RECENT STATE DECISIONS

June 2006

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California Supreme Court Rules Agency Failed to Comply with Administrative Procedure Act in Establishing Hazardous Materials Fee Regulation
Morning Star Company v. California State Board of Equalization

In Morning Star Company v. California State Board of Equalization, the California Supreme Court ruled that the Department of Toxic Substances Control’s (DTSC) determination that all non-exempt companies having 50 or more employees “use, generate, store or conduct activities related to hazardous materials” and, therefore, must pay an annual hazardous materials fee, constitutes a regulation which should have complied with state Administrative Procedure Act (APA) requirements. Despite declaring the regulation invalid, however, the Court ruled that the proper remedy was to maintain the status quo, and to allow DTSC an opportunity to correct the procedural deficiency rather than disrupt the fee collection scheme given the critical importance of those fees to the State of California.