V-1 Oil Co. v. Utah State Tax Comm. (8-5-97)
Annotate this CaseThis opinion is subject to revision before final publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
V-1 Oil Company, an Idaho
corporation, on behalf of
itself and all others
similarly situated; and
Harding Mechanical, Inc.,
a Utah corporation, and
Robert G. Harding, an
individual, on behalf of
themselves and all others
similarly situated,
Plaintiffs and Appellants,
v.
Utah State Tax Commission
and Utah State Department
of Environmental Quality,
Defendants and Appellees.
No. 950156
F I L E D
August 5, 1997
Third District, Salt Lake Div. I
The Honorable Frank G. Noel
Attorneys: Peter Stirba, Benson L. Hathaway, Linette B.
Hutton, Salt Lake City, for plaintiffs
Jan Graham, Att'y Gen., Melissa M. Hubbell,
Clark L. Snelson, Asst. Att'ys Gen., Salt Lake
City, for defendants
On Petition for Rehearing
ZIMMERMAN, Chief Justice:
This court called for rehearing sua sponte in this case after issuing an opinion finding the
environmental surcharge imposed by the Underground Storage Tank Act unconstitutional. See
V-1 Oil Co. v. Utah State Tax Comm'n, 302 Utah Adv. Rep. 30, 34 (Oct. 29, 1996); see also
Utah Code Ann. 19-6-401 to -427. Our initial opinion held that the one-half-cent-per-gallon
environmental surcharge imposed on petroleum delivered to underground storage tanks was a tax
rather than a regulatory fee because V-1 Oil Company ("V-1") did not benefit from the
Petroleum Storage Tank Fund ("the Fund") created by section 19-6-409 of the Code. Having
found this charge a tax, we held it unconstitutional because it violated article XIII, section 13 of
the Utah Constitution, which provides that any excise tax on gasoline must be used exclusively
for highway purposes. V-1, 302 Utah Adv. Rep. at 33-34; see also Utah Const. art. XIII, 13.
As noted, our holding in that first opinion was based primarily on the factual premise that V-1
did not benefit from the Fund because it was self-insured. V-1, 302 Utah Adv. Rep. at 33; see
also Utah Code Ann. 19-6-409. This led to our conclusion that the charge was not a fee, but a
tax. In its brief on rehearing, the Commission argues that V-1 actually does benefit from the
Fund and that our factual assertion to the contrary in the initial opinion was erroneous.(1) If V-1
does benefit, then we must also address the second prong of the test for whether a regulatory fee
is valid--whether such benefit is commensurate with the burden imposed by the environmental
surcharge. V-1, 302 Utah Adv. Rep. at 32-33; see also Walker v. Brigham City, 856 P.2d 347,
349 (Utah 1993). If we find the environmental surcharge a valid fee, not a tax, then we must
vacate the result in our prior opinion and affirm the trial court.
We first state the standard of review. Because V-1 appeals from the district court's grant of
summary judgment dismissing its claims, we view the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party, V-1. Harline v. Barker, 912 P.2d 433, 435 (Utah 1996).
To the extent that our statement of facts in our prior opinion outlined the origins and general
operation of the Fund, we will not restate them here. We hereby adopt that statement except to
the extent it implies that the Fund would not pay to clean up a spill occurring at a tank owned by
V-1. See V-1, 302 Utah Adv. Rep. at 30-31. Similarly, the analytical model for addressing
whether the surcharge is a legitimate fee for service or a tax is also set out fully in our initial
opinion. Id. at 32-33. We will not restate it here.
Addressing the question of benefit, we find that V-1 does benefit from the Fund because a spill at
one of its tanks would be covered by the Fund. The statute requires that V-1 have a certificate of
compliance for each of its petroleum storage tank facilities. Utah Code Ann. 19-6-412. The
certificate was issued only after V-1 registered the tanks, paid the petroleum tank storage fee,
complied with state and federal statutes, rules, and regulations, and submitted the results of tank
tightness tests. Id. Once the certificate of compliance was issued, V-1 was eligible to recover
costs covered by the Fund. Id. 19-6-419. V-1 therefore benefits from the Fund because any
costs above $10,000 incurred by V-1 in investigating, abating, or correcting any spill from its
tanks would be eligible for reimbursement, subject to the other limitations of the act. Id.
V-1 argues that this benefit is illusory because, by the provisions of the statute, the State can turn
around and recover from V-1 any costs paid by the Fund. Section 19-6-424.5 of the Utah Code
does provide that the executive secretary of the Solid and Hazardous Waste Control Board ("the
secretary") "may . . . take action . . . to recover costs from responsible parties, including costs of
any investigation, abatement, and corrective action." Utah Code Ann. 19-6-424.5(1)(c). The
Commission argues that this section simply allows the secretary to recover any costs the Fund
expends in excess of the $1,000,000 limit or to recover the first $10,000 for which owners
remain liable if the Fund expends monies to clean up a spill.
Here, as in other cases, "[w]hen faced with a question of statutory construction, we look first to
the plain language of the statute." CIG Exploration, Inc. v. Utah State Tax Comm'n, 897 P.2d 1214, 1216 (Utah 1995), cert. denied, 116 S. Ct. 699 (1996). Under our rules of statutory
construction, we need not look beyond the plain language of this provision unless we find some
ambiguity in it. Schurtz v. BMW of N. Am., Inc., 814 P.2d 1108, 1112 (Utah 1991). In
analyzing a statute's plain language, we must attempt to give each part of the provision a relevant
and independent meaning so as to give effect to all of its terms. Id. If we find the provision
ambiguous, however, we then seek guidance from the legislative history and relevant policy
considerations. World Peace Movement of Am. v. Newspaper Agency Corp., 879 P.2d 253, 259
(Utah 1994). In addition, "if doubt or uncertainty exists as to the meaning or application of an
act's provisions, the court should analyze the act in its entirety and 'harmonize its provisions in
accordance with the legislative intent and purpose.'" Beynon v. St. George-Dixie Lodge #1743,
854 P.2d 513, 518 (Utah) (quoting Osuala v. Aetna Life & Casualty, 608 P.2d 242, 243 (Utah
1980)), cert. denied, 510 U.S. 869 (1993).
When we look to the statute as a whole, it is clear that the Fund will pay $990,000 to clean up a
spill, with the owner being responsible for the first $10,000 and any costs over $1,000,000. See
Utah Code Ann. 19-6-419.(2) In that context, section -424.5, allowing the secretary to recover
costs from owners, must be read as providing the secretary the authority to take legal action to
recover costs in the limited situations where the Fund has paid to clean up a spill and the owner
has not covered the first $10,000, where the Fund has paid more than the $990,000 authorized
under section -419, or where the Fund has paid to clean up a spill and the owner is not covered
because it lacks a compliance certificate. Reading the section, as V-1 does, to allow the secretary
to recover costs paid out under section -419 renders the statute incomprehensible. Such a reading
would mean that an owner could spend $1,000,000 to clean up a spill, recover $990,000 of that
cost from the Fund under section -419, and then face a suit from the secretary to recover the same
$990,000 in costs that the Fund just paid to the owner. Such a reading is absurd.
We find further support for our reading of the statute in section -424.5, which also provides that
the secretary may apportion liability among responsible parties and then gives factors to consider
in such apportionments. Utah Code Ann. 19-6-424.5(2). The use of "liability" in this section
must refer to the proportion of costs for which an owner remains liable, i.e., the first $10,000 of
costs or any costs over $1,000,000 for a covered owner, and all costs for a noncovered owner.
Therefore, we find that V-1 does benefit from the Fund because its compliance certificates render
it eligible for coverage.
The determination that V-1 benefits from the Fund is only the first prong in deciding whether the
environmental surcharge is a fee or a tax. We must now consider whether the surcharge bears
some reasonable relationship to the cost of the benefit said to justify its imposition. V-1, 302
Utah Adv. Rep. at 32-33; Utah Restaurant Ass'n v. Davis County Bd. of Health, 709 P.2d 1159,
1164 (Utah 1985). We note that fixing the amount of a fee is a legislative act to which we grant
great deference. See, e.g., Walker, 856 P.2d at 349; Barberry Dev. Corp. v. South Jordan City,
631 P.2d 899, 904 (Utah 1981). Such fees are presumed reasonable, and the burden is on the
party challenging the fee to prove that the fee is unreasonable. Walker, 856 P.2d at 349;
Barberry, 631 P.2d at 904. Here, V-1 has failed to meet its burden of proving that the
environmental surcharge is unreasonable.
V-1 claims that the environmental surcharge is unreasonable because to date the Fund it
establishes has taken in more money from fees than it has paid out in cleanup costs. This fact
alone does not, however, establish that the fee is unreasonable. We have held that a fee may
exceed the cost of providing the intended service and remain reasonable. See Walker, 856 P.2d
at 350. Fee-setting bodies are entitled to flexibility in their legislative solutions to problems.
Barberry, 631 P.2d at 904. The problems they address are "not susceptible of exact
measurement." Id. Such bodies must also have the power to deal creatively with the problems
they encounter. Id. Absent any proof that the fee is unreasonable in its relationship to the
benefits that V-1 receives from the Fund, we hold that the environmental surcharge established
by section 19-6-410 is a valid, constitutional fee.
We vacate the ruling of our prior decision, affirm the trial court, and hold the environmental
surcharge constitutional.
Associate Chief Justice Stewart, Justice Howe, Justice Durham, and Justice Russon concur in Chief Justice Zimmerman's opinion.
Opinion Endnotes:
1. Our initial opinion's finding that V-1 did not benefit from the Fund was based upon concessions made by the Commission's counsel. During the trial court proceedings, the Commission moved to dismiss V-1's class action suit, claiming that V-1 was not a member of the class it claimed to represent. In making that argument, the Commission pointed out that V-1 "does not rely on the fund for insurance. . . . V-1 chooses to self-insure and does no[t] benefit from the fund." Further, at oral argument on the Commission's motion to dismiss the class action, counsel for the Commission stated, "V-1 . . . self insure[s] and they don't benefit from the Environmental Surcharge and the Petroleum Storage Tank Fund."
Our discovery after issuance of the initial opinion that, in fact, V-1 may benefit from the Fund is what prompted us to call sua sponte for rehearing of this case.
2. Such payments can occur in one of two ways. First, the Fund may reimburse an owner for the costs the owner has incurred in abating and correcting a spill. Id. 19-6-420(3), (5)(c). Second, the Fund may pay directly to investigate, abate, and correct a spill. Id. 19-6-420(2)(b)(i).
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