By Jessie Eisenmenger and Jonathan Feldman

The Texas Supreme Court held that a non-discriminatory tax on stored gas held for future resale does not violate the Commerce Clause of the US Constitution. Harris County imposed an ad valorem tax on natural gas stored in the county on January 1 of the tax year. Applying the four-prong Complete Auto test after first finding that the gas was in interstate commerce, the court reasoned that: (1) the gas had substantial nexus with the county because it was not merely in transit through the county; (2) the tax was fairly apportioned because it was limited only to the amount of gas in the county on a certain day and therefore was internally consistent; (3) the tax did not discriminate against interstate commerce because it applied equally to gas that will be sold in the state and gas that will be sold outside the state; and (4) the tax was fairly related to services provided by the state because the stored gas benefited from services (specifically, fire department services). The ruling is consistent with similar cases in Oklahoma and Kansas. ETC Marketing Ltd. v. Harris County Appraisal District, No. 15-0687 (Tex. Dec. 6, 2016).