
    ETC MARKETING, LTD., Appellant v. HARRIS COUNTY APPRAISAL DISTRICT, Appellee
    NO. 01-12-00264-CV
    Court of Appeals of Texas, Houston (1st Dist.).
    Opinion issued May 5, 2015
    Dissenting Opinion on Rehearing January 13, 2015
    Rehearing En Banc Overruled July 30, 2015
    
      John J. Shaw, Robert J. Myers, Myers*Hill, Fort Worth, for Appellant.
    -Mario L. Dell’Osso, ■ Charles M. Williams, Sarah M. Morrow, Olson & 'Olson, L.L.P., Houston, for Appellee.
    Panel consists of Justices Keyes, Higley, and Massengale.
   OPINION

Michael Massengale, Justice

Appellant ETC Marketing, Ltd. protested the appraisal of its natural gas stored in Harris County and the resulting assessment of ad valorem taxes. In the district court, ETC Marketing moved for summary judgment, arguing that its natural gas was in interstate commerce and therefore exempt from ad valorem taxation. Appellee Harris County Appraisal District (HCAD) also moved for summary judgment, arguing that the natural gas was not in interstate commerce, but even if it were, it was nevertheless subject to ad valorem taxation.

The court denied ETC Marketing’s motion for summary judgment and granted the appraisal district’s competing motion. ETC Marketing appealed the rulings. We held that the stored gas was subject to ad valorem taxation, and we affirmed the trial court’s judgment. Represented by new counsel, ETC Marketing’filed a motion for en banc reconsideration, raising new issues and new arguments. We withdraw our prior opinion and vacate our prior judgment, and we issue this opinion and judgment in their stead. The disposition remains the same. The issuance of this opinion renders the motion for en banc reconsideration moot. See, e.g., Poland v. Ott, 278 S.W.3d 39, 41 (Tex.App.-Houston [1st Dist.] 2008, pet. denied); Brookshire Bros., Inc. v. Smith, 176 S.W.3d 30, 41 (Tex.App.-Houston [1st Dist.] 2004, pet. denied).

Background

ETC Marketing and its affiliate, Houston Pipeline Company, conduct business and maintain offices in multiple locations throughout Texas. Both entities have offices and employees in Houston and Dallas.

Houston Pipeline operates an intrastate natural gas pipeline. Its system is located entirely within Texas, although it connects to interstate pipelines. It owns and stores natural gas in the Bammel reservoir, a depleted oil reservoir in Harris County. As such, both Houston Pipeline and its contractual partners who store gas at Bammel rely upon and benefit from local emergency and law enforcement services provided by Harris County. Houston Pipeline pays ad valorem taxes to the county based on the appraised value of the land, the equipment used to operate the Bammel reservoir, and the “cushion gas,” which is natural gas stored for the purpose of maintaining pressure in the reservoir and which is not sold or intended for sale.

Natural gas is often traded across state lines, and title to the gas transfers to whomever the seller “causes [the gas] to be delivered” and at the point where it is delivered. Because natural gas is fungible, the point of sale does not necessarily correspond to a physical location associated with any particular seller’s natural gas. Put another way, the natural gas that a marketer offers for sale is not identifiable as any particular molecules of gas that will be delivered to the purchaser. Instead, the marketer offers gas for sale, and the purchaser receives a corresponding amount of gas at the location where it is accepted.

Gas owned by various marketers is physically commingled in the pipeline system. For example, within the Bammel reservoir, gas destined for sale in Texas is physically commingled with gas destined for sale in interstate commerce. Distinct volumes of gas are segregated by paper allocation, which is used for verifying compliance with contracts and pipeline requirements, reporting to the Texas Railroad Commission, and payment of tariffs. The pipeline system controls the physical movement of natural gas, and storage facilities such as the Bammel reservoir are necessary for the efficient movement of the gas and for the regulation of pipeline capacities so that sufficient quantities can be supplied to users during peak demand periods.

ETC Marketing is a natural-gas marketer, which buys, sells, and markets natural gas. It buys natural gas from multiple sellers, principally at the “Katy Hub,” which is a central delivery and distribution point for natural gas into and out of Texas. Because of the nature of the operation of the Katy Hub, ETC Marketing is unable to determine whether the natural gas it purchases there originated in Texas.

When ETC Marketing purchases natural gas, it is “immediately entrusted” to its affiliate- Houston Pipeline for storage, and ultimately for transportation to purchasers through the pipeline system. ETC Marketing’s storage agreement with-Houston Pipeline allows it to buy gas and “time the market” by holding it for delivery at a later time. Accordingly, ETC Marketing has stored gas in the Bammel reservoir for several months at a time, buying it during warmer months and selling it to northern markets in the winter months. The length of time the gas is stored depends on the volume, time of year, and demand for the gas.

ETC Marketing takes the position that all of its gas stored in the Bammel reservoir is in interstate cornmerce, because its business plan is to sell all of the gas to out-of-state customers. Daniel Hyvl, senior counsel to both ETC Marketing and Houston Pipeline, testified that ETC Marketing was created for the purpose of buying and selling gas in the interstate market, as contrasted with the intrastate business of Houston Pipeline. He explained that all of ETC Marketing’s gas “is being sold in interstate commerce, because that’s the business they’re in, to market the gas ... and not in competition with the pipeline who’s selling in intrastate marketing.” However, while ETC Marketing generally has a profit-maximizing motivation to sell its gas only in interstate commerce, there is no legal requirement that - it do so. Rather, Hyvl explained that ETC Marketing is “free to sell” its gas wherever it could “get the best price.” He also, said: “[Tjhere is nothing that says that the gas has to go to a particular location.... ETC Marketing has the right to sell” its gas stored at Bammel “anywhere it wants to sell it.”

HCAD appraised the value of approximately 33 billion cubic 'feet of natural gas owned by ETC Marketing and stored in the Bammel reservoir for the calendar year 2010, and it assessed ad valorem taxes on the value of that gas. ETC Marketing has admitted that it owns the natural gas that was stored in the Bammel reservoir and was the subject of HCAD’s appraisal. Yet ETC Marketing protested the tax to the Harris County Appraisal Review Board (ARB), challenging it, in part, on the legal basis that the gas was entirely exempt from taxation because it was in interstate commerce. The ARB upheld the inclusion of the natural gas on the appraisal rolls, and ETC Marketing appealed to the district court. The appeal was premised entirely on the legal argument that the gas was exempt from taxation because it was in interstate commerce. CR 3-8 (original petition); CR 23-32 (ETC, Marketing’s motion for • summary-judgment).

In the district court, the parties filed competing motions for summary judgment. As summary-judgment evidence, ETC Marketing attached to its motion several affidavits, explaining the facts relating to the storage and transportation of the natural gas at issue and establishing the amount of ad valorem property tax paid by Houston Pipeline for the 2009 and 2010 tax years. HCAD took positions opposite from ETC Marketing: that the gas was not in interstate commerce, but even if it were, it would nevertheless be subject to taxation under the standard of Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977). After considering the, arguments made by the parties, the. trial court denied ETC Marketing’s motion for summary judgment, and it rendered a final judgment in favor of HCAD. .ETC Marketing appealed,.

Analysis

On appeal, ETC Marketing contends that the trial court erred by denying its motion for summary. judgment and by granting. HCAD’s motion for. summary judgment. To prevail on appeal, ETC Marketing must demonstrate both that its natural gas was in interstate commerce, and that the trial court erred in its determination that the gas was subject to ad valorem taxation. We conclude that .even if ETC Marketing’s stored gas was in interstate commerce, it has presented no compelling legal argument that the gas was immune from local taxation. Accordingly, we will address that issue directly, and we need not separately resolve whether the gas was actually in interstate commerce (including a subsidiary evidentiary issue relevant to that issue). See Tex R.App. P. 47.1.

We review de novo the trial court’s ruling on a motion for summary judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). When both sides move for summary judgment, and the trial court grants one motion and denies the other, reviewing courts consider both sides’ summary-judgment evidence, determine all questions presented, and render the judgment the trial court should have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex.2010). Each party moving for traditional summary judgment bears the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); see Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex.2003). When a plaintiff moves for summary judgment on, its own claim, it must conclusively prove all essential elements of its cause of action. See Rhone- Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979). A defendant moving for summary judgment must conclusively negate at least one essential element of each of the plaintiffs causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997).

The Texas Constitution provides that “all ... tangible personal property in this State, unless exempt as required or permitted by this Constitution ... shall be taxed in proportioh to its value, which shall be ascertained as may be provided by law.” Tex. Const, art. VIII,. § 1(b). Under the Tax Code, unless exempt by law, tangible personal property is taxable if it is located in the taxing unit “for longer than a temporary .period,” as the gas in this case was. If federal law exempts proper-, ty from ad -valorem taxation, then it is also exempt from the state tax. Tex. Tax Code § 11.12.

The Commerce Clause grants Congress the power to regulate interstate commerce, see U.S. Const. art. I, § 8, cl. 3, and it has , been interpreted by the United States Supreme Court to include a “dormant” Commerce Clause, an implicit prohibition on a state’s imposition of discriminatory burdens on interstate commerce. The Dormant Commerce Clause does not relieve those engaged- in interstate commerce from their “just share of the state tax burden even though it increases the cost of doing business.” “The ‘just share of state tax burden’ includes sharing in the cost of providing ‘police and fire protection, the benefit of a trained work force and the advantages of a civilized society.’ ” The burden is on the taxpayer to prove that a tax is invalid under the Dormant Commerce Clause, but to do so the taxpayer need only prove that the tax fails' one prong of the Complete Auto test. Under the Complete Auto standard, a state tax on interstate commerce ordinarily “will not survive Commerce Clause scrutiny if the taxpayer demonstrates that the tax (1) applies to an activity lacking a substantial nexus to the taxing State; (2) is not fairly apportioned; (3) discriminates against interstate commerce; or (4) is not fairly related to the services provided by the State.”

As explained above, for the purposes of our analysis we assume without deciding that the natural gas at issue is in the stream of interstate commerce. We also assume, as admitted by ETC Marketing, that it owns an amount of gas stored in Harris County, at the Bammel reservoir, equivalent to the amount of gas appraised by HCAD. "The primary argument advanced by ETC Marketing to evade the application of ad valorem taxation is the operation of the dormant Commerce Clause, as measured by the four prongs of the Complete Auto test. See Appellant’s Br. at 32-46.

,1. Substantial nexus to the taxing state

The first prong of the Complete Auto test considers whether the tax applies to an activity that has a substantial nexus with the taxing state. Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079. ETC Marketing had offices and employees in Harris County and elsewhere' in the state of Texas. The‘natural gas at issue was purchased in Texas at the Katy Hub, and it was transported by Houston Pipeline, which also has offices and employees in the state of Texas. Houston Pipeline’s entire system is located within Texas, including the Bammel reservoir. The natural gas in question was owned by ETC Marketing and stored for up to several months at a time in the Bammel reservoir, pursuant to a storage agreement with Houston Pipeline.

These factors establish that ETC Marketing had a substantial physical presence in Harris County, and they therefore distinguish this case from one it relies upon in this appeal, Peoples Gas, Light, & Coke Co. v. Harrison Cent. Appraisal Dist., 270 S.W.3d 208 (Tex.App.-Texarkana 2008, pet. denied). In Peoples Gas, the court of appeals held that a tax assessment on stored natural gas was invalid under Complete Auto because a substantial nexus with Texas was lacking. Id. at 219. But unlike this case, Peoples Gas had no physical facilities, employees, representatives, or customers in Texas. Id. at 218. Its only connection to Texas was through the “structure and location” of the separately owned pipeline, which made the decision about where to store the gas and paid its own ad valorem taxes on the facility and equipment used for storage of natural gas in Texas. Id. at 218-19. In contrast, ETC Marketing had a physical presence in Harris County including employees, offices, and — most significantly — natural gas that it had specifically contracted to store with Houston Pipeline. - Unlike the pipeline at issue in Peoples Gas, Houston Pipeline’s facilities are located entirely within Texas, including the Bammel reservoir in Harris County. There was no evidence that the gas was already bound for another state when it was committed to Houston Pipeline. Moreover, unlike the scenario in Peoples Gas, in which the court emphasized that the owner of the gas made no decision to store gas in Texas to serve its own business purpose, here there was evidence that ETC Marketing contracted to store the gas in Houston Pipeline’s facilities, located entirely within Texas, for its own business purposes of timing the market and selling the gas at higher prices out of state during cold months. And although ETC Marketing asserts that Houston Pipeline had the contractual right to control where the gas was stored, the record contains no evidence that Houston Pipeline had storage capacity for the appraised volume of gas at any location other than at the Bammel reservoir.

The prolonged physical presence of ETC Marketing’s gas, deliberately stored in Texas, also distinguishes this case from the circumstances presented in Midland Central Appraisal District v. BP America Production Co., 282 S.W.3d 215 (Tex.App.-Eastland. 2009, pet. denied), in which ad valorem tax was improperly assessed on oil passing in interstate commerce through an interstate pipeline, but temporarily held in a tank farm located in .Texas. Unlike ETC Marketing’s natural gas deliberately stored at Bammel to facilitate timing the natural, gas market, the oil at issue in the Midland case was not held in the tank farm for storage purposes or for any business purpose of the owner other than its transmission through the pipeline. See 282 S.W.3d at 221-23.

ETC Marketing argues that the United States Supreme Court has held that physical presence does not satisfy the substantial nexus , test in ad valorem cases. We disagree. ETC Marketing relies on Quill Corp. v. North Dakota By & Through Heitkamp, 504 U.S. 298, 112 S.Ct. 1904, 119 L.Ed.2d 91 (1992), which reaffirmed that physical presence satisfies the first prong of. the Complete Auto test in sales-and-use tax cases. See id. at 317-18, 112 S.Ct. at 1916. Texas cases have come to the same conclusion in other contexts and expressly rejected ETC Marketing’s argument. See, e.g., Rylander v. 3 Beall Bros. 3, Inc., 2 S.W.3d 562, 570 (Tex.App.-Austin 1999, pet, denied) (franchise tax case, citing Quill Corp., 504 U.S. at 312-14, 112 S.Ct. 1904). ,

The Commerce Clause requirement of a substantial nexus with the taxing state is satisfied for purposes of an ad valorem tax by the taxpayer’s physical presence in the state in the form of physical storage of tangible personal property, Because ETC Marketing was physically present in the state, and the activity being taxed — ownership and storage of natural gas — occurred in Harris County, there is a substantial nexus between the activity being taxed and the state of Texas. Accordingly, we conclude that the tax in this case applies to an activity that has a substantial nexus with the taxing state. See Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079.

II. Fair apportionment

The second prong of the Complete Auto test is whether the tax is fairly apportioned. Id. “The central purpose behind the apportionment requirement is to ensure that each State taxes only its fair share of an interstate transaction.” Goldberg v. Sweet, 488 U.S. 252, 260-61, 109 S.Ct. 582, 588, 102 L.Ed.2d 607 (1989). To determine “whether a tax is fairly apportioned” we examine “whether it is internally and externally consistent.” Id. at 261, 109 S.Ct. at 589.

a. Internal consistency. , A tax is internally consistent when it is “structured so that if every State were to impose an identical tax, no multiple taxation would result.” Id. We consider the text of-the challenged statute and determine whether multiple taxation would ensue if other States had identical, statutes. Id. Here, the relevant provisions of the Texas Tax Code impose taxes on “tangible personal property” that is located in the taxing unit on the date of valuation “for longer than a temporary period.” Tex. Tax Code §§ 11.01, 21.02. It has been conceded for purposes of this appeal that ETC Marketing owned the gas at issue and that it was located in Harris County at the time its value was assessed. We have also explained that the gas was present in Harris County for longer than a temporary period. See supra, note 6. There is no argument that ETC Marketing contracted to store its gas in any other state. There is no argument that any other taxing jurisdiction has attempted to impose an. ad valorem tax- - on the gas at issue for a period of time that overlaps the assessment at issue. Because the record does not suggest that ETC Marketing attempted to store its gas in two different states at the same time, its value could not be taxed by another jurisdiction at the same time, and thus we conclude on this record that the tax is internally consistent. See Goldberg, 488 U.S. at 261,109 S.Ct. at 589.

b. External consistency. “The external consistency test asks whether the State has taxed only that-portion of the revenues from the interstate activity which reasonably reflects the in-state component of the activity being taxed.” Id. at 262, 109 S.Ct. at 589. ‘We thus examine the in-state business activity which, triggers the taxable event and the practical or economic effect of the tax on that interstate activity.” Id. HCAD argues that the tax is externally consistent because it has á right to impose the ad valorem tax and because the gas is stored for months" rather than simply being present on the date of assessment or valuation. ETC Marketing argues that the tax is éxternally inconsistent because it is not possible to determine, at any given time, the actual, physical location of its natural gas. It says in its brief: “Given the ethereal nature of gas, it is impossible to- determine- what portion of the gas to which ETC has a right, if any, is actually located under Harris County.” Likewise, it contends that it is not possible to determine whether or how much of its natural gas originated in Texas. But as we have already explained, we must reject this reasoning because ETC Marketing has acknowledged its ownership of the 33 billion cubic feet of natural- gas stored in the Bammel reservoir as to which HCAD assessed taxes. In light of this record, ETC -Marketing’s argument that the tax was externally inconsistent because it was not possible to determine the location of particular molecules of its gas. must fail. The tax reflects the in-state component of the storage of the entire volume of gas and is externally -consistent. Accordingly, we conclude that the tax in this case was fairly apportioned. See Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079.

III. Discrimination against - interstate commerce

The third prong of the Complete Auto test is whether the tax discriminates against interstate commerce. Id. A tax is nondiscriminatory under Complete Auto when it “places no greater burden upon interstate ..commerce than the state places upon competing intrastate commerce of like character.” Id. at 282, 97 S.Ct. at 1081. Based on its argument that the tax is not fairly apportioned, ETC Marketing concludes that the tax discriminates “in practical effect.” We have explained why its arguments as to fair apportionment are not meritorious. HCAD taxed only that quantity of gas stored in Harris County' on the date of taxation and as to which ETC Marketing acknowledged its ownership. Nothing in the record indicates that these taxes were selectively* imposed on interstate commerce or that the rates of taxation were different - or more onerous for property in interstate commerce. Nothing in the record 'indicates any lack of uniformity or unfairness in the process of assessing ad valorem taxes on ETC Marketing’s gas which we assume to be in interstate commerce as compared with like property purely in intrastate commerce. Accordingly, we conclude that the ad valorem taxes here were nondiscriminatory. See Nueces Cnty. Appraisal Dist. v. Diamond Shamrock Refining & Marketing Co., 853 S.W.2d 212, 217-18 (Tex.App.-Corpus Christi 1993) (“Clearly, this nondiscriminatory tax passes this test because the taxing state only taxed that property which was present within its boundaries and received governmental services regardless of its origin or its destination.”), aff'd, 876 S.W.2d 298 (Tex.1994); see also Vinmar, Inc. v. Harris Cnty. Appraisal Dist., 947 S.W.2d 554, 559 (Tex.1997) (Hecht, J., dissenting) (“The tax in this case is nondiscriminatory; that is, it does not single out- property awaiting export. It is imposed on all- personal property in Harris County on January 1 each year.”); cf. Michelin Tire Corp. v. Wages, 423 U.S. 276, 287, 96 S.Ct. 535, 542, 46 L.Ed.2d 495 (1976) (noting that “nondiscriminatory ad valorem” and other types of taxes share “the characteristic that they cannot be selectively imposed and increased so as substantially to impair or prohibit importation”); Dep’t of Revenue of State of Wash. v. Ass’n of Wash. Stevedoring Cos., 435 U.S. 734, 748, 98 S.Ct. 1388, 1398, 55 L.Ed.2d 682 (1978) (“The Commerce Clause balance tips against the tax only when it unfairly burdens commerce by exacting more than a just share from the interstate activity.”)

The tax at issue in this case is an ad valorem tax of general application, and we hold that it was not discriminatory. See Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079.

IV. Fair relation to State-provided services

The fourth and final prong of the Complete Auto test is whether the tax is fairly related to the services provided by the state. Id. “The fair relation prong of Complete Auto requires no detailed accounting of the services provided to the taxpayer on account of the activity being taxed, nor, indeed, is a State limited to offsetting the public costs created by the taxed activity.” Okla. Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 199-200, 115 S.Ct. 1331, 1345-46, 131 L.Ed.2d 261 (1995); see also In re Nestle USA, Inc., 387 S.W.3d 610, 625 (Tex.2012). “[Pjolice and fire protection, along with the usual and usually forgotten advantages conferred by the State’s maintenance of a civilized society, are justifications enough for the imposition of a tax.” Jefferson Lines, 514 U.S. at 199-200, 115 S.Ct. at 1345-46.

ETC Marketing argues that the “fairly related” prong is not satisfied because the gas was entrusted to Houston Pipeline, which pays taxes on the Bammel reservoir and the equipment related to it. It further. argues that Houston Pipeline has complete and exclusive control over the activity being taxed, which is the storage of the gas in the reservoir. However, the summary-judgment evidence showed that ETC Marketing retained control over the disposition of the gas for its own business purposes.

ETC Marketing has the burden of proof on this Complete Auto issue. See Barclays Bank, 512 U.S. at 314, 114 S.Ct. at 2278. It owns the gas while it is stored at Bammel, and it enjoys the benefit of public services which facilitate gas storage, which in turn allows it to accomplish its business objective of buying natural gas and holding it for sale.at some later point in time. Accordingly, we conclude that the. summary-judgment evidence shows that the tax in this case is fairly related to the services provided by the state. See Complete Auto, 430 U.S. at. 279, 97 S.Ct. at 1079; accord In re Assessment of Pers. Prop. Taxes Against Missouri Gas Energy, Div. of S. Union Co., for Tax Years 1998, 1999, & 2000, 234 P.3d 938, 959 n. 84 (Okla.2008) (“suffice it to say that both the pipeline company and the owner of gas stored in an underground storage facility benefit from the state’s services and protection”), cert. denied sub nom. Missouri Gas Energy v. Schmidt, 559 U.S. 970, 130 S.Ct. 1685, 176 L.Ed.2d 179 (2010); In re Appeals of Various Applicants from a Decision of Div. of Prop. Valuation of State for Tax Year 2009 Pursuant to K.S.A. 74-2438, 298 Kan. 439, 313 P.3d 789, 799 (2013), cert. denied, — U.S. -, 135 S.Ct. 51, 190 L.Ed.2d 29 (2014).

Conclusion

Although the parties have vigorously disputed whether the natural gas being stored at the Bammel reservoir was in interstate commerce for the purposes of evaluating the validity of an ad valorem tax imposed upon it, it is not necessary for us to resolve that dispute, or the related evidentiary issue concerning the admissibility of ETC Marketing’s expert report, in order to resolve this appeal. Even assuming that the gas is in interstate commerce, it was nevertheless appropriate for an ad valorem tax to be'imposed when the owner stored the gas in Texas for the business purpose of selling the gas at a higher price at a later time of the owner’s choosing. Accordingly, we affirm the judgment of the trial court.

Justice Keyes, dissenting.

Justice Keyes,

dissenting on rehearing.

This case addresses a county: appraisal district’s right to impose ad valorem taxes on “working” gas in interstate commerce that is temporarily stored in a storage facility in the county. The majority opinion extends the county’s ad valorem taxing power to this gas in contravention of both United'States 'Supreme Court and Texas authority. Therefore, I respectfully dissent.

Appellant ETC Marketing, Ltd. (“ETC”), a marketer of natural gas, protested the appraisal and ad valorem taxation by appellee Harris County Appraisal District (“HCAD”) of the portion of the working gas temporarily stored in Houston Pipeline Company, LP’s Bammel facility in Harris County, Texas, and awaiting resale in the interstate market that was allotted to ETC. The majority affirms the trial court’s order denying ETC’s motion for summary judgment and granting HCAD’s competing motion, thus upholding the tax. Because I believe the tax places an unconstitutional burden on interstate commerce, I would reverse and render judgment declaring that .the ad valorem , tax imposed on ETC’s portion of the working gas stored in the Harris. County facility by HCAD. is unconstitutional. I withdraw the prior dissenting opinion dated October 2, 2014, and issue this dissenting opinion in its stead.

Background

The facts material to the analysis are restated below for ease of reference.

As the majority acknowledges, ETC buys, markets, and resells natural gas that it acquires from multiple sellers, principally from the “Katy Hub,” a central delivery and distribution point for natural gas into and out of the state of Texas. All of the gas ETC buys for resale is “working gas,” or gas that is intended for ultimate delivery through the pipeline system to other buyers, and end users. The gas ETC buys is entrusted to its affiliate, Houston Pipeline Company, LP (“HPL”), either for immediate transportation to a buyer or user through HPL’s pipeline or for storage at HPL’s Bammel facility, located in Harris County, for later transportation into the interstate pipeline system. There ETC either sells the gas or causes-it to be further transported' by the pipelines to ETC’s requested redelivery points in' Texas and out of state. Both ETC and HPL conduct business and maintain offices in multiple locations throughout Texas. Both entities have offices and employees in Houston and Dallas. HPL operates solely in Texas,' but its pipelines connect with interstate pipelines.

HPL transports gas into the interstate pipelines both for ETC and for others as permitted by Federal Energy Regulatory Commission (“FERC”) regulations. Gas owned by ETC and by thé other marketers is physically commingled in the pipe-liné system for withdrawal for later delivery to purchasers or users as working gas. Thus, within the Bammel reservoir, any gas destined for sale in Texas is physically commingled with gas destined- for sale - in interstate commerce. HPL directs the physical movement of the gas;, and, once ETC entrusts the- gas it buys to HPL, ETC has no control over the storage or movement of the gas,

HPL’s Bammel facility is not the only natural gas storage facility -between the place where ETC purchases the gas and the burner tips where it is ultimately consumed. HPL’s pipeline system connects with multiple downstream pipelines and systems that, in turn, utilize other storage facilities in other states to- facilitate the movement of the gas in the same way it utilizes the Bammel facility. Storage facilities such as the ■ Bammel reservoir are located throughout the entire nationwide natural gas distribution system and are necessary for the efficient movement of the gas, facilitating regulation of pipeline capacities so that sufficient gas supplies can be provided to downstream users during peak demand periods. FERC recognizes such storage as a component of the transportation of natural gas.

The gas moves constantly throughout the pipeline system, and sellers, such as ETC, who have delivered gas into the system at one point, have the right to sell a corresponding volume of gas at another point in the system, subject only to FERC regulations governing the gas and HPL’s handling of it. Distinct volumes of gas are segregated by paper allocation, which is used for verifying compliance with, contracts and pipeline requirements, reporting to the Texas Railroad Commission, and payment of tariffs. ETC then sells the. gas at “paper points” at various places along the interstate pipeline systems with which HPL may connect. The point of sale does not necessarily correspond to a physical location associated with any particular seller’s natural gas.

Analysis

As the majority states, to prevail on appeal, ETC must demonstrate both that the natural gas taxed by HCAD was in interstate commerce and, if so, that the gas was not subject to ad valorem taxation by HCAD under the Complete Auto test. The majority declines to determine whether the gas w;as in interstate commerce on the ground that the gas is subject to ad valorem taxation by HCAD regardless of whether it was in interstate commerce. Op. at 505-06. I would hold that the storage of gas in the Bammel facility is an integral part of the interstate delivery of gas ^ regulated by FERC and- that the ad valorem tax fails the. Complete Auto test that justifies the taxation of tangible property in interstate commerce. I would reverse and render judgment declaring the tax unconstitutional.

A. Law Governing the Taxátion of Tangible Personal Property

The Texas Constitution provides that “[a]ll ... tangible personal property in this State, unless exempt as required or permitted by this Constitution .,. shall be taxed in proportion to its value, which shall be ascertained as may be provided by law.” Tex Const, art. VIII, § 1. Under the Texas Tax Code, unless exempt by law, tangible personal property is taxable if it is located in the taxing unit “for longer than a temporary period.” Tex Tax Code Ann. § 11.01 (West 2008); see also id. § 21.02(a)(1) (West Supp.2014) (“[T]angi-ble personal property is taxable by a taxing unit if it is located in the unit on January 1 for more than a temporary period.”). But “[pjroperty exempt from ad valorem taxation by federal law is exempt from taxation.” Tex. Tax Code Ann. § 11.12 (West 2008).

The Interstate Commerce Clause of the United States Constitution grants Congress the power to' regulate interstate commerce. See U.S. Const, art. I, § 8, cl. 8. The United States Supreme Court has long interpreted the Commerce Clause to include a “dormant” Commerce Clause,' which prohibits a state from imposing discriminatory burdens on interstate commerce. Am. Trucking Ass’ns, Inc. v. Mich. Pub. Serv. Comm’n, 545 U.S. 429, 433, 125 S.Ct. 2419, 2422-23, 162 L.Ed.2d 407 (2005); see In re Nestle USA, Inc., 387 S.W.3d 610, 624-25 (Tex.2012) (orig. proceeding). “[A] tax imposed on local activity related -to interstate commerce is valid if, and only if, the local activity is not such an integral part of the interstate process, the flow of commerce, that it cannot realistically be separated from it.” Mich.-Wis. Pipe Line Co. v. Calvert, 347 U.S. 157, 166, 74 S.Ct. 396, 401, 98 L.Ed. 583 (1954) (holding unconstitutional Texas occupation tax on taking'gas from outlet of independent gasoline plant in state, after production, gathering, and processing, for immediate interstate transmission). “ ‘The very purpose of the Commerce Clause was to create an area of free trade among the several States. That clause vested the power of taxing a transaction forming an unbroken process of interstate commerce in the Congress, not in the States.’ ” Id. at 170, 74 S.Ct. at 403 (quoting McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330-31, 64 S.Ct. 1023, 1026, 88 L.Ed. 1304 (1944)).

The burden is on the taxpayer to prove that a tax is invalid under the Dormant Commerce. Clause by showing that the tax fails at least one prong of the Complete Auto test. See Barclays Bank PLC v. Franchise Tax Bd. of Cal., 512 U.S. 298, 310-11, 114 S.Ct. 2268, 2276, 129 L.Ed.2d 244 (1994); Midland Cent. Appraisal Dist. v. BP Am. Prod. Co., 282 S.W.3d 215, 223 (Tex.App.-Eastland 2009, pet. denied). Under the Complete Auto standard, a state tax on interstate commerce ordinarily “will not survive Commerce Clause scrutiny if the taxpayer demonstrates that the tax (1) applies to an activity lacking a substantial nexus to the taxing State; (2) is not fairly apportioned; (3) discriminates against interstate commerce; or (4) is not fairly related to thé services provided by the State.” Barclays Bank, 512 U.S. at 310-11, 114 S.Ct. at 2276 (emphasis in original) (citing Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 1079, 51 L.Ed.2d 326 (1977)). A state tax must, therefore, fail only one prong of the Complete Auto test to be unconstitutional.

B, Application of the Interstate Commerce Clause to the Storage of Natural Gas

The majority finds it unnecessary to determine whether ETC’s gas is in interstate commerce, reasoning that, even if it is, the tax is constitutional. Thus, for purposes of its argument, it simply assumes that the gas is in interstate commerce, and it addresses the facts of the case solely in the context of determining whether the Complete Auto test is satisfied. See Op. at 507-08.

The majority first recites the facts it finds material to its determination as to whether the gas has a “substantial nexus” with Texas, the taxing state, and therefore satisfies the first factor used under the Complete Auto test. Op. at 507-10. It observes that ETC has offices and employees in Harris County and elsewhere in Texas; that the gas at issue was purchased by ETC at the Katy Hub in Harris County; that HPL, which has offices and employees in Texas and whose entire system, including the Bammel facility, is located within Texas, transported the gas; and that ETC’s natural gas is stored for up to several months in the Bammel facility “pursuant to a storage agreement with [HPL].” Op. at 509.

The majority opines that “[t]hese factors establish that ETC Marketing ha[s] a substantial physical presence in Harris County” and that these facts distinguish this case from a case that ETC relies upon, Peoples Gas, Light, & Coke Co. v. Harrison Cent. Appraisal Dist., 270 S.W.3d 208 (Tex.App.-Texarkana 2008, pet. denied). Op. at 509. The majority reasons that, “unlike this case, Peoples Gas had no physical facilities, employees, representatives, or customers in Texas,” whereas “ETC Marketing had a physical presence in Harris County including employees, offices, and — most significantly — natural gas that it had specifically contracted to store with [HPL].” Op. at 509. It points out, “Unlike the pipeline at issue in Peoples Gas, [HPL’s] facilities are located entirely within Texas, including the Bammel reservoir in Harris County.” Op. at 509.; The majority also points.out that Peoples’ “only connection to Texas was through, the ‘structure and location’ of the separately owned pipeline, which made the decision about where to store the gas and paid its own ad valorem taxes on the facility and equipment used for storage, of natural gas in Texas.” Op. at 509.

Unlike the majority, I would first determine whether the portion of the working gas owned by ETC that is temporarily stored in the Bammel facility is indeed in interstate commerce under the facts of the case; and, if it is, I would apply the Complete Auto test to determine the constitutionality of the ad valorem tax imposed by HCAD on that gas. Therefore, rather than beginning with the first Complete Auto factor, I would perform the same analysis as the Peoples court — first determining whether the working gas owned by ETC is property in interstate commerce and, if so, determining whether it is nevertheless subject to the ad valorem tax imposed by HCAD. When the analysis is performed this way, it is clear to me that the distinctions the majority draws between this case on the one hand — in which a county appraisal district imposed an ad valorem tax on the amount of working gas owned by the taxpayer that was in temporary storage in a Texas county in a gas storage facility connected "to the' interstate pipeline system — and the Peoples case on the other hand — in which a different Texas county appraisal district did the same thing — are immaterial to the analysis- of the constitutionality or unconstitutionality of the tax. Finding no material distinction between this case and the Peoples case, I would reach the same result as the Texar-kana Court of Appeals in Peoples. I would hold that the gas is in interstate commerce and that the HCAD tax is unconstitutional.

ETC is a marketing company that buys gas committed to the' interstate natural gas pipeline system, 'some of which is stored by HPL, the pipeline owner, at thé Bammel facility in Harris 'County until a specified quantity is resold and delivered by ETC to a customer at a paper point along the interstate pipeline system, subject to regulations promulgated by FERC. Peoples was similarly “a distribution company that purchased]' natural gas from suppliers and delivered] it to users in Chicago, Illinois” through an interstate pipeline system operated by Natural Gas Pipeline Company of America (“the Pipeline”). Peoples, 270 S.W.3d at 211. Like ETC, Peoples bought and sold natural gas in the interstate pipeline ’system owned and operated by the Pipeline. Id. Some of the gas distributed by Peoples was stored at the North Lansing facility, a natural gas storage facility in a large depleted natural gas field in Harrison County, Texas, similar to. the Bammel facility located in Harris County. Id. The Pipeline, however, had many associated storage facilities for gas in the pipeline, which were owned and operated “in the aggregate.” Id. In Peoples, Harrison County attempted to place an ad valorem tax on a portion of the working gas in the Harrison County storage facility that it had allocated to Peoples based, on the Pipeline’s records of Peoples’ working natural gas balance at the facility at the end.of.the year. See id. at 211-12, Here, HCAD has done the same thing with respect to a Harris County storage facility.

In short, Harrison County attempted to do exactly what Harris County has done in this case under the same material circumstances, the only differences being that ETC has offices in Texas, whereas Peoples did not, and that HPL, which, operates the Bammel facility and stores gas there, including gas allocated to ETC, operates an intrastate Texas pipeline system connected to the interstate pipeline system, whereas the Pipeline into which Peoples delivered its gas stored at the North Lansing facility was itself an interstate pipeline system. The Texarkana Court of Appeals, however, struck down the ad valorem tax, unlike the majority in this case. The majority here upholds the tax on the ground that ETC has a physical presence in Texas, whereas Peoples did not, and ETC’s gas stored at the Bammel facility moves into the pipeline system of HPL, a Texas pipeline, to the points of sale and consumption along the interstate pipeline system to which HPL connects, whereas Peoples’ gas moved directly into an interstate pipeline operated by the Pipeline. Óp. at 508-09. These distinctions are, in my view, distinctions without a difference in any way material to this case.

The Peoples court’s reasoning is instructive. The court first pointed out that the natural gas transportation and storage industry was restructured by FERC in 1992, creating “a system of commercial rights for the pipeline customer that was separate from' the physical operation of the pipeline system” in which gas is bought and sold at “paper points,” or imaginary points along the pipeline “that do not necessarily reflect the physical location of the gas purchased.” Peoples, 270-S.W.3d at 213. In this nationwide gas transportation system — the same as that in this case — the system operator, here HPL, retains complete control of the physical operation of the pipeline and decides when and where the natural gas is stored, and there is no physical connection between a pipeline customer’s storage account balance and physical volumes at any particular storage facility. See id.

The Peoples court reasoned that although the Pipeline had full custody, control, and possession of the gas in the pipeline system it had no ownership rights over it. Id. at 213-14. Rather, for ad valorem tax purposes, Peoples was the owner of its allotted portion of the natural gas stored at the Pipeline’s North Lansing facility in Harrison County. Id. at 214. However, the court 'held that the Commerce Clause shielded Peoples from the county appraisal district’s ad valorem tax assessment because the gas was in interstate commerce and the tax: did not pass the Complete Auto test that would nevertheless allow it to be assessed: See id. at 215-19. ■

Stating that “[t]he crucial question in determining whether the state may exert its taxing power is whether there is ‘continuity of transit,’ ” the Peoples court looked first to see whether there was such, continuity. Id. at 215-16 (quoting Indep. Warehouses v. Scheele, 331 U.S. 70, 73, 67 S,Ct. 1062, 1064-65, 91 L.Ed. 1346 (1947) (stating, “If the interstate movement has begun, it may be regarded as continuing, so as to maintain the immunity of the property from state taxation, despite temporary interruptions..due to the necessities of the journey or for the purpose of safety and convenience in the course of the movement. ... Formalities, such as the forms of billing, and mere changes in the method of transportation, do not affect the continuity of the transit”)). The Peoples court opined that because “Peoples has no control over where [its] natural gas is stored and how much is stored at any given location, we cannot say that Peoples made the decision to store gas at North Lansing in order to serve its business purpose.” Id. at 216. Consequently, it concluded that “the stoppage of natural gas in North Lansing does not serve the business purpose of Peoples.” Id. at 217. Rather, it served the business purpose of the Pipeline. See id. The court determined that the storage of natural gas at the North Lansing facility did not take the gas out of interstate commerce, which “it entered by injection into an interstate pipeline,” because “[t]o conclude otherwise would be to segregate, from the pipeline itself, a function deemed ‘necessary and integral’ to the pipeline,” namely the function of storing working gas in the system for delivery to points of resale and consumption in interstate commerce. Id.

Here, by contrast, the majority declines to determine whether the working gas stored at the Bammel facility was in interstate commerce, but states that it assumes it was. Op. at 507-08. However, it implicitly, and contradictorily, concludes that the portion of the working gas allotted to ETC was not in interstate commerce, stating, “There was no evidence that the gas was already bound for. another state when it was committed to [HPL],” and, “[T]here was evidence that ETC Marketing contracted to store the gas in [HPL’s] facilities, located entirely within Texas, for its own business purposes-” Op. at 509. This is the opposite of the Peoples court’s conclusions that the working gas in the pipeline was in interstate commerce from the moment it was injected into the pipeline system and that the storage was an integral part of the Pipeline’s business purpose of interstate gas transportation and could not realistically be separated from it. See Peoples, 270 S.W.3d at 217. I agree with the reasoning of the Peoples court, which is supported by Supreme Court case law. See Mich.-Wis. Pipe Line Co., 347 U.S. at 166, 74. S.Ct. at 401 (stating that tax of local activity related to interstate commerce is valid only if it is not such an integral part of interstate process of flow of commerce that.it cannot realistically be separated from it).

In reaching the opposite conclusion from the Peoples court, the' majority places great emphasis on ETC’s business purpose in storing the gas at the Bammel facility so it could ⅞⅛⅛] the market and sell[ ] the gas at higher prices out of state during cold months” and the lack of évidence of specific sales of the stored gas into the interstate market. Op. at 508-09. I agree with the majority that ETC has as a business purpose the storage of a portion of its gas in interstate commerce until the price rises with demand and that it contracted with HPL (as Peoples contracted with the Pipeline) to use a portion of the Bammel facility to store some of its gas for this purpose. However, it does not follow that this business purpose took the gas out of interstate commerce or justified burdening the portion of ETC’s gas allocated to the Bammel facility with a local ad valorem tax in Harris County. Storage of a portion of the gas until needed served the business purposes of both ETC and HPL, but storage of a portion of ETC’s gas at the Bam-mél facility was only incidental to the overriding purpose served by the agreement between ETC and HPL: the efficient transportation and sale of natural gas throughout the interstate pipeline system in order to meet the need for gas as and wherever the need might arise, a function “necessary and integral” to the operation of the FERC-regulated nationwide gas distribution system. See Peoples, 270 S.W.3d at 217.

I-would hold that the working gas owned by ETC on which HCAD imposed the contested ad valorem tax was in interstate commerce when it was temporarily stored in the Bammel facility, and I would then apply the Complete Auto test to determine whether the ad valorem tax imposed by HCAD on that gas placed an unconstitutional burden on interstate commerce.

C. The Complete Auto Test for Constitutional Taxation of Property in Interstate Commerce

1. Substantial nexus to the taxing state

I agree with the majority that the validity of the tax imposed by HCAD on the portion of ETC’s gas stored at the Bam-mel facility must be determined under the Complete Auto test. See 430 U.S. at 279, 97 S.Ct. at 1079. The first prong of that test, upon which the majority concentrates, considers whether the tax applies to an activity that has a substantial nexus with the taxing state. See id.-, Op. at 507-10. Again, the majority distinguishes Peoples, which I find to be both materially indistinguishable and instructive.

The Texarkana Court of Appeals observed that Peoples maintained no office in Texas and had no employees, representatives, or physical facilities in Texas and that there was no evidence that any of the gas it purchased was delivered in Texas, although the record suggested that much of the stored gas was produced in Texas. Peoples, 270 S.W.3d at 218-19. The court found this to be an “insufficient nexus between Texas and the entity, property, or transaction to be taxed” to justify the tax under the Complete Auto test. Id. at 219. Therefore, it held that the tax violated the Commerce Clause. See id.

The majority in this case, viewing those facts as determinative of the “substantial nexus” factor, concludes that ETC’s own physical presence in Harris County and its contract with HPL for temporary working gas storage at the Bammel facility distinguish this case from Peoples and also from Midland Central Appraisal District v. BP America Production Co. Op. at 508-09. I have already opined that I find this case indistinguishable from Peoples. I draw the same conclusion with respect to BP America.

In BP America, the Eastland Court of Appeals, similarly to the Texarkana Court of Appeals in Peoples, held that an ad valorem tax was improperly assessed by a Texas county on oil in interstate commerce passing through an interstate pipeline but temporarily held in a tank farm located in Texas. See 282 S.W.3d at 219, 223-24. The majority in this case, however, distinguishes oil in interstate commerce that is temporarily stored in Texas from working gas that is similarly temporarily stored. It opines, “Unlike ETC Marketing’s natural gas deliberately stored at Bammel to facilitate timing the natural gas market, the oil at issue in the Midland case was not held in the tank farm for storage purposes or for any business purpose of the owner other than its transmission through the pipeline.” Op. at 510 (citing BP Am. Prod. Co., 282 S.W.3d at 221-23). The problem with this argument is that every seller of oil or gas in an interstate pipeline system that is destined for resale on an interstate market necessarily has the business purpose of making money on the resale. Further, this fact is immaterial to the overriding purpose of holding either oil or gas in a temporary storage facility to further its efficient transportation and sale throughout the interstate pipeline system.

I find the Peoples and BP America decisions to be not only indistinguishable from this case on the law and material facts but also persuasive authority in deciding the constitutionality of the tax imposed in this case.

In assessing the validity of the tax on the oil stored in Midland County under the first prong of the Complete Auto test, the Eastland Court of Appeals opined in BP America:

To comply with the first prong of the Complete Auto test, the ad valorem tax on the oil in the tank farm must have applied to an activity with a substantial nexus with Texas. Although the oil itself had a substantial nexus with this state as' much of it was produced in this state and some of it was destined for an in-state refinery, the “activity” being taxed had no such nexus. The activity essentially being taxed in this case was the ownership of oil that was present but in transit on January 1 in a tank farm that constituted an integral part of an interstate, common carrier pipeline system.

282 S.W.3d at 224. Likewise, the activity that is being taxed in this case is the ownership of natural gas that was present but in transit in a natural gas storage facility that constituted an integral part of an interstate, common carrier pipeline system into which the gas was transmitted for resale and consumption in accordance with market forces, pipeline handling, and FERC regulations.

Unlike the majority, I would hold that the ad valorem tax imposed by Harris County on the gas owned by ETC and stored in the Bammel facility does not satisfy the substantial nexus test, the first prong of the Complete Auto test for constitutionality under the Commerce Clause, and is therefore unconstitutional. This conclusion becomes even more compelling when the other prongs of that test are considered.

2. Discrimination against interstate commerce

The Complete Auto test also .asks whether the tax discriminates against interstate commerce. See 430 U.S. at 279, 97 S.Ct. at 1079. A tax is nondiscriminatory under Complete Auto when it “places no greater burden upon interstate commerce than the state- places upon competing intrastate commerce of like character.” Id. at 282, 97 S.Ct. at 1081. The United States Supreme Court elaborated upon this test in American Trucking Associations. See 545 U.S. at 433-38, 125 S.Ct. at 2423-26 (upholding flat tax imposed on truckers exclusively for intrastate activities). The Court observed 'that it had found unconstitutional state regulations and taxes that (1) “unjustifiably discriminate on their face against out-of-state entities”; (2) “impose burdens on interstate trade that are ‘clearly excessive in relation to the putative local benefits’ ”; (3) “facially discriminate against interstate business and offer commercial advantage to .local enterprises”; (4) “improperly apportion state assessments on transactions with out-of-state components”; and (5) “have the ‘inevitable effect [of] threatening] the free movement of commerce by placing a financial barrier around the State.’” Id. at 433, 125 S.Ct. at 2423 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970) and Am. Trucking Ass’ns, Inc. v. Scheiner, 483 U.S. 266, 284, 107 S.Ct. 2829, 2840, 97 L.Ed.2d 226 (1987)).

The majority concludes that “the ad va-lorem taxes here were nondiscriminatory.” Op. at 512.

I would hold that the tax imposed by HCAD on ETC’s gas stored in the Bam-mel facility in Harris County is discriminatory against interstate commerce on two of the grounds recognized by the United States Supreme Court in American Trucking Associations. First, it imposes a burden on working gas in interstate trade that is “clearly excessive in relation to the putative local benefits” in that the local benefits of storage in the Bammel facility are not necessary to the efficient' distribution of the gas, which could be stored by HPL .and others elsewhere but is stored in Harris County at HPL’s discretion. And the local benefits of fire and police protection afforded to the Bammel facility by its location in Harris County primarily benefit HPL and are taxed to ⅛ as argued below with respect to the fourth prong, of the Complete Auto test. Thus, the benefits to ETC of temporarily storing a portion of its working gas at the Bammel facility are clearly outweighed by the burden of paying an ad valorem tax for use of that facility.

Second, the tax has “the'‘inevitable effect [of] threaten[ing] the free movement of-commerce by placing a financial barrier around the [s]tate’ ” by imposing a tax on gas temporarily stored in Harris County that is not levied by taxing authorities in other taxing jurisdictions through which the gas passes and in which it is temporarily stored. See Am. Trucking Ass’ns, 545 U.S. at 433, 125 S.Ct. at 2423. In this case, the tax the majority upholds is particularly discriminatory in- that it places a financial barrier around Harris County in the form of an ad valorem tax that two other Texas courts of appeals have invalidated as unconstitutional on facts materially indistinguishable from those in this case.

I would hold that- the ad valorem tax imposed by HCAD on ETC’s gas stored in the Bammel facility is discriminatory against interstate trade and is therefore unconstitutional under the third prong of Complete Auto.

3. Fair relation to state-provided services

The final prong of the Complete Auto test is whether the tax is fairly related to the services provided by the state. See 430, U.S. at 279, 97 S.Ct. at 1079. The “fair relation prong of Complete Auto requires no detailed accounting of the services provided to the taxpayer on account of the activity being-taxed, nor, indeed, is a State limited to offsetting the public costs created by the taxed activity.” Okla.Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 199, 115 S.Ct. 1331, 1345, 131 L.Ed.2d 261 (1995). Rather, “police and fire protection, along with the usual and usually forgotten advantages conferred by the State’s .maintenance of a civilized society, are justifications enough for the imposition of a tax.” Id. at 200, 115 S.Ct. at 1346.

Taking at face value the statement of the law by the Supreme Court in Oklahoma Tax Commission, the majority reasons that “[ETC] owns the gas.while.it is stored at Bammel, and it enjoys the benefit of public services which facilitate gas storage, which in turn allows it to accomplish its business objective of buying natural gas and holding it for sale at some later point in time.” Op. at 513. Therefore, it concludes that “the tax' in this case is fairly related to the services provided by the state.” Op. at 513 (citing Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079).

Again, I disagree with the , majority’s reasoning and, instead, find the reasoning and the conclusion of the Peoples court on this fourth prong of the Complete Auto test to b¿ persuasive. In that case, the Texarkana Court of Appeals, having found the ad valorem tax imposed by Harrison County on Peoples’ gas stored in the North Lansing facility to be unconstitutional under the “substantial nexus” test of the first prong of the Complete Auto test, turned directly to the fourth prong. It reasoned:

Under the Commerce Clause, the measure of the tax must be reasonably related to the extent of the taxpayer’s presence or activities within the taxing state and to the taxpayer’s consequent enjoyment of the opportunities which the state has afforded. Even though fire and police services may not be invoked, protection conferred by these “along with the usual and usually forgotten advantages conferred by the state’s maintenance of a civilized society are justification enough for the imposition of a tax.” The District presented substantial evidence of services provided within the county. While we do not doubt the value of those services, we note, again, that services such as law enforcement and the fire department would serve the North Lansing facility itself, and, the facility undoubtedly belongs to Pipeline, which does pay ad valorem taxes on both the “cushion” gas it maintains in the facility and the physical plant of the facility itself.

Peoples, 270 S.W.3d at 219 (internal citations omitted). The court held that the tax imposed by Harrison County on. Peoples’ gas in storage at the North Lansing facility failed the fourth prong of the Complete Auto test as well as the first. Id.

Here, as in Peoples, the record shows that HPL pays millions of dollars in property taxes on the Bammel facility and on its cushion gas maintained at the facility, just as the Pipeline in Peoples paid ad valorem taxes on its cushion gas and the physical plant of the Harrison County facility. I, therefore, agree with the Peoples court’s reasoning with regard to the fourth prong of the Complete Auto test. I would conclude, like that,court, that while law enforcement, fire, ■ and other public services provided by Harris.County to the Bammel facility are valuable services, those services serve the facility itself, on which HPL pays substantial taxes, in addition to paying taxes on the cushion gas it maintains permanently at the facility. These taxes are not properly levied against the activity of temporarily storing gas owned by marketers during its transmission through the interstate pipeline system or the use of the facility for that purpose.

I would conclude that the ad. valorem tax imposed on ETC’s gas at the Bammel facility fails the fourth prong of the Complete Auto test, in addition to the first and third prongs.

Because I would conclude that the portion of the working gas stored at the Bam-mel facility that is allotted to ETC is in interstate commerce and that the ad valo-rem -tax imposed on that gas by HCAD impermissibly burdens interstate- commerce, as shown by the tax’s failure to satisfy three of the Complete Auto test factors, I would hold that the tax violates the Commerce Clause of the United States Constitution.

Conclusion

I would reverse the judgment of the trial court and render judgment declaring that the ad valorem tax imposed by HCAD on working gas allotted to ETC that is temporarily' stored in the Bammel facility in Harris County is unconstitutional. 
      
      . Before filing its motion for en banc reconsideration, ETC Marketing focused its arguments on whether its gas was subject to taxation under the standard of Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977). This was the basis of its arguments in its motion for summary judgment, response to HCAD’s motion for summary judgment, appellate briefing on original submission, and initial motion for rehearing. The motion for summary judgment also included an argument that HCAD lacked jurisdiction to tax the property, albeit with little explanation or argument. The final judgment in this case granted HCAD’s motion for summary judgment and denied ETC Marketing’s motion for summary judgment. The trial court did not specify the grounds upon which its ruling was based. Because the issue of whether the trial court properly ruled on the competing motions for summary judgment was raised on the original submission of this case, we will address the additional argument urged in the motion for en banc reconsideration.
     
      
      . Although Houston Pipeline operates an intrastate pipeline, it is authorized to provide such storage and transportation services to ETC Marketing, which sells some of its gas in the interstate market, without becoming subject to federal regulation as a natural gas company. See 15 U.S.C. § 717; 15 U.S.C. § 3371 (Natural Gas Policy Act of 1978, § 311). However, due to the nature of this authorization, Houston Pipeline gives precedence to transportation of intrastate-bound gas and may refuse to deliver interstate gas if necessary for the operation of the pipeline.
     
      
      . In its original petition, ETC Marketing alleged that it "owns Property within the Defendant's jurisdictional boundaries for the tax year.” "Property” is a defined term in the original petition; it means "the property ' and/or properties listed in Exhibit ‘A’;” Exhibit A to the original petition identifies the "Property” as "Bammel Working Gas-32,-267,485.”
     
      
      .. One of the exhibits submitted by ETC Marketing in support of its motion for summary judgment was an affidavit and report from its designated expert witness, Richard Smead. Among other things, the Smead report opined that all of the gas "handled by ETC Marketing that traveled to the Bammel Field was destined for interconnections with interstate pipelines to be carried to out-of-state markets,” and therefore was "in interstate commerce.” The district court sustained HCAD’s objection to Smead’s report on the grounds that his opinions were "unsupported, conclu-sory, [and] subjective,” and that his "legal conclusions that the gas is in interstate commerce are ipse dixit,” and are not competent summary-judgment evidence under Rule 702 of the Texas Rules of Evidence and Rules 192.3 and 194.2(f) of the Texas Rules of Civil Procedure. In light of the disposition of this case, we need not resolve the issue of whether the trial court erred by sustaining HCAD’s objection to the report. See Tex.R.App. P. 47.1.
     
      
      . Tex. Tax Code § 11.01; see also id, § 21.02., With respect to the date of, the valuation, which is not a disputed issue in this appeal, .the "owner of an inventory” “may elect to have the inventory appraised at its market value as of September 1 of the year preceding the tax year to which the appraisal applies.” Id. § 23.12; see Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 933 (Tex.1996). ETC Marketing elected a September 2009 valuation for the purposes of the 2010 tax year.
     
      
      . In its motion for en banc reconsideration, ETC Marketing argued that HCAD lacked jurisdiction to impose the tax at issue because the natural gas was not located in Harris County for "longer than, a temporary period.” The Tax Code does not define "longer than a temporary period,” See Tex. Tax Code § 11.01; see also id, § 21.02. When resolving disputes about what constitutes a "temporary period,” Texas courts have considered whether the property is in interstate commerce, whether there was an interruption in transportation, and whether such stoppage was necessary to facilitate transportation or occurred to accommodate "the business purposes and profits of the company.” Friedrich Air Conditioning & Refrigeration Co. v. Bexar Appraisal Dist., 762 S.W.2d 763, 769 (Tex.App.-San Antonio 1988, no writ); see Midland Cent. Appraisal Dist. v. BP Am. Prod. Co., 282 S.W.3d 215, 220-22 (Tex.App.-Eastland 2009, pet. denied); Dallas Cnty. Appraisal Dist. v. L.D. Brinkman & Co. (Tex.), Inc., 701 S.W.2d 20, 21-22 (Tex.App.-Dallas 1985, writ ref'd n.r.e.); cf. Virginia Indonesia Co. v. Harris Cnty. Appraisal Dist., 910 S.W.2d 905, 912 (Tex.1995) (determining whether goods bound for export were subject to ad valorem taxation).
      Contrary to the new assertions in the motion for en banc reconsideration, the summary-judgment evidence showed that the gas that ETC Marketing stored in the Bam-mel Reservoir was not presold and could be sold both within Texas and out of state. ETC Marketing contracted to store the gas in Houston Pipeline’s facilities, located entirely within Texas, for its own business purposes of timing the market and selling the gas at higher prices out of state during cold months. This interruption in transportation was not necessary to facilitate transportation of the gas but occurred to accommodate the profit-maximizing business purposes of the company. The evidence further showed that the gas was stored for up to several months. Thus, it was not merely "briefly" passing through Harris County on its way out of state. Accordingly, ETC Marketing’s natural gas stored in Harris County was not exempt from taxation due to its presence for a mere "temporary period.”
     
      
      . Am. Trucking Ass'ns, Inc. v. Michigan Public Svc. Comm’n, 545 U.S. 429, 433, 125 S.Ct. 2419, 2422-23, 162 L.Ed.2d 407 (2005); see also In re Nestle USA, Inc., 387 S.W.3d 610, 624-25 (Tex.2012).
     
      
      . Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 254, 58 S.Ct. 546, 548, 82 L.Ed. 823 (1938); accord Commonwealth Edison Co. v. Montana, 453 U.S. 609, 623-24, 101 S.Ct. 2946, 2956-57, 69 L.Ed.2d 884 (1981); see also Am. Trucking Ass'ns, 545 U.S. at 438, 125 S.Ct. at 2425.
     
      
      . Commonwealth Edison, 453 U.S. at 624, 101 S.Ct. at 2957 (quoting Exxon Corp. v, Wisconsin Dep't of Revenue, 447 U.S. 207, 228, 100 S.Ct. 2109, 2123, 65 L.Ed,2d 66 (1980)).
     
      
      . Barclays Bank PLC v. Franchise Tax Bd. of Cal., 512 U.S. 298, 310-11, 114 S.Ct, 2268, 2276, 129 L.Ed.2d 244 (1994); Midland Cent. Appraisal Dist., 282 S.W.3d at 223.
     
      
      . Barclays Bank, 512 U.S. at 310-11, 114 S.Ct. at 2276 (citing Complete Auto, 430 U.S. at 279, 97 S.Ct. at 1079).
     
      
      . Some of ETC Marketing’s arguments are premised upon the physical nature of the gas and the pipeline system, effectively suggesting that its gas is not actually contained within the Bammel reservoir, but that instead it at all times flows freely throughout the interstate pipeline system. Our legal analysis accepts ETC Marketing’s admission that it owns the gas located at Bammel, just as both parties assumed this fact for the purposes of the appraisal, and just as ETC Marketing itself assumes for accounting and regulatory purposes. The Tax Code permits a taxpayer protest on the basis that property should not be included on the appraisal records. See, e.g., Tex. Tax Code § 41.41(a)(3). But the challenge raised by the appeals to the district court and to this court cannot fairly be considered a challenge to the factual determination that ETC Marketing owned and stored gas at Bammel; instead the appeals assert a legal challenge to HCAD’s assessment of a tax on that gas based upon ETC Marketing's legal contention that .the gas is in interstate commerce and therefore exempt from local taxation.
     
      
      . Peoples Gas, Light, & Coke Co. v. Harrison Cent. Appraisal Dist., 270 S.W.3d 208, 211 (Tex.App.-Texarkana 2008, pet. denied) (pipeline-at issue had “many” associated "storage facilities” that were "operated ‘in the aggregate,’ ” such that the pipeline’s storage and transportation of gas did not “use any particular storage field exclusively”).
     
      
      . In contrast, in Peoples Gas the appellant had purchased natural gas and paid for its “contractual storage in the Iowa-Illinois zone,” "transportation to the Iowa-Illinois zone,” and the contractual right to physical delivery in Chicago, Illinois. Id. at 213-14.
     
      
      . Id. at 216 ("Since Peoples has no control over where that natural gas is stored and how much is stored at any given location, we cannot say that Peoples made the decision- to store gas at North Lansing in order to serve its business purpose.”).
     
      
      .Our dissenting colleague contends that by observing the differences between this case and Peoples Gas, we have "implicitly” concluded that the gas at issue was not in interstate commerce. Not so. Still, we observe the distinction between the cases because it is ETC Marketing’s express contention that its gas is in interstate commerce even while it is being stored at Bammel pending its later decision of where and when to sell the gas'. See Appellant’s Br. at 27. The circumstances that inform a decision' about whether goods' are "in transit” also may inform a court’s decision about whether the first and fourth nexus requirements of Complete Auto are met. See Diamond Shamrock Ref. & Mktg. Co. v. Nueces Cnty. Appraisal Dist., 876 S.W.2d 298, 302 (Tex.1994).
     
      
      . Moréover, this issue was presented to the Supreme Court of Texas in Virginia Indonesia Co. v, Harris County Appraisal Dist., 910 S.W.2d 905 (Tex.1995), a case that challenged HCAD’s assessment of ad valorem taxes on goods stored in Harris County while in transit intended for foreign export.'
      The Court’s majority resolved that appeal by concluding that the tax violated the federal constitution’s Import-Export Clause, U.S. Const, art.. 1, § 10, cl. 2, expressly declining to address whether the tax also offended the Commerce Clause. See VICO, 910 S.W.2d at 915. But in his dissenting opinion, then-Justice Nathan Hecht did reach the issue, joined by then-Justice Priscilla Owen. And Justice Hecht observed in that case: "The goods clearly have a nexus to this state. They are present for relatively prolonged periods during which they receive local services such as police and fire protection.” Id. at 925 (Hecht, J., dissenting); see also Peoples Gas, 270 S.W.3d at 218 ("The Commerce Clause requirement of a substantial nexus with the taxing state is satisfied by the taxpayer’s physical presence in the state.”).
     
      
      . Notably, in similar circumstances the supreme courts of both Oklahoma and Kansas have recently found the required substantial nexus to exist based solely on the physical presence of the gas and without regard to any of the owner’s other activities within the state. See In re Assessment of Pers. Prop. Taxes Against Missouri Gas Energy, Div. of S. Union Co., for Tax Years 1998, 1999, & 2000, 234 P.3d 938, 959 n. 84 (Okla.2008) (expressly declining to follow Peoples Gas ), cert. denied sub nom. Missouri Gas Energy v. Schmidt, 559 U.S. 970, 130 S.Ct. 1685, 176 L.Ed.2d 179 (2010); In re Appeals of Various Applicants from a Decision of Div. of Prop. Valuation of State for Tax Year 2009 Pursuant to K.S.A. 74-2438, 298 Kan. 439, 313 P.3d 789, 799 (2013) (also declining to follow Peoples Gas: "There is axiomatically a substantial nexus between Kansas and the gas stored in this state.”), cert. denied, — U.S. -, 135 S.Ct. 51, 190 L.Ed.2d 29 (2014).
     
      
      . Dan Hyvl, senior counsel to ETC Marketing, specifically testified that the company had no concern about another state imposing ad valorem tax while the gas was in transit because once the gas leaves the state, it belongs to the purchaser. This refutes the suggestion, made in the motion for en banc reconsideration, that our holding in this case would subject all “natural gas suppliers” to multiple taxation as natural gas in commerce traverses multiple jurisdictions. Moreover, ETC Marketing does not suggest that all interstate natural gas sales involve the particular facts that are dispositive in this case, including the deliberate storage of gas for more than a "temporary period,” within one taxing jurisdiction, for reasons that Serve the owner’s business purposes as opposed to being merely incidental to the interstate transportation of the gas to facilitate its sale.
     
      
      . Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977)..
     
      
      . "Cushion gas” is gas that remains in the storage facility and is used to maintain adequate pressure to keep the working gas at issue in this case moving through the pipeline system.
     