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March 13, 2026 Get Citation Alerts Download PDF Add Note

Nustar Energy, L.P. v. Kelly Hancock, Comptroller of Public Accounts of the State of Texas; And Ken Paxton, Attorney General of the State of Texas

Texas Supreme Court

• Citations: None known
• Docket Number: 24-0037
• Judges: Devine

• Disposition: The Court affirms the court of appeals' judgment and remands the case to the trial court.

• Opinion

• Authorities (30)

• Cited By (0)

• Summaries (0)

• Similar Cases (9.6K)

• PDF

Disposition

The Court affirms the court of appeals' judgment and remands the case to the trial court.

Lead Opinion

                        by Devine

Supreme Court of Texas
══════════
No. 24-0037
══════════

NuStar Energy, L.P.,
Petitioner,

v.

Kelly Hancock, Comptroller of Public Accounts of the State of
Texas; and Ken Paxton, Attorney General of the State of Texas,
Respondents

═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Third District of Texas
═══════════════════════════════════════

Argued September 10, 2025

JUSTICE DEVINE delivered the opinion of the Court.

Justice Lehrmann did not participate in the decision.

This franchise-tax dispute presents a question of statutory
interpretation: does section 171.103(a)(1) of the Texas Tax Code
attribute sales of tangible personal property to the location the buyer
takes delivery (the place of transfer) or to the location the buyer uses or
consumes the goods (the ultimate destination)? In a suit to invalidate
state comptroller rules making the transfer point determinative, the
taxpayer asserts the regulations are invalid because they conflict with
the statute. The taxpayer reads statutory language sourcing sales
receipts to Texas when goods are “delivered or shipped to a buyer in this
state” as referencing the ultimate destination for the goods rather than
the place of transfer to the buyer. 1 The lower courts rejected the
taxpayer’s construction of the Tax Code and upheld the comptroller’s
rules. We affirm. The statute unambiguously sources receipts from
sales of tangible personal property to Texas if the taxpayer yields
possession and control of the goods to a buyer at a location in this state
even if the buyer subsequently transports those goods to another
jurisdiction for consumption or use.
I
Texas imposes a franchise tax on domestic and foreign entities
conducting business in this state. 2 The tax approximates “the value of
th[e] privilege to transact business in Texas,” including economic
benefits like “the opportunity to realize gross income and the right to
invoke the protection of local law.” 3 An entity’s franchise-tax liability is
determined by multiplying its “taxable margin” by the applicable tax
rate. 4 Determining taxable margin has three steps: (1) calculation of
the entity’s margin (total revenue minus authorized deductions);

1 See TEX. TAX CODE § 171.103(a)(1) (emphasis added).

2 Id. § 171.001(a).

3 Hegar v. Am. Multi-Cinema, Inc., 605 S.W.3d 35, 38 (Tex. 2020)
(alteration in original) (internal quotation marks and citation omitted).
4 TEX. TAX CODE §§ 171.002, .101.

2
(2) apportionment to Texas; and (3) subtraction of other allowable
deductions. 5 Only apportionment is at issue here. 6
The Tax Code’s single-factor apportionment method is based on
the proportion of the taxpayer’s total sales attributable to “business done
in this state.” 7 This is a “sales-factor” formula that compares the
taxpayer’s gross receipts from business done in Texas (the numerator)
with its gross receipts from its entire business (the denominator). 8 The
resulting percentage, ranging from 0% to 100%, is applied to the entity’s
margin to determine the taxpayer’s apportioned margin. 9 Because an
entity’s “franchise-tax liability increases as the ratio of Texas receipts to
total receipts increases,” 10 apportioning gross receipts to Texas directly
impacts the taxes due.

5 Id. § 171.101(a)(1)–(3); see id. § 171.1011 (determination of total
revenue); Sirius XM Radio, Inc. v. Hegar, 643 S.W.3d 402, 404 (Tex. 2022)
(discussing the three-step taxable-margin formula).
6 For a more comprehensive overview of Texas’s franchise-tax scheme

see, for example, Graphic Packaging Corp. v. Hegar, 538 S.W.3d 89, 93 & n.1
(Tex. 2017), and In re Nestle USA, Inc., 387 S.W.3d 610, 614-16 (Tex. 2012).
7 TEX. TAX CODE §§ 171.103(a), .106(a). As we observed in Sirius XM
Radio, “Texas has used a single-factor test based on sales receipts” “[g]oing
back to 1919.” 643 S.W.3d at 409. Other states consider factors in addition to
sales receipts, typically the taxpayer’s payroll and property, and may weight
the factors equally or unequally. See Bloomberg Tax, Executive Summary:
2019 Survey of State Tax Departments (Tax Management Multistate Tax
Report) 19 (2019).
8 TEX. TAX CODE § 171.106(a).

9 Id.

10 Hallmark Mktg. Co. v. Hegar, 488 S.W.3d 795, 796 (Tex. 2016).

3
Section 171.103(a) of the Tax Code directs when various
categories of commercial receipts are counted as “business done in this
state.” 11 Relevant here, subsection (a)(1) sources gross receipts from
sales of tangible personal property to Texas “if the property is delivered
or shipped to a buyer in this state regardless of the FOB point or another
condition of the sale.” 12 At issue in this rule-validity challenge are
administrative rules sourcing gross receipts to Texas when the buyer
has taken possession and control of goods in Texas, including Texas
waters. 13 The examples provided in the challenged rules attribute gross
receipts based on what is often referred to as the “place of delivery” or
“place of transfer” to the buyer.
Texas-based NuStar Energy, L.P. sells high-sulfur bunker fuel for
use in large, oceangoing ships and delivers that fuel to primarily foreign-
registered vessels at Texas ports. 14 For tax years 2011 to 2013, NuStar
treated those sales as Texas transactions and paid franchise taxes
accordingly. NuStar then requested a $2.4 million tax refund based on
a revised apportionment factor that excluded the bunker-fuel sales from

11 See TEX. TAX CODE § 171.103(a)(1)–(6) (providing sourcing rules for

receipts from sales of goods, services, real-property sales and rentals, royalties,
and business generally).
12 Id. § 171.103(a)(1).

13 See 34 TEX. ADMIN. CODE § 3.591(e)(29)(A), (C), (H), (e)(31) (Margin:

Apportionment, computation and sourcing of gross receipts).
14 “Bunker fuel” is used to power oceangoing vessels and their
machinery. See bunker fuel or bunker oil, WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY, at 297 (2002) [hereinafter WEBSTER’S]; bunker or
bunker oil, THE RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE, at
278 (2d ed. 1987) [hereinafter RANDOM HOUSE].

4
its Texas receipts because the nonresident purchasers do not (and
legally cannot) use, sell, or otherwise consume bunker fuel in Texas or
Texas waters. 15 NuStar took the position that these “dock sales” were
not business done in Texas because the buyers are here only temporarily
to take delivery, not to use or consume the goods NuStar has physically
delivered to them in this state. 16
After the refund request was denied, NuStar exhausted
administrative remedies and then filed a tax-refund suit against the
Texas Comptroller of Public Accounts and the Texas Attorney General
(collectively, the Comptroller). 17 NuStar also sought a declaration that
administrative rules 3.591(e)(29)(A), (C), and (H) and 3.591(e)(31) 18 are

15 For purposes of the issue on appeal, we take as true NuStar’s
allegations about the nature of the sales transactions.
16 “Dock sales” are transactions in which the buyer takes physical
possession of goods at the seller’s loading dock and provides transportation to
remove the goods from the seller’s location. See Brian Kopp, Does the
Destination Rule Control the Situs of Dock Sales?, 5 J. MULTISTATE TAX’N 156,
156 (1995).
17 Kelly Hancock, the interim successor to former comptroller Glenn

Hegar, has been substituted as a party. See TEX. R. APP. P. 7.2(a).
18 The court of appeals’ opinion sets out the text of the rules in full.
683
S.W.3d 831, 835 (Tex. App.—Austin 2023) (quoting the applicable versions of
the administrative rules formerly at 34 TEX. ADMIN. CODE § 3.591(e)(29)(A),
(C), (H), (e)(31)). As the court noted, the rules were twice amended in
nonmaterial ways during this litigation. See id. at 835 n.2. Of note, subsection
(e)(31), which defines Texas’s maritime boundary, is now numbered as (e)(32).
See 34 TEX. ADMIN. CODE § 3.591(e)(32); 46 Tex. Reg. 460, 464, 472 (2021)
(adopting amendments to rule 3.591, including by “add[ing] new subsection
(e)(31)” with subsequent paragraphs “renumbered accordingly”). Unlike the
other disputed provisions, this subsection merely establishes the geographical
limit in which a sale occurs in Texas waters; it does not include examples of
transactions sourcing receipts to Texas. See 34 TEX. ADMIN. CODE
§ 3.591(e)(32).

5
facially invalid as contrary to section 171.103(a)(1)’s plain language and
objectives. 19
The parties teed up the rule challenge in cross-motions for partial
summary judgment joining issue on what it means for goods to be
“delivered or shipped to a buyer in this state” under section
171.103(a)(1). According to NuStar, the statute employs a
“market-based” or “ultimate-destination” sourcing rule. 20 Under such a
rule, sales receipts are attributable to the market for the seller’s goods
as determined by the destination where the buyer intends to use, sell,
or otherwise dispose of the property. NuStar contends that section
171.103(a)(1) must be read in this way because the phrase “in this state”
grammatically modifies the words “a buyer,” not the words “delivered or
shipped.” Construing “to a buyer in this state” as describing the buyer’s
location for use or consumption, NuStar asserts that notwithstanding
the transfer of possession and control to a buyer in Texas, goods have
not been delivered “to a buyer in this state” if the buyer intends to
subsequently transport the goods to an out-of-state location for use, sale,
or other disposition.
The Comptroller, by contrast, maintains that the buyer’s
subsequent transportation or intended use of the goods is irrelevant

19 See TEX. GOV’T CODE § 2001.038 (authorizing a declaratory-judgment

action to challenge the validity or applicability of an administrative rule).
20 NuStar has alternatively referred to the controlling location as the

“place of market” or “ultimate destination” without intending any distinction
between the two. NuStar construes all as referring to the location at which the
goods finally come to rest after all transportation has concluded, meaning the
location the buyer ultimately places those goods for consumption, use, or
storage for resale.

6
under the statute’s plain language. Instead, the Comptroller construes
the statute as employing a “place of delivery” or “place of transfer” test.
According to the Comptroller, “delivered or shipped to a buyer in this
state” simply means the seller has [1] physically transferred possession
and control [2] to a buyer [3] at a location in Texas. Stated differently,
section 171.103(a)(1) fixes the sales situs at the location where the
transaction is consummated by the actual transfer of possession and
control to the buyer.
The trial court granted the Comptroller’s summary-judgment
motion, denied NuStar’s motion, and declared that the disputed rules
are valid. On permissive interlocutory appeal, 21 the court of appeals
affirmed, holding that (1) section 171.103(a)(1) unambiguously
apportions sales receipts to Texas “[based] on where the buyer received
the property, not where the buyer is ultimately located when they plan
to use, sell, or otherwise dispose of the property”; and (2) based on a
plain reading of the statute, NuStar’s rule challenge fails on its
fundamental premise. 22
II
The proper interpretation of the apportionment statute is a legal
question that ultimately settles the parties’ dispute about the validity of

21 See TEX. CIV. PRAC. & REM. CODE § 51.014(d), (f) (authorizing an
appeal from an otherwise unappealable interlocutory order involving a
controlling and potentially dispositive question of law).
22 683 S.W.3d at 838, 841.

7
the challenged administrative rules. 23 This is a matter we consider
de novo according to well-established and well-known principles. 24
Neither side has argued that section 171.103(a)(1) determines the
sales situs by looking to the origin of a delivery or shipment. 25 Rather,
the parties agree the statute employs a destination-based sourcing
rule, 26 with both sides viewing the statute as unambiguous in its
meaning. They part company, however, on what destination the statute

23 See TEX. TAX CODE § 111.002(a) (“The comptroller may adopt rules

that do not conflict with the laws of this state or the constitution of this state
or the United States for the enforcement of the provisions of this title and the
collection of taxes and other revenues under this title.”); Tex. Bd. of
Chiropractic Exam’rs v. Tex. Med. Ass’n, 616 S.W.3d 558, 568-69 (Tex. 2021)
(explaining that rule-validity challenges present purely legal questions based
on the meaning of the relevant statutes); Tex. State Bd. of Exam’rs of Marriage
& Fam. Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 33 (Tex. 2017) (to
overcome the presumption that an administrative rule is valid, the party
challenging the rule must show it “(1) contravenes specific statutory language;
(2) runs counter to the general objectives of the statute; or (3) imposes
additional burdens, conditions, or restrictions in excess of or inconsistent with
the relevant statutory provisions”).
24 See Maxim Crane Works, L.P. v. Zurich Am. Ins. Co., 642 S.W.3d 551,

557 (Tex. 2022) (statutory interpretation is a question of law reviewed de novo);
Brazos Elec. Power Coop., Inc. v. Tex. Comm’n on Env’t Quality, 576 S.W.3d
374, 383-84 (Tex. 2019) (setting out typical statutory-construction principles);
Tex. Dep’t of Crim. Just. v. Levin, 572 S.W.3d 671, 680 (Tex. 2019) (a ruling on
cross-motions for summary judgment is reviewed de novo).
25 See Sirius XM Radio, 643 S.W.3d at 408-10 (observing that unlike

sales of tangible personal property, section 171.103(a)(2) sources receipts from
services to the location the service originates); see also Jerome R. Hellerstein
& Walter Hellerstein, STATE TAXATION ¶ 9.181 (defining an
“origin” based sourcing method as attributing sales to the taxing state based
on shipment from a location in the state).
26 Hellerstein & Hellerstein, supra note 25, ¶ 9.181.

8
specifies: where the goods are delivered to the buyer or where the buyer
consumes or uses the property (if that differs from the transfer point).
Though the parties read the statute differently, this disagreement does
not render the statute ambiguous, 27 and we agree with the court of
appeals that it is not. The text does not embrace NuStar’s
use-or-consumption construction, which is therefore not a reasonable
interpretation of the statute. An alternative reading that has been
disclaimed by the parties—sourcing receipts to Texas only when the
buyer is a Texas resident or does business in Texas—is equally
untenable when section 171.103(a)(1) is considered within the broader
statutory context. We therefore agree with the Comptroller that section
171.103(a)(1) employs a “place of delivery” or “place of transfer” test and
that the Comptroller’s rules, which do the same, are not in conflict.
A
A party challenging the validity of an administrative rule bears
the burden to demonstrate “that the rule’s provisions are not in harmony
with the general objectives of the act involved, which we discern from
the statute’s plain text.” 28 Starting there, section 171.103(a)(1)
provides:
[I]n apportioning margin, the gross receipts of a taxable
entity from its business done in this state is the sum of the
taxable entity’s receipts from:

27 See Sw. Royalties, Inc. v. Hegar, 500 S.W.3d 400, 405 (Tex. 2016)

(statutory “language is ambiguous only if the words yield more than one
reasonable interpretation”).
28 Tex. Bd. of Chiropractic Exam’rs, 616 S.W.3d at 569 (internal
quotation marks and citations omitted).

9
(1) each sale of tangible personal property if the
property is delivered or shipped to a buyer in this
state regardless of the FOB point or another
condition of the sale . . . . 29
The terms relevant to the present dispute are not defined, so we begin
by considering their ordinary meaning as informed by the statutory
context. 30
“Delivered,” which always refers to a destination, means to “carry
and turn over . . . goods . . . to the intended recipient,” to “hand over,”
and to “yield possession and control.” 31 The statute uses “shipped” in
the sense of sending or causing something to be transported. 32 This
could refer to either an origination point or a destination except that the
immediately following word—“to”—confirms that shipping is just an
alternative way of effectuating delivery. “To” is a function word
indicating movement toward a destination, 33 in this case “a buyer.” As

29 TEX. TAX CODE § 171.103(a)(1); see Fort Worth Transp. Auth. v.
Rodriguez, 547 S.W.3d 830, 838-39 (Tex. 2018) (discussing principles of
statutory construction).
30 Fort Worth Transp. Auth., 547 S.W.3d at 838.

31 WEBSTER’S, supra note 14, at 597; RANDOM HOUSE, supra note 14, at

528; accord delivery, BLACK’S LAW DICTIONARY, at 541 (12th ed. 2024) (“The
formal act of voluntarily transferring something; esp., the act of bringing goods
. . . to a particular person or place.”); see Epps v. Fowler, 351 S.W.3d 862, 866
(Tex. 2011) (“Often, we consult dictionaries to discern the natural meaning of
a common-usage term not defined by contract, statute or regulation.”).
32 WEBSTER’S, supra note 14, at 2096; RANDOM HOUSE, supra note 14,

at 1766; accord ship, BLACK’S LAW DICTIONARY, supra note 31, at 1661 (“To
send (goods . . .) from one place to another, esp. by delivery to a carrier for
transportation.”).
33 WEBSTER’S, supra note 14, at 2401; RANDOM HOUSE, supra note 14,

at 1989.

10
we explained in Lockheed Martin Corp. v. Hegar, “to a buyer”
distinguishes the intended recipient of the goods from a mere
intermediary who takes possession only to facilitate further transport to
the buyer. 34 And “in this state” obviously refers to a location or place in
Texas. 35 Read syntactically, section 171.103(a)(1) sources sales receipts
to Texas when tangible personal property was (1) handed over (2) to a
buyer (3) in Texas. A simple, clear, and objectively determinable sales
point.
NuStar, however, says there is much more to it than that because
a place-of-transfer sourcing point fails to accurately reflect the seller’s
market for the goods when the customer intends to subsequently
transport the property to its ultimate destination. Describing the
sales-factor formula as generally accounting for the market state’s
contribution to the seller’s revenue, 36 NuStar contends that “to a buyer

601 S.W.3d 769, 775-76 (Tex. 2020) (holding that despite lack of
34

contractual privity between the buyer and seller, the U.S. government, which
held privity with both, was a required intermediary under federal law, not the
buyer contemplated by section 171.103(a)(1)).
See in, WEBSTER’S, supra note 14, at 1139 (“a function word to
35

indicate location or position in space”); in, RANDOM HOUSE, supra note 14, at
964 (“used to indicate inclusion within space, a place, or limits”); see also ETC
Mktg., Ltd. v. Harris Cnty. Appraisal Dist., 528 S.W.3d 70, 76 (Tex. 2017)
(holding that a state tax implicating interstate commerce applies only to “an
activity with a substantial nexus with the taxing state” (citing D.H. Holmes
Co. v. McNamara, 486 U.S. 24, 30 (1998))).
36Compare Lockheed Martin, 601 S.W.3d at 777 (“Generally, a
sales-factor apportionment formula is intended ‘to reflect the contribution of
the market state to the taxpayer’s income.’” (quoting Hellerstein & Hellerstein,
supra note 25, ¶ 9.18[3]a)), with Sirius XM Radio, 643 S.W.3d at 407-08, 409 n.5 (suggesting
that the sales-factor formula as adopted in Texas is not always directed to

11
in this state” plainly requires the taxpayer and the taxing authority to
look beyond the transfer point to determine the buyer’s location for the
goods. In comparison to a place-of-transfer rule, the sourcing rule
NuStar envisions would give rise to more complex administrative,
practical, and recordkeeping burdens related to ascertaining and
documenting a buyer’s post-acquisition journey to the place of
consumption or use. 37 If that is what the statute mandated, so be it. 38
But it does not.
While we can accept NuStar’s argument that “in this state”
modifies “buyer,” the full prepositional phrase “to a buyer in this state”
modifies the verb phrase “if the property is delivered or shipped,”
specifying where the delivery or shipment is taking place to the buyer.
If “in this state” were as grammatically constrained as NuStar posits,
the action verbs would be mere surplusage. The express condition “if
the property is delivered or shipped” would not matter one whit if the
decisive inquiry is the location the buyer intends to use or consume the
goods. Those words lack any function if the statute means what NuStar

capturing the customer market given that receipts from sales of services are
sourced to the place services are “performed” not where they are “received” by
the customer or their “effects felt”).
37 See Hellerstein & Hellerstein, supra note 25, ¶ 9.18[1][a][i] (observing

that the ultimate-destination rule “introduce[s] time-consuming and
burdensome complexities that require vendors to inquire into the course of a
product’s journey after it is turned over to the customer, the local trucker, or
other local recipient”).
38 See EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554
S.W.3d 572, 586 (Tex. 2018) (explaining that the judiciary’s role does not
include “pass[ing] judgment on the wisdom of the legislature’s chosen tax
policies”).

12
says. Because we presume the Legislature chose its words with care, we
must read the statute to give effect to all its terms and not treat any
language as surplusage if possible. 39 Only a point-of-transfer
construction does that.
Giving effect to the statute’s plain language means that the
outcome of the sourcing rule may differ depending on whether the buyer
has subsequently transported the property to an extraterritorial
destination or whether the seller has delivered or shipped the property
to the buyer at the same location. But that does not run counter to the
statute’s admonishment that sourcing is determined “regardless of the
FOB point or another condition of the sale.” 40 The mode of
transportation is not what makes the difference; what matters is the
customer’s location when the seller surrenders the goods. Different
transaction facts often produce different results. Section 171.103(a)(1)
instructs that legal technicalities cannot override transaction realities,
but this instruction does not mean that transaction facts must be

39 PlainsCapital Bank v. Martin, 459 S.W.3d 550, 556 (Tex. 2015).

40 TEX. TAX CODE § 171.103(a)(1). “FOB,” which is an initialism for “free

on board,” refers to a delivery or shipment term designating the location where
a seller is or a buyer becomes responsible for the expense and risk of
transporting the goods. See, e.g., TEX. BUS. & COM. CODE § 2.319(a) (defining
the term FOB absent an agreement otherwise). A “condition of sale” is a term
that must be met for the transaction to be completed. See Lockheed Martin,
601 S.W.3d at 777 (defining “condition” as “a circumstance that is essential to
the appearance or occurrence of something else” (quoting WEBSTER’S, supra
note 14, at 473)). Applying the rule of ejusdem generis, “another” condition of
the sale refers to sales terms sharing similar qualities as an FOB point, which
is the immediately preceding statutory term. See Ferchichi v. Whataburger
Rests. LLC, 713 S.W.3d 330, 338 (Tex. 2025) (explaining the ejusdem generis
doctrine).

13
ignored or disregarded just because they might also qualify as conditions
of sale.
The broader statutory context could, of course, suggest a different
or more precise understanding of enacted language, 41 but not so here.
In that regard, the words omitted from the statute are just as telling as
those the Legislature adopted. 42 Section 171.103(a)(1) speaks only of
delivery and shipment. If the Legislature intended to describe the
buyer’s domicile, business location, or location for use or consumption of
the property, different phrasing would be expected. After all, these are
not abstruse concepts that defy clear explication. Yet section
171.103(a)(1) says nothing about the “ultimate” destination of the
property the taxpayer sold; the “market” for that property; or the buyer’s
“consumption,” “use,” or other “disposition” of the property. In notable
comparison, subsection (a)(4) specifically defines “business done in this
state” as including “the use of a patent, copyright, trademark, franchise,
or license in this state.” 43 Given subsection (a)(4)’s phrasing, it is
inexplicable that subsection (a)(1) would be written as it is if the
Legislature intended the taxing situs to be determined by the location
the buyer intends to use the goods.
Nor would it be reasonable to construe section 171.103(a)(1) as
incorporating a residency, domicile, home-state, or place-of-business

41 Fort Worth Transp. Auth., 547 S.W.3d at 838.

42 See Union Carbide Corp. v. Synatzske, 438 S.W.3d 39, 52 (Tex. 2014)

(“We take statutes as we find them, presuming the Legislature . . . omitted
words it intended to omit.”).
43 TEX. TAX CODE § 171.103(a)(4) (emphases added).

14
destination. Subsection (a)(1) makes no mention of such things. In
comparison, when the Legislature imposed a residency limitation
elsewhere in Chapter 171, it used clear and specific language to convey
that requirement. 44
The notion that the franchise tax’s sales-factor formula does (or
should) capture the customer market for the taxpayer’s goods comes not
from the statute’s text but from an unstated policy that may or may not
have motivated the Legislature’s adoption of section 171.103(a)(1) as
part of Texas’s franchise-tax scheme. As NuStar points out, the
language in subsection (a)(1) is similar (though not identical) to section
16(a) of the Uniform Division of Income for Tax Purposes Act
(UDITPA), 45 a model uniform income tax scheme with a three-factor
apportionment formula. 46 UDITPA is designed to address the issue of
allocating multistate business income among the states having the
power to tax at least some portion of that income. 47 This model law has
been adopted in varying degrees by a majority of states and has also

44 See id. §§ 171.101(a)(1)(B)(ii)(b) (“resident of this state”), .106(b)–(d),

(h) (“domiciled in this state,” “residents of this state,” “domiciled in Texas,” and
“legal domicile of the [taxpayer’s] customer is in this state”), .354 (“resident of
this state”); see also id. § 171.106(g) (“A receipt from internet hosting . . . is a
receipt from business done in this state only if the customer to whom the
service is provided is located in this state.”); cf. id. § 171.109 (using the term
“place of business” in relation to a deduction of a taxpayer’s relocation costs).
45 See UDITPA § 16(a), 7A U.L.A. 418 (1957).

46 See id. § 9 (describing the model law’s three factors of property,
payroll, and sales).
47 See Walter Hellerstein, Construing the Uniform Division of Income

for Tax Purposes Act: Reflections on the Illinois Supreme Court’s Reading of the
“Throwback” Rule, 45 U. CHI. L. REV. 768, 769 (1978).

15
been incorporated into article IV of the 1967 Multistate Tax Compact
(MTC), which functions as a framework for member states, including
Texas, to adopt, modify, or ignore at their discretion. 48 In
section 171.103(a)(1), Texas has adopted language similar to UDITPA
section 16(a), but our franchise-tax statute—the context in which we
read that language—differs in significant ways. 49
A uniform law will ideally be interpreted and applied in a way
that promotes consistency with how other states interpret the same law,
but only if it is possible to do so while remaining faithful to the statutory
text as understood in the statute as a whole. 50 Here, NuStar would

48 See TEX. TAX CODE § 141.001 (Adoption of Multistate Tax Compact);

Graphic Packaging, 538 S.W.3d at 98-106 (concluding that MTC “member
states did not intend for [the UDITPA provisions] to be immutable, binding
contractual terms” and holding that it is ultimately Texas law as articulated
in chapter 171 that controls); see also U.S. Steel Corp. v. Multistate Tax
Comm’n, 434 U.S. 452, 457 n.6 (1978) (noting that the MTC, which contains
UDITPA in article IV, “allows multistate taxpayers to apportion and allocate
their income under formulae and rules set forth in the Compact or by any other
method available under state law”).
49 Compare, e.g., UDIPTA, supra note 45, §§ 10–18 (adopting an income

tax with a three-factor net income apportionment formula that includes a
sales-factor element with sourcing rules for two categories of gross receipts and
a “throwback” rule sourcing receipts to the origin, rather than the destination,
for tangible personal property sales that are not taxable in the location to
which property is shipped), with, e.g., TEX. TAX CODE § 171.103 (utilizing a
single-factor apportionment formula focusing on gross receipts from doing
business in Texas with sourcing rules for six categories of gross receipts
without a throwback rule).
50 Compare TEX. GOV’T CODE § 311.028 (“A uniform act included in a

code shall be construed to effect its general purpose to make uniform the law
of those states that enact it.”), with Entergy Gulf States, Inc. v. Summers, 282
S.W.3d 433, 437 (Tex. 2009) (“Where text is clear, text is determinative of
[legislative] intent.”).

16
prefer our statute to be read as encompassing an ultimate-destination
theory that alters the ordinary meaning of enacted language. To
support that outcome, NuStar finds affirmation in authority from other
jurisdictions that have considered the issue presented here. Not all of
the cited cases actually decided the issue or construed materially similar
language. 51 In several jurisdictions, the issue presented in this case has
been addressed under statutes with a provision similar to section
171.103(a)(1), but even then, the authorities are not uniform in their
conclusions. 52

51 See, e.g., Corp. Exec. Bd. Co. v. Va. Dep’t of Tax’n, 822 S.E.2d 918, 921

(Va. 2019) (involving services and intangibles under a differently worded
statute); Powerex Corp. v. Dep’t of Revenue, 346 P.3d 476, 483-84 (Or. 2015)
(expressly declining to take a position on the matter); Lone Star Steel Co. v.
Dolan, 668 P.2d 916, 920 (Colo. 1983) (holding only that transfer in the taxing
state was to an intermediary, not the buyer).
52 Compare Hercules, Inc. v. Utah State Tax Comm’n, 877 P.2d 133, 136

& n.5 (Utah 1994) (rejecting “the destination rule” to source receipts from a
sale of goods completed in Utah even though the product was destined to be
used outside the state of delivery by incorporation into the buyer’s end-product:
“The statute does not use the term ‘consumption,’ and the location of
consumption of the goods cannot be read into the statute to defeat its plain
language.”), and Miss. State Tax Comm’n v. Murphy Oil USA, Inc., 933 So. 2d
285, 292 (Miss. 2006) (applying an “entirety of events” sourcing rule that
depends on “what is being done in the state” “in each unique instance”), with
McDonnell Douglas Corp. v. Franchise Tax Bd., 33 Cal. Rptr. 2d 129, 133 (Ct.
App. 1994) (explicitly rejecting the place-of-delivery rule); compare also, e.g.,
Pabst Brewing Co. v. Wis. Dep’t of Revenue, 387 N.W.2d 121, 123 (Wis. Ct. App.
1986) (holding that the buyer’s business location controlled), with Dep’t of
Revenue v. Parker Banana Co., 391 So.2d 762, 763-64 (Fla. Dist. Ct. App. 1980)
(holding that the destination of the goods controlled, regardless of the buyer’s
business location), superseded by FLA. STAT. § 220.15(5)(b)(1) (amending
statute to make delivery or shipment “to a purchaser within this state”
determinative “regardless of the . . . ultimate destination of the property,
unless shipment is made via a common or contract carrier”); see Powerex, 346
P.3d at 483 (observing that “[a]greement is not universal” regarding whether

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We acknowledge that there may be some tension between our
holding today and decisions from other jurisdictions that have reached
contrary conclusions about very similar language. 53 But substantial
variations among state taxing regimes reduce uniformity and diminish
consistency concerns. 54 In any event, what is determinative here—and
most important—is that our statute’s plain language trumps unstated
policy objectives that might be gleaned from extratextual sources. 55 We
will not work backwards from an unspoken purpose or rely on extrinsic

UDITPA’s sales-factor provision “embod[ies] an ultimate-destination theory of
sales apportionment”); Olympia Brewing Co. v. Comm’r of Revenue, 326
N.W.2d 642, 646 (Minn. 1982) (“At best, the authorities cited by the parties
indicate that there is not a unanimity of opinion as to the meaning of the
phrase ‘within this state’ in section 16 of UDITPA.”); see also Hellerstein &
Hellerstein, supra note 25, ¶ 9.18[1][a]i.
53 See, e.g., Commonwealth v. Gilmour Mfg., 822 A.2d 676, 677-78, 684

(Pa. 2003).
54 See Hellerstein & Hellerstein, supra note 25, ¶ 9.21 (“[T]he statutory

variations among the ‘uniform’ provisions of UDITPA states are rampant;
judicial construction of identical language can vary from state to state; and
administrative regulations and practices among states are often
inconsistent.”); see also id. ¶ 9.18 (providing a chart that gives a flavor of the
variances among state sourcing rules governing receipts from the sale of
tangible personal property).
55 See Tex. Health Presbyterian Hosp. of Denton v. D.A., 569 S.W.3d 126,

136 (Tex. 2018) (explaining that, in fulfilling the judiciary’s duty to construe
statutes, “we do not consider . . . extrinsic aides to interpret an unambiguous
statute because the statute’s plain language most reliably reveals the
legislature’s intent”); In re Allcat Claims Serv., L.P., 356 S.W.3d 455, 467 (Tex.
2011) (“The language is not ambiguous and, as such, opinions from . . . other
sources cannot override the text approved by the Legislature.”).

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sources to inject (and then resolve) ambiguity when, as here, the text is
clear.
Perhaps the Legislature prefers uniformity across jurisdictions as
to the taxing situs for tangible personal property sales. Only the
Legislature has the prerogative to determine whether uniformity is the
ideal and, if so, whether the benefits of uniformity outweigh any
disadvantages of excluding transactions like dock sales from the reach
of our state’s franchise tax. But if our application of the statute’s plain
language puts Texas out of step with other states, the remedy is
legislative, not judicial. The judiciary’s role is not to determine what the
policy is or to provide a fix if statutory language does not unfailingly
achieve presumed policy goals. 56 Our duty is to enforce what the
Legislature has committed to writing. As we have reiterated many
times, including in our most recent franchise-tax opinion, we take
statutes as we find them without adding or subtracting “to achieve an

56 See Tex. Health, 569 S.W.3d at 137 (stating that if the Legislature

has mistakenly enacted unambiguous language that “does not accurately
reflect its collective intent,” “our duty is to fairly construe and apply the
language enacted and leave it to the [L]egislature to correct its own errors or
omissions [if any]”); EXLP Leasing, 554 S.W.3d at 580 (whether “the outcome
is unfair . . . is a concern beyond our purview,” so “we decline to usurp
legislative authority by issuing reform diktats from on high” (internal
quotation marks and citation omitted)); In re Dep’t of Fam. & Protective Servs.,
273 S.W.3d 637, 645 (Tex. 2009) (“[I]t is not for courts to decide if . . . particular
provisions of statutes could be more effectively worded . . . .”); see also McLane
Champions, LLC v. Hou. Baseball Partners LLC, 671 S.W.3d 907, 918 (Tex.
2023) (“[J]udicial policy preferences should play no role in statutory
interpretation.”); cf. BankDirect Cap. Fin., LLC v. Plasma Fab, LLC, 519
S.W.3d 76, 86 (Tex. 2017) (“[O]ur 181 legislators—who may have had 181
different motives, reasons, and understandings—nowhere codified an agreed
purpose.”).

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unstated purpose.” 57 But that is exactly what would have to happen to
make section 171.103(a)(1) provide a sourcing rule based on something
other than the point of transfer to the buyer. Accordingly, we reject
NuStar’s ultimate-destination interpretation, which is atextual and
contradicts the statute’s plain language. It follows then that NuStar’s
rule-validity challenge, which is premised on an invalid construction of
the statute, fails to overcome the presumption that the Comptroller’s
rules are valid. 58
B
NuStar’s complaints about the Comptroller’s rules are threefold.
First, the rules transpose statutory text in ways that decouple “in this
state” from “a buyer.” 59 Second, the rules generally impose a
place-of-delivery test that sources receipts based on where the seller
transfers possession or control of the property to the buyer. Third, the
rules treat the taxpayer’s delivery to a purchaser in Texas differently

57 BankDirect Cap. Fin., 519 S.W.3d at 87 (internal quotation marks

and citation omitted); see Sirius XM Radio, 643 S.W.3d at 408 (even when
statutory text is difficult to apply, “it should not be replaced by words of
limitation or expansion not chosen by the Legislature”).
58 See Tex. State Bd. of Exam’rs of Marriage & Fam. Therapists, 511

S.W.3d at 33.
59 Compare TEX. TAX CODE § 171.103(a)(1) (“delivered or shipped to a

buyer in this state”), with 34 TEX. ADMIN. CODE § 3.591(e)(29)(A) (“the sale of
tangible personal property that is delivered in Texas to a purchaser”), (C) (“the
sale and delivery in Texas of tangible personal property that is loaded into a . . .
means of conveyance that the purchaser of the property leases and controls or
owns”), (H) (“the drop shipment of tangible personal property in Texas,”
meaning a direct shipment from the seller “to a purchaser’s customer, at the
request of the purchaser, without passing through the hands of the
purchaser”).

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from delivery to a common carrier in Texas, thereby creating a special
“carve out” for extraterritorial transportation by common carrier. 60
We start with the “core administrative-law principle that an
agency may not rewrite clear statutory terms to suit its own sense of
how the statute should operate.” 61 “Where a statute’s language carries
a plain meaning, the duty of an administrative agency is to follow its
commands as written, not to supplant those commands with others it
may prefer.” 62 An agency’s power to execute the law “does not include a
power to revise clear statutory terms.” 63 Indeed, “the need to rewrite
clear provisions of [a] statute” will often be an indication that the agency
has “taken a wrong interpretive turn.” 64 NuStar is therefore correct to
be skeptical of the Comptroller’s curious decision to transpose the text
by converting the statute’s words, “delivered . . . to a buyer in this state,”
into the rules’ words, “delivered in Texas to a purchaser” and like

60 Compare 34 TEX. ADMIN. CODE § 3.591(e)(29)(A) (“Delivery is
complete upon transfer of possession or control of the property to the
purchaser, an employee of the purchaser, or transportation vehicles that the
purchaser leases or owns.”), and id. § 3.591(e)(29)(C) (Texas gross receipts
result from “the sale and delivery in Texas of tangible personal property that
is loaded into a . . . means of conveyance that the purchaser of the property
leases and controls or owns”), with id. § 3.591(e)(29)(C) (“The sale of tangible
personal property that is delivered in Texas to an independent contract carrier,
common carrier, or freight forwarder that a purchaser of the property hires
[does not result in a Texas sale] if the carrier transports or forwards the
property to the purchaser outside this state.”).
61 Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 328 (2014).

62 SAS Inst. Inc. v. Iancu, 584 U.S. 357, 363 (2018).

63 Util. Air Regul. Grp., 573 U.S. at 327.

64 Id. at 328.

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verbiage. If that transposition worked a substantive change in the
statute’s operation, NuStar’s position would have considerable force.
But in this case, the transposition does not appear to make any
substantive difference. Under a proper construction of section
171.103(a)(1), the examples in the Comptroller’s rule are ultimately
consistent with the statute’s place-of-transfer sourcing rule. As NuStar
points out, the disputed subsections of the Comptroller’s rule are written
as attributing receipts to Texas when goods are “delivered in Texas to a
buyer” rather than “delivered to a buyer in Texas.” But under either
phrasing, the destination is the same—the location the buyer took
possession or control of the goods. Transposition of the statutory
language would be problematic—or rather, more problematic—if the
examples addressed shipments to a buyer because, as discussed above,
“shipment in Texas to a buyer” would provide an origination-based
sourcing rule instead of the destination-based sourcing rule section
171.103(a)(1)’s language and grammatical structure dictate. But the
examples in the Comptroller’s rules do not source receipts from
shipments made in Texas to destinations outside of Texas. Quite the
opposite. What NuStar characterizes as a “carve out” for in-state
delivery to a common carrier for out-of-state delivery actually describes
a shipment to a buyer outside this state, and this distinction
acknowledges that a sale is not consummated for franchise-tax purposes
merely by placing the goods in an intermediary’s hands. The
Comptroller’s rules thus survive NuStar’s challenge—not because the
transposition was wise or warranted, but because NuStar has not shown
that it substantively altered the controlling statute’s plain command

22
that a Texas sale results only from delivery or shipment “to a buyer in
this state.”
III
Under section 171.103(a)(1)’s unmistakably clear language, goods
are delivered in the statutory sense where the buyer receives them in
the actual sense. Because the challenged administrative rules are
consistent with section 171.103(a)(1) as written, NuStar failed to
overcome the presumption that the rules are valid. We therefore agree
with the lower courts that those regulations withstand the taxpayer’s
validity challenge. The court of appeals’ judgment is affirmed, and the
case is remanded to the trial court for further proceedings consistent
with this opinion.

John P. Devine
Justice

OPINION DELIVERED: March 13, 2026

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