California Vehicle Smog Impact
Fee ruled unconstitutional

The California Court of Appeal, Third Appellate District, on October 1 declared unconstitutional the $300 Non-Resident Vehicle Smog Impact Fee imposed by the State of California on persons registering used vehicles in California that were previously registered outside the state. The Smog Impact Fee is paid almost exclusively by people moving into California and registering the vehicles they bring with them. If everyone entitled to a refund filed a claim, the State would be required to refund approximately $250 million.The Court of Appeal agreed with the trial court that the Smog Impact Fee violated both the Commerce Clause of the United States Constitution and Article 19 of the California Constitution. According to the Court, “The discrimination between interstate and local commerce is plain... [T]he violation of the commerce clause is patent.”Unless the Court’s ruling is modified by the California Supreme Court or United States Supreme Court, the Department of Motor Vehicles (DMV) will be required to stop charging the $300 fee, which it is still collecting. It also must refund the fee, plus interest, to all persons who paid the fee and who file a timely refund claim. However, in light of other parts of the Court of Appeal’s ruling, the DMV will not voluntarily notify taxpayers of the need to promptly file refund claims nor will it automatically file claims on their behalf.Leonard B. Simon, one of the lead lawyers for the plaintiffs, referred to evidence that the California Legislative Counsel had advised the Legislature that the $300 fee was unconstitutional both before and after its approval in July 1990. He stated that “the Court’s ruling on the remedy is very unfortunate. It means that California can pass an obviously invalid fee, collect hundreds of millions of dollars, and then keep virtually all of the money collected by making the claims process very difficult.” Simon further stated that, “such a system gives government a perverse incentive to impose unlawful taxes, knowing they will get to keep most of the money. The remedy for this violation should be modified by the California Supreme Court or by the Legislature.”