SIERRA CLUB v. STATE ex rel. OKLAHOMA TAX COMMISSION
2017 OK 83, 2017 WL 4785354, 405 P.3d 691 (2017)
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Rule of Law:
A legislative measure constitutes an unconstitutional "revenue bill" under Article V, Section 33 of the Oklahoma Constitution if its principal object is to raise revenue and it levies a tax in the strict sense of the word, rather than being for another purpose where revenue is merely incidental, thereby requiring a three-fourths legislative vote and compliance with other procedural restrictions.
Facts:
- H.B. 1449 was enacted by the Oklahoma Legislature to create a new Motor Fuels Tax Fee.
- The bill established an annual fee of $100 for electric-drive vehicles and $30 for hybrid-drive vehicles.
- H.B. 1449 directed that the money collected from these fees be deposited into the State Highway Construction and Maintenance Fund.
- The House of Representatives passed H.B. 1449 on May 22, 2017, and the Senate passed it on May 25, 2017.
- The bill passed with more than 51% but less than 75% (three-fourths) of the vote in both legislative chambers.
- H.B. 1449 was passed within the last five days of the legislative session.
- The bill did not create additional regulations or state any purpose or intent within its text beyond imposing the fee and directing its revenue to the fund.
- The bill was set to take effect on November 1, 2017.
Procedural Posture:
- The Oklahoma House of Representatives passed H.B. 1449 on May 22, 2017.
- The Oklahoma Senate passed H.B. 1449 on May 25, 2017.
- Petitioner filed an application to assume original jurisdiction in the Oklahoma Supreme Court on August 7, 2017, challenging H.B. 1449 as an unconstitutional revenue bill and requesting a writ of prohibition or mandamus.
- The Oklahoma Supreme Court assumed original jurisdiction due to the matter concerning public interest, a question of constitutionality, statewide effect, and the urgency for an early decision.
- The Oklahoma Supreme Court transformed Petitioner's request for a writ of prohibition or mandamus into a request for declaratory relief concerning the constitutionality of H.B. 1449.
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Issue:
Does H.B. 1449, which creates a Motor Fuels Tax Fee for electric-drive and hybrid-drive vehicles, constitute a "revenue bill" requiring a three-fourths legislative vote and compliance with other constitutional restrictions under Article V, Section 33 of the Oklahoma Constitution, or is it a permissible user fee?
Opinions:
Majority - Watt, J.
Yes, H.B. 1449 is an unconstitutional revenue bill because its principal object is to raise revenue, and it levies a tax in the strict sense of the word, failing to meet the three-fourths supermajority vote and other procedural requirements of Article V, Section 33 of the Oklahoma Constitution. The Court applied a two-part test, with the "principal object" being the overarching consideration. First, the Court found the principal object of H.B. 1449 was clearly to raise revenue, noting that the bill's language, title, and actual operation showed no stated regulatory purpose or intent beyond imposing a financial burden and directing funds to the State Highway Construction and Maintenance Fund. The Court distinguished this from "mileage tax" cases (e.g., Ex parte Tindall, Ex parte Sales, Pure Oil Co.), which involved commercial enterprises and extensive regulations where revenue was incidental to a primary regulatory purpose. The Court also found City of Tulsa ex rel. Tulsa Airport Authority v. Air Tulsa, Inc. not precedential because H.B. 1449 did not involve a municipal utility. Second, the Court determined H.B. 1449 levied a tax in the strict sense, not a user fee. Unlike a fee (which typically corresponds to a specific government service, where the amount is tied to the cost of that service, and there's a direct nexus between payment and benefit, as in In re Lee), H.B. 1449's "Motor Fuels Tax Fee" was a forced contribution for general governmental functions, regardless of actual road use, making the apportionment questionable. The existing Motor Fuel Tax Code (as discussed in Sanders v. Okla. Tax Comm’n) was characterized as a tax on fuel consumption, not a user fee for roads. Therefore, as a revenue bill passed without the required three-fourths majority and within the last five days of session, H.B. 1449 violated Article V, Section 33.
Dissenting - Winchester, J.
No, H.B. 1449 is constitutional as a measure designed to equalize the burden of maintaining Oklahoma’s roads and highways, and is not a revenue bill subject to Article V, Section 33. Justice Winchester argued that the bill imposes a fee meant to compensate for the lost fuel tax revenue from electric and hybrid vehicles that still use the state's roads. Citing the two-part test from Naifeh v. State, the dissent believed the fees, projected to generate $4 million (compared to over $473 million from motor fuel taxes), demonstrate a direct correlation between the charge and the benefit received by these vehicles, which is the maintenance of the roads they use. The dissent noted that the Legislature estimated gasoline-driven vehicles generated $123 per vehicle in gasoline taxes and conservatively established the new fees at $100 for electric and $30 for hybrid. Justice Winchester emphasized that the Legislature is charged with establishing the policies of the state, its actions are presumed constitutional, and it must be given some leeway when circumstances change to address the maintenance of highways.
Analysis:
This case provides crucial clarification on the distinction between a "tax" and a "fee" in the context of Oklahoma's constitutional requirements for revenue bills. It reinforces that a legislative measure's "principal object" and whether it "levies taxes in the strict sense" are paramount. The ruling emphasizes the necessity for a direct nexus between the payment and a specific, proportional government service for an assessment to be considered a fee, thereby limiting the Legislature's ability to label general revenue-generating measures as "fees" to bypass supermajority requirements. This decision impacts future legislative attempts to fund state services or equalize financial burdens, ensuring that measures primarily aimed at raising general revenue adhere to stricter constitutional procedural safeguards.
