Department of Fish and Game Fees for Reviewing Documents Survives
The Department of Fish & Game's flat fees for reviewing documents under the California Environmental Quality Act do not constitute taxes even though the fees do not reflect the exact cost of the CEQA review in every case, the Third District Court of Appeal has ruled.
In rejecting a Shasta County landowner's argument to the contrary, the Third District reaffirmed a longstanding principle of "takings" law that property-rights advocates have unsuccessfully sought to overturn: the courts should not overturn a governmental decision on fees so long as the government agency involved has exercised reasonable judgment in determining the fee scale.
"[A]s long as the cumulative amount of the fees does not surpass the cost of the regulatory program or service and the record discloses a reasonable basis to justify distributing the cost among payors, a fee does not become a tax simply because each payor is required to pay a predetermined fixed amount," Justice Vance Raye wrote for a unanimous three-judge panel. "Flat fees are not in legal effect taxes," Raye added, and therefore the fee mechanism does not violate Proposition 13.
The ruling is the latest skirmish in a decade-long legal battle over the fees. In 1990, the Legislature passed a bill permitting the cash-strapped Department of Fish & Game to impose fees on CEQA applicants of $1,250 to review negative declarations and $850 to review environmental impact reports. What was controversial was the fact that these fees were imposed on applicants seeking approvals from other agencies, not from Fish & Game, and were supposed to be used to cover the cost of Fish & Game's review as a commenting agency. Dozens of other agencies play a similar role in the CEQA process, but only Fish & Game ever received legislative authority to charge for its review.
Shasta County property owner Albert Mills challenged the fees and in 1994 a Superior Court judge ruled that although the statute was not unconstitutional on its face, it was unconstitutionally applied. In a 1995 settlement, Fish & Game refunded Mills's fee and stopped collecting the fees. But subsequently the Fish & Game employee union, California Association of Professional Scientists, challenged the settlement, claiming that in the absence of a finding that the statute itself was unconstitutional, Fish & Game could not stop collecting it. Sacramento County Superior Court Judge Jeffrey Gunther ruled in favor of the union and the fee was reinstated. (See CP&DR, January 1996 and April 1996.)
Mills appealed Gunther's decision. Mills argued that the Fish & Game fee was, in fact, a tax and therefore could not be imposed without a two-thirds supermajority in the Legislature. In ruling for Fish & Game, the Third District relied heavily on Sinclair Paint Co. v. State Bd. Of Equalization, 15 Cal.4th 866 (1997), which identified three types of fees: special assessment, development fees, and regulatory fees. On appeal, Mills — supported by an amicus brief from the Pacific Legal Foundation — argued that the Fish & Game fee did not fall into any of these categories. In particular, Mills argued that because Fish & Game does not operate CEQA as a regulatory program, the fee in question is not a regulatory fee. But the court disagreed, concluding that "the Legislature has given Fish and Game a critical regulatory role in the complex regulatory structure created to safeguard precious environmental resources."
The other question the court dealt with is the question of whether the Legislature has the latitude to establish a fixed fee regardless of the actual cost of the services. Mills argued that because the fee was fixed, it did not cover the actual cost of CEQA review and therefore must be considered a tax.
However, wrote Raye: "We hold that a regulatory fee, to survive as a fee, does not require a precise cost-fee ratio. A regulatory fee is enacted for purposes broader than the privilege to use a service or to obtain a permit. … [A] regulatory fee does not violate article XIII A when the fees collected do not surpass the costs of the regulatory programs they support and the cost allocations to individual payors have a reasonable basis on the record." The Third District found that Fish & Game's cost of CEQA review was far greater than the amount the department collected in fees.
The Cases: California Association of Professional Scientists v. Department of Fish & Game, No. C023075, and Mills v. Department of Fish & Game, No. C023184, 00 CDOS 2760, filed April 10, 2000.
For California Association of Professional Respondents: Dennis F. Moss, (818) 246-0629.
For Department of Fish & Game: Charles Getz, deputy attorney general, (415) 356-6348.
For Albert Mills: Walter McNeill, (530) 243-0190.