H.B. No. 3469
AN ACT
relating to the establishment of a program to provide grants to be 
used to reduce emissions of diesel exhaust from school buses and to 
the use of the Texas emissions reduction plan to fund the program.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 386.051(b), Health and Safety Code, is 
amended to read as follows:
	(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;  [and]
		(3)  the new technology research and development 
program established under Chapter 387; and
		(4)  the clean school bus program established under 
Chapter 390.     
	SECTION 2.  Section 386.052(b), Health and Safety Code, is 
amended to read as follows:
	(b)  Appropriate commission objectives include:                                
		(1)  achieving maximum reductions in oxides of nitrogen 
to demonstrate compliance with the state implementation plan;
		(2)  preventing areas of the state from being in 
violation of national ambient air quality standards;  [and]
		(3)  achieving cost-saving and multiple benefits by 
reducing emissions of other pollutants; and
		(4)  achieving reductions of emissions of diesel 
exhaust from school buses.
	SECTION 3.  Section 386.252, Health and Safety Code, is 
amended by amending Subsection (a) and adding Subsection (c) to 
read as follows:
	(a)  Money in the fund may be used only to implement and 
administer programs established under the plan and shall be 
allocated as follows:
		(1)  for the diesel emissions reduction incentive 
program, 87.5 percent of the money in the fund, of which not more 
than four percent may be used for the clean school bus program and 
not more than 10 percent may be used for on-road diesel purchase or 
lease incentives;
		(2)  for the new technology research and development 
program, 9.5 percent of the money in the fund, of which up to 
$250,000 is allocated for administration, up to $200,000 is 
allocated for a health effects study, $500,000 is to be deposited in 
the state treasury to the credit of the clean air account created 
under Section 382.0622 to supplement funding for air quality 
planning activities in affected counties, and not less than 20 
percent is to be allocated each year to support research related to 
air quality for the Houston-Galveston-Brazoria and Dallas-Fort 
Worth nonattainment areas by a nonprofit organization based in 
Houston; and
		(3)  for administrative costs incurred by the 
commission and the laboratory, three percent.
	(c)  Money in the fund may be allocated to the clean school 
bus program only if:
		(1)  the money is available for that purpose after 
money is allocated for the other purposes of the fund as required by 
the state implementation plan; or
		(2)  the amount of money deposited to the credit of the 
fund in a state fiscal year exceeds the amount the comptroller's 
biennial revenue estimate shows as the comptroller's estimated 
amount to be deposited to the credit of the fund in that year.
	SECTION 4.  Subtitle C, Title 5, Health and Safety Code, is 
amended by adding Chapter 390 to read as follows:
	CHAPTER 390.  CLEAN SCHOOL BUS PROGRAM
	Sec. 390.001.  DEFINITIONS.  In this chapter:                           
		(1)  "Diesel exhaust" means one or more of the air 
pollutants emitted from an engine by the combustion of diesel fuel, 
including particulate matter, nitrogen oxides, volatile organic 
compounds, air toxics, and carbon monoxide.
		(2)  "Incremental cost" has the meaning assigned by 
Section 386.001. 
		(3)  "Program" means the clean school bus program 
established under this chapter.
		(4)  "Qualifying fuel" includes any liquid or gaseous 
fuel or additive registered or verified by the United States 
Environmental Protection Agency, other than standard gasoline or 
diesel, that is ultimately dispensed into a school bus that 
provides reductions of emissions of particulate matter.
		(5)  "Retrofit" has the meaning assigned by Section 
386.101.         
	Sec. 390.002.  PROGRAM.  (a) The commission shall establish 
and administer a clean school bus program designed to reduce the 
exposure of school children to diesel exhaust in and around 
diesel-fueled school buses.  Under the program, the commission 
shall provide grants for eligible projects to offset the 
incremental cost of projects that reduce emissions of diesel 
exhaust.
	(b)  Projects that may be considered for a grant under the 
program include:
		(1)  diesel oxidation catalysts for school buses built 
before 1994;  
		(2)  diesel particulate filters for school buses built 
from 1994 to 1998;
		(3)  the purchase and use of emission-reducing add-on 
equipment for school buses, including devices that reduce crankcase 
emissions;
		(4)  the use of qualifying fuel; and                                   
		(5)  other technologies that the commission finds will 
bring about significant emissions reductions.
	Sec. 390.003.  APPLICATION FOR GRANT.  (a) A school district 
in this state that operates one or more diesel-fueled school buses 
or a transportation system provided by a countywide school district 
may apply for and receive a grant under the program.
	(b)  The commission may adopt guidelines to allow a regional 
planning commission, council of governments, or similar regional 
planning agency created under Chapter 391, Local Government Code, 
or a private nonprofit organization to also apply for and receive a 
grant to improve the ability of the program to achieve its goals.
	(c)  An application for a grant under this chapter must be 
made on a form provided by the commission and must contain the 
information required by the commission.
	Sec. 390.004.  ELIGIBILITY OF PROJECTS FOR GRANTS.  (a)  The 
commission by rule shall establish criteria for setting priorities 
for projects eligible to receive grants under this chapter.  The 
commission shall review and may modify the criteria and priorities 
as appropriate.
	(b)  A school bus proposed for retrofit must be used on a 
regular, daily route to and from a school and have at least five 
years of useful life remaining unless the applicant agrees to 
remove the retrofit device at the end of the life of the bus and 
reinstall the device on another bus.
	Sec. 390.005.  RESTRICTION ON USE OF GRANT.  A recipient of a 
grant under this chapter shall use the grant to pay the incremental 
costs of the project for which the grant is made, which may include 
the reasonable and necessary expenses incurred for the labor needed 
to install emissions-reducing equipment.  The recipient may not use 
the grant to pay the recipient's administrative expenses.
	Sec. 390.006.  EXPIRATION.  This chapter expires August 31, 
2013.     
	SECTION 5.  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. 3469 was passed by the House on April 
29, 2005, by a non-record vote; and that the House concurred in 
Senate amendments to H.B. No. 3469 on May 27, 2005, by the following 
vote:  Yeas 142, Nays 0, 2 present, not voting.
                                                  ______________________________
                                                     Chief Clerk of the House   
	
I certify that H.B. No. 3469 was passed by the Senate, with 
amendments, on May 25, 2005, by the following vote:  Yeas 31, Nays 
0.
                                                  ______________________________
                                                      Secretary of the Senate   
APPROVED: __________________                                                
 
                Date                                                         
 
         __________________                                              
 
              Governor