Valero Energy Corp. said last week it would not appeal Texas’ rejection of its request for a property-tax exemption on refinery equipment.

A successful appeal could have cut the company’s local property tax bills by $130 million a year and required refunds of up to $92 million by several school districts.

Similar exemptions sought by 10 other companies were put on hold until the Valero request was decided.

The Texas Commission on Environmental Quality notified the San Antonio-based company in December that it did not qualify for a partial tax-exemption on expensive hydrotreaters it installed to remove sulfur dioxide from diesel and gasoline fuel.

The commission said the units, which can cost up to $250 million each, did not reduce air pollution at the site as state law requires for the tax exemption.

Valero was seeking the tax break for equipment at refineries in Houston, Texas City, Port Arthur, Corpus Christi and Moore County in the Texas Panhandle.

The Harris County Appraisal District said there are more than $1 billion worth of hydrocrackers on the county’s tax roll. Property tax on the units provides $7 million in revenues and $2 million a year for the Houston Independent School District.

A company spokesman said Valero would not appeal because it had reached agreements with all but one county. Negotiations with Moore are under way, he said.

Valero sought the tax exemption in 2007 after it installed the units under a mandate from the federal Environmental Protection Agency in 2006 that ordered refiners to reduce sulfur dioxide in motor fuels.

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