TCEQ to Consider Pollution Control Equipment Tax Exemption Rules

In 1993 the voters approved a constitutional amendment (Prop. 2) to authorize the Legislature to exempt from ad valorem taxation any property used to meet environmental pollution regulations. Section 11.31, Tax Code, instructs the Texas Commission on Environmental Quality (TCEQ) to determine applications for this exemption. Since 1994, counties and appraisal districts have worked with the TCEQ to evaluate these exemption requests. Generally, the determinations by the TCEQ have restricted these exemptions to legitimate, mandated pollution control equipment.
In the past session, the Legislature adopted House Bill 3732 and amended the Tax Code provisions on the pollution control equipment exemption. HB3732 instructs the TCEQ to include certain facilities, devices and methods on its list of pollution control equipment. To most analysts, the bill seems limited in its effect on the pollution control equipment exemption.
However, some industry representatives are urging a broad expansion of the exemption program by the TCEQ using HB3732 as their pretext. These groups have called for a full revision of the program to grant unlimited exemptions. This program revision would exceed the scope of the constitutional provisions, the Tax Code provisions, and previous TCEQ policy determinations. Virtually all new production equipment would qualify for an exemption under this interpretation. These proposals would severely impact the county tax base and would unfairly shift the tax burden to residential property owners.
Rep. Rick Hardcastle, the House Sponsor of HB3732, has filed a statement of legislative intent with the TCEQ stating in part: “HB3732 clarifies but does not alter, the TCEQ’s underlying legal authority under the Prop. 2 program. It was not my intent to alter that authority with this legislation. Nor does this legislation change the fundamental requirements of the Prop. 2 program