The U.S. Supreme Court Monday upheld a lower court’s decision that a distributor could owe county taxes on natural gas that it stores temporarily along the interstate gas pipeline system.

Kansas City, MO-based Missouri Gas Energy (MGE), a subsidiary of Southern Union, challenged the Oklahoma Supreme Court decision, which held that MGE owed Woods County, OK, taxes for gas stored in the North Hopeton storage facility in the Oklahoma Panhandle.

Before the high court, MGE argued that it was immune to the taxation under the the Commerce Clause. Millions of dollars were at stake in the case.

Harriet Miers, former White House counsel and former President George W. Bush’s one-time nominee for the Supreme Court, filed the petition for certiorari in 2009 on behalf of MGE (see Daily GPI, Oct. 13, 2009).

At issue in the case is whether states and local governments have the power to tax a distributor’s natural gas that is stored temporarily in an interstate pipeline system.

MGE serves more than 500,000 gas customers in 155 western Missouri communities. It does not supply gas to Oklahoma. The gas stored at the North Hopeton facility is commingled from two sources — MGE’s gas, which originates in Kansas, and natural gas from Oklahoma — and this complicates the issue of who owns the gas.

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