HB 3868

relating to 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
(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
(4)  the clean school bus program established under
(5)  the new technology implementation grant program
(6)  the regional air monitoring program established
(7)  a health effects study as provided by Section
(8)  air quality planning activities as provided by
(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
(10)  the Texas clean fleet program established under
(11)  the Texas alternative fueling facilities program
(12)  the Texas natural gas vehicle grant program
(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
(14)  other programs the commission may develop that
support congestion mitigation to reduce mobile source ozone
(15)  the seaport and rail yard areas emissions
reduction program established under Subchapter D-1;
(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;
(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);
(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
(19)[(20)]  the Texas hydrogen infrastructure,
vehicle, and equipment grant program established under Subchapter
SECTION 2.  Section 386.252(a), Health and Safety Code, is
(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
(1)  three [four] percent may be used for the clean
school bus program under Chapter 390;
(2)  eight percent may be used for 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 hydrogen infrastructure and vehicles;
(3)  six [five] percent may be used for the Texas clean
fleet program under Chapter 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
(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
(7)  not more than $750,000 may be used each year to
support research related to air quality as provided by Chapter 387;
(8)  not more than $200,000 may be used for a health
(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;
(10)  six percent may be used by the commission for the
seaport and rail yard areas emissions reduction program established
(11)  2.5 percent may be used for the light-duty motor
vehicle purchase or lease incentive program established under
(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 obtained through wind and other renewable
energy resources for the state implementation plan that are
(A)  wind and other renewable energy resources;
(B)  energy efficiency programs administered by the
Public Utility Commission of Texas or the State Energy Conservation
(C)  the implementation of advanced building energy
(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
(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 5.  Sec. 391.001, Health and Safety Code is amended
to read as follows: DEFINITIONS. In this chapter:
(1)  "Best available control technology" has the
meaning assigned by Section 169 of the federal Clean Air Act (42
(2)  "Commission" means the Texas Commission on
(3)  "Facility" has the meaning assigned by Section
(4)  "Incremental cost" has the meaning assigned by
(5)  "New technology" means emissions control
technology that results in emissions reductions that exceed state
or federal requirements in effect at the time of submission of a new
technology implementation grant application.
(6)  "Stationary source" has the meaning assigned by
Section 302 of the federal Clean Air Act (42 U.S.C. Section
(7)  "Hydrogen vehicle" means a 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
SECTION 6.  Sec. 391.002(b), Health and Safety Code, is
(b)  Projects that may be considered for a grant under the
(1)  advanced clean energy projects, as defined by
(2)  new technology projects that reduce emissions of
regulated pollutants from stationary sources;
(3)  new technology projects that reduce emissions from
upstream and midstream oil and gas production, completions,
gathering, storage, processing, and transmission activities
(A)  the replacement, repower, or retrofit of
(B)  the installation of systems to reduce or
eliminate the loss of gas, flaring of gas, or burning of gas using
other combustion control devices; or
(C)  the installation of systems that reduce
flaring emissions and other site emissions; [and]
(4)  electricity storage projects related to renewable
energy, including projects to store electricity produced from wind
and solar generation that provide efficient means of making the
stored energy available during periods of peak energy use; and[.]
(5)  to encourage the adoption of hydrogen
infrastructure and vehicles, including:
(A)  implementation of hydrogen infrastructure
(B)  purchase or lease of on-road or non-road
(C)  replacement of on-road or non-road vehicles
with newer on-road or non-road hydrogen vehicles;
(E)  purchase or lease of hydrogen engines and
SECTION 1.  Section 393.006(a), Health and Safety Code, is
(a)  Grants awarded under this chapter for a facility to
provide alternative fuels other than natural gas may not exceed
[(1)]  50 percent of the sum of the actual eligible
costs incurred by the grant recipient within deadlines established
SECTION 2.  The changes in law made by this Act apply only to
a Texas emissions reduction plan grant awarded on or after the
effective date of this Act.  A grant awarded before the effective
date of this Act is governed by the law in effect on the date the
award was made, and the former law is continued in effect for that
SECTION 3.  This Act takes effect September 1, 2025.