry
to manufacture products;
(12) to facilitate construction of one or more
components of the FutureGen projects at a new or existing electric
generating, steam production, or industrial products facility is in
the best interest of all of this state’s residents; and
(13) streamlining procedural processes as necessary
to ensure predictability in this state’s regulatory scheme will
improve this state’s position for obtaining federal funding and
will preserve the environmental protection obtained by present
substantive regulatory standards.
SECTION 2. Section 2305.037, Government Code, is amended to
read as follows:
Sec. 2305.037. INNOVATIVE [RENEWABLE] ENERGY DEMONSTRATION
PROGRAM. (a) The energy office is the supervising state agency of
the innovative [renewable] energy demonstration program and shall
distribute grant money under the program for demonstration projects
that develop sustainable and innovative [renewable] energy
resources, including:
(1) a clean coal project, as defined by Section 5.001,
Water Code;
(2) a gasification project for a coal and biomass
mixture;
(3) photovoltaic, biomass, wind, and solar
applications; and
(4) [(2)] other appropriate low-emission, renewable,
and sustainable energy applications.
(b) Contingent on the selection of a Texas site for the
location of the coal-based integrated sequestration and hydrogen
project to be built in partnership with the United States
Department of Energy, commonly referred to as the FutureGen
project, and to the extent that funds are appropriated for this
purpose, the energy office shall distribute to the managing entity
of the FutureGen project an amount equal to 50 percent of the total
amount invested in the project by private industry sources. The
managing entity of the FutureGen project shall provide records as
considered necessary by the energy office to justify grants under
this subsection. Cumulative distributions under this subsection
may not exceed $20 million.
(c) The energy office may require a grant recipient under
the program to match a grant in a ratio determined by the energy
office.
SECTION 3. Subchapter C, Chapter 382, Health and Safety
Code, is amended by adding Section 382.0565 to read as follows:
Sec. 382.0565. CLEAN COAL PROJECT PERMITTING PROCEDURE.
(a) The United States Department of Energy may specify the
FutureGen emissions profile for a project in that department’s
request for proposals or request for a contract. If the United
States Department of Energy does not specify in a request for
proposals or a request for a contract the FutureGen emissions
profile, the profile means emissions of air contaminants at a
component of the FutureGen project, as defined by Section 5.001,
Water Code, that equal not more than:
(1) one percent of the average sulphur content of the
coal or coals used for the generation of electricity at the
component;
(2) 10 percent of the average mercury content of the
coal or coals used for the generation of electricity at the
component;
(3) 0.05 pounds of nitrogen oxides per million British
thermal units of energy produced at the component; and
(4) 0.005 pounds of particulate matter per million
British thermal units of energy produced at the component.
(b) As authorized by federal law, the commission by rule
shall implement reasonably streamlined processes for issuing
permits required to construct a component of the FutureGen project
designed to meet the FutureGen emissions profile.
(c) When acting under a rule adopted under Subsection (b),
the commission shall use public meetings, informal conferences, or
advisory committees to gather the opinions and advice of interested
persons.
(d) The permit processes authorized by this section are not
subject to the requirements relating to a contested case hearing
under this chapter, Chapter 5, Water Code, or Subchapters C-G,
Chapter 2001, Government Code.
(e) This section does not apply to an application for a
permit to construct or modify a new or existing coal-fired electric
generating facility that will use pulverized or supercritical
pulverized coal.
SECTION 4. Subchapter C, Chapter 171, Tax Code, is amended
by adding Section 171.108 to read as follows:
Sec. 171.108. DEDUCTION OF COST OF CLEAN COAL PROJECT FROM
TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS
STATE. (a) In this section, “clean coal project” has the meaning
assigned by Section 5.001, Water Code.
(b) A corporation may deduct from its apportioned taxable
capital the amortized cost of equipment or from its apportioned
taxable earned surplus 10 percent of the amortized cost of
equipment:
(1) that is used in a clean coal project;
(2) that is acquired by the corporation for use in
generation of electricity, production of process steam, or
industrial production;
(3) that the corporation uses in this state; and
(4) the cost of which is amortized in accordance with
Subsection (c).
(c) The amortization of the cost of capital used in a clean
coal project must:
(1) be for a period of at least 60 months;
(2) provide for equal monthly amounts;
(3) begin in the month during which the equipment is
placed in service in this state; and
(4) cover only a period during which the equipment is
used in this state.
(d) A corporation that makes a deduction under this section
shall file with the comptroller an amortization schedule showing
the period for which the deduction is to be made. On the request of
the comptroller, the corporation shall file with the comptroller
proof of the cost of the equipment or proof of the equipment’s
operation in this state.
(e) A corporation may elect to make the deduction authorized
by this section from apportioned taxable capital or apportioned
taxable earned surplus, but not from both, for each separate
regular annual period. An election for an initial period applies to
the second tax period and to the first regular annual period.
SECTION 5. Section 313.024(b), Tax Code, is amended to read
as follows:
(b) To be eligible for a limitation on appraised value under
this subchapter, the corporation or limited liability company must
use the property in connection with:
(1) manufacturing;
(2) research and development;
(3) a clean coal project, as defined by Section 5.001,
Water Code;
(4) a gasification project for a coal and biomass
mixture; or
(5) [(3)] renewable energy electric generation.
SECTION 6. Section 5.001, Water Code, is amended by
amending Subdivisions (2) and (3) and adding Subdivisions (4), (5),
(6), and (7) to read as follows:
(2) “Commission” means the Texas [Natural Resource
Conservation] Commission on Environmental Quality.
(3) “Executive director” means the executive director
of the Texas [Natural Resource Conservation] Commission on
Environmental Quality.
(4) “Clean coal project” means the installation of one
or more components of the coal-based integrated sequestration and
hydrogen research project to be built in partnership with the
United States Department of Energy, commonly referred to as the
FutureGen project. The term includes the construction or
modification of a facility for electric generation, industrial
production, or the production of steam as a byproduct of coal
gasification to the extent that the facility installs one or more
components of the FutureGen project.
(5) “Coal” has the meaning assigned by Section
134.004, Natural Resources Code.
(6) “Component of the FutureGen project” means a
process, technology, or piece of equipment that:
(A) is designed to employ coal gasification
technology to generate electricity, hydrogen, or steam in a manner
that meets the FutureGen project profile;
(B) is designed to employ fuel cells to generate
electricity in a manner that meets the FutureGen project profile;
(C) is designed to employ a hydrogen-fueled
turbine to generate electricity where the hydrogen is derived from
coal in a manner that meets the FutureGen project profile;
(D) is designed to demonstrate the efficacy at an
electric generation or industrial production facility of a carbon
dioxide capture technology in a manner that meets the FutureGen
project profile;
(E) is designed to sequester a portion of the
carbon dioxide captured from an electric generation or industrial
production facility in a manner that meets the FutureGen project
profile in conjunction with appropriate remediation plans and
appropriate techniques for reservoir characterization, injection
control, and monitoring;
(F) is designed to sequester carbon dioxide as
part of enhanced oil recovery in a manner that meets the FutureGen
project profile in conjunction with appropriate techniques for
reservoir characterization, injection control, and monitoring;
(G) qualifies for federal funds designated for
the FutureGen project;
(H) is required to perform the sampling,
analysis, or research necessary to submit a proposal to the United
States Department of Energy for the FutureGen project; or
(I) is required in a final United States
Department of Energy request for proposals for the FutureGen
project or is described in a final United States Department of
Energy request for proposals as a desirable element to be
considered in the awarding of the project.
(7) “FutureGen project profile” means a standard or
standards relevant to a component of the FutureGen project, as
provided in a final or amended United States Department of Energy
request for proposals or contract.
SECTION 7. Subchapter M, Chapter 5, Water Code, is amended
by adding Section 5.558 to read as follows:
Sec. 5.558. CLEAN COAL PROJECT PERMITTING. (a) As
authorized by federal law, the commission by rule shall implement
reasonably streamlined processes for issuing permits required to
construct a component of the FutureGen project designed to meet the
FutureGen emissions profile as defined by Section 382.0565, Health
and Safety Code.
(b) When acting under a rule adopted under Subsection (a),
the commission shall use public meetings, informal conferences, or
advisory committees to gather the opinions and advice of interested
persons.
(c) The permit processes authorized by this section are not
subject to the requirements relating to a contested case hearing
under this chapter, Chapter 382, Health and Safety Code, or
Subchapters C-G, Chapter 2001, Government Code.
(d) This section does not apply to an application for a
permit to construct or modify a new or existing coal-fired electric
generating facility that will use pulverized or supercritical
pulverized coal.
SECTION 8. Section 16.053, Water Code, is amended by adding
Subsection (r) to read as follows:
(r) The board by rule shall provide for reasonable
flexibility to allow for a timely amendment of a regional water
plan, the board’s approval of an amended regional water plan, and
the amendment of the state water plan, to facilitate planning for
water supplies reasonably required for a clean coal project, as
defined by Section 5.001. The rules may allow for amending a
regional water plan without providing notice and without a public
meeting or hearing under Subsection (h) if the amendment does not:
(1) significantly change the regional water plan, as
reasonably determined by the board; or
(2) adversely affect other water management
strategies in the regional water plan.
SECTION 9. Subchapter B, Chapter 27, Water Code, is amended
by adding Section 27.022 to read as follows:
Sec. 27.022. JURISDICTION OVER CARBON DIOXIDE INJECTION.
The commission has jurisdiction over the injection of carbon
dioxide 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 10. The heading to Subchapter C, Chapter 27, Water
Code, is amended to read as follows:

SUBCHAPTER C. OIL AND GAS WASTE; INJECTION WELLS

SECTION 11. Subchapter C, Chapter 27, Water Code, is
amended by adding Section 27.038 to read as follows:
Sec. 27.038. JURISDICTION OVER CARBON DIOXIDE INJECTION.
The railroad commission has jurisdiction over injection of carbon
dioxide produced by a clean coal project, to the extent authorized
by federal law, into a reservoir that is 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 12. (a) This section takes effect only if Senate
Bill No. 831, Acts of the 79th Legislature, Regular Session, 2005,
or similar legislation providing for funding emerging
technologies, is enacted and becomes law.
(b) Chapter 490, Government Code, as added by Senate Bill
No. 831, Acts of the 79th Legislature, Regular Session, 2005, is
amended by adding Subchapter G to read as follows:

SUBCHAPTER G. CLEAN COAL PROJECTS

Sec. 490.301. DEFINITION. In this section, “clean coal
project” has the meaning assigned by Section 5.001, Water Code.
Sec. 490.302. USE OF MONEY FOR CLEAN COAL PROJECT. (a)
Notwithstanding Section 490.102, the governor may allocate money
appropriated to the fund by the legislature to provide matching
money for a clean coal project as described by Section 2305.037 if
the governor has the express written prior approval of the
lieutenant governor and the speaker of the house of representatives
to do so.
(b) The governor may allocate proceeds deposited in the fund
as provided by an agreement described by Section 490.103 to provide
matching money for a clean coal project as described by Section
2305.037 if the governor has the express written prior approval of
the lieutenant governor and the speaker of the house of
representatives to do so.
Sec. 490.303. ELIGIBILITY OF CLEAN COAL PROJECT FOR MONEY.
Notwithstanding any other provision of this subchapter, a clean
coal 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 13. Not later than September 1, 2006:
(1) the Texas Water Development Board shall adopt
rules under Section 16.053, Water Code, as amended by this Act;
(2) the Texas Commission on Environmental Quality
shall adopt rules under Section 382.0565, Health and Safety Code,
and under Sections 5.558 and 27.022, Water Code, as added by this
Act; and
(3) the Railroad Commission of Texas shall adopt rules
under Section 27.038, Water Code, as added by this Act.
SECTION 14. 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, 2005.

 

______________________________ ______________________________

President of the Senate Speaker of the House

I certify that H.B. No. 2201 was passed by the House on May
11, 2005, by the following vote: Yeas 143, Nays 0, 1 present, not
voting; that the House refused to concur in Senate amendments to
H.B. No. 2201 on May 27, 2005, and requested the appointment of a
conference committee to consider the differences between the two
houses; and that the House adopted the conference committee report
on H.B. No. 2201 on May 29, 2005, by the following vote: Yeas 140,
Nays 3, 2 present, not voting; and that the House adopted H.C.R. No.
238 authorizing certain corrections in H.B. No. 2201 on May 29,
2005, by a non-record vote.

______________________________
Chief Clerk of the House

I certify that H.B. No. 2201 was passed by the Senate, with
amendments, on May 25, 2005, by the following vote: Yeas 31, Nays
0; at the request of the House, the Senate appointed a conference
committee to consider the differences between the two houses; and
that the Senate adopted the conference committee report on H.B. No.
2201 on May 29, 2005, by the following vote: Yeas 31, Nays 0; and
that the Senate adopted H.C.R. No. 238 authorizing certain
corrections in H.B. No. 2201 on May 30, 2005, by a viva-voce vote.

______________________________
Secretary of the Senate

 

APPROVED: __________________

Date

 

__________________

Governor

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