Mallard Bay Drilling, Inc. v. Kennedy

Summary

The Supreme Court of Louisiana held that Act No. 40 of 2002, which purported to clarify the meaning of a sales-tax exemption after a prior judicial interpretation, could apply only prospectively because retroactive application violated separation-of-powers principles. The court further held that Mallard Bay Drilling was not entitled to the exemption for diesel fuel used by its drilling barges, and that the taxes did not unconstitutionally burden interstate commerce.

Holdings

1. Act No. 40 could not be applied retroactively to this pending case because the legislature's attempt to abrogate the Supreme Court's prior interpretation of La. R.S. 47:305.1 improperly exercised the judicial function and violated separation-of-powers principles.
2. Mallard Bay was not entitled to the exemption because its drilling barges, which lacked their own motive power and were towed from location to location, were barges rather than ships or vessels for purposes of La. R.S. 47:305.1(B).
3. La. R.S. 47:305(E) did not prohibit taxation of the diesel fuel because the fuel was sold, delivered, and consumed in Louisiana.
4. The sales tax on diesel fuel sold, delivered, and consumed in Louisiana did not violate the Commerce Clause.

Questions Presented

1. Whether Act No. 40 of 2002, which purported to clarify La. R.S. 47:305.1 and apply retroactively, could constitutionally be applied to this pending litigation.
2. Whether Mallard Bay's drilling barges qualified as ships or vessels under La. R.S. 47:305.1(B) and therefore qualified for the sales-tax exemption.
3. Whether La. R.S. 47:305(E) prohibited sales taxation of diesel fuel sold, delivered, and consumed in Louisiana.
4. Whether the sales tax on the diesel fuel violated the Commerce Clause of the United States Constitution.

Disposition

reversed