San Patricio County Appraisal District v. Gunvor USA LLC

NUMBER 13-24-00590-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

SAN PATRICIO COUNTY
APPRAISAL DISTRICT, Appellant,

v.

GUNVOR USA LLC, Appellee.

ON APPEAL FROM THE 156TH DISTRICT COURT
OF SAN PATRICIO COUNTY, TEXAS
NUMBER 13-25-00027-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

SAN PATRICIO COUNTY
APPRAISAL DISTRICT, Appellant,

v.

DEVON GAS SERVICES, L.P.,
AS AGENT FOR GLENCORE LTD., Appellee.

ON APPEAL FROM THE 36TH DISTRICT COURT
OF SAN PATRICIO COUNTY, TEXAS

OPINION

Before Chief Justice Tijerina and Justices Cron and Fonseca
Opinion by Justice Fonseca

The Import-Export Clause of the United States Constitution provides: “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 . . . .”

U.S. CONST. art. I, § 10, cl. 2. In these two appeals, the trial courts held that inventories

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of crude oil held in coastal tank farms in San Patricio County are exempt from State

property tax under this clause. By two issues in each case, appellant San Patricio County

Appraisal District (the District) argues the trial court erred by “fail[ing] to enforce the rules

of discovery” and by granting summary judgment in favor of the taxpayers, appellees

Gunvor USA LLC (Gunvor)1 and Devon Gas Services, L.P., as agent for Glencore Ltd.

(Devon).2 In the case concerning Devon, the District also raises a third issue complaining

that the trial court failed to rule on its objections to evidence. We affirm.

I. BACKGROUND

Crude oil is delivered via pipeline from wells around the region to the Pin Oak

Taft/Midway Junction (Taft Junction), located near Taft in San Patricio County, and it is

stored in tanks there until it can be transferred to an export terminal in Corpus Christi,

where it is loaded onto tanker ships. For tax year 2023, the District appraised Devon’s

taxable property to include 219,546 barrels of crude oil stored at Taft Junction and valued

at over $17 million. See TEX. TAX CODE § 21.02(a)(1) (providing generally that “tangible

personal property is taxable by a taxing unit if . . . it is located in the unit on January 1 for

more than a temporary period”). It appraised Gunvor’s taxable property to include 428,576

barrels stored at a similar tank farm at South Texas Gateway Terminal in Ingleside, valued

at over $38 million.

Both appellees protested with the local appraisal review board, arguing the oil is

exempt from ad valorem taxation under the Import-Export Clause and the Texas Tax

Code. See U.S. CONST. art. I, § 10, cl. 2; TEX. TAX CODE §§ 11.12 (“Property exempt from

1 Appellate court cause number 13-24-00590-CV.

2 Appellate court cause number 13-25-00027-CV.

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ad valorem taxation by federal law is exempt from taxation.”), 41.41(a) (stating a property

owner is entitled to protest an appraisal district’s decision to the appraisal review board).

The appraisal review board denied appellees’ protests, and appellees timely filed the

underlying suits for judicial review. See TEX. TAX CODE § 42.21(h). In August of 2024,

each appellee filed a motion for summary judgment making the same arguments and

attaching evidence. Devon’s evidence included an affidavit by Greg Horne, its Vice

President of Marketing and Midstream, stating in relevant part:

5. Glencore Ltd. (Glencore) is an international crude oil trader.
Glencore entered into a Master Purchase and Sale Marketing
Agreement with Devon to market, sell, and export crude oil that
Devon produces from the Permian Basin to customers in
international markets.

6. Devon has been appointed as the agent of record on behalf of
Glencore . . . .

7. During calendar years 2022 through 2023, an affiliate of Devon
produced West Texas Intermediate crude oil from the Permian Basin
in Texas and New Mexico. All the barrels of crude oil relevant to this
lawsuit . . . were produced by Devon’s affiliate and transported to the
Corpus Christi Ship Channel by Devon exclusively for the purpose of
fulfilling orders Glencore received from buyers seeking cargos of
unrefined West Texas Intermediate crude oil to be delivered to
foreign destinations (the WTI).

8. Devon utilized third-party operated common carrier pipelines to
transport the WTI to the Corpus Christi Ship Channel. All the WTI
was sold to be delivered to foreign destinations. From 2022 to 2023
when the WTI arrived in San Patricio County, it was first delivered
into the Pin Oak Taft/Midway Junction (Taft Junction) located in San
Patricio County and then transported on to the Pin Oak Corpus
Christi Terminal (Corpus Christi Export Terminal) located in Nueces
County along the Corpus Christi Ship Channel for loading on vessels
for exportation.

9. Title to the WTI passes from Devon to Glencore when it enters Taft
Junction.[3] Thereafter[,] in order to continue the uninterrupted

3 Despite this provision, Devon has never disputed that it owned the subject oil at all times relevant

to this case.

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transport of the WTI[,] GIencore utilized (i) above-ground tanks at
Taft Junction and the Corpus Christi Export Terminal (the Export
Tanks) and (ii) the pipelines connecting these Export Tanks to the
loading arms located on the vessel docks to load the WTI on various
classes of non-Jones Act vessels.

10. The Corpus Christi Export Terminal will not bring a vessel to berth
unless the exporting customer (like Glencore) has sufficient volume
of product to completely load the vessel without having to await
arrival of the final barrels of WTI. It is the Corpus Christi Export
Terminal—not the exporting customer—that calls in the vessel to
berth. Glencore could not export the WTI through the Corpus Christi
Export Terminal without utilizing the Export Tanks.

11. The quantity of WTI in the Export Tanks at any given time was always
waiting on Glencore’s next laycan window[4] upon which Glencore’s
chartered vessel was called to berth by the Corpus Christi Export
Terminal after there was sufficient accumulation to load the relevant
vessel.

12. During calendar years 2022 through 2023, Glencore always
exported the WTI in the Export Tanks to international markets and
never diverted any of the WTI for domestic use.

Devon’s affidavit was accompanied by bills of lading and cargo manifests indicating that

three “non-Jones Act vessel[s]” containing over two million barrels of crude oil in total

departed the Corpus Christi Export Terminal in January of 2023, bound for Canada,

Denmark, and China, respectively. Gunvor filed a substantially similar affidavit.5

4 “In LNG or crude oil shipping, the laycan is the date range during which a vessel must arrive at

the loading port to load its cargo. If the vessel misses the laycan window, it can be refused loading.” GUNVOR
GROUP, https://gunvorgroup.com/glossary/cargo-laycan/ (last visited Jan. 7, 2026).
5 Specifically, Brian Bormaster, Gunvor’s “Business Developer – Crude,” averred in relevant part:

6. Gunvor utilized third-party operated common carrier pipelines to transport the WTI
to San Patricio County, Texas. The vast majority of WTI was sold to be delivered
to foreign destinations before entering the pipelines in the Permian Basin. All the
WTI was sold to be delivered to foreign destinations. From 2021 through 2023
when the WTI arrived in San Patricio County, it was delivered into the South Texas
Gateway (STG) crude oil export terminal located along the Corpus Christi Ship
Channel (the Export Terminal).
7. At the Export Terminal, Gunvor utilized (i) above ground storage tanks (the Export
Tanks) for staging the WTI and (ii) the pipelines connecting these Export Tanks to
the loading arms located on the vessel docks to load the WTI on various classes

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In each case, the District filed a response and objected to some of appellees’

evidence.6 The District argued in part that the oil was taxable, despite the fact that it was

bound for export, because there were “incredibly large volumes of oil constantly present”

at both tank farms. As evidence, it attached monthly reports indicating that the Taft

Junction tanks used by Devon contained an average of 154,000 barrels of crude oil in the

year preceding the appraisal date, and that they never contained less than 92,000 barrels

during that time period. As to Gunvor, the District attached monthly reports indicating that

its South Texas Gateway tanks contained an average of over 2.8 million barrels in the

year preceding the appraisal date and never contained less than 1.9 million barrels during

that time period. These amounts included “tank heels,” or the minimum volumes which

must be retained in each tank at all times in order for them to remain operational. The

of non-Jones Act vessels.
8. The Export Terminal will not bring a vessel to berth unless the exporting customer
(like Gunvor) has sufficient volume of product either fully landed in the Export
Tanks or sufficiently landed in the Export Tanks with the remainder in transit to
land in the Export Tanks to completely load the vessel without having to await
arrival of the final barrels of WTI. It is the Export Terminals—not the exporting
customer—that calls in the vessel to berth. Gunvor could not export the WTI
through the Export Terminal without utilizing the Export Tanks to aggregate and
stage the WTI for its next laycan window.
9. The quantity of WTI in the Export Tanks at any given time was always waiting on
Gunvor’s next laycan window upon which Gunvor’s chartered vessel was called to
berth by the Export Terminal after there was sufficient accumulation to load the
relevant vessel.
10. During calendar years 2021 through 2023, Gunvor always had unfulfilled orders
for future cargos of WTI in quantities that exceeded the quantities of WTI staged
in the Export Tanks. Gunvor exported all the WTI in the Export Tanks to
international markets and never diverted any of the WTI for domestic use.
11. During calendar years 2021 through 2023, Gunvor did not refine the WTI in any
way or at any point during its transit from the point of purchase through the Export
Terminals and onto the non-Jones Act vessels.
Both Horne and Bormaster noted that, unlike San Patricio County, Nueces County determined the oil to be
exempt from taxation.
6 The records contain no explicit rulings on the District’s objections to evidence.

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District attached deposition testimony by Pin Oak’s vice president stating that “around

46,000” barrels need to remain at the bottom of the Taft Junction tanks, and that the

customer is responsible for maintaining those amounts. South Texas Gateway’s director

of crude oil exports testified in deposition that the minimum volume was “[a]pproximately

30 to 35,000 barrels per tank” at that facility; that customers are required to contribute to

the minimum; and that the precise amount of that contribution “varies greatly by customer

and how their contracts are structured.”

Appellees filed replies to the District’s responses. In September and October of

2024, the trial courts granted appellees’ summary judgment motions and declared that

the subject oil is exempt from taxation. In November of 2024, the trial court denied motions

for new trial filed by the District in both cases. These appeals followed.

II. PRELIMINARY ISSUES

A. Motions to Compel Discovery

By its first issue in both appeals, the District argues that the trial courts erred by

“fail[ing] to enforce the rules of discovery.” The record reflects that the District filed

motions to compel discovery in both cases, arguing that appellees failed to answer

interrogatories and requests for production, and seeking orders compelling responses.

The motion concerning Gunvor was granted in part, though the District argues Gunvor

did not comply with the ruling. The motion concerning Devon was not ruled upon.

In response, Gunvor contends that the District inadequately briefed the issue

because it did not supply “record citations identifying the alleged error committed by the

trial court”; did not “demonstrate how it properly preserved the issue for appeal”; did not

identify the applicable standard of review; and did not “provide argument and authorities

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relevant to the standard of review.” We agree. In its brief, the District points to the trial

court’s order partially granting and partially denying its motion to compel as to Gunvor,

but it is not clear whether it is complaining of the trial court’s partial denial of the motion

or of Gunvor’s failure to comply with the order to the extent the motion was granted. Either

way, the District does not refer to any authority concerning an applicable standard of

review or demonstrating that error occurred.7 See TEX. R. APP. P. 38.1(i).

Moreover, the only discussion in the District’s brief regarding how it was harmed

by any discovery ruling is as follows:

[A]dequate discovery would confirm that Gunvor’s oil was constantly
present in massive quantities in the tank farms in San Patricio County during
relevant times. . . . Discovery would very likely show that Gunvor contributed
to oil in tank bottoms that must be present at all times for the tanks to
function properly. Furthermore, adequate discovery would very likely show
that Gunvor’s oil came from Texas and was thus not merely flowing
[through] the state.

But the facts which the District identifies as potentially established by more complete

discovery are not in significant dispute. The uncontroverted reports attached to the

District’s summary judgment response established that the tanks at issue contained at

least 1.9 million barrels for every month in the year prior to the appraisal date. South

Texas Gateway’s representative testified that the facility has a “commingled storage

system” but serves fewer than twenty shippers. And Gunvor has never disputed that it

owns the quantity of oil attributed to it by the District; the only question is whether the oil

7 The only legal authority cited by the District in its discussion of this issue is as follows:

“The summary judgment rule clearly contemplates that the trial court will allow parties a
reasonable opportunity to conduct discovery before rendering summary judgment.”
Coleman v. Winn-Coleman, Inc., 110 S.W.3d 104, 111 (Tex. App.—Houston [1st Dist.]
2003, no pet.). “Discovery is designed to ‘allow the litigants the fullest knowledge of the
facts and issues prior to trial.’” Chapa v. Garcia, 848 S.W.2d 667, 668 (Tex. 1992) (citing
Axelson, Inc. v. McIlhany, 798 S.W.2d 550, 553 (Tex. 1990) (orig. proceeding)).

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is exempt from taxation as an export. Thus, even if the trial court erred in its discovery

rulings, the District has not established that any error was reversible. See TEX. R. APP. P.

44.1(a) (providing that a judgment in a civil case may not be “reversed on the ground that

the trial court made an error of law” unless we conclude the error complained of:

“(1) probably caused the rendition of an improper judgment; or (2) probably prevented the

appellant from properly presenting the case to the court of appeals.”).

Devon, on the other hand, argues that the issue was not preserved because the

District did not object to the trial court’s failure to rule on its motion to compel. We agree.

To preserve a complaint for appellate review, the record must show that it was first “made

to the trial court by a timely request, objection, or motion” and that “the trial court: (A) ruled

on the request, objection, or motion, either expressly or implicitly; or (B) refused to rule

on the request, objection, or motion, and the complaining party objected to the refusal.”

TEX. R. APP. P. 33.1(a). Here, in the Devon case, the District neither obtained an adverse

ruling on its motion to compel nor objected to the trial court’s failure to rule at any point.

Accordingly, the issue has not been preserved for our review. See id.; Harris Cent.

Appraisal Dist. v. Hous. Pipe Line Co., 706 S.W.3d 568, 577 (Tex. App.—Houston [1st

Dist.] 2024, no pet.) (holding that appellant “cannot raise evidentiary objections on appeal

that it was required to preserve in the trial court” because it “did not object to the trial

court’s failure to rule”); Alejandro v. Bell, 84 S.W.3d 383, 388 (Tex. App.—Corpus Christi–

Edinburg 2002, no pet.) (holding issue was preserved where appellant “complained in his

motion for new trial of the trial court’s refusal to rule”).

The District’s first issues are overruled.

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B. Failure to Rule on Evidentiary Objections

By its third issue in the appeal concerning Devon, the District argues the trial court

erred by failing to rule on its objections to Devon’s summary judgment evidence. The

record reflects that the District made twelve specific objections in writing on October 1,

2024. Several weeks after the trial court ruled on the summary judgment motions, the

District filed a written pleading on January 17, 2025, asserting that the trial court “has

failed to set the [o]bjections for a hearing or rule on them.”

Devon argues that the issue has been waived as not preserved and inadequately

briefed. We agree on both points. As noted above, a party must object to a trial court’s

failure to rule in order to preserve an issue for appeal. See TEX. R. APP. P. 33.1(a)(2)(B);

Harris Cent. Appraisal Dist., 706 S.W.3d at 577; Alejandro, 84 S.W.3d at 388. Here, the

District objected to the trial court’s failure to rule on the evidentiary issues, but it only did

so fifty-six days after the trial court denied the District’s motion for new trial, by which time

the court’s plenary power over the case had already expired.8 See TEX. R. CIV. P. 329b(e)

(providing that a court’s “plenary power to grant a new trial or to vacate, modify, correct,

or reform a judgment” expires thirty days after a timely-filed motion for new trial is denied).

We agree with Devon that the objection was untimely for that reason. See Burbage v.

Burbage, 447 S.W.3d 249, 257 (Tex. 2014) (noting that, to effectively preserve error, an

objection “must apprise the trial court of the error alleged such that the court has the

opportunity to correct the problem”).

Further, the District has again failed to explain how it was harmed by the trial

8 The District’s motion for new trial did not complain about the trial court’s evidentiary rulings or its

failure to rule.

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court’s failure to rule. See TEX. R. APP. P. 44.1(a). After reiterating the substantive

arguments it made in its evidentiary objections before the trial court,9 the District merely

states: “Without the evidence described above, all of which is objectionable, Devon

cannot establish its entitlement to judgment.” In the absence of any further description of

how the trial court’s failure to rule affected the case, we cannot conclude that any error is

reversible. See id. R. 38.1(i). We overrule the District’s third issue in appellate cause

number 13-25-00027-CV.

III. SUMMARY JUDGMENT

By its second issue in both appeals, the District argues the trial court erred by

granting summary judgment declaring the subject oil exempt from taxation.

A. Standard of Review and Applicable Law

The trial court’s summary judgment ruling is reviewed de novo. Scripps NP

Operating, LLC v. Carter, 573 S.W.3d 781, 790 (Tex. 2019). We view the evidence in the

light most favorable to the non-movant, and we indulge every reasonable inference and

resolve any doubts against the motion. Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012)

(per curiam); Smith v. O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009).

A movant for traditional summary judgment has the burden to establish that no

genuine issue of a material fact exists and that it is entitled to judgment as a matter of

law. TEX. R. CIV. P. 166a(c). If the non-movant produces more than a scintilla of evidence

to raise a fact issue on the challenged elements, then summary judgment is improper.

Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014);

9 We note that, of the twelve specific evidentiary objections made by the District, two concern

statements made in Devon’s motion rather than evidence attached to the motion, and three complain that
certain statements in Horne’s affidavit were “contradict[ed] by other evidence,” which is not germane to the
statements’ admissibility at the summary judgment stage of proceedings.

11
King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). “More than a scintilla of

evidence exists when the evidence ‘rises to a level that would enable reasonable and fair-

minded people to differ in their conclusions.’” King Ranch, Inc., 118 S.W.3d at 751

(quoting Merrell Dow Pharms. Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). Less

than a scintilla of evidence exists when the evidence is “so weak as to do no more than

create a mere surmise or suspicion” of a fact. Ford Motor Co. v. Ridgway, 135 S.W.3d

598, 601 (Tex. 2004).

B. Import-Export Clause

1. Historical Application

For much of the nation’s history, the Import-Export Clause was interpreted broadly

to forbid any type of state taxation on any property which is properly characterized as an

“import” or “export.” See, e.g., Low v. Austin, 80 U.S. 29, 34 (1871) (“Whilst retaining their

character as imports, a tax upon them, in any shape, is within the constitutional

prohibition. The question is not as to the extent of the tax, or its equality with respect to

taxes on other property, but as to the power of the State to levy any tax.”). Whether a

product was properly characterized as an “import” was, in turn, based on whether it

remained in the importer’s possession or control or remained in the same containers in

which it was brought into the country (the “original package doctrine”). See id. (“[G]oods

imported do not lose their character as imports, and become incorporated into the mass

of property of the State, until they have passed from the control of the importer or been

broken up by him from their original cases.”); Brown v. Maryland, 25 U.S. 419, 441–42

(1827) (“[G]enerally, . . . when the importer has so acted upon the thing imported, that it

has become incorporated and mixed up with the mass of property in the country, it has,

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perhaps, lost its distinctive character as an import, and has become subject to the taxing

power of the State; but while remaining the property of the importer, in his warehouse, in

the original form or package in which it was imported, a tax upon it is too plainly a duty on

imports to escape the prohibition in the constitution.”).

On the other hand, a product was properly characterized as an “export” only upon

“its physical entry into the stream of exportation.” Kosydar v. Nat’l Cash Reg. Co., 417

U.S. 62, 71 (1974) (citing Coe v. Errol, 116 U.S. 517, 527 (1886)).10 Courts deemed this

to occur only when goods “have been shipped, or entered with a common carrier for

transportation to another State, or have been started upon such transportation in a

continuous route or journey.” Id. at 66–67 (quoting Coe, 116 U.S. at 527); see Joy Oil Co.

v. State Tax Comm’n of Mich., 337 U.S. 286, 288 (1949) (holding that gasoline held in

storage was taxable because it “might have been diverted to domestic markets without

disruption of any existing arrangement for its transshipment and without even breach of

any contractual commitment to a foreign purchaser”). “The means of shipment are

unimportant so long as the certainty of the foreign destination is plain.” Richfield Oil Corp.

v. State Bd. of Equalization, 329 U.S. 69, 82–83 (1946) (finding oil stored in a vessel was

10 In Kosydar, the Court explained the benefits of a bright-line rule:

It may be said that insistence upon an actual movement into the stream of export in the
case at hand represents an overly wooden or mechanistic application of the Coe doctrine.
This is an instance, however, where we believe that simplicity has its virtues. The Court
recognized long ago that even if it is not an easy matter to set down a rule determining the
moment in time when articles obtain the protection of the Import-Export Clause, “it is highly
important, both to the shipper and to the State, that it should be clearly defined so as to
avoid all ambiguity or question.”
Kosydar v. Nat’l Cash Reg. Co., 417 U.S. 62, 71 (1974) (quoting Coe v. Errol, 116 U.S. 517, 526 (1886));
see A.G. Spalding & Bros. v. Edwards, 262 U.S. 66, 69 (1923) (“[W]e have to fix a point at which, in view
of the purpose of the Constitution, the export must be said to begin. As elsewhere in the law there will be
other points very near to it on the other side, so that if the necessity of fixing one definitely is not remembered
any determination may seem arbitrary.”).

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exempt even though “at the time of the delivery the vessel was in California waters and

was not bound for its destination,” noting that “when the oil was pumped into the hold of

the vessel, it passed into the control of a foreign purchaser and there was nothing

equivocal in the transaction which created even a probability that the oil would be diverted

to domestic use”); see Empresa Siderurgica v. County of Merced, 337 U.S. 154, 156–57

(1949) (“[I]t is not enough that there is an intent to export, or a plan which contemplates

exportation, or an integrated series of events which will end with it. . . . It is the entrance

of the articles into the export stream that marks the start of the process of exportation.

Then there is certainty that the goods are headed for their foreign destination and will not

be diverted to domestic use. Nothing less will suffice.”).

Under the “stream of export” doctrine,

[o]nce exportation has begun, goods retain their “export” status, and thus
remain exempt from state taxation as long as they are in transit. Temporary
interruptions “due to the necessities of the journey or for the purpose of
safety and convenience in the course of the movement” do not break the
continuity of transit; however, stoppages that serve the owner’s business
purpose interrupt the goods’ continuity of transit, rendering them subject to
the taxing power of the state.

Va. Indon. Co. v. Harris Cnty. Appraisal Dist. (VICO), 910 S.W.2d 905, 908 (Tex. 1995)

(citing Minnesota v. Blasius, 290 U.S. 1, 9–10 (1933)).

2. Michelin

In Michelin Tire Corp. v. Wages, 423 U.S. 276, 301 (1976), the United States

Supreme Court “adopted a fundamentally different approach to cases claiming the

protection of the Import-Export Clause.” Limbach v. Hooven & Allison Co., 466 U.S. 353,

359 (1984). There, a Georgia county assessed ad valorem property taxes on tires and

tubes which had been imported from France and Canada and were being stored at

Michelin’s wholesale distribution warehouse in the county. Michelin, 423 U.S. at 278–79.

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The products were destined for resale to customers at one of Michelin’s franchised

dealers in the region. Id. at 280. Relying on Low, the Georgia Supreme Court first

summarily rejected Michelin’s argument that “an annual ad valorem tax is not a tax . . .

within the meaning of the federal constitutional provision.” Wages v. Michelin Tire Corp.,

214 S.E.2d 349, 355 (Ga. 1975), aff’d, 423 U.S. 276. Then, applying the “original

package” doctrine, the Georgia court held that the “unpackaged” tires lost their status as

“imports” and were subject to taxation, but the tubes—which remained in the original

“corrugated cartons” in which they were shipped—were exempt. Id.11

The United States Supreme Court affirmed the Georgia court’s decision “without

addressing the question whether [it] was correct in holding that the tires had lost their

status as imports.” Michelin, 423 U.S. at 279. Instead, the Court reframed the issue and

held that “nondiscriminatory ad valorem property taxes are not prohibited by the Import-

Export Clause” because they are not “Imposts or Duties” within the meaning of the clause.

Id. at 301.12 It reasoned as follows:

The Framers of the Constitution . . . sought to alleviate three main concerns
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

11 The Georgia court observed that the “original package” doctrine

has been almost universally applied, in a mechanical way, for about 150 years. The great
weight of authority makes a vast distinction between goods shipped in packaging, such as
crates or cartons, and goods shipped in bulk. Packaged imports retain their status as
imports, and are not subject to taxation. Bulk imports that have been mingled with other
bulk imports, sorted, and arranged for sale do not retain their status as imports, and they
are subject to taxation.
Wages v. Michelin Tire Corp., 214 S.E.2d 349, 355 (Ga. 1975), aff’d, 423 U.S. 276 (1976) (noting that
“[w]hat we do in this case is to merely ‘draw a line,’ and it is, admittedly, a difficult line to draw”).
12 The United States Supreme Court later noted that, although the framers granted Congress the

“Power To lay and collect Taxes, Duties, Imposts and Excises” in the Commerce Clause, they limited the
Import-Export Clause’s ban to “Imposts or Duties,” thereby indicating an intent to restrict the scope of that
clause. Dep’t of Revenue of State of Wash. v. Ass’n of Wash. Stevedoring Cos., 435 U.S. 734, 759 (1978).

15
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 other States not situated as favorably
geographically.

Nothing in the history of the Import-Export Clause even remotely
suggests that a nondiscriminatory ad valorem property tax which is also
imposed on imported goods that are no longer in import transit was the type
of exaction that was regarded as objectionable by the Framers of the
Constitution. For such an exaction, unlike discriminatory state taxation
against imported goods as imports, was not regarded as an impediment that
severely hampered commerce or constituted a form of tribute by seaboard
States to the disadvantage of the other States.

It is obvious that such nondiscriminatory property taxation can have
no impact whatsoever on the Federal Government’s exclusive regulation of
foreign commerce, probably the most important purpose of the Clause’s
prohibition. By definition, such a tax does not fall on imports as such
because of their place of origin. It cannot be used to create special
protective tariffs or particular preferences for certain domestic goods, and it
cannot be applied selectively to encourage or discourage any importation
in a manner inconsistent with federal regulation.

Nor will such taxation deprive the Federal Government of the
exclusive right to all revenues from imposts and duties on imports and
exports, since that right by definition only extends to revenues from
exactions of a particular category; if nondiscriminatory ad valorem taxation
is not in that category, it deprives the Federal Government of nothing to
which it is entitled. Unlike imposts and duties, which are essentially taxes
on the commercial privilege of bringing goods into a country, such property
taxes are taxes by which a State apportions the cost of such services as
police and fire protection among the beneficiaries according to their
respective wealth; there is no reason why an importer should not bear his
share of these costs along with his competitors handling only domestic
goods. The Import-Export Clause clearly prohibits state taxation based on
the foreign origin of the imported goods, but it cannot be read to accord
imported goods preferential treatment that permits escape from uniform
taxes imposed without regard to foreign origin for services which the State
supplies. It may be that such taxation could diminish federal impost
revenues to the extent its economic burden may discourage purchase or
importation of foreign goods. The prevention or avoidance of this incidental
effect was not, however, even remotely an objective of the Framers in
enacting the prohibition.

16
....

[S]ince prohibition of nondiscriminatory ad valorem property taxation
would not further the objectives of the Import-Export Clause, only the
clearest constitutional mandate should lead us to condemn such taxation.
The terminology employed in the Clause “Imposts or Duties” is sufficiently
ambiguous that we decline to presume it was intended to embrace taxation
that does not create the evils the Clause was specifically intended to
eliminate.

423 U.S. 276 at 285–87, 293–94 (emphasis added, internal citations and quotations

omitted). Michelin explicitly overruled Low to the extent that it conflicted with its holding.

Id. at 279.13 However, it was careful to note that the tires at issue “were no longer in

transit,” and it suggested that the result would be different in a case involving “goods

which are merely in transit through the State when the tax is assessed.” Id. at 290.14

The Court applied Michelin two years later in Department of Revenue of State of

Washington v. Ass’n of Washington Stevedoring Cos., 435 U.S. 734 (1978). There,

Washington assessed a business and occupation tax on stevedoring, i.e., “the business

of loading and unloading cargo from ships.” Id. at 737. The United States Supreme Court

13 Because it reframed the issue, the Michelin Court did not explicitly abrogate the “original
package” doctrine as a mechanism for determining whether a product has retained its character as an
“import.” Michelin Tire Corp. v. Wages, 423 U.S. 276, 279, 301 (1976). Similarly, because it was not an
export case, Michelin did not explicitly reject the “stream of export” doctrine as a mechanism for determining
whether a product has attained the character of an “export.” Instead, the crux of Michelin is that whether a
product is considered an “import” or “export” is irrelevant, because regardless of how the goods are
characterized, a tax thereon will pass constitutional muster if and only if it advances the objectives of the
Import-Export Clause. See id. at 294.
14 The Court explained:

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 non-discriminatory ad valorem property tax
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.
Id. at 289–90 (footnotes omitted and emphasis added).

17
first held generally that “the Michelin approach should apply to taxation involving exports

as well as imports.” Id. at 758 (citations and footnotes omitted). And it found that the

Washington tax was assessed on “transportation services . . . necessary to the import-

export process.” Id. at 757. Nevertheless, because the tax did not “relate[] to the value of

the goods,” the Court held it “[cannot] be considered taxation upon the goods

themselves.” Id. (citing Canton R.R. Co. v. Rogan, 340 U.S. 511, 514–15 (1951) (“The

difference is that in the present case the tax is not on the goods, but on the handling of

them at the port. An article may be an export and immune from a tax long before or long

after it reaches the port. But when the tax is on activities connected with the export or

import the range of immunity cannot be so wide.”)). Moreover, the Washington tax

“violates none of the constitutional policies identified in Michelin.” Id. at 761. Thus, even

though the imported and exported goods were still “in transit” at the time the tax was

assessed, the tax was “not among the ‘Imposts or Duties’ within the prohibition of the

Import-Export Clause.” Id. at 755 (“Under the analysis of Michelin, then, the application

of the Washington business and occupation tax to stevedoring violates no Import-Export

Clause policy and therefore should not qualify as an ‘Impost or Duty’ subject to the

absolute ban of the Clause.”). The Court explicitly declined to “reach the question of the

applicability of the Michelin approach when a State directly taxes imports or exports in

transit.” Id.

3. Diamond Shamrock

The constitutionality of direct State taxation of crude oil was at issue before the

Texas Supreme Court in Diamond Shamrock Refining & Marketing Co. v. Nueces County

Appraisal District, 876 S.W.2d 298 (Tex. 1994). That case involved imported oil stored at

18
the Harbor Island storage facility in Nueces County, which was appraised to be part of

Diamond Shamrock’s taxable property in the county for tax years 1988, 1989, and 1990.

Id. at 298. “The oil in question was shipped from foreign sources through the Gulf of

Mexico, off-loaded at [Harbor Island], held there in tanks, and transmitted by pipeline to

Diamond Shamrock’s refinery in Three Rivers, Live Oak County, Texas.” Id. at 299. Some

of the oil “was always present at Harbor Island between 1987 and 1990, although the

particular oil in the tanks on January 1, 1988, 1989 and 1990 was actually present for a

maximum period of 12 to 25.3 days.” Id. (noting that “[t]he government provides services

to the Harbor Island facility in general and to Diamond Shamrock’s crude oil in particular”).

This Court held that the tax was permissible under the Import-Export Clause. Nueces

Cnty. Appraisal Dist. v. Diamond Shamrock Ref. & Mktg. Co., 853 S.W.2d 212, 214–18

(Tex. App.—Corpus Christi–Edinburg 1993), aff’d, 876 S.W.2d 298.

In the Texas Supreme Court, the parties stipulated that the oil was “in transit” while

in Nueces County, and Diamond Shamrock argued that it was exempt from taxation under

the Import-Export Clause for that reason. Diamond Shamrock, 876 S.W.2d at 299–300.15

The Court rejected that argument:

The tax in question here does not in any way impinge on the third “harmony
among the States” policy of the Import-Export Clause. Although still on its
foreign import journey and in that sense “in transit,” the oil in question here
entered only the State of Texas and, according to the stipulated facts, never
left Texas in its crude oil form. Thus, there simply was no opportunity for
harmony between the states to be disturbed. Read in context, the Michelin
Court’s qualification clearly applies only to goods in transit through the state
to or from another state and not to goods merely in transit within the only
state the goods ever enter. See Robert C.W. Frantz, Comment,
Constitutional Law—Nondiscriminatory Ad Valorem Tax May Be Applied To

15 In response, the appraisal district argued that the property was not exempt because “none of the

evils prevented by application of the Import-Export Clause . . . are implicated by its taxation of Diamond
Shamrock’s oil.” Diamond Shamrock Ref. & Mktg. Co. v. Nueces Cnty. Appraisal Dist., 876 S.W.2d 298,
299 (Tex. 1994).

19
Imports, 30 RUTGERS L.REV. 193, 197 (1976) (defining the “transit”
discussed by the Michelin Court as “i.e., travelling through the importing
state en route to another”). Under the Import-Export Clause, the oil is
taxable in Texas.

Id. at 300–301 (footnotes omitted). The Court noted that

the “in transit” nature of the oil does not bring its taxation in Nueces County
into conflict with the first two policy prongs of the Import-Export Clause, as
identified in Michelin. Although a tax on goods in transit into the foreign
export stream of commerce may negatively impact the “one voice” policy, it
is clear under Michelin that a nondiscriminatory ad valorem tax on imported
goods does not violate either of the first two policy prongs of the Clause,
regardless of whether the goods are in transit or not.

Id. at 301 n.3 (citation omitted).

4. VICO

The Texas Supreme Court applied these principles in the export context in VICO.

There, the appellant “purchase[d] goods from vendors throughout the United States” on

behalf of an “Indonesian oil and gas exploration joint venture.” 910 S.W.2d at 906.

At the time of purchase, the goods are committed to foreign export and
cannot thereafter be diverted to domestic use. The goods are transported
from the vendors directly to an independent export packer in Houston,
Harris County, Texas. Upon arriving at the export packer’s facility, the goods
are checked to confirm that the proper items were shipped, and that they
meet specifications required for import to Indonesia. Any dispute over the
items are resolved at that time. VICO then requests approval from Indonesia
to import the goods. When approval is granted, an international inspection
agency inspects the goods on behalf of Indonesia and clears the goods for
shipment. The goods are then packed and shipped abroad on the next
available vessel.

In most instances, the goods remain with the export packer no longer
than 45 days while these procedures are being performed. In exceptional
cases, however, this period may be somewhat longer: if the goods received
from the vendor are damaged or defective, or if VICO encounters problems
obtaining approval for import to Indonesia, the goods may remain with the
export packer for up to 175 days. VICO has some quantity of goods present
at the export packer’s facility year-round.

Id. at 907. VICO sued after its taxable property was assessed to include property located

20
at the export packer’s facility. Id. In a summary judgment motion, VICO argued that “its

goods are merely in transit through Texas and that they are therefore immune from state

taxation under the import-export and commerce clauses.” Id. Relatedly, VICO also argued

that “neither Michelin nor its progeny have altered the fundamental rule that goods in the

export stream of commerce are exempt from taxation.” Id. at 910.

After reviewing the cases discussed above, the Court agreed with VICO,

concluding that the “stream of export” doctrine has continued validity, despite Michelin.

Id. at 908. The Court noted that, “[a]lthough the Michelin court rejected the original

package doctrine, it did not overrule Coe v. Errol or any of the stream of export cases.”

Id. at 911–12 (citing Rodriguez de Quijas v. Shearson/Am. Exp., Inc., 490 U.S. 477, 484

(1989) (“If a precedent of this Court has direct application in a case, yet appears to rest

on reasons rejected in some other line of decisions, the Court of Appeals should follow

the case which directly controls, leaving to this Court the prerogative of overruling its own

decisions.”)). Instead, “[a]bandoning the original package doctrine ‘brought import tax

immunity into alignment with export tax immunity’” in that it eliminated a “loophole” which

had shielded imported goods from taxation. Id. at 911 (quoting Frantz, supra, at 203).

Moreover, “the rejection of the original package doctrine does not compel the conclusion

that the Michelin court abandoned the rule of immunity for in-transit goods”; “[t]o the

contrary, by explicitly articulating an exception for in-transit goods, Michelin appears to

preserve bright-line immunity for goods in the stream of export.” Id.

The Court then concluded that “VICO’s goods were in the export stream of

commerce when the tax was assessed.” Id. at 912. It noted that “VICO’s goods entered

the export stream of commerce when they were shipped from the vendors to the export

21
packer’s facility in Harris County because, at that point, the goods began their movement

to a precommitted foreign destination.” Id. Further, “the stoppage of VICO’s goods in

Harris County was attributable to an exportation, not a business, purpose.” Id. at 913

(noting that, “[f]rom the moment of purchase, VICO retains no control to divert the goods

from their precommitted foreign destination or to sell the goods in a domestic market”);

see id. at 914–15 (noting that “[w]hile in Harris County, VICO’s goods undergo only those

procedures—inspection, approval for import to Indonesia, and packaging—required for

exportation” and though “the delay necessary to perform these procedures is somewhat

longer than that which is generally associated with a ‘transportation’ delay, it is no longer

than is necessary to get the goods on their way to Indonesia”). Finally, the Court observed

that “the tax imposed on VICO’s goods transgresses the ‘one voice’ policy” as described

in Michelin. Id. at 915 (“The tax at issue has the potential of interfering with the United

States’ commercial relations with Indonesia insofar as Indonesia might turn to other

countries for its imported goods or might engage in retaliatory taxation of its own exports

destined for the United States.”).

C. Analysis

As the above review demonstrates, the approach taken by courts to the Import-

Export Clause evolved in a complex fashion, at least until 1995. In shifting the relevant

inquiry from the nature of the products taxed to the nature of the tax assessed, the

Michelin Court attempted to bring the clause’s operation into closer alignment with the

three principal public policies motivating its adoption. But in doing this, the United States

Supreme Court necessarily eschewed the bright-line simplicity of the “original package”

doctrine and made the constitutional analysis more uncertain and fact-intensive. Further,

22
Michelin was an import case, and it was thus unclear to what extent its principles could

be extended to the export context. By subsequently concluding that “the Michelin

approach should apply to taxation involving exports as well as imports,” the Washington

Stevedoring Court seemed to offer clarity in that regard. See 435 U.S. at 758. Relying on

this holding, the District claims that a state exaction on goods bound for export “is valid

unless it interferes with the three policy concerns” identified in Michelin, regardless of

whether the goods are “in transit,” and it proceeds to argue that the tax assessed in this

case does not offend any of those three policies.

Michelin and Washington Stevedoring instruct us to disregard whether goods are

characterized as exports or imports, and to focus instead on the policies underlying the

clause. However, Washington Stevedoring did not involve a “direct” tax on goods, and,

as the Texas Supreme Court observed, the cases establishing the “stream of export”

doctrine, such as Coe, were never explicitly overruled. See VICO, 910 S.W.2d at 912.

Instead, noting that Michelin excluded “in transit” goods from its purview, the VICO Court

construed Michelin as “preserv[ing] bright-line immunity for goods in the stream of export.”

Id.

We are bound by the Texas Supreme Court’s construction and application of

United States Supreme Court caselaw, including its analysis in VICO, which has not been

revisited or abrogated in the thirty years since its issuance. See Dall. Area Rapid Transit

v. Amalgamated Transit Union Local No. 1338, 273 S.W.3d 659, 666 (Tex. 2008) (“[T]he

Supreme Court of Texas possesses the power, and thus the duty, to correct a decision

of a Court of Civil Appeals that conflicts with the ‘supreme law of the land’ as established

by the Congress and Supreme Court of the United States.”); Silguero v. State, 287 S.W.3d

23
146, 150 (Tex. App.—Corpus Christi–Edinburg 2009, no pet.) (“As an intermediate

appellate court, we are bound by supreme court precedent.”). Under VICO, goods which

are “in transit” out of the country or are “in the stream of export” enjoy “bright-line”

immunity from taxation, regardless of whether the taxation advances the public policies

which underlie the clause. See 910 S.W.2d at 912.16

1. Stream of Export

With these principles in mind, we proceed to consider whether the oil at issue here

was indeed “in [export] transit” or “in the stream of export” at the time the tax was

assessed. As appellees note, goods enter the stream of export when they “beg[i]n their

movement to a precommitted foreign destination.” VICO, 910 S.W.2d at 912 (first citing

Kosydar, 417 U.S. at 70; then citing Richfield Oil, 329 U.S. at 82–83 (holding that delivery

of oil into a storage tank of a foreign-bound steamer “marked the commencement of the

movement of the oil abroad”); and then citing A.G. Spalding & Bros. v. Edwards, 262 U.S.

66, 68 (1923) (holding that delivery of goods to an export carrier for shipment abroad

constituted a significant “step in exportation”)).

Appellees contend that, according to the evidence, the subject oil had “beg[u]n [its]

movement to a precommitted foreign destination” as of January 1, 2023. We agree. Horne

stated in his affidavit that “[a]ll the barrels of crude oil relevant to this lawsuit” were

“transported to the Corpus Christi Ship Channel by Devon exclusively for the purpose of

fulfilling orders Glencore received from buyers seeking cargos of unrefined . . . oil to be

delivered to foreign destinations.” Bormaster similarly testified that “[a]ll the [oil] was sold

16 As noted, the VICO Court found that “the tax imposed on VICO’s goods transgresses the ‘one

voice’ policy of the import-export clause.” Va. Indon. Co. v. Harris Cnty. Appraisal Dist., 910 S.W.2d 905,
914 (Tex. 1995). However, that finding was superfluous and unnecessary to the Court’s analysis, as it had
already concluded that “VICO’s goods remain in the stream of export and immune from state taxation.” Id.

24
to be delivered to foreign destinations.” The District argues that appellees “do[] not

actually know what happens to the oil after [they] transfer[] the oil to a purchaser in Corpus

Christi Bay.” But that is precisely what their representatives testified to in this case: Horne

averred that “Glencore always exported the WTI in the Export Tanks to international

markets and never diverted any of the WTI for domestic use;” Bormaster testified that

“Gunvor exported all the WTI in the Export Tanks to international markets and never

diverted any of the WTI for domestic use.” In any event, though the District casts doubt

on the affiants’ ability to discern the ultimate destination of the oil, it does not dispute that

their affidavits established that all of the subject oil had a “precommitted foreign

destination” at the time of the appraisal. See id. Moreover, the District did not produce

any evidence indicating that any of the oil was actually diverted for domestic use or

otherwise creating a fact issue on this specific question. See TEX. R. CIV. P. 166a(c).

The District further contends that the oil could not have been “in transit” because

it was extracted from wells in Texas17 and was therefore not “merely flowing through” the

state. It points to the observation in Diamond Shamrock that “the Michelin Court’s

qualification [for ‘in transit’ goods] clearly applies only to goods in transit through the state

to or from another state and not to goods merely in transit within the only state the goods

ever enter.” 876 S.W.2d at 300–301 (emphasis added). We disagree. It is true that the oil

in Diamond Shamrock was deemed taxable despite the parties’ stipulation that it was “in

transit.” See id. However, that was an import case, and so the “stream of export” doctrine

was not applied; instead, the Texas Supreme Court evaluated the effect of the tax at issue

17 According to the affidavits, the oil originated from wells throughout the Permian Basin, which is

mostly in Texas but extends into New Mexico. See R.R. COMM’N OF TEX., Permian Basin Information,
https://www.rrc.texas.gov/oil-and-gas/major-oil-and-gas-formations/permian-basin (last visited Jan. 7,
2026).

25
on the policies identified in Michelin. See id. For the reasons set forth above, under VICO,

such an evaluation is not necessary in this case.

The development of the caselaw strongly indicates that, though state taxation of

imports and state taxation of exports are banned by the same constitutional provision, the

factors considered in an analysis differ greatly depending on whether the taxed goods are

destined to depart the country or have just arrived in it. To be more specific, because it

was an import case, Diamond Shamrock does not compel the conclusion that oil “in export

transit” may nevertheless be taxable. In any event, as appellees note, Diamond Shamrock

was decided before VICO, which for the first time clarified that the “in transit” and “stream

of export” analyses are essentially equivalent in export cases.

2. Constant Presence

The District next argues that “[r]egardless of whether [appellees’] oil was ultimately

loaded onto ships for foreign export, the oil is still taxable in San Patricio County because

a vast quantity of oil is constantly present in the tank farms in San Patricio County.”18

Citing a 1991 case in which it was involved, the District contends that “the oil’s presence

in San Patricio County is continuous” and it is not “merely passing through” the state or

the county. See Exxon Corp. v. San Patricio Cnty. Appraisal Dist., 822 S.W.2d 269 (Tex.

App.—Corpus Christi-Edinburg 1991, writ denied).

In Exxon, we considered whether crude oil in transit through San Patricio County

18 The District notes that it does not appraise “every drop of oil that is ever in the tanks” but rather

“only appraises what is in the tanks on January 1,” which “is a mere fraction of the oil that passes through
the tanks and is a proxy for the oil constantly present in the tanks.” But the District is only authorized to
appraise property situated in the county on January 1 for more than a temporary period, TEX. TAX CODE
§ 21.02(a)(1); if oil is “pass[ing] through the tanks,” it is there temporarily. In any event, according to
testimony, the minimum volume of oil necessary for the tanks to remain operational is far less than that
which was appraised to be present on January 1, 2023. And the District points to no evidence indicating
that the volume of oil present in the tanks on January 1 was different than any other day of the year.

26
acquired situs there for tax purposes. See id. at 271–74. Exxo n argued that, because

“each barrel of oil appraised on January 1, 1988[,] remained only temporarily in, and was

merely being transported through, the county,” it “could not have attained situs there” for

the 1988 tax year. Id. at 271; see id. at 274 (“Property will acquire a situs when it has

been located in the area with such permanence that it becomes a part of the general

mass of property within the boundaries of the taxing authority.”); see also TEX. TAX CODE

§ 21.02(a)(1). On the other hand, the District argued that “because Exxon maintained at

least 400,000 barrels of oil in seventeen working tanks in the County at all times, the oil

had been located there with such a degree of permanence that the oil became part of the

general mass of property within the County.” Exxon, 822 S.W.2d at 271.

We agreed with the District for two principal reasons. First, we noted that, in

“determining whether a large quantity of oil is to be taxed,” we do not “consider the situs

of each individual barrel separately.” Id. at 272. We explained:

The fact that each individual barrel does not remain in the County for more
than seventeen days, but rather flows sporadically through the working
tanks, is inconsequential. We do not view this mass of oil as a continual flow
of singular barrels which independently do not remain in the County long
enough to establish a tax situs there. Rather, because Exxon held a quantity
of over 400,000 barrels of oil in San Patricio County in seventeen tanks at
all times, a massive quantity was located in the County throughout 1987
and 1988 for more than a temporary period. That the particular oil present
on January 1, 1988, shortly left the county is not determinative.

Id. at 272–73. Second, we noted that “the controlling issue is not only the property’s

presence within the taxing authority’s borders, but also the taxpayer’s activities within the

governmental unit and the opportunities and protections the government affords to those

activities.” Id. at 274 (citing Aransas Cnty. Appraisal Rev. Bd. v. Tex. Gulf Shrimp Co.,

707 S.W.2d 186, 191 (Tex. App.—Corpus Christi–Edinburg 1986, writ ref’d n.r.e.)

(“Whether property has a tax situs in a particular state is purely a due process

27
question. . . . The test under the Due Process Clause is whether the tax in practical

operation has relation to opportunities, benefits, or protections conferred or afforded by

the taxing State.” (internal quotation omitted))). Because “San Patricio County provided

protection to the oil and bore a substantial risk of significant financial injury in the event

of a mishap, such as a massive leak or fire,” the tax was proper. Id.

Exxon did not involve imports or exports, and it did not discuss whether the oil was

“in transit” or in the “stream of export.” Moreover, though some courts have considered

taxpayer activities and government protections in determining whether property is

taxable, that is not among the policy considerations referred to in Michelin or any other

Import-Export Clause case. Therefore, Exxon has limited relevance here.19 Nevertheless,

it is instructive to the extent it explores the difference between the tax treatment of fungible

property, such as fluid or a grain commodity, and discrete, countable items such as

ordinary consumer products. We concluded that “[i]t would be inappropriate when

analyzing a quantity of fungible personal property for purposes of discerning its proper

tax situs to find that the quantity should be broken down into individual units.” Id. at 273.

This approach would also be inappropriate for purposes of discerning whether such

property was in the stream of export. As both parties concede, due to the physical nature

of oil as a fungible fluid, it is impossible to describe which specific portions remained in

the tanks and which were exported. Here, it is undisputed that several tens of thousands

of barrels had to remain in the subject tanks at all times in order for them to function

properly, but under Exxon, we do not consider those “tank heels,” which export customers

19 The District cites no authority, and we find none, indicating that property may be taxed, despite

its presence in the “stream of export,” so long as the quantity is sufficiently “vast.”

28
are responsible for maintaining, separately from the remainder of the oil in the tanks. All

of it had a “precommitted foreign destination” and all of it entered the “stream of export.”

3. Purpose of Temporary Stoppage

Having concluded the oil entered the stream of export, we finally consider whether

the “continuity of transit” was broken by its storage in tanks in San Patricio County.20

The effect of a “temporary stoppage” of goods in the stream of export depends on

the purpose of the stoppage. VICO, 910 S.W.2d at 912. “If the stoppage is attributable to

the business purpose of the owner, then the exportation is deemed to have terminated,

and the goods are subject to tax in the jurisdiction of their stoppage.” Id. (citing Blasius,

290 U.S. at 11–12). “For instance, if goods are delayed for the purpose of further

processing or for storage pending the receipt of orders, the goods are no longer in the

stream of commerce.” Id. (first citing Bacon v. Illinois, 227 U.S. 504 (1913) (holding that

stoppage of grain for processing served owner’s business purpose); and then citing

Blasius, 290 U.S. at 12 (holding that storage of inventory awaiting orders served owner’s

business purpose)). But if a stoppage is “due to the necessities of the journey or for the

purpose of safety and convenience in the course of the movement,” the “continuity of

transit is not interrupted, and the goods remain immune from taxation throughout the

stoppage.” Id. (quoting Blasius, 290 U.S. at 9–10). “Delays that are incidental to the

journey and to a necessary change in the mode of transportation do not affect the

continuity of transit.” Id.

In VICO, when the goods were stopped in Harris County, they underwent “only

20 The District does not discuss this matter in its briefs. We address it out of an abundance of

caution and in our sole discretion.

29
those procedures—inspection, approval for import to Indonesia, and packaging—

required for exportation,” and the delay was “no longer than is necessary to get the goods

on their way” to their foreign destination; therefore, the stoppage was “attributable to an

exportation, not a business, purpose.” Id. at 913. Here, both Horne and Bormaster

testified that the oil is stored in the tank farms until such time as there is “sufficient volume

of product” to “completely load the vessel without having to await arrival of the final

barrels” of oil. Crucially, both stated that the export terminals decide when to call the

vessel into berth and that appellees could not use the export terminals without first storing

the accumulated oil at the tank farms. We conclude that this testimony established the

stoppage in San Patricio County was “attributable to an exportation, not a business,

purpose.” See id. The District points to no controverting evidence raising a fact issue.

Accordingly, the continuity of transit was not interrupted, and the oil is exempt from

taxation.

For the reasons set forth above, the trial court did not err in granting summary

judgment in favor of appellees. See TEX. R. CIV. P. 166a(c). The District’s second issues

are overruled.

IV. CONCLUSION

Having concluded that the subject oil was in the stream of export and therefore

enjoyed “bright-line” immunity from taxation under the Import-Export Clause of the United

States Constitution, we affirm the trial courts’ judgments.

YSMAEL D. FONSECA
Justice

Delivered and filed on the
8th day of January, 2026.

30