SHELL OIL COMPANY, APPELLANT V. DIRECTOR OF REVENUE OF MISSOURI

   No. 87-609

   In the Supreme Court of the United States

   October Term, 1987

   On Appeal from the Supreme Court of Missouri

   Brief for the United States as Amicus Curiae Supporting Appellee

   This brief is submitted in response to the Court's order inviting
the Solicitor General to express the views of the United States.

            TABLE OF CONTENTS
   Question Presented
   Statement
   Discussion
   Conclusion

                          QUESTION PRESENTED

   Whether the imposition of county sales taxes on appellant's sales
of aviation fuel to various airlines at an airport within the county
violated the Commerce Clause or the Fourteenth Amendment.

                               STATEMENT

   1. Appellant Shell Oil Company is a Delaware corporation with its
principal business office in Houston, Texas.  It has long been engaged
in the business of marketing various petroleum products throughout
most of the United States.  For the period at issue in this case
(1978-1981), appellant entered into contracts for the sale of aviation
fuel to a number of airlines, some of which used Lambert-St. Louis
International Airport in St. Louis County, Missouri.  Each contract
was executed by appellant in Houston and included an estimated annual
gallonage of fuel to be sold.  Stip. paras. 1-4, 6;  App., infra,
1a-2a.  /1/

   Appellant did not maintain, operate, or own any aviation fuel
storage facility at the St. Louis County airport.  Nor did it maintain
anywhere in Missouri any administrative or sales office, store,
warehouse, or similar facility that participated in the sale or
delivery of aviation fuel to the airlines at that airport.  Stip.
paras. 15, 19;  App., infra, 3a-4a.  Rather, appellant sold the
contracted-for fuel to the airlines through a series of fuel "exchange
agreements" with Amoco Oil Company (Amoco).  Those agreements,
together with appellant's airline contracts, allowed appellant to sell
and to deliver aviation fuel to the airlines at the airport via fuel
facilities at the airport maintained by Allied Aviation Fueling
Company of St. Louis, Inc. (Allied), and a pipeline from Amoco's
refinery at Wood River, Illinois.  Stip. paras. 5, 9;  App., infra,
2a, 3a.

   An airline's purchase of particular quantities of fuel from
appellant began with Allied, a company with which appellant had no
contractual relationship and in which appellant had no financial
interest.  Allied operated an aviation fuel storage and distribution
system at the airport;  it contracted with the airlines to render
fueling services to them and was directly paid by them.  Upon
receiving instructions from the airlines, Allied employees decided
when to request delivery of fuel, the quantity of fuel to be
delivered, what airlines would receive particular deliveries, and when
deliveries would begin and end.  Stip. paras. 12, 13, 17;  App.,
infra, 3a, 4a.

   The aviation fuel thus ordered through Allied was obtained from the
Amoco refinery in Wood River, Illinois, and transported to airport
storage tanks through a pipeline.  /2/ A meter owned by Amoco at the
airport end of the pipeline was read by Allied employees, who recorded
the quantity of fuel delivered into storage, tendered the meter ticket
to the airline customer, and sent a copy to appellant's Chicago
office, which then billed the airline purchasing the fuel.  Stip.
paras. 5, 9, 11, 12, 16, 20;  App., infra, 2a, 3a, 4a.  Pursuant to
appellant's contracts with Amoco and with the airlines, appellant both
obtained and transferred title to the fuel at the airport:  as
aviation fuel flowed through the meter at the airport and was
delivered into storage, title to the fuel passed instantaneously from
Amoco to appellant and then to the airline for which the fuel had been
ordered.  Stip. paras. 12-14, 17, 18;  App., infra, 3a, 4a.

   2. The State of Missouri has long imposed a statewide sales tax (at
three percent from 1978 through 1979, and four percent thereafter) on
the sale of tangible personal property at retail in the State.  Mo.
Ann. Stat. section 144.020.1(1) (Vernon 1976 & Supp. 1988).  /3/ The
seller is primarily responsible for payment of the tax, but the seller
is also generally directed to add the tax to the sale price to the
purchaser (id. sections 144.021, 144.080, 144.285).  Appellee Director
of Revenue collects the tax (id. section 32.028.1 (Vernon Supp.
1988)).  /4/

   Pursuant to Mo. Ann. Stat. section 66.600 (Vernon Supp. 1987), St.
Louis County may add to the state sales tax a county-wide sales tax of
its own, at a rate of one percent.  /5/ Pursuant to Mo. Ann. Stat.
section 94.605 (Vernon Supp. 1987), St. Louis County (and the cities
of St. Louis and Kansas City) may also impose a transportation sales
tax of up to 1/2 percent.  Both taxes may be imposed only on sales
subject to the state sales tax and only in the manner of, and in
accordance with the rules governing, that tax.  Id. sections 66.605,
66.610, 94.605, 94.610.  St. Louis County adopted the authorized one
percent supplemental sales tax in 1977.  J.S. App. 36a (St. Louis
County, Mo., Ordinance 8378 (Sept. 13, 1977)).  It adopted the
authorized transportation tax in 1973.  J.S. App. 35a-36a (St. Louis
County, Mo., Ordinance 6792 (June 28, 1973)).

   Sections 66.615 and 94.620, Mo. Ann. Stat. (Vernon Supp. 1987),
contain identical language concerning where particular sales are
deemed to occur for purposes of the two county taxes.  With exceptions
not relevant here, each provides that "all retail sales shall be
deemed to be consummated at the place of business of the retailer."
Each further provides:  "In the event a retailer has more than one
place of business in this state which participates in the sale, the
sale shall be deemed to be consummated at the place of business of the
retailer where the initial order for the tangible personal property is
taken, even though the order must be forwarded elsewhere for
acceptance, approval of credit, shipment or billing."

   3. Appellant paid the statewide "sales or use taxes" for aviation
fuel delivered at the airport and has not contested its liability for
such taxes (Stip. para. 24;  App., infra, 5a).  /6/ Appellant denied
its liability for the two taxes imposed by St. Louis County on the
same fuel transactions (ibid.).  Appellee Director, taking the
contrary view, assessed appellant for the two county taxes for the
period from March 1, 1978, through February 28, 1981, in the aggregate
amount of $103,009.53, including interest (Stip. paras. 21, 22;  App.,
infra, 4a-5a).  /7/

   Appellant appealed to the State Administrative Hearing Commission,
which agreed with appellee's assessment (J.S. App. 14a-24a).  After
making findings based on the stipulated facts (id. at 15a-17a), the
Commission concluded that appellant's contracts with the airlines were
merely contracts for future sales (id. at 22a-23a), that the actual
sales and transfers took place at the airport upon each airline's
"request for service from Allied" (id. at 23a-24a), and that appellant
accordingly had a "place of business" in the county, within the terms
of Mo. Ann. Stat. sections 66.615 and 94.620 (Vernon Supp. 1987) (J.S.
App. 23a-24a).  The Commission did not discuss appellant's
constitutional challenge to the imposition of the county taxes.

   A divided Supreme Court of Missouri affirmed (J.S. App. 1a-12a).
After observing that the airport fuel sales were subject to the
Missouri sales tax because title passed at the airport (id. at 4a-5a),
the court rejected appellant's "principal contention" -- that its
sales were exempt under the "place of business" provisions, Mo. Ann.
Stat. sections 66.615, 94.620 (Vernon Supp. 1987), "because it (did)
not maintain a place of business in St. Louis County" (J.S. App. 1a).
The court rules that the relied-on provisions, which state that
"retail sales shall be consummated at the place of business of the
retailer," apply only to transactions that might have a nexus with
more than one state subdivision.  They do not apply here, the court
held, because "(t)hese sales (were) entirely consummated in St. Louis
County where() (appellant), through its agents, deliver(ed) the
aviation fuel, and passe(d) title to the purchasers and ultimate
users, the airlines with whom it has contracted." Id. at 5a.

   Based on the same view of the fuel sales, the court also rejected
appellant's Commerce Clause and Due Process Clause challenges (J.S.
App. 7a-8a).  "Since this Court has found the sale(s) to be intrastate
in character, this challenge evaporates.  * * * The sale(s) themselves
are inextricably linked to St. Louis County.  Through its agent,
(appellant) maintains a continuing presence at Lambert Field by which
it fulfills its contracts with airlines which operate there." Ibid.
/8/ The dissenting judges concluded (id. at 9a-12a), to the contrary,
that appellant's sales had an insufficient connection to Missouri.

                              DISCUSSION

   Appellant contends in this Court that the Commerce Clause (J.S.
12-18), the Fourteenth Amendment Due Process Clause (id. at 20), and
the Equal Protection Clause (id. at 21-22) prohibit imposition of the
St. Louis County taxes on its sales of fuel to the Lambert Field
airlines.  As appellant recognizes (id. at 12), the Commerce Clause
contention is governed by the standards summarized by this Court in
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, (1977):  the
taxed activity must have a nexus with the taxing State;  the measure
of the tax must be fairly related to the State's protections and
services;  the tax must be fairly apportioned so as to protect against
multiple taxation;  and the tax must not discriminate against
interstate commerce.  See, e.g., Wardair Cananda Inc. v. Florida Dep't
of Revenue, 477 U.S. 1, 8 (1986);  Commonwealth Edison Co. v. Montana,
453 U.S. 609, 622-626 (1981).  If, as we will show, those standards
are easily met in this case, appellant's other challenges fail as
well;  for, as appellant recognizes (J.S. 20), due process
requirements are met here if Commerce Clause requirements are met
(see, e.g., Exxon Corp. v. Department of Revenue, 447 U.S. 207, 220,
227-228 (1980)), and appellant's equal protection argument (J.S.
21-22), which in any event appellant never raised in the state courts
(id. at 11 n.7), is at best simply a version of the Commerce Clause
discrimination argument.  /9/

   If we put temporarily to one side the question of discrimination,
this Court's decisions on state sales taxes (i.e., taxes on sellers
imposed on sales and measured by sale price) make clear that the nexus
fair relationship, and fair apportionment requirements of the
four-part Complete Auto test are satisfied if enough significant
aspects of the taxed sales are connected with the taxing State that
the sales may be said to take place in that State, so that no other
State may tax those sales.  See Tyler Pipe Indus., Inc. v. Washington
State Dep't of Revenue, No. 85-1963 (June 23, 1987), slip op. 18 (only
one State may tax sale).  Although it would be consistent with this
Court's decisions to identify the place of passage of title, or
ownership, as the single determinative factor that fixes the location
for a particular sale (see U.C.C. section 2-106(1) ("sale" is "the
passing of title from the seller to the buyer")), this Court has not
yet found it necessary, in this relatively uncontroversial area, to
adopt such a test.  Rather, the Court's decisions have focused on
several aspects of sales -- principally, order taking, delivery, and
title passage -- without expressly indicating whether one aspect might
be determinative.  See American Oil Co. v. Neill, 380 U.S. 451 (1965)
(sales tax invalid where invitations for bids, submission of bids,
delivery, and passage of title all occurred out-of-State);  Norton Co.
v. Department of Revenue, 340 U.S. 534 (1951) (state sales tax valid
as applied to sales having some relation to in-State retail outlets,
but invalid where in-State customers sent orders to an out-of-State
office, which shipped goods directly to the customer, with no
involvement of the in-State retail outlet);  McLeod v. J.E. Dilworth
Co., 322 U.S. 327, 330 (1944) (sales tax invalid where orders were
accepted and title was passed, upon delivery to carrier, out-of-State:
 seller was "through selling" before goods reached taxing State);
McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33 (1940) (sales
tax valid where "seller completed his sales" (McLeod, 322 U.S. at 330)
in the taxing State -- order taking, sales office, and delivery all
were in the taxing State);  Wiloil Corp. v. Pennsylvania, 294 U.S. 169
(1935) (sales tax valid where orders taken and delivery made in taxing
State, even though seller obtained goods out-of-State);  Sonneborn
Bros. v. Cureton, 262 U.S. 506 (1923) (same);  Wagner v. City of
Covington, 251 U.S. 95 (1919) (sales tax valid where soft-drink seller
from out-of-State came to State with loaded truck and took orders and
delivered goods in the taxing State).

   This is a straightforward case, for, as the Missouri Supreme Court
concluded (J.S. App. 5a), the record indicates that all of the
relevant aspects of the sale occurred at the airport in the State.
First, as the parties' stipulation expressly states, title to the
aviation fuel was passed from appellant to the airlines at the
airport;  indeed, appellant itself did not own the fuel sold to the
airlines until the fuel was present in Missouri.  Stip. para. 18;
App., infra, 4a.  Second appellant, through its contractual
arrangements with Amoco and the airlines, delivered the fuel to the
airlines' agent (Allied) at the Missouri airport.  Stip. para. 5;
App., infra, 2a (arrangements allow appellant to "deliver aviation
fuel at the airport").  Third, although appellant's Texas office had
executed "estimated annual gallonage" contracts for future sales
(Stip. paras. 3, 4;  App., infra, 2a), orders for particular
quantities of fuel (billed at the time of delivery) were placed by the
airlines through Allied's employees, presumably at the airport, who
passed on the orders and controlled the deliveries.  Stip. para. 17;
App., infra, 4a.  In these circumstances, it is not surprising that
the parties' stipulation expressly states that appellant's
arrangements allowed it "to sell * * * aviation fuel at the airport"
(Stip. para. 5;  App., infra, 2a), and there can be no doubt that
Missouri, and hence St. Louis County, may constitutionally tax the
sales at issue.

   That the fuel was obtained by appellant from an out-of-State
supplier (Amoco's Illinois refinery) is irrelevant, because it does
not alter the fact that appellant's sales to the airlines took place
at the airport.  See Wiloil Corp. v. Pennsylvania, supra;  Sonneborn
Bros. v. Cureton, supra;  cf. J. Bacon & Sons v. Martin, 305 U.S. 380
(1939) (tax on post-sale "receipt" in the State valid).  Nor is it
relevant that the aviation fuel arrived at the airport by a pipeline
operated by someone other than appellant.  See Memphis Gas Co. v.
Beeler, 315 U.S. 649, 653 (1942) ("sale of gas at the burner tips by
one who pipes the gas into the state or by a local distributor
acquiring the gas from another who has similarly brought it into the
state, is subject to state taxation").  Nor, contrary to appellant's
protests (J.S. 13-14), can it matter that the Missouri Supreme Court
referred to appellant's use of "agents" in the airport sales (J.S.
App. 5a, 7a, 8a):  whatever the terminology, the fact remains that
appellant had a series of contractual arrangements that enabled it to
respond to airline customer orders and to obtain, to deliver, and to
transfer title to aviation fuel at the Missouri airport.

   Appellant suggests (J.S. 15-16) that other States -- i.e., Texas
and Illinois -- could "conceivably" tax the same sales of aviation
fuel that Missouri taxes.  But no other State has tried or is likely
to try to tax those sales, since it is clear that no sale by appellant
occurred either in Texas, where only contracts for future sales were
executed, or in Illinois, where Amoco but not appellant owned and
possessed the fuel.  /10/ In any event, for precisely the same reasons
that Missouri may tax the sales, no other State could validly do so.

   The two decisions on which appellant principally relies (J.S.
14-15, 19-20), National Bellas Hess, Inc. v. Department of Revenue,
386 U.S. 753 (1967), and Norton Co. v. Department of Revenue, supra,
involve entirely different facts from those presented here.  In both
cases, in-State purchasers sent orders out-of-State for goods that the
purchaser knew would come from the seller's out-of-State stock.  In
this case, as far as the record indicates, the airlines placed their
orders for fuel at the airport, without regard to the source of the
fuel that would fill the orders.  Moreover, in neither National Bellas
nor Norton is there any suggestion that title to the shipped goods was
passed to the purchaser within the taxing State.  /11/ Here, it is
undisputed that title to the fuel passed in Missouri.  And, indeed, in
this case, unlike National Bellas and Norton, the goods sold did not
in fact come from the seller's out-of-State stock:  the seller never
even owned the goods being sold before those goods arrived in the
taxing State.  Unlike the sellers in National Bellas and Norton,
appellant could not conceivably be described as an out-of-State
seller.  /12/

   If, as we have shown, the fact that all relevant aspects of the
fuel sales occurred at the airport answers appellant's arguments with
respect to the first three components of the Complete Auto test, that
fact also disposes of appellant's argument with respect to the
discrimination component of the Complete Auto test.  The Missouri
provisions that govern the county taxes at issue (Mo. Ann. Stat.
sections 66.615, 94.620 (Vernon Supp. 1987)) state that, when "a
retailer has more than one place of business in this state which
participates in the sale," the sale is deemed to take place where the
initial order is taken.  Appellant contends (J.S. 21-22) that that
provision discriminates against interstate commerce because a retailer
that delivered and passed title to aviation fuel at the airport would
not incur the county taxes if it utilized a separate order-taking
office in another county in Missouri (perhaps with a lower county
sales-tax rate), whereas a retailer that delivered and passed title to
aviation fuel at the airport would incur the county taxes if it
utilized a separate order-taking office outside the State.  The second
part of this comparison, however, is hardly clear under Missouri law
and, in any event, has no application to appellant.  The Missouri
Supreme Court had no occasion to decide where a sale would be located
for purposes of the county taxes if appellant had an out-of-State
office that took orders for fuel sales.  There is no basis for
questioning the state court's conclusion (J.S. App. 5a, 7a-8a) that
all aspects of appellant's sales, including the taking of orders for
fuel sales, took place within Missouri.

                              CONCLUSION

   For the foregoing reasons, the appeal should be dismissed for want
of a substantial federal question.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   WILLIAM S. ROSE, JR.

      Assistant Attorney General

   LAWRENCE G. WALLACE

      Deputy Solicitor General

   RICHARD G. TARANTO

      Assistant to the Solicitor General

   ERNEST J. BROWN

      Attorney

   MARCH 1988

   /1/ This case was submitted to the Administrative Hearing
Commission of the State of Missouri on an agreed Stipulation of Facts
(J.S. App. 14a).  We include the Stipulation of Facts as an appendix
to this brief.

   /2/ The pipeline is owned by St. Louis Pipeline Company and
operated by Amoco Pipeline Company, a wholly-owned subsidiary of
Standard Oil Company (Indiana).  Appellant has no equity or other
ownership interest in St. Louis Pipeline Company, Amoco Pipeline
Company, or Amoco.  Stip. paras. 7, 8;  App., infra, 2a.

   /3/ For purposes of the issues in this case, there is no material
difference between the current versions of the relevant statutes and
the versions in effect during the years at issue here.  We therefore
cite the current versions of the statutes.

   /4/ Missouri also imposes a use tax on certain goods, in the same
amount as the sales tax;  and it directs vendors who make sales of
goods "for the purpose of storage, use or consumption in th(e) state,"
which is presumed from in-State delivery, to collect the use tax from
purchasers of their goods.  Mo. Ann. Stat. sections 144.610, 144.615,
144.620, 144.635 (Vernon 1976 & Supp. 1988).  As is common throughout
the Nation, this "compensating" use tax (id. section 144.600) is
designed chiefly to protect the sales tax.  Accordingly, no use tax on
goods must be paid by persons who have paid the (seller's) Missouri
sales tax;  and if a lower out-of-State sales or use tax has been
paid, the Missouri use tax is due only for the excess of the Missouri
tax over the out-of-State tax.  Id. section 144.615.

   /5/ Other counties are authorized to impose supplemental sales
taxes of 1/4, 3/8, or 1/2%.  Mo. Ann. Stat. sections 67.505 et seq.
(Vernon Supp. 1987).  Cities are authorized to impose supplemental
sales taxes of 1/2, 7/8, or 1%.  See id. sections 94.500 et seq.
(Vernon 1971 & Supp. 1987).

   /6/ The stipulation does not specify whether the state tax paid was
the sales tax or the use tax (see note 4, supra).  As the Missouri
Supreme Court observed (J.S. App. 3a), however, the Administrative
Hearing Commission concluded that, because the sales took place in the
State, the tax paid was a sales tax (J.S. App. 17a n.3).  Appellant
points out (Reply Br. 6 n.6) that it has always contended that the
state tax it paid was the use tax and that it had no reason to
challenge the contrary ruling because it would be liable in any event
for the same amount.

   /7/ The stipulation gives numbers for the taxes and the interest
for each of the two county taxes.  The sum of those four figures is
$103,009.53.  The stipulation also gives a number for the sum of taxes
and interest for the county sales tax and a number for the sum of
taxes and interest for the county transportation sales tax.  Those two
figures add up to $104,009.53.  The discrepancy results from the fact
that the tax and interest figures for the transportation tax do not in
fact add up to the figure given by the stipulation for their sum.

   /8/ The court stated, "(appellant's) equal protection argument
fails for similar reasons" (J.S. App. 8a).  Because appellant made no
equal protection argument (J.S. 11 n.7), this statement apparently
refers to appellant's due process challenge.

   /9/ To the extent appellant suggests that Missouri has deprived it
of equal protection by discriminating on the basis of residence or
State of incorporation (J.S. 21-22, citing Williams v. Vermont, 472
U.S. 14 (1985)), the premise of the suggestion is wrong:  the alleged
discrimination attacked by appellant (see J.S. 16-18, 21-22) turns on
the location of a particular activity (taking orders for sales), not
on a taxpayer's residence or State of incorporation.

   /10/ See also Tex. Tax Code Ann. section 151.005 (Vernon 1982 &
Supp. 1988) (defining "sale" for sale-tax purposes, as relevant here,
to mean transfer of title or possession);  Tex. Bus. & Com. Code Ann.
section 2.106(a) (Vernon 1968) (adopting U.C.C. section 2-106(1)
title-passage definition of "sale");  Ill. Ann. Stat. ch. 120, para.
440 (Smith-Hurd 1974 & Supp. 1987) (defining "sale at retail" for
purposes of retailer's occupation tax, as relevant here, to mean
transfer of ownership or title);  Ill. Ann. Stat. ch. 26, para.
2-106(1) (Smith-Hurd 1963) (adopting U.C.C. section 2-106(1)).

   /11/ Under U.C.C. section 2-401(1), if a contract merely requires
the seller to send goods to the buyer, title passes at the time and
place of shipment, not upon later delivery to the buyer.  See J.S.
App. 4a (quoting Missouri version of that provision).

   /12/ National Bellas, like Miller Bros. v. Maryland, 347 U.S. 340
(1954), which appellant also cites (J.S. 14), actually involved a use
tax rather than a sales tax.  Here, the county taxes at issue are
sales taxes;  and unlike Missouri's statewide sales tax, they are not
even accompanied by a "protective" use tax.  If the county taxes were
use taxes, however, or if the constitutional standards applicable to
use taxes applied here, appellant would clearly have no constitutional
complaint.

   This Court in National Geographic Soc'y v. California Bd. of
Equalization, 430 U.S. 551, 560-561 (1977), ruled that, when a State
compels a seller to collect, at the time of sale, a use tax imposed on
in-State users, the constitutional nexus requirement focuses on the
connection of the seller to the State, not of particular sales to the
State.  In this case, nothing in the record suggests, what is
certainly unlikely, that appellant did not have substantial operations
in Missouri in 1978-1981, albeit unrelated to these aviation-fuel
sales.  If appellant had such a presence, which the sellers in
National Bellas and Miller Bros. did not, National Geographic makes
clear that Missouri and St. Louis County could insist that appellant
collect a use tax on aviation fuel.  See also General Trading Co. v.
State Tax Comm'n, 322 U.S. 335 (1944);  Nelson v. Sears, Roebuck &
Co., 312 U.S. 359 (1941).  Indeed, the validity of such a requirement
would follow from appellant's concession that it is liable for the
statewide use tax, because, as the dissent in the Missouri Supreme
Court recognized (J.S. App. 12a), it is nexus to the State, not to any
particular county, that should matter for Commerce Clause purposes.
See Hillsborough County v. Automated Medical Laboratories, 471 U.S.
707, 713 (1985);  Town of Lockport v. Citizens for Community Action at
the Local Level, Inc., 430 U.S. 259, 269 (1977);  Railroad Co. v.
Peniston, 85 U.S. (18 Wall.) 5, 37 (1873);  Peterman v. Coleman, 764
F. 2d 1416, 1422 (11th Cir. 1985);  cf. Breard v. Alexandria, 341 U.S.
622 (1951);  McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33
(1940);  Wagner v. City of Covington, 251 U.S. 95 (1919).

   APPENDIX