88R8840 CJD-F
By: Shine H.B. No. 3894
A BILL TO BE ENTITLED
AN ACT
relating to an exemption from sales and use taxes for battery energy
storage systems.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 151.318, Tax Code, is amended by
amending Subsection (a) and adding Subsection (g) to read as
follows:
(a) The following items are exempted from the taxes imposed
by this chapter if sold, leased, or rented to, or stored, used, or
consumed by a manufacturer:
(1) tangible personal property that will become an
ingredient or component part of tangible personal property
manufactured, processed, or fabricated for ultimate sale;
(2) tangible personal property directly used or
consumed in or during the actual manufacturing, processing, or
fabrication of tangible personal property for ultimate sale if the
use or consumption of the property is necessary or essential to the
manufacturing, processing, or fabrication operation and directly
makes or causes a chemical or physical change to:
(A) the product being manufactured, processed,
or fabricated for ultimate sale; or
(B) any intermediate or preliminary product that
will become an ingredient or component part of the product being
manufactured, processed, or fabricated for ultimate sale;
(3) services performed directly on the product being
manufactured prior to its distribution for sale and for the purpose
of making the product more marketable;
(4) actuators, steam production equipment and its
fuel, in-process flow through tanks, cooling towers, generators,
heat exchangers, transformers and the switches, breakers,
capacitor banks, regulators, relays, reclosers, fuses,
interruptors, reactors, arrestors, resistors, insulators,
instrument transformers, and telemetry units that are related to
the transformers, electronic control room equipment, computerized
control units, pumps, compressors, and hydraulic units, that are
used to power, supply, support, or control equipment that qualifies
for exemption under Subdivision (2) or (5) or to generate
electricity, chilled water, or steam for ultimate sale; battery
energy storage systems used to generate, process, or store
electricity for distribution and sale, regardless of the origin of
the electricity used to charge the battery energy storage system;
transformers located at an electric generating facility that
increase the voltage of electricity generated for ultimate sale,
the electrical cable that carries the electricity from the electric
generating equipment to the step-up transformers, and the switches,
breakers, capacitor banks, regulators, relays, reclosers, fuses,
interruptors, reactors, arrestors, resistors, insulators,
instrument transformers, and telemetry units that are related to
the step-up transformers; and transformers that decrease the
voltage of electricity generated for ultimate sale and the
switches, breakers, capacitor banks, regulators, relays,
reclosers, fuses, interruptors, reactors, arrestors, resistors,
insulators, instrument transformers, and telemetry units that are
related to the step-down transformers;
(5) tangible personal property used or consumed in the
actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if the use or consumption of the
property is necessary and essential to a pollution control process;
(6) lubricants, chemicals, chemical compounds, gases,
or liquids that are used or consumed during the actual
manufacturing, processing, or fabrication of tangible personal
property for ultimate sale if their use or consumption is necessary
and essential to prevent the decline, failure, lapse, or
deterioration of equipment exempted by this section;
(7) gases used on the premises of a manufacturing
plant to prevent contamination of raw material or product, or to
prevent a fire, explosion, or other hazardous or environmentally
damaging situation at any stage in the manufacturing process or in
loading or storage of the product or raw material on premises;
(8) tangible personal property used or consumed during
the actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if the use or consumption of the
property is necessary and essential to a quality control process
that tests tangible personal property that is being manufactured,
processed, or fabricated for ultimate sale;
(9) safety apparel or work clothing that is used
during the actual manufacturing, processing, or fabrication of
tangible personal property for ultimate sale if:
(A) the manufacturing process would not be
possible without the use of the apparel or clothing; and
(B) the apparel or clothing is not resold to the
employee;
(10) tangible personal property used or consumed in
the actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if the use or consumption of the
property is necessary and essential to comply with federal, state,
or local laws or rules that establish requirements related to
public health; and
(11) tangible personal property specifically
installed to:
(A) reduce water use and wastewater flow volumes
from the manufacturing, processing, fabrication, or repair
operation;
(B) reuse and recycle wastewater streams
generated within the manufacturing, processing, fabrication, or
repair operation; or
(C) treat wastewater from another industrial or
municipal source for the purpose of replacing existing freshwater
sources in the manufacturing, processing, fabrication, or repair
operation.
(g) In this section, "battery energy storage system" means
an electrochemical device that processes, stores, and transforms
electrical energy into chemical energy and processes and transforms
chemical energy back into electrical energy for distribution and
sale. The term includes cells, battery modules, racks, battery
management systems, invertors or power conversion systems,
controllers, ventilation and cooling systems, fire suppression
systems, containers or enclosures, and ancillary equipment
including breakers, cabling, junction boxes, and lighting.
SECTION 2. The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
SECTION 3. This Act takes effect September 1, 2023.