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TCEQ Denies Valero Property Tax Exemptions

The Texas Commission on Environmental Quality (TCEQ) recently rejected Valero Energy Corporation’s request for property tax exemptions that would have required refunds of up to a reported $92 million by affected local taxing entities.

The request relates to property tax exemptions granted for certain pollution control equipment, as authorized by a constitutional amendment (Proposition 2) adopted in 1993. In exemption applications to TCEQ, Valero requested property tax exemptions on hydrotreater equipment that removes sulfur dioxide from motor fuel at their refineries, arguing that the low-sulfur gasoline produced by the equipment provides an environmental benefit when used in vehicles.

TCEQ staff initially denied Valero’s request for the exemptions, but Valero appealed the decision to the TCEQ commissioners who directed staff to reconsider their review for potential partial exemptions. Upon further review, TCEQ’s executive director recently affirmed that the equipment does not qualify for any exemption as it does not provide an environmental benefit at the refinery site as required by regulations.

If TCEQ had granted the exemptions, other refineries could have been eligible for exemptions on similar equipment, leading to a significant loss in property tax revenue for many local taxing entities. Valero has chosen not to appeal the decision to the TCEQ commissioners. TAC staff will continue to monitor any further activity on this matter in the future.