Associated General Contractors of South Dakota, Inc. v. Schreiner

492 N.W.2d 916, 1992 S.D. LEXIS 155, 1992 WL 347267
CourtSouth Dakota Supreme Court
DecidedNovember 25, 1992
Docket17917
StatusPublished
Cited by18 cases

This text of 492 N.W.2d 916 (Associated General Contractors of South Dakota, Inc. v. Schreiner) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Associated General Contractors of South Dakota, Inc. v. Schreiner, 492 N.W.2d 916, 1992 S.D. LEXIS 155, 1992 WL 347267 (S.D. 1992).

Opinions

WUEST, Justice.

AGC seeks a permanent writ of prohibition to prevent State from disbursing funds, claiming the statutes authorizing the expenditures are contrary to our State Constitution.

This is an original proceeding brought to this court under S.D. Const, art. V, § 5, the provisions of SDCL chs. 21-30 and SDCL 15-25-1.

Associated General Contractors and the Trucking Association (hereinafter AGC) filed a verified application for an alternative writ and permanent writ of prohibition contending both HB 1311, appropriating ethanol production payments, and HB 1009, creating ethanol tax credits, violate S.D. Const, art. XI, § 8 and art. XIII, §§ 1 and 2. AGC sought to prohibit Department of Revenue Secretary Ronald Schreiner, State Auditor Vern Larson and State Treasurer Homer Harding (hereinafter State) from expending state highway funds received from vehicle and fuel taxes for ethanol production payments and ethanol tax credits. AGC was granted an alternative writ of prohibition on April 27, 1992. State was given an opportunity to show cause why a permanent writ should not be issued.

On May 6, 1992, AGC filed a verified, amended, supplemental application expanding the list of state officials whose activities it sought to prohibit. AGC also augmented the list of challenged legislation to include SB 143, HB 1174, SB 204, and HB 1098. State filed a motion to quash and filed its verified answer to the application as amended and supplemented, denying any constitutional violations, and seeking dismissal of the application. An amended, supplemental alternative writ of prohibition was granted May 12, 1992.

South Dakota Corn Growers, et ah, filed a motion to intervene on May 8, 1992, asking that the application for a permanent writ be denied and joining in the State’s motion to quash. On May 15, 1992, Gregory B. Branaugh, D & G Concrete Construction, Inc., Pat Tlustos, and Hills Materials Co., applied to intervene as applicants. On May 19, 1992, a motion to intervene was filed on behalf of the South Dakota Association of Conservation Districts. All motions to intervene were granted.

FACTS

The sixty-seventh session of the South Dakota Legislature, 1992, passed six bills which appropriated proceeds from the motor fuel tax for the purpose of subsidizing private ethanol producers and for other agricultural programs.

HB’s 1311 and 1009 were enacted and approved as emergency measures by the Governor and became effective upon execution. SB 143, HB 1174, SB 204, and HB 1098 were enacted and approved by the Governor and became effective July 1, 1992.

(1) HB 1311

This act creates the “Unclaimed Non-highway Agricultural Motor Fuel Tax Fund.” It further provides that up to $80,-000, the amount which the legislature found represents the unclaimed tax refunds for fiscal year (FY) 1992, may be appropriated from the fund to the Department of Revenue to provide for ethanol production payments in April and May, 1992.

(2) HB 1009

This act creates a tax credit program for producers of ethanol. A producer of etha[919]*919nol may receive a credit, in the form of a transferrable motor fuel tax credit certificate, of twenty cents per gallon of ethanol. The credit is allowed only for ethanol produced in a South Dakota plant at which all fermentation, distillation, and dehydration takes place. Annual tax credits to one producer may not exceed the greater of 11,000,000 or an amount equal to $1,000,-000 averaged over the last three years. Cumulatively, the incentive payments may not exceed five million dollars per year. The Secretary of Revenue is to adopt rules for the tax credit program. Producers must be licensed to be eligible to file for the credit. The credit may only be collected for the 120-month period following the producer’s receipt of the first credit certificate.

(3) SB US

This act appropriates money for the reconstruction of Lake Menno Dam. The act allocates $60,000 from the fund to the Commissioner of School and Public Lands in FY 1993 for the purpose of repairing Menno Dam. SB 143 directs the Secretary of Revenue to transfer $57,000 per month, for a period of ten months, into the unclaimed nonhighway agricultural motor fuel tax fund commencing July 1, 1992. Total transfers are not to exceed $570,000.

(4) HB 1174

This act appropriates $460,000 from the fund in FY 1993 to the Department of Transportation for public and special transportation grants. The grants are to assist South Dakota communities in meeting the match requirements of federally funded transportation programs.

(5) SB 204

This act appropriates $50,000 from the unclaimed nonhighway agricultural motor fuel tax fund in FY 1993 to the Department of Agriculture for the purpose of assisting the Northern Crops Institute located in Fargo, North Dakota.

(6)HB 1098

This act clarifies the uses of taxes imposed on motor fuel not used to propel a motor vehicle on public highways. It creates the “Conservation Commission Grant Fund,” and appropriates $850,000 to the fund in FY 1993 and an amount not to exceed $1,500,000 per year thereafter.

The legislature found that not all motor fuel taxes which qualify for the nonhigh-way motor fuel tax refund are, in fact, refunded under the procedure set forth in SDCL §§ 10-47A-46 to 10-47A-53, inclusive. The legislature determined that a certain amount of these unclaimed tax refunds from the sale of motor fuel for non-highway uses should be utilized in a manner which benefits both agriculture and the citizens of the state by preserving South Dakota’s natural resources. Thus, the legislature declared that an amount equal to 35%1 of the claimed refunds, $80,000 in FY 1992, not to exceed $1,420,000 in FY 1993 and not to exceed $1,500,000 in any single fiscal year thereafter, represents the amount of unclaimed tax refunds from the sale of motor fuel for nonhighway uses. The legislature further declared that it is the policy of this state to use these funds to implement the conservation grant program.

The burden is on AGC to prove beyond a reasonable doubt the legislature acted beyond its constitutional authority.

Any legislative act is accorded a presumption in favor of constitutionality and that presumption is not overcome until the unconstitutionality of the act is clearly and unmistakenly shown and there is no reasonable doubt that it violates fundamental constitutional principles.

Independent Community Bankers Ass’n v. State, 346 N.W.2d 737, 739 (S.D.1984); [920]*920South Dakota Ass’n of Tobacco and Candy Distributors v. State, 280 N.W.2d 662, 664-65 (S.D.1979).

ISSUES
I.Whether the transfer of unclaimed nonhighway motor fuel tax refunds to the unclaimed nonhighway agricultural motor fuel tax fund pursuant to HB 143 was an unconstitutional diversion of highway funds under art. XI, § 8 of the South Dakota Constitution.

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Associated General Contractors of South Dakota, Inc. v. Schreiner
492 N.W.2d 916 (South Dakota Supreme Court, 1992)

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Bluebook (online)
492 N.W.2d 916, 1992 S.D. LEXIS 155, 1992 WL 347267, Counsel Stack Legal Research, https://law.counselstack.com/opinion/associated-general-contractors-of-south-dakota-inc-v-schreiner-sd-1992.