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Click here for the full text of this decision FACTS:Under the cigarette tax scheme in Texas, cigarette distributors are required to affix a stamp to each cigarette package sold to show the tax has been paid. In exchange for the service of affixing stamps, distributors are entitled to 3 percent of the stamps’ face value, called a stamp allowance. A distributor must pay for its stamps in advance, unless in participates in the Cigarette Recovery Tax Fund, run by the state comptroller, or pledges sufficient collateral. To participate, the distributor establishes and account with the comptroller, contributing its stamp allowance until the account balance equals 20 percent of its monthly stamp purchases. The distributor’s account becomes vested at that point, so long as the 20 percent balance is maintained. McLane Co. participated in the fund for more than 13 years. It then notified the comptroller in April 2001 that instead of maintaining the 20 percent balance, it would be pledging an irrevocable letter of credit as collateral; it sought to have its stamp allowance refunded and to continue to obtain stamps without advance payment. The comptroller refused to accept the letter of credit as adequate collateral, while pointing McLane to the statute that listed several types of acceptable collateral. McLane went ahead and paid the amount due to the comptroller at the time, then filed suit against the comptroller, seeking: 1. the recovery of “taxes” paid under protest; 2. an injunction prohibiting the comptroller from denying McLane the right to provide its letter of credit as collateral in lieu of fund participation and from requiring its continued participation to obtain stamps without prepayment; 3. a declaration that it could pledge an irrevocable letter of credit in lieu of participating in the fund; 4. a declaration that the comptroller violated McLane’s rights by withholding the three-percent stamping allowance and by forcing them to pay the 3 percent allowance in issue under protest; and 5. a declaration that the comptroller was taking McLane’s property without just compensation and violating the Commerce Clause and its rights to due process and equal protection. The comptroller filed a plea to the jurisdiction. The trial court granted the plea in part, as it related to McLane’s claim under the tax protest statute, but the trial court denied the rest of the plea. The trial court did, however, rule for the comptroller on the rest of the non-jurisdictional grounds. McLane appeals. HOLDING:Affirmed as modified. McLane argues that the district court had jurisdiction over its declaratory judgment claims because the comptroller acted outside of her legal authority in refusing to accept McLane’s irrevocable letter of credit as collateral for McLane’s continuing to receive stamps without prepayment and without fund participation. The court says that to answer McLane’s question, the court must decide whether the comptroller validly exercised her discretion or acted outside of her legal authority. A letter of credit is not listed in the applicable as one of the acceptable forms for collateral, but another statutory provision says that the comptroller may take any other reasonable and necessary action to protect the state treasury from loss due to the nonpayment of cigarette taxes. The court concludes that the statutory language evidences a clear grant of discretion. The legislature has clearly given the comptroller the authority and responsibility to manage and administer the fund, including the authority to decide what collateral to accept in lieu of fund participation other than certificates of deposit, treasury bills and notes. Contrary to McLane’s assertions, the comptroller acted within that discretion by refusing to accept an irrevocable letter of credit. McLane’s suit, therefore, is seeking to control state action and is a suit against the state, a suit that cannot be maintained unless the state’s immunity has been waived, which it has not. Therefore, the trial court did not have jurisdiction over McLane’s declaratory judgment claims. The court agrees that McLane could not establish jurisdiction under the tax protest statutes, either. McLane was not seeking the return of the stamp taxes it paid under the invoices but rather sought both to withdraw from the fund, receiving a refund of its stamping allowance, and to continue to obtain stamps on credit. In other words, McLane did not protest the stamp tax itself, but rather the comptroller’s terms under which a distributor may obtain stamps without prepayment or fund participation. McLane was not protesting the stamp tax or other required or imposed taxes or fees, as would be required to negate jurisdiction under the protest statutes. Finally, the court finds that based on its holding that the comptroller acted within her discretion, jurisdiction under 42 U.S.C. 1983 was not established, either. OPINION:Puryear, J.; Law, Patterson and Puryear, JJ.

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