Tuesday, Jun. 24, 2008

Subsidized guns, dishwashers and gas add up to lawsuit loss

THE GOVERNOR is usually making a judgment call when he accuses legislators of squandering tax dollars.

But in the case of S.1143, which Gov. Mark Sanford vetoed two weeks ago, that charge has nothing to do with priorities. This is a lawsuit waiting to happen and a lawsuit the state is sure to lose, at considerable expense to taxpayers.

While the statement Rep. James Smith put in the House Journal might seem a bit melodramatic to those of us who haven’t just returned from fighting the Taliban in Afghanistan, he was spot-on: “In swearing an oath to hold this office and to offer my life in defense of this Country and it’s Constitution, I cannot vote to concur with the Senate Amendments to S. 1143, which is facially unconstitutional.”

The bill started off as a sales tax break for energy-efficient appliances. But a week before the session ended, the Senate tacked on an amendment no one had seen before forcing oil companies to sell raw, or “blendable,” gasoline to the distributors in our state, so the distributors can “splash-blend,” or mix it with ethanol, themselves.

This was a very popular idea, because the oil companies were about to stop selling blendable gasoline, and the distributors said they’d have to raise gas prices by as much as 8 cents a gallon if the Legislature didn’t act.

The most obvious problem is that our state constitution requires that bills relate to “a single subject.” This prevents small groups of lawmakers from joining together to pass provisions that don’t have enough support to pass on their own, and it makes it easier for voters and legislators to keep up with what’s in bills.

Perhaps you could tie the dishwasher tax break and the blendable fuel mandate together under a single subject if the bill had a bunch of other provisions dealing with “energy.” It doesn’t; it has just those two. To further complicate matters, it has a third provision — a sales tax holiday for guns — that was added when the “single subject” appeared to be sales tax exemptions.

Despite the clear language of the constitution, stringing unrelated proposals together into one bill — called “bobtailing” — is a time-honored tradition in South Carolina. It’s given us some of our worst laws, from the legalization of video poker to a bribery-tainted retroactive tax break, from keeping the Barnwell nuclear waste landfill open to the nation to the first round of replacing some school property taxes with state revenue.

But in 2005, the state Supreme Court made a startling ruling. It said the constitution means what it says. The ruling wasn’t ambiguous — If a bill deals with more than one subject, the court ruled unanimously, it is unconstitutional and must be struck down — and the court reiterated its ruling on Monday, in yet another lawsuit.

But bobtailing is only one of the problems with the bill. The blendable-fuel mandate invalidates existing contracts between oil companies and distributors, which allow the companies to stop selling blendable fuel on 30 days’ notice. The oil companies want to exercise that option because a 2007 federal law requires them to produce a specific amount of blended fuel, and they can’t do that if they keep letting the distributors do the blending.

This is what has the S.C. Manufacturers Association and other business groups freaked out. They worry that if the Legislature can wipe out an existing contract between oil companies and distributors, it can wipe out any contract.

The U.S. and S.C. constitutions both prohibit government from interfering with contracts, although the courts have allowed it if the state demonstrates that there is a significant and legitimate public purpose for doing so, and if it uses the narrowest and least intrusive means possible to further that purpose.

It’s hard to imagine how our state could meet either test.

If there’s a reason for the mandate other than holding down gas prices, it didn’t get much attention during fairly extensive debate, and though popular, no public purpose is met by holding down gas prices. Even if that was a legitimate state concern, there are less intrusive means: The Legislature could eliminate the gasoline tax and have twice the effect.

Add in the possibility that the mandate could violate the interstate commerce clause of the U.S. Constitution, and it would seem easy enough to round up 16 senators or 42 representatives to uphold Mr. Sanford’s veto when they return to town Wednesday.

But there are two political complications.

The first is that it’s Mr. Sanford’s veto, and few sports are more popular at the State House than overturning Sanford vetoes.

The second is the gun-tax holiday. Few legislators want to risk ticking off the gun lobby, and it clearly wants the state to subsidize gun purchases. I thought the gun lobby’s personal representative, Rep. Mike Pitts, was going to have a heart attack trying to avoid a delay in the bill’s final passage, he was so animated in his attempt to round up votes. So despite the best efforts of people who actually think the Legislature ought to obey the constitution, only 10 House members voted against the bill’s final passage.

The thing is, supporters aren’t going to get their gun subsidy. If the veto is overturned, lawsuits will be filed, perhaps by week’s end. And since the bill doesn’t have a severability clause, the court won’t have the option of striking down just the blendable-fuel mandate; the whole bill will go down.

Worse still, from lawmakers’ perspective, Mr. Sanford will again get to say “I told you so.”

But at least somebody wins: all those top-dollar attorneys big oil is going to hire to challenge the law. They’ll get their fees paid by the S.C. taxpayers.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571.

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