Opposition Brief — Harris County Appraisal District v. Virginia Indonesia Co.

i Supreme Court, U.S.

FILED

v | PRR 19 1996

Re | cuERy

No. 95-1528

IN THE

Supreme Court Of The Anited States

OCTOBER TERM, 1995

Harris County Appraisal District and

Harris County Appraisal Review Board,

Petitioners,

v.

Virginia Indonesia Company,

Respondent.

On Petition for Writ of Certiorari

to the Supreme Court of Texas

RESPONDENT’S BRIEF IN OPPOSITION

RANDY BURTON

Moerer & Burton, L.L.P.

440 Louisiana, Suite 350

Houston, Texas 77002

(713) 222-6262 [telephone]

(713) 222-6811 [facsimile]

Counsel for Respondent

QUESTION PRESENTED

Whether a direct tax on export goods that are merely in

transit through a state on their way to a foreign country is an

"impost or duty" on an "export" prohibited by the Import-

Export Clause in Article I, Section 10, Clause 2, of the

United States Constitution.

li

PARTIES TO THE PROCEEDING

Petitioners:

Harris County Appraisal District

Harris County Appraisal Review Board

Respondent:

Virginia Indonesia Company

iil

RULE 29.6 LISTING

The following are parent corporations related to Virginia

Indonesia Company in which outside persons or investors

might have an interest:

Virginia Indonesia Company is a wholly-owned subsidiary of

VICO 7.5, Inc., which is a wholly-owned subsidiary of

ENSTAR Corporation.

ENSTAR Corporation is a wholly-owned subsidiary of

Unimar Company, a Texas general partnership jointly

owned by Unistar, Inc., and LASMO (USTAR) Inc.

Unistar, Inc., is a wholly-owned subsidiary of Union Texas

Petroleum Holdings, Inc.

LASMO (USTAR) Inc., is a wholly-owned subsidiary of

LASMO America Limited, which is a wholly-owned

subsidiary of LASMO plc.

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iv

TABLE OF CONTENTS

Page

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WEN UE ES Ss cle eos ovine Cakcc nce. ii

catacshccistihe. uy ERED CLOT TCT iii

EEE cya te iv

be ks a ee vi

CI er oye a bb ob oo ow oa vb oboe l

I et ]

Constitutional Provision Involved ............... 3

Reasons for Denying the Writ ................. 4

I. Certiorari should be denied because

the Texas Supreme Court’s opinion

does not conflict with previous

U.S. Supreme Court decisions ............ 4

A. The Texas Supreme Court’s opinion

does not conflict with previous

rulings of this Court concerning

goods that are no longer in transit ......... 5

TABLE OF CONTENTS (continued)

B. The Texas Supreme Court’s opinion

does not conflict with previous

rulings of this Court concerning

indirect taxation relating to

oe on ee,

C. The Texas Supreme Court’s opinion

is entirely consistent with previous

rulings of this Court concerning

direct taxation of export

gk. TRS Se See

If. Certiorari should be denied because the

result reached by the Texas Supreme Court

is consistent with sound policy ............

III. Certiorari should be denied because

the result reached by the Texas

Supreme Court was correct

Pe

eas etc anni ne

Appendix (Table of Import-Export Clause Cases)

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TABLE OF AUTHORITIES

Cases:

A. G. Spalding & Bros. v. Edwards,

- eo ® 2) Sr eae

Brown v. Maryland, 25 U.S. 419 (1827)

Coe v. Town of Errol, 116 U.S. 517 (1886)

Department of Revenue v. Association

of Washington Stevedoring Companies,

Wee OS a eee ke es

Empressa Siderurgica v. County of Merced,

ee aes SO ga a ee

Itel Containers Int’l Corp. v. Huddleston,

Fig Ne a kd

Joy Oil Co. v. State Tax Comm’n,

Re eS

Kosydar v. National Cash Register Co..,

a Mn cs a a a

Limbach v. Hooven & Allison Company,

Ms EE

4,8

Vii

TABLE OF AUTHORITIES (continued)

Cases, continued: Page

Louisiana Land & Exploration Co. v.

Pilot Petroleum, 900 F.2d 816 (Sth Cir. 1990),

cert. denied, 498 U.S. 897(1990) ....... 13-14

Low v. Austin, 80 U.S. 29 (1872) ............. 8

Michelin Tire Corp. v. Wages,

kk 5-14

R. J. Reynolds Tobacco Co. v. Durham County, N.C.,

i A

Richfield Oil Corp. v. State Board of Equalization,

ES 14-15

Virginia Indonesia Co. v. Harris Cty.,

910 S.W.2d 905 (Tex. 1995) .......... LoS

Statutes and Constitutional Provisions: Page

TEX. TAX CODE ANN. §11.01

CE See 16-17

IF ee ee) Oe 3-10, 12-17

Re ee ee 16, 17

No. 95-1528

IN THE

Supreme Cort Of The United States

OCTOBER TERM, 1995

Harris County Appraisal District and

Harris County Appraisal Review Board,

Petitioners,

¥.

Virginia Indonesia Company,

Respondent.

OPINION BELOW

The opinion of the Supreme Court of Texas is

reported at 910 S.W.2d 905 (Tex. 1995).

STATEMENT OF THE CASE

The statement of Petitioners Harris County Appraisal

District and Harris County Appraisal Review Board ("Harris

County") contains omissions or inaccuracies, and Respondent

Virginia Indonesia Company ("VICO") offers the following

Clarifications:

2

1. Harris County omitted or distorted several

salient facts concerning the nature of VICO’s business and

the in transit status of the goods in question. First, VICO is

not in the business of importing or exporting goods. VICO

is the operator and agent for an Indonesian joint venture that

explores for oil and gas in the Republic of Indonesia. It is

this Indonesian joint venture that purchases goods through

VICO. Second, VICO derives no profits from its

procurement of the goods; it is merely reimbursed. VICO

has no authority to divert the goods for use in the United

States. Furthermore, VICO has no authority to delay the

goods from being shipped to their final destination in the

Republic of Indonesia. If the goods are deemed to be

nonconforming, they are returned to the vendor. Therefore,

the continuity of transit is not broken at any point.

y B Harris County also omitted a fact which is key

to the "one voice” policy addressed by the Texas Supreme

Court. Under the Decree of the President of the Republic of

Indonesia 14A Year 1980 on the Implementation of the State

Revenues and Expenditures Budget, certain of VICO’s goods

present at the export packer on January 1, 1991, are subject

to import duties and taxes in Indonesia.

D>. Harris County’s assertion that "Local

inspection enables the goods to avoid customs inspection

upon their arrival in Indonesia," is inaccurate and not part of

the record. This erroneous statement originally appeared in

the Texas court of appeals’ opinion and its origin is

unknown. What the record indicates is that, under

Indonesian law, a pre-shipment inspection must be conducted

in the country of origin and any problem must be corrected

at the country of origin before Indonesia will accept the

goods. Indonesian law also requires that a list of goods and

3

equipment being exported must be submitted on a

quarterly basis to the Indonesian government for approval

prior to export from the country of origin. This process is

not for the business convenience of VICO; it is a legal

prerequisite for goods being imported into Indonesia.

a Harris County’s statement that "VICO has

goods at the export packer’s yard throughout the year"

implies that the same goods are sitting there throughout

the year. Actually, VICO moves various shipments of

goods through the export packer in the course of a year,

so that varying types and quantities of goods are at the

export packer’s facilities at any given time during the year,

but the same goods do not remain at the export packer’s

facility for the entire year.

CONSTITUTIONAL PROVISION INVOLVED

The United States Constitution, Article I, § 10, cl.

2, provides:

No State shall, without the Consent of

Congress, lay any Imposts or Duties on

Imports or Exports, except that which may

be absolutely necessary for executing

inspection Laws...

REASONS FOR DENYING THE WRIT

I. CERTIORARI SHOULD BE DENIED BECAUSE

THE TEXAS SUPREME COURTS OPINION

DOES NOT CONFLICT WITH PREVIOUS U.S.

SUPREME COURT DECISIONS

Since at least 1827, this Court has recognized that

the constitutional prohibition on the states to lay imposts

or duties on imports and exports may conflict with a state’s

acknowledged power to tax persons and property within its

territory. See Brown v. Maryland, 25 U.S. 419, 441 (1827).

Decisions by this Court involving the Import-Export Clause

have been fact specific. Kosydar v. National Cash Register

Co., 417 U.S. 62, 67 (1974) ("Of necessity, the inquiry has

usually been a factual one."). Cases in this area have

turned on two separate but related factors:

° whether the goods are in transit at the time

of taxation; and

° whether the tax is a direct tax on the goods

themselves.

A chart of Supreme Court decisions in this area, organized

according to these factors, is attached as an Appendix.

This chart clearly illustrates that this Court has consistently

looked to these factors when analyzing whether the tax

was valid under the Import-Export Clause. The threshold

question in this analysis is:

Is the tax in question a direct tax on goods "in

transit"?

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If so, the tax is invalid and no further inquiry is necessary.

If the tax is not a direct tax and/or is not on goods in transit,

then the Court has framed a second question:

Does the tax offend any of the policies underlying

the Import-Export Clause?

In this case, Harris County assessed an ad valorem

property tax on goods which VICO was exporting from the

United States to the Republic of Indonesia. Under Import-

Export Clause analysis, this tax is a direct tax on exports

merely in transit through the state of Texas. Therefore,

applying the basic "in transit" test, the Texas Supreme Court

correctly held that these goods are immune from such a tax.

That holding does not conflict with the body of case law from

this Court on the Import-Export Clause.

A. The Texas Supreme Court’s opinion

does not conflict with previous rulings of

this Court concerning goods that are no

longer in transit.

The Texas Supreme Court’s opinion does not conflict

with opinions of this Court upholding taxes, such as Coe v.

Town of Errol, 116 U.S. 517 (1886), Joy Oil Co. v. State

Tax Comm’n, 337 U.S. 286 (1949), Empressa Siderurgica v.

County of Merced, 337 U.S. 154 (1949), Kosydar v. National

Cash Register, Michelin Tire Corp. v. Wages, 423 U.S. 276

(1976), Limbach v. Hooven & Allison Company, 466 U.S.

353 (1984), and R. J. Reynolds Tobacco Co. v. Durham

County, N.C., 479 U.S. 130 (1986). All of those cases

involved goods that were not in transit at the time of

taxation. Accordingly, those goods were properly excluded

from the protection of the Import-Export Clause.

6

In Coe, this Court established the in transit test to

determine whether a tax being applied by a state directly to

imports or exports is constitutional. Coe recognized that the

taxing power of the state ceases when goods are in transit to

a foreign country or to another state.

This question does not present the predicament

of goods in course of transportation through a

State, though detained for a time . . . Such

goods are already in the course of

commercial transportation, and are clearly

under the protection of the constitution.

Coe, 116 U.S. at 525-527. Conversely, Coe held that goods

that are not in transit are subject to taxation because they are

"part of the general mass of property in the state." Coe, 116

U.S. at 527. This Court has consistently applied this basic

in transit test in Import-Export Clause cases.

Kosydar is the last case where this Court specifically

dealt with export goods under the Import-Export Clause. In

Kosydar, this Court again stressed that export goods that are

in transit are exempt from taxation. Kosydar, 417 U.S. at 57.

This principle has never been overruled by this Court.

Harris County has conceded that the goods in this

case are in transit. See Petition for Writ of Certiorari, pp.

7-8. | However, Harris County claims that Michelin

abandoned the in transit test altogether in the determination

of whether goods are exempt from taxation under the Import-

Export Clause. Harris County’s argument suggests that

Michelin effectively overruled ninety years of reasoning

beginning with Coe, without expressly overruling any of

those cases.

7

Although Michelin appears to change the focus of

Import-Export Clause analysis in some cases, this change is

not as extensive as Harris County claims, for several reasons.

First, the three policy concerns introduced in Michelin' are

expressly limited to cases where the goods are no longer

in transit and/or where the tax is not on the goods

themselves. Michelin still requires a threshold determination

of whether the goods are imports or exports merely in transit

through the state at the time of taxation. R. J. Reynolds, 479

U.S. at 154-55. If so, they are exempt from taxation and no

further analysis is required.

' Michelin discussed three concerns sought to be alleviated by the

Framers of the Constitution by committing sole power to lay imposts and

duties on imports in the Federal Government, with no concurrent state

power:

(1) the 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) import revenues were to be the major source of revenue

of the Federal Government and should not be diverted

to the States; and

(3) harmony 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.

Michelin, 423 U.S. at 285-286.

8

Second, Michelin has been described as shifting the

analysis from whether the goods have lost their status as

imports or exports to an analysis of the nature of the tax.

Department of Revenue v. Association of Washington

Stevedoring Companies, 435 U.S. 734, 752, 760 (1978).

However, this inquiry necessarily involves some analysis of

the goods themselves. The Michelin analysis only applies to

goods no longer in transit and/or to situations where the tax

is not on the imports or exports themselves.

Third, Harris County argues that both Michelin and

Itel Containers Int’l Corp. v. Huddleston, 113 S.Ct. 1095

(1993) replaced the in transit test with a three-part "test" to

be applied in every case involving the Import-Export Clause.

See Petition for Writ of Certiorari, pp. 5-6, 8-9, 11. This

argument ignores key factual distinctions in Michelin and Itel

that were critical to this Court’s analysis in those cases.’

Both Michelin and Itel involved imports which at the time of

the tax were no longer in transit. Although Michelin may

have articulated some factors to consider when the tax is not

? Further, if this Court uniformly applied the Michelin analysis to all

Import-Export Clause cases, it would risk making the following type of

mistakes made in Low v. Austin, 80 U.S. 29 (1872), when the Court

misinterpreted Brown v. Maryland. "[T]he Court in Low v Austin

ignored the warning that the boundary between the power of States to tax

persons and property within their jurisdictions and the limitations on the

power of the States to impose imposts or duties with respect to ‘imports’

was a subtle and difficult line which must be drawn as the cases arise.

Low v Austin also ignored the cautionary remark that, for those reasons,

it ‘might be premature to state any rule as being universal in its

application.’" Michelin, 423 U.S., at 298-299.

9

a direct tax on goods in transit, that analysis is limited to a

certain set of facts.°

Finally, neither Jtel, nor Michelin, nor any other

United States Supreme Court case since, has concluded that

the in transit test utilized by this Court should be abandoned.

The Jtel Court simply stated that it was "inapplicable here."

Itel, S.Ct. at 1106. Likewise, the Michelin Court expressly

limited its holding to imported goods "no longer in transit."

Michelin, 423 U.S. at 302. Accordingly, the in transit test

is still the proper analytical framework for determining

whether exports under the Import-Export Clause are exempt

from taxation and should be followed on the basis of stare

decisis alone.

Michelin clearly sets out both the genesis of the "in-

transit" test and the basis for its continued viability:

One of the major defects of the Articles of

Confederation, and a compelling reason for

the calling of the Constitutional Convention of

1787, was the fact that the Articles essentially

left the individual States free to burden

> It is unclear what the rationale was behind the Michelin Court’s

discussion of the three policy considerations, or whether that Court even

intended its discussion to become the foundation for a test attributed to

Michelin by later decisions. Regardless of the rationale, it is not

necessary for the Court to apply the additional criteria in Michelin in

order to determine the viability of the tax in this case because this case

is factually distinguishable from Michelin. However, as a practical

matter, it is difficult to imagine a case involving exports in which the

more complicated Michelin analysis, originally developed for imports no

longer in transit, would produce a different result from the basic in transit

test recognized since Coe. See Appendix.

10

commerce both among themselves and with

foreign countries very much as they pleased.

An evil to be prevented by the Import-Export

Clause was the levying of taxes which could

only be imposed because of the peculiar

geographical situation of certain States that

enabled them to single out goods destined for

other States. In effect, the Clause was

fashioned to prevent the imposition of

exactions which were no more than transit

fees on the privilege of moving through a

State. A nondiscriminatory ad valorem

property tax [on goods no longer in transit]

obviously stands on a different footing, and to

the extent there is any conflict whatsoever

with this purpose of the Clause, it may be

secured merely by prohibiting’ the

assessment of even nondiscriminatory

property taxes on goods which are merely

in transit through the State when the tax is

assessed.

Michelin, 423 U.S. at 283, 289-290 (emphasis added).

Since Harris County has conceded for purposes of this

appeal that the export goods in this case are in transit, the

Texas Supreme Court properly held the ad valorem tax on the

goods in question was unconstitutional under the Import-

Export Clause.

11

B. The Texas Supreme Court’s opinion

does not conflict with previous rulings of

this Court concerning indirect taxation

relating to imports or exports.

The Texas Supreme Court’s opinion does not conflict

with Washington Stevedoring or with Itel because those cases

involved an indirect tax on a business activity related to

imports or exports within the state, whereas this case involves

the direct taxation of exports.

In Washington Stevedoring, this Court stated:

The Court in Michelin qualified its holding

with the observation that Georgia had applied

the property tax to goods "no longer in

transit." 423 U.S. at 302. Because the goods

were no longer in transit, however, the Court

did not have to face the question whether a tax

relating to goods in transit would be an

"Impost or Duty" even if it offended none of

the policies behind the Clause. Inasmuch as

we now face this inquiry, we note two

distinctions between this case and Michelin.

First, the activity taxed here occurs while

imports and exports are in transit. Second,

however, the tax does not fall on the goods

themselves. The levy reaches only the

business of loading and unloading ships... .

Despite the existence of the first distinction,

the presence of the second leads to the

conclusion that the Washington tax is not a

prohibited "Impost or Duty" when it violates

none of the policies.

12

Washington Stevedoring, 435 U.S. at 755 (footnote omitted).

Drawing a distinction between a direct tax on in transit

goods, and a tax on the business activity of handling goods

in transit, the Court upheld the stevedoring tax. Jd., 435

U.S. at 755 (stating that the "immunity of services incidental

to importing and exporting [is] not so broad as the immunity

of the goods themselves"). In so doing, Washington

Stevedoring applied the Michelin analysis to cases involving

the indirect taxation of imports or exports.

The question presented by Harris County of "Whether

the Import-Export Clause prohibits state and local ad valorem

property taxation of goods in transit in the stream of export

even if the tax offends none of the policies underlying the

Clause" is not the question presented by Washington

Stevedoring, 435 U.S. at 755. The question posed by

Washington Stevedoring was “whether a[n indirect] tax

relating to goods in transit would be an ‘Impost or Duty’

even if it offended none of the policies behind the [Import-

Export] Clause." This question was correctly answered by

the Washington Stevedoring Court, holding that a tax that

does not fall on the goods themselves is not a prohibited

impost or duty. Washington Stevedoring, 435 U.S. at 755.

However, the question presented to the Court by Harris

County concerns a direct tax on the in transit goods

themselves and, therefore, presents an impossibility under

Michelin.* Since a direct tax on goods in transit offends the

* Harris County’s second question presented is "Whether an ad

valorem property tax usurps the Federal Government’s ability to ‘speak

with one voice when regulating commercial relations with foreign

governments’ for the sole reason that it is levied on goods in transit in the

stream of export." However, this question must be addressed only when

the facts of a case present a tax related to imports or exports which are

no longer in transit. Since the goods in this case are exports in transit

13

threshold test under Michelin, it would be impossible for a

direct tax on goods in transit to be an “impost or duty"

without offending the policies behind the Import-Export

Clause. Furthermore, the term "imposts or duties" in the

Import-Export Clause was intended to embrace taxation that

creates any of the evils the Clause was intended to eliminate.

Michelin, 423 U.S. at 293-294. Accordingly, if a tax is on

goods themselves, merely in transit through a state, it is a

constitutionally prohibited "impost or duty” per se.

Like Washington Stevedoring, Itel involved an indirect

tax On a business activity, not a tax on the goods themselves.

Accordingly, /tel rejected the argument that "the tax violated

the prohibition on the direct taxation of imports and exports

‘in transit,’ holding that "the tax in question is not a tax on

importation or imported goods .. ." Jtel, 113 S.Ct. at 1106

(emphasis added).

The most recent federal case that addresses the

constitutionality of a direct tax on exports in transit is

Louisiana Land & Exploration Co. v. Pilot Petroleum, 900

F.2d 816 (Sth Cir. 1990), cert denied, 498 U.S. 897 (1990).

In addition to recognizing that Michelin limited its analysis to

taxes levied on goods no longer in transit, the Fifth Circuit

and, therefore, immune from taxation under Michelin’s threshold

determination, this Court need never address Harris County’s second

question. There can be no doubt that, "The tax imposed on VICO’s

goods tramsgresses the ‘one voice’ policy of the import-export clause."

Virginia Indonesia Co. v. Harris Cty., 910 S.W.2d 905, 914-915 (Tex. 1995);

See Louisiana Land & Exploration Co. v. Pilot Petroleum, 900 F.2d 816,

821 (Sth Cir. 1990), cert. denied, 498 U.S. 897 (1990) ("To permit any and

every state to impose a direct tax on goods in the export stream wouki

circumvent this [one voice] objective.").

i

drew the additional distinction that the Import-Export

Clause was designed to protect against direct taxes on

goods in the export stream.

The tax in this case is not like the tax on a business

or occupation related to imports or exports in Washington

Stevedoring and Itel. Instead, as in Louisiana Land, it is a

direct tax on the export goods themselves while they are

in transit. Accordingly, the tax in this case constitutes a

transit fee on the privilege of moving goods through the

state of Texas. As such, it creates one of the evils sought

to be prevented under the Import-Export Clause.

Michelin, 423 U.S. at 290. Since this tax is distinguishable

from the taxes upheld in Washington Stevedoring and Itel,

the holding of the Texas Supreme Court does not conflict

with those cases.

C. The Texas Supreme Court’s opinion is

entirely consistent with previous rulings of

this Court concerning direct taxation of

export goods in transit.

The Texas Supreme Court’s opinion is entirely

consistent with A. G. Spalding & Bros. v. Edwards, 262 U.S.

66 (1923), and Richfield Oil Corp. v. State Board of

Equalization, 329 U.S. 69 (1946). In those cases, this

Court held that a direct tax on export goods in transit

violated the Import-Export Clause of the United States

Constitution. A. G. Spalding and Richfield are the only

cases in the Appendix that are factually analogous to this

case. A. G. Spalding, 262 U.S. at 69-70; Richfield, 329 U.S.

at 78-79.

In A. G. Spalding, this Court decided that delivery

of baseballs and bats to an export carrier for shipment to

15

Venezuela constituted a significant "step in exportation," and

exempted the goods from a federal revenue tax, stating:

The fact that further acts were to be done

before the goods would get to sea does not

matter so long as they were only the regular

steps to the contemplated result.

A. G. Spalding, 262 U.S. at 69-70.

Richfield reaffirmed the rule established in Coe,

holding that a state retail sales tax assessed against a seller of

oil delivered in the state to a foreign purchaser was a

prohibited impost upon an export. The Court declared that

the Import-Export Clause’s requirement that foreign

commerce be involved was met, since the oil was sold for

shipment abroad.

The determinative question in this case was whether

the goods were in transit at the time of taxation. The Texas

Supreme Court correctly determined VICO’s goods are in

transit, are the subject of foreign export at the time of

taxation, and that the Harris County ad valorem tax is a

direct tax assessed on exports within the meaning of the

Import-Export Clause. Therefore, the tax is unconstitutional.

IT. CERTIORARI SHOULD BE DENIED BECAUSE

THE RESULT REACHED BY THE TEXAS

SUPREME COURT IS CONSISTENT WITH

SOUND POLICY

The policy reflected in the Federal Constitution

against state interference with the export process requires that

the goods in this case be protected from taxation. If this

16

were not so, then all goods in transit to a foreign country

would be subject to taxation as soon as they cross into the

taxing state. The only inquiry would be whether the goods

had crossed the state line. If the Import-Export Clause were

interpreted by this Court as narrowly as recommended by

Harris County, the Clause would be effectively emasculated.

Even nondiscriminatory taxation of exports constitutes a very

real threat to foreign commerce. If the exportation of goods

through coastal states of these United States becomes

prohibitively expensive because of transit fees such as those

sought to be imposed by Harris County, the ultimate

consequence will be that the Republic of Indonesia and other

similarly situated countries or businesses will go elsewhere

for their goods. The effect of these transit fees will be to

place American businesses at a competitive disadvantage with

other goods in the international marketplace.

Il. CERTIORARI SHOULD BE DENIED BECAUSE

THE RESULT REACHED BY THE TEXAS

SUPREME COURT WAS CORRECT FOR

OTHER REASONS

The trial court granted VICO’s motion for summary

judgment on the basis that the goods are exempt from

taxation under the Import-Export Clause and the Commerce

Clause of the United States Constitution and under Section

11.01 of the Texas Tax Code. The Texas Supreme Court did

not reach the latter two issues because it decided that the tax

violated the Import-Export Clause of the United States

Constitution. Certiorari should be denied because the result

below was also correct on the basis of the Commerce Clause

and the Texas Tax Code.

17

As noted previously, the determinative question in this

case is whether the goods were in transit at the time of

taxation, which the Texas Supreme Court answered in the

affirmative, and which Harris County concedes in this appeal.

The court below correctly determined this case on the Import-

Export Clause issue and, appropriately, did not reach an

analysis of the Commerce Clause and the Texas Tax Code.

Nevertheless, that constitutional provision and that state

statute provide two additional reasons for holding that the tax

is invalid and for denying the writ of certiorari.

CONCLUSION

For these reasons, Respondent VICO requests that

Harris County’s Petition for Writ of Certiorari be denied.

Respectfully submitted,

RANDY BURTON

Moerer & Burton, L.L.P.

440 Louisiana, Suite 350

Houston, Texas 77002

(713) 222-6262 [telephone]

(713) 222-6811 [facsimile]

Attorney for Respondent

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