This case addressed whether an initiative petition to amend the Oklahoma Constitution was legally sufficient to present to the public. The petition imposed a tax on the production of oil and gas for the benefit of Oklahoma’s education; however, the language used to impose the tax was called into question. After careful analysis, the court determined the petition was legally sufficient to present to the public and enter Oklahoma’s legislative process.
The conflict arose after respondents, Ray H. Potts, Michael O. Thompson and Mary Lynn Peacher filed Initiative Petition No. 416 State Question No. 795 (“IP 416”) with the Oklahoma Secretary of State. IP 416 contains eight sections and would add Article XII-C into Article XIII of the Oklahoma Constitution. The purposes of the eight sections were to impose a 5% gross production tax on oil and gas production from certain wells. The proceeds from this tax would be distributed to common school districts of Oklahoma and to the state’s Department of Education, 90% of the proceeds going to the former and the remaining 10% going to the latter.36 Pursuant to the filing of this petition, petitioner, Oklahoma Independent Petroleum Association (“OIPA”), filed an Application to Assume Original Jurisdiction in this court. They contested the sufficiency of IP 416 and claimed it failed to pass constitutional muster.
Before the court addressed the Petitioners’ arguments, they determined the opponents of an initiative petition bore the burden of demonstrating the “petition was clearly and manifestly unconstitutional.”37 Then, they addressed OIPA’s first argument, that the IP language created an unconstitutional retroactive tax. OIPA pointed to language, which stated that a tax would be levied on production of oil and gas “spudded after July 1, 2015, during the first thirty-six (36) months of production, commencing with the month of first production from and after the effective date of this Article III.” 38 They contended this language could lead to multiple interpretations.39 One being that the tax would be imposed on the same date as Article III took effect and not the new Article III-C, or that the tax took effect the same day IP 416 came into effect. The court was not persuaded by OIPA’s contention, because they believed an “initiative is so precious, all doubts as to the construction of pertinent provisions is resolved in favor of the initiative.”40 Therefore, in finding the proposed initiative constitutional, the court said:
If there are two possible interpretations—one of which would hold the legislation unconstitutional, the construction must be applied which renders them constitutional. Unless a law is shown to be fraught with constitutional infirmities beyond a reasonable doubt, this Court is “bound to accept an interpretation that avoids constitutional doubt as to the validity of the provision.”41
Next, OIPA argued that IP 416 is legally insufficient because the petition violated the Oklahoma Constitution, claiming the eight sections of IP 416 collectively do not embrace a single general subject.42 However, the court quickly dissolved this issue through the application of the germane test. OIPA failed to prove that the changes proposed by IP 416 are not germane to a singular common subject.43
In conclusion of their review, the court held that IP 416 did not impose an unconstitutional retroactive tax, nor did it violate the single subject rule. It is therefore constitutionally sufficient to be presented to the public.44 What is to be taken away from this case is the fact that a mere claim of ambiguity will not defeat a legislative proposition regarding the production of oil and gas, and it too may be taxed for adequate rationales.
35 Oklahoma Independent Petroleum Association v. Potts —P.3d—2018 WL 1376757, 2018 OK 24.
36 Id . at ¶1.
37 In re Initiative Petition No. 403, 2016 OK 1 at ¶3.
38 Id . at ¶2.
39 Id . at ¶3.
40 In re Initiative Petition No. 403, 2016 OK 1 ¶3.
41 Calvey v. Daxon , 997 P.2d 164, 2000 OK 17.
42 Id . at ¶5, In re Initiative Petition No. 403, State Question No. 779, 2016.
43 Id . at ¶26.
44 Id . at ¶7.