3 No. 98
In the Matter of Texas Eastern Transmission Corporation,
Appellant,
v.
Tax Appeals Tribunal et al.,
Respondents.
_________________________________________________________________
2000 NY Int. 109
October 19, 2000
This opinion is uncorrected and subject to revision before publication
in the New York Reports.
Paul H. Frankel, for appellant.
Andrew D. Bing, for respondents.
_________________________________________________________________
ROSENBLATT, J.:
Tax Law § 186 is a franchise tax applicable to gas companies and
others. In the appeal before us, Texas Eastern Transmission
Corporation has challenged the tax as violative of the Commerce Clause
of the United States Constitution. In essence, it asserts that section
186 is an unapportioned gross earnings tax that unduly burdens
interstate commerce. In response, the Commissioner of Taxation and
Finance argues that Tax Law § 186 applies only to gross earnings
from sources within the State of New York and therefore satisfies the
fair apportionment requirements of the Commerce Clause. Because Texas
Eastern has failed to demonstrate how taxation under section 186
violates the Commerce Clause, we affirm the judgment of the Appellate
Division.
Texas Eastern is a Delaware corporation with its principal place of
business in Houston, Texas. During the years in question (1989, 1990
and 1991), it owned and operated a natural gas pipeline system
spanning some 1,900 miles, extending from Texas to the midwest and
northeast United States. Approximately 2.5 miles of the pipeline ran
into New York, terminating at a meter and regulating station located
on Staten Island. In its New York corporate tax returns, Texas Eastern
reported total gross earnings of approximately $1.976 billion in 1989,
$1.607 billion in 1990 and $1.443 billion in 1991. Section 186 taxed
only the company's gross earnings from New York sources: approximately
$136 million in 1989, $125 million in 1990 and $117 million in 1991.
SNIPPETS:
In the Matter of Texas Eastern Transmission Corporation, Appellant, v. Tax Appeals Tribunal
Tax Law § 186 is a franchise tax applicable to gas companies and others.
Texas Eastern Transmission Corporation has challenged the tax as violative of the Commerce
it asserts that section 186 is an unapportioned gross earnings tax that unduly burdens
the Commissioner of Taxation and Finance argues that Tax Law § 186 applies only to gross
Because Texas Eastern has failed to demonstrate how taxation under section 186 violates the
During the years in question, it owned and operated a natural gas pipeline system spanning
Section 186 taxed only the company's gross earnings from New York sources: approximately $136
In 1994, the company sought a refund for those three years, contending that because,
the Division of Taxation applied a "gross receipts test" to the company's nationwide revenue
Texas Eastern appealed to the Division of Tax Appeals, pressing its argument that it was,
Though phrased as a positive grant of regulatory power to Congress, the United States Supreme
Addressing the dormant Commerce Clause, our analysis begins with Complete Auto Transit v
As one commentator explained, "f every state could tax the entirety of a company's business,
In the proceedings below and in its briefs to this Court, Texas Eastern challenged the tax
Chief Judge Kaye and Judges Smith,
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