The Senate Finance Committee met January 30, 2018 to consider the following interim charge:

Review the Texas Emission Reduction Plan (TERP) and its economic benefits to the state. Examine whether the state’s investment in TERP, including transfers from the Department of Transportation, are being effectively utilized to comply with federal air quality standards, reduce pollution, and protect the public health of Texans.

Representatives from the Texas Commission on Environmental Quality (Commissioner Jon Niermann) and the Legislative Budget Board (LBB) testified as invited testimony.

With a number of questions and comments coming from Senator Kirk Watson (D-Austin), the LBB representative indicated that there is $1.2B in the TERP account with an annual expectation of revenues from fees going into the account of approximately $200M. At the present time, a large portion of the TERP account is unspent in order for the certification of the budget.

Sen. Kirk Watson

The TERP program expires on August 31, 2019. Because of this, the Legislature must act in 2019 if the program is to continue. If the program is not continued, the fees of $200M/annually would cease. The account containing $1.2B would continue and be available for certification of the budget. The account, however, would not grow.

The State Implementation Plan also expires in 2019. Air environmental issues, therefore, will be in the forefront during this upcoming legislative session.

Senator Watson made a strong argument that those who are paying the fees expect the money to be used for clean air initiatives. Comments from the senators seemed to express the desire to reduce or eliminate the fees during the next session if the program is continued. A senator indicated that he felt the program is a “cash for clunkers” program. He asked if the program is worth the money. The response was that the program has succeeded in keeping the EPA out of the business of Texas.

The Commissioner indicated that Texas is to receive $209M in the VW Settlement (see TSA Principal Karen Reagan’s overview here). The funds are to be used by the State to mitigate the emissions that have been generated in the state that would not have been in the air but for the “VW fraud.”

– by John R. Pitts