Opinion ID: 1335334
Heading Depth: 1
Heading Rank: 6

Heading: Richfield Oil

Text: Distilled to its essence, the Import-Export Clause of the United States Constitution prohibits states from lay[ing] any Imposts or Duties on ... Exports .... United States Constitution, Art. I, Sec. 10, Cl. 2. For purposes of a Richfield Oil analysis, I believe the taxes questioned in this appeal are Imposts or Duties. 329 U.S. at 76, 67 S.Ct. at 160. Implicit in any consideration of the Import-Export Clause are two basic questions: (1) when is a product an export?, and (2) when is there a tax on such an export? Richfield Oil addresses both questions in the context of the facts of that case. Those answers are, I believe, determinative of the resolution of the issues in this appeal. In Richfield Oil the Supreme Court was concerned with when the exportation or movement [of a product] abroad began. The commencement thereof of the product for the foreign market makes the product an export. In Richfield Oil, the Court held that oil, the product at issue in that case, became an export at the time it was delivered into the hold of a sea-going vessel, at which time it passed into the control of a foreign customer, there being no probability that the oil would thereafter be diverted to domestic use. 329 U.S. at 83, 67 S.Ct. at 164. In Richfield Oil, California had assessed a retail sales tax against the seller/deliverer of the oil measured by the gross receipts from the transaction. The seller protested and sought a refund claiming that the levy of the tax violated the Import-Export Clause. As interpreted by the California Supreme Court, the California tax was described as an excise tax for the privilege of conducting a retail business measured by the gross receipts from sales. It was not a tax on the sale or because of the sale. While the United States Supreme Court in Richfield Oil said that it was bound by the California court's construction, being a matter of state law, the Supreme Court found that that determination was not determinative of the question of whether the tax deprived the taxpayer of a federal right, stating [t]hat issue turns not on the characterization which the state has given the tax, but on its operation and effect. 329 U.S. at 84, 67 S.Ct. at 164. (Emphasis added.) The Supreme Court then made much of a concession by the California court, namely, that the delivery of the oil `resulted in the passage of title and the completion of the sale, and the taxable incident'. Id. (Emphasis added.) The Supreme Court's holding that the California tax was unconstitutional under the Import-Export Clause was based, in my opinion, on its conclusion that [t]he incident which gave rise to the accrual of the tax was a step in the export process. Id. (Emphasis added.) The highlighted phrases are, I believe, of importance to navigating the issues in the case on appeal. These phrases, operation and effect, taxable incident, incident, and accrual, require some consideration. The Supreme Court did not accept the California court's view that the activity or incident taxed by that state's excise tax was the conducting of a retail business and that the gross receipts from sales were only the measure of the tax. Rather, the Court ruled that the operation and effect of the tax was that it was a tax on the sale of the oil. In other words, the tax was a sales tax, as the California court implicitly conceded in describing the completion of the sale as the taxable incident. When the Supreme Court said that [t]he incident which gave rise to the accrual of the tax was a step in the export process, the incident was the sale itself. The gross receipts from the sale was the measure of the tax on the sale itself and not the measure of the tax on the conducting of a retail business because the conducting of a retail business was not a taxable incident. In using the phrase, [t]he [taxable] incident which gave rise to the accrual of the tax, the Supreme Court determined that the sale was [t]he [taxable] incident which created the liability for the California tax. [15] Id. at 84-85, 67 S.Ct. at 164-65 Accordingly, I am of the opinion that Richfield Oil stands for the proposition that a coal-related tax is a tax on an export only if (1) an incident or activity involving the coal is taxed simultaneously with, or subsequent to, the commencement of exportation, and (2) that incident or activity contributes or relates to the value of the coal which determines the amount of the tax liability. I do not believe such a coal-related tax would be a tax on an export if the activities or incidents involving coal occurred prior to the commencement of exportation even though the measure of the taxes on such prior activities may not be ascertainable until after the commencement of the exportation. Accord, Washington Stevedoring.