By Matthew Tresaugue, Houston Chronicle
Texas environmental regulators have rejected Valero Energy Corp.’s request for a tax break that cities, counties and school districts feared would lead to devastating cuts to their budgets.
The Texas Commission on Environmental Quality denied the request because the San Antonio-based oil giant could not show an environmental benefit at its six Texas refineries from the equipment at the center of its application for the tax break.
Texas law provides property tax exemptions for equipment that reduces pollution at the refinery. Valero, however, sought a tax break for hydrotreaters, which are used to produce low-sulfur fuels. In this case, the lower emissions come at the tailpipe.
If TCEQ had granted the exemption, Valero stood to gain up to $130 million a year in property tax relief from cities, counties and school districts, officials said. The company earned $1.2 billion in profits for the most recent quarter, its best quarterly results in four years.
“It’s a nice Christmas gift to many cities, counties and school districts around the state that would have had to shell out millions to a rich oil company,” said Matthew Tejada, executive director of Air Alliance Houston. “Justice and logic can still prevail in the state of Texas.”
State Sen. Rodney Ellis, D-Houston, also praised the decision, saying it was “a major victory for the people and school children of Texas.”
“Texas schools are already struggling with the $5 billion in cuts this (legislative) session,” he said in a statement. “Allowing huge companies to essentially rob our school children of another $100 million would have been unconscionable.”
20 days to appeal
Valero spokesman Bill Day said the company was notified by TCEQ last week, but had no other comment. The company has 20 days from the notice to appeal the agency’s decision.
The TCEQ previously recommended denial of Valero’s request, which was filed in 2007. The agency’s commissioners, however, sent the issue back to staff for further review last year after suggesting that the company should receive some tax relief.
Valero has said that it would be wrong to tax the hydrotreaters, valued at as much as $250 million per unit, because they were purchased and installed to meet federal mandates, not to improve the bottom line.
Some state and local officials disagreed, saying that the equipment is not used to reduce air pollution at the refineries. Plus, the TCEQ has said the removal of additional sulfur in the refining process actually results in a net increase in emissions at the site.
Valero was seeking a tax break for its refineries in Houston, Texas City, Port Arthur, Corpus Christi and Moore County. Eight other companies have applied for the exemption, but their applications were on hold, pending a decision on those from Valero.
Hydrotreaters account for more than $1 billion of taxable property value in Harris County alone. That is nearly $7 million a year toward county services and about $2 million a year for the Houston Independent School District, according to the Harris County Appraisal District.
“This is a significant decision and a correct decision,” said David Hodgins, an attorney at Thompson & Horton, which represents 20 school and community college districts on the tax issue. “We are pleased, but this issue has been appealed before and will likely be again.”