Gen. Motors Corp. v. Tracy, Nos. 94-642

• Court: United States State Supreme Court of Ohio
• Writing for the Court: PER CURIAM; MOYER
• Citation: 652 N.E.2d 188,73 Ohio St.3d 29
• Docket Number: 94-643 and 94-644,Nos. 94-642
• Decision Date: 09 August 1995
• Parties: , 132 Oil & Gas Rep. 674 GENERAL MOTORS CORPORATION, Appellant, v. TRACY, Tax Commr., Appellee.

Page 29

73 Ohio St.3d 29 652 N.E.2d 188, 132 Oil & Gas Rep. 674 GENERAL MOTORS CORPORATION, Appellant,
v.
TRACY, Tax Commr., Appellee. Nos. 94-642, 94-643 and 94-644. Supreme Court of Ohio. Submitted April 25, 1995.
Decided Aug. 9, 1995.

[652 N.E.2d 189] General Motors Corporation ("GM"), appellant, contests the assessment of use tax on its purchases of natural gas from out-of-state vendors.

GM purchased natural gas from independent natural gas marketers to heat its manufacturing plants. These marketers obtained natural gas from producers outside the state and arranged for transportation to the initial receiving pipeline of the national natural gas pipeline outside the state. These marketers did not own the transportation equipment; they paid a fee to pipeline companies to transport the natural gas to the insertion points. GM took title to the gas at delivery to the receiving pipeline outside the state. GM then arranged to transport and deliver the natural gas to its locations in Ohio: the Lordstown plant, the Defiance Central Foundry, and the Packard Electric facility in Warren.

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The Tax Commissioner, appellee, assessed a use tax for various audit periods in these three cases because GM purchased the natural gas outside Ohio and consumed it in Ohio. GM appealed the commissioner's order to the Board of Tax Appeals ("BTA"), and the BTA affirmed the order (except for a penalty on preassessment interest), citing for support its decision in Chrysler Corp. v. Tracy (Jan. 21, 1994), BTA No. 91-K-1523, unreported.

These causes are now before this court upon appeals as of right.

Jones, Day, Reavis & Pogue, John C. Duffy, Jr., Timothy B. Dyk and Gregory A. Castanias, Cleveland, for appellant.

Betty D. Montgomery, Atty. Gen., and Barton A. Hubbard, Asst. Atty. Gen., for appellee.

Emens, Kegler, Brown, Hill & Ritter Co., L.P.A., Paul D. Ritter, Jr., Holly R. Fischer and Thomas W. Hill, Columbus, urging affirmance for amicus curiae, Enron Access Corp.

PER CURIAM.

R.C. 5741.02 imposes a use tax on the storage, use, or consumption of tangible personal property in Ohio. R.C. 5741.02(C)(2) exempts from this tax acquisitions "which, if made in Ohio, would be a sale not subject to the tax imposed by sections 5739.01 to 5739.31 of the Revised Code." GM claims that the instant acquisitions would be exempt under R.C. 5739.02(B)(7) as sales of natural gas by a natural gas company.

However, in Chrysler Corp. v. Tracy (1995), 73 Ohio St.3d 26, 652 N.E.2d 185, we upheld the determination of the Public Utilities Commission of Ohio that a vendor in the type of sales now before us is by definition not a natural gas company and held that R.C. 5739.02(B)(7) does not exempt this type of sale. Consequently, we affirm the BTA's decision as to this claim.

GM also contends that the commissioner's application of this exemption statute violates the Commerce and Equal Protection Clauses of the federal Constitution. According to New Energy Co. of Indiana v. Limbach (1988), 486 U.S. 269, 273-274, 108 S.Ct. 1803, 1807-1808, 100 L.Ed.2d 302, 308:

"It has long been accepted that the Commerce Clause not only grants Congress the authority to regulate commerce among the States, but also directly limits the power of the States to discriminate against interstate commerce. See, e.g., Hughes v. Oklahoma, 441 U.S. 322, 326 [99 S.Ct. 1727, 1731, 60 L.Ed.2d 250, 255-256] (1979); H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 534-535 [69 S.Ct. 657, 663-664, 93 L.Ed. 865, 872-873] (1949); Welton v. Missouri, 91 U.S. 275 [23 L.Ed. 347] (1876). This 'negative' aspect of the...