Filed 5/5/11
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
---THE MORNING STAR COMPANY,
C063437
Plaintiff and Appellant,
(Super. Ct. No. 34-200800005600-CU-MC-GDS)
v.
BOARD OF EQUALIZATION et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Sacramento
County, Lloyd G. Connelly, Judge. Affirmed.
Law Offices of Brian C. Leighton and Brian C. Leighton for
Plaintiff and Appellant.
Edmund G. Brown, Jr., Attorney General, Paul D. Gifford,
Assistant Attorney General, William L. Carter and Molly K.
Mosley, Deputy Attorneys General, for Defendants and
Respondents.
In this appeal, we uphold the validity of a regulation
adopted by defendant Department of Toxic Substances Control (the
Department)—California Code of Regulations, title 22, section
66269.1 (the Regulation)—which interprets its underlying
1
statute, Health and Safety Code section 25205.6.1
We also
conclude that section 25205.6 imposes a constitutionally valid
tax.
Section 25205.6 imposes an annual charge on those types of
businesses, with at least 50 employees, which use, generate,
store, or conduct activities in California related to hazardous
materials.
(§ 25205.6, subds. (b), (c).)
We have seen this matter before.
Supreme Court.
So too has the state
Contrary to our prior opinion,2 the Supreme Court
subsequently concluded in Morning Star Co. v. State Bd. of
Equalization (2006) 38 Cal.4th 324 (Morning Star) that the
Department‘s broad interpretation of former section 25205.6—as
applicable to essentially all corporations with at least 50
employees, given that most modern office equipment contains
hazardous materials—constituted a ―regulation‖ subject to the
formal rulemaking procedures of the Administrative Procedure Act
(APA) (Gov. Code, § 11340 et seq.).
(Morning Star, at pp. 332,
334, 342 [when Morning Star was decided, former § 25205.6
applied only to corporations; the statute was amended in 2006 to
apply essentially to all business organizations, not just
corporations (Stats. 2006, ch. 77, § 13, eff. July 18, 2006;
Stats. 2006, ch. 344, §§ 1, 2, eff. Sept. 20, 2006)].)
The
1
Undesignated statutory references are to the Health and Safety
Code.
2
Morning Star Co. v. State Bd. of Equalization (2004)
115 Cal.App.4th 799, review granted Apr. 28, 2004, S123481.
2
Regulation was the result of Morning Star.
(Cal. Code Regs.,
tit. 22, § 66269.1, Register 2007, No. 45 (Nov. 7, 2007).)
And the present appeal is the result of two questions left
open in Morning Star, plus the issue of the Regulation‘s
consistency with section 25205.6.
38 Cal.4th at pp. 332, 342.)
(Morning Star, supra,
Specifically, we conclude here
that (1) the Regulation is consistent with section 25205.6; (2)
section 25205.6 imposes a tax rather than a regulatory fee; and
(3) this tax does not violate equal protection or substantive
due process.
Consequently, we shall affirm the judgment, which
concluded likewise.
FACTUAL AND PROCEDURAL BACKGROUND
Instead of reinventing the wheel, we will draw much of our
background from that provided in Morning Star, supra, 38 Cal.4th
324, with references to the current version of section 25205.6
(Stats. 2006, ch. 77, § 13, eff. July 18, 2006).
This case concerns an annual charge imposed on businesses
that was enacted in 1989 as part of a comprehensive overhaul of
state law concerning hazardous materials.
(Morning Star, supra,
38 Cal.4th at p. 328.)
The charge works as follows.
Pursuant to section 25205.6,
subdivision (b), each year the Department must provide
California‘s Board of Equalization (the Board) with a schedule
(i.e., a list) of business classification codes that identifies
the ―‗types of [businesses] that use, generate, store, or
conduct activities in this state related to hazardous
3
materials.‘‖3
(Morning Star, supra, 38 Cal.4th at p. 327.)
If a
business has 50 or more employees in this state and falls within
one of the listed codes, it must pay a graduated annual charge
based on how many employees it has.
The charge, which ranges
from the hundreds to the thousands of dollars, is deposited in
the state‘s Toxic Substances Control Account, to be disbursed to
various programs relating to the control of hazardous materials.
(§ 25205.6, subd. (d); see also § 25173.6, subd. (b)
[identifying programs funded by this account].)
(Morning Star,
supra, 38 Cal.4th at pp. 327, 329.)
In the Regulation, the Department finds that ―every‖
nonexempted ―business in California with fifty or more employees
uses, generates, stores, or conducts activities in this state
related to hazardous materials.‖
(Cal. Code Regs., tit. 22,
§ 66269.1; § 25205.6, subd. (b); Morning Star, supra, 38 Cal.4th
at p. 327.)
The Department reasons that materials it regards as
inherent in everyday business activity, such as fluorescent
light bulbs, batteries, inks, correction fluid, and toner used
in printers and fax machines, constitute ―hazardous materials,‖
and that all qualifying companies ―‗use, generate, store, or
conduct activities‘‖ related to these items.
p. 327.)
(Morning Star, at
Thus, each year the list submitted by the Department
has included the codes for all businesses, except for one type
3
As noted, before it was amended in 2006, section 25205.6
applied only to ―corporations‖; it now covers essentially all
business organizations. (Stats. 2006, ch. 77, § 13; § 25205.6,
subds. (a), (b).)
4
of business that section 25205.6 specifically exempts from the
charge—nonprofit residential care facilities (§ 25205.6, subd.
(h)).
(Morning Star, at p. 327.)
This means that virtually all
businesses with 50 or more employees in this state must pay the
hazardous materials charge.
(Morning Star, at p. 328.)
Plaintiff The Morning Star Company (the Company) is a
California corporation that offers labor services to companies
involved in the tomato processing business.
supra, 38 Cal.4th at p. 328.)
(Morning Star,
The Company believes that it
should not have to pay the hazardous materials charge.
(Ibid.)
The Company acknowledges that it uses computers, printers,
fluorescent lights, and other items that the Department
classifies as (or regards as containing) ―hazardous materials.‖
(Ibid.)
But the Company asserts that the Legislature did not
consider companies in its position as ―‗us[ing], generat[ing],
stor[ing], or conduct[ing] activities . . . related to hazardous
materials,‘‖ and that the Department, therefore, has promulgated
overly expansive lists of codes in the Regulation.
(Ibid.)
Consistent with this position, the Company paid its section
25205.6 charges for the years 1993 through 1996 and 2003 through
2005 under protest, and sought refunds from the Board.
Star, supra, 38 Cal.4th at p. 328.)
(Morning
The Company instituted this
action when the Board rejected its demand.
The Company seeks a
refund, an injunction preventing collection of the charge, a
declaration that the Regulation conflicts with section 25205.6,
and a declaration that section 25205.6 is a regulatory fee that
5
violates equal protection and substantive due process.
(See
Morning Star, at p. 328.)
In a bench trial, the trial court rejected the Company‘s
position and denied it relief.
So do we.
DISCUSSION
I. The Regulation Is Consistent and Not in Conflict with Section 25205.6
A. Legal Background
―Government Code section 11342.2 provides the general
standard of review for determining the validity of
administrative regulations.
That section states that
‗[w]henever by the express or implied terms of any statute a
state agency has authority to adopt regulations to implement,
interpret, make specific or otherwise carry out the provisions
of the statute, no regulation adopted is valid or effective
unless [1] consistent and not in conflict with the statute and
[2] reasonably necessary to effectuate the purpose of the
statute.‘
―Under the first prong of this standard, the judiciary
independently reviews the administrative regulation for
consistency with controlling law.
The question is whether the
regulation alters or amends the governing statute or case law,
or enlarges or impairs its scope.
In short, the question is
whether the regulation is within the scope of the authority
conferred; if it is not, it is void.
This is a question
particularly suited for the judiciary as the final arbiter of
6
the law, and does not invade the technical expertise of the
agency.
―By contrast, the second prong of this standard, reasonable
necessity, generally does implicate the agency‘s expertise;
therefore, it receives a much more deferential standard of
review.
The question is whether the agency‘s action was
arbitrary, capricious, or without reasonable or rational basis.‖
(Communities for a Better Environment v. California Resources
Agency (2002) 103 Cal.App.4th 98, 108-109, fns. omitted; Yamaha
Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th
1, 11 & fn. 4.)
A regulation which interprets a statute may be
declared invalid if the agency‘s determination that the
regulation is reasonably necessary to effectuate the statutory
purpose is not supported by substantial evidence.
(Gov. Code,
§ 11350, subd. (b)(1).)
The Regulation interprets section 25205.6, which currently
provides in pertinent part:
―(a) For purposes of this section, ‗organization‘ means a
corporation, limited liability company, limited partnership,
limited liability partnership, general partnership, and sole
proprietorship.
―(b) On or before November 1 of each year, the [D]epartment
shall provide the [B]oard with a schedule of codes, that
consists of the types of organizations that use, generate,
store, or conduct activities in this state related to hazardous
materials, as defined in Section 25501, including, but not
7
limited to, hazardous waste.
The schedule shall consist of
identification codes from one of the following classification
systems, as deemed suitable by the [D]epartment:
―(1) The Standard Industrial Classification (SIC) system
established by the United States Department of Commerce.
―(2) The North American Industry Classification System
(NAICS) adopted by the United States Census Bureau.
―(c) Each organization of a type identified in the schedule
adopted pursuant to subdivision [b] shall pay an annual fee,
which shall be set in the following amounts:
[¶] . . . [¶]
[ranging, for example, from $200 for business organizations with
50 to 74 employees, to $1,500 for 250 to 499 employees, up to
$9,500 if there are at least 1,000 employees].
―(d) The fee imposed pursuant to this section shall be paid
by each organization . . . in accordance with . . . the Revenue
and Taxation Code and shall be deposited in the Toxic Substances
Control Account.
The revenues shall be available, upon
appropriation by the Legislature, for the purposes specified in
subdivision (b) of Section 25173.6 [primarily, for hazardous
material remediation, cleanup and disposal, including
California‘s share of the cost of the federal Superfund
Program].‖
As quoted above, section 25205.6, subdivision (b)
―expressly incorporates the definition of ‗hazardous material‘
[set forth] in section 25501.
Section 25501, [former]
8
subdivision (o) [now (p)] states, ‗―Hazardous material‖ means
any material that, because of its quantity, concentration, or
physical or chemical characteristics, poses a significant
present or potential hazard to human health and safety or to the
environment if released into the workplace or the environment.
―Hazardous materials‖ include, but are not limited to, hazardous
substances, hazardous waste, and any material that a handler or
the administering agency has a reasonable basis for believing
that it would be injurious to the health and safety of persons
or harmful to the environment if released into the workplace or
the environment.‘
The terms ‗hazardous substance‘ and
‗hazardous waste,‘ both subsumed within the definition of
‗hazardous materials,‘ are themselves also defined within
section 25501 (see § 25501, subds. (p), (q)); these definitions
incorporate numerous schedules and descriptions of substances
and items deemed hazardous in particular contexts or
concentrations under state law, federal law, or both (ibid.).
Several of these schedules and definitions, in turn, refer to
other schedules and definitions found elsewhere in the law, and
so forth.‖
(Morning Star, supra, 38 Cal.4th at p. 337, fn. 5.)
The Regulation in pertinent part ―finds that every business
in California with fifty or more employees [except for nonprofit
residential care facilities, exempted by section 25205.6,
subdivision (h)] uses, generates, stores, or conducts activities
in this state related to hazardous materials, as defined in
9
section 25501 of the Health and Safety Code and in this
section.‖
(Cal. Code Regs., tit. 22, § 66269.1.)
B. The First Prong for Regulation Validity Under Government Code Section 11342.2
We begin with the first prong for regulation validity under
Government Code section 11342.2:
To be valid, the Regulation
must be ―consistent and not in conflict with‖ (Gov. Code,
§ 11342.2) Health and Safety Code section 25205.6.
Section 25205.6 directs the Department to inform the Board
annually, through a list of business classification codes
referenced in the section, of the types of businesses that use,
generate, store, or conduct activities in California related to
―hazardous materials,‖ as that term is defined in section 25501,
subdivision (p).
(§ 25205.6, subd. (b).)
In the Regulation,
the Department has provided the Board with all of the business
classification codes referred to in section 25205.6 (except for
nonprofit residential care facilities) based on the Department‘s
view that all modern businesses with at least 50 employees use,
generate, store, or conduct activities related to common
products that contain hazardous material, such as copy machines,
fax machines, printers, computers, fluorescent lights,
batteries, and cell phones.
In this most basic sense, then, the
Regulation is ―consistent and not in conflict with‖ section
25205.6:
the Regulation carries out the task the statute
directed it to do.
The Company argues that had this all-inclusive view been
what the Legislature intended section 25205.6 to mean, the
10
Legislature, in the pithy words of Morning Star, would have
―simply said so, and said so simply.‖
38 Cal.4th at p. 337.)
(Morning Star, supra,
Instead, the Legislature in section
25205.6 adopted a detailed, code–listing scheme based on the
types of businesses that use, generate, store, or conduct
activities related to ―hazardous materials,‖ with ―hazardous
materials‖ defined by reference to a further array of statutes
and regulations.
(Morning Star, at p. 337.)
This is a potent argument.
But it is not the whole story.
In examining the legislative intent of section 25205.6, we find
the rest of the story.
In 1994, the Legislature amended section 25205.6 to exempt
nonprofit residential care facilities from its reach.
(§ 25205.6, subd. (h), formerly subd. (g), and before that,
subd. (e); Stats. 1994, ch. 619, § 1.)
In the course of
adopting this amendment, the Legislature was informed in 1994:
“In
enacting the environmental fee [in section 25205.6] . . . the
Legislature authorized an assessment on all corporations with
more than 50 employees.
The purpose was to generate funding for
the activities of the [Department], broaden the base of fees
which support hazardous waste control activities and call
attention to the fact that virtually all corporations, in some
way, contribute to the generation of hazardous materials and
hazardous waste[,] e.g., fluorescent lights contain mercury,
solvents are used in everything from computers to the adhesives
which hold down carpets, etc.‖
(Sen. Com. on Appropriations,
11
Rep. on Assem. Bill No. 3540 (1993-1994 Reg. Sess.) Aug. 15,
1994, p. 1, some italics omitted, first italics added.)
In fact, frequently, the Legislature has been told that
section 25205.6 applied to all corporations (now businesses).
(E.g., as cited in Morning Star, supra, 38 Cal.4th at p. 339:
Sen. Com. on Environmental Quality, Analysis of Sen. Bill No.
660 (1997-1998 Reg. Sess.) Sept. 15, 1997, p. 3 [referring to
the assessment as ―the broadbased fee levied on all
corporations‖]; see also Sen. Com. on Environmental Quality,
Rep. on Sen. Bill No. 660 (1997-1998 Reg. Sess.) Sept. 10, 1997;
Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading
analysis of Sen. Bill No. 2240 (1997-1998 Reg. Sess.).)
And, from the time section 25205.6 was enacted in 1989, the
Department has interpreted the statute in the all-inclusive way
the Regulation does.
The point is, there is strong evidence the Legislature
knows full well that the Department has long been interpreting
section 25205.6 in the manner expressed in the Regulation, and
the Legislature is fine with that interpretation.
This is
strong evidence that the Regulation is ―consistent and not in
conflict with‖ (Gov. Code, § 11342.2) Health and Safety Code
section 25205.6.
Furthermore, the Morning Star court‘s phrasing that section
25205.6 ―could have simply said so, and said so simply‖ had it
intended to apply to all businesses, was made in a limited
context.
(Morning Star, supra, 38 Cal.4th at p. 327.)
12
That
context was Morning Star‘s rejection of the Department‘s
argument there that such an all-inclusive view of section
25205.6 was ―‗the only legally tenable interpretation‘‖ of
section 25205.6, and therefore exempted from the APA‘s
requirement of formal rulemaking.
(Morning Star, at pp. 328,
336-337, italics added, quoting Gov. Code, § 11340.9, subd. (f)
[setting forth this exemption].)
Significantly, Morning Star
added, in this context, that the Department‘s all-inclusive view
of section 25205.6 was ―reasonable, but not plainly
ineluctable.‖
(Morning Star, at p. 328, italics added.)
The Company, however, points to the definition of
―hazardous materials‖ set forth in section 25501, subdivision
(p), which section 25205.6 incorporates at subdivision (b).
In
pertinent part, ―hazardous material‖ is defined in section 25501
as ―material that, because of its quantity, concentration, or
physical or chemical characteristics, poses a significant
present or potential hazard to human health and safety or to the
environment if released into the workplace or the environment.‖
(§ 25501, subd. (p), italics added.)
The Company argues that
the Regulation ignores this statutory standard of
―significan[ce]‖ by applying section 25205.6 to virtually all
businesses; therefore, the Regulation is inconsistent with
section 25205.6.
We disagree.
As the trial court found, the Department‘s view that all
modern businesses, in some way, use, generate, store, or conduct
activities related to hazardous materials is supported by
13
substantial evidence in the rulemaking record for the
Regulation.
That record disclosed that products used by
virtually all California businesses in their normal operations—
e.g., batteries, computers, personal data assistants, cell
phones, copy machines, fax machines, toner cartridges, and
fluorescent lights—contain materials which have been identified
as hazardous within the meaning of section 25501.
In short, the
Regulation simply recognizes that virtually all modern
businesses are surrounded by modern business equipment
containing hazardous material.
Given this hazardous material
ubiquity in the modern economy, the Regulation is ―consistent
and not in conflict with‖ section 25205.6‘s standard of
hazardous material significance (incorporated from § 25501,
subd. (p)), because the statute applies only to relatively large
businesses—those with at least 50 employees.
In a related argument, the Company argues that, because
section 25205.6‘s standard of hazardous material significance
(incorporated from § 25501, subd. (p)) defines ―hazardous
material‖ as one ―pos[ing] a significant present or potential
hazard to human health and safety or to the environment,‖
scientific peer review under section 57004 is required to
determine whether the Company‘s use of its batteries,
fluorescent lights, copy machines, computers and toners, for
example, poses a ―significant present or potential hazard.‖
In
other words, the Company argues, section 25501, subdivision (p)
calls for science, and thus scientific peer review, as opposed
14
to the Department‘s merely assuming that any business which has
fluorescent lights, computers, copy machines, etc., must pay the
fee.
Section 57004 requires scientific peer review of the
scientific basis for a proposed administrative regulation
establishing a regulatory level or standard for the protection
of public health or the environment.
(§ 57004, subds. (a)(2),
(b).)
This argument stumbles in two respects, however.
First,
section 25501, subdivision (p) and the Regulation incorporate
already-established hazardous material regulatory levels and
standards from federal and state law.
(§ 25501, subds. (p),
(q), (r); Cal. Code Regs., tit. 22, § 66269.1, subds. (a), (b);
see Morning Star, supra, 38 Cal.4th at p. 337, fn. 5.)
Second,
section 25205.6 applies to ―types of [business] organizations‖
(and the Company is of the regulated ―type‖), rather than to
individual businesses (such as the Company individually,
independent of its type).
(§ 25205.6, subd. (b).)
We conclude the Regulation is ―consistent and not in
conflict with‖ (Gov. Code, § 11342.2) Health and Safety Code
section 25205.6.
C. The Second Prong for Regulation Validity Under Government Code Section 11342.2
That leads us to the second prong for regulation validity
under Government Code section 11342.2:
Is the Regulation
reasonably necessary to effectuate the purpose of section
25205.6?
15
In light of what we have just said, the Regulation is not
arbitrary, capricious or without reasonable or rational basis.
(Communities for a Better Environment v. California Resources
Agency, supra, 103 Cal.App.4th at p. 109.)
As we have seen, the
Department‘s determination that the Regulation is reasonably
necessary to effectuate the purpose of section 25205.6 is
supported by substantial evidence.
(Gov. Code, § 11350, subd.
(b)(1).)
We conclude the Regulation is ―reasonably necessary to
effectuate the purpose of‖ (Gov. Code, § 11350, subd. (b)(1))
Health and Safety Code section 25205.6.
II. Section 25205.6 Imposes a Tax Rather Than a Regulatory Fee
The Company contends that section 25205.6 imposes a
regulatory fee rather than a tax.
Based on this premise, the
Company argues (as we shall see in pt. III of this opinion,
post) that this fee violates equal protection and substantive
due process because it is not reasonably related to the
regulatory purposes of section 25205.6.
We conclude section
25205.6 imposes a tax rather than a regulatory fee.
Regulatory fees are imposed under the state‘s police power
rather than its taxing power, and must bear a reasonable
relationship to the fee payer‘s burdens on or benefits from the
regulatory activity.
(Sinclair Paint Co. v. State Bd. of
Equalization (1997) 15 Cal.4th 866, 874-878 (Sinclair).)
A tax,
on the other hand, may be imposed upon a class that may enjoy no
direct benefit from its expenditure and may not be directly
16
responsible for the condition to be remedied.
(Carmichael v.
Southern Coal & Coke Co. (1937) 301 U.S. 495, 521-523 [81 L.Ed.
1245, 1260-1261]; Leslie’s Pool Mart, Inc. v. Department of Food
& Agriculture (1990) 223 Cal.App.3d 1524, 1543.)
―In general,
taxes are imposed for revenue purposes, rather than in return
for a specific benefit conferred or privilege granted.‖
(Sinclair, supra, 15 Cal.4th at p. 874; Shapell Industries, Inc.
v. Governing Board (1991) 1 Cal.App.4th 218, 240.)
The charge imposed by section 25205.6 is a tax ―if revenue
is the primary purpose, and regulation is merely
incidental. . . .‖
(Sinclair, supra, 15 Cal.4th at p. 880.)
Regulatory fees, on the other hand, are ―‗―charged in connection
with regulatory activities . . . [and] do not exceed the
reasonable cost of providing services necessary to the activity
for which the fee is charged and which are not levied for
unrelated revenue purposes.‖
[Citations.]‘‖
(Id. at p. 876,
quoting Pennell v. City of San Jose (1986) 42 Cal.3d 365, 375,
which quotes Mills v. County of Trinity (1980) 108 Cal.App.3d
656, 659-660.)
In Sinclair, the court concluded that an assessment imposed
pursuant to the Childhood Lead Poisoning Prevention Act of 1991
(§ 105275 et seq.) on manufacturers and other persons whose
industry or products contributed to environmental lead
contamination, was a regulatory fee imposed under the state‘s
police power.
(Sinclair, supra, 15 Cal.4th at p. 875.)
holding, the court considered a number of factors.
17
In so
Under the
act, the prevention program was supported entirely by the fees
collected pursuant to the act, the fees were imposed to mitigate
the actual or anticipated adverse effects of the fee payers‘
operations, and the amount of the fees was required to bear a
reasonable relationship to those adverse effects.
pp. 870-871, 876-878.)
(Id. at
Persons able to show that their industry
did not contribute to the contamination or that their product
did not result in quantifiable contamination were exempt from
paying the fee.
(Id. at p. 871.)
―Moreover, imposition of
‗mitigating effects‘ fees in a substantial amount (Sinclair
allegedly paid $97,825.26 in 1991) also ‗regulates‘ future
conduct by deterring further manufacture, distribution, or sale
of dangerous products, and by stimulating research and
development efforts to produce safer or alternative products.‖
(Id. at p. 877.)
By contrast, section 25205.6 makes plain the purpose of its
charge is to raise sufficient revenues to fund the purposes of
subdivision (b) of section 25173.6, including the state‘s
federal obligation under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (i.e., the
federal superfund program) ―to pay specified costs of removal
and remedial actions carried out pursuant to‖ the federal act.
(§ 25205.6, subds. (d), (g)(1) & (2).)
Section 25173.6,
subdivision (b) authorizes the appropriation of section 25205.6
funds primarily to remediate, clean up and dispose of hazardous
materials, rather than to regulate the payers‘ business
18
activities in using, generating or storing hazardous materials.
The amount of the section 25205.6 charge does not bear a
reasonable relationship to the adverse effects of the
contamination generated by the payer and therefore has no
regulatory deterrent effect.
In sum, the purpose of the charge imposed pursuant to
section 25205.6 is to raise revenue to pay for a wide range of
governmental services and programs primarily relating to
hazardous waste remediation, cleanup and disposal.
The charge
to the Company is not regulatory because it does not seek to
specifically regulate the Company‘s use, generation or storage
of hazardous material but to raise money for the disposal and
remediation of hazardous material generally.
therefore a tax.
The charge is
As the trial court found, unlike the
regulatory fee imposed on a business that generates large
amounts of hazardous wastes or that disposes of hazardous waste
on land or that operates a hazardous waste facility (see
§§ 25205.2, 25205.4, 25205.5), the charge imposed by section
25205.6 on a business whose activities are generally ―related to
hazardous materials‖ is designed to raise revenue for toxic
substances control activities and involves no regulation or
policing of individual business operations.
We conclude section 25205.6 imposes a tax rather than a
regulatory fee.
19
III. The Section 25205.6 Tax Does Not Violate Equal Protection
or Substantive Due Process
The Company claims the section 25205.6 charge violates
equal protection and substantive due process.
Having determined
that section 25205.6 imposes a tax, we reject these claims under
the deferential standard of review used to assess the
constitutionality of a tax.
The Company argues that the section 25205.6 charge
irrationally singled out corporations (prior to being amended in
2006, when section 25205.6 was made applicable to essentially
all business organizations with at least 50 employees), and
irrationally bases the amount of its graduated assessment solely
on the number of employees.
The Company asserts that imposing
the tax only on corporations or on businesses employing 50 or
more persons bears no rational relationship to the goal of
placing the costs of disposal on those who create the problem.
We disagree.
―‗It is inherent in the exercise of the power to tax that a
state be free to select the subjects of taxation and to grant
exemptions.
Neither due process nor equal protection imposes
upon a state any rigid rule of equality of taxation.
[Citations.]
. . . [I]nequalities which result from a singling
out of one particular class for taxation or exemption infringe
no constitutional limitation.
[Citations.]‘‖
(Stevens v.
Watson (1971) 16 Cal.App.3d 629, 633, quoting Carmichael v.
Southern Coal & Coke Co., supra, 301 U.S. at pp. 509-510
[81 L.Ed. at p. 1253].)
20
The rational basis test is used for both equal protection
analysis involving economic legislation (Swoap v. Superior Court
(1973) 10 Cal.3d 490, 504; County of Los Angeles v. Patrick
(1992) 11 Cal.App.4th 1246, 1252) and substantive due process
analysis (Ehrlich v. City of Culver City (1996) 12 Cal.4th 854,
863, fn. 3; City of San Jose v. Donohue (1975) 51 Cal.App.3d 40,
45).
We therefore treat the two claims as one.
(See Cohan v.
Alvord (1984) 162 Cal.App.3d 176, 186; see also Minnesota v.
Clover Leaf Creamery Co. (1981) 449 U.S. 456, 470, fn. 12
[66 L.Ed.2d 659, 673].)
The legislative choices over the methods to implement its
programs are not as limited as the Company argues.
The
Legislature is given broad power to determine the best methods
to carry out its programs.
The Legislature need only make
statutory classifications that are rationally related to a
reasonably conceivable legislative purpose.
(Warden v. State
Bar (1999) 21 Cal.4th 628, 644-651.)
The purpose of section 25205.6 is to raise revenue to fund
the state‘s hazardous material and hazardous waste programs.
The taxing of businesses with 50 or more employees, as a general
measure of the size of the business and its use of hazardous
material, is manifestly rationally related to that of funding
the disposal of hazardous material.
Furthermore, as for the
pre-2006 amended version of section 25205.6 that applied to
corporations only, a legislative decision to tax corporations
and not other businesses (via the individuals who comprise them)
21
is generally permissible under the equal protection clause,
given the advantages that corporations enjoy in carrying on
their businesses.
(Lehnhausen v. Lake Shore Auto Parts Co.
(1973) 410 U.S. 356, 359-362, 365 [35 L.Ed.2d 351, 354-356,
358].)
To impose on the state the task and costs of relating the
disposal charge to each business by the amount of hazardous
material used would eviscerate the program.
As with other
taxes, the Legislature need only generally relate the subject of
the hazardous material tax with the purpose to be served.
It
has done so in this case.
DISPOSITION
The judgment is affirmed.
(CERTIFIED FOR PUBLICATION.)
BUTZ
We concur:
BLEASE
, Acting P. J.
HULL
, J.
22
, J.
