81R3256 JTS-D
	By: Hernandez	H.B. No. 634

	A BILL TO BE ENTITLED
	AN ACT
	relating to establishing a carbon dioxide "cap and trade" program
	to enable participation in the Regional Greenhouse Gas Initiative.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle C, Title 5, Health and Safety Code, is
	amended by adding Chapter 391 to read as follows:
	CHAPTER 391. "CAP AND TRADE" PROGRAM FOR CARBON DIOXIDE
	EMISSIONS FROM CERTAIN ELECTRIC GENERATING
	FACILITIES; REGIONAL GREENHOUSE GAS INITIATIVE
	Sec. 391.001.  DEFINITIONS. In this chapter:
	(1)  "Allowance" means an authorization to emit a
	certain amount of carbon dioxide.
	(2)  "Commission" means the Texas Commission on
	Environmental Quality.
	(3)  "Regional Greenhouse Gas Initiative" means a
	memorandum of understanding dated December 20, 2005, as may be
	amended, and the corresponding model rule, as may be amended, that
	establishes a "cap and trade" program in the northeast region of the
	United States.
	Sec. 391.002.  "CAP AND TRADE" PROGRAM.  (a)  The commission
	in consultation with the Public Utility Commission of Texas by rule
	shall establish a carbon dioxide "cap and trade" program that will
	limit and then reduce the total carbon dioxide emissions released
	by fossil fuel-fired electric generating facilities in this state.
	(b)  The commission's rules establishing the carbon dioxide
	"cap and trade" program shall be designed to:
	(1)  fully comply with the Regional Greenhouse Gas
	Initiative or with another similar initiative as the commission
	determines is best suited for this state; and
	(2)  permit the holders of carbon dioxide allowances to
	trade them in a market to be established through the Regional
	Greenhouse Gas Initiative or other entity as determined by the
	commission.
	(c)  The commission and any other relevant state agency or
	official shall take the steps necessary to allow electric
	generating facilities in this state to participate in a market to
	trade carbon dioxide allowances allocated under the program.
	Sec. 391.003.  AUCTION OF ALLOWANCES. (a) Rules adopted
	under the "cap and trade" program must require that in 2010 at least
	50 percent of all allowances issued under the program be sold
	through an auction open to any person in this state who wishes to
	participate. In the years after 2010, the percentage of allowances
	sold through auction shall be as follows:
	(1)  in 2011, at least 60 percent;
	(2)  in 2012, at least 70 percent;
	(3)  in 2013, at least 80 percent;
	(4)  in 2014, at least 90 percent; and
	(5)  in 2015 and all following years, 100 percent.
	(b)  The proceeds recovered from the allowance auction must
	be used to benefit consumers, balancing short-term and long-term
	benefits. The proceeds may be used only for the following purposes,
	in proportions to be determined by the commission:
	(1)  to promote energy efficiency and conservation;
	(2)  to directly mitigate the adverse effects of the
	program on consumers of electricity; and
	(3)  to promote renewable energy technologies that do
	not produce carbon dioxide emissions.
	(c)  The commission shall determine and specify details for
	implementing the auction of carbon dioxide emission allowances,
	including:
	(1)  the auction's design;
	(2)  the person to conduct and manage the auction; and
	(3)  the timing of the auction in any year relative to
	the dates of the compliance period in the Regional Greenhouse Gas
	Initiative or other market.
	Sec. 391.004.  AUCTION MANAGER. (a) The commission shall:
	(1)  engage a person to serve as auction manager that is
	experienced in auction design and management; or
	(2)  contract with a person to serve as auction manager
	that is determined by the commission to be qualified to design,
	manage, and conduct the auction in a manner that assures the
	efficiency of the auction.
	(b)  The selection process for choosing an auction manager to
	design, manage, and conduct the auction shall include an open and
	public request for proposals. Proposals submitted in response to a
	request under this subsection must include a summary of
	qualifications and experience relevant to designing, managing, and
	conducting the auction.
	(c)  An auction manager selected by the commission may be
	reimbursed only for reasonable costs incurred by the auction
	manager in administering the auction as determined by the
	commission.
	Sec. 391.005.  ALLOWANCES HELD BY AUCTION MANAGER;
	DISTRIBUTION OF AUCTION PROCEEDS. (a) The auction manager selected
	under Section 391.004 shall be authorized to receive, hold, and
	sell carbon dioxide emission allowances.
	(b)  The commission shall convey all allowances to the
	auction manager, who shall collect the auction proceeds and,
	without further appropriation, distribute the proceeds in
	accordance with Section 391.003(b) under commission oversight.
	(c)  The auction manager annually shall submit to the
	commission, not less than six months before the start of the
	auction, a draft proposal on how to allocate the proceeds from the
	auction. The commission shall hold a public hearing, accept public
	comment, and approve, modify, or reject the draft proposal. If the
	commission rejects the proposal, the commission shall work with the
	auction manager to draft an acceptable proposal.
	(d)  The office shall require an annual report from the
	auction manager describing the auction and its results. The
	commission shall make the report public and shall submit the report
	to the appropriate legislative committees.
	Sec. 391.006.  OTHER COMMISSION POWERS AND DUTIES RELATED TO
	CLIMATE-CHANGING SUBSTANCES. The responsibilities created by
	establishing a carbon dioxide "cap and trade" program are in
	addition to all other responsibilities imposed by any other law or
	rule and do not reduce any authority of the commission, including
	the authority to adopt standards and regulations necessary for this
	state to join and participate in a multistate program, at any stage
	in the development and implementation of the program, intended to
	control emissions of carbon dioxide or other substances that are
	determined by the commission to be damaging or altering the
	climate.
	SECTION 2.  Subchapter Z, Chapter 39, Utilities Code, is
	amended by adding Section 39.927 to read as follows:
	Sec. 39.927.  CARBON DIOXIDE "CAP AND TRADE" PROGRAM. The
	commission, in consultation with the Texas Commission on
	Environmental Quality and the attorney general, through the
	commission's authority under this chapter, including the authority
	to review rates, prices, and schedules, shall adopt rules that
	fully implement the carbon dioxide "cap and trade" program
	prescribed by Chapter 391, Health and Safety Code. The commission
	may adopt rules and enter any orders that ensure that the carbon
	dioxide emissions associated with the generation of electric power
	serving the customer load of this state are treated on a
	commercially comparable basis regardless of the location of the
	power stations operating to serve that load.
	SECTION 3.  Not later than January 1, 2010, the Texas
	Commission on Environmental Quality and the Public Utility
	Commission of Texas shall adopt rules to implement Chapter 391,
	Health and Safety Code, as added by this Act.
	SECTION 4.  This Act takes effect September 1, 2009.