OPINION
This is an ad valorem taxation case. The trial court entered a judgment against the Nueces County Appraisal District and the Appraisal Review Board of the Nueces County Appraisal District which decreed that the crude oil owned by Diamond Shamrock and located within appellants' appraisal jurisdiction on January 1st of 1988, 1989, and 1990, was exempt from ad valorem taxation for those years. By a single point of error, appellants complain that the trial court erred by holding that Diamond Shamrock's property was exempt from taxation. We reverse and render.
The Constitution of the State of Texas provides that "all real property and tangible personal property in this State, unless exempt as required or permitted by this Constitution . . . shall be taxed in proportion to its value. . . ." TEX. CONST. art. VIII, § 1(b). See TEX. CONST. art. VIII, §§ 1(d), 1-b, 1-j, 1-k, 2. Principles of federal law may limit a state's power to tax. TEX.TAX CODE ANN. § 11.12 (Vernon 1992);1 Dallas County Appraisal Dist. v. L.D.Brinkman, 701 S.W.2d 20, 20 (Tex.App. — Dallas 1985, writ ref'd n.r.e.). Thus, subject only to the state's constitutional exemptions and federal limitations, the State of Texas has the power and the duty to tax any real and
*Page 214 tangible personal private property in the state. Id. When construing constitutional authorization of tax exemptions, "our courts must resolve any doubts against the exemption because tax exemptions are never favored." Aransas CountyAppraisal Review Board v. Texas Gulf Shrimp, 707 S.W.2d 186, 188 (Tex.App. — Corpus Christi 1986, writ ref'd n.r.e.).
The following facts, among others, were stipulated by the parties. The crude oil was shipped from foreign sources to American Petrofina's Harbor Island storage facility within the Nueces County Appraisal District to await shipment by pipeline to its final destination, Diamond Shamrock's refinery located approximately 100 miles from Harbor Island in Three Rivers, Texas. None of the crude oil was pumped or sold outside Texas. On January 1, 1988, 323,019 barrels of crude oil were present for no longer than 12 days at the Harbor Island facility; 658,968 barrels were present on January 1, 1989, for no longer than 25.3 days; and, 408,667 barrels were present on January 1, 1990, for no longer than 18.1 days. At all times during the years 1987 through 1990, some volume of crude oil owned by Diamond Shamrock was present in the Harbor Island storage facility. While located in Nueces County, the crude oil received governmental services.
Further, Diamond Shamrock admits that the tax is valid except to the extent that it may be precluded by the Import-Export Clause and the Commerce Clause of the United States Constitution, and, if valid, this property is subject to taxation in appellants' taxing district. The parties also stipulated that if the oil originated from sources within Texas, it would be subject to ad valorem taxation in Texas.
THE IMPORT-EXPORT CLAUSE The Import-Export Clause states:
No State shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws: and the net produce of all duties and imposts laid by any State on imports or exports, shall be for the use of the treasury of the United States: and all such laws shall be subject to revision and control of the Congress.
U.S. CONST. art. I, § 10, cl. 2.
Diamond Shamrock contends that the oil was in transit to its refinery and immune from property taxes under the Import-Export Clause until it arrived at its final destination in Three Rivers, Texas. Using the traditional analysis of taxation under the Import-Export Clause, as urged by Diamond Shamrock, all taxes, even nondiscriminatory property taxes, on imports and the importing processes are banned by the Clause. Cityof Farmers Branch v. Matsushita Elec. Corp. of Am., 537 S.W.2d 452, 454 (Tex. 1976) (citing Low v. Austin, 80 U.S. (13 Wall.) 29, 20 L.Ed. 517 (1871) and Brown v.Maryland, 25 U.S. 262, 12 Wheat 419, 6 L.Ed. 678 (1827)). A court's primary consideration, under this traditional approach, is whether the tax under review reaches imports or exports. Department of Revenue of Washington v.Association of Washington Stevedoring Cos., 435 U.S. 734, 752, 98 S.Ct. 1388, 1400, 55 L.Ed.2d 682 (1978).
Diamond Shamrock argues that whether goods are in transit and not subject to local taxation depends on the intent of the parties. Diamond Shamrock relies on cases that determine the validity of the tax by analyzing the character of the taxed property. Swift Textiles, Inc. v. Watkins Motor Lines,Inc., 799 F.2d 697, 699, 700-01, 701 n. 2 (11th Cir. 1986); State v. Anderson, Clayton Co., 92 F.2d 104, 107 (5th Cir. 1937), cert. denied, 302 U.S. 747, 58 S.Ct. 265, 82 L.Ed. 578 (1937); Binderup v. Pathe Exch.,Inc., 263 U.S. 291, 309, 44 S.Ct. 96, 99, 68 L.Ed. 308 (1923).
In Swift, the court considered the intent of the parties and whether the shipment was a part of a larger journey originating in a foreign country. It determined whether the intrastate shipment of machinery was a continuation of foreign commerce under the Carmack Amendment to the Interstate Commerce Act. Swift, 799 F.2d at 699, 700-01, 701 n. 2. Appellants correctly argue that the intentions of the parties might be relevant for defining the nature of a shipment when the dispute is between *Page 215 a common carrier and its client and the issues are contractual in nature. However, under the present facts we are concerned, not with a contract as it applies to an appropriate act, but with the validity of a tax imposed upon one of the parties by a third-party taxing district.
Diamond Shamrock cites the following propositions inAnderson, Clayton. "[T]he intention existing at the time the movement starts governs and fixes the character of the shipment," and "[t]emporary stoppage within the state, made necessary in furtherance of the interstate carriage, does not change its character." Anderson, Clayton, 92 F.2d at 107. Diamond Shamrock relies on cases that reflect the traditional analysis of taxation under the Import-Export Clause.
The United States Supreme Court abandoned the traditional inquiry into the character of the taxed property inMichelin Tire Corp. v. Wages, 423 U.S. 276, 279, 96 S.Ct. 535, 537, 46 L.Ed.2d 495 (1976). See R.J. ReynoldsTobacco Co. v. Durham County, North Carolina,479 U.S. 130, 152, 107 S.Ct. 499, 513, 93 L.Ed.2d 449 (1986); XeroxCorp. v. County of Harris, 459 U.S. 145, 150-51, 103 S.Ct. 523, 526-27, 74 L.Ed.2d 323 (1982); WashingtonStevedoring, 435 U.S. at 759, 98 S.Ct. at 1404;Recent Cases, 29 VANDERBILT L.REV. 487, 493-94 (1978). In Michelin, the Court initiated a new, fundamentally different approach to the Import-Export Clause. Under the contemporary analysis, instead of focusing on whether the property has lost its status as an "import," the Court focused on whether the tax sought to be imposed is an "impost or duty."Michelin, 423 U.S. at 290-94, 96 S.Ct. at 543-45;see Limbach v. Hooven Allison Co., 466 U.S. 353, 360, 104 S.Ct. 1837, 1842, 80 L.Ed.2d 356 (1984);Louisiana Land Exploration v. Pilot Petroleum,900 F.2d 816, 820-21 (5th Cir. 1990), cert. denied,498 U.S. 897, 111 S.Ct. 248, 112 L.Ed.2d 207 (1990). Appellants urge that, under the holding in Michelin, the oil was not in transit for taxation purposes. Additionally, even if "in transit," appellants contend that it was not automatically immune from taxation.
"[T]he [Import-Export] Clause was fashioned to prevent the imposition of exactions which were no more than transit fees on the privilege of moving through a State." Michelin, 423 U.S. at 290, 96 S.Ct. at 543. The Court inMichelin concluded that an exaction by a state would be objectionable if it offended any of the three policy considerations which led the framers to incorporate the Import-Export Clause into the Constitution. These considerations are:
Michelin, 423 U.S. at 285-86, 96 S.Ct. at 540-41. We conclude that the tax at issue in this case offends none of these policies.1. [T]he Federal Government must speak with one voice when regulating commercial relations with foreign governments, and tariffs, which might affect foreign relations, could not be implemented by the States consistently with that exclusive power;
2. [I]mport revenues were to be the major source of revenue of the Federal Government and should not be diverted to the States; and
3. [H]armony among the States might be disturbed unless seaboard States, with their crucial ports of entry, were prohibited from levying taxes on citizens of other States by taxing goods merely flowing through their ports to the inland States not situated as favorably geographically.
First, this property tax can have no impact on the federal government's exclusive regulation of foreign commerce. By definition, it does not fall on imports because of their place of origin. Michelin, 423 U.S. at 286, 96 S.Ct. at 541.
Second, the federal government retains the exclusive right to all revenues from exactions on imports and exports. Unlike imposts and duties, which are essentially taxes on the commercial privilege of bringing goods into a country, ad valorem property taxes are taxes by which a state apportions the cost of such services as police and fire protection among the beneficiaries. Michelin, 423 U.S. at 287, 96 S.Ct. at 541; Matsushita, 537 S.W.2d at 454. Although the Import-Export Clause prohibits *Page 216
state taxation based on the foreign origin of the imported goods, it cannot be read to accord imported goods preferential treatment that permits escape from uniform nondiscriminatory taxes for services which the state supplies.Michelin, 423 U.S. at 286-87, 96 S.Ct. at 541-42. There is no reason why Diamond Shamrock should not bear its share of these costs.
Diamond Shamrock argues that the only reason for the oil being in the Harbor Island tanks was because it could not be transported out more quickly through the pipeline. However, the stipulations reveal that Diamond Shamrock's Three Rivers storage capacity was only 200,000 barrels while the average volume in the Harbor Island facility on January 1st of the relevant years was 463,550 barrels. It appears that Diamond Shamrock could have stored the oil in these tanks until such time as the capacity of the tanks at Three Rivers could have accepted it. We conclude that a substantial amount of oil was stored in the Harbor Island facility because it had a higher comparable capacity than the tanks at Three Rivers.
Finally, this tax in no way conflicts with the third purpose of the Import-Export Clause. With this concern the framers desired to encourage harmony among the states.Michelin, 423 U.S. at 286-88, 96 S.Ct. at 541-42. The crude oil originated totally from foreign sources. It entered the United States at the Harbor Island facility located within the Nueces County Appraisal District. The parties stipulated that the final destination of the crude oil was Three Rivers, Texas. None of the crude oil in question was pumped or sold outside the State of Texas in its present form. The import was concluded when off-loaded and put into storage tanks and was stored there continuously until it was transferred to the tanks in Three Rivers. Under these facts, there was never an opportunity for disturbing harmony among the states. This tax has no effect on the cost of property moving to any inland state, but simply requires appellee to bear a share of the cost of government in proportion to its ownership of this property.
We conclude that once the purposes of the Import-Export Clauses of the United States Constitution have been satisfied, as in this case, the concept of "in transit" loses any rational meaning. At that point the taxability of the property becomes a matter for the state. It is clear that had this oil been produced in another taxing district in Texas and transferred to the Harbor Island Storage facilities under the same circumstances and for the same purposes, Texas law would hold the appellants' tax valid. See Exxon Corp. v. San PatricioCounty Appraisal Dist., 822 S.W.2d 269 (Tex.App. — Corpus Christi 1991, writ denied). The fact that this crude oil came from a foreign country makes it no more "in transit" under Texas law than it would have been in the Exxon case.
We hold that the Import-Export Clause does not prohibit the tax in this case.
THE COMMERCE CLAUSE The Commerce Clause grants Congress power "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes. . . ." U.S. CONST. art. I, § 8, cl. 3.
Initially, Diamond Shamrock contends that because appellants failed to brief or argue the Commerce Clause question, they have waived the right to challenge the trial court's judgment on that issue. However, appellants filed a reply brief that argues the validity of the tax under the Commerce Clause. The issue has not been waived on appeal.
Diamond Shamrock urges that the traditional rule which provides a blanket prohibition against any state taxation imposed directly on an interstate [or foreign] transaction, applies in this case. See Freeman v. Hewit,329 U.S. 249, 256-57, 67 S.Ct. 274, 278-79, 91 L.Ed. 265 (1946). Appellants contend that the Supreme Court has abandoned the traditional analysis of interstate and international commerce immunities from state taxation, and has moved to a review of the tax in question to determine whether it discriminates against such commerce or fairly relates to services provided by the State or both. See Michelin, 423 *Page 217 U.S. at 286-89, 96 S.Ct. at 541-42; Complete AutoTransit, Inc. v. Brady, 430 U.S. 274, 282, 97 S.Ct. 1076, 1080, 51 L.Ed.2d 326 (1977); Washington Stevedoring, 435 U.S. at 753, 98 S.Ct. at 1400; Colonial Pipeline Co.v. Traigle, 421 U.S. 100, 108, 95 S.Ct. 1538, 1543, 44 L.Ed.2d 1 (1975).
Complete Auto sets out the test for the validity of taxes on interstate commerce. A tax is sustainable against a Commerce Clause challenge when the tax 1) is applied to an activity with a substantial nexus with the taxing state, 2) is fairly apportioned, 3) does not discriminate against interstate commerce, and 4) is fairly related to the services provided by the State. Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079; see Washington Stevedoring, 435 U.S. at 750, 98 S.Ct. at 1399. The Court in Japan Line, Ltd. v. Countyof Los Angeles, 441 U.S. 434, 451, 99 S.Ct. 1813, 1823, 60 L.Ed.2d 336 (1979), formulated a more extensive foreign commerce clause test by adding two inquiries to the existingComplete Auto interstate commerce clause test: 1) whether the tax, notwithstanding apportionment, creates a substantial risk of international multiple taxation, and 2) whether the tax may impair federal uniformity and prevent the federal government from speaking with one voice when regulating commercial relations with foreign governments. JapanLine, 441 U.S. at 448, 451, 99 S.Ct. at 1821, 1823. We conclude that the foreign commerce clause test is satisfied, thus, no impermissible burden on this foreign commerce exists.
Diamond Shamrock urges the tax in question is impermissible under either the Complete Auto or the JapanLine tests. Under the first prong of CompleteAuto, Diamond Shamrock contends that the crude oil did not have a sufficient nexus to Nueces County because it was only entering, exiting, or passing through the county. The stipulated facts reveal that some of Diamond Shamrock's oil was present within appellants' boundaries at all times during the tax years in question. The oil was consumed in the state. The oil present on January 1st of each of the three years remained for a period of 12, 25, and 18 days, respectively. The oil received governmental services in Nueces County. We conclude that the oil had a substantial local nexus with the taxing entity, satisfying prong one.
Under the second prong of Complete Auto, Diamond Shamrock contends that because appellants' tax is on the full value of the oil on the assessment date, it does not meet the apportionment requirement of Complete Auto. We disagree.
The apportionment test is designed to avoid multiple taxation of the same property or activity among the states or nations. Its purpose "is to ensure that each State taxes only its fair share of an interstate transaction." Goldberg v.Sweet, 488 U.S. 252, 260, 109 S.Ct. 582, 588, 102 L.Ed.2d 607 (1989). Under the facts of this case, no multiple burdens were demonstrated. The tax could occur in no other state because the oil had no contact with any other state. Additionally, the facts revealed no apportionment issue involving the importing country.
Even if there were an apportionment issue as it relates to the portion of the property present within the county's boundary, the burden of proving the tax unfair or that an exemption applies is on the taxpayer who makes such a claim.See Central R.R. Co. of Pennsylvania v. Pennsylvania,370 U.S. 607, 613-17, 82 S.Ct. 1297, 1302-04, 8 L.Ed.2d 720 (1962). To meet his burden the taxpayer must show that the taxing state is taxing more than its fair share of the property's value. The record reveals Diamond Shamrock contested neither the volume nor the value of the property which appellants sought to tax. As a result, it has waived any claim that this state has sought to impose a tax on more than its fair share of the property. If property is located in the taxing district on the assessment day, the presumption is that it is taxable. The burden should be on the person or entity taxed to prove otherwise. See TEX.TAX CODE ANN. §21.02(1) (Vernon 1992); Davis v. City of Austin, 632 S.W.2d 331, 333 (Tex. 1982).
The record contains nothing that shows the tax discriminates against interstate or *Page 218 foreign commerce, the third prong of Complete Auto. Clearly, this nondiscriminatory tax passes this test because the taxing state only taxed that property which was present within its boundaries and received governmental services regardless of its origin or its destination.
Under Complete Auto's fourth prong, "the tax is fairly related to the services provided by the State," Diamond Shamrock repeats its argument involving nexus and appropriation with the same result: the facts, as articulated under prong one, show a clear relationship exists between the tax and the services provided. Thus, the fourth prong is met.
Next, we review the two foreign commerce requirements identified in Japan Line. Diamond Shamrock asserts that the tax enhances the risk of multiple taxation and impairs federal uniformity. Specifically, Diamond Shamrock urges that full taxation on goods in transit may provoke retaliation by foreign nations. Relying on Japan Line, Diamond Shamrock argues that since appellants taxed the crude oil on its full value, multiple taxation is inevitable and the United States has no way to prevent that multiple taxation. SeeJapan Line, 441 U.S. at 447, 99 S.Ct. at 1820.
The property in question in Japan Line was shipping containers owned by Japan Line, Inc., a Japanese domiciliary.Japan Line, 441 U.S. at 436, 99 S.Ct. at 1815. The containers were repeatedly sent back and forth between Japan and the United States. Id. All containers were subject to property tax in Japan and, in fact, were taxed in Japan. Id. The County of Los Angeles sought to tax the same entity on the assessed value of the containers present in its jurisdiction on the assessment date. Id. at 437, 99 S.Ct. at 1815. The Court held that because Japan had the right to tax the property value of the containers in full, California's tax necessarily produced multiple taxation.Id. at 447, 99 S.Ct. at 1820. The Court further held that the California tax prevented the United States from speaking with one voice in foreign affairs because the risk of retaliation by Japan, under these circumstances, was acute.Id. at 453, 99 S.Ct. at 1824.
No similar facts exist in the present case. Once the crude oil enters this country, the application of appellants' tax does not necessarily result in double taxation. In fact, it is undisputed that if the property is subject to property taxes in Texas, its taxable situs is Nueces County, thus avoiding the possibility of double taxation within the state. Diamond Shamrock's arguments under Japan Line concerning an enhanced risk of multiple taxation and an impairment of federal uniformity have no application in this case.
Finally, an ad valorem property tax that conflicts with the three basic purposes of the Import-Export Clause would also be invalid under the Commerce Clause analysis because the policies animating both clauses are much the same. Japan Line, 441 U.S. at 449 n. 14, 99 S.Ct. at 1822 n. 14. As previously discussed, no conflict exists between this tax and the federal government's exclusive regulation of foreign commerce or its exclusive right to all revenues from exactions on imports and exports, or the framers' desire to encourage harmony among the states.
We hold that the tax is sustainable against a Commerce Clause challenge.
Because the Import-Export Clause and the Commerce Clause have no application in this case, the law of the State of Texas applies. Thus, we conclude that Diamond Shamrock's crude oil located in the Harbor Island facility on January 1st of 1988, 1989, and 1990 is not exempt from the ad valorem property taxes for those years.
We reverse the judgment of the trial court and render that Diamond Shamrock's property is not qualified as exempt property.
Concurring opinion by DORSEY, J.
Dissenting opinion by Assigned Justice GERALD T. BISSETT2, joined by NYE, C.J., and KENNEDY, J. *Page 219