Richard A. WEISS, Director, Arkansas Department of Finance and Administration, State of Arkansas v. Ronald J. GEISBAUER
04-1324
Supreme Court of Arkansas
Opinion delivered October 13, 2005
215 S.W.3d 628
Daily & Woods, P.L.L.C., by: Jerry L. Canfield, for appellee.
BETTY C. DICKEY, Justice. This appeal arises from a constitutional challenge to Section 2 of Act 727 of the 1997 Acts of Arkansas (§ 2 of Act 727 of 1997), which is now codified at
Appellee, Ronald J. Geisbauer, owns and operates a retail business, Ron‘s NSC, that sells motor fuels. Appellee‘s business is the tenant of a commercial tract of real property utilized for the distribution and sale of motor fuels, which was annexed to the City of Fort Smith after July 1, 2001. Because Fort Smith is not a city bordering a state line that is in the main channel of the Mississippi, the appellee‘s land does not qualify for the border city exemption. On June 11, 2003, on behalf of the appellee, appellee‘s landlord sought administrative relief from the director of the Arkansas Department of Finance and Administration, Richard A. Weiss. Appellee was denied relief and, on December 3, 2003, sought to obtain a declaratory judgment from the circuit court that the addition to
On August 16, 2004, the circuit court entered an order in favor of the appellee. The court first concluded that § 2 of Act 727 of 1997, as written, is unconstitutional. Then, the court attempted to cure the unconstitutionality of the Act by striking the words “the Mississippi” and substituting the words “a river,” claiming that this would be the intention of the General Assembly. The circuit court entered an order on September 7, 2004, denying the appellant‘s motion to vacate or modify the order; and, appellant then filed his notice of appeal on September 14, 2004.
The first argument presented on appeal is that the circuit court erred by declaring that the classification, created by § 2 of Act 727 of 1997, between border cities located on the Mississippi River and border cities located on other rivers violates both the Arkansas and United States Constitutions. However, appellee maintains that the classification (1) is special or local legislation in violation of Amendment 14 to the Arkansas Constitution and (2) ignores that the equal protection and privileges and immunities provisions of Article 2, sections 3 and 18 of the Arkansas Constitution and under Amendment 14 to the United States Constitu-
Amendment 14 of the Arkansas Constitution provides: “The General Assembly shall not pass any local or special act.” Local legislation has been interpreted by this court to mean legislation that is arbitrarily applied to only one geographic area of the state, while special legislation has been interpreted to mean legislation that arbitrarily separates from the operation of an act some person, place, or thing from another. Boyd v. Weiss, 333 Ark. 684, 971 S.W.2d 237 (1998); Fayetteville Sch. Dist. No. 1, 313 Ark. 1, 852 S.W.2d 122 (1993). It is important to note that state statutes are presumed to be constitutional, and the party attacking the statute has the burden of showing that the challenged statute is clearly unconstitutional. Id.
Fort Smith, the city where appellee‘s business is adversely affected, is a river border city. Land annexed to Fort Smith after July 1, 2001 does not qualify to receive the border city exemption. However, if Fort Smith were to border the Mississippi River, the appellee‘s land would not be excluded from receiving that exemption. Appellee asserts that this classification between river border cities that lie on the Mississippi River and all other river border cities is arbitrary local and special legislation. The fact that a statute affects less than all of the state‘s territory does not automatically render it local or special legislation. McCutchen v. Huckabee, supra; Littleton v. Blanton, 281 Ark. 395, 665 S.W.2d 239 (1984). We have consistently held that an act of the general assembly that applies to only a portion of the state is constitutional if the reason for limiting the act to one area is rationally related to the purposes of that act. McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997).
This court has upheld the constitutionality of legislation that made a distinction between border cities and non-border cities; and even legislation that created a separate classification for border cities that were separated by a street-state-line. Bollinger v. Watson, 187 Ark. 1044, 63 S.W.2d 642 (1933); Boyd v. Weiss, 333 Ark. 684, 971 S.W.2d 237 (1998). Act 63 of the 1931 Acts of Arkansas, which was a predecessor to
Years later, in Boyd v. Weiss, this court addressed the constitutionality of legislation that created the distinction between border cities that were separated by a street-state-line and border cities that were not. This classification was created by Act 48 of the 1977 Acts of Arkansas. Texarkana was the only city in Arkansas eligible for the benefit of the Act; the city of Texarkana was permitted to elect to adopt an additional one cent gross receipts tax in lieu of its residents paying income taxes. The constitutionality of that classification was challenged. Boyd v. Weiss, 333 Ark. 684, 971 S.W.2d 237 (1998). This court concluded that the stated purpose of Act 48 was to protect the city of Texarkana by exempting residents from state income taxes who might otherwise be induced to move to Texas, which would only require them to cross the street. Id. In addition, we noted that the classification was reasonably related to the purpose of the Act because residents of other border cities, like West Memphis, would have less incentive to relocate due to long distances or major waterways between their city and the next state. Id.
Lines drawn by the legislature must be rationally related to the purpose of the Act, and may not be arbitrary. F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 113 S. Ct. 2096 (1993). This court can conceive how granting the border city exemption to certain territory within the state, regardless of the date of annexation, might assist certain cities to compete with other states. However, the classification that limits the application of the Act only to border cities along the Mississippi River, a small portion of the state, we do not conclude is rationally related to that purpose. Appellant asserts that it is reasonable to assume that the general assembly was creating this classification because the Mississippi River border cities are in the least prosperous area of the state or because those cities were allegedly put at a competitive disadvantage to sellers in other border cities in this state since Mississippi River border cities were denied the border city rate from 1941 to 1997. However, the economic statistics cannot be rationally linked with assisting in their ability to compete with the border cities on the other side of the state line. The economic data that was provided to support that assertion was based on counties rather than cities. While the statistics easily illustrate that certain counties along the Mississippi River are less prosperous than other counties in the state, the statistics do not demonstrate how providing a tax benefit to annexed territory of a small number of cities within those counties could possibly help. Additionally, the fact that border cities along the Mississippi River were allegedly put at a competitive disadvantage compared to sellers in other border cities within the state from 1941 to 1997 is irrelevant. It is unreasonable to think that motor fuel buyers would drive to other border cities across the state and buy fuel there or in the state adjoining that
This court can find no basis upon which to justify how being along the Mississippi River, versus being along another, places the Mississippi River border cities in more need for the exemption to apply only to its annexed territory. The fact that the Mississippi River border cities were once excluded from the exemption is not a rational basis for presently giving those cities special treatment. Presumably, there was a rational basis for each time the motor-fuel tax exemption was permitted to apply to certain areas that excluded the Mississippi River border areas. In turn, there must now be a rational basis to give those areas special treatment over other areas in the state that are similarly situated, including the Fort Smith area. If we allow the simple fact that the Mississippi River border areas were once not eligible for the exemption to now provide a rational basis to give them special privileges, we fall into a trap similar to reverse discrimination. As pointed out in a racial discrimination case, “a court could uphold remedies that are ageless in their reach into the past, and timeless in their ability to affect the future.” Wygant v. Jackson Bd. of Education, 476 U.S. 267, 106 S. Ct. 1842 (1986). General legislation affects all parts of the state similarly situated, whereas a local act affects only one locality arbitrarily selected. Humphrey v. Thompson, 222 Ark. 884, 263 S.W.2d 716 (1954) (holding that Act 273 of 1953, legislation that provided for the establishment of a vocational school in counties with a population of less than 6,000 according to a 1950 censes, was local and unconstitutional considering that population afforded no basis on which to justify such a classification and the legislation affected only one county). The act here is
While we agree with the circuit court regarding the constitutionality of the Act, the court did not have the authority to strike words from the Act and replace them with new ones. The court attempted to guess the intent of the legislature by declaring that the words “the Mississippi” should be struck from
With few exceptions we have held that once a statute is declared unconstitutional it must be treated as if it had never existed and legal contemplation is “as inoperative as if it had never been passed.” Weiss v. McFadden, 356 Ark. 123, 148 S.W.3d 248 (2004). However, if only part of the statute is unconstitutional, then the remainder of the statute may stand unless the legislature would not have passed one part without the other. Seagrave v. Price, 349 Ark. 433, 79 S.W.3d 339 (2002); Levy v. Albright, 204 Ark. 657, 163 S.W.2d 529 (1942). The classification in
“Whenever any territory included within the boundaries of any city, incorporated town, or planned community in this state is included within the border tax rate on motor fuel, as provided for in
§ 26-55-210 , or by any other law of this state governing the border area tax rate on motor fuel, the same rate of tax on motor fuel that applies in the border tax area of the city, incorporated town, or planned community shall also apply to all sales of motor fuel within the boundaries of the city, incorporated town, or planned community. [This is where the unconstitutional classification was placed.] The provisions of this section shall apply only to that territory included within the limits of such city, incorporated town, or planned community on July 1, 2001, and shall not apply to territory added to or annexed to the city, incorporated town, or planned community thereafter.
In conclusion, the decision of the circuit court is affirmed in part and reversed in part. The classification in
CORBIN, BROWN, and IMBER, JJ., dissent.
ROBERT L. BROWN, Justice, dissenting. The majority opinion correctly states the law that in order to salvage § 2 of Act 727 of 1997, now codified at
Where the majority jumps the track, however, is when it says there is no conceivable rational basis for distinguishing Mississippi River border cities and other border cities on a river like Fort Smith. That is simply wrong, and because of that, I would reverse.
The Department of Finance and Administration posits a bona fide reason for classifying Mississippi River border cities differently. That reason is that Mississippi River border cities need more favorable tax treatment, because they are located in an economically depressed area of the state as compared to Fort Smith, for example. Lessening the motor fuel tax burden of residents and businesses in a depressed area will, no doubt, have a salutary effect on the economy.
A second reason asserted by DFA is that from 1941 to 1997, Mississippi River border cities were not given the favorable tax treatment available to other river and non-river border cities. Indeed, Mississippi River border cities were expressly excluded from the legislation. See Act 383 of 1941. In 1997, that exclusion for Mississippi River border cities was removed by Act 727, as if to set right what had been denied these communities for more than fifty years. Surely, that qualifies as another reasonable explanation for the General Assembly‘s treatment of these cities in 1997. It is really beyond debate that the General Assembly has known precisely what it has been doing with Mississippi River border cities for more than fifty years. That is because these cities were first expressly excluded from favorable treatment in legislation in 1941, and then expressly included for such treatment in a 1997 act.
The danger, of course, with the majority‘s opinion is that it supplants clear legislative intent and strikes part of a sentence when, as already stated, valid reasons exist for the General Assembly‘s Mississippi River exemption. This court has traditionally been leery of striking down legislation on grounds of some classification, including whether it is local or special, because of the potential hazard that we would be legislating ourselves. That is why we have often stated that we have used the hypothesized rational basis standard and said that will suffice to save suspect legislation. See, e.g., Johnson v. Sunray Servs., Inc., 306 Ark. 497, 816 S.W.2d 582 (1991); Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983). The Streight case is the seminal case for this proposition. There, we elaborated on what is meant by a rational basis:
Before it is said that such hypothesizing is far afield, we reemphasize that our role is not to discover the actual basis for the legislation. Our task is merely to consider if any rational basis exists which demonstrates the possibility of a deliberate nexus with state objectives so that the legislation is not the product of utterly arbitrary and capricious government and void of any hint of deliberate and lawful purpose. Since we can reasonably conceive of lawful purposes for the state‘s classification scheme, it may not be held to have been arbitrarily enacted.
280 Ark. at 215, 655 S.W.2d at 464 (emphasis in original).
It was Mr. Geisbauer‘s burden to disprove any hypothesized rational basis for the Mississippi River exemption. See id. This he did not do. There are two reasonable and legitimate bases for the legislation. The majority may disagree with the hypothesized reasons, but this does not make them per se unreasonable. Nor does it justify striking the words, “the Mississippi” from the statute.
I respectfully dissent.
CORBIN and IMBER, JJ., join this dissent.
ANNABELLE CLINTON IMBER, Justice, dissenting. Under a rational-basis review, we are not to judge the wisdom, fairness, or logic of legislative choices. Heller v. Doe, 509 U.S. 312 (1993) (citing F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 313 (1993)). Classifications that do not involve a fundamental right or proceed along suspect lines are accorded a strong presumption of validity. Id. at 319. Furthermore, a legislature that creates “categories need not ‘actually articulate at any time the purpose or rationale supporting its classification.‘” Id. at 320 (citing Nordlinger v. Hahn, 505 U.S. 1, 11 (1992)). “Instead, a classification ‘must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.‘” Id. (citing F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 313). States, moreover, have no obligation to produce evidence to sustain the rationality of statutory classifications. Id. “[A] legislative choice is not subject to courtroom factfinding and may be based on rational speculation unsupported by evidence or empirical data.” Id. (quoting F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 315). “A statute is presumed constitutional... and ‘[t]he burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it’ whether or not the basis has a
When the General Assembly originally enacted the predecessor statute to section 26-55-211 in 1941, the border-city tax rate was expressly denied to Arkansas cities bordering the Mississippi River.
It is important to note that interstate travel increased substantially during the fifty years preceding the 1997 amendment to section 26-55-211. The development and improvement of state and interstate highways fostered the increase in interstate travel. More specifically, travel across the Mississippi River between eastern Arkansas and neighboring states became easier and more frequent. Moreover, with the expansion of interstate trucking, more trucks traveled the highways through eastern Arkansas and crossed the Mississippi River. Likewise, there was an increased likelihood that motor fuel buyers would drive across the mighty Mississippi River for the purpose of buying fuel in neighboring states. As a result of increased interstate travel through eastern Arkansas, more tax revenues would have been needed to repair
With the enactment of the 1997 amendment to
The majority posits that it “can find no basis upon which to justify how being along the Mississippi River, versus being along another, places the Mississippi River border cities in more need for the exemption to apply only to its annexed territory.” Yet, as set forth above, it is in fact possible to hypothesize a basis that is rationally related to the statute at issue,
For the above-stated reasons, I must respectfully dissent.
CORBIN and BROWN, JJ., join this dissent.