Title: IN THE MATTER OF THE APPLICATION OF THE OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY
Citation: 2003 OK 59, 80 P.3d 109
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: June 3, 2003

IN THE MATTER OF THE APPLICATION OF THE OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY Annotate this Case IN THE MATTER OF THE APPLICATION OF THE OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY 2003 OK 59 80 P.3d 109 Case Number: 97936 Decided: 06/03/2003 THE SUPREME COURT OF THE STATE OF OKLAHOMA IN THE MATTER OF THE APPLICATION OF THE OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY FOR APPROVAL OF $155 MILLION OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY STATE FACILITIES REVENUE BONDS, SERIES 2002C AND $20 MILLION, SERIES 2002D(TAXABLE). ORIGINAL PROCEEDING TO DETERMINE VALIDITY OF PROPOSED STATE FACILITIES REVENUE BONDS ¶0 The Oklahoma Capitol Improvement Authority resolved to issue state facilities revenue bonds in amounts not to exceed a total of $175 million, pursuant to amendments to APPLICATION FOR APPROVAL OF NOT TO EXCEED $155 MILLION OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY STATE FACILITIES REVENUE BONDS, SERIES 2002C AND $20 MILLION, SERIES 2002D (TAXABLE) DENIED. W.A. Drew Edmondson, Attorney General for the State of Oklahoma, Lynn C. Rogers, Assistant Attorney General, Gary M. Bush, Oklahoma City, Oklahoma, and Douglas F. Price, Stillwater, Oklahoma, for applicant. Richard James, Stroud, Oklahoma, for protestant John Cassidy, Jr. Protestant Jerry R. Fent, pro se, Oklahoma City, Oklahoma. Protestant Edwin Kessler, pro se, Norman, Oklahoma. BOUDREAU, Justice ¶1 By amendment to ¶2 Three individuals, protestants John Cassidy, Jr. (Cassidy), Jerry R. Fent (Fent), and Edwin Kessler (Kessler), objected to the bond proposal. Protestants challenged both the authorizing statute, § 301, and the bond-approval process on several state constitutional grounds. ¶3 Upon considering the briefs and other filings by the parties and hearing oral argument en banc, we conclude that the deciding issue in this controversy is whether the authorizing statute satisfies the purpose-of-borrowing requirement in Okla. Const., art. 10, § 16. I. OCIA's Application for Approval of the Proposed Bonds ¶4 In its application for approval of the proposed bonds, OCIA asserted there is no valid distinction between this bond proposal and the bond proposal previously approved by this Court in Fent v. Oklahoma Capitol Improvement Authority, ¶5 Anticipating protests to its application, OCIA argued that the proposed bonds do not violate either the separation of powers requirement in Okla. Const., art. 4, § 1, the appropriation requirements in art. 5, § 55, nor the purpose of borrowing requirement in art. 10, § 16. OCIA contended that by designating twenty-seven state agencies to participate in the bond program and the dollar amount for each agency "for the purpose of 'capital projects which are important to the furtherance of state functions'" the statute passes constitutional muster for a self-liquidating revenue bond authorization statute. II. The Protests to the Proposed Bonds ¶6 Cassidy challenged the constitutionality of the 2000 amendments to § 301. He contended that the statutory provisions, allocating the borrowed funds to various state agencies, including $51 million to the Department of Central Services to be expended as directed by the Governor, without specifying the purpose, result in a delegation of legislative power which offends the state constitutional separation of powers doctrine and also violates the appropriations and borrowing provisions in Okla. Const., art. 4, § 1, art. 5, § 55, and art. 10, § 16. ¶7 In response to Cassidy, OCIA contended that the authorizing statute requires that the bond proceeds be used for capital projects of the specified agencies and confers discretion on the various agencies in choosing the capital projects. OCIA argued that the Legislature sufficiently set out general standards and policies for the use of the bond proceeds to guide the state agencies in carrying out the delegated power, citing Okla. Const., art. 4, § 1 and Bailey v. State Board of Public Affairs, ¶8 Cassidy and Fent filed documents showing that Governor Keating and members of the Legislature agreed that the bond proceeds will be allocated as follows: House members will decide how to spend $55 million of the bond proceeds, Senate members will decide how to spend $55 million of the bond proceeds, and the Governor will decide how to spend $51 million of the bond proceeds. The documents listed some 520 possible projects for the bond proceeds. Cassidy asserted that this agreement is not an official legislative act and does not satisfy the purpose-of-borrowing requirement of Okla. Const., art. 10, § 16 nor the separation of powers doctrine of nondelegation. ¶9 OCIA also acknowledged the existence of one or more lists prepared by individual legislative members directing a range of uses of the bond proceeds by various state agencies from purchasing equipment for rural firefighters to completing the Capitol dome. OCIA took the position that these "wish lists" are not a result of any official action of the Legislature and are not binding on the state agencies. OCIA explained that it will, with the assistance of the Office of the Attorney General, ultimately oversee the expenditure of the bond proceeds to assure that each project fulfills a lawful public purpose and does not involve the unconstitutional or unlawful gift or loan of proceeds to any local or private entity. III. The State Attorney General's Position ¶10 The OCIA, a state entity, ¶11 The Attorney General took the position that the authorizing statute is not only presumed constitutional but is constitutional under this Court's pronouncement in Fent v. Oklahoma Capitol Improvement Authority, ¶12 Cassidy replied to the Attorney General's position contending that a lump sum allocation of borrowed money to the Oklahoma State Regents for Higher Education for capital improvements sufficiently specifies the purpose for the borrowing. He referred to Okla. Const., art. 13-A, § 3, which requires the Legislature to appropriate funds to the Board of Regents in consolidated form without reference to a particular institution and requires the Board of Regents to allocate the appropriated funds to each institution. IV. The Purpose-of-Borrowing Requirement in Okla. Const., art. 10, § 16 ¶13 The Oklahoma Constitution, art. 10, § 16 requires the Legislature to specify the purpose for which borrowed money is to be used in a statute authorizing the State to borrow money. It also prohibits the use of the money so borrowed for any other purpose. ¶14 This constitutional purpose-of-borrowing requirement is a limitation on the Legislature. Protest of Reid, ¶15 Application of the constitutional purpose-of-borrowing requirement to a state statute is a matter of first impression. However, this Court has considered the application of art. 10, § 16 to proposed municipal bonds and uses of municipal bond proceeds. Our decisions have, for the most part, strictly applied the constitutional purpose-of-borrowing requirement to limit the use of the proceeds. ¶16 In Protest of Reid, supra., we concluded that the purpose-of-borrowing requirement limits not only the immediate use of money borrowed, but also limits any subsequent use of the proceeds from the sale of property purchased with money borrowed by a municipality. Similarly, in Borin v. City of Erick, supra., we invalidated proposed municipal bonds, finding that the ordinance did not specify the real purpose for borrowing money in that it failed to reveal the power plant would be constructed partially with federal grant money. ¶17 Protest of Reid and Borin v. City of Erick utilized the word "purpose" in its ordinary meaning as "the thing to be accomplished." See also, Barnes v. Barnes, ¶18 While the analogy between the legislative authority of the sovereign state and the legislative authority of its municipalities is limited in its usefulness, V. The 2000 amendments to ¶19 Cassidy argues that § 301 does not reveal the purposes for which the borrowed money may be expended contrary to the purpose-of-borrowing requirement. On the other hand, OCIA argues that the legislative purpose of the borrowing authorized in § 301 is capital projects of listed agencies. ¶20 The arguments require us to examine the pertinent provisions of the 2000 amendments to § 301. 1) increase the authorized amount from $320 million to $325 million bonds; 2) allocate proceeds of the second half of the $325 million bonds to twenty-seven state agencies and direct the Governor to determine the use of approximately one-third of the bond proceeds; 3) declare legislative intent "to appropriate to the agencies administering the projects sufficient monies to make rental payments for the purpose of retiring the obligations" for the fiscal year ending June 30, 2002, and thereafter; and, 4) make legislative findings that the use of bond proceeds by municipalities and counties will effectuate essential state governmental functions relating to the services of fire protection, roads and bridges, historic preservation, recreational facilities, air transportation, housing and care of elderly, juvenile delinquency prevention, agriculture, horticulture, health care, tourism, economic development, and public safety. ¶21 Central to the controversy sought to be resolved is whether the statute, § 301, sufficiently specifies the purpose for which the proceeds of the proposed bonds are to be used. Upon careful consideration of the text of the 2000 amendments to § 301, ¶22 Subsection (A)(16) of § 301 states "The following capital projects to be funded by the obligations authorized herein". However, a listing of projects does not follow. The subsection does not identify or otherwise describe a single "capital project" to be funded with the borrowed money. Rather, it sets forth a listing of the amounts of the borrowed money and identifies twenty-seven state agencies to which the various amounts are to be allocated. It does not, however, provide any description whatsoever of the projects to be accomplished by the twenty-seven state agencies with the borrowed money. This subsection does not reveal the purpose or the object of the borrowing. ¶23 While subsection (L) of § 301 identifies some twelve areas of services where the use of the borrowed money would effectuate the performance of essential state governmental functions, it is silent as to any description of any "capital project" that might be funded with the borrowed money. The listing of the twelve service areas, without more, simply does not disclose the projects to be accomplished with the borrowed money. ¶24 Subsection (M) of § 301 vests the identified state agencies with the authority as may be necessary to fully fund the projects for which the proceeds from the obligations authorized by this section are available. Although § 301(M) does not describe or otherwise identify a single project that the Legislature intended to be funded, OCIA argues that it sufficiently complies with the purpose-of-borrowing requirement. OCIA points out that § 301(M) requires the bond proceeds to be used for capital projects of the various state agencies and confers discretion in the agencies to select the capital project. While the Legislature undoubtedly may delegate to the agencies the task of implementing a declared policy under certain conditions, ¶25 The term "capital project" as used in § 301 is not a sufficiently descriptive designation of the things to be accomplished with the borrowed money to satisfy the purpose-of-borrowing requirement in Okla. Const., art.10, § 16. Oklahoma law provides no definition of the term. The word "capital" has different meanings when used in different connections. ¶26 Realizing that the term "capital project" is imprecise in its meaning, the dissent looks to other Oklahoma law to define the term. The dissent, citing Oklahoma Public Employees Association v. Oklahoma Department of Central Services, ¶27 The Public Employees case addressed the Department of Human Services' authority to privatize one of its institutions for the mentally retarded and the Sand Springs case addressed that department's authority to construct an institution for juvenile delinquents. Neither case made any attempt to define the term "capital project." By way of obiter dicta, the Sand Springs case did equate "capital expenditure" with "capital outlay," but did not equate either term with "capital improvement." The dissent, in its strained effort to give meaning to the term "capital project," overlooks the fact that none of the terms referred to in either case is used in the 2000 amendments to § 301. ¶28 Relying heavily on Edwards v. Childers, ¶29 The Legislature has consistently provided descriptive designations of the projects to be funded in previous borrowing enactments, thereby recognizing the constitutional requirement to specify the purposes for which borrowed money will be expended. ¶30 The dissent correctly urges that the-purpose-of-borrowing provision must be harmonized with other constitutional provisions. ¶31 This Court has determined that the art. 10, § 25 requirement of an antecedent election does not apply where the bond or similar obligation does not constitute a debt of the state payable out of state funds or property, such as a self-liquidating project. ¶32 If the election requirement in art. 10, § 25 is to have any meaning, then the specificity requirement in that section demands that a descriptive designation of the project be specified in the authorizing law. If we are to harmonize §§ 16 and 25 of art. 10, then the purpose-of-borrowing language in § 16 must require more than just the identity of the agency to receive the borrowed money. VI. Allocation of Bond Proceeds to Higher Education ¶33 We recognize, as Cassidy pointed out, that appropriations for the institutions in the Oklahoma State System of Higher Education must be made in consolidated form without reference to any particular institution to be allocated by the Oklahoma State Regents for Higher Education according to the needs and functions of each institution. Okla. Const., art. 13-A, § 3.25 Even if the allocation of some $30 million bond proceeds to the Oklahoma State Regents in § 301(A)(16)(m) satisfies the purpose-in-borrowing requirement in light of Article 13-A of the state constitution, that allocation cannot be saved. ¶34 The Legislature did not expressly provide for the severability of the 2000 amendments to § 301.26 In the absence of a severability clause, the offending portion of a statute may be severed from the non-offending portion, if it appears that 1) the Legislature would have enacted the statute without the offending portion and 2) the non-offending portion is capable of standing alone. Application of Oklahoma Department of Transportation, 2002 OK 74, ¶27, 64 P.3d 546 , 553. ¶35 The Oklahoma State Regents aside, our decision today determines that the 2000 amendments to § 301 do not satisfy the constitutional requirements for borrowing with respect to twenty-six of the identified twenty-seven state agencies. After severing the allocations to twenty-six of the identified twenty-seven state agencies, only saving that to the Oklahoma State Regents, not enough remains in the statute to carry out the legislative intent. Stated in another way, the unconstitutional portion of the 2000 amendments to § 301 are such a significant portion of the whole as to make it impossible to give effect to the legislative authorization for the borrowing by saving only the allocation to the Oklahoma State Regents. Accordingly, the allocation of bond proceeds to the Oklahoma State Regents in subparagraph (m) cannot stand alone in § 301(A)(16). VII. Conclusion ¶36 The purpose-of-borrowing requirement in the Oklahoma Constitution, art. 10, § 16 requires that a statute authorizing the borrowing of money must include a descriptive designation of the projects to be accomplished with the borrowed money. We determine that the 2000 amendments to § 301 authorize the borrowing of money without specifying the purposes for which the bond proceeds may be used. We conclude that the 2000 amendments to § 301 do not satisfy the purpose-of-borrowing requirement of Okla. Const., art. 10, § 16.27 We hold that the proposed bonds are not properly authorized in 73 O.S.2001, § 301. APPLICATION FOR APPROVAL OF NOT TO EXCEED $155 MILLION OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY STATE FACILITIES REVENUE BONDS, SERIES 2002C AND $20 MILLION, SERIES 2002D (TAXABLE) DENIED. WATT, C.J., and HODGES, LAVENDER, HARGRAVE, KAUGER, BOUDREAU and WINCHESTER, JJ., concur. OPALA, V.C.J., concurs in result and writes separately. SUMMERS, J., dissents and writes separately. FOOT