84R5842 SMH-F

By: Smith H.B. No. 2746

A BILL TO BE ENTITLED

AN ACT

relating to the treatment for ad valorem tax purposes of pollution control property.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 11.31, Tax Code, is amended by amending Subsections (a), (b), (c), (d), (g), (k), and (m) and adding Subsections (b-1), (b-2), and (b-3) to read as follows:

(a) A person is entitled to an exemption from taxation of all [or part] of the real and personal property that the person owns and that is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution, subject to Section 23.27. A person is not entitled to an exemption from taxation under this section solely on the basis that the person manufactures or produces a product or provides a service that prevents, monitors, controls, or reduces air, water, or land pollution. Property used for residential purposes, or for recreational, park, or scenic uses as defined by Section 23.81, is ineligible for an exemption under this section.

(b) In this section:

(1) "Facility [, "facility], device, or method for the control of air, water, or land pollution" means land that is acquired after January 1, 1994, or any structure, building, installation, excavation, machinery, equipment, or device, and any attachment or addition to or reconstruction, replacement, or improvement of that property, that is used, constructed, acquired, or installed wholly or partly to meet or exceed rules or regulations adopted by any environmental protection agency of the United States, this state, or a political subdivision of this state for the prevention, monitoring, control, or reduction of air, water, or land pollution.

(2) "Pollution control" or a similar term includes the prevention, monitoring, or reduction of pollution.

(b-1) This section does not apply to a motor vehicle.

(b-2) The circumstances in which property is considered to be used, constructed, acquired, or installed wholly or partly to meet or exceed rules or regulations described by Subsection (b) include circumstances in which:

(1) the property is used as part of a voluntary project or otherwise to meet or exceed a goal, target, or general standard set by a rule or regulation described by that subsection; or

(2) the property is used to meet or exceed a rule or regulation described by that subsection that has been adopted but does not apply to the property because of:

(A) the date the property is installed;

(B) the manner in which the property is used; or

(C) the fact that the installation of the property reduces or prevents pollution in a manner that prevents the rule or regulation from applying to the property.

(b-3) For property to qualify for an exemption from taxation under this section, the control of air, water, or land pollution resulting from the use of the property must result from the use of the property by the person seeking the exemption and not from the characteristics of the goods produced or services provided by the person or the use of those goods or services by another person.

(c) In applying for an exemption under this section, a person seeking the exemption shall present in a permit application or permit exemption request to the executive director of the Texas Commission on Environmental Quality information detailing:

(1) the anticipated environmental benefits from the installation of the facility, device, or method for the control of air, water, or land pollution;

(2) the estimated cost of the pollution control facility, device, or method; and

(3) the purpose of the installation of such facility, device, or method[, and the proportion of the installation that is pollution control property].

[If the installation includes property that is not used wholly for the control of air, water, or land pollution, the person seeking the exemption shall also present such financial or other data as the executive director requires by rule for the determination of the proportion of the installation that is pollution control property.]

(d) Following submission of the information required by Subsection (c), the executive director of the Texas Commission on Environmental Quality shall determine if the facility, device, or method is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution. As soon as practicable, the executive director shall send notice by regular mail or by electronic means to the chief appraiser of the appraisal district for the county in which the property is located that the person has applied for a determination under this subsection. The executive director shall issue a letter to the person stating the executive director's determination of whether the facility, device, or method is used wholly or partly to control pollution [and, if applicable, the proportion of the property that is pollution control property]. The executive director shall send a copy of the letter by regular mail or by electronic means to the chief appraiser of the appraisal district for the county in which the property is located.

(g) The commission shall adopt rules to implement this section. Rules adopted under this section must:

(1) establish specific standards for considering applications for determinations, including standards for determining whether a facility or device is used as a facility, device, or method for the control of air, water, or land pollution; and

(2) be sufficiently specific to ensure that determinations are equal and uniform[; and

[(3) allow for determinations that distinguish the proportion of property that is used to control, monitor, prevent, or reduce pollution from the proportion of property that is used to produce goods or services].

(k) The Texas Commission on Environmental Quality shall adopt rules establishing a nonexclusive list of facilities, devices, or methods that qualify as facilities, devices, or methods for the control of air, water, or land pollution, which must include:

(1) coal cleaning or refining facilities;

(2) atmospheric or pressurized and bubbling or circulating fluidized bed combustion systems and gasification fluidized bed combustion combined cycle systems;

(3) ultra-supercritical pulverized coal boilers;

(4) flue gas recirculation components;

(5) syngas purification systems and gas-cleanup units;

(6) enhanced heat recovery systems;

(7) exhaust heat recovery boilers;

(8) heat recovery steam generators;

(9) superheaters and evaporators;

(10) [enhanced] steam turbine systems enhanced to accommodate steam from heat recovery systems;

(11) methanation;

(12) coal combustion or gasification byproduct and coproduct handling, storage, or treatment facilities;

(13) biomass cofiring storage, distribution, and firing systems;

(14) coal cleaning or drying processes, such as coal drying/moisture reduction, air jigging, precombustion decarbonization, and coal flow balancing technology;

(15) oxy-fuel combustion technology, amine or chilled ammonia scrubbing, fuel or emission conversion through the use of catalysts, enhanced scrubbing technology, modified combustion technology such as chemical looping, and cryogenic technology;

(16) so long as [if] the United States Environmental Protection Agency regulates [adopts a final rule or regulation regulating] carbon dioxide as a pollutant or if any other environmental protection agency of the United States, this state, or a political subdivision of this state adopts a final rule or regulation regulating carbon dioxide for that purpose, property that is used, constructed, acquired, or installed wholly or partly to:

(A) capture and sequester in this state carbon dioxide from an anthropogenic source in this state; or

(B) [that is] geologically sequester carbon dioxide captured from an anthropogenic source [sequestered in this state]; and

(17) fuel cells generating electricity using hydrogen derived from coal, biomass, petroleum coke, or solid waste[; and

[(18) any other equipment designed to prevent, capture, abate, or monitor nitrogen oxides, volatile organic compounds, particulate matter, mercury, carbon monoxide, or any criteria pollutant].

(m) Notwithstanding the other provisions of this section, if the executive director of the Texas Commission on Environmental Quality confirms that the facility, device, or method for the control of air, water, or land pollution described in an application for an exemption under this section is a facility, device, or method included on the list adopted under Subsection (k), the executive director [of the Texas Commission on Environmental Quality], not later than the 30th day after the date of receipt of the information required by Subsections (c)(2) and (3) and without regard to whether the information required by Subsection (c)(1) has been submitted, shall determine that the facility, device, or method described in the application is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution and shall take the actions that are required by Subsection (d) to be taken in a case in which [the event] such a determination is made.

SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by adding Section 23.27 to read as follows:

Sec. 23.27. APPRAISAL OF PROPERTY AT FACILITY WHERE POLLUTION CONTROL PROPERTY IS INSTALLED. If the executive director of the Texas Commission on Environmental Quality determines under Section 11.31 that property is used wholly or partly to control pollution, the chief appraiser:

(1) may evaluate whether the pollution control property facilitates an increase in production of goods at the facility or the sale of a marketable product at a profit in the ordinary course of business of the facility; and

(2) may take any additional income resulting from the facilitation by the pollution control property of the increase in production or the sale of a marketable product described by Subdivision (1) into account if the chief appraiser uses the income method of appraisal to determine the market value of the facility.

SECTION 3. Not later than December 31, 2015, the Texas Commission on Environmental Quality shall adopt rules as necessary to implement the changes in law made to Section 11.31, Tax Code, by this Act.

SECTION 4. Sections 11.31(b) and (m), Tax Code, as amended by this Act, and Sections 11.31(b-1), (b-2), (b-3), and 23.27, Tax Code, as added by this Act, are intended to clarify rather than change existing law.

SECTION 5. Sections 11.31(a), (c), (d), (g), and (k), Tax Code, as amended by this Act, apply only to ad valorem taxes imposed for a tax year beginning on or after January 1, 2016.

SECTION 6. (a) Except as provided by Subsection (b) of this section:

(1) this Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution; and

(2) if this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2015.

(b) Sections 11.31(a), (c), (d), (g), and (k), Tax Code, as amended by this Act, take effect January 1, 2016.