TITLE 30. ENVIRONMENTAL QUALITY

PART 1. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

CHAPTER 17. TAX RELIEF FOR PROPERTY USED FOR ENVIRONMENTAL PROTECTION

(Editor's note: In accordance with Texas Government Code, §2002.014, which permits the omission of material which is "cumbersome, expensive, or otherwise inexpedient," the figures in 30 TAC §§17.14, 17.17 and 17.18 are not included in the print version of the Texas Register. The figures are available in the on-line version of the September 5, 2025, issue of the Texas Register.)

The Texas Commission on Environmental Quality (TCEQ, agency, or commission) proposes to amend §§17.2, 17.10, 17.12, 17.14, 17.17, 17.20, and 17.25 and add new §17.18.

Background and Summary of the Factual Basis for the Proposed Rules

The commission's rules in 30 Texas Administrative Code (TAC) Chapter 17 implement the exemption from taxation established in Texas Tax Code (TTC), §11.31 for certain property that is used wholly or partially as a facility, device, or method for the control of air, water, or land pollution. Under the requirements of 30 TAC Chapter 17, an owner of property may submit an application to the executive director to 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. The proposed rulemaking would amend the provisions in 30 TAC Chapter 17 to update the requirements of the Tax Relief for Pollution Control Property Program based on the recommendations and advice of the Tax Relief for Pollution Control Property Advisory Committee (committee), established under TTC, §11.31(n), make clarifying changes to existing items on the Tier I Table, and provide other updates as discussed in the Section by Section Discussion. This rulemaking would also fulfill the requirement of TTC, §11.31(l) that the commission, by rule, update the list adopted under TTC, §11.31(k), the Expedited Review List (ERL), at least once every three years and fulfills the requirement of 30 TAC §17.14(b) that the commission review and update the Tier I Table every three years.

On December 1, 2022, the committee submitted its recommendations to TCEQ as part of the triennial review of the Tier I Table located in §17.14(a) and the ERL included as part of §17.17(b). The committee evaluated Tier II and Tier III applications submitted from April 1, 2018, through April 30, 2021, that received positive use determinations (PUD) to determine whether the pollution control property, if any, had been demonstrated consistently to be wholly used as pollution control property in the same manner on each application for any given property. The committee determined that one type of pollution control property currently submitted as Tier II property should be considered Tier I property in the Tier I Table, which would no longer require a Tier II application. Additional proposed changes include clarifying changes to existing items on the Tier I Table.

Applications for use determinations may be submitted under Tiers I, II, and III. A Tier I application may be submitted for property used as listed on the Tier I Table that is used for pollution control in accordance with the description listed in the Tier I Table for that property type. A Tier II application may be submitted for property that is not listed on the Tier I Table, but is used wholly for the control of air, water, and/or land pollution. A Tier III application may be submitted for property that is used partially for pollution control. For Tier III applications, a cost analysis procedure (CAP) is used to determine the proportion of the property used for pollution control purposes.

The proposed rulemaking would remove existing requirements that the commission review and update the Tier I Table every three years. This review is not required by statute and would not preclude the commission from reviewing the table or the committee from providing advice regarding the Tier I Table at any time. The requirement to review the ERL would not change because it is required in TTC, §11.31(l).

This proposed rulemaking would allow for appeal-related documents and executive director notifications to be sent and received electronically to make the process more efficient.

The commission also proposes to amend the corresponding provisions in Chapter 18, Voter-Approval Tax Relief for Pollution Control Requirements, to mirror the proposed changes in Chapter 17.

Section by Section Discussion

In addition to the proposed amendments to address recommendations from the advisory committee and to update and clarify program requirements, the commission proposes non-substantive changes to update the rules in accordance with current Texas Register style and format requirements, improve readability, establish consistency in the rules, and conform to the standards in the Texas Legislative Council Drafting Manual, September 2020. The specific substantive changes are discussed in greater detail in this Section by Section Discussion in the corresponding portions related to the affected rule sections. Non-substantive changes are not intended to alter the existing rule requirements in any way and may not be specifically discussed in this preamble.

§17.2 Definitions

The commission proposes to update references included in certain definitions in §17.2 to reflect revisions to other sections of the chapter. The proposed relocation of the ERL from §17.17(b) to a new section, §17.18, would make the reference to §17.17(b)(1) obsolete; therefore, the reference to 17.17(b)(1) of this title relating to Partial Determinations will be replaced with a reference to §17.18 of this title (relating to Expedited Review List) in the definition of "capital cost old." Similarly, the proposed removal of subsection (b) in §17.14 would make references to §17.14(b) obsolete, and those references are proposed for revision from §17.14(b) to §17.14 in the definitions for "Tier I," "Tier II," and "Tier III."

§17.10. Application for Use Determination

The commission proposes amendments to §17.10(a)(1) to provide that the executive director specifies the form of applications submitted to the program instead of requiring applicants to submit two printed copies of the application. This would allow for the executive director to require electronic submittal of applications, which is more efficient for the program to administer than processing paper applications. Proposed amendments to §17.10(c) would remove references to the postmarking of applications and replace them with references to submittal of applications.

The commission proposes to add language in §17.10(d)(1) to specify that applications pertaining only to property listed on the ERL need not provide the environmental benefits of the property. This change is consistent with TTC, §11.31(m), and existing requirements in Chapter 17.

The commission proposes to amend §17.10(d)(5) to change the reference to §17.17(c) to §17.17(b). This change would correspond with the proposed relocation of the ERL.

§17.12. Application Review Schedule

The commission proposes revisions to §17.12 to allow administrative completeness "notifications" to be sent in a form other than a letter, such as via electronic mail. Electronic correspondence for communications with applicants is more efficient. The commission also proposes an amendment to §17.12(3) to revise the reference to the ERL to reflect the proposed renumbering of the ERL to proposed new §17.18.

§17.14. Tier I Pollution Control Property

The commission proposes to amend §17.14 to remove subsection (b) and update the Tier I table. Proposed amendments to the table include adding an item based on a recommendation from the committee and revising existing items for clarity and to expand applicability.

The property listed in the table of §17.14 is designated as Tier I because the property has been predetermined to be pollution control property when used as described in the table. The commission proposes to add item number M-25 to the Tier I Table at 100% use for pollution control purposes as the committee recommended, but with some deviations from the committee's recommendation. The commission agrees with the committee's recommendation to add Amine Treating Systems (components necessary to transfer impurities removed from natural gas to a final control device), when used as described in the committee's recommendation, to the Tier I Table because they are used wholly for pollution control purposes.

The committee recommended adding amine treating systems as an item number beginning with letter "A," to designate it as air pollution control equipment. However, the commission proposes to designate this as miscellaneous pollution equipment, using the letter "M" because this property could be used to control pollution from the air, water, or land. Similarly, the commission proposes to list Amine Treating Systems with the media Air/Land/Water. The commission proposes to add the item using the property name, description, and use determination percentage recommended by the committee. This property type is described in the proposed rule language and is not further discussed in the Section by Section Discussion of this preamble.

The committee recommended that amine treating systems be added to the Tier I Table based on a review and analysis of Tier II applications submitted from April 1, 2018, through April 30, 2021. The property type consistently received a PUD of 100% each time an applicant requested a use determination for such property, demonstrating the property was consistently used wholly for pollution control. Although the proposed item number is added to the Tier I Table as 100% for pollution control purposes, an applicant would still be required, under §17.14 and §17.17, to submit a Tier III application if such property produces a marketable product or a Tier II or Tier III application if it is not used as described in the Tier I table.

The commission proposes to remove the requirement from item A-115 that external floating roofs be used to comply with a requirement in 30 TAC §115.112. This rule applies only to certain geographical areas in Texas, but external floating roofs may be used throughout the state to comply with a pollution control requirement other than those in §115.112. Additionally, other rules may be appropriate for applicants to cite when identifying the sections of the law(s), rule(s), or regulation(s) being met or exceeded by the use, installation, construction, or acquisition of the external floating roofs. Removing this requirement for item A-115 would allow applicants outside of the areas specified in §115.112 to be able to apply for a use determination using a Tier I application.

The commission proposes an amendment to revise the description for item T-32 for Dielectric Coatings to clarify that the item includes factory installed coal-tar epoxies, enamels, fiberglass reinforced plastic, or urethanes on tanks and/or piping. This change would clarify that newer and alternative technologies such as fusion-bonded epoxies that protect against corrosion of tanks or pipes could also qualify for Tier I applications.

The commission proposes to remove subsection (b) that requires the commission to update and review the Tier I Table at least once every three years. The scheduled review required in this section is not required by statute and places an unnecessary burden on the commission to engage in a review and rulemaking on a rigid schedule. Further, the standard of review requiring "compelling evidence" in paragraphs (1) and (2) to add or remove items on the Tier I Table is not required by statute and does not need to be imposed on the commission. Any future rulemaking to revise the Tier I Table would be subject to the rulemaking authority conferred to the commission in the Texas Water Code, the Texas Government Code, and the TTC. Removal of the requirements and limitations would not preclude the commission from reviewing the table or the committee from providing advice on its contents at any time. The proposed removal of subsection (b) would result in a §17.14 that no longer requires subsection formatting. Corresponding changes to reflect reference to the renumbering of §17.14 would also be made.

§17.17. Partial Determinations

The proposed rulemaking would move §17.17(b) concerning and including the ERL to proposed new §17.18. The rule provisions for applications for partial use determinations and applications for property on the ERL are different and should be addressed in separate sections. No changes are proposed to the ERL in the figure in existing 30 TAC §17.17(b). Subsections (c) and (d) and figures in 30 TAC §17.17(c)(1) and §17.17(c)(2) would be renumbered accordingly. References to §17.14(a) would also be removed from the rule language.

§17.18. Expedited Review List

The proposed rulemaking would add new §17.18 and move existing §17.17(b), including the ERL, into the new section. The proposed move would help clarify that the applicability of the ERL is independent of the application requirements for partial use determinations, which are provided in existing §17.17. No changes are proposed for the ERL in the existing figure in 30 TAC §17.17(b), proposed new figure 30 TAC §17.18. However, the rule language in proposed new §17.18 would be revised from existing §17.17(b) to indicate that an application that relies on an item from the ERL must still adhere to the requirements in Chapter 17 associated with application tier and fee.

§17.20. Application Fees

The proposed amendments would update rules related to the payment of application fees. The proposed rule revisions in §17.20(b) would clarify that if it is determined, during review of an application, that the fee originally remitted with an application was not appropriate for the application, the correct fee must be submitted before application review continues. Additionally, proposed revisions to §17.20(c) would specify how payment may be remitted and that the payment must be made payable to the Texas Commission on Environmental Quality. This change would reflect rule language used by other program areas for processing payments to the agency. Finally, the commission proposes an amendment to §17.20(d) to specify that either the application fee or a receipt for payment of the application fee must accompany the application.

§17.25. Appeals Process

The commission proposes amendments to §17.25 to provide for electronic submission of appeals and related correspondence by e-mail. Allowing such communications by e-mail provides more efficient administration of the program. This proposed rule would allow for appeal-related documents to be sent and received electronically. Currently, the rules specify appeals must be submitted via United States mail, facsimile or hand delivery, but do not specifically include e-mail. Conforming changes, including requiring the appeal to include the e-mail address of the person who files the appeal, to accommodate these changes, are also proposed in §17.25(b), (c), (f), and (g).

Fiscal Note: Costs to State and Local Government

Kyle Girten, Analyst in the Budget and Planning Division, has determined that for the first five-year period the proposed rules are in effect, the proposed rulemaking will not result in increased costs to TCEQ. Additionally, it is anticipated that there would be no or minimal revenue impacts to the agency. Addition of Amine Treating Systems and other minor revisions to the Tier I table (§17.14), would decrease the application fee for impacted systems from $1,000 (Tier II fee amount) to $150. However, only four Tier II applications received since 2020 would have been affected by these revisions.

The rulemaking is not anticipated to result in any fiscal implications for other state or local government entities.

Public Benefits and Costs

Mr. Girten determined that the public benefit of this rulemaking is that the agency will be compliant with state law, specifically the requirement in TTC, §11.31(l), that TCEQ update the list of pollution control properties in §17.14 at least once every three years. Additionally, the public will benefit from the addition of Amine Treating Systems and other minor revisions to the Tier I Table (§17.14), and this would reduce the application fee for applicants affected by these changes from $1,000 (Tier II fee amount) to $150. Lastly, the public will benefit from provisions allowing for electronic submittals of applications and uses of other electronic tools and communications (§17.10, §17.12, §17.20, and §17.25) and from non-substantive revisions which improve the clarity of the rule. This rulemaking would not result in any compulsory costs or requirements for any businesses or individuals.

Local Employment Impact Statement

The commission reviewed this proposed rulemaking and determined that a Local Employment Impact Statement is not required because the proposed rulemaking does not adversely affect a local economy in a material way for the first five years that the proposed rule is in effect.

Rural Communities Impact Assessment

The commission reviewed this proposed rulemaking and determined that the proposed rulemaking does not adversely affect rural communities in a material way for the first five years that the proposed rules are in effect. The amendments would apply statewide and have the same effect in rural communities as in urban communities.

Small Business and Micro-Business Assessment

No adverse fiscal implications are anticipated for small or micro-businesses due to the implementation or administration of the proposed rule for the first five-year period the proposed rules are in effect.

Small Business Regulatory Flexibility Analysis

The commission reviewed this proposed rulemaking and determined that a Small Business Regulatory Flexibility Analysis is not required because the proposed rule does not adversely affect a small or micro-business in a material way for the first five years the proposed rules are in effect.

Government Growth Impact Statement

The commission prepared a Government Growth Impact Statement assessment for this proposed rulemaking. The proposed rulemaking does not create or eliminate a government program and will not require an increase or decrease in future legislative appropriations to the agency. The proposed rulemaking does not require the creation of new employee positions, eliminate current employee positions, nor require an increase or decrease in fees paid to the agency. The proposed rulemaking amends an existing regulation, and it does not create, expand, repeal, or limit this regulation. The proposed rulemaking does not increase or decrease the number of individuals subject to its applicability. During the first five years, the proposed rule should not impact positively or negatively the state's economy.

Draft Regulatory Impact Analysis Determination

The commission reviewed the proposed amendments in light of the regulatory analysis requirements of Texas Government Code (TGC), §2001.0225, and determined the rules do not meet the definition of "a Major environmental rule." Under TGC, §2001.0225, "a major environmental rule" means a rule, the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. Furthermore, the proposed rulemaking does not meet any of the four applicability requirements listed in TGC, §2001.0225(a). TGC, §2001.0225 applies only to a major environmental rule that: 1) exceeds a standard set by federal law, unless the rule is specifically required by state law; 2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; 3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopts a rule solely under the general powers of the agency instead of under a specific state law. The proposed rulemaking amends the Tax Relief for Pollution Control Property rules. The commission rules in Chapter 17 implement a voluntary property tax exemption for owners of certain property used to control pollution as set out in TTC, §11.31. Because the proposed rules are not specifically intended to protect the environment or reduce risks to human health from environmental exposure but to implement a tax relief program, this rulemaking is not a major environmental rule and does not meet any of the four applicability requirements. These rules do not result in any new environmental requirements and should not adversely affect in a material way the economy, a sector of the economy, productivity, competition, or jobs. The commission invites public comment regarding this draft regulatory impact analysis determination.

Written comments on the Draft Regulatory Impact Analysis may be submitted to the contact person at the address listed under the Submittal of Comments section of this preamble.

Takings Impact Assessment

The commission evaluated these amended rules and performed a preliminary assessment of whether TGC, Chapter 2007 is applicable. The commission's preliminary assessment indicates TGC, Chapter 2007 does not apply to these proposed amendments. Enforcement of these proposed rules would be neither a statutory nor constitutional taking of private real property. Specifically, the proposed rules do not affect a landowner's rights in private real property, because this rulemaking action does not burden, restrict, or limit the owner's rights to property or reduce its value by 25% or more beyond which would otherwise exist in the absence of the proposed regulations.

Consistency with the Coastal Management Program

The commission reviewed the proposed rules and found that they are neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §29.11(b)(2) or (4), nor will they affect any action/authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §29.11(a)(6). Therefore, the proposed rules are not subject to the Texas Coastal Management Program.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the Submittal of Comments section of this preamble.

Effect on Sites Subject to the Federal Operating Permits Program

Participation in the Tax Relief for Pollution Control Property Program is voluntary, but sites subject to the Federal Operating Permits Program could choose to file an application for a use determination. If the proposed rules are adopted, owners or operators of affected sites subject to the federal operating permit program may choose to apply consistent with Chapter 17.

Announcement of Hearing

The commission will hold a virtual public hearing on this proposal on September 29, 2025, at 10:00 a.m. Central Daylight Time (CDT). The hearing is structured for the receipt of oral comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes prior to the hearing at 9:30 a.m. CDT.

Individuals who plan to attend the hearing virtually and want to provide oral comments and/or want their attendance on record must register by Thursday, September 25, 2025. To register for the hearing, please e-mail Rules@tceq.texas.gov and provide the following information: your name, your affiliation, your email address, your phone number, and whether or not you plan to provide oral comments during the hearing. Instructions for participating in the hearing will be sent on Friday, September 26, 2025, to those who register for the hearing.

For the public who do not wish to provide oral comments but would like to view the hearing may do so at no cost at:

https://events.teams.microsoft.com/event/2a564f09-897c-468b-a887-20536f00caa5@871a83a4-a1ce-4b7a-8156-3bcd93a08fba

Persons who have special communication or other accommodation needs who are planning to attend the hearing should contact Sandy Wong, Office of Legal Services at (512) 239-1802 or 1-800-RELAY-TX (TDD). Requests should be made as far in advance as possible.

Submittal of Comments

Written comments may be submitted to Gwen Ricco, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to fax4808@tceq.texas.gov. Electronic comments may be submitted at: https://tceq.commentinput.com/comment/search. File size restrictions may apply to comments being submitted via the TCEQ Public Comments system. All comments should reference Rule Project Number 2023-123-017-AI. The comment period closes on October 6, 2025. Please choose one of the methods provided to submit your written comments.

Copies of the proposed rulemaking can be obtained from the commission's website at https://www.tceq.texas.gov/rules/propose_adopt.html. For further information, please contact Elizabeth Sartain, Air Quality Planning Section, at (512) 239-3933 or elizabeth.sartain@tceq.texas.gov, Tax Relief for Pollution Control Property Program 12100 Park 35 Circle, Bldg. F, Austin, Texas 78753, Mail: MC-110, P.O. Box 13087, Austin Texas 78711-3087.

Statutory Authority

The new and amended rules are proposed under Texas Water Code (TWC), §5.102, which authorizes the commission to perform any acts authorized by the TWC or other laws that are necessary and convenient to the exercise of its jurisdiction and powers; and TWC, §5.103, which authorizes the commission to adopt rules necessary to carry out its powers and duties under the TWC. The rules are also proposed under Texas Tax Code (TTC), §11.31, which authorizes the commission to adopt rules to implement the tax exemption for pollution control property.

The proposed amendments and new section implement TTC, §11.31.

§17.2. Definitions.

Unless specifically defined in the Texas Clean Air Act (TCAA), the Texas Solid Waste Disposal Act (TSWDA), the Texas Water Code (TWC), the Texas Tax Code (TTC), or the Texas Health and Safety Code (THSC), or in the rules of the commission, the terms used by the commission have the meanings commonly ascribed to them in the fields of pollution control or property taxation. In addition to the terms that are defined by Chapter 3 of this title (relating to Definitions), the TCAA, the TSWDA, TWC, TTC, and THSC, the following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Capital cost new--The estimated total capital cost of the equipment or process.

(2) Capital cost old--The cost of the equipment that is being or has been replaced by the equipment covered in an application. The value of this variable in the cost analysis procedure is calculated using one of the four hierarchal methods for this variable in the figure in §17.18 [§17.17(b)(1)] of this title (relating to Expedited Review List [Partial Determinations]).

(3) Cost analysis procedure--A procedure that uses cost accounting principles to calculate the percentage of a project or process that qualifies for a positive use determination as pollution control property.

(4) Environmental benefit--The prevention, monitoring, control, or reduction of air, water, and/or land pollution that results from the actions of the applicant. For purposes of this chapter, environmental benefit does not include the prevention, monitoring, control, or reduction of air, water, and/or land pollution that results from the use or characteristics of the applicant's goods or service produced or provided. For the purpose of this chapter, the terms "environmental benefit" and "pollution control" are synonymous.

(5) Marketable product--Anything produced or recovered using pollution control property that is sold as a product, is accumulated for later use, or is used as a raw material in a manufacturing process. Marketable product includes, but is not limited to, anything recovered or produced using the pollution control property and sold, traded, accumulated for later use, or used in a manufacturing process (including at a different facility). Marketable product does not include any emission credits or emission allowances that result from installation of the pollution control property.

(6) Partial Determination--A determination that an item of property or a process is not used wholly as pollution control.

(7) Pollution control property--A facility, device, or method for control of air, water, and/or land pollution as defined by TTC, §11.31(b).

(8) Tier I--An application containing property that is on the Tier I Table in §17.14 [§17.14(a)] of this title (relating to Tier I Pollution Control Property) or that is necessary for the installation or operation of property located on the Tier I Table.

(9) Tier II--An application for property that is used wholly for the control of air, water, and/or land pollution, but is not located on the Tier I Table in §17.14 [§17.14(a)] of this title.

(10) Tier III--An application for property used partially for the control of air, water, and/or land pollution and that does not correspond exactly to an item on the Tier I Table in §17.14 [§17.14(a)] of this title.

(11) Use determination--A finding, either positive or negative, by the executive director that the property is used wholly or partially for pollution control purposes and listing the percentage of the property that is determined to be used for pollution control.

§17.10. Application for Use Determination.

(a) To be granted a use determination a person shall submit to the executive director:

(1) a completed and signed [commission] application form specified by the executive director [and one copy of the completed, signed form]; and

(2) the appropriate fee, under §17.20 of this title (relating to Application Fees).

(b) An application must be submitted for each unit of pollution control property or for each group of integrated units that has been, or will be, installed for a common purpose.

(c) If the applicant desires to apply for a use determination for a specific tax year, the application must be submitted [ postmarked] no later than January 31 of the same tax year. Applications submitted [postmarked] after this date will be processed as a lower priority than applications submitted [postmarked] by the due date and without regard for any appraisal district deadlines.

(d) All use determination applications must contain at least the following:

(1) the anticipated environmental benefits from the installation of the pollution control property for the control of air, water, and/or land pollution, except for applications containing only equipment on the Expedited Review List located in §17.18 of this title (relating to Expedited Review List);

(2) the estimated cost of the pollution control property;

(3) the purpose of the installation of such facility, device, or method, and the proportion of the installation that is for pollution control, such as, if deemed by the executive director to be relevant and essential to the use determination, a detailed description of the pollution source and a detailed and labeled process flow diagram that clearly depicts the pollution control property and the processes and equipment that generate the pollutant(s) being controlled;

(4) the specific sections of the law(s), rule(s), or regulation(s) being met or exceeded by the use, installation, construction, or acquisition of the pollution control property;

(5) if the installation includes property that is not used wholly for the control of air, water, and/or land pollution and is not on the Tier I Table, a worksheet showing the calculation of the Cost Analysis Procedure, §17.17(b) [§17.17(c)] of this title (relating to Partial Determinations), and explaining each of the variables;

(6) any information that the executive director deems reasonably necessary to determine the eligibility of the application;

(7) if the property for which a use determination is sought has been purchased from another owner who previously used the property as pollution control property, a copy of the bill of sale or other information submitted by the person or political subdivision that demonstrates, to the satisfaction of the executive director, that the transaction involves a bona fide change in ownership of the property and is not a sham transaction for the purpose of avoiding tax liability; and

(8) the name of the appraisal district for the county in which the property is located.

§17.12. Application Review Schedule.

Following submission of the information required by §17.10 of this title (relating to Application for Use Determination), the executive director shall determine whether the pollution control property is used wholly or partly for the control of air, water, and/or land pollution. If the determination is that the property is used partly for pollution control, the executive director shall determine the proportion of the property used for pollution control.

(1) As soon as practicable, the executive director shall send notice by regular mail or electronic mail to the chief appraiser of the appraisal district for the county in which the property is located that the person has applied for a use determination under this chapter.

(2) As soon as practicable after receipt of an application for use determination, the executive director shall send written notification informing the applicant that the application is administratively complete or that it is deficient.

(A) If the application is not administratively complete, the notification will specify the deficiencies, and allow the applicant 30 days to provide a revised application with the requested information. If the applicant does not submit the requested information within 30 days, the executive director shall take no further action on the application and the application fee will be forfeited under §17.20(b) of this title (relating to Application Fees). If the first revised application is deficient, the executive director shall send written notification informing the applicant that the application is deficient and providing the applicant 30 days to provide a second revised application. If the second revised application is not administratively complete or the applicant does not provide a second revised application within the 30 days, the executive director shall take no further action on the application and the application fee will be forfeited under §17.20(b) of this title.

(B) The executive director may request additional technical information within 60 days of issuance of an administrative completeness notification [letter]. If additional information is requested, the applicant shall provide a revised application with the requested information. If the revised application is determined to be incomplete or the applicant does not provide the requested technical information within 30 days, the executive director may request additional technical information or the executive director may decide to take no further action on the application and the application fee will be forfeited under §17.20(b) of this title. The executive director may not issue more than two notices of deficiency after the issuance of an administrative completeness notification [letter] on an application.

(C) The technical review process is limited to a total of 230 days from the date of declaration that the application is administratively complete. If at the end of the review period the application is considered to be incomplete, the executive director shall issue a negative use determination for failure to document the eligibility of the property/equipment to receive a positive use determination.

(D) An application where the executive director will take no further action under subparagraph (A) or (B) of this paragraph may be refiled by the applicant. In such cases, the applicant shall pay the appropriate fee as required by §17.20 of this title.

(3) For applications covering property listed in the table in §17.18 [§17.17(b)] of this title (relating to Expedited Review List [Partial Determinations]), the executive director will complete the technical review of the application within 30 days of receipt of the required application information without regard to whether the information required by §17.10(d)(1) of this title has been submitted.

(4) The executive director shall determine whether the property is or is not used wholly or partly to control pollution. The executive director is authorized to grant positive use determinations for the portion of the property included in the application that is deemed pollution control property.

(A) If a positive use determination is made, the executive director shall issue a use determination letter to the applicant that describes the proportion of the property that is pollution control property.

(B) If a negative use determination is made, the executive director shall issue a denial letter explaining the reason for the denial.

(C) A letter enclosing a copy of the determination shall be sent by regular or electronic mail to the chief appraiser of the appraisal district for the county in which the property is located.

§17.14. Tier I Pollution Control Property.

[(a)] For the property listed in the Tier I Table located in this subsection that is used wholly for pollution control purposes, a Tier I application is required. A Tier I application must not include any property that is not listed in this subsection or that is used for pollution control purposes at a use percentage that is different than what is listed in the table. Unless otherwise designated with a partial use percentage on the Tier I Table, if a marketable product is recovered (not including materials that are disposed) from property listed in this subsection, a Tier III application is required.

Figure: 30 TAC §17.14 (.pdf)

[Figure: 30 TAC §17.14(a)]

§17.17. Partial Determinations.

(a) A Tier III application requesting a partial determination must be submitted for all property that is either not used as described on the Tier I Table located in §17.14 [§17.14(a)] of this title (relating to Tier I Pollution Control Property), or does not fully satisfy the requirements for a 100% positive use determination under this chapter. For all property for which a partial use determination is sought, the cost analysis procedure (CAP) described in subsection (b) [(c)] of this section must be used.

(b) [(c)] Consistent with subsection (a) of this section, the following calculation (cost analysis procedure) must be used to determine the creditable partial percentage for a property that is filed on a Tier III application:

(1) If no marketable product results from the use of the property, use the following equation and enter "0" for the net present value of the marketable product (NPVMP):

Figure: 30 TAC §17.17(b)(1) (.pdf)

[Figure: 30 TAC §17.17(c)(1)]

(2) For property that generates a marketable product (MP), the net present value (NPV) of the MP is used to reduce the partial determination when used in the equation in the figure in paragraph (1) of this subsection. The value of the MP is calculated by subtracting the production costs of the MP from the market value of the MP. This value is then used to calculate the NPV of the MP (NPVMP) over the lifetime of the equipment. The equation for calculating NPVMP is as follows:

Figure: 30 TAC §17.17(b)(2) (.pdf)

[Figure: 30 TAC §17.17(c)(2)]

(c) [(d)] If the cost analysis procedure of this section produces a negative number or a zero, the property is not eligible for a positive use determination.

§17.20. Application Fees.

(a) Fees shall be remitted with each application for a use determination as required in paragraphs (1) - (3) of this subsection.

(1) Tier I Application--A $150 fee shall be charged for applications for property that is located in the Tier I Table located in §17.14 [§17.14(a)] of this title (relating to Tier I Pollution Control Property), as long as the application seeks no variance from that use determination.

(2) Tier II Application--A $1,000 fee shall be charged for applications for property that is used wholly for the control of air, water, and/or land pollution, but not in the Tier I Table located in §17.14 [§17.14(a)] of this title.

(3) Tier III Application--A $2,500 fee shall be charged for applications for property used partially for the control of air, water, and/or land pollution.

(b) Fees will be forfeited for applications for use determination on which the executive director will take no further action under §17.12(2) of this title (relating to Application Review Schedule). An applicant who submits an insufficient fee will receive a deficiency notice in accordance with the procedures in §17.12(2) of this title. The fee must be remitted with the response to the deficiency notice before the application will be deemed administratively complete. If it is determined [during a technical review] that an application was submitted at the wrong tier level, the executive director will notify the applicant of the amount in which the fees are deficient or in excess, and if there are deficient fees, the applicant shall remit the appropriate fee according to the requirements in subsection (a) of this section [deficient amount of fees] before review of the application continues. If the deficient fees are not paid in full within 30 days of the applicant being notified of the deficiency, the executive director will take no further action on the application. If the executive director takes no further action on the application, the portion of the fees already paid shall be forfeited by the applicant.

(c) All fees shall be paid by check, money order, electronic funds transfer, or through the commission's payment portal, and shall be made payable to the Texas Commission on Environmental Quality [either be remitted in the form of a check or money order made payable to the Texas Commission on Environmental Quality (TCEQ), by electronic funds transfer, or by using the commission's ePay system].

(d) The application fee or receipt for payment of the application fee [check, money order, or electronic funds transfer receipt] must be delivered with the application to the commission[, at the address listed on the application form].

§17.25. Appeals Process.

(a) Applicability.

(1) This subchapter applies to all appeals of use determinations issued by the executive director. A proceeding based upon an appeal filed under this subchapter is not a contested case for purposes of Texas Government Code, Chapter 2001.

(2) The following persons may appeal a use determination issued by the executive director:

(A) the applicant seeking a use determination; and

(B) the chief appraiser of the appraisal district for the county in which the property for which a use determination is sought is located.

(b) Form and timing of appeal. An appeal must be in writing and must be filed by United States mail, facsimile, e-mail, or hand delivery with the chief clerk of the commission within 20 days after the receipt of the executive director's determination letter. A person is presumed to have been notified on the third regular business day after the date the notice of the executive director's action is e-mailed or mailed by first class mail. If an appeal meeting the requirements of this subsection is not filed within the time period specified, the executive director's use determination is final. An appeal filed under this subchapter must:

(1) provide the name, address, e-mail address, and daytime telephone number of the person who files the appeal;

(2) give the name and address of the entity to which the use determination was issued;

(3) provide the use determination application number for the application for which the use determination was issued;

(4) request commission consideration of the use determination; and

(5) explain the basis for the appeal.

(c) Appeal processing. The chief clerk shall:

(1) deliver, e-mail, or mail to the executive director a copy of the appeal;

(2) deliver, e-mail, or mail a copy of the appeal to the applicant if the appeal was filed by the chief appraiser or to the chief appraiser if the appeal was filed by the applicant; and

(3) schedule the appeal for consideration at the next regularly scheduled commission meeting for which adequate notice can be given.

(d) Action by the general counsel. The general counsel may remand a matter from the commission's agenda to the executive director if the executive director or the public interest counsel requests a remand.

(e) Action by the commission.

(1) The person seeking the determination and the chief appraiser may testify at the commission meeting at which the appeal is considered.

(2) The commission may remand the matter to the executive director for a new determination or deny the appeal and affirm the executive director's use determination.

(3) If the commission denies the appeal and affirms the executive director's use determination, the commission's decision shall be final and appealable in district court.

(f) Action by the executive director.

(1) If the commission remands a use determination to the executive director, the executive director shall:

(A) conduct a new technical review of the application that includes an evaluation of any information presented during the commission meeting; and

(B) upon completion of the technical review, issue a new determination. A copy of the new determination shall be e-mailed [mailed] to both the applicant and the chief appraiser of the county in which the property is located.

(2) A new determination by the executive director may be appealed to the commission in the manner provided by this subchapter.

(g) Withdrawn appeals. An appeal may be withdrawn by the entity who requested the appeal. The withdrawal must be in writing, and give the name, e-mail address, address, and daytime telephone number of the person who files the withdrawal, and the withdrawal shall indicate the identification number of the use determination. The withdrawal must be filed by United States mail, facsimile, e-mail, or hand delivery with the chief clerk of the commission.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 21, 2025.

TRD-202503030

Charmaine K. Backens

Deputy Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: October 5, 2025

For further information, please call: (512) 239-0682

CHAPTER 18. VOTER-APPROVAL TAX RELIEF FOR POLLUTION CONTROL REQUIREMENTS

(Editor's note: In accordance with Texas Government Code, §2002.014, which permits the omission of material which is "cumbersome, expensive, or otherwise inexpedient," the figures in 30 TAC §18.25 and §18.26 are not included in the print version of the Texas Register. The figures are available in the on-line version of the September 5, 2025, issue of the Texas Register.)

The Texas Commission on Environmental Quality (TCEQ, agency, or commission) proposes to amend the title of Chapter 18 and §§18.2, 18.10, 18.15, 18.25, 18.26, 18.30, and 18.35.

Background and Summary of the Factual Basis for the Proposed Rules

The commission's rules in 30 Texas Administrative Code (TAC) Chapter 18 implement a tax rate adjustment program established in Texas Tax Code (TTC), §26.045 to increase a political subdivision's tax rate equal to an amount that would allow the political subdivision to spend maintenance and operation funds to pay for certain property that is used wholly or partially as a facility, device, or method for the control of air, water or land pollution necessary to meet a permit issued by the commission. Under the requirements of 30 TAC Chapter 18, a political subdivision may submit an application to the executive director to determine if property is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution. If the determination is approved by the executive director, the political subdivision then presents the executive director's determination to the tax assessor for adjustment of the tax rate for the political subdivision.

The proposed rulemaking would amend the provisions in 30 TAC Chapter 18 to correct the title of the chapter from Voter-Approval Tax Relief for Pollution Control Requirements to Voter-Approval Tax Rate Relief for Pollution Control Requirements. Senate Bill (SB) 2, Section 44, 86th Texas Legislature, 2019, required the revision of the title's chapter. This change was adopted as part of a previous rulemaking, Rule Project Number 2020-031-018-AI, but the full title change was not made correctly.

The proposed rulemaking would also amend the provisions in Chapter 18 to mirror the changes proposed in Chapter 17 as part of this rulemaking project (Rule Project No. 2023-123-017-AI). The commission's proposed amendments are based on the recommendations and advice of the Tax Relief for Pollution Control Property Advisory Committee (committee) and also include clarifying changes to existing items on the Tier I Table, and provide other updates as discussed in the Section by Section Discussion. This rulemaking would also fulfill the requirement of TTC, §26.045(g) that the commission, by rule, update the list adopted under TTC, §26.045(f), the Expedited Review List (ERL), at least once every three years and fulfills the existing requirement of 30 TAC §18.25(b) that the commission review and update the Tier I Table every three years.

On December 1, 2022, the committee submitted its recommendations to TCEQ as part of the triennial review of the Tier I Table located in §17.14(a) and ERL located in existing §17.17(b). This proposed rulemaking mirrors the committee's recommendation made for Chapter 17 regarding the Tier I Table and ERL in Chapter 18, except when deviation from these recommendations is needed to ensure the rule appropriately and consistently describes pollution control property eligible for a positive use determination (PUD) under Chapter 18.

Because Chapter 18 is not in the committee's purview, it did not consider the ERL in TTC, §26.045(f), codified in §18.26, or the Tier I Table in §18.25(a). The ERL and Tier I table in Chapter 18 are identical to the ERL in existing §17.17(b) and the Tier I Table in existing §17.14(a), respectively. The committee did not recommend any changes for the ERL in existing §17.17(b). However, the committee recommended the addition of one type of pollution control property be added to the Tier I Table. In the associated rule project for Chapter 17, several changes are proposed to the Tier I Table; therefore, the commission proposes corresponding changes to the Tier I Table in §18.25(a). The proposed changes would afford applicants applying under the Chapter 18 rules the same opportunities to receive a PUD for property submitted on a Tier I application as applicants applying under the Chapter 17 rules.

The proposed rulemaking would remove existing requirements in §18.25(b) that the commission review and update the Tier I Table every three years. This review is not required by statute and would not preclude the commission from reviewing the table at any time. The requirement to review the ERL would not change because it is required in TTC, §26.045(g).

Section by Section Discussion

The commission proposes to amend the title of Chapter 18 from "Voter-Approval Tax Relief for Pollution Control Requirements" to "Voter-Approval Tax Rate Relief for Pollution Control Requirements" to implement SB 2, Section 44 and revise the chapter's title.

In addition to the proposed amendments to incorporate corresponding proposed changes to Chapter 17, the commission proposes non-substantive changes to update the rules in accordance with current Texas Register style and format requirements, improve readability, establish consistency in the rules, and conform to the standards in the Texas Legislative Council Drafting Manual, September 2020. The specific substantive changes are discussed in greater detail in this Section by Section Discussion in the corresponding portions related to the affected rule sections. Non-substantive changes are not intended to alter the existing rule requirements in any way and may not be specifically discussed in this preamble.

§18.2 Definitions

The commission proposes revisions to the definition of Tier II in §18.2(5) to remove language that associates a Tier II application with property listed on the ERL. This change would clarify that the applicability of the ERL is independent of the Tier II application requirements for partial use determinations. The definition for Tier II would also be revised to add language that clarifies Tier II applications are associated not only with property not included on the Tier I Table but also with property that does not correspond exactly to an item on the Tier I Table.

Under the current rules, §18.25(a) requires applicants to submit a Tier II application for any of the proposed property additions if the property is used for pollution control purposes at a percentage different than what is listed on the table or, at the request of the executive director, if the equipment is not being used in a standard manner. These existing criteria in §18.25(a) are not proposed for revision. Any of the property proposed for inclusion in the Tier I Table would need to continue to adhere to these existing requirements.

§18.10 Application for Use Determination

The commission proposes amendments to §18.10 to provide that the executive director specifies the form of applications submitted to the program. This would allow for the executive director to require electronic submittal of applications, which is more efficient for the program to administer than processing paper applications.

The commission proposes revision to §18.10(c)(5) to specify that the applicability of the ERL is independent of the Tier II application requirements for partial use determinations as specified in §18.30, relating to Partial Determinations.

§18.15 Application Review Schedule

The commission proposes amendments to §18.15 to allow the executive director to send notifications in a form other than a letter, such as via electronic mail, and to remove references to applications being mailed or sent back with notices of deficiency. Electronic correspondence for communications with applicants is more efficient. The commission also proposes amendments to §18.15 to specify that the executive director will take no action on an application, rather than sending an application back, if an applicant does not submit an adequate response within the 30 days.

§18.25 Tier I Eligible Equipment

The commission proposes amendments to §18.25 to remove subsection (b) and update the Tier I table. In addition to proposed updates to the Tier I table in §18.25 to mirror the updates proposed for the Chapter 17 Tier I table in §17.14, the commission proposes revisions to the Tier I table in §18.25 to remove the reference to the Cost Analysis Procedure, which is not found in Chapter 18, and to add a reference to documentation of the calculation of the partial determination for Tier II applications. The proposed revisions would also correct the citation in the introductory paragraph to the Tier I table to refer to the appropriate section in the TTC.

The commission proposes to add item number M-25 to the Tier I Table in §18.25(a), at 100% pollution control property as the advisory committee recommended for the Tier I Table of Chapter 17, but with some deviations from the committee's recommendation. The commission agrees with the committee's recommendation to add Amine Treating Systems (components necessary to transfer impurities removed from natural gas to a final control device), when used as described in the committee's recommendation, to the Tier I Table because they are used wholly for pollution control purposes. The commission proposes to add item M-25 to be consistent with the proposed revisions for Chapter 17.

The committee recommended adding amine treating systems as an item number beginning with letter "A," to designate it as air pollution control equipment. However, the commission proposes to designate this as miscellaneous pollution equipment, using the letter "M" because this property could be used to control pollution from the air, water, or land. Similarly, the commission proposes to list Amine Treating Systems with the media Air/Land/Water. The commission proposes to add the item using the property name, description, and use determination percentage recommended by the committee. This property type is described in the proposed rule language and is not further discussed in the Section by Section Discussion of this preamble.

The committee recommended that amine treating systems be added to the Tier I Table based on a review and analysis of Tier II applications submitted under Chapter 17 from April 1, 2018, through April 30, 2021. The property type consistently received a PUD of 100% each time an applicant requested a use determination for such property, demonstrating the property was consistently used wholly for pollution control. Although the proposed item number is added to the Tier I Table as 100% for pollution control purposes, an applicant would still be required, under §18.25, to submit a Tier II application if such property produces a marketable product or is not used as described in the Tier I table.

The commission proposes to remove the requirement from item A-115 that external floating roofs be used to comply with a requirement in 30 TAC §115.112. This rule applies only to certain geographical areas in Texas, but external floating roofs may be used throughout the state to comply with a pollution control requirement other than those in §115.112. Additionally, other rules may be appropriate for applicants to cite when identifying the sections of the law(s), rule(s), or regulation(s) being met or exceeded by the use, installation, construction, or acquisition of the external floating roofs. Removing this requirement for item A-115 would allow applicants outside of the areas specified in §115.112 to be able to apply for a use determination using a Tier I application.

The commission proposes amendments to revise the description for item T-32 for Dielectric Coatings to clarify that the item includes factory installed coal-tar epoxies, enamels, fiberglass reinforced plastic, or urethanes on tanks and/or piping. This change would clarify that newer and alternative technologies such as fusion-bonded epoxies that protect against corrosion of tanks or pipes could also qualify for Tier I applications.

The commission proposes to remove subsection (b) that requires the commission to update and review the Tier I Table at least once every three years. The scheduled review required in this section is not required by statute and places an unnecessary burden on the commission to engage in a review and rulemaking on a rigid schedule. Further, the standard of review requiring "compelling evidence" in paragraphs (1) and (2) to add or remove items on the Tier I Table is not required by statute and does not need to be imposed on the commission. Any future rulemaking to revise the Tier I Table would be subject to the rulemaking authority conferred to the commission in the Texas Water Code, the Texas Government Code (TGC), and the TTC. Removal of the requirements and limitations would not preclude the commission from reviewing the table or the committee from providing advice on it at any time. The proposed removal of subsection (b) would result in §18.25 that no longer requires subsection formatting. References to the subsection for §18.25(a) would also be removed from the rule language.

§18.26 Expedited Review List

The commission proposes amendments to §18.26 to add language to §18.26 to indicate that an application that relies on an item from the ERL must still adhere to the requirements in Chapter 18 associated with application tier and fee.

§18.30 Partial Determinations

The commission proposes amendments to §18.30 to remove the requirement that applicants must request a partial use determination for items on the ERL. Existing rule language does not account for a scenario in which ERL property could be used as described on the Tier I Table, making it eligible for a Tier I application. This change would clarify that property included on the Tier I Table and ERL may be included on a Tier I application when used as described on the Tier I Table. A Tier II application would still be required if the property is not used wholly for pollution control purposes or as described on the Tier I Table.

§18.35 Application Fees

Revisions are proposed to remove the provision in existing §18.35(a)(2) that a Tier II application is required for items listed on the ERL. Removal of this provision would help clarify that property on the ERL does not have to be submitted on a Tier II application.

The proposed amendments would also update rules related to application fees. Proposed revisions to §18.35(b) would explain that fees would be forfeited for a use application upon which the executive director takes no further action, rather than for an application that is sent back to an applicant. The proposed rule revisions in §18.35(b) would clarify that if, during review of an application, it is determined that the fee originally remitted with an application was not appropriate for the application, the correct fee must be submitted before application review continues. Additional proposed revisions to §18.35(c) would clarify how payment may be remitted and that the payment must be made payable to the Texas Commission on Environmental Quality. This change would reflect rule language used by other program areas for processing payments to the agency. Finally, the commission proposes amendment to §18.35(d) to specify that either the application fee or a receipt for payment of the application fee must accompany the application.

Fiscal Note: Costs to State and Local Government

Kyle Girten, Analyst in the Budget and Planning Division, has determined that for the first five-year period the proposed rules are in effect, the proposed rulemaking would not result in increased costs to TCEQ.

The rulemaking is not anticipated to result in any costs for other state government entities or local government entities. This rulemaking would not result in any compulsory costs or requirements for any local entities.

Public Benefits and Costs

Mr. Girten determined that the public benefit of this rulemaking is that the agency would be compliant with state law, specifically the requirement in TTC, §26.045(g) that TCEQ update the list of pollution control properties in §18.25 at least once every three years. Additionally, the public would benefit from provisions allowing for electronic submittals of applications and uses of other electronic tools and communications (§18.10, §18.15, and §18.35) and from non-substantive revisions which improve the clarity of the rule.

The proposed rulemaking would not result in any costs or requirements for businesses or individuals.

Local Employment Impact Statement

The commission reviewed this proposed rulemaking and determined that a Local Employment Impact Statement is not required because the proposed rulemaking does not adversely affect a local economy in a material way for the first five years that the proposed rule is in effect.

Rural Communities Impact Assessment

The commission reviewed this proposed rulemaking and determined that the proposed rulemaking does not adversely affect rural communities in a material way for the first five years that the proposed rules are in effect. The amendments would apply statewide and have the same effect in rural communities as in urban communities.

Small Business and Micro-Business Assessment

No adverse fiscal implications are anticipated for small or micro-businesses due to the implementation or administration of the proposed rules for the first five-year period the proposed rules are in effect.

Small Business Regulatory Flexibility Analysis

The commission reviewed this proposed rulemaking and determined that a Small Business Regulatory Flexibility Analysis is not required because the proposed rules do not adversely affect a small or micro-business in a material way for the first five years the proposed rules are in effect.

Government Growth Impact Statement

The commission prepared a Government Growth Impact Statement assessment for this proposed rulemaking. The proposed rulemaking does not create or eliminate a government program and will not require an increase or decrease in future legislative appropriations to the agency. The proposed rulemaking does not require the creation of new employee positions, eliminate current employee positions, nor require an increase or decrease in fees paid to the agency. The proposed rulemaking amends an existing regulation, and it does not create, expand, repeal, or limit this regulation. The proposed rulemaking does not increase or decrease the number of individuals subject to its applicability. During the first five years, the proposed rule should not impact positively or negatively the state's economy.

Draft Regulatory Impact Analysis Determination

The commission reviewed the proposed amendments in light of the regulatory analysis requirements of TGC, §2001.0225, and determined the rules do not meet the definition of a "major environmental rule." Under TGC, §2001.0225, a "Major environmental rule" means a rule, the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. Furthermore, the proposed rulemaking does not meet any of the four applicability requirements listed in TGC, §2001.0225(a). TGC, §2001.0225 applies only to a major environmental rule that: 1) exceeds a standard set by federal law, unless the rule is specifically required by state law; 2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; 3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopts a rule solely under the general powers of the agency instead of under a specific state law. The proposed rulemaking amends the voter-approval tax rate relief for pollution control property rules. The commission rules in Chapter 18 implement a procedure available to political subdivisions to adjust tax rates to recover maintenance and operation funds used to pay for certain property used to control pollution as set out in TTC, §26.045. The proposed rule amendments revise requirements for use determination applications submitted to the executive director. Because the proposed rules are not specifically intended to protect the environment or reduce risks to human health from environmental exposure but to implement a tax rate adjustment program, this rulemaking is not a major environmental rule and does not meet any of the four applicability requirements. These rules do not result in any new environmental requirements and should not adversely affect in a material way the economy, a sector of the economy, productivity, competition, or jobs. The commission invites public comment regarding this draft regulatory impact analysis determination.

Written comments on the Draft Regulatory Impact Analysis may be submitted to the contact person at the address listed under the Submittal of Comments section of this preamble.

Takings Impact Assessment

The commission evaluated these amended rules and performed a preliminary assessment of whether TGC, Chapter 2007 is applicable. The commission's preliminary assessment indicates TGC, Chapter 2007 does not apply to these proposed amendments. Enforcement of these proposed rules would be neither a statutory nor constitutional taking of private real property. Specifically, the proposed rules do not affect a landowner's rights in private real property, because this rulemaking action does not burden, restrict, or limit the owner's rights to property or reduce its value by 25% or more beyond which would otherwise exist in the absence of the proposed regulations.

Consistency with the Coastal Management Program

The commission reviewed the proposed rules and found that they are neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §29.11(b)(2) or (4), nor will they affect any action/authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §29.11(a)(6). Therefore, the proposed rules are not subject to the Texas Coastal Management Program.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the Submittal of Comments section of this preamble.

Effect on Sites Subject to the Federal Operating Permits Program

Participation in the Tax Relief for Pollution Control Property Program is voluntary, but sites subject to the Federal Operating Permits Program could choose to file an application for a use determination. If the proposed rules are adopted, political subdivisions that own or operate affected sites subject to the federal operating permit program may choose to apply consistent with Chapter 18.

Announcement of Hearing

The commission will hold a virtual public hearing on this proposal on September 29, 2025, at 10:00 a.m. Central Daylight Time (CDT). The hearing is structured for the receipt of oral comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes prior to the hearing at 9:30 a.m. CDT.

Individuals who plan to attend the hearing virtually and want to provide oral comments and/or want their attendance on record must register by Thursday, September 25, 2025. To register for the hearing, please e-mail Rules@tceq.texas.gov and provide the following information: your name, your affiliation, your email address, your phone number, and whether or not you plan to provide oral comments during the hearing. Instructions for participating in the hearing will be sent on Friday, September 26, 2025, to those who register for the hearing.

For the public who do not wish to provide oral comments but would like to view the hearing may do so at no cost at:

https://events.teams.microsoft.com/event/2a564f09-897c-468b-a887-20536f00caa5@871a83a4-a1ce-4b7a-8156-3bcd93a08fba

Persons who have special communication or other accommodation needs who are planning to attend the hearing should contact Sandy Wong, Office of Legal Services at (512) 239-1802 or 1-800-RELAY-TX (TDD). Requests should be made as far in advance as possible.

Submittal of Comments

Written comments may be submitted to Gwen Ricco, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to fax4808@tceq.texas.gov. Electronic comments may be submitted at: https://tceq.commentinput.com/comment/search. File size restrictions may apply to comments being submitted via the TCEQ Public Comments system. All comments should reference Rule Project Number 2023-123-017-AI. The comment period closes on October 6, 2025. Please choose one of the methods provided to submit your written comments.

Copies of the proposed rulemaking can be obtained from the commission's website at https://www.tceq.texas.gov/rules/propose_adopt.html. For further information, please contact Elizabeth Sartain, Air Quality Planning Section, at (512) 239-3933 or elizabeth.sartain@tceq.texas.gov, Tax Relief for Pollution Control Property Program 12100 Park 35 Circle, Bldg. F, Austin, Texas 78753, Mail: MC-110, P.O. Box 13087, Austin Texas 78711-3087.

Statutory Authority

The amendments are proposed under Texas Water Code (TWC), §5.102, which authorizes the commission to perform any acts authorized by the TWC or other laws that are necessary and convenient to the exercise of its jurisdiction and powers; and TWC, §5.103, which authorizes the commission to adopt rules necessary to carry out its powers and duties under the TWC. The rules are also proposed under Texas Tax Code, §26.045, which authorizes the commission to adopt rules to implement the program for the voter-approval tax rate relief for pollution control requirements.

The proposed amendments implement Texas Tax Code, §26.045.

§18.2. Definitions.

Unless specifically defined in the Texas Clean Air Act (TCAA), the Texas Solid Waste Disposal Act (TSWDA), the Texas Water Code (TWC), the Texas Tax Code (TTC), the Texas Health and Safety Code (THSC), or in the rules of the commission, the terms used by the commission have the meanings commonly ascribed to them in the fields of pollution control or property taxation. In addition to the terms that are defined by §3.2 of this title (relating to Definitions), the TCAA, the TSWDA, TWC, TTC, and THSC, the following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Partial determination--A determination that an item of property or a process is not used wholly as pollution control.

(2) Permit requirement--A clause within a permit issued by the Texas Commission on Environmental Quality (TCEQ) which requires the receiver of a permit to expend funds for a facility, device, or method for control of air, water, or land pollution as defined by TTC, §26.045(b).

(3) Pollution control property--A facility, device, or method for control of air, water, or land pollution as defined by TTC, §26.045(b).

(4) Tier I--An application containing only property that is on the Tier I Table in §18.25 [§18.25(a)] of this title (relating to Tier I Eligible Equipment) or that is necessary for the installation or operation of property located on the Tier I Table.

(5) Tier II--An application containing property that [is listed or contained on the Expedited Review List in §18.26 of this title (relating to Expedited Review List) or that] is not listed on the Tier I Table or that does not correspond exactly to an item on the Tier I Table in §18.25(a) of this title.

(6) Use determination--A finding, either positive or negative, by the executive director that the property is used wholly or partially for pollution control purposes and listing the percentage of the property that is determined to be used for pollution control.

§18.10. Application for Use Determination.

(a) In order to be granted a positive use determination, a political subdivision shall submit to the executive director:

(1) a completed and signed application form specified by the executive director [a Texas Commission on Environmental Quality application form or a similar reproduction]; and

(2) the appropriate fee, under §18.30 of this title (relating to Application Fees).

(b) An application must be submitted for each permit requirement for which pollution control property has been or will be installed.

(c) The application shall contain at least the following:

(1) the anticipated environmental benefits from the installation of the pollution control property for the control of air, water, or land pollution, except for applications containing only equipment on the Expedited Review List located in §18.26 of this title (relating to Expedited Review List);

(2) the estimated cost of the pollution control property, where the cost includes not only the cost of the specific property, but also any costs related to the installation or construction of the property;

(3) the permit requirement being met by the installation of such facility, device, or method, and the proportion of the installation that is pollution control property;

(4) a copy of the permit that is being met or exceeded by the use, installation, construction, or acquisition of the pollution control property;

(5) if the installation includes property that is not used wholly for the control of air, water, or land pollution, and is not on the Tier I Table [ or is property that is listed on the Expedited Review List ], a worksheet showing the calculation of the partial determination as required in §18.30 of this title (relating to Partial Determinations) , and explaining each of the variables; and

(6) any information that the executive director deems reasonably necessary to determine the eligibility of the application.

§18.15. Application Review Schedule.

Following submission of the information required by §18.10 of this title (relating to Application for Use Determination), the executive director shall determine whether the pollution control property is used wholly or partly to meet the requirements of a permit issued by the commission. If the determination is that the property is used partly for pollution control, the executive director shall determine the proportion of the property used for pollution control.

(1) As soon as practicable, the executive director shall send [mail] written notification informing the applicant that the application has been received and if the application is considered to be administratively complete or deficient.

(A) If the application is not administratively complete, the notification shall specify the deficiencies and allow the applicant 30 days to provide the requested information. If the applicant does not submit an adequate response, the executive director shall take no [the application will be sent back to the applicant without] further action on the application [by the executive director] and the application fee will be forfeited under §18.35(b) of this title (relating to Application Fees).

(B) If no further action is taken on an application [is sent back to the applicant] under subparagraph (A) of this paragraph, the applicant may re-file the application and pay the appropriate fee as required by §18.35(a) of this title [(relating to Application Fees)].

(2) For applications which contain only property that is listed on the Expedited Review List in §18.26 of this title (relating to Expedited Review List), the executive director shall complete the technical review of the application and issue the use determination within 30 days of receipt of the required application documents.

(3) For all other applications, within 30 days of receiving the application, the executive director shall either issue a notification requesting additional information or issue the final determination.

(A) If additional information is requested, the notification shall specify the deficiencies and allow the applicant 30 days to provide the requested information. If the applicant does not submit an adequate response, the executive director shall take no [the application will be sent back to the applicant without] further action [by the executive director] and the application fee will be forfeited under §18.35(b) of this title.

(B) If no further action is taken on an application [is sent back to the applicant] under subparagraph (A) of this paragraph, the applicant may re-file the application and pay the appropriate fee as required by §18.35(a) of this title.

(4) The executive director shall determine whether the property is used wholly or partly to control pollution. The executive director is authorized to grant positive use determinations for some or all of the property included in the application that is deemed pollution control property.

(A) If a positive use determination is made, the executive director shall issue a use determination letter to the applicant that describes the proportion of the property that is pollution control property.

(B) If a negative use determination is made, the executive director shall issue a denial letter explaining the reason for the denial.

§18.25. Tier I Eligible Equipment.

[(a)] For the property listed on the Tier I Table located in this subsection that is used wholly for pollution control purposes, a Tier I application is required. A Tier I application must not include any property that is not listed in this subsection or that is used for pollution control purposes at a use percentage that is different than what is listed in the table in this subsection. Unless otherwise designated with a partial use percentage in the Tier I Table of this subsection, if a marketable product is recovered (not including materials that are disposed) from property listed in this subsection, a Tier II application is required.

Figure 30 TAC §18.25 (.pdf)

[Figure 30 TAC §18.25(a)]

§18.26. Expedited Review List.

The Expedited Review List in this section is a nonexclusive list of facilities, devices, or methods for the control of air, water, and/or land pollution. This table consists of the list located in Texas Tax Code, §26.045(f) with changes as authorized by Texas Tax Code, §26.045(g). The commission shall review and add to the items listed in this table only if there is compelling evidence to support the conclusion that the item provides [provide] pollution control benefits. The commission may remove an item from this table only if there is compelling evidence to support the conclusion that the item does not render pollution control benefits. An application that identifies an appropriate item from this list must be submitted as the appropriate tier level described in §18.2 (Relating to Definitions) along with the corresponding fee as listed in §18.35(a) (related to Application Fees).

Figure: 30 TAC §18.26 (.pdf)

[Figure: 30 TAC §18.26]

§18.30. Partial Determinations.

A partial determination must be requested for all property that [is in the figure in §18.26 of this title (relating to Expedited Review List) or that] is not wholly used for pollution control, except for property that is on the Tier I Table located in §18.25 [§18.25(a)] of this title (relating to Tier I Eligible Equipment) at a specified partial use percentage. It is the responsibility of the applicant to propose a reasonable method for calculating a partial determination. The calculation must be documented and included with the application. It is the responsibility of the executive director to review the appropriateness of the proposed method and make the final determination.

§18.35. Application Fees.

(a) Fees shall be remitted with each application for a use determination as required in paragraphs (1) - (2) of this subsection.

(1) Tier I Application. A $150 fee shall be charged for applications which contain only property that is listed in the figure in §18.25 [§18.25(a)] of this title (relating to Tier I Eligible Equipment) or is necessary for the installation or operation of an item listed on the Tier I Table, as long as the application seeks no variance from the percentage listed on the Tier I Table.

(2) Tier II Application. A $500 fee shall be charged for applications for property not listed in the figure located in §18.25 [§18.25(a)] of this title [or that is listed in the figure located in §18.26 of this title (relating to Expedited Review List)].

(b) Fees shall be forfeited for applications for use determination on which the executive director will take no further action under §18.15 of this title (relating to Application Review Schedule) [are sent back under §18.15 of this title (relating to Application Review Schedule)]. An applicant who submits an insufficient fee will receive a deficiency notice in accordance with the procedures in §18.15 of this title. The fee must be remitted with the response to the deficiency notice before the application will be deemed administratively complete. If it is determined that an application was submitted at an inappropriate tier level, the executive director will notify the applicant of the amount in which the fees are deficient or in excess, and if there are deficient fees, the applicant shall remit the appropriate fee described under §18.35(a) before review of the application proceeds. If the deficient fees are not paid in full within 30 days of the applicant being notified of the deficiency, the executive director will take no further action on the application. If the executive director takes no further action on the application, the portion of the fees already paid shall be forfeited by the applicant.

(c) All fees shall be paid by check, money order, electronic funds transfer, or through the commission's payment portal, and shall be made payable to the Texas Commission on Environmental Quality [either be remitted in the form of a check or money order made payable to the Texas Commission on Environmental Quality or by electronic funds transfer by using the commission's ePay system].

(d) The application fee or receipt for payment [check, money order, or electronic funds transfer] must be delivered with the application [to the commission at the address listed on the application form].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 21, 2025.

TRD-202503031

Charmaine K. Backens

Deputy Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: October 5, 2025

For further information, please call: (512) 239-0682