diff --git a/CHANGELOG.md b/CHANGELOG.md
index 5631059..711ba35 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,9 @@
 # rackspace-toolbox Changelog
 
+## [1.7.4](https://github.com/rackspace-infrastructure-automation/rackspace-toolbox/releases/tag/1.7.4) (Mar 11, 2019)
+
+Ensures both plan and apply succeed when working with deleted layer directories.
+
 ## [1.7.3](https://github.com/rackspace-infrastructure-automation/rackspace-toolbox/releases/tag/1.7.3) (Jan 30, 2019)
 
 Ensures changed_layers is always created.
diff --git a/tests/empty_layer.bats b/tests/empty_layer.bats
index 72c9d9e..e15266b 100644
--- a/tests/empty_layer.bats
+++ b/tests/empty_layer.bats
@@ -24,32 +24,30 @@ function teardown() {
 
 @test "plan makes empty layer if layer does not exist" {
   mkdir -p ./workspace
-  printf 'base_network\ndeleted_layer\n' > ./workspace/changed_layers
-  TEST_LOCAL_REPO=$(pwd)
-
-  # ensure base_network looks like a real layer already
-  mkdir -p layers/base_network
-
-  echo '
-  echo "$@"
-  if [ "$1" = "init" ]; then
-    mkdir -p ./.terraform
-    echo "$@" > ./.terraform/init
-  elif [ "$1" = "plan" ]; then
-    for arg in $@; do
-      if (echo $arg | grep -q "^-out="); then
-        output=$(echo $arg | sed "s/^-out=//")
-        pwd > "$output"
-        cat ./.terraform/init >> "$output"
-        echo $@ >> "$output"
-      fi
-    done
-  fi
-  ' > $bin_terraform
-
-  TF_STATE_BUCKET='le-bucket'
-  TF_STATE_REGION='le-region'
-  plan.sh
+  printf 'deleted_layer\n' > ./workspace/changed_layers
+
+  TF_STATE_BUCKET='le-bucket' TF_STATE_REGION='le-region' plan.sh
+
+  # ensure the deleted layer was created
+  [ -d "layers/deleted_layer" ]
+  [ -d "layers/deleted_layer/.terraform" ]
+  [ -f "layers/deleted_layer/deleted.tf" ]
+
+  # ensure the existing layer didn't have special deleted.tf created
+  [ ! -f "layers/base_network/deleted.tf" ]
+}
+
+@test "apply makes empty layer if layer does not exist" {
+  mkdir -p ./workspace
+  printf 'deleted_layer\n' > ./workspace/changed_layers
+
+  mkdir .terraform
+  echo 'init-data' > .terraform/init
+  tar -czf ./workspace/.terraform.deleted_layer.tar.gz .terraform
+  rm -r .terraform
+  echo 'fake-plan' > workspace/terraform.deleted_layer.plan
+
+  TF_STATE_BUCKET='le-bucket' TF_STATE_REGION='le-region' apply.sh
 
   # ensure the deleted layer was created
   [ -d "layers/deleted_layer" ]
diff --git a/toolbox/bin/apply.sh b/toolbox/bin/apply.sh
index e967858..3832d44 100755
--- a/toolbox/bin/apply.sh
+++ b/toolbox/bin/apply.sh
@@ -21,6 +21,13 @@ for LAYER in $CHANGED_LAYERS; do
   ls -la "$WORKSPACE_DIR/.terraform.$LAYER.tar.gz"
   ls -la "$WORKSPACE_DIR/terraform.$LAYER.plan"
 
+  # ensure even deleted layers are applyable
+  if [ ! -d "$LAYERS_DIR/$LAYER" ]; then
+    echo "> Layer directory $LAYERS_DIR/$LAYER was not found, creating an empty version."
+    mkdir -p "$LAYERS_DIR/$LAYER/.terraform"
+    touch "$LAYERS_DIR/$LAYER/deleted.tf"
+  fi
+
   # uncache .terraform for the apply
   cd "$LAYERS_DIR/$LAYER"
   tar xzf "$WORKSPACE_DIR/.terraform.$LAYER.tar.gz"
diff --git a/toolbox/bin/variables.sh b/toolbox/bin/variables.sh
index 1176240..cb9f47e 100755
--- a/toolbox/bin/variables.sh
+++ b/toolbox/bin/variables.sh
@@ -1,7 +1,7 @@
 #!/usr/bin/env sh
 set -eu -o pipefail
 
-echo "Rackspace Toolbox - 1.7.3"
+echo "Rackspace Toolbox - 1.7.4"
 
 check_old() {
   local fake_hostname='github.com.original.invalid'