By Definition, Polluters Win

The polluter should pay: That’s a reasonable tenet of modern society. A fee on the sale of automobile tires finances the recycling or disposal of old tires. If an oil company causes a spill, it pays to clean it up. Such fees are designed to discourage careless or illegal behavior and to generate the money needed to fix a mess when it occurs. But Proposition 37 would change the state Constitution to make it much more difficult to hold polluters accountable by redefining certain regulatory fees as taxes, meaning they could only be imposed by a two-thirds vote of the Legislature. This bad policy violates the concept that polluters should be held accountable for their performance. The result: Taxpayers would have to bear the burden. Voters should reject Proposition 37.

In 1991, the Legislature imposed a fee on companies whose products contained lead to finance a program to identify sources of lead contamination, screen children for possible lead poisoning and provide treatment. The bill needed only a majority vote to pass.

Sinclair Paint Co. challenged the fee in the courts, contending it was in fact a tax because it provided a broad public benefit rather than one related just to the paint business. As a tax, the company said, it is illegal because it did not pass by the two-thirds vote required by Proposition 13. The firm also contended the fee was a tax because the legislation imposed no regulatory burden on the company other than paying the fee.

The state Supreme Court unanimously rejected Sinclair’s lawsuit in 1997, ruling that the assessment of the general costs of lead poisoning to the manufacturers of the product was a reasonable regulatory decision and thus subject only to a majority vote. Now, the financial backers of Proposition 37--largely the oil, tobacco and alcoholic beverage industries--seek to achieve by ballot initiative what they could not get from the court.

They want to redefine as a tax any fee that does not impose a specific regulatory burden. Also, any fee must raise no more money than needed to pay the actual cost of control or mitigation involved.

The sponsors now fear a flood of fees that really are taxes in disguise because of the Sinclair ruling. There has been no flurry of such cases, but several important regulatory programs now financed by fees come up for renewal soon, including one to help pay for state pesticide regulation. These programs would be in jeopardy if the fees were redefined as taxes because so many members of the Legislature have vowed they will not vote for any new or increased taxes.

Proposition 37 is a bit of legal hairsplitting that seeks to turn the regulatory role of government on its head and allow big corporations to escape responsibility for the effects of their products and actions. In the end, the courts will have to decide what is a fee and what is a tax--just as they do now. Californians should vote no on Proposition 37.