Court Opinion

ID: 5083347
Source: CourtListenerOpinion
Date Created: 2021-10-01 13:15:51.025351+00
Date Added: 2024-06-11T14:21:57.476743
License: Public Domain

I join in the well-written majority opinion authored by Justice Seerden. I write to express my analysis of the case, because I do not believe the following issue is illuminated by the exegesis of the dissent.
Both the Import-Export Clause and the Commerce Clause of the federal constitution prohibit a state from levying a duty on goods passing through that state, when those goods originate from and are destined for a foreign land or sister state. If the goods are merely "passing through" bound for another jurisdiction, they are in transit and not subject to the local state's taxation.
The oil at issue was produced abroad, transported by ship until unloaded into the terminal at Harbor Island, located in Nueces County, Texas. The oil will be transported from there by pipeline to a refinery in Live Oak County, Texas, where it will be refined and transformed into gasoline and other products. There is no assertion that the resulting gasoline and related products will be transported from Texas to be consumed elsewhere. The oil is owned by Diamond Shamrock at all relevant times.
The issue in the present case is whether the State of Texas may tax the oil in the storage tanks in Nueces County. The issue is not which taxing entity within the State of Texas is the proper taxing agency. The Import-Export and Commerce Clauses are restrictions on the State vis-a-vis the Federal Government. If the goods sought to be taxed cease being in transit within the state, the State may impose non-discriminatory ad valorem taxes.
The power of the State to tax being at issue, it is not important where within the state the material finally comes to rest and ceases to be in transit. It is immaterial for federal constitutional purposes that the final destination of the imported crude oil is Nueces County or Live Oak County, Texas. If the State of Texas has jurisdiction to tax, a dispute regarding which taxing authority within the state may levy ad valorem taxes is determined by state law. Neither the Import-Export Clause nor the Commerce Clause of the United States Constitution is implicated.