Weiss v. Geisbauer

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 Ark. Code Ann. § 26-55-211. The circuit court held that § 2 of Act 727 of 1997, as written, is unconstitutional and concluded that the words “the Mississippi” should be struck from the statute and substituted with the words “a river.” Appellant asserts that (1) the trial court erred by declaring the classification created by § 2 of Act 727 of 1997, between border cities located on the Mississippi River and border cities that are not, violates the Arkansas and United States Constitution; and (2) the trial court erred by declaring that the term “The Mississippi” should be struck from § 26-55-211 and that the term “a river” should be substituted in its place. We affirm in part and reverse in part.

Ark. Code Ann. § 26-55-205 levies a motor-fuel tax on the sale of motor fuels in Arkansas. Ark. Code Ann. § 26-55-210 provides that, in certain “border cities” and specified territory, the motor fuel tax shall not be greater than one cent per gallon above the rate of tax levied in the adjoining state (“border city exemption”). The General Assembly has, at various times, amended the legislation now codified at § 26-55-211 to provide that “border cities” will not include any territory annexed to those cities after a specified date. (Act 1498 of the 2001 Acts of Arkansas changed the date from February 1, 1973 to July 1, 2001.) Section 2 of Act 727 of 1997 added a provision to § 26-55-211 that makes the limitation date, July 1, 2001, irrelevant “in a city bordering a state line which is in the main channel of the Mississippi . . .” In other words, a border city that borders the main channel of the Mississippi can annex territory and that territory will qualify for the border city exemption, regardless of the date of the annexation.

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 § 26-55-211 by § 2 of Act 727 of 1997 was unconstitutional. It was appellee’s contention that the classification between border cities located on the Mississippi and border cities located on other rivers is unconstitutional. Further, appellee sought a declaratory judgment that the legislative intent of the Arkansas General Assembly would be best effectuated by striking the unconstitutional portion and extending the addition to all river border cities within the state of Arkansas.

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 Constitution that prohibit the arbitrary separation of some person, place, or thing from those upon which, but for the separation, it would operate. This court uses a “rational basis” standard of review when determining whether legislation is special or local and prohibited by Amendment 14. McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997); Fayetteville Sch. Dist. No. 1 v. Arkansas State Bd. of Educ., 313 Ark. 1, 852 S.W.2d 122 (1993). This same standard is applicable to the constitutional issues raised by appellee under the equal protection and privileges and immunities provisions of the Arkansas and United States Constitutions. Medlock v. Leathers, 311 Ark. 175, 842 S.W.2d 428 (1992); Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983). Therefore, all the constitutional arguments presented require the same analysis from this court, a rational basis review.

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 v. Arkansas State Bd. of Educ., 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). What we review is whether the decision to apply the act to only one area of the state is rational. Id.

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 § 26-55-210, provided that motor vehicle fuel tax in border cities would be the same rate as in the adjoining state, not to exceed a rate established in the Act. We concluded that the purpose of the act was to impose a tax for the use of the amount of motor fuel consumed in motor-driven vehicles, and the object was to obtain revenue for the building and maintenance of the highway system for the benefit of those who used it. Id. We recognized that the legislature had in mind that the rate of taxation on motor fuel was much lower in some of the bordering states than in this state because of the greater wealth and population in those states. Id. It was clear that the classification for border cities was made necessary, and bore a reasonable relation to the purpose and objective of the act, because inhabitants of border cities could go across the state line to purchase their fuel and deprive revenue from Arkansas. Id.

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 ofits 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.

We now turn to the legislation currently being challenged, Act 727 of the 1997 Acts of Arkansas, which created a separate classification for border cities along the Mississippi River, not including border cities along other rivers. The Act itself stated a purpose in its subtitle: “[a]n act to assist cities to compete with other states by allowing for the adjustment of motor fuel rates.” Therefore, the question before us now is whether or not limiting the border city exemption only to territory annexed after July 1, 2001 by river border cities that are along the Mississippi River, rather than all river border cities, is rationally related to the purpose of assisting cities to compete with other states. We hold that it is not.

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 border city. This court is not limited to the rational bases suggested by the parties, rather we have the power to hypothesize a rational basis for the legislation. Medlock v. Leathers, 311 Ark. 175, 842 S.W.2d 428 (1992), rehearing denied (1993); Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983). However, the basis hypothesized or speculated by this court, or by any party, is still required to be rational and related to the purpose of the Act. F. C. C. v. Beach Communications, Inc., supra; Streight v. Ragland, supra (concluding that the court’s conceived basis was rational, reasonably distinctive, and not arbitrary). We cannot hypothesize a basis for this classification that would be rational and related to purpose of the Act; instead, we find it to be arbitrary local and special legislation.

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 clearly local and special legislation and in violation of Amendment No. 14 to the Arkansas Constitution. Therefore, we affirm the conclusion of the Circuit Court and hold that the classification created by § 2 of Act 727 of 1997, codified in § 26-55-211, is unconstitutional.

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 § 26-55-211 and replaced with the words “a river.” However, if the statute is clear, we will not search for the legislative intent; rather, the intent must be gathered from the plain meaning of the language used. Cave City Nursing Home, Inc. v. Ark. Dept. of Human Serv., 351 Ark. 13, 89 S.W.3d 884 (2002). Substituting words for the original words included in the Act substitutes the judgment of the circuit court for that of the general assembly. We have declined to salvage facially unconstitutional statutes by narrowing the scope because to do so would be legislating. Linder v. Linder, 348 Ark. 322, 72 S.W.3d 841 (2002), discussing Shoemaker v. State, 343 Ark. 727, 38 S.W.3d 350 (2001). Article 4 of the Arkansas Constitution prohibits intrusion by the judiciary upon the legislative domain. Arkansas State Highway Comm’n v. White Advertising Intern., 273 Ark. 364, 620 S.W.2d 280 (1981). Here, allowing the court to broaden the scope of § 26-55-211 by extending the statute’s application from only river border cities on the Mississippi to all river border cities would be an intrusion into the legislative domain and we will not allow it.

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 § 26-55-211 that was created by § 2 of Act 1997 can easily be stricken, while leaving the rest of the statute in place. The statute should read as it did before 1997, but the additional, constitutional changes to the statute that have been passed between 1997 and the present will remain:¹

“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 § 26-55-211, established by § 2 of Act 727 of 1997, is unconstitutional and the circuit court will be affirmed in that regard. However, the circuit court did not have the authority to substitute language within the Act. To allow such an action would be allowing the court to legislate. Therefore, the circuit court is reversed and the Act will read in accordance with this opinion unless and until further action is taken by the legislature.

Corbin, Brown, and Imber, JJ., dissent.

1 Act 1498 of 2001 amended 26-55-211 to extend the border rate to areas of otherwise qualifying cities, incorporated towns, or planned communities annexed on or before July 1, 2001, but not thereafter. The date has been changed several times throughout the years and would still apply regardless of the deletion of the Mississippi River border city exception.