Equilon Enterprises LLC v. Board of Equilization

In this tax refund case, plaintiff Equilon Enterprises LLC, doing business as Shell Oil Products US (Shell), sought a refund of $3,910,359.10 it paid for the year 2002 pursuant to regulations promulgated under the Childhood Lead Poisoning Prevention Act of 1991 (Health & Saf. Code, § 105275 et seq.), on the theory (among others) that the amount was an unconstitutional tax under section 3 of Proposition 13 (Cal. Const., art. XIII A, § 3). The trial court entered judgment against Shell and in favor of defendants Board of Equalization (the board) and State Department of Health Services (now the State Department of Public Health) (the department), concluding the fee Shell paid was a legitimate regulatory fee and not a tax.

On appeal, Shell contends the fee imposed on the gasoline industry under the department’s regulations, which require the industry to bear approximately 85 percent of the costs of the childhood lead poisoning prevention program (lead program), is an unconstitutional tax because it does not bear a reasonable relationship to the industry’s responsibility for cases of childhood lead poisoning in California. According to Shell, the paint industry is mainly…