United Gas Pipe Line Company v. Ideal Cement Company

PETITIONER: United Gas Pipe Line Company
RESPONDENT: Ideal Cement Company
LOCATION: Florida General Assembly

DOCKET NO.: 61
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 369 US 134 (1962)
ARGUED: Dec 13, 1961
DECIDED: Mar 19, 1962

Facts of the case

Question

Media for United Gas Pipe Line Company v. Ideal Cement Company

Audio Transcription for Oral Argument - December 13, 1961 in United Gas Pipe Line Company v. Ideal Cement Company

Earl Warren:

Number 61, United Gas Pipeline Company, Appellant, versus Ideal Cement Company.

Mr. Beggs, you may proceed with your argument.

E. Dixie Beggs:

Mr. Chief Justice, and may it please the Court.

This appeal presents a question of whether the Commerce Clause of the Federal Constitution denies a municipality the right to tax the direct sale of natural gas to industrial consumers within the city.

The seller being, an interstate pipeline company, but the seller itself making the deliveries direct to the plant of the purchaser and admittedly the situs of the sale lying within the city levying the tax.

The appellate, United Gas Pipeline Company occupies here the unique position of a taxpayer arguing for the validity of a tax levied upon it rather than against the validity of the tax.

That situation is brought about by the fact that United Gas paid the City of Mobile, the taxes for the three years in question and then sued two of its industrial customers to whom these direct deliveries are made for their contractual reimbursement.

Under theF contract, customers were obligated to reimburse to United in his subsequent levied sales, occupation, privilege or the types of taxes and this tax was subsequently levied and the liability of the appellees to United Gas is admitted save only on the question of the validity of the tax.

The case was litigated in the District Court solely on the question of whether the Commerce Clause was infringed upon by the levy of this direct tax.

The District Court held that the delivery to the -- directly to the consumer on the sale completed within the City of Mobile was separable from commerce and sustained the tax.

The Court of Appeals took the view that the tax on the privilege of selling within the City of Mobile was the equivalent of a tax on the preceding interstate transportation and struck the tax down as an improper burden upon interstate commerce.

Felix Frankfurter:

Equivalent or part of which?

E. Dixie Beggs:

I suppose, Your Honor, a part of the inseparable from commerce.

There is distributed to the Justices and served on opposing counsel, a reproduction in miniature of a map which was a part of the record in the case below, the original, which was transmitted to this Court, and the local picture might best be obtained by an examination of that map.

The map shows in green --

Felix Frankfurter:

(Voice Overlap) would you just (Inaudible) for a minute.

E. Dixie Beggs:

Yes sir.

Felix Frankfurter:

(Inaudible)

E. Dixie Beggs:

The names of the industry -- yes, sir.

The names of the industry should be on the right.

Mobile Bay will be on your right and Pennsylvania in the lower left hand corner.

The green lines in the upper left hand corner of the map show the transmission lines by which the gas is brought into the State.

There are three connections with orange colored lines marked, TB Stations which means Town Border Stations or Town Boundary Stations.

The orange lines are the lines of Mobile Gas Service Corporation, the local distributor which has no connection with United Gas except that it purchases its gas at wholesale from United.

The Line Industries that -- or direct customers of United are labeled on the right hand margin of the map.

At the time of this litigation, seven of those industries were within the City of Mobile or its police jurisdiction.

The two northern most industries were outside of that jurisdiction and therefore not involved in this case.

Hugo L. Black:

That in the ninth replacement?

E. Dixie Beggs:

Alabama Power and International Paper were the two -- were already involved at that time Your Honor.

Now, the history of the direct sales is this.