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Statewide TERP

In 2001, the Texas Legislature created an innovative program to reduce the levels of ground-level ozone in industrial areas of the State.  Named the Texas Emissions Reduction Program, “TERP” receives funding primarily from vehicle purchase and transfer fees, surcharges on off-road, heavy-duty equipment purchases and maintenance, and semi-trailer inspection fees.  The Legislature collects and then appropriates those dollars to the Texas Commission on Environmental Quality (“TCEQ”).  In turn, the TCEQ funds grant programs in counties and municipalities that have been designated “non-attainment” or “near non-attainment” under the Federal and State Clean Air Acts.  The TERP grant programs are each designed to target different sources of pollutants, and each has a different set of requirements, but in general, they provide funding for the replacement or substitution of older, dirtier heavy-duty industrial vehicles and equipment with newer, cleaner versions.

Since TERP’s inception, its geographic restriction to regions with air quality problems has effectively meant that it is only available to Houston and Dallas and their extended metropolitan areas.  So, if the Port of Corpus Christi wanted to upgrade to a newer drayage truck, or Brownsville’s School District wanted to replace its fleet of school buses, or El Paso’s airport wanted to bring in new heavy-duty trucks, they would have to bear the costs themselves.  A Dallas or Houston entity, in the exact same situation, would be eligible for TERP grants.

The recent settlement of the Volkswagen emissions scandal promises to change that dynamic.  In 2015, the discovery of a coordinated effort by Volkswagen to evade emissions tests with secret testing evasion software in its cars made worldwide news.  VW ultimately settled the ensuing legal claims against it by a host of Federal and State governmental entities in January 2017 for $2.8 Billion.  Texas has been allocated at least $209 million of that amount for programs that reduce ozone-causing nitrogen oxides.

The consent decree governing the administration of the funds lays out a broad set of categories of vehicles and equipment that are funding-eligible.  However, it leaves many details of allocating and administering the funds to the discretion of each individual state.  In Texas, Governor Abbott tasked the TCEQ with developing and implementing the guidelines for the funding process.  This is an incredible opportunity for areas of the state, like Corpus Christi, Brownsville, or El Paso, that have some level of industrial activity, but not at the level of other areas that are under State and Federal air quality supervision.

However, these areas must be proactive.  TCEQ has already received over 100 comments from the public, and the more heavily-polluted areas are already advocating for a TERP-like funding scheme that is more favorable to those areas.  If the less polluted (and less populated) areas want to influence the process created to distribute the VW funds, they need to engage with their elected representatives, the Governor’s Office, and the TCEQ.  And they need to do it quickly.  TCEQ has publicly stated that a draft plan will be unveiled within months, and the final plan could be ready as early as this fall.

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