# San Patricio County Appraisal Dist. v. Gunvor USA LLC Supreme Court of Texas, No. 26-0157 **San Patricio County Appraisal Dist. v. Gunvor USA LLC, No. 26-0157, is before the Supreme Court of Texas. Key issue: Is crude oil stored in San Patricio County tanks before export exempt from ad valorem taxation under the Import-Export Clause, as incorporated by Tax Code § 11.12, or is it taxable because a constant, substantial quantity is present and it is not merely passing through Texas?** Practice areas: tax ## Key issues - Is crude oil stored in San Patricio County tanks before export exempt from ad valorem taxation under the Import-Export Clause, as incorporated by Tax Code § 11.12, or is it taxable because a constant, substantial quantity is present and it is not merely passing through Texas? - Does the Court's decision in Virginia Indonesia Co. v. Harris County Appraisal District ("VICO") and its stream-of-export rule control, or does the Supreme Court's Michelin Tire framework permit a nondiscriminatory property tax on oil awaiting export? ## Factual History Gunvor USA bought West Texas Intermediate crude oil from producers in the Permian Basin, in both Texas and New Mexico, solely to fill preexisting purchase orders requiring delivery by vessel to countries overseas, and moved it by common-carrier pipeline to the South Texas Gateway export terminal on the Corpus Christi Ship Channel (Response to Petition (Respondent), PDF pp. 11-12). Gunvor says it used the terminal's above-ground tanks to accumulate enough oil to load pre-chartered, non-Jones Act vessels bound for foreign destinations during its next available loading window, and could not have exported the oil without them (Response to Petition (Respondent), PDF p. 12; Brief on the Merits (Respondent), PDF p. 14). The San Patricio County Appraisal District (SPCAD) put on its roll 428,576 barrels owned by Gunvor at the terminal on September 1, 2022, which it says was about 6% of the oil Gunvor moved in and out of the tank farm in 2022, with tank inventories that never ran low (Brief on the Merits (Petitioner), PDF pp. 11-12). SPCAD had treated the oil as exempt for tax years 2021 and 2022 but listed it for 2023 (Response to Petition (Respondent), PDF p. 12). ## Procedural History Gunvor protested the appraisal and filed a Chapter 42 property-tax appeal in the 156th District Court of San Patricio County seeking a declaration that the oil was exempt under Tax Code section 11.12 by operation of the Import-Export Clause, and the trial court granted its summary-judgment motion (Response to Petition (Respondent), PDF p. 9; Brief on the Merits (Respondent), PDF p. 18). The Thirteenth Court of Appeals affirmed on January 8, 2026, holding the undisputed facts showed the oil was in export transit and that it enjoyed bright-line immunity under *VICO*, which it considered binding (Response to Petition (Respondent), PDF pp. 9-10). The Supreme Court granted SPCAD's petition on May 1, 2026; the companion case is 26-0153 (Devon). ## Issues Presented - SPCAD (Brief on the Merits (Petitioner), PDF p. 9): (1) whether the trial court should have denied summary judgment because the oil was not merely passing through Texas and had a substantial nexus to Texas; and (2) whether it should have denied summary judgment because the oil is taxable, regardless of the Import-Export Clause, as it is constantly present in substantial quantities in San Patricio County and not in foreign transit. - Gunvor and Devon (Brief on the Merits (Respondent), PDF p. 13): whether the trial court correctly determined that crude oil temporarily located in above-ground tanks in San Patricio County is exempt from ad valorem taxation under section 11.12 by operation of the Import-Export Clause. ## Standard(s) of Review Summary judgments are reviewed de novo, taking evidence favorable to the nonmovant as true and resolving doubts in the nonmovant's favor, and a summary judgment must be affirmed if any asserted ground is meritorious when the trial court did not specify its grounds (Brief on the Merits (Petitioner), PDF p. 17). ## Legal Arguments **Whether the stored crude oil is exempt from ad valorem tax.** **SPCAD (Petitioner):** A constant presence of a substantial quantity of oil in the tank farms shows the oil was not embarked in international transit, and oil that came from Texas and was still in Texas on the valuation date was not merely passing through, so a nondiscriminatory property tax is allowed under *Michelin Tire v. Wages* (Brief on the Merits (Petitioner), PDF pp. 15-16). This Court's *Diamond Shamrock* decision is consistent with taxing oil that may later be exported, and the courts below misapplied *VICO* (Brief on the Merits (Petitioner), PDF pp. 16-17). In reply, SPCAD says *VICO* sets the legal test, not the result, and that Gunvor did not conclusively establish that its September 1 inventory had begun movement to a precommitted foreign destination (Reply Brief (Petitioner), PDF p. 2). **Gunvor (Respondent):** *VICO* controls: this Court there rejected the argument that *Michelin* altered the bright-line stream-of-export rule and held an ad valorem tax on goods waiting at an export packer's warehouse for the next vessel violated the Import-Export Clause (Brief on the Merits (Respondent), PDF p. 19). The Supreme Court's *Carson Petroleum* decision invalidated a nondiscriminatory property tax on crude oil in storage tanks awaiting loading on a tanker bound abroad, so whether a constant presence of oil exists is immaterial (Brief on the Merits (Respondent), PDF p. 20). It adds that taxing the oil would violate the clause's one-voice prong, that there is no "constant presence of a substantial quantity" exception, and that goods need not cross state lines to be in export transit (Brief on the Merits (Respondent), PDF p. 8). ## Stated Reasons the Court Should Take the Case SPCAD argued that oil constantly present in substantial quantity in a Texas tank farm was not embarked in international transit, that oil produced in and still in Texas is not merely passing through, and that the courts below were wrong to treat it as individual barrels in transit (Petition for Review (Petitioner), PDF p. 16). Gunvor argued that none of the Rule 56.1(a) factors supports review because the petition rehashes arguments this Court rejected in *VICO* thirty years ago and identifies no intervening change in precedent (Response to Petition (Respondent), PDF p. 14). ## Oral Argument - **Pre-committed movement.** Asked what pre-commitment means, respondents' counsel said VICO's test requires movement to a pre-committed foreign destination, so exportation must have begun. (Oral Argument, 2:04:18) - **Constant presence.** The district's counsel said oil is not exempt just because contracts designate it for export; oil is fungible, and constant presence of a substantial quantity is the key. (Oral Argument, 1:49:46; 1:52:11) - **Carson Petroleum.** Pressed on *Carson Petroleum*, the District's counsel distinguished it: the oil there crossed state lines and the case did not discuss a constant presence of substantial quantity. (Oral Argument, 1:51:04) - **Interstate requirement.** Asked whether the clause requires interstate movement, respondents' counsel said no geographic requirement exists and disagreed that *Michelin* held otherwise. (Oral Argument, 2:01:29) - **One voice.** Asked why VICO discussed *Michelin*'s one-voice factor if it adopted a bright-line test, respondents' counsel said they had no answer, since the factor is not required under that test. (Oral Argument, 2:16:20) - **Reach of the argument.** A Justice asked whether the theory would also exempt the severance tax; respondents' counsel said movement is required, citing *Marathon Ashland*. (Oral Argument, 2:08:18; 2:09:37) - **Emergency services.** Respondents' counsel agreed fire, police and emergency workers protect the stored oil and said an ad valorem tax reflects those burdens, unlike a tax on each gallon leaving. (Oral Argument, 2:19:32; 2:22:59) - **Fact question.** Asked whether in-transit status can be decided as a matter of law, the District's counsel said it is inherently a fact issue and the facts were not undisputed here. (Oral Argument, 1:48:15) - **Hub counties.** Asked whether a county hosting an export hub could tax wheat set for foreign destinations, and whether that resembles a tariff, the District's counsel answered no, citing *Michelin*. (Oral Argument, 1:45:35) - **Pipeline counties.** On rebuttal, asked whether every county along a pipeline could tax passing volume, the District's counsel distinguished oil moving in a pipeline from oil sitting in a tank farm. (Oral Argument, 2:24:56) - **Carson's tanks.** On rebuttal, asked about a *Carson* block quote, the District's counsel said one can only surmise from that opinion, and its tanks predated the floating roof. (Oral Argument, 2:26:49) ## Practice Area Tags tax ## Procedural Posture/Vehicle Petition for review from the Thirteenth Court of Appeals (Corpus Christi-Edinburg); granted May 1, 2026. Oral argument: October 8, 2026. ## Amicus Involvement - Amicus curiae briefs were filed, with responses; they are not summarized here. --- Source: The SCOTX Report, https://scotxreport.com/cases/26-0157. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.