H.B. No. 1090
 
 
 
 
AN ACT
  relating to the establishment of a program by the Department of
  Agriculture to make grants to encourage the construction of
  facilities that generate electric energy with certain types of
  agricultural residues, waste, debris, or crops and to the state's
  goal for generating renewable energy.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 2, Agriculture Code, is amended by adding
  Chapter 22 to read as follows:
  CHAPTER 22.  AGRICULTURAL BIOMASS AND LANDFILL DIVERSION
  INCENTIVE PROGRAM
         Sec. 22.001.  POLICY AND PURPOSE. It is the policy of this
  state and the purpose of this chapter to reduce air pollution,
  improve air quality, protect public health, help this state
  diversify its energy supply, and divert waste from landfills
  through new price-support incentives to encourage the construction
  of facilities to generate electric energy with certain types of
  agricultural residues, forest wood waste, urban wood waste,
  storm-generated biomass debris, and energy-dedicated crops.
         Sec. 22.002.  DEFINITIONS. In this chapter:
               (1)  "Diverter":
                     (A)  means:
                           (i)  a person or facility that qualifies for
  an exemption under Section 361.111 or 363.006, Health and Safety
  Code;
                           (ii)  a handler of nonhazardous industrial
  waste that is registered or permitted under Chapter 361, Health and
  Safety Code; or
                           (iii)  a facility that separates recyclable
  materials from a municipal solid waste stream and that is
  registered or permitted under Chapter 363, Health and Safety Code,
  as a municipal solid waste management facility; and
                     (B)  does not include a facility that uses biomass
  to generate electric energy.
               (2)  "Farmer" means the owner or operator of an
  agricultural facility that produces qualified agricultural
  biomass.
               (3)  "Forest wood waste" includes residual tops and
  limbs of trees, unused cull trees, pre-commercial thinnings, and
  wood or debris from noncommercial tree species, slash, or brush.
               (4)  "Logger" means a harvester of forest wood waste,
  regardless of whether the harvesting occurs as a part of the
  harvesting of merchantable timber.
               (5)  "Qualified agricultural biomass" means:
                     (A)  agricultural residues that are of a type that
  historically have been disposed of in a landfill, relocated from
  their point of origin and stored in a manner not intended to enhance
  or restore the soil, burned in open fields in the area from which
  they are derived, or burned in fields and orchards that continue to
  be used for the production of agricultural goods, and includes:
                           (i)  field or seed crop residues, including
  straw from rice or wheat;
                           (ii)  fruit or nut crop residues, including
  orchard or vineyard prunings and removals;
                           (iii)  forest wood waste or urban wood
  waste; and
                           (iv)  agricultural livestock waste
  nutrients; and
                     (B)  a crop grown and used specifically for its
  energy generation value, including a crop consisting of a
  fast-growing tree species.
               (6)  "Storm-generated biomass debris" means
  biomass-based residues that result from a natural weather event,
  including a hurricane, tornado, or flood, that would otherwise be
  disposed of in a landfill or burned in the open. The term includes:
                     (A)  trees, brush, and other vegetative matter
  that have been damaged or felled by severe weather but that would
  not otherwise qualify as forest wood waste; and
                     (B)  clean solid wood waste that has been damaged
  by severe weather but that would not otherwise qualify as urban wood
  waste.
               (7)  "Urban wood waste" means:
                     (A)  solid wood waste material, other than
  pressure-treated, chemically treated, or painted wood waste, that
  is free of rubber, plastic, glass, nails, or other inorganic
  material; and
                     (B)  landscape or right-of-way trimmings.
         Sec. 22.003.  GRANT PROGRAM. (a)  The department shall
  develop and administer an agricultural biomass and landfill
  diversion incentive program to make grants to farmers, loggers, and
  diverters who provide qualified agricultural biomass, forest wood
  waste, urban wood waste, or storm-generated biomass debris to
  facilities that use biomass to generate electric energy in order to
  provide an incentive for the construction of facilities for that
  purpose and to:
               (1)  promote economic development;
               (2)  encourage the use of renewable sources in the
  generation of electric energy;
               (3)  reduce air pollution caused by burning
  agricultural biomass, forest wood waste, urban wood waste, or
  storm-generated biomass debris in open fields; and
               (4)  divert waste from landfills.
         (b)  Subject to Section 22.005, a farmer, logger, or diverter
  is entitled to receive a grant in the amount of $20 for each
  bone-dry ton of qualified agricultural biomass, forest wood waste,
  urban wood waste, or storm-generated biomass debris provided by the
  farmer, logger, or diverter in a form suitable for generating
  electric energy to a facility that:
               (1)  is located in this state;
               (2)  was placed in service after August 31, 2009;
               (3)  generates electric energy sold to a third party by
  using qualified agricultural biomass, forest wood waste, urban wood
  waste, or storm-generated biomass debris;
               (4)  uses the best available emissions control
  technology, considering the technical practicability and economic
  reasonableness of reducing or eliminating the air contaminant
  emissions resulting from the facility;
               (5)  maintains its emissions control equipment in good
  working order; and
               (6)  is in compliance with its operating permit issued
  by the Texas Commission on Environmental Quality under Chapter 382,
  Health and Safety Code.
         (c)  The commissioner by rule may authorize a grant to be
  made for providing each bone-dry ton of a type or source of
  qualified agricultural biomass, forest wood waste, urban wood
  waste, or storm-generated biomass debris in an amount that is
  greater than the amount provided by Subsection (b) if the
  commissioner determines that a grant in a greater amount is
  necessary to provide an adequate incentive to use that type or
  source of qualified agricultural biomass, forest wood waste, urban
  wood waste, or storm-generated biomass debris to generate electric
  energy.
         (d)  The Public Utility Commission of Texas and the Texas
  Commission on Environmental Quality shall assist the department as
  necessary to enable the department to determine whether a facility
  meets the requirements of Subsection (b) for purposes of the
  eligibility of farmers, loggers, and diverters for grants under
  this chapter.
         (e)  To receive a grant under this chapter, a farmer, logger,
  or diverter must deliver qualified agricultural biomass, forest
  wood waste, urban wood waste, or storm-generated biomass debris to
  a facility described by Subsection (b). The operator of each
  facility described by that subsection shall:
               (1)  verify and document the amount of qualified
  agricultural biomass, forest wood waste, urban wood waste, or
  storm-generated biomass debris delivered to the facility for the
  generation of electric energy; and
               (2)  make a grant on behalf of the department in the
  appropriate amount to each farmer, logger, or diverter who delivers
  qualified agricultural biomass, forest wood waste, urban wood
  waste, or storm-generated biomass debris to the facility.
         (f)  The department quarterly shall reimburse each operator
  of a facility described by Subsection (b) for grants under this
  chapter made by the operator during the preceding quarter to
  eligible farmers, loggers, and diverters. To receive reimbursement
  for one or more grants, an operator of a facility described by that
  subsection must file an application with the department that
  verifies the amount of the grants made by the operator during the
  preceding quarter for which the operator seeks reimbursement.
         (g)  The department may contract with and provide for the
  compensation of private consultants, contractors, and other
  persons to assist the department in administering the agricultural
  biomass and landfill diversion incentive program.
         Sec. 22.004.  AGRICULTURAL BIOMASS AND LANDFILL DIVERSION
  INCENTIVE PROGRAM ACCOUNT. (a)  The agricultural biomass and
  landfill diversion incentive program account is an account in the
  general revenue fund. The account is composed of:
               (1)  legislative appropriations;
               (2)  gifts, grants, donations, and matching funds
  received under Subsection (b); and
               (3)  other money required by law to be deposited in the
  account.
         (b)  The department may solicit and accept gifts in kind,
  donations, and grants of money from the federal government, local
  governments, private corporations, or other persons to be used for
  the purposes of this chapter.
         (c)  Money in the account may be appropriated only to the
  department for the purpose of implementing and maintaining the
  agricultural biomass and landfill diversion incentive program.
         (d)  Income from money in the account shall be credited to
  the account.
         (e)  The account is exempt from the application of Section
  403.095, Government Code.
         Sec. 22.005.  LIMITATION ON GRANT AMOUNT. (a)  The total
  amount of grants awarded by operators of facilities under Section
  22.003 and by the department under Section 22.006 during each state
  fiscal year may not exceed $30 million.
         (b)  During each state fiscal year, the department may not
  pay to an operator of a facility as reimbursements under Section
  22.003 or grants under Section 22.006 an amount that exceeds $6
  million.
         Sec. 22.006.  ELIGIBILITY OF OPERATORS OF ELECTRIC ENERGY
  GENERATION FACILITIES FOR GRANTS. (a)  Except as provided by
  Subsection (b), an operator of a facility that uses biomass to
  generate electric energy is not eligible to receive a grant under
  this chapter or under any other state law for the generation of
  electric energy with qualified agricultural biomass, forest wood
  waste, urban wood waste, or storm-generated biomass debris for
  which a farmer, logger, or diverter has received a grant under this
  chapter.
         (b)  An operator of a facility that uses biomass to generate
  electric energy may receive a grant from the department under this
  chapter for generating electric energy with qualified agricultural
  biomass, forest wood waste, urban wood waste, or storm-generated
  biomass debris that arrives at the facility in a form unsuitable for
  generating electric energy and that the facility processes into a
  form suitable for generating electric energy.
         (c)  To receive a grant from the department under Subsection
  (b), an operator of a facility must file an application with the
  department that verifies the amount of qualified agricultural
  biomass, forest wood waste, urban wood waste, or storm-generated
  biomass debris that the facility processed into a form suitable for
  generating electric energy. The department shall make grants to
  eligible operators of facilities quarterly, subject to
  appropriations. The provisions of this chapter governing grants to
  farmers, loggers, and diverters, including the provisions
  governing the amount of a grant, apply to a grant from the
  department under Subsection (b) to the extent they can be made
  applicable.
         Sec. 22.007.  RULES. The commissioner, in consultation with
  the Public Utility Commission of Texas and the Texas Commission on
  Environmental Quality, shall adopt rules to implement this chapter.
         Sec. 22.008.  AVAILABILITY OF FUNDS. Notwithstanding any
  other provision of this chapter, the department is not required to
  administer this chapter or adopt rules under this chapter, and the
  operator of a facility described by Section 22.003(b) is not
  required to make a grant on behalf of the department, until funds
  are appropriated for those purposes.
         Sec. 22.009.  EXPIRATION OF PROGRAM AND CHAPTER. The
  agricultural biomass and landfill diversion incentive program
  terminates on August 31, 2019. On September 1, 2019:
               (1)  any unobligated funds remaining in the
  agricultural biomass and landfill diversion incentive program
  account shall be transferred to the undedicated portion of the
  general revenue fund; and
               (2)  this chapter expires.
         SECTION 2.  Section 39.904, Utilities Code, is amended by
  amending Subsection (m) and adding Subsections (m-1), (m-2), (m-3),
  and (o) to read as follows:
         (m)  A renewable energy credit retired for purposes other
  than to meet the requirements of Subsection (c)(1) may not affect
  the minimum annual renewable energy requirement under Subsection
  (c)(1) for a retail electric provider, municipally owned utility,
  or electric cooperative.
         (m-1)  As provided by this subsection, the commission shall
  reduce the requirement under Subsection (c)(1) for a retail
  electric provider, municipally owned utility, or electric
  cooperative that is subject to a renewable energy requirement under
  this section and that serves a customer receiving electric service
  at transmission-level voltage if, before any year for which the
  commission calculates renewable energy requirements under
  Subsection (c)(1), the customer notifies the commission in writing
  that the customer chooses not to support the goal for renewable
  energy generation under this section for that year. The commission
  shall exclude from the calculation of a retail electric provider's,
  municipally owned utility's, or electric cooperative's requirement
  under Subsection (c)(1) energy sold by the retail electric
  provider, municipally owned utility, or electric cooperative at
  transmission-level voltage to customers who have submitted the
  notice to the commission under this subsection for the applicable
  year.
         (m-2)  The commission shall determine the reporting
  requirements and schedule necessary to implement Subsections (m)
  and (m-1).
         (m-3)  Subsections (m), (m-1), and (m-2) do not alter the
  renewable energy goals or targets established in Subsection (a) or
  reduce the minimum statewide renewable energy requirements of
  Subsection (c)(1) [Notwithstanding any other provision of law, the
  commission shall ensure that all renewable capacity installed in
  this state and all renewable energy credits awarded, produced,
  procured, or sold from renewable capacity in this state are counted
  toward the goal in Subsection (a)].
         (o)  The commission may establish an alternative compliance
  payment.  An entity that has a renewable energy purchase
  requirement under this section may elect to pay the alternative
  compliance payment instead of applying renewable energy credits
  toward the satisfaction of the entity's obligation under this
  section.  The commission may establish a separate alternative
  compliance payment for the goal of 500 megawatts of capacity from
  renewable energy technologies other than wind energy.  The
  alternative compliance payment for a renewable energy purchase
  requirement that could be satisfied with a renewable energy credit
  from wind energy may not be less than $2.50 per credit or greater
  than $20 per credit.  Prior to September 1, 2009, an alternative
  compliance payment under this subsection may not be set above $5 per
  credit.  In implementing this subsection, the commission shall
  consider:
               (1)  the effect of renewable energy credit prices on
  retail competition;
               (2)  the effect of renewable energy credit prices on
  electric rates;
               (3)  the effect of the alternative compliance payment
  level on the renewable energy credit market; and
               (4)  any other factors necessary to ensure the
  continued development of the renewable energy industry in this
  state while protecting ratepayers from unnecessary rate increases.
         SECTION 3.  (a) The commissioner of agriculture, in
  consultation with the Texas Forest Service, shall conduct a study
  to determine the volume of wood waste in the East Texas and Central
  Texas forest regions of this state.
         (b)  Not later than January 1, 2009, the commissioner of
  agriculture shall prepare and present to the governor, the
  lieutenant governor, the speaker of the house of representatives,
  and each member of the legislature a report describing the results
  of the study.
         SECTION 4.  (a)  The Public Utility Commission of Texas shall
  conduct a study of the effect that Section 39.904, Utilities Code,
  has had on:
               (1)  market power in this state; and
               (2)  the rates paid for electricity by residential
  customers in this state.
         (b)  Not later than January 1, 2009, the Public Utility
  Commission of Texas shall prepare and present to the governor,
  lieutenant governor, and speaker of the house of representatives a
  report describing the results of the study that specifies any
  changes in market power and any costs to or savings for residential
  customers because of the implementation of Section 39.904,
  Utilities Code.
         SECTION 5.  This Act takes effect September 1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1090 was passed by the House on May 1,
  2007, by the following vote:  Yeas 144, Nays 1, 1 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 1090 on May 21, 2007, 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. 1090 on May 26, 2007, by the following vote:  Yeas 139,
  Nays 4, 2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 1090 was passed by the Senate, with
  amendments, on May 17, 2007, by the following vote:  Yeas 28, Nays
  3; 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.
  1090 on May 27, 2007, by the following vote:  Yeas 27, Nays 3.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor