Decatur County vs. Vulcan Materials

This case involves the constitutionality of a mineral severance tax increase. In 1984, the Tennessee General Assembly enacted a public act of statewide application authorizing counties to collect a mineral severance tax, directing that the proceeds of the tax be deposited in the county road fund. In 1987, the General Assembly passed a private act allowing Decatur County to impose a mineral severance tax, but allocating the revenue from the tax to the county's general fund. Decatur County adopted the tax and the proceeds went to the county's general fund. In 1994, the General Assembly amended the private act to provide for an increase in the mineral severance tax. Decatur County adopted the increased rate, and then filed suit against a company that severed minerals from the earth in that county, to collect the mineral severance tax at the increased rate. The mineral company, and three other mineral companies, resisted payment of the tax, arguing inter alia that the tax was unconstitutional under Article XI, Section 8 of the Tennessee Constitution, the equal protection clause, because the proceeds were allocated to the county's general fund, rather than to the county road fund, as directed in the public act authorizing the tax. After a trial, the trial court held that the mineral companies were estopped from arguing that the tax was unconstitutional, and, in the alternative, that the tax was constitutional because the mineral companies failed to show that there was not a rational basis for the allocation of the funds to the county's general fund rather than to the road fund. Both parties appealed. We affirm in part and reverse in part, finding that the mineral companies were not required to pay the tax in protest, that the mineral companies have standing to sue and are not estopped from contesting the constitutionality of the tax, and finally that the tax is constitutional because there is a rational basis for allocating the revenue to the county's general fund rather than to its road fund.