Texas Legislature Expands Types of Pollution Control Equipment Eligible for Tax Relief; TCEQ Rules Underway
Beveridge & Diamond, P.C. - Texas Environmental Update, July 2007
The Texas Legislature passed a Law, H.B. 3732, expanding the list of pollution control equipment eligible for exemptions from ad valorem taxes. Tax relief for this equipment was originally provided by way of a 1993 amendment to the Texas Constitution (so-called Proposition 2). TCEQ has adopted rules implementing Proposition 2 at 30 Tex. Admin. Code Chapter 17.
H.B. 3732, entitled the “Advanced Clean Energy Project Grant and Loan Program, identifies 18 categories of equipment that TCEQ must now add to the Prop 2 rules. For the most part, these categories appear largely directed towards combustion and energy-related equipment. Among others, the list includes: coal cleaning or refining facilities; atmospheric or pressurized and bubbling or circulating fluidized bed combustion systems and gasification fluidized bed combustion combined cycle systems; ultra-supercritical pulverized coal boilers; flue gas recirculation components; syngas purification systems and gas-cleanup units; enhanced heat recovery systems; exhaust heat recovery boilers; heat recovery steam generators; superheaters and evaporators; enhanced steam turbine systems; and methanation, among others.
Importantly, H.B. 3732 also includes a catch-all category that could provide tax relief for other types of pollution control equipment as well. The last category includes “any other equipment designed to prevent, capture, abate, or monitor nitrogen oxides, volatile organic compounds, particulate matter, mercury, carbon monoxide, or any criteria pollutant.” On its face, this section should expand TCEQ's existing policy to grant exemptions only to equipment that provides "environmental benefits at the site." Assuming the Commission agrees, the non-exclusive list could be expanded to include equipment that has not been eligible for Prop 2 tax relief to date, such as equipment controlling low sulfur gas and ultra low sulfur diesel as well as all sulfur recovery units (SRUs).
TCEQ is in the process of developing rules implementing H.B. 3732, which must be in place January 1, 2008, and has established an advisory group on the predetermined equipment list. The next meeting is set for August 9th, 8:00 a.m. to 12:00 p.m., Agenda Room, Building E, at the TCEQ Headquarters in Austin. Additional information is available on the TCEQ website.1
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1 http://www.tceq.state.tx.us/assistance/Prop2/tax_relief.html
