In 1988, voters approved Initiative 97, which enacted the Model Toxics Control Act (MTCA), RCW70.105D, and created the hazardous substances tax (HST), RCW 82.21. The HST is imposed on the first in-state possession of any toxic substance, including motor vehicle fuel, and revenue collected is used to fund hazardous substances cleanup under the MTCA. HST revenue is not used for highway purposes.

Automotive United Traders Organization (AUTO) was involved in the initiative process in 1988 that led to the creation of the HST but did not challenge the HST at that time. Twenty-two years later, AUTO and Tower Energy Group brought an as-applied challenge to the HST under the Uniform Declaratory Judgment Act (UDJA), chapter 7.24 RCW, asserting that the HST violates Article II, § 40 of the Washington Constitution because HST revenue is not used for high purposes. On summary judgment, the trial court ruled that AUTO’s claim was time-barred under the UDJA because it was not brought within a “reasonable time” and under the equitable doctrine of laches.  Nonetheless, the trial court upheld the HST on the merits.

After granting direct appeal, the Washington Supreme Court (9-0) reversed the trial court’s procedural time-bar ruling and affirmed on the merits:

Time-Bar Issue

  • There is no statutory limitations period on actions under the UDJA.  Instead, such actions must be brought within a “reasonable time.” With respect to laches, a party must establish (1) inexcusable delay and (2) resulting prejudice.”  (Note: Our Supreme Court previously recognized a third element to laches – plaintiff’s knowledge of or a reasonable opportunity to discover cause against defendant – that now appears to be subsumed in the first element of inexcusable delay.)
  • These doctrines did not bar AUTO’s and Tower’s claims for three reasons: (1) a time limit on constitutional challenges under the UDJA would violate the principle of separation of powers; (2) courts have an overriding obligation to interpret the constitution; and (3) constitutional challenges have never been subject to a limitations period.

Constitutionality of the HST

  • Article II, section 40 provides that “. . . all excise taxes collected by the State . . . on the sale, distribution or use of motor vehicle fuel and all other state revenue intended to be used for highway purposes, shall be . . . placed in a special fund to be used exclusively for highway purposes.” Again, HST revenue is not used for highway purposes.
  • Language in the Constitution is read according to its common and ordinary meaning. The legislature is presumed to have power to enact legislation, unless there is an express or reasonably inferred prohibition by either the state or federal constitution.

Read according to its ordinary meaning, the HST provision does not violate Article II, section 40 because it taxes motor vehicle fuel for the purpose of cleaning up spills or hazardous substances, not for highways.

Read the decision, filed October 4, 2012.