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ETC Marketing, Ltd. v. Harris County Appraisal District

Supreme Court of Texas

April 28, 2017

ETC Marketing, Ltd., Petitioner,
Harris County Appraisal District, Respondent

          Argued December 6, 2016

         On Petition for Review from the Court of Appeals for the First District of Texas

          Justice Green, Justice Johnson, Justice Willett, Justice Lehrmann, Justice Boyd, and Justice Brown joined.

          Justice Guzman did not participate in the decision.

          John P. Devine Justice

         The Commerce Clause of the United States Constitution limits a state's power to tax interstate commerce. But this limit is not all-encompassing, and states may tax some property despite its interstate character. This case requires us to determine whether those constitutional limits bar property taxes levied on natural gas stored in Texas while awaiting future resale and shipment to out-of-state consumers.

         We are not the first to address this question. The Oklahoma and Kansas Supreme Courts found taxation of stored gas constitutional under similar circumstances. See In re Assessment of Personal Prop. Taxes Against Mo. Gas Energy, a Div. of S. Union Co. for Tax Years 1998, 1999, and 2000, 234 P.3d 938, 959 (Okla. 2008) [hereinafter Missouri Gas]; In re Appeals of Various Applicants From a Div. of Prop. Valuation of Kan. for Tax Year 2009 Pursuant to K.S.A. 74-2438, 313 P.3d 789, 799 (Kan. 2013) [hereinafter Kansas Gas]. The court of appeals likewise found the tax valid in this case. See 476 S.W.3d 501, 513 (Tex. App.-Houston [1st Dist.] 2015). But the dissenting justice and one other court of appeals saw the issue differently, finding that the Commerce Clause forbids the taxation at issue. See id. at 523 (Keyes, J., dissenting); Peoples Gas, Light, and Coke Co. v. Harrison Cent. Appraisal Dist., 270 S.W.3d 208, 219 (Tex. App.-Texarkana 2008, pet. denied). Although Texans and Oklahomans may disagree from time to time[1], our Supreme Courts agree, at least, on this: a nondiscriminatory tax on surplus gas held for future resale does not violate the Commerce Clause. The judgment of the court of appeals is affirmed.

         I. Background

         ETC Marketing, Ltd. buys and sells natural gas. ETC purchases gas at the Katy marketing hub, which is located in Texas. And ETC immediately entrusts that gas to its affiliate, Houston Pipe Line Company (HPL), a pipeline operator authorized by the Federal Energy Regulatory Commission (FERC) to transport gas. HPL's pipeline system does not extend beyond the borders of Texas but does connect to several other interstate pipelines. This interstate connection allows ETC to market and sell gas across the country.

         Once injected into the pipeline, ETC's gas commingles with other gas, making tracking the exact location of certain gas molecules impossible. To overcome this dilemma, ETC and HPL allocate ownership of stored gas on paper. When ETC orders HPL to ship a certain volume of gas downstream, the volume of gas shipped is subtracted from ETC's total allocated amount.

         Central to this dispute is the storage of ETC's gas. HPL stores ETC's gas at the Bammel facility in Harris County. The Bammel facility, which HPL owns and operates, connects to HPL's pipeline system and is located atop the Bammel reservoir. That reservoir lies under several thousand acres and holds a vast amount of natural gas. In order to create the pressure necessary to pump gas in and out of the reservoir, HPL maintains a permanent supply of "cushion gas" in the facility. HPL pays ad valorem taxes on that cushion gas and on the Bammel facility itself. But HPL does not pay taxes on stored gas owned by marketers like ETC.

         ETC purchased a dedicated storage capacity in the Bammel reservoir from HPL. The resulting storage agreement between the two parties is authorized by Section 311 of the Natural Gas Policy Act. Pursuant to the agreement, HPL pumps ETC's excess gas (gas that exceeds the pipeline's capacity) into the reservoir. There, the gas remains while it awaits orders from ETC to ship certain volumes to downstream consumers. This storage capacity allows ETC to maintain a surplus of gas on the pipeline system so that it can better satisfy future demand and "time the market" during peak periods. As demand rises and falls, the volume of stored gas fluctuates accordingly. Specifically, ETC begins to accumulate gas in April and effectively sells all of the accumulated gas by the end of the winter season. ETC thus maintains a seasonal-though not year-round-presence of gas in the reservoir. Although ETC intends to and does sell a majority of this stored gas outside Texas, it is not obligated to do so. Rather, ETC can sell the gas outside Texas, within Texas, or not at all.

         This taxing saga began in September 2009[2], when the Harris County Appraisal District (HCAD) appraised the value of approximately 33 billion cubic feet of gas allocated to ETC and stored in the Bammel reservoir. HCAD then assessed ad valorem taxes on the value of that gas for the 2010 tax year. ETC protested the tax to the Harris County Appraisal Review Board on the basis that the stored gas was in the stream of interstate commerce and therefore immune from taxation.

         After the Review Board denied ETC's challenge, ETC appealed to the district court. There, both ETC and HCAD filed motions for summary judgment. ETC relied again on the protections of the Commerce Clause. HCAD countered that the stored gas was not in the stream of interstate commerce, and even if it was, the tax was valid under all four prongs of the Supreme Court's holding in Complete Auto Transit, Inc. v. Brady, which supplies the test for determining the constitutionality of state taxation of interstate commerce. 430 U.S. 274, 279 (1977). The district court granted HCAD's motion and denied ETC's motion, and ETC appealed. The court of appeals affirmed, assuming the gas was in interstate commerce but agreeing with HCAD that the tax satisfied Complete Auto. See 476 S.W.3d at 513. One justice dissented, finding "no material distinction between this case and Peoples, " which, on similar facts, found the ad valorem tax violated Complete Auto. Id. at 517 (Keyes, J., dissenting); see also Peoples, 270 S.W.3d at 219. We granted ETC's petition for review.

         II. The Texas Tax Code

         The centerpiece of this dispute is the Commerce Clause. But there is another issue at play-whether the Texas Tax Code provides an independent shield against taxation. Two provisions of the Code are of particular importance.[3] First, the state can tax only personal property "located in this state for longer than a temporary period." Tex. Tax Code § 11.01(c)(1). Likewise, a taxing unit may tax only property "located in the unit on January 1 for more than a temporary period." Id. § 21.02(a)(1) (also known as the "taxable situs" requirement). Taking these provisions together, ETC argues that because its stored gas is not located in Texas for longer than a "temporary period, " neither Texas nor HCAD can tax the gas.

         ETC cautions that we must address these issues of Texas law first under well-recognized principles of constitutional avoidance. ETC is, of course, correct that we will "only decide constitutional questions when we cannot resolve issues on nonconstitutional grounds." In re B.L.D., 113 S.W.3d 340, 349 (Tex. 2003). But in doing so, we remain subject to our procedural rules, such as those governing preservation of error. On that front, HCAD contends ETC waived its temporary-period argument in the trial court. We agree.

In its motion for summary judgment, ETC listed the following two grounds for recovery:
1) the property is exempt from taxation as it is in the stream of interstate commerce; and
2) Harris County Appraisal District does not have jurisdiction to appraise the property since the taxing units served by the Appraisal District are without jurisdiction to tax the property.

         ETC argues that the second of these grounds preserved its temporary-period argument. HCAD counters that ETC's motion did not mention "temporary period, " cite the relevant statutory provisions, or discuss anything other than the applicability of the Commerce Clause.[4] There was nothing in the motion, HCAD says, to point the trial judge to the statutory sections ETC now invokes.

         To preserve error a party must present "the grounds for the ruling that the complaining party sought from the trial court with sufficient specificity to make the trial court aware of the complaint, unless the specific grounds were apparent from the context." Tex.R.App.P. 33.1(a)(1)(A). And to obtain summary judgment, a movant must "state the specific grounds" entitling it to summary judgment. Tex.R.Civ.P. 166a(c). Undergirding these rules is the principle that the trial court should have the chance to rule on issues that become the subject of the appeal.

         The only sentence from ETC's motion that could possibly preserve its temporary-period argument is the statement outlining ground two: "Harris County Appraisal District does not have jurisdiction to appraise the property since the taxing units served by the Appraisal District are without jurisdiction to tax the property."[5] The body of the motion, the prayer for relief, and the accompanying affidavits were devoted entirely to discussion of the Commerce Clause. Though ETC does not say so expressly, implicit in its argument is the concept that "jurisdiction to tax" must necessarily point to the sections of the Tax Code containing the temporary-period requirement. True, Section 11.01(c)(1) does speak of the temporary-period requirement in jurisdictional terms. Tex. Tax. Code. § 11.01(c)(1) (explaining that the "state has jurisdiction to tax" personal property "located in this state for longer than a temporary period"). But though a reference to taxing jurisdiction can refer to the temporary-period requirement, it does not mean that ETC's motion used the term for that purpose. After all, jurisdiction "'is a word of many, too many, meanings.'" In re United Servs. Auto. Ass'n, 307 S.W.3d 299, 305 (Tex. 2010) (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 90 (1998)).

         Which of the many meanings did ETC use as the basis for its motion? The answer is in the motion itself, where ETC provided a decidedly federal explanation for the term:

[I]f Federal law makes a thing exempt from taxation, any inconsistent state law, or one which 'impedes' the free movement of commerce among the several states just yield, thus depriving the State (and any of its various political subdivisions, such as [the appraisal district]) of jurisdiction to tax or attempt to tax that which Federal law deems non-taxable by the States.

         This passage-which contains the only other mention of jurisdiction in the motion-clears up all ambiguity about ETC's use of the term. ETC articulated that federal law (the Commerce Clause), not the Texas Tax Code, deprived HCAD of jurisdiction. To hold otherwise would require us to assume the trial judge ignored the movant's own explanation of the term. ETC cannot devote an entire motion to one federal argument and seek to argue a distinct state-law position on appeal by relying on a term that is ambiguous in isolation. Context matters. And in the context of this motion there is no question that ETC failed to present the temporary-period ground at all, let alone specifically. Accordingly, ETC waived any complaint on appeal involving Sections 11.01(c) and 22.01(a) of the Tax Code. See D.R. Horton-Tex., Ltd. v. Markel Intern. Ins. Co., Ltd., 300 S.W.3d 740, 743 (Tex. 2009) ("In summary judgment practice, 'issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal.'") (quoting Tex.R.Civ.P. 166a(c)).

         III. The Commerce Clause

         The Commerce Clause gives Congress authority to "regulate Commerce . . . among the several States." U.S. Const. art. I, § 8, cl. 3. Though written as an affirmative grant of authority, the clause also limits the power of states to interfere with interstate commerce. See Okla. Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175, 179 (1995) (explaining that this inverse effect is known as the "dormant Commerce Clause"). The challenge before us squarely implicates that limit in the context of state taxation.

         Complete Auto provides the most recent test for determining whether a state tax violates the Commerce Clause. D.H. Holmes Co. v. McNamara, 486 U.S. 24, 30 (1988) (citing Complete Auto, 430 U.S. at 288). If the tax implicates interstate commerce, the tax must meet four necessary conditions to withstand constitutional scrutiny. McNamara, 486 U.S. at 30. The tax must: (1) apply to an activity with a substantial nexus with the taxing state; (2) be fairly apportioned; (3) not discriminate against interstate commerce; and (4) be fairly related to the services provided by the state. Id. The Court has clarified how to apply the latter three prongs, but provided little insight into what constitutes a "substantial nexus."

         Another issue that remains unclear is to what extent the Complete Auto test supplanted the traditional method for determining whether state taxation was proper: the "in transit" test. The test was simple. If property was in transit, it was not taxable because it was in interstate commerce. Minnesota v. Blasius, 290 U.S. 1, 9 (1933). On the other hand, property that lacked continuity of transit was fully taxable because it was considered outside interstate commerce entirely. Id. This litmus test had a particularized application in cases (like the present one) involving property stopped during the course of an otherwise interstate journey. See id. at 12 (explaining that the purpose of the stoppage was central to determining whether property remained in transit). Though the Court later explained that Complete Auto "abandoned the abstract notion that interstate commerce 'itself' cannot be taxed by the State, " McNamara, 486 U.S. at 30, the Court remains silent on whether the in-transit test has any remaining vitality within the modern approach.

         A synthesis of the frameworks may be proper. See Diamond Shamrock Ref. & Mktg. Co. v. Nueces Cty. Appraisal Dist., 876 S.W.2d 298, 302 (Tex. 1994). In Diamond Shamrock, we addressed a Commerce Clause challenge to taxation of imported oil. Id. at 298. In applying Complete Auto, we noted that "the circumstances which make the goods 'in transit' may inform a court's decision that the [substantial nexus and fair relation] requirements of Complete Auto are not met." Id. at 302. The court of appeals in this case similarly reconciled the two tests. See 476 S.W.3d at 509 n.16. And both ETC and HCAD seem to agree with that methodology. We see no reason to stray from this approach.

         A. Is the Gas in Interstate Commerce?

         The court of appeals assumed without deciding that the stored gas at the Bammel facility was in interstate commerce. 476 S.W.3d at 508. So did the Kansas and Oklahoma Supreme Courts when faced with nearly identical storage arrangements. See Kan. Gas, 313 P.3d at 796-97 (moving immediately to analysis under Complete Auto without addressing the threshold question); Mo. Gas, 234 P.3d at 953-54 (similarly skipping the threshold question). Before doing the same and diving headlong into Complete Auto, HCAD urges us to entertain the possibility that the gas is not in interstate commerce at all. HCAD points us to cases predating Complete Auto that apply the in-transit test. See, e.g., Blasius, 290 U.S. at 12; Bacon v. Illinois, 227 U.S. 504, 515-16 (1912). In those cases, the Court treated property that was not in transit as outside interstate commerce entirely. See Blasius, 290 U.S. at 9-10. HCAD stresses ETC's business purpose in storing the gas for future resale as indicating a lack of continuity of transit. See id. at 10 (explaining that property is not in transit when it "has come to rest within a state, being held there at the pleasure of the owner, for disposal or use, so that he may dispose of it either within the state, or for shipment elsewhere, as his interest dictates"). Because ETC's gas was not in transit, HCAD posits, it was outside the stream of interstate commerce such that we need not reach Complete Auto.

         Though HCAD's one-step approach (no transit equals no interstate commerce) may have been proper under the Supreme Court's old methodology, the Court's new approach casts doubt on that assumption. Under Complete Auto, we must effectively conduct two distinct inquiries: (1) whether the tax implicates interstate commercial activity and, if so, (2) whether the tax satisfies all four prongs. See Jefferson Lines, 514 U.S. at 183 (citing Complete Auto, 430 U.S. at 287-88). As mentioned above, the in-transit issue plays a vital role in the second part of that test-specifically, the substantial-nexus prong. See Diamond Shamrock, 876 S.W.2d at 302. Utilizing an inquiry during the second step of the sequence that is dispositive on the first would make little sense.[6] This practical hurdle aside, Maryland v. Louisiana, 451 U.S. 725, 754-55 (1981), a case decided under the modern framework, militates against HCAD's conclusion.

         In Maryland, the Court addressed whether a Louisiana first-use tax on natural gas violated the Commerce Clause. Id. at 728. Before reaching the Complete Auto prongs, the Court noted:

[I]t is clear to us that the flow of gas from . . . wells, through processing plants in Louisiana, and through interstate pipelines to the ultimate consumers in over 30 states constitutes interstate commerce. . . . But although Louisiana "uses" may possess a sufficient local nexus to support otherwise valid taxation, we do not agree that the flow of gas from the wellhead to the consumer, even though interrupted by certain events, is anything but a continual flow of gas in interstate commerce. Gas crossing a state line at any stage of its movement to the ultimate consumer is in interstate commerce during the entire journey.

Id. at 754-55. This passage settles the threshold debate. When making the initial interstate-commerce determination, the Court did not analyze whether the gas was "in transit" by looking to the character of the interruptions. Instead, the Court saw gas placed in an interstate pipeline system and summarily found interstate commerce. Id. To the extent the Court's holding in Maryland is at odds with statements from older in-transit cases, we heed the Court's advice for dealing with a possible inconsistency: "If a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, [the lower court] should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions." Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989). Maryland is on point, and we apply it to the facts at hand.

         ETC places its gas (some of which comes from out of state) in the HPL system, an intrastate pipeline that is connected to an interstate pipeline network. HPL eventually conveys a majority of the gas through those pipelines to ETC's out-of-state customers downstream. As a result, ETC's gas enters interstate commerce. See Maryland, 451 U.S. at 755. Maryland requires nothing more. The circumstances of ETC's storage-though critical to our later analysis-do not control at the outset.

         B. The Complete Auto Test Having found the gas in interstate commerce, we turn now to the four prongs of Complete Auto.

         1. Substantial Nexus

         The first prong of the test requires us to determine whether ETC's gas has a substantial nexus with the taxing state. McNamara, 486 U.S. at 30. The purpose of this prong is to "limit the reach of state taxing authority so as to ensure that state taxation does not unduly burden interstate commerce." Quill Corp. v. North Dakota, 504 U.S. 298, 313 (1992). In effect, a state "will not be able to exact a fee simply for the privilege of passing through the state." Mo. Gas, 234 P.3d at 965. Vital to this question-and muddying the analysis of courts below-is the issue of precisely what must bear a substantial nexus to the state. See 476 S.W.3d at 508-09; Peoples Gas, 270 S.W.3d at 218. Is it the property, the taxpayer, or both? We must first dispel the confusion.

         In coming to different conclusions on the first prong, the court of appeals in this case and the court in Peoples both gave special significance to the physical presence of the taxpayer in the state. See 476 S.W.3d at 508-09; see also Peoples Gas, 270 S.W.3d at 218. Finding no substantial nexus, the Peoples court stressed, "[The taxpayer] maintains no office in Texas. Nor does it have any employees, representatives, or physical facilities in the State." 270 S.W.3d at 218. The court of appeals here, in distinguishing Peoples, emphasized that "ETC Marketing had offices and employees in Harris County and elsewhere in the state of Texas." 476 S.W.3d at 508. These distinctions may be among the quintessential due-process considerations of personal jurisdiction-i.e., a defendant's so-called "minimum contacts" with a state. But they are irrelevant to this Commerce Clause challenge.

         The Supreme Court has instituted a physical-presence test for Commerce Clause challenges only in the realm of sales and use taxes, but it has refused to do so in other cases. See, e.g., Quill Corp., 504 U.S. at 315; Nat'l Bellas Hess, Inc. v. Dep't of Revenue, 386 U.S. 753, 757 (1967). More generally, the Commerce Clause requires "some definite link, some minimum connection, between a state and the person, property, or transaction it seeks to tax." Allied-Signal, Inc. v. Dir., Div. Of Taxation, 504 U.S. 768, 777 (1992) (citing Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45 (1954)). We must therefore examine what the Texas ad valorem scheme "seeks to tax." Allied-Signal, 504 U.S. at 777.

         Though a municipality collects ad valorem taxes from the coffers of the tax-paying business, the tax is levied on property located in the jurisdiction. It is, after all, a property tax. See Tex. Tax Code § 11.01(c) (explaining that the state generally has "jurisdiction to tax tangible personal property"). So long as the property qualifies, the ad valorem tax does not care whether a taxpayer is located in the taxing unit, the state, or the country for that matter. Nor does the Commerce Clause. When dealing with ad valorem taxation, therefore, the link between the property and the state is the relevant consideration. Allied-Signal, Inc., 504 U.S. at 777. To the extent Peoples and the court of appeals relied on the taxpayer's physical presence (or lack thereof), such reliance was misplaced.

         Having determined the proper scope of the inquiry, we turn now to whether the gas here bears a satisfactory connection to Texas. We reiterate the importance of injecting the in-transit test at this juncture. The Kansas and Oklahoma Supreme Courts, when tasked with applying the first prong of Complete Auto to a similar set of facts, did not find application of the in-transit test to be dispositive but concluded instead that the gas bore a substantial nexus to the respective states based on the objective fact that the gas was stored in the state for a substantial period of time. See Kan. Gas, 313 P.3d at 799; Mo. Gas; 234 P.3d at 955 (explaining that because the in-transit test's "subjective factors are inconclusive, the nexus issue is better decided on the basis of the objective fact that [the pipeline] stored gas on behalf of [the taxpayer] and that a certain amount of it was held [in storage] at all times during the tax years in question").

         Though the mere presence of gas in the taxing jurisdiction is surely the starting point for the substantial-nexus inquiry, it is not the end of the road. Indeed, a presence-based rule, standing alone, would allow a state to tax gas "merely passing through" the state on the taxing day-an outcome the Commerce Clause does not tolerate. Mo. Gas, 234 P.3d at 955. Nor is it tenable to put dispositive weight on the length of time property stays within the confines of a jurisdiction. Doing so would require us to answer a series of unanswerable questions. How long is long enough? Several months? Year round?[7] Our answer to that question would be inherently arbitrary. Instead, the in-transit test provides a more nuanced approach for determining whether property is sufficiently connected to the state while adding a measure of predictability that the presence-plus-time approach lacks.

         So, with the in-transit line of cases in mind, we summarize the relevant law and apply it to ETC's stored gas. We pay special attention to cases establishing a framework for dealing with property that stops in a state amidst an otherwise interstate journey. On one side of the spectrum are cases involving a clearly transitory stop. See, e.g., Champlain Realty Co. v. Town of Brattleboro, 260 U.S. 366, 373 (1922) (finding continuity of transit when logs shipped interstate stopped due to an impasse created by the frozen river); Kelley v. Rhoads, 188 U.S. 1, 8-9 (1903) (finding continuity of transit when a heard of sheep transported from Utah to Nebraska would take intermittent stops to graze); Carson Petroleum Co. v. Vial, 179 U.S. 95, 107-09 (1929) (finding continuity of transit when oil stopped while awaiting the eventual return of its transport vessel). These decisions illustrate that stoppage integral to the journey itself is really no stoppage at all in the eyes of the Commerce Clause. See Blasius, 290 U.S. at 9-10 (explaining that "[t]emporary interruptions due to the necessities of the journey or for the purpose of safety and convenience in the course of the movement" do not break continuity of transit). ETC urges us to analogize between these cases and the present one because gas storage is necessary to facilitate safe and efficient interstate transportation.

         HCAD argues cases on the other end of the spectrum are more analogous. These cases invariably contain a stoppage for some other (usually business-centric) purpose. See, e.g., id. at 12 (finding that cattle shipped to Minnesota from out of state were no longer in transit once held in Minnesota for future interstate resale); Bacon, 227 U.S. at 516 (finding that grain held in Chicago for processing was no longer in transit even though the taxpayer intended to send the grain to another state); Coe v. Town of Errol, 116 U.S. 517, 528-29 (1886) (finding that logs held in New Hampshire were not in transit despite the taxpayer's intention to ship the logs to Maine). Resonating from these cases is the following principle:

Where property has come to rest within a state, being held there at the pleasure of the owner, for disposal or use, so that he may dispose of it either within the state, or for shipment elsewhere, as his interest dictates, it is deemed to be a part of the general mass of property within the state and is thus subject to its taxing power.

Blasius, 290 U.S. at 10. HCAD proposes that ETC's storage is akin to these nontransitory stops because ETC holds the gas for future resale and disposition.

         Starting with the cases finding continuity of transit, Carson Petroleum bears perhaps the closest resemblance to the current scenario; both cases involve oil or gas that is stopped awaiting transport to a final destination. 279 U.S. at 98-99. But the in-transit test does not view interruptions in a vacuum. Instead, we must examine why the stoppage takes place. Bacon, 227 U.S. at 516-17. With that touchstone in mind, the differences between Carson Petroleum and this case become manifest. In Carson Petroleum, a shipper unloaded oil from trains and stored the oil in tanks at a port to await the arrival of seafaring vessels. 279 U.S. at 99. Storage was therefore necessary because there was no vehicle ready to continue the journey when the oil arrived at the dock. See id. at 108-09. Said differently, the oil in Carson Petroleum was part of a disjointed system of transit, making the accumulation of oil at Point A an inevitability of the continuous (albeit delayed) journey to Point B. See id. (explaining that "the delay in transshipment was due to nothing but the failure of the arrival of the subject to be shipped at the same time as the arrival of the ships at the port of transshipment") (emphasis added).

         No such transport dilemma exists here. Natural-gas transportation does not involve the disjointed, moving pieces found in Carson Petroleum. Quite the opposite; HPL's storage facility and pipeline are, at all times, connected to an interstate pipeline system. But ETC does not utilize this fixed means of transportation for months at a time, choosing instead to entrust massive quantities of gas to HPL for extended storage and eventual transportation. Thus, ETC's gas, unlike the oil in Carson Petroleum, is not paused in anticipation of the return of its only means of transportation. 279 U.S. at 108-09. Rather, the gas awaits ETC's decision to order shipment via an already-available mode of transportation. After all, the lack of a precommitted destination is precisely why the gas must stop; it has nowhere to go while awaiting ETC's shipment orders. If ETC's gas were viewed in terms of Carson's oil, it would be as if the oil shipper turned the captain of the returning vessel away empty handed in hopes of selling the oil after future demand rose. As such, ETC's storage facilitates anything but "speedy and continuous export": it delays transportation until a later, more profitable date. Carson Petroleum, 279 U.S. at 109 (explaining that facilitating "speedy and continuous export" is a reason that furthers continuity of transit).

         Rather, the gas storage here mirrors stoppages in cases finding a lack of continuity. Again, those cases stress that property shall not be considered in transit when it "has come to rest within a state, being held there at the pleasure of the owner, for disposal or use, so that he may dispose of it either within the state, or for shipment elsewhere, as his interest dictates." Blasius, 290 U.S. at 10. That descriptor fits this case perfectly. ETC, through HPL, holds the taxed gas in Texas for eventual resale and final transportation. ETC has full discretion to decide when and where to deliver its gas. Though ETC intends to sell most of its gas outside Texas, the Commerce Clause does not give controlling effect to a property owner's future plans. See Bacon, 227 U.S. at 303 (explaining that the "intention of the owner to send [property] to another state" is not controlling); Blasius, 290 U.S. at 9 ("If the interstate movement has not begun, the mere fact that such a movement is contemplated does not withdraw the property from the state's power to tax it."). Instead, that ETC's gas may be sold in state or out of state (or not at all) is the relevant fact, and it is one that weighs decidedly against continuity of transit. Blasius, 290 U.S. at 10; see also Va. Indo. Co. v. Harris Cty. Appraisal Dist., 910 S.W.2d 905, 912 (Tex. 1995) (explaining that "if goods are delayed for the purpose of . . . storage pending receipt of orders, " we do not consider the goods in transit).

         This case bears a close resemblance to the scenario in Federal Compress & Warehouse Co. v. McLean, 291 U.S. 17 (1934). McLean dealt with cotton stored in a warehouse before its eventual resale and shipment out of state. Id. at 19-20. The owner of the cotton entrusted it to the warehouse operator, who gave the owner a receipt in return. Id. at 19. Though the warehouse operator exercised physical control over the cotton, the owner could direct the warehouse operator to deliver certain amounts of cotton to a rail carrier for interstate transportation. Id. at 19-20. These facts mirror ETC and HPL's entrustment relationship. As a result, McLean's following in-transit analysis is highly persuasive in the present case:

It is clear that by all accepted tests the cotton, while in [the] warehouse, has not begun to move in interstate commerce, and hence is not a subject of interstate commerce immune from local taxation. When it comes to rest there, its intrastate journey, whether by truck or by rail, comes to an end, and, although in the ordinary course of business the cotton would ultimately reach points outside the state, its journey interstate does not begin, and so it does not become exempt from local tax until its shipment to points of destination outside the state. Before shipping orders are given, it has no ascertainable destination without the state, and in the meantime, until surrender of the warehouse receipts, it is subject to the exclusive control of the owner. Property thus withdrawn from transportation, whether intrastate or interstate, until restored to a transportation movement interstate, has often been held to be subject to local taxation.

Id. at 21. This analysis[8] lends further support to the conclusion that ETC's gas is not ...

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