TCEQ Proposes New Rules for Property Tax Breaks for Pollution Control Equipment
The Texas Commission on Environmental Quality (TCEQ) has proposed new rules that would clarify both the types of pollution control equipment eligible as well as the procedure for industries to receive property tax exemptions on that equipment. TCEQ is accepting written comments on the rules, and the agency will also hold five public hearings on the proposal around the state in August. The original tax break for equipment used to control pollution resulted from a 1993 amendment to the state Constitution, which also authorized the state environmental agency (now TCEQ) to determine what equipment would be eligible for that tax break. Legislation adopted in 2009 – HB 3206 and HB 3544 – required TCEQ to review its eligibility rules and its list of pre-certified equipment, and take input on these issues from an advisory committee.
While the proposal largely continues the program as it has existed since the mid-1990s, three significant changes are being proposed by the TCEQ:
(1) A simplification of the process
for applying for the exemption. A different application form would be used for, respectively, pieces of pollution control equipment on the pre-certified list, pieces of equipment that are partially pollution control equipment and partially production equipment, and new applications.
(2) A clarification that an entity
could not seek nor receive a tax break based on the production
of a good or service, even if that good or service had some
pollution control benefits. For example, a refinery producing low-sulfur gasoline would not be eligible for a tax break even if the resulting gasoline does have pollution control benefits. The change is significant and a direct result of the attempt by Valero to exempt from taxation some portions of one of its refineries since it helps reduce the sulfur content due to EPA requirements. (The new proposal, if adopted, would not impact the Valero application, but it would assure that a future tax break would have to be directly related to an environmental benefit onsite.)
(3) A requirement that any facility seeking a tax break would have to use a specific formula based on the cost of the new equipment minus any marketable product resulting from the use of the equipment.
The legislation (HB 3206 and HB 3544) which led to these proposed changes stemmed from a recommendation by the Legislative Budget Board to make the program more uniform and from criticism of the program by the Sierra Club, urban counties, and tax assessors that “pollution control equipment” was being too broadly defined. Some of the more egregious examples were major components of natural gas power plants and refineries being declared tax exempt.
The TCEQ Tax Relief for Pollution Control Property Advisory Committee – a requirement of the legislation – is composed of industrial, environmental, and tax assessment representatives and has been advising TCEQ on the pre-certified list and proposed rule changes. Information about the Committee and its recommendations can be found at http://www.tceq.state.tx.us/implementation/air/taxrelief/prop2_hottopics.html. Cyrus Reed, Conservation Director for the Lone Star Chapter of the Sierra Club, is a member of the committee.
Comments on the proposed rules may be submitted electronically at:
http://www5.tceq.state.tx.us/rules/ecomments/. Copies of the proposal may be found at http://www.tceq.state.tx.us/nav/rules/propose_adopt.html. The TCEQ will be accepting written comments until August 16. All comments should reference Rule Project Number 2009-050-017-EN.
In addition, TCEQ will hold five public hearings on this proposal:
August 9 – Houston – 1 PM, Conference Room A, Houston-Galveston Area Council of Governments (HGAC), 3555 Timmons, Suite 120
August 10 – Beaumont – 9 AM, TCEQ Regional Office, 3870 Eastex Freeway
August 10 – Austin – 2 PM, Building E, Room 201S, TCEQ, 12100 Park 35 Circle
August 12 – Corpus Christi – 1 PM, Conference Room 1003, NRC Building, Texas A&M University-Corpus Christi, 6300 Ocean Drive
August 13 – Fort Worth – 1 PM, Public Meeting Room, TCEQ Regional Office, 2309 Gravel Drive
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