DMV Plays Hardball on Smog-Impact Fees

The California Department of Motor Vehicles, an agency that critics rank as a master of bureaucratic hardball, is likely to refund only a fraction of the $455 million in smog-impact fees it has collected since 1990--despite a recent state appeals court ruling that the tax has been unconstitutional all along.

The court, while deeming illegal the $300-per-vehicle tax on cars and trucks brought into California from other states, also set aside key provisions of a lower-court ruling two years ago that would have ensured that motorists dinged by the DMV tax would get fair refunds.

Lost in the clatter over the ruling were key details that now make it appear that the DMV and its partners in the tax at the state Board of Equalization and the attorney general’s office walked away with a stunning victory.

The DMV is still collecting the tax, because the court decision is not yet final and will not be final if either side appeals.

“What we have seen in the litigation of this case I find appalling,” said Bill Dato, a San Diego attorney who has helped represent motorists against the state.

The smog-impact fee was enacted by the Legislature in 1990 during desperate financial times, hitting anybody moving into the state with a $300 tax for the supposed pollution their out-of-state cars and trucks would cause--even new vehicles that would pass California’s tough smog test. It evoked little opposition at first, because existing state residents did not have to pay it.

The tax passed, even though the Legislature’s own legal counsel warned that it was unconstitutional on both state and federal grounds, said Assemblyman Tom McClintock (R-Northridge).

Sacramento Superior Court Judge Joe Gray ruled the fee unconstitutional in 1997 and ordered the DMV to issue automatic refunds to everybody who had paid it, going back three years from the date when the case was filed in 1995 under the state’s statute of limitations. That ruling left out only motorists who paid the tax from 1990 to 1992.

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But the California Court of Appeal struck down that decision Oct. 1, saying Davis did not have the authority to order tax refunds. By setting aside the original ruling, the appeals court sharply limited the state’s liability.

First, the three-year clock on the statute of limitations has been reset so that only individuals who paid the tax beginning in late 1996 can get refunds.

Second, the court ruled that each individual must file a refund request with the state to get his or her money. In a related ruling on Sept. 29, the court had overturned a decision that would have forced the DMV to disclose the names and addresses of everybody who paid the tax, which would have allowed plaintiff attorneys to contact potential claimants.

The DMV has refused to disclose the names of those who paid the smog-impact fee, saying that the information is confidential under state law. And until just last week, the agency had refused to notify payers that the tax had been ruled unconstitutional and that they had a right to file a refund request.

“Our feeling over here is that we were dragged into this thing,” said DMV spokesman Evan Nossoff. “We just do what the law says. We would like to get it resolved. We will do what the courts instruct us to do. Until they instruct us to no longer collect the tax, we will continue to collect it.”

Nossoff added that the agency is now informing individuals when they pay the tax that they can file for an eventual refund.

Indeed, Deputy Atty. Gen. Michael Cornez, who handled the case, said the DMV had no leeway under the law to release the names of individuals who paid the tax and no leeway to stop collecting the tax ordered by Legislature.

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There is no doubt that the smog-impact fee is a money machine for California, raising more than $50 million a year. Thus, by excluding everybody who paid the tax from 1990 until late 1996, the appeals court effectively slashed the DMV’s liability by as much as half.

Moreover, many individuals may never file a refund claim with the state Board of Equalization, which is holding the money. So far, the board said, it has received just 4,000 refund requests--out of as many as 1.5 million who have paid the fees.

The state, as well as opponents of the fee, have until Nov. 10 to decide whether to appeal the ruling to the California Supreme Court. So far, plaintiff attorneys, which include three major law firms, have not made a decision.

If you paid the smog tax, you can file for a refund by calling a toll-free number, (877) SMOG-FEE (766-4333), or downloading a refund request form at https://www.smogfee.com, a Web site set up by Weiss & Yourman, one of the firms that brought the case against the DMV.

The DMV Web site also posts its form at https://www.dmv.ca.gov. The forms are supposed to be available at DMV offices, though finding a clerk who knows about this may be asking for a lot from the agency.

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Ralph Vartabedian cannot answer mail personally but responds in this column to automotive questions of general interest. Please do not telephone. Write to Your Wheels, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. E-mail: ralph.vartabedian@latimes.com.