Charles Evans Hughes

“ The value of asphalt base oil is largely for the manufacture of lubricating oil, and the value for this purpose is determined by viscosity and sulphur content, not by gravity. The coastal oils of South Louisiana are divided into 'A' and 'B' grades, 'Grade A' being the oils that are useful in the production of lubricating oil, and the other oil being classed as 'Grade B.' While gravity is not the determining factor, it appears from the testimony that 'Grade A' oils must be less than 25 degrees gravity. ”

“ The higher gravity oils usually have a paraffine base, while the lower gravity oils usually have an asphalt base. All three of these classes are found in Louisiana. In North Louisiana there are paraffine base, asphalt base, and mixed base crudes, the oils generally having paraffine base, while in South Louisiana the oil produced is mostly asphalt base.
The process of refining oil is distillation. The evidence is that paraffine base oil in that manner yields gasoline, kerosene, gas oil, some lubricating oil, and wax. Gasoline comes off first and is the most valuable component of such oil. ”

“ Asphalt base oil usually yields a very small amount of gasoline by distillation, the first product ordinarily being gas oil, then lubricating oil, and the residuum, asphalt. The gas oil may be subjected to the cracking process and gasoline may be obtained in that way. ”

“ The States, in the exercise of their taxing power, as with respect to the exertion of other powers, are subject to the requirements of the due process and the equal protection clauses of the Fourteenth Amendment, but that Amendment imposes no iron rule of equality, prohibiting the flexibility and variety that are appropriate to schemes of taxation. ”

“ When dealing with their proper domestic concerns, and not trenching upon the prerogatives of the national government or violating the guarantees of the Federal Constitution, the States have the attribute of sovereign powers in devising their fiscal systems to insure revenue and foster their local interests. ”

“ The complainant's contention under the Constitution of Louisiana is that the tax is invalid because it was not levied according to either quantity or value. It manifestly is a specific tax at a rate per barrel of 42 gallons, and not strictly ad valorem. ”

“ Under this amendment taxes on oil were classified according to gravity and ran from 4 cents a barrel of 42 gallons on oil of 28 degrees gravity and below, to 11 cents a barrel on oil above 43 degrees gravity. Act 5 of 1928. [2]
The business of the complainant in Louisiana is that of producing and selling oil and not of refining it. The production of the complainant is in the following fields: Haynesville, in the parish of Claiborne; Cotton Valley, in the parish of Webster; Pine Island, in the parish of Caddo; Urania, in the parish of La Salle. All these fields are in North Louisiana. ”

“ Such natural resources may be classified for the purpose of taxation and such taxes predicated upon either the quantity or value of the product at the time and place where it is severed. No severance tax shall be levied by any parish or other local subdivision of the State.↑ The text of section 2 of Act No. ”