Coverdale v. Arkansas-Louisiana Pipe Line Co.
303 U.S. 604 (1938)

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U.S. Supreme Court

Coverdale v. Arkansas-Louisiana Pipe Line Co., 303 U.S. 604 (1938)

Coverdale v. Arkansas-Louisiana Pipe Line Co.

No. 458

Argued February 28, 1938

Decided April 4, 1938

303 U.S. 604

Syllabus

A corporation produced and purchased natural gas in Louisiana, piped it from the wells to the Louisiana terminus of its interstate pipeline, and introduced it into that line under increased pressure induced by the power of gas engines operating gas compressors. Nearly all of the gas was transported and disposed of in interstate commerce, and the increase of pressure was essential to its movement through the pipeline. As a complement to taxation of the generation and sale of electricity, Louisiana laid a privilege tax on operation of machines for production of mechanical power used by the operator in his business within the State, the tax being measured on the horsepower capacity of such machines.

Held:

1. That, applied to the operation of the corporation's gas engines, the tax was not invalid as a burden on the interstate commerce. P. 303 U. S. 609.

2. Taxation by the States of the business of interstate commerce is forbidden only because it is deemed an interference with that commerce, the uniform regulation of which is necessarily reserved to the Congress. P. 303 U. S. 610.

3. Exemption of those engaged in interstate commerce from the taxation others bear should not be extended beyond the necessity of keeping that commerce free from interference. P. 303 U. S. 610.

4. Privileges closely connected with interstate commerce may be regarded as distinct for purposes of taxation. P. 303 U. S. 610.

5. While the engine and compressor units are connected directly, on a common bedplate, their functions are as completely separate as if they operated through belting. While the use of the engine for the production of power synchronizes with the transmission of that power to the compressor, production occurs prior to transmission. Cf. Utah Power & Light Co. v. Pfost,286 U. S. 165. P. 303 U. S. 611.

6. The tax is without discrimination in form or application as between interstate and intrastate commerce, and is not such as can be imposed by more than one State. It obviously adds to the

Page 303 U. S. 605

cost of the interstate commerce. But increased cost alone is not sufficient to invalidate the tax as an interference with that commerce. Cf. Western Live Stock v. Bureau of Revenue, ante p. 303 U. S. 250. P. 303 U. S. 612.

20 F.Supp. 676 reversed.

Appeal from a decree of the three-judge District Court which permanently enjoined the sheriff from enforcing a state tax found to be unconstitutional. See also 17 F.Supp. 34, 36.

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