Opinion ID: 2176035
Heading Depth: 1
Heading Rank: 2

Heading: facts

Text: On April 15, 1992, 1992 Neb.Laws, L.B. 754, known as the Ethanol Authority and Development Act, was signed into law. It was codified at Neb.Rev.Stat. §§ 66-1301 through 66-1329 (Cum.Supp.1992) and later recodified at Neb.Rev.Stat. §§ 66-1330 through 66-1348 (Supp.1993). Effective September 1, 1993, §§ 66-1326 and 66-1329 were recodified as §§ 66-1344 and 66-1347 (Supp.1993) pursuant to 1993 Neb.Laws, L.B. 364. Hereinafter, we shall refer to the statutory citations by their current designations. M. Berri Balka is the duly appointed and acting state Tax Commissioner of the State of Nebraska and is charged with the duty of administering the revenue laws of the state, including provisions of the Ethanol Development Act. The act requires the Nebraska Department of Revenue to adopt and promulgate rules and regulations to provide for the issuance of transferable motor fuel tax credit certificates to ethanol producers in Nebraska and to enter into agreements with ethanol producers on behalf of the State of Nebraska to furnish tax credits to producers as mandated by § 66-1344. On June 8, 1993, Callan filed a petition in the district court for declaratory judgment and injunctive relief, seeking to permanently enjoin Balka from implementing and administering or enforcing the provisions of §§ 66-1344 and 66-1347. In his answer, Balka denied that the statutes violate Neb. Const. art. XIII, § 3. Balka subsequently filed a motion for summary judgment, and following a hearing, the district court found there was no genuine issue of material fact that §§ 66-1344 and 66-1347 serve a valid public purpose and do not violate Neb. Const. art. XIII, § 3. The court dismissed Callan's petition. The section of the Nebraska Constitution, article XIII, § 3, under which this action is brought provides: The credit of the state shall never be given or loaned in aid of any individual, association, or corporation, except that the state may guarantee or make long-term, low-interest loans to Nebraska residents seeking adult or post high school education at any public or private institution in this state. Qualifications for and the repayment of such loans shall be as prescribed by the Legislature. The statutes alleged to be unconstitutional provided as follows: (1) Each producer of ethanol shall receive a credit pursuant to this section of twenty cents per gallon of ethanol produced in Nebraska, which credit shall be in the form of a transferable motor fuel tax credit certificate. After July 1, 1994, no such credit shall be given for ethanol produced at an ethanol facility which was in production on or before January 1, 1992, unless on or before July 1, 1994, the name plate design capacity for the production of ethanol, before denaturing, at the facility has been expanded to equal at least two times the name plate design capacity for production of ethanol, before denaturing, existing at the facility as of January 1, 1992. (2) Any ethanol facility which is in production at the rate of at least twenty-five percent of its name plate design capacity for the production of ethanol, before denaturing, on or before December 31, 1992, shall receive a credit of twenty cents per gallon of ethanol produced beginning with the first month for which it is eligible to receive such credit and ending not later than December 31, 1997. (3) Any ethanol facility which is not in production on or before December 31, 1992, but which is in production at the rate of at least twenty-five percent of its name plate design capacity for the production of ethanol, before denaturing, on or before December 31, 1995, shall receive a credit of twenty cents per gallon of ethanol produced for sixty months beginning with the first month for which it is eligible to receive such credit and ending not later than December 31, 2000. (4) Any ethanol facility eligible for a credit under subsection (1), (2), or (3) of this section shall also receive a credit of twenty cents per gallon of ethanol produced in excess of the original name plate design capacity which results from expansion of the facility completed on or before December 31, 1995. Such credit shall be for sixty months beginning with the first month for which production from the expanded facility is eligible to receive such credit and ending not later than December 31, 2000. (5) The credit shall be given only for ethanol produced at a plant in Nebraska at which all fermentation, distillation, and dehydration takes place. Not less than two million gallons and not more than twenty-five million gallons of ethanol produced annually at an ethanol facility shall be eligible for the credit, and the credit may only be claimed by a producer for the period specified in subsection (2), (3), or (4) of this section. (6) The Department of Revenue shall prescribe an application form and procedures for claiming the credit and shall adopt and promulgate rules and regulations to carry out this section. § 66-1344. (1) There is hereby created the Ethanol Production Incentive Cash Fund which shall be used by the board to pay the credits created in section 66-1344 to the extent provided in this section. Any money in the fund available for investment shall be invested by the state investment officer pursuant to sections 72-1237 to 72-1276. On or before September 1, 1993, the State Treasurer shall transfer to the Ethanol Production Incentive Cash Fund the entire balance of the Ethanol Authority and Development Cash Fund and thereafter shall transfer such additional money as shall be (a) appropriated to the Ethanol Production Incentive Cash Fund by the Legislature, (b) given as gifts, bequests, grants, or other contributions to the Ethanol Production Incentive Cash Fund from public or private sources, (c) made available due to failure to fulfill conditional requirements pursuant to investment agreements entered into prior to April 30, 1992, (d) received as return on investment of the Ethanol Authority and Development Cash Fund, and (e) otherwise credited to the Ethanol Production Incentive Cash Fund from sources deemed appropriate by the Legislature. (2) Commencing January 1, 1993, the Department of Revenue shall, at the end of each calendar quarter, notify the State Treasurer of the amount of motor fuel tax that was not collected in the preceding calendar quarter due to the credits provided in section 66-1344. The State Treasurer shall transfer from the Ethanol Production Incentive Cash Fund to the Highway Trust Fund an amount equal to such credits less the following amounts: (a) For 1993, 1994, and 1995, the amount generated during the calendar quarter by a one-cent tax on motor fuel pursuant to sections 66-489 and 66-605.07; (b) For 1996, the amount generated during the calendar quarter by a three-quarters-cent tax on motor fuel pursuant to such sections; (c) For 1997, the amount generated during the calendar quarter by a one-half-cent tax on motor fuel pursuant to such sections; and (d) For 1998, 1999, and 2000, no reduction. The amounts shall be transferred through December 31, 2000. For 1993 through 1997, if the amount generated pursuant to subdivisions (a), (b), and (c) of this subsection and the amount transferred pursuant to subsection (1) of this section are not sufficient to fund the credits provided in section 66-1344, then the credits shall be funded through the Ethanol Production Incentive Cash Fund but shall not be funded through either the Highway Cash Fund or the Highway Trust Fund. For 1998, 1999, and 2000, the credits provided in such section shall be funded through the Ethanol Production Incentive Cash Fund but shall not be funded through either the Highway Cash Fund or the Highway Trust Fund. (3) On February 15, 2001, the State Treasurer shall transfer any unexpended and unobligated funds from the Ethanol Production Incentive Cash Fund to the Highway Trust Fund. § 66-1345. The Tax Commissioner and the producer eligible to receive credit under section 66-1344 shall enter into a written agreement. The producer shall agree to produce ethanol at the designated facility and any expansion thereof. The Tax Commissioner, on behalf of the State of Nebraska, shall agree to furnish the producer the tax credits as provided by and limited in such section in effect on the date of the agreement. The agreement to produce ethanol in return for the credit shall be sufficient consideration, and the agreement shall be binding upon the state. No credit shall be given to any producer of ethanol which fails to produce ethanol in Nebraska in compliance with the agreement. The agreement shall include: (a) The name of the producer; (b) The address of the ethanol facility; (c) The date of the initial eligibility of the ethanol facility to receive such credits; (d) The name plate design capacity of the ethanol facility as of the date of its initial eligibility to receive such credits; and (e) The name plate design capacity which the facility is intended to have after the completion of any proposed expansion. If no expansion is contemplated at the time of the initial agreement, the agreement may be amended to include any proposed expansion. § 66-1347. It is undisputed that Balka, as the Tax Commissioner, has entered into an agreement with one or more ethanol producers located in the State of Nebraska pursuant to §§ 66-1344 and 66-1347 and has issued and continues to issue transferable motor fuel tax credit certificates to ethanol producers.