Taxation and State Taxation -- 2017

ETC Marketing, Ltd. v. Harris County Appraisal Dist.   (U.S. Supreme Court)

State taxation of temporarily stored natural gas

The issue in this case is whether temporarily stored natural gas can be taxed while in interstate transit to consumers. Natural gas is a cornerstone of the national energy infrastructure and requires an intricate system of cross-border pipeline networks connecting suppliers with end users. Lower courts have approved many state and local practices of taxing natural gas as it is temporarily stored within this pipeline network. By taxing natural gas in this way, state and local authorities are levying costs on consumers thousands of miles away, many of whom often have no other substitute for natural gas. These taxes violate the “in-transit” principle of the Commerce Clause. The principle states that goods that remain in the transit process cannot be locally taxed.

The NAM filed a brief in October 2017 asking the Supreme Court to review this case to resolve a split between lower court rulings, some of which abide by the older and binding “in-transit” precedent and newer decisions which have unlawfully and unconstitutionally departed from this standard. The NAM requests that the Court use this case as an opportunity to reaffirm the “in-transit” standard and issue clear guidance to the states that taxes should not be levied in a manner that harms interstate commerce.

On December 11, 2017, the Supreme Court denied the petition for certiorari.

Related Documents:
NAM amicus brief  (October 20, 2017)


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