By Lewis of Orange                                    H.B. No. 2402
         77R5933 DAK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to sales tax exemptions to promote water conservation.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 151.318(c), Tax Code, is amended to read
 1-5     as follows:
 1-6           (c)  The exemption does not include:
 1-7                 (1)  intraplant transportation equipment, including
 1-8     intraplant transportation equipment used to move a product or raw
 1-9     material in connection with the manufacturing process and
1-10     specifically including all piping and conveyor systems, provided
1-11     that the following remain eligible for the exemption:
1-12                       (A)  piping or conveyor systems that are a
1-13     component part of a single item of manufacturing equipment, [or]
1-14     pollution control equipment, or water conservation, recycle, and
1-15     reuse equipment eligible for the exemption under Subsection (a)(2),
1-16     (a)(4), [or] (a)(5), or (a)(11);
1-17                       (B)  piping through which the product or an
1-18     intermediate or preliminary product that will become an ingredient
1-19     or component part of the product is recycled or circulated in a
1-20     loop between the single item of manufacturing equipment and the
1-21     ancillary equipment that supports only that single item of
1-22     manufacturing equipment if the single item of manufacturing
1-23     equipment and the ancillary equipment operate together to perform a
1-24     specific step in the manufacturing process; and
 2-1                       (C)  piping through which the product or an
 2-2     intermediate or preliminary product that will become an ingredient
 2-3     or component part of the product is recycled back to another single
 2-4     item of manufacturing equipment and its ancillary equipment in the
 2-5     same manufacturing process;
 2-6                 (2)  hand tools;
 2-7                 (3)  maintenance supplies not otherwise exempted under
 2-8     this section, maintenance equipment, janitorial supplies or
 2-9     equipment, office equipment or supplies, equipment or supplies used
2-10     in sales or distribution activities, research or development of new
2-11     products, or transportation activities;
2-12                 (4)  machinery and equipment or supplies to the extent
2-13     not otherwise exempted under this section used to maintain or store
2-14     tangible personal property; or
2-15                 (5)  tangible personal property used in the
2-16     transmission or distribution of electricity, including
2-17     transformers, cable, switches, breakers, capacitor banks,
2-18     regulators, relays, reclosers, fuses, interruptors, reactors,
2-19     arrestors, resistors, insulators, instrument transformers, and
2-20     telemetry units not otherwise exempted under this section, and
2-21     lines, conduit, towers, and poles.
2-22           SECTION 2.  Section 151.338, Tax Code, is amended to read as
2-23     follows:
2-24           Sec. 151.338.  ENVIRONMENT AND CONSERVATION SERVICES.  The
2-25     services involved in the repair, remodeling, maintenance, or
2-26     restoration of tangible personal property are not taxable under
2-27     this chapter if the repair, remodeling, maintenance, or restoration
 3-1     is required by statute, ordinance, order, rule, or regulation of
 3-2     any commission, agency, court, or political, governmental, or
 3-3     quasi-governmental entity in order to protect the environment or to
 3-4     conserve energy or water.
 3-5           SECTION 3.  Subchapter H, Chapter 151, Tax Code, is amended
 3-6     by adding Sections 151.355 and 151.356 to read as follows:
 3-7           Sec. 151.355.  WATER CONSERVATION.  (a)  An item of tangible
 3-8     personal property is exempt from the taxes imposed by this chapter
 3-9     if the item is used for:
3-10                 (1)  rainwater harvesting and water recycling and
3-11     reuse; or
3-12                 (2)  reducing or eliminating water use.
3-13           (b)  To qualify for the exemption under this section, the
3-14     purchaser must certify in writing to the seller that the item of
3-15     tangible personal property will be used for the purpose described
3-16     by Subsection (a) unless the item is designed to be used only for
3-17     that purpose.
3-18           Sec. 151.356.  CLOTHES WASHERS.  (a)  A clothes washing
3-19     machine is exempt from the taxes imposed by this chapter if it:
3-20                 (1)  meets the standards of the Energy Star Program
3-21     maintained by the United States Department of Energy and the
3-22     Environmental Protection Agency; and
3-23                 (2)  has a water factor of 9.5 or less, based on
3-24     standard test procedures contained in the regulations of the United
3-25     States Department of Energy (10 C.F.R. Part 430, Subpart B,
3-26     Appendix J).
3-27           (b)  This section expires January 1, 2007.
 4-1           SECTION 4.  (a)  This Act takes effect July 1, 2001, if it
 4-2     receives a vote of two-thirds of all the members elected to each
 4-3     house, as provided by Section 39, Article III, Texas Constitution.
 4-4     If this Act does not receive the vote necessary for effect on that
 4-5     date, this Act takes effect October 1, 2001.
 4-6           (b)  The change in law made by this Act does not affect taxes
 4-7     imposed before the effective date of this Act, and the law in
 4-8     effect before the effective date of this Act is continued in effect
 4-9     for purposes of the liability for and collection of those taxes.