tax relief for pollution control property advisory committee february 25, 2010

Tax Relief for Pollution Tax Relief for Pollution Control Property Advisory Control Property Advisory

CommitteeCommittee

February 25, 2010February 25, 2010

Advisory Committee MembersAdvisory Committee Members

Mr. John E. Nichols, Texas Chemical Council, Mr. John E. Nichols, Texas Chemical Council, Representing IndustryRepresenting Industry Director of U.S. State & Local Tax, Dow Chemical Director of U.S. State & Local Tax, Dow Chemical

CompanyCompany Dow is responsible for approximately 6% of the Dow is responsible for approximately 6% of the

Use Determination applicationsUse Determination applications Participated in drafting HB 1920 and the Participated in drafting HB 1920 and the

amendment to Article 8, Section 1-l of the Texas amendment to Article 8, Section 1-l of the Texas Constitution Constitution


Mr. Bob Adair, Texas Oil and Gas Mr. Bob Adair, Texas Oil and Gas Association, Representing IndustryAssociation, Representing Industry Senior Consultant, Corporate Real Estate – Senior Consultant, Corporate Real Estate –

Property Tax, Real Estate, Right of Way and Property Tax, Real Estate, Right of Way and Claims, ConocoPhillips CompanyClaims, ConocoPhillips Company

23 years of experience in corporate property 23 years of experience in corporate property taxation taxation


Mr. Paul Coon, Association of Electric Mr. Paul Coon, Association of Electric Companies of Texas, Representing IndustryCompanies of Texas, Representing Industry Air Permitting Manager, LuminantAir Permitting Manager, Luminant 29 years of experience in the utility industry29 years of experience in the utility industry


Mr. Michael Nasi, Clean Coal Foundation, Mr. Michael Nasi, Clean Coal Foundation, Representing IndustryRepresenting Industry Partner, Jackson Walker, L.L.P. Partner, Jackson Walker, L.L.P. Founded Jackson Walker’s Climate Change and Founded Jackson Walker’s Climate Change and

Carbon Management GroupCarbon Management Group Serves as the General Counsel to the Clean Coal Serves as the General Counsel to the Clean Coal

Foundation of TexasFoundation of Texas


Mr. Robert Castor, Freescale Semiconductor, Mr. Robert Castor, Freescale Semiconductor, Inc., Representing IndustryInc., Representing Industry Environmental Compliance, Awareness & Environmental Compliance, Awareness &

Communications, Freescale Semiconductor, Inc. Communications, Freescale Semiconductor, Inc. Responsible for maintaining compliance with Responsible for maintaining compliance with

federal, state, and local environmental regulations.federal, state, and local environmental regulations.


Mr. Gregory Maxim, Duff & Phelps, L.L.C., Mr. Gregory Maxim, Duff & Phelps, L.L.C., Representing IndustryRepresenting Industry Director, Duff & Phelps, L.L.C.Director, Duff & Phelps, L.L.C. More than 20 years of valuation and consulting More than 20 years of valuation and consulting

experience within the energy industryexperience within the energy industry Certified property tax consultantCertified property tax consultant


Mr. Roland Bieber, Jefferson County Mr. Roland Bieber, Jefferson County Appraisal District, Representing Appraisal Appraisal District, Representing Appraisal DistrictsDistricts Chief Appraiser, Jefferson County Appraisal Chief Appraiser, Jefferson County Appraisal

DistrictDistrict 25 years of experience as the Chief Appraiser for 25 years of experience as the Chief Appraiser for

Jefferson County Appraisal DistrictJefferson County Appraisal District


Mr. C. Wayne Frazell, Pritchard & Abbot, Mr. C. Wayne Frazell, Pritchard & Abbot, Inc., Representing Appraisal DistrictsInc., Representing Appraisal Districts Engineer/Appraiser for Engineering Services, Engineer/Appraiser for Engineering Services,

Pritchard & Abbot, Inc. Pritchard & Abbot, Inc. Mr. Frazell has participated in the review of the Mr. Frazell has participated in the review of the

Predetermined Equipment List Workgroup and the Predetermined Equipment List Workgroup and the Advisory Group on Heat Recovery Steam Advisory Group on Heat Recovery Steam GeneratorsGenerators


Mr. Eddie Arnold, County Commissioner, Mr. Eddie Arnold, County Commissioner, Precinct No. 1, Jefferson County, Representing Precinct No. 1, Jefferson County, Representing Taxing UnitTaxing Unit Elected to Jefferson County Commissioner’s Court Elected to Jefferson County Commissioner’s Court

on January 1, 2005on January 1, 2005 Member of East Texas Regional Planning Member of East Texas Regional Planning

Commission, Texas Association of Counties, and Commission, Texas Association of Counties, and Conference of Urban CountiesConference of Urban Counties


Mr. Don Lee, Executive Director, Texas Mr. Don Lee, Executive Director, Texas Conference of Urban Counties, Representing Conference of Urban Counties, Representing Taxing UnitsTaxing Units 15 years experience as Executive Director of 15 years experience as Executive Director of

Texas Conference of Urban CountiesTexas Conference of Urban Counties The Conference of Urban Counties is an non-profit The Conference of Urban Counties is an non-profit

organization composed of 35 member counties, organization composed of 35 member counties, representing nearly 80% of the population of representing nearly 80% of the population of TexasTexas


Mr. Bennett Sandlin, Texas Municipal League, Mr. Bennett Sandlin, Texas Municipal League, Representing Taxing UnitsRepresenting Taxing Units General Counsel, Texas Municipal LeagueGeneral Counsel, Texas Municipal League The Texas Municipal League serves the needs and The Texas Municipal League serves the needs and

advocates the interests of its 1,100 member citiesadvocates the interests of its 1,100 member cities


Mr. Cyrus Reed, Lone Star Chapter, Sierra Mr. Cyrus Reed, Lone Star Chapter, Sierra Club, Representing Environmental GroupsClub, Representing Environmental Groups Conservation Director, Lone Star Chapter, Sierra Conservation Director, Lone Star Chapter, Sierra

ClubClub The Lone Star Chapter of the Sierra Club is an The Lone Star Chapter of the Sierra Club is an

outdoor recreation and conservation organization outdoor recreation and conservation organization representing approximately 24,000 Texans in 13 representing approximately 24,000 Texans in 13 regional groups located throughout the state. regional groups located throughout the state.


Mr. Leo Scherrer, Technical ExpertMr. Leo Scherrer, Technical Expert Licensed Professional EngineerLicensed Professional Engineer Licensed Senior Property Tax Consultant Licensed Senior Property Tax Consultant 19 years of experience in regulatory compliance at 19 years of experience in regulatory compliance at

Dow Chemical CompanyDow Chemical Company 13 years of experience as Senior Property Tax 13 years of experience as Senior Property Tax

Specialist at Dow Chemical CompanySpecialist at Dow Chemical Company

Committee ProceduresCommittee Procedures

Terms Terms Advisory committee members shall serve Advisory committee members shall serve

staggered four-year terms. Initially, six of the staggered four-year terms. Initially, six of the thirteen members shall serve two-year terms while thirteen members shall serve two-year terms while the remaining seven members shall serve four-year the remaining seven members shall serve four-year terms; to be decided by the drawing of lots during terms; to be decided by the drawing of lots during the first committee meeting.the first committee meeting.

Committee ProceduresCommittee ProceduresTax Relief for Pollution Control Property Advisory Committee BylawsTax Relief for Pollution Control Property Advisory Committee Bylaws

ARTICLE 1 – PURPOSEARTICLE 1 – PURPOSE1.1. The purpose of the Tax Relief for Pollution Control Property Advisory Committee (the Committee) is The purpose of the Tax Relief for Pollution Control Property Advisory Committee (the Committee) is

to provide guidance to the Commissioners of the Texas Commission on Environmental Quality to provide guidance to the Commissioners of the Texas Commission on Environmental Quality (TCEQ) on matters relating to property tax exemptions for pollution control property.(TCEQ) on matters relating to property tax exemptions for pollution control property.

ARTICLE 2 – MEMBERSHIPARTICLE 2 – MEMBERSHIP1.1. Number of MembersNumber of Members: The size of the Committee may vary from time to time, but may not exceed : The size of the Committee may vary from time to time, but may not exceed

thirteen members. The Committee will be comprised of members of industry, appraisal districts, taxing thirteen members. The Committee will be comprised of members of industry, appraisal districts, taxing units, environmental groups, and members who are not representatives of any of the aforementioned units, environmental groups, and members who are not representatives of any of the aforementioned entities but have substantial technical expertise in pollution control technology and environmental entities but have substantial technical expertise in pollution control technology and environmental engineering.engineering.

2.2. Terms of AppointmentTerms of Appointment: Members of the Committee are appointed by and serve at the pleasure of the : Members of the Committee are appointed by and serve at the pleasure of the Commission. Members of the Committee will serve staggered four-year terms and may be Commission. Members of the Committee will serve staggered four-year terms and may be reappointed.reappointed.

3.3. Resignation and Replacement AppointmentResignation and Replacement Appointment: If a member of the Committee resigns, dies, becomes : If a member of the Committee resigns, dies, becomes incapacitated, is removed by the Commission, otherwise vacate his or her position, or becomes incapacitated, is removed by the Commission, otherwise vacate his or her position, or becomes ineligible prior to the expiration of his or her term, the Commission shall appoint a replacement who ineligible prior to the expiration of his or her term, the Commission shall appoint a replacement who shall serve the remainder of the unexpired term.shall serve the remainder of the unexpired term.


ARTICLE 2 – MEMBERSHIPARTICLE 2 – MEMBERSHIP4.4. AttendanceAttendance: A record of attendance at each meeting of the Committee will be made. If a member : A record of attendance at each meeting of the Committee will be made. If a member

misses three consecutive regularly scheduled meetings or more than half of all of the regularly misses three consecutive regularly scheduled meetings or more than half of all of the regularly scheduled meetings in a one-year period, that member automatically vacates his or her position on the scheduled meetings in a one-year period, that member automatically vacates his or her position on the Committee and the Commissioners shall appoint a replacement Committee and the Commissioners shall appoint a replacement

ARTICLE 3 – PRESIDING OFFICERARTICLE 3 – PRESIDING OFFICER1.1. Presiding OfficerPresiding Officer: The Committee shall elect from its members a Presiding Officer. The Presiding : The Committee shall elect from its members a Presiding Officer. The Presiding

Officer shall preside over the Committee, develop meeting agendas, and provide written reports to the Officer shall preside over the Committee, develop meeting agendas, and provide written reports to the Commissioners.Commissioners.

2.2. Terms of OfficeTerms of Office: Elections shall be held annually or at the request of a majority of the members of the : Elections shall be held annually or at the request of a majority of the members of the Committee. The Presiding Officer may be reappointed.Committee. The Presiding Officer may be reappointed.

ARTICLE 4 – MEETINGSARTICLE 4 – MEETINGS1.1. Meeting ScheduleMeeting Schedule: Meetings will be held quarterly or at the call of the Presiding Officer or the : Meetings will be held quarterly or at the call of the Presiding Officer or the

Commissioners. Commissioners.


ARTICLE 4 – MEETINGSARTICLE 4 – MEETINGS2.2. Agenda DevelopmentAgenda Development: Meeting agendas will be developed by the Presiding Officer with assistance : Meeting agendas will be developed by the Presiding Officer with assistance

from Executive Director staff. Any member wishing to include an item on the agenda has the from Executive Director staff. Any member wishing to include an item on the agenda has the responsibility to draft and present the proposed agenda item to the Presiding Officer for approval and responsibility to draft and present the proposed agenda item to the Presiding Officer for approval and inclusion. Agendas will typically adhere to the following fixed order: 1. Call to order, 2. Roll call of inclusion. Agendas will typically adhere to the following fixed order: 1. Call to order, 2. Roll call of members present, 3. Reading of the minutes from the last meeting, 4. Old business, 5. New business, 6. members present, 3. Reading of the minutes from the last meeting, 4. Old business, 5. New business, 6. Announcements, and 7. Adjournment. Announcements, and 7. Adjournment.

3.3. Public ParticipationPublic Participation: Committee meetings will be open to the public. Members of the public will be : Committee meetings will be open to the public. Members of the public will be asked to sign an attendance sheet and state their purpose for attending. Comments from members of asked to sign an attendance sheet and state their purpose for attending. Comments from members of the public may be permitted at the discretion of the Presiding Officer. the public may be permitted at the discretion of the Presiding Officer.

ARTICLE 5 – MOTIONS AND VOTINGARTICLE 5 – MOTIONS AND VOTING1.1. Obtaining the FloorObtaining the Floor: Members who wish to obtain the floor shall wait until the preceding speaker has : Members who wish to obtain the floor shall wait until the preceding speaker has

finished, rise and address the Presiding Officer, and wait to be recognized by the Presiding Officer.finished, rise and address the Presiding Officer, and wait to be recognized by the Presiding Officer.

2.2. MotionsMotions: Motions should be stated in the affirmative (i.e., “I move that we…,” not “I move that we do : Motions should be stated in the affirmative (i.e., “I move that we…,” not “I move that we do not…”). The Presiding Officer will call for a second. Wait for a member to second the motion. If not…”). The Presiding Officer will call for a second. Wait for a member to second the motion. If there is no second, the motion will be lost. there is no second, the motion will be lost.


ARTICLE 5 – MOTIONS AND VOTINGARTICLE 5 – MOTIONS AND VOTING3.3. Establishing a MajorityEstablishing a Majority: For administrative decisions, such as the election of the Presiding Officer or : For administrative decisions, such as the election of the Presiding Officer or

amending Committee bylaws, a majority is established by a majority of all members of the Committee. amending Committee bylaws, a majority is established by a majority of all members of the Committee. For all other matters, a majority is established by a simple majority of all members present. For all other matters, a majority is established by a simple majority of all members present.

4.4. VotingVoting: The Committee will vote on any issue requiring advice to the Commissioners. All votes will : The Committee will vote on any issue requiring advice to the Commissioners. All votes will be taken by roll call, with each member answering “aye” or “no” when his or her name is called by the be taken by roll call, with each member answering “aye” or “no” when his or her name is called by the Presiding Officer. Consensus is not required. Executive Director staff will assist the Presiding Officer Presiding Officer. Consensus is not required. Executive Director staff will assist the Presiding Officer in preparing the Committee’s written recommendation to the Commissioners. If there is not consensus in preparing the Committee’s written recommendation to the Commissioners. If there is not consensus among all members of the Committee, minority members are encouraged to submit minority reports for among all members of the Committee, minority members are encouraged to submit minority reports for the Commissioners’ consideration. Executive Director staff will assist minority members in drafting the Commissioners’ consideration. Executive Director staff will assist minority members in drafting minority reports.minority reports.

ARTICLE 6 – RECORDS AND REPORTSARTICLE 6 – RECORDS AND REPORTS1.1. Periodic Reports to the CommissionPeriodic Reports to the Commission: When requested by the Commissioners the Committee shall : When requested by the Commissioners the Committee shall

provide written reports containing their recommendations regarding matters associated with the tax provide written reports containing their recommendations regarding matters associated with the tax relief for pollution control property program. relief for pollution control property program.

2.2. Annual Reports to the CommissionAnnual Reports to the Commission: Unless otherwise directed, the Committee shall report to the : Unless otherwise directed, the Committee shall report to the Commissioners a minimum of once per year. The report must be sufficient to allow the Commissioners a minimum of once per year. The report must be sufficient to allow the Commissioners to properly evaluate the Committee’s work, usefulness, and the costs related to the Commissioners to properly evaluate the Committee’s work, usefulness, and the costs related to the Committee’s existence. Committee’s existence.


ARTICLE 6 – RECORDS AND REPORTSARTICLE 6 – RECORDS AND REPORTS3.3. Records of Committee MeetingsRecords of Committee Meetings: Executive Director staff shall audio record each Committee meeting. : Executive Director staff shall audio record each Committee meeting.

Executive Director staff shall also record and maintain the attendance and minutes of each Committee Executive Director staff shall also record and maintain the attendance and minutes of each Committee meeting. Executive Director staff shall maintain a record of actions taken at Committee meetings and meeting. Executive Director staff shall maintain a record of actions taken at Committee meetings and shall distribute approved attendance lists, meeting minutes, and other Committee documents to the shall distribute approved attendance lists, meeting minutes, and other Committee documents to the Commissioners and Committee members upon request. Minutes and Committee reports will be Commissioners and Committee members upon request. Minutes and Committee reports will be maintained in a form and location that is easily accessible to the public, including on the TCEQ’s maintained in a form and location that is easily accessible to the public, including on the TCEQ’s website. website.

Committee ProceduresCommittee Procedures

Presiding OfficerPresiding Officer The Committee shall elect from its members a The Committee shall elect from its members a

Presiding Officer, who shall report the Presiding Officer, who shall report the Committee’s advice and attendance in writing to Committee’s advice and attendance in writing to the Commissioners. the Commissioners.

Action ItemsAction ItemsAmending 30 TAC Ch. 17Amending 30 TAC Ch. 17

Revised Cost Analysis Procedure (CAP)Revised Cost Analysis Procedure (CAP)

(PCF x CCN) – CCO – MP(PCF x CCN) – CCO – MP x 100 x 100

CCNCCN


Revised Definitions Revised Definitions Marketable Product – Anything produced or recovered Marketable Product – Anything produced or recovered

using pollution control property that is sold as a product, is using pollution control property that is sold as a product, is accumulated for later use, or is used as a raw material in a accumulated for later use, or is used as a raw material in a manufacturing process. Marketable product includes, but manufacturing process. Marketable product includes, but is not limited to, anything that is recovered or produced is not limited to, anything that is recovered or produced using the pollution control property and that is sold, using the pollution control property and that is sold, accumulated for later use, or used in a manufacturing accumulated for later use, or used in a manufacturing process (including at a different facility).process (including at a different facility).


Revised DefinitionsRevised Definitions Capital Cost Old – This is the cost of Capital Cost Old – This is the cost of the equipment that is the equipment that is

being or has been replaced by the equipment covered in an being or has been replaced by the equipment covered in an application. In a situation where a piece of equipment is application. In a situation where a piece of equipment is not replacing previous equipment, capital cost old can be not replacing previous equipment, capital cost old can be the cost ofthe cost of comparable equipment or process without the comparable equipment or process without the pollution control feature.pollution control feature.


Equipment and Categories List (ECL)Equipment and Categories List (ECL) Every three years, the ECL must be reviewed and updated.Every three years, the ECL must be reviewed and updated.

Items may be added if there is compelling evidence that the Items may be added if there is compelling evidence that the

item provides pollution control benefits and a justifiable item provides pollution control benefits and a justifiable pollution control percentage is calculable.pollution control percentage is calculable.

Items may be removed from the list only if there is Items may be removed from the list only if there is compelling evidence to support the conclusion that the item compelling evidence to support the conclusion that the item does not render pollution control benefits.does not render pollution control benefits.


Environmental Benefit at the Site RequirementEnvironmental Benefit at the Site Requirement The Commissioners and the regulated community has The Commissioners and the regulated community has

requested that the TCEQ provide additional guidance on requested that the TCEQ provide additional guidance on complying with the environmental benefit at the site complying with the environmental benefit at the site requirement.requirement.

How can the current rule language be amended to clarify How can the current rule language be amended to clarify the environmental benefit at the site requirement? the environmental benefit at the site requirement?

tax relief for pollution control property advisory committee february 25, 2010

Documents

texas association of

texas oil

texas chemical council

industry director of

advisory group

member counties

luminant29 years of

consulting experience