Brazos Electric Power Cooperative, Inc. v. Texas Commission on Environmental Quality and Richard A. Hyde, Executive Director of the Texas Commission on Environmental Quality, 576 S.W.3d 374

Brazos Electric applied for ad valorem tax exemptions under Tex. Tax Code § 11.31 for heat recovery steam generators (HRSGs), equipment used in combined-cycle power plants that capture waste heat and reduce emissions per unit of electricity.
§ 11.31(a)–(b) exempts property "used wholly or partly" to control pollution; § 11.31(k) (the "k-list") mandates the Commission list certain devices (including HRSGs) as pollution-control property.
The statute sets an administrative process: applicants submit information, the TCEQ Executive Director must determine whether property is pollution-control property and the proportion so used, and applicants can appeal negative determinations to the Commission. Tiered rules and a CAP (cost analysis procedure) formula govern mixed-use (production + pollution control) items.
After rule changes, Brazos filed Tier III applications using the CAP; the Executive Director issued negative use determinations for HRSGs (treating them as used solely for production). The Commission affirmed; courts below split, with one appellate panel (Freestone) holding k-list items cannot be 0% pollution-control.
The Texas Supreme Court granted review to decide whether § 11.31 permits the Commission to deny an exemption for HRSGs despite their inclusion on the k-list.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 11.31 requires a positive use determination for HRSGs on the k-list	Brazos: inclusion on § 11.31(k) means HRSGs are per se at least partly pollution-control property and the Executive Director cannot issue a 0% determination	TCEQ: it retains discretion to determine, case-by-case, whether a k-list item meets constitutional/statutory standards and may issue negative determinations	Held: Inclusion on the k-list and § 11.31(m) mandate a determination that HRSGs are at least partly pollution-control property; the Executive Director cannot issue a 0% (wholly non-exempt) determination for k-list items unless the Commission removes the item under § 11.31(l)

Freestone Power Generation, LLC v. Tex. Comm’n on Envtl. Quality, 564 S.W.3d 1 (Tex. App.—Austin 2017) (k-list property cannot be deemed 100% non-pollution-control)
Tex. Comm’n on Envtl. Quality v. City of Waco, 413 S.W.3d 409 (Tex. 2013) (abuse-of-discretion standard for certain agency decisions)
Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011) (agency abuses discretion by failing to apply law correctly)
Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm’n, 518 S.W.3d 318 (Tex. 2017) (statutory interpretation reviewed de novo)
N. Alamo Water Supply Corp. v. Willacy Cty. Appraisal Dist., 804 S.W.2d 894 (Tex. 1991) (tax exemptions construed strictly; doubts resolved against exemption)
TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432 (Tex. 2011) (agency interpretations warrant deference only when statute ambiguous)