Advisory Opinion Re 1976 Pa 295 and 1976 Pa 297

• Decision Date: 07 November 1977
• Docket Number: J,No. 24,24
• Citation: 401 Mich. 686,259 N.W.2d 129
• Parties: Request for ADVISORY OPINION In RE Enrolled Senate Bills 1385 and 1387 (being 1976 PA 295 AND 1976 PA 297). une Term.
• Court: Michigan Supreme Court

Page 129

259 N.W.2d 129

401 Mich. 686

Request for ADVISORY OPINION In RE Enrolled Senate Bills 1385 and 1387 (being 1976 PA 295 AND 1976 PA 297).

No. 24, June Term.

Supreme Court of Michigan.

Nov. 7, 1977.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Louis J. Caruso, Janis Meija, Francis J. Carrier, Asst. Attys. Gen., Lansing, in support of the constitutionality of 1976 PA 295 and 1976 PA 297.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Richard R. Roesch, Lawrence W. Morgan, Asst. Attys. Gen., Lansing, Opposing Constitutionality of 1976 PA 295 and 1976 PA 297.

Warren J. Perlove, Southfield, Lippitt, Harrison, Perlove, Friedman & Zack, Southfield, for amicus.

Downs, Edwards & Pirich, Lansing, for amicus, County Road Ass'n of Mich., and Mich. Townships Ass'n; John Cushman, Gen. Counsel, Wayne County Road Com'n, Detroit, L. W. McEntee, Gen. Counsel, Oakland County Road Com'n, Birmingham, of counsel.

Dickinson, Wright, McKean, Cudlip & Moon by George E. McKean, John R. Axe, Julia D. Darlow, Detroit, for Southeastern Mich. Transp. Authority, et al., Walter H. Clements, Detroit, of counsel.

Clark, Klein, Winter, Parsons & Prewitt by H. William Butler, L. A. Hynds, Joseph J. Ayaub, Detroit, for amicus Michigan Trucking Ass'n.

James F. Schouman, Dearborn, Jeffery Zeh, Gen. Counsel, Brotherhood of Maintenance of Way Employes, Highland Park, for amicus curiae intervenors United Transp. Union et al.

RYAN, Justice.

The Court has been asked by the Governor for an advisory opinion on the constitutionality of 1976 P.A. 295; M.C.L.A. § 474.51 et seq.; M.S.A. § 22.180(21) et seq., and 1976 P.A. 297; M.C.L.A. § 247.660b et seq.; M.S.A. § 9.1097 (10c) et seq 1976 P.A. 295 (hereafter P.A. 295) is labelled the State Transportation Preservation Act of 1976 and is designed to improve and maintain transportation services in Michigan.

1976 P.A. 297 (hereafter P.A. 297) was added to 1951 P.A. 51; M.C.L.A. § 247.651 et seq.; M.S.A. § 9.1097(1) et seq. Broadly speaking, the portions of this act which are presently under scrutiny provide for the establishment and administration of the general transportation fund, the establishment and functions of the transportation council, conditions for grants and the issuance of bonds and notes for public transportation services.

The Court has agreed to provide an opinion advising whether P.A. 295 violates either Const.1963, art. 3, § 6 which prohibits state involvement in internal improvements which are not public internal improvements, or Const.1963, art. 9, § 18 which prohibits the state from granting or pledging its credit to or for another, except as authorized in the Constitution. In addition, the Court has agreed to provide an opinion advising whether P.A. 297 violates Const.1963, art. 9, § 9 which requires that the proceeds of all specific taxes, other than general sales and use taxes and regulatory fees, imposed on motor vehicle fuels and on registered motor vehicles, be used exclusively for highway purposes as defined by law, and further advising whether the issuance of notes and bonds under P.A. 297, to be repaid from gasoline tax revenues in the general transportation fund, violates Const.1963, art. 9, § 9 or the state borrowing provisions of Const.1963, art. 9, § 15.

I

1976 P.A. 295 and Const.1963, art. 3, § 6

Const.1963, art. 3, § 6 provides:

"The state shall not be a party to, nor be financially interested in, any work of internal improvement, nor engage in carrying on any such work, except for public internal improvements provided by law."

P.A. 295, among its provisions, empowers the State Highway Commission to exercise the powers necessary to obtain qualification on behalf of the state for rail service continuation contractual grants pursuant to the federal regional rail reorganization act of 1973 (§ 4); to provide financial assistance for the operation and maintenance of a railroad within the state as provided by relevant federal legislation (§ 5); to acquire rail property or other facilities necessary for the operation of a railroad and to acquire a portion or portions of a railroad right of way (§ 6); to acquire railroad rights of way approved for abandonment within the state by purchase or the exercise of eminent domain (§ 8); to cooperate with other states in connection with the purchase of rail property within the state and to acquire trackage rights and rail property in other states (§ 9); to acquire abandoned properties for other specified public bodies; to preserve, use and dispose of, grant the right to occupy, develop or lease abandoned rail property (§ 10); to apply for an acquisition or modernization loan, or a guarantee of a loan under certain federal programs (§ 12); to purchase intercity bus equipment and related station and servicing facilities, ferry equipment, dock, port, and water equipment servicing facilities (§ 14); to spend sums for the modernization, rehabilitation, rebuilding and relocation of rail property, and perform or contract for maintenance and improvements on rail property, whether such property is owned by the state or by a private carrier (§ 15); to contract for the provision of rail, intercity bus or ferry service (§ 16); to provide financial assistance for the continuation and improvement of operations, and the maintenance of equipment and support facilities of intercity bus and ferry carriers (§ 17); and, with the approval of the Michigan Public Service Commission, to contract for substitute services and relocation assistance within the state to serve shippers and communities affected by the termination of rail freight services (§ 18).

In enacting the statute, the Legislature found:

"(2) There exists a need to provide authorization for financial assistance for the capital improvement, maintenance, and operation of rail, intercity bus, and ferry services in this state. To undertake the planning, development, acquisition, and operation of these services is in the best interest of the state and is a valid public purpose.

"(3) The preservation of abandoned railroad rights of way for future rail use and their interim use as public trails is declared to be a public purpose." M.C.L.A. § 474.51; M.S.A. § 22.180(21).

Initially, it is assumed that rail, bus and ferry services are works of internal improvement, for otherwise there would be no constitutional infirmity under Const.1963, art. 3, § 6. The question for the Court then is whether this statute impermissibly empowers the state to become a party to, and financially interested in, such works which are not public internal improvements.

At the outset it should be noted that this Court has recognized that the determination of what constitutes a public purpose is primarily the responsibility of the Legislature, and that the concept of public purpose has been construed quite broadly in Michigan. Advisory Opinion on Constitutionality of 1975 P.A. 227 (Questions 2-10), 396 Mich. 465, 495-498, 242 N.W.2d 3 (1976). For example, this Court has found that promoting the sale of Michigan apples, ¹ the payment of dues by a city for a membership in the Michigan Municipal League, ² the construction of a port marina by a city, ³ the issuance of bonds by a city to finance the construction of privately owned industrial buildings, ⁴ the construction of a sports arena, ⁵ public financing of gubernatorial elections ⁶ and the creation of a state authority authorized to make loans directly to, or guarantee loans made to, private business enterprises for financing job development projects ⁷ may all serve a valid public purpose.

Two major arguments are presented to support the contention that the activities authorized under P.A. 295 are not similar, permissible works of public internal improvement: 1) that, historically, the constitutional ban on state involvement in internal improvements has prohibited involvement in railroads and 2) that the provisions for direct grants to private rail companies under P.A. 295 do not constitute expenditures for public internal improvements.

1) A Brief History of Article 3

Michigan's first constitution stated that internal improvement was to be encouraged by the state and indicated that the Legislature had the authority to appropriate funds for such purpose. Const.1835, art. 12, § 3. Under this authority, the state incurred large debts for the construction of railroads and canals. The public's reaction to the tax burdens imposed by these debts prompted a ban on state involvement in works of internal improvement in the Constitution of 1850, art. 14, § 9. This ban was continued in the Constitution of 1908, art. 10, § 14, although exceptions were made from time to time in both the 1850 and the 1908 Constitutions to permit the state to become involved in certain specified works of internal improvement. However, none of these exceptions allowed the state to once again become involved in the development of the state's railroad system.

At the Constitutional Convention of 1961, the committee on legislative powers first proposed to retain the language of the 1908 Constitution, as amended, with an additional provision giving the Legislature the authority to empower political subdivisions of the state to engage in those works of public internal improvement prohibited to the state. 2 Official Record, Constitutional Convention 1961, pp. 2309-10. After considerable debate on this proposal, the abbreviated wording of the 1963 Constitution, noted above, was adopted to make ". . . it clear that the state 'may not be a party to' nor 'financially interested' in internal improvements other than those of a public nature and by authorization of law". 2 Official Record, Constitutional Convention 1961, "Address to the People", p. 3368.

The debate of the delegates to the 1961 convention indicates they were well aware of the historic basis that prompted this constitutional ban on state involvement in works of internal improvement, yet they did...