SIERRA CLUB v. STATE ex rel. OKLAHOMA TAX COMMISSION
2017 Okla. LEXIS 84
| Okla. | 2017Background
- H.B. 1449 (2017) imposed an annual Motor Fuels Tax Fee of $100 on electric-drive vehicles and $30 on hybrid-drive vehicles, with proceeds deposited to the State Highway Construction and Maintenance Fund; effective Nov. 1, 2017.
- The bill passed both chambers with simple majorities but less than the three-fourths required for revenue bills and was passed within the last five days of session.
- Petitioner sought original jurisdiction in the Oklahoma Supreme Court challenging H.B. 1449 as an unconstitutional revenue bill under Okla. Const. art. V, §33; the Court assumed original jurisdiction and treated the petition as a request for declaratory relief.
- The core legal test (from Naifeh and Leveridge) asks (1) whether the bill’s principal object is raising revenue and (2) whether it levies a tax in the strict sense or merely creates incidental revenue.
- The Legislature included minimal regulatory language: payment is required for registration and a small portion (capped at $10,000 or 1.5%) may be used for alternative fuel corridors; no regulatory scheme or cost-based nexus was established.
- The majority concluded the fee functions as a tax (no direct nexus between amount and benefit, principal object to raise revenue), so Article V, §33’s procedural requirements were not met and the statute is unconstitutional; a dissent would have upheld the fee as an equalization user fee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether H.B. 1449 is a "revenue bill" under Art. V, §33 | H.B. 1449’s principal object is raising revenue and it levies a tax; therefore it is a revenue bill and invalid because it failed §33 requirements | H.B. 1449 is a user fee to equalize road-maintenance burdens (not a tax); proceeds fund highways and serve a regulatory/user-charge purpose | Held: It is a revenue bill — principal object is raising revenue; unconstitutional under Art. V, §33 |
| Whether the Motor Fuels Tax Fee is a regulatory/user fee or a tax in the strict sense | Amounts are not tied to cost of a specific regulatory service; no regulatory scheme; thus it is a tax | The fee equalizes highway maintenance burden and approximates fuel-tax contributions (a prototypical user fee) | Held: It levies a tax in the strict sense — lacks direct nexus to specific service and is a general revenue extraction |
| Whether the statute’s operation shows revenue is incidental to another purpose | Plaintiff: No substantial regulatory or other primary purpose; revenue is the principal object | Defendant: Legislative intent was equalization of road-use burden (analogous to mileage/user fees) | Held: Revenue is not incidental; the statute’s operation shows primary aim is raising revenue |
| Remedy and posture (original jurisdiction/writ) | Petitioner sought prohibition/mandamus to block enforcement | Respondents argued statute valid and writ improper | Court assumed original jurisdiction and converted request to declaratory relief, granted relief invalidating H.B. 1449 |
Key Cases Cited
- Naifeh v. State ex rel. Okla. Tax Comm’n, 400 P.3d 759 (Okla. 2017) (articulates test: whether principal object is raising revenue and whether measure levies a tax in the strict sense)
- Leveridge v. Okla. Tax Comm’n, 294 P.2d 809 (Okla. 1956) (defining revenue laws as those whose principal object is raising revenue)
- City of Tulsa ex rel. Tulsa Airport Auth. v. Air Tulsa, Inc., 851 P.2d 519 (Okla. 1992) (user-fee characterization for municipal utilities; distinguishing factors for fees vs. taxes)
- Sanders v. Okla. Tax Comm’n, 169 P.2d 748 (Okla. 1946) (gasoline excise is a tax despite earmarking for highways)
- Olustee Co-op. Ass’n v. Okla. Wheat Util. Research & Mkt. Dev. Comm’n, 391 P.2d 216 (Okla. 1964) (payment that contributes to general governmental costs is a tax)