Corporation Income Tax
Individual Income Tax
Load Covers For Coal Trucks
[Opinion - Vriginia Attorney General: 1988 at 108]
REQUEST BY: Honorable Jack Kennedy Member, House of Delegates 699 Fox Run Road, S.E. Norton, Virginia 24273
OPINION BY: Mary Sue Terry, Attorney General
You ask whether legislation providing a credit against individual and corporate income tax for the cost of purchase and installation of load covers for coal trucks is special legislation prohibited by Art. IV, § 14 of the Constitution of Virginia (1971). Your inquiry is based on draft legislation that you are considering for introduction in the 1989 Session of the General Assembly and that you have provided for my review.
I. Applicable Constitutional Provision
Virginia Const. Art. IV, § 14 provides:
The General Assembly shall not enact any local, special, or private law in the following cases:
(18) Granting to any private corporation, association, or individual any special or exclusive right, privilege, or immunity.
II. Constitutional Prohibition Against "Special Laws" Based upon Arbitrary Classifications
The Supreme Court of Virginia has defined "special laws" prohibited by Art. IV, § 14 as those which, by force of an inherent limitation, arbitrarily separate some persons, groups or things from those upon which, but for such separation, they would operate. Martin's Ex'rs v. Commonwealth, 126 Va. 603, 610, 102 S.E. 77, 79 (1920).
A general law, on the other hand, is defined as one that applies to all who are similarly situated. County Bd. of Sup'rs v. Am. Trailer Co., 193 Va. 72, 78, 68 S.E.2d 115, 120 (1951). Statutory classifications are not prohibited. A statute may embrace only one small class of persons and still be a general law if the classification is a reasonable one, not purely arbitrary, and appropriate to the situation. Martin's Ex'rs, 126 Va. at 618, 102 S.E. at 80.
III. Determination of Validity of Special Legislation Based on Reasonableness of Classification
The distinction between general laws that are permitted and special laws that are not must be determined on a case-by-case basis. Mandell v. Haddon, 202 Va. 979, 989, 121 S.E.2d k16, 524 (1961); 1983-1984 Att'y Gen. Ann. Rep. 67, 68.
Any review of legislation for possible violations of the special legislation prohibition in Art. IV, § 14 must begin with the long-standing rule that a presumption of constitutionality attaches to acts of the General Assembly. Peery v. Board of Funeral Directors, 203 Va. 161, 165, 123 S.E.2d 94, 97 (1961). "Courts uphold acts of the legislature when their constitutionality is debatable." Id. If any facts may reasonably be conceived to support the classification, those facts must be assumed to have existed at the time the challenged legislation was enacted. Mandell, 202 Va. at 989, 121 S.E.2d at 524.
As indicated above, general legislation unquestionably may contain classifications. Those classifications must be reasonable, not arbitrary, and appropriate to the occasion. Am. Trailer Co., 193 Va. at 78-79, 68 S.E.2d at 120.
In determining what constitutes a reasonable statutory classification (or conversely, an arbitrary one), a court must examine (1) whether the act affects all persons similarly situated or engaged in the same business throughout the state without discrimination,1 and (2) the purpose of the act, i.e., whether the classification bears "a reasonable and substantial relationship to the object sought to be accomplished by the legislation." Mandell, 202 Va. at 991, 121 S.E.2d at 525.
Applying these principles, the Supreme Court of Virginia has upheld the constitutionality of an act with a population classification limiting its effect to one county because the Court was able to articulate a rational relationship between the population density requirement and the purpose of the statute,2 and the constitutionality of Virginia's Sunday closing law as it was amended in 19603 because the classifications affected all persons similarly situated or engaged in the same business throughout the state and furthered the purpose of the act of promoting and strengthening the established policy in the Commonwealth of a common day of rest, relaxation and recreation for as many persons as possible.4
On the other hand, the Court has found unconstitutional an act providing that the trial justice of Carroll County should be elected by the people instead of being appointed by the judge as in other counties,5 an act giving disparate treatment to State Police officers to the exclusion of all other Virginia policemen,6 and an act providing different and special powers for Fairfax County not available to other counties.7 In each of these cases, the Court looked for a reasonable basis to support the statutory classification -- a problem or difference peculiar to the subjects of the class -- and found that none was suggested by statute or otherwise. See Am. Trailer Co., 193 Va. at 81, 68 S.E.2d at 121.
IV. Classification of Coal Truckers Has Reasonable Basis
The draft legislation you provide would create, as a separate class, those individuals and corporations hauling coal under a permit issued pursuant to § 46.1-343(c) which, under another provision of your bill, would be required to install truck covers for their loads.8 Members of that class would be afforded a tax credit for the cost of purchase and installation of the load cover up to $ 1,000 per vehicle.
The General Assembly has recognized that the coal industry is essential to the health, welfare and safety of the citizens of Virginia and has provided for seizure of coal properties by the Commonwealth under certain conditions to assure constant availability of resources. See §§ 45.1-145 and 45.1-146. The coal industry in the Commonwealth is depressed economically, and, in 1987, the General Assembly attempted to stimulate this industry by enacting legislation to give coal mined in Virginia priority over coal mined elsewhere in the award of contracts for coal used in state facilities. See § 11-47.1. In 1986, the General Assembly also created the Virginia Coal Employment and Production Incentive Tax Credit, designed to promote the Virginia coal industry. See Ch. 450, 1986 Va. Acts Reg. Sess. 762. The purpose of the tax credit which you propose is to provide relief from the expense of purchasing and installing load covers to businesses operating in this depressed coal industry.
V. Tax Credit for Load Covers of Coal Haulers Not Prohibited Special Legislation
The separate classification of individuals and corporations hauling coal entitled to the proposed tax credit arises from a legitimate concern about the economic health of an industry that the General Assembly has deemed to be essential to the public health, safety and welfare. In addition, the classification in the legislation you provide affects all persons similarly situated or engaged in the same business throughout the state -- individuals or businesses hauling coal. Its purpose, to provide relief to the coal industry from additional expenses related to load covers, also furthers the General Assembly's policy of strengthening a class distinct from others because of its essential nature to the welfare of the people of the Commonwealth.
Based on the above, it is my opinion that the classification created by your proposed tax credit legislation for coal haulers is reasonable and not arbitrary under the principles established by the Supreme Court of Virginia. It is further my opinion, therefore, that the draft legislation providing a tax credit against individual and corporate income taxes for the cost of purchasing and installing load covers for coal trucks does not constitute special legislation prohibited by Art. IV, § 14.
1 See Benderson Development Co. v. Sciortino, 5 VLR 569, 582, 236 Va. , , S.E.2d , (1988) [hereinafter Benderson]; Mandell, 202 Va. at 991, 121 S.E.2d at 525. In Benderson, the Supreme Court of Virginia held that this consideration was not satisfied because Virginia's Sunday closing law affected only businesses which could not qualify for at least one of nearly sixty statutory exemptions. Id. at 582, Va. at , S.E.2d at . In Mandell, the Court considered an earlier version of the same Sunday closing law with fewer exemptions that were related to works of "necessity or charity," and upheld the law, holding that it affects all persons similarly situated or engaged in the same business throughout the state without discrimination. Id. at 991-92, 121 S.E.2d at 525-26.
2 Ex Parte Settle, 114 Va. 715, 77 S.E. 496 (1913). See also Polglaise's Case, 114 Va. 850, 76 S.E. 897 (1913) (upholding an act challenged on equal protection grounds in which there was a classification of wagons by haulers of lumber for the purpose of requiring use of tires of specified widths).
3 See Ch. 267, 1960 Va. Acts 332.
4 Mandell, 202 Va. at 988, 121 S.E.2d at 524. In Benderson, supra note 1, the opposite result was reached because the Sunday closing law contained so many exemptions that its scope would close only a small minority of stores. 5 VLR at 582, 236 Va. at , S.E.2d at .
5 Quesinberry v. Hull, 159 Va. 270, 165 S.E. 382 (1932).
6 Commonwealth v. Hines, 221 Va. 626, 272 S.E.2d 210 (1980).
7 Am. Trailer Co., 193 Va. at 72, 68 S.E.2d at 115.
8 Section 46.1-401(E) currently excludes "coal trucks" from those vehicles whose loads, as of October 1, 1988, must be either secured to the vehicles in which they are being transported or covered.