Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157 (1954)

Michigan-Wisconsin Pipe Line Co. v. Calvert

Argued January 5-6, 1954
Decided February 8, 1954 *
347 U.S. 157

APPEAL FROM THE COURT OF CIVIL APPEALS OF TEXAS,

THIRD SUPREME JUDICIAL DISTRICT

Syllabus

1. A Texas tax on the occupation of "gathering gas," measured by the entire volume of gas "taken," as applied to an interstate natural gas pipeline company, where the taxable incidence is the taking of gas from the outlet of an independent gasoline plant within the State for the purpose of immediate interstate transmission, held invalid under the Commerce Clause of the Federal Constitution. Pp. 161-170.

(a) The validity of the tax under the Commerce Clause depends upon considerations of constitutional policy having reference to the substantial effects, actual or potential, of the tax in suppressing or unduly burdening interstate commerce. P. 164.

(b) A tax imposed on a local activity related to interstate commerce is valid only if the local activity is not such an integral part of the flow of interstate commerce that it cannot realistically be separated from it. P. 166.

(c) As here applied, the State has delayed the incidence of the tax beyond the step where production and processing have ceased and transmission in interstate commerce has begun, so that the tax here is not levied on the capture or production of the gas, but rather on its taking into interstate commerce after production, gathering, and processing. Utah Power & Light Co. v. Pfost, 286 U.S. 165, distinguished. Pp. 166-169.

(d) Validation of this tax would permit a multiple burden upon interstate commerce, for if Texas may impose this "first taking" tax measured by the total volume of gas so taken, then the other recipient states would have at least equal right to tax the first taking or "unloading" from the pipeline of the same gas when it arrives for distribution, and thus, in effect, would be resurrected the customs barriers that the Commerce Clause was designed to eliminate. P. 170.

2. The Supreme Court of Texas "refused" applications for writs af error to review a decision of the Court of Civil Appeals which upheld the validity of a state statute challenged as violative of the Federal Constitution. By state statute and procedural rule, the refusal signified that the State Supreme Court deemed the judgment of the Court of Civil Appeals correct, and that the principles of law had been correctly determined. Held: the Court of Civil Appeals was "the highest court of a State in which a decision could be had" within the meaning of 28 U.S.C. § 1257, and the appeals to this Court were properly from the Court of Civil Appeals, and not from the Supreme Court of Texas. Pp. 159-160.

3. The issue of the validity of the tax was properly raised in this case. P. 165, n. 4.

255 S.W.2d 535 reversed.

The Texas Court of Civil Appeals sustained the validity of a state statute challenged as violative of the Federal Constitution. 255 S.W.2d 535. The State Supreme Court refused writs of error. The two appellants each took appeals from both the Court of Civil Appeals and the State Supreme Court. Here, the appeals from the State Supreme Court are dismissed, and the judgments of the Court of Civil Appeals are reversed, pp. 160, 170.