New TCEQ Rules for Pollution Control Property Tax Exemptions Go Into Effect
Beveridge & Diamond, P.C. - Texas Environmental Update, February 2008
On February 7, 2008, TCEQ’s new rules1 for obtaining tax relief for pollution control equipment went into effect. The rules were proposed last October to implement amendments to the Tax Code enacted by the Texas Legislature under H.B. 3732. They were adopted without changes in January after an Attorney General opinion2 was issued confirming that the legislative changes were not limited to equipment associated with advanced clean energy projects.
The new rule changes are not likely to impact significantly the tax relief program as it is currently run, despite statutory changes that required the Commission to adopt eighteen new categories of equipment eligible for tax exemptions, including a catch-all category for “any . . . . equipment designed to prevent, capture, abate, or monitor nitrogen oxides, volatile organic compounds, particulate matter, mercury, carbon monoxide, or any criteria pollutant.” This is largely because the Commission applied its existing regulatory criterion requiring applicants to demonstrate that there be an “environmental benefit at the site.” 30 T.A.C. § 17.15(b). Accordingly, equipment belonging to the new statutory categories will be subject to case-by-case use determinations and evaluated on the environmental benefit criterion.
It is conceivable that the Commission could modify the way it has interpreted “environmental benefit at the site” through program guidance it plans to develop for the new categories of pollution control equipment. The outcome of appeals on use determinations pending before the Commission could shed light on the direction of the Commission going forward.
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2 http://www.oag.state.tx.us/opinions/op50abbott/ga-0587.htm
