CHAPTER 383. CLEAN AIR FINANCING ACT

State Codes and Statutes

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HEALTH AND SAFETY CODE

TITLE 5. SANITATION AND ENVIRONMENTAL QUALITY

SUBTITLE C. AIR QUALITY

CHAPTER 383. CLEAN AIR FINANCING ACT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 383.001. SHORT TITLE. This chapter may be cited as the

Clean Air Financing Act.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.002. POLICY AND PURPOSE. (a) The policy of the state

and the purpose of this chapter are to:

(1) safeguard state air resources from emissions of air

contaminants and other pollution;

(2) protect public health, general welfare, physical property,

and the esthetic enjoyment of air resources by the public; and

(3) maintain adequate visibility.

(b) It is the policy of the state that the control of air

pollution is essential to the well-being and survival of state

inhabitants and the protection of the environment. The control,

prevention, and abatement of air pollution will conserve and

develop state natural resources, within the meaning of Article

XVI, Section 59(a), of the Texas Constitution, by preventing

further damage to the environment.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.003. DEFINITIONS. In this chapter:

(1) "Air contaminant" has the meaning assigned by Section

382.003 (Texas Clean Air Act).

(2) "Air pollution" has the meaning assigned by Section 382.003

(Texas Clean Air Act).

(3) "Bond" includes a note.

(4) "Coastal basin" means an area that:

(A) is defined and designated as a coastal basin as of April 26,

1973, by the Texas Water Development Board, and as a separate

unit that has the purpose of water development and interwatershed

transfers; and

(B) has boundaries determined by a contour map filed in the

office of the Texas Water Development Board.

(5) "Commission" means the Texas Natural Resource Conservation

Commission.

(6) "Control facility" means a facility that has been certified

by the commission, or by its executive secretary if the

commission authorizes, as being designed to reduce or eliminate

air pollution.

(7) "Disposal system" has the meaning assigned by Section

30.003(10), Water Code.

(8) "District" means a district or authority created under

Article XVI, Section 59, or Article III, Section 52, of the Texas

Constitution, but does not include a district or authority

located entirely within a river authority unless the district or

authority:

(A) has all or part of at least two municipalities within its

boundaries;

(B) is governed by Chapter 56, 60, 61, 62, or 63, Water Code; or

coastal and inland waters.

(9) "Issuer" means a municipality, county, or district.

(10) "Real property" means land, a structure, a franchise or

interest in land, water, land under water, riparian rights, air

rights, or another thing or right pertaining to that property,

including an easement, right-of-way, use, lease, license, or

other incorporeal hereditament, or an estate, interest, or legal

or equitable right, including a term for years or lien on that

property because of a judgment, mortgage, or other reason.

(11) "Resolution" means the action, including an order or

ordinance, that authorizes bonds and that is taken by the

governing body of an issuer.

(12) "River authority" has the meaning assigned by Section

30.003(4), Water Code.

(13) "River basin" means an area that:

(A) is defined and designated as a river basin as of April 26,

1973, by the Texas Water Development Board, and as a separate

unit that has the purpose of water development and interwatershed

transfers; and

(B) has boundaries determined by a contour map filed in the

office of the Texas Water Development Board.

(14) "Security agreement" means a trust indenture or other

instrument securing bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 11.198, eff. Sept.

1, 1995.

Sec. 383.004. CERTIFICATION OF CONTROL FACILITY BY COMMISSION.

The commission may prescribe necessary criteria and procedures

for certifying a control facility and may limit certification to

confirmation that a proposed facility is intended to control air

pollution. Certification of a control facility's adequacy or

expected performance or of other specifications is not necessary.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 11.199, eff. Sept.

1, 1995.

Sec. 383.005. ADOPTION OF ALTERNATE PROCEDURE. If a court holds

that a procedure under this chapter violates the United States

Constitution or Texas Constitution, an issuer by resolution may

provide an alternate procedure that conforms to those

constitutions.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.006. EFFECT OF CHAPTER ON OTHER LAW. (a) This chapter

does not limit the authority of the commission, a district, or a

local government in performing a power or duty provided by other

law. This chapter does not limit the authority of the commission

or a local government to adopt and enforce rules or carry out

duties under Chapter 382 (Texas Clean Air Act).

(b) Chapter 382 (Texas Clean Air Act) shall be enforced without

regard to ownership of a control facility financed under this

chapter.

to pursue, against a person who contracts with an issuer under

this chapter, a common-law remedy to abate or recover damages for

a condition of pollution or other nuisance. A person purchasing

or using a control facility under contract with an issuer may not

assert the defense of sovereign immunity because of the issuer's

ownership of the control facility.

(d) An issuer may use other law not in conflict with this

chapter to the extent convenient or necessary to carry out a

power or authority expressly or impliedly granted by this

chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 11.200, eff. Sept.

1, 1995.

SUBCHAPTER B. OPERATION OF CONTROL FACILITY

Sec. 383.011. AUTHORITY TO ACQUIRE AND TRANSFER PROPERTY. (a)

An issuer may acquire, construct, and improve a control facility

and may acquire real property as the issuer considers appropriate

for the control facility.

(b) An issuer may enter into a lease or other contract under

which another person uses or acquires the issuer's control

facility. An issuer may sell a control facility, by installment

payments or otherwise, to any person on conditions the issuer

considers desirable.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.012. LOCATION OF CONTROL FACILITY. (a) A control

facility may be located on the property of any person.

(b) A control facility of a municipality must be located in

whole or in part within:

(1) the boundaries of the municipality; or

(2) the municipality's extraterritorial jurisdiction, as

determined under Chapter 42, Local Government Code.

outside the river authority's boundaries if it is located in

whole or in part within the river authority's river basin or a

coastal basin adjoining the river authority's boundaries. A

control facility of a river authority may be located anywhere in

the state if it is financed at the same time and with the same

bond issue as a control facility located within the river

authority's boundaries or located in whole or in part within the

river authority's river basin or a coastal basin adjoining the

river authority's boundaries.

(d) A control facility of a county or a district other than a

river authority must be located in whole or in part within the

county's or district's boundaries.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.013. CONTRACTS. (a) A lease or other contract entered

into under this chapter may be for the term agreed to by the

parties. The lease or other contract may provide that it

continues in effect until specified bonds or refunding bonds

issued in place of the specified bonds are fully paid.

(b) The provisions of Chapter 2253, Government Code, that relate

to performance and payment bonds apply to a construction contract

let by an issuer, except that an issuer is not required to

receive construction bids on a project.

construction contract for a project authorized by this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(17), eff.

Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1064, Sec. 34, eff.

Sept. 1, 1999.

Sec. 383.014. COST OF CERTAIN REQUIRED ALTERATIONS. The

relocation, raising, lowering, rerouting, changing of grade, or

altering of construction of a highway, railroad, electric

transmission line, telegraph or telephone property or facility,

or pipeline made necessary by the actions of an issuer shall be

accomplished at the sole expense of the issuer, who shall pay the

cost of the required activity as necessary to provide comparable

replacement, minus the net salvage value of any replaced

facility. The issuer shall pay that amount from the proceeds of

bonds issued to finance a control facility.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.015. TAXATION. (a) An issuer is not required to pay a

tax or other assessment on a control facility or part of a

control facility.

(b) Bonds issued under this chapter, the transfer of the bonds,

and income from the bonds are exempt from taxation in this state.

valorem tax imposed on a person who is not a public agency or

political subdivision or on an interest held by such a person. A

control facility purchased or used under this chapter is subject

to ad valorem taxation payable by the person contracting with the

issuer for the facility's purchase or use as if the contract

created a leasehold.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER C. BONDS

Sec. 383.021. AUTHORITY TO ISSUE. (a) An issuer may issue

negotiable bonds, payable from revenues of the issuer, to pay

costs related to the acquisition, construction, or improvement of

a control facility, including:

(1) the cost of real property acquired for the control facility;

(2) finance charges;

(3) interest before and during construction and for a period the

issuer finds reasonable after completion of construction;

(4) expenses incurred for architectural, engineering, and legal

services;

(5) expenses incurred for plans, specifications, surveys, and

estimates;

(6) expenses incurred in placing the control facility in

operation;

(7) expenses of administration; and

(8) other expenses necessary or incident to the acquisition,

construction, or improvement.

(b) The bonds may be issued in more than one series and from

time to time as required to carry out the purposes of this

chapter.

authorize the delivery of negotiable interim bonds eligible for

exchange or substitution by use of the definitive bonds.

(d) An issuer may not issue bonds to acquire an existing control

facility solely for the purpose of leasing or selling it back to

the person from whom it was acquired or to another person

controlled by that person, unless the control facility is to be

substantially improved before it is leased or sold back to such a

person.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.022. FORM AND PROCEDURE. (a) Bonds under this chapter

must be authorized by resolution. The bonds must:

(1) be signed by the presiding officer or assistant presiding

officer of the governing body;

(2) be attested by the secretary of the governing body; and

(3) have the seal of the issuer impressed, printed, or

lithographed on the bonds.

(b) The bonds may have the characteristics and bear the

designation determined by the governing body of the issuer,

except that the designation must include for each control

facility to be financed with the bonds:

(1) the name of each person using or purchasing the control

facility;

(2) the name of each person guaranteeing the contractual

obligations of each person using or purchasing the control

facility; or

(3) a statement, if applicable, that a group of persons will be

using or purchasing the control facility.

printed or lithographed on the bonds. The issuer may adopt or use

the signature of a person who has been an officer, regardless of

whether the person is an officer when the bonds are delivered to

a purchaser.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.023. TERMS. Bonds issued under this chapter must

mature serially or otherwise not more than 40 years after they

are issued. The bonds may:

(1) bear interest at a rate and be sold at a price or under

terms that the governing body of the issuer determines to be the

most advantageous reasonably obtainable;

(2) be made callable before maturity at times and prices

prescribed in the resolution authorizing the bonds;

(3) be in coupon form; and

(4) be registrable as to principal or as to principal and

interest.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.024. APPROVAL AND REGISTRATION. (a) An issuer shall

submit bonds that have been authorized by its governing body,

including refunding bonds and the record relating to the bond

issuance, to the attorney general for examination as to their

validity. If the bonds state that they are secured by a pledge of

proceeds of a lease or other contract previously entered into by

the issuer, the issuer may submit the contract with the bonds.

(b) If the bonds have been authorized in accordance with state

law and any contract has been made in accordance with state law,

the attorney general shall approve the bonds and contract and the

comptroller shall register the bonds.

are incontestable.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.025. PLEDGE OF REVENUE AS SECURITY; ELECTION. (a) An

issuer's bonds may be secured, as specified by the resolution or

a security agreement, by a pledge of all or part of the revenues

of the issuer derived from:

(1) the use or sale of a control facility or disposal system; or

(2) services rendered by a disposal system.

(b) Except as provided by Section 383.026, before a municipality

or county issues bonds secured under Subsection (a), the

municipality or county must publish notice of its intention to

issue the bonds at least once in a newspaper of general

circulation within the boundaries of the municipality or county.

Not later than 30 days after the date of the publication, not

less than 10 percent of the qualified voters of the municipality

or county may file a petition with the clerk or secretary of the

governing body requesting the governing body to order an election

on the issuance of the bonds. On the filing of the petition, the

governing body shall order an election to be held in the

municipality or county to determine whether the bonds may be

issued as indicated in the notice. The governing body shall set

the date of the election in accordance with Section 41.001,

Election Code. If the majority of voters who vote at the election

approve the issuance of the bonds, the governing body may issue

the bonds. If a petition is not filed within the period provided

by this subsection, the governing body may issue the bonds

without an election.

payments under a lease or other contract for the use or sale of a

control facility so that the payments and other pledged revenue

will be sufficient to pay the bonds and interest on the bonds as

they mature and become due and to maintain reserve or other funds

as provided by the resolution or security agreement. The

governing body may direct the investment of money in the funds

created by the resolution or security agreement.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.026. PLEDGE OF OTHER UTILITY REVENUE; ELECTION. (a)

In addition to the security under Section 383.025, a

municipality's or county's bonds may be secured, as specified by

the resolution or a security agreement, by a pledge of other

utility revenue of the municipality or county.

(b) Before issuing bonds secured by other utility revenue, the

governing body must order an election to determine whether the

bonds may be issued. The governing body shall set the date of the

election in accordance with Section 41.001, Election Code. The

manner of holding the election is governed by Chapter 1251,

Government Code. If the majority of voters who vote at the

election approve the issuance of the bonds, the governing body

may issue the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.272, eff. Sept.

1, 2001.

Sec. 383.027. SECURITY MAY APPLY TO ADDITIONAL BONDS. A pledge

under Section 383.025 or 383.026 may reserve the right, under

conditions specified by the pledge, to issue additional bonds to

be on a parity with or subordinate to the bonds secured by the

pledge. Bonds issued under this chapter may be combined in the

same issue with bonds issued for other purposes authorized by

law.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.028. TRUSTS AS SECURITY. (a) The governing body may

additionally secure bonds, including refunding bonds, by a trust

indenture under which the trustee may be a bank having trust

powers located inside or outside the state.

(b) Regardless of any mortgage, deed of trust lien, or security

interest under Section 383.029, the trust indenture may:

(1) contain any provision that the governing body prescribes for

the security of the bonds and the preservation of the trust

estate;

(2) provide for amendment or modification of the trust

indenture;

(3) condition the right to spend the issuer's money or sell an

issuer's control facility on approval of a registered

professional engineer selected as provided by the trust

indenture;

(4) contain provisions governing issuance of bonds to replace

lost, stolen, or mutilated bonds; and

(5) otherwise provide for protecting and enforcing a

bondholder's rights and remedies as is reasonable, proper, and

lawful.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.029. OTHER SECURITY. (a) The bonds may be

additionally secured by a mortgage, deed of trust lien, or

security interest in a designated control facility of the

governing body and all property and rights appurtenant to the

control facility.

(b) The mortgage, deed of trust lien, or security interest may

give the trustee the power to operate the control facility, sell

the control facility to pay the debt, or take any other action to

secure the bonds.

is the absolute owner of the control facility and rights

purchased.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.030. ACTION BY BONDHOLDERS. (a) The resolution or a

security agreement may provide that on default in the payment of

principal of or interest on the bonds, or threatened default

under conditions stated in the resolution or security agreement,

and on petition of the holders of outstanding bonds, a court of

competent jurisdiction may appoint a receiver to collect and

receive pledged income.

(b) The resolution or security agreement may limit or qualify

the rights of less than all of the holders of outstanding bonds

payable from the same source to institute or prosecute litigation

affecting the issuer's property or income.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.031. INVESTMENT AND USE OF PROCEEDS. (a) The

governing body may set aside amounts from the proceeds of the

sale of bonds for payment into an interest and sinking fund and

reserve funds and may provide for this in the resolution or a

security agreement. All expenses of issuing and selling the bonds

must be paid from the proceeds of the sale of the bonds.

(b) Proceeds from the sale of bonds may be invested in:

(1) direct or indirect obligations of the United States

government or an agency of the United States government that

mature in a manner specified by the resolution or a security

agreement; or

(2) certificates of deposit of a bank or trust company if the

deposits are secured by obligations described by Subdivision (1).

as depository for proceeds of bonds or of lease or other contract

revenue. The bank or trust company shall furnish indemnifying

bonds or pledge securities as required by the issuer to secure

the deposits.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.032. REFUNDING BONDS. (a) A governing body may issue

refunding bonds to refund the principal of, interest on, and any

redemption premium applicable to outstanding bonds. The refunding

bonds may:

(1) refund more than one series of outstanding bonds and combine

the revenue pledged to the outstanding bonds for the security of

the refunding bonds; and

(2) be secured by other or additional revenues and deed of trust

liens.

(b) The provisions of this chapter relating to issuance of

bonds, security for bonds, approval by the attorney general, and

remedies of bondholders apply to refunding bonds.

(1) on the surrender and cancellation of the original bonds; or

(2) without surrender and cancellation of the original bonds if:

(A) the resolution authorizing the refunding bonds provides that

their proceeds be deposited in the bank where the original bonds

are payable; and

(B) the refunding bonds are issued in an amount sufficient to

pay the principal of, interest on, and any redemption premium

applicable to the original bonds up to their option date or

maturity date.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.033. LEGAL INVESTMENTS; SECURITY FOR DEPOSITS. (a)

Bonds issued under this chapter are legal and authorized

investments for:

(1) a bank;

(2) a savings bank;

(3) a trust company;

(4) a savings and loan association;

(5) an insurance company;

(6) a fiduciary;

(7) a trustee; and

(8) a sinking fund of a municipality, county, school district,

or other political corporation or subdivision of the state.

(b) The bonds may secure the deposits of public funds of the

state or a municipality, county, school district, or other

political corporation or subdivision of the state. The bonds are

lawful and sufficient security for those deposits in an amount up

to their face value, if accompanied by all appurtenant unmatured

coupons.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 383.034. BONDS NOT GENERAL OBLIGATION. The bonds are

special obligations payable solely from revenues pledged to their

payment and are not general obligations of the governing body,

the issuer, or the state. A bondholder may not demand payment

from money obtained from a tax or other revenue of the issuer,

excluding revenues pledged to the payment of the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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