## Facts

- California enacted the Childhood Lead Poisoning Prevention Act of 1991 to fund evaluation, screening, and medically necessary follow-up services for children at risk of lead poisoning.
- The program was funded by charges imposed on manufacturers and others whose activities contributed to environmental lead contamination, with amounts set by regulation based on estimated contribution to contamination.
- Sinclair Paint Company, a manufacturer of lead-containing products, was assessed charges, paid under protest, and sued for a refund.
- Sinclair argued the charges were unconstitutional “taxes” enacted without the two-thirds legislative vote required by Proposition 13 for state tax increases.
- The trial court granted summary judgment for Sinclair, and the Court of Appeal affirmed.
- The California Supreme Court granted review to determine whether the exaction was a tax subject to Proposition 13 or a valid regulatory fee imposed under the police power.

## Issues

1. Whether the Act’s charges are “taxes” that must be enacted by a two-thirds vote under Cal. Const. art. XIII A, § 3.
2. Whether the charges instead qualify as regulatory fees because they mitigate adverse effects attributable to the payers and bear a reasonable relationship to the program’s costs or burdens addressed.

## Decision

- The California Supreme Court unanimously reversed.
- The Court held the charges were valid regulatory (mitigation) fees, not taxes within the meaning of Proposition 13.
- Because the exactions were not taxes, they did not require enactment by a two-thirds vote.
- The Court directed entry of judgment for the State Board of Equalization and the Department of Health Services, upholding the fee program.

## Legal Principles

- The constitutional classification of an exaction turns on its operation and effect, not the Legislature’s label.
- A tax is generally imposed for revenue-raising purposes, while a regulatory fee is imposed under the police power to regulate or to mitigate and compensate for adverse effects attributable to the payers’ activities.
- Regulatory fees must bear a reasonable relationship to the burdens imposed or costs addressed by the regulatory program; mathematical precision is not required.
- A fee does not become a tax merely because it funds a broad remedial program or may generate incidental revenue beyond narrow administrative costs, so long as the charge remains tied to mitigating harms linked to the payers.
- Earmarking revenues to address the social costs created by identified contributors supports classification as a regulatory mitigation fee rather than a general-revenue tax.

## Conclusion

The court upheld California’s lead-poisoning prevention charges as police-power mitigation fees reasonably related to the harms of lead contamination caused by the assessed entities, and therefore not subject to Proposition 13’s two-thirds vote requirement for state taxes.


Sinclair Paint Co. v. State Board of Equalization, 937 P.2d 1350 (Cal. 1997)