Opinion ID: 1430546
Heading Depth: 1
Heading Rank: 3

Heading: limits on use of regulatory fees

Text: [3] The annual fee paid by the railroads pursuant to RCW 81.24.010 is payable only to cover the reasonable cost of supervising and regulating the railroads. RCW 81.24.050. The legislature's clear intent that the fee use be so limited is set out in RCW 81.24.060: It is the intent and purpose of the legislature that the several groups of public service companies shall each contribute sufficient in fees to the commission to pay the reasonable cost of regulating the several groups respectively. Such a restrictive purpose is mandated by the decision of the United States Supreme Court in Great N. Ry. v. Washington, 300 U.S. 154, 81 L.Ed. 573, 57 S.Ct. 397 (1937), in which an earlier version of RCW 81.24 was considered. In Great Northern, the Supreme Court noted that: In the exercise of its police power the state may provide for the supervision and regulation of public utilities ... and may exact the reasonable cost of such supervision and regulation from the utilities concerned and allocate the exaction amongst the members of the affected class without violating the rule of equality imposed by the Fourteenth Amendment. Great Northern Ry. v. Washington, supra at 159-60. However, as the Supreme Court went on to hold, the use of fees collected in this manner from the regulated industry for purposes other than supervision and regulation violated not only the equal protection clause of the Fourteenth Amendment, but also imposed an unreasonable burden on interstate commerce and did not afford the feepayers due process by unjustifiably placing a heavier tax burden on the class of fee-paying companies. The Supreme Court in Great Northern struck down an unlimited fee collection scheme in which the fee was based only on gross intrastate revenues of the regulated companies and not also on the cost of the activities to be funded through the fee. The statutes were changed by the Washington State Legislature in 1939 to reflect the holding in Great Northern by limiting the fee to those amounts necessary for regulation and supervision. Thus, by both statutory provision and constitutional case law, the State's power to collect from the railroads the fees in the Railroad Regulatory Fee Account is limited to collection of those funds necessary for regulatory and supervisory purposes. The appropriateness within RCW 81.24 of repayment of Tort Claims and Legal Services Revolving Funds disbursements from the account therefore depends on whether the reimbursed expenses can properly be considered a cost of regulating the industry.