V-1 Oil Company, an Idaho Corporation v. Utah State Tax Comm., et al.

This opinion is subject to revision before final publication in the Pacific Reporter.

IN THE SUPREME COURT OF THE STATE OF UTAH

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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).