Delta Air Lines, Inc. v. Dept. of Rev.

308 	August 23, 2023 	No. 20
IN THE OREGON TAX COURT
REGULAR DIVISION
DELTA AIR LINES, INC.,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
State of Oregon,
Defendant.
(TC 5409 (Control); TC 5418; TC 5433; TC 5452)
Delta, a centrally assessed airline, challenged its property valuation by the
Department of Revenue (the department). On a motion for partial summary judg-
ment, Delta argued that Oregon violated the uniformity clauses of the Oregon
constitution and the federal equal protection clause by taxing intangible prop-
erty only when used in one of the 14 businesses listed in ORS 308.515(1). Another
centrally assessed company, PacifiCorp, an electric utility, added a similar claim
to its own pending valuation case and participated with Delta in a combined
oral argument and briefing. See PacifiCorp v. Dept. of Rev., ____ OTR ___ (Aug
23, 2023). The department cross-moved for partial summary judgment in both
cases, and the court addressed all arguments together in the opinion filed in
Delta. Under Oregon’s “rational basis” test, a classification must be (1) based on
“genuine differences” and (2) reasonably related to a conceivable government
purpose. See Knapp v. City of Jacksonville, 342 Or 268, 276, 151 P3d 143 (2007).
“Genuine differences” are objectively determinable features relevant to the pur-
pose of the classification, including physical, economic, or political features of the
kind or use of the property. The court found no difference in kind between tax-
able and exempt intangible property because all intangible property was either
taxable or exempt. Applying this framework to the parties’ arguments, the court
rejected the department’s arguments that other features of central assessment
(unit valuation and the use of department personnel to value the property) serve
as a rational basis to tax intangible property used in a listed business. The court
also rejected the taxpayers’ argument that the classification invalidly depends
merely on who owns the property, because the classification is based on the use of
the property. The department argued that the use of centrally assessed property
is distinct because the types of property used in the listed business have value
only when used in a “network,” typically over a large geographic area. The court
rejected that argument based on case law showing that the property merely has
greater value when used as a network, a characteristic of virtually all property.
The court considered the possibility that the legislature had different purposes
for including particular businesses in the list. As to rate-regulated public util-
ities, including PacifiCorp’s electricity business, the court found a “genuine dif-
ference” in use (public service) compared to other uses, and the court found that
the legislature conceivably could have taxed the intangibles of those businesses
as a complement to the regulatory scheme. However, as to Delta’s transportation
business, the court found no genuine differences between intangible property
used in an airline or a railroad (taxable) and intangible property used in a bus or
trucking company (exempt). The court held that taxation of intangibles violated
Oregon’s uniformity clauses and federal equal protection as to Delta, but not as
to PacifiCorp.

Cite as 25 OTR 308 (2023) 	309
Oral argument on cross-motions for partial summary
judgment was held April 28, 2021, in the courtroom of the
Oregon Tax Court, Salem.
Brad S. Daniels, Stoel Rives LLP, Portland, filed the
motion and argued the cause for Plaintiff.
Marilyn J. Harbur, Senior Assistant Attorney General,
Department of Justice, Salem, filed the cross-motion and
argued the cause for Defendant.
Decision rendered August 23, 2023.
ROBERT T. MANICKE, Judge.
I. 	INTRODUCTION
Plaintiff, Delta Air Lines, Inc. (Delta), is an inter-
state and international air carrier doing business in Oregon.
As an “[a]ir transportation” company, its property is subject
to central assessment, with consequences discussed below.
See ORS 308.515(1)(e).1 Delta appeals from the Opinion
and Order (O&O) issued by Defendant (the department) for
property tax year 2019-20, which determined a real market
value of (1) $50 billion for Delta’s worldwide property val-
ued as a unit, or “system,” and (2) an allocated real market
value of $212,560,000 for Delta’s property sitused in Oregon.
2, 3 Each of these values includes some amount attributable
to intangible property, such that the value would be less if
intangible property were excluded.
Delta’s complaint asserts two claims:
1. 	That assessment for taxation of Delta’s intangible
property violates the Uniformity Clauses of the Oregon
1 Unless otherwise specified, the court’s references to the Oregon Revised
Statutes (ORS) are to the 2017 edition.
2 Appeals for the following tax years have been consolidated with this case
for pretrial purposes: 2020-21 (TC 5418), 2021-22 (TC 5433), 2022-23 (TC 5452).
Delta also appealed tax year 2023-24 (TC 5460), which has not been consolidated.
Except to the extent discussed below, the relevant law was the same for all of the
foregoing tax years.
3 As is customary, the court refers to the property comprising this valuation
unit as a “system.” See, e.g., Alaska Airlines, Inc. v. Dept. of Rev., 307 Or 406, 410,
769 P2d 193 (1989) (describing formulary allocation of taxpayer’s “total system
value”); see Or Laws 1909, ch 218, § 4.15 (referring to companies “doing business
as one system, partly within this State and partly without, or so doing business
in more than one county of the State.”).

310 	Delta Air Lines, Inc. v. Dept. of Rev.
Constitution (Or Const, Art I, § 32; Art IX, § 1) and the
Equal Protection Clause of the Fourteenth Amendment of
the United States Constitution (US Const, Am XIV).
2. 	That the department’s allocation of Delta’s unit value
to Oregon:
a. 	Does not fairly reflect the real market value of
Delta’s property that has a situs in Oregon and
b. 	Results in the taxation of Delta’s property located
outside Oregon.
Delta’s first claim is now before the court on Delta’s and the
department’s cross-motions for partial summary judgment.
II. 	PROCEDURAL BACKGROUND
After an initial set of briefs on the parties’ cross-
motions in this case, the court held a first hearing on April
28, 2021, at which it heard oral argument and directed
the 	parties 	to 	address 	certain 	issues 	in 	supplemental
briefing. While the cross-motions were under advisement,
another centrally assessed taxpayer pursuing its own val-
uation appeal, PacifiCorp, moved for leave to amend its
complaint to add a claim similar to Delta’s regarding the
validity of taxation of its intangible property for tax year
2020-21.4 On November 8, 2021, the court issued an order
in PacifiCorp allowing the amendment but staying proceed-
ings on PacifiCorp’s new, constitutional claim until after the
trial set for later that month. Also on November 8, 2021,
the court issued a letter in Delta, with copies to the parties
in PacifiCorp, that requested additional briefing on certain
tentative conclusions of the court, as well as four further
questions related to Delta’s claims. The letter invited the
parties in both cases to consider a joint hearing for oral
argument on the tentative conclusions and questions, and
the parties in both cases agreed. Shortly after the PacifiCorp
trial, on January 18, 2022, the court held a single hearing
at which the court heard oral argument from the parties
in both cases. The court directed the parties to file a final
set of briefs, which the parties completed on May 18, 2022.
Delta and PacifiCorp responded separately from each other,
4 PacifiCorp’s claim differs from Delta’s only in that PacifiCorp asserts its
claim solely under the Oregon Uniformity Clauses.

Cite as 25 OTR 308 (2023) 	311
but neither Delta nor PacifiCorp has expressed substantive
disagreement with the other’s arguments. 5
PacifiCorp’s March 2, 2022, brief concludes as fol-
lows: “PacifiCorp joins Delta in its request that the court
grant summary judgment finding that ORS 307.030(2)
is unconstitutional * * *.” Accordingly, the court treats
PacifiCorp as having moved for partial summary judgment
as to the second, constitutional claim in its October 25, 2021,
First Amended Complaint, and the court treats the depart-
ment as having cross-moved for partial summary judgment
as to that same claim of PacifiCorp. The court today issues
a separate order, incorporating this order, on the cross-
motions regarding PacifiCorp’s constitutional claim.6
For convenience, the remainder of this order uses
the term “taxpayer” to mean both Delta and PacifiCorp.
III. 	ISSUE
Are Oregon’s Uniformity Clauses or the federal
Equal Protection Clause violated by Oregon’s taxation of
intangible personal property only when used or held for
future use in a business listed in ORS 308.515(1)? 7
IV. 	LEGAL BACKGROUND
A. 	Oregon Uniformity Clauses and Federal Equal Protection
Clause
As is true for nearly every state, the Constitution of
Oregon imposes requirements of uniformity of taxation. See
Jerome R. Hellerstein & Walter Hellerstein, 1 State Taxation
5 The department responded separately to each brief.
6 The court issued its opinion in the valuation trial in PacifiCorp’s case on
May 24, 2023; following reconsideration, the court issued an amended opinion on
July 17, 2023.
7 Neither Delta nor PacifiCorp refers specifically to Oregon’s equal protec-
tion clause. See Or Const, Art I, § 20. However, the Oregon Supreme Court has
applied the same analysis to the equal protection clauses of Article I, section 20
of the Oregon Constitution and the Fourteenth Amendment to the United States
Constitution. Knapp v. City of Jacksonville, 342 Or 268, 276, 151 P3d 143 (2007)
(“Article I, sections 20 and 32, of the Oregon Constitution and the Equal Protection
Clause of the United States Constitution, require plaintiffs to establish that the
city had no rational basis for creating the class of persons subject to the charges.”)
(citing Crocker and Crocker, 332 Or 42, 55, 22 P3d 759 (2001) (“We think that the
constitutional analysis that we have advanced under Article I, section 20, of the
Oregon Constitution, applies equally under the federal standard[.]”)).

312 	Delta Air Lines, Inc. v. Dept. of Rev.
¶ INTRO PT II (3d ed 2023) (“[A]lmost every state consti-
tution contains an explicit constitutional requirement of
uniformity and equality in taxation * * *.”). Oregon has two
Uniformity Clauses. Article I, section 32, provides in relevant
part: “[A]ll taxation shall be uniform on the same class of
subjects within the territorial limits of the authority levying
the tax.” Article IX, section 1, provides in relevant part: “The
Legislative Assembly shall * * * provide by law uniform rules
of assessment and taxation. All taxes shall be levied and col-
lected under general laws operating uniformly throughout the
State.” The Oregon Supreme Court has declared that “[t]he
two sections are to be read together.” State ex rel. v. Malheur
County Court, 185 Or 392, 410-11, 203 P2d 305 (1949).
The current text of both Uniformity Clauses reflects
amendments in 1917, which the Oregon Supreme Court has
discussed. See Mathias v. Dept. of Rev., 312 Or 50, 57-60,
817 P2d 272 (1991), aff’g 11 OTR 347 (1990); Jarvill v. City
of Eugene, 289 Or 157, 170-84, 613 P2d 1 (1980). By requir-
ing that taxation be “uniform on the same class of sub-
jects,” rather than “equal and uniform,” the framers of the
amendments “confirmed that property could be broken up
into rational classes and treated differently class by class.”
Mathias, 312 Or at 58.
The requirement of a “rational class” under the
Uniformity Clauses overlaps substantially with the require-
ment under the federal Equal Protection Clause that a leg-
islative classification have a “ ‘rational relation to some legit-
imate end.’ ” See US Const, Am XIV, § 1 (“[N]or [shall any
State] deny to any person within its jurisdiction the equal
protection of the laws.”); Crocker and Crocker, 332 Or 42,
55, 22 P3d 759 (2001) (quoting Romer v. Evans, 517 US 620,
631, 116 S Ct 1620, 134 L Ed 2d 855 (1996)); Jarvill, 289 Or
at 184 (denying claim under Article I, section 32 and Equal
Protection Clause “[f]or the same reasons”). As the Oregon
Supreme Court most recently summarized, a claim that a
tax
“violated the provisions of Article I, sections 20 and 32, of
the Oregon Constitution and the Equal Protection Clause
of the United States Constitution, require[s the taxpayer]
to establish that the [legislative body] had no rational basis

Cite as 25 OTR 308 (2023) 	313
for creating the class of persons subject to the charges. See
Crocker and Crocker, 332 Or 42, 55, 22 P3d 759 (2001) (stat-
ing standard with respect to equal privileges and immuni-
ties and equal protection analysis); Jarvill v.City of Eugene,
289 Or 157, 613 P2d 1 (1980) (stating standard). A classi-
fication is rationally based ‘if it rests upon genuine differ-
ences’ and those differences bear a ‘reasonable relationship
to the legislative purpose.’ Jarvill, 289 Or at 180, 613 P2d
1; Huckaba v. Johnson, 281 Or 23, 26, 573 P2d 305 (1978).”
Knapp, 342 Or at 276 (upholding city water and sewer bill
surcharges solely on developed property, because city “ ‘could
have correctly concluded that safety needs increase when
property is developed’ ”) (quoting 18 OTR 22, 38 (2004)
(Knapp I)). The task of this court, therefore, is to determine
whether the legislature based the classification in this case
on genuine differences that bear a reasonable relationship
to a legislative purpose. Under this standard, the legislature
need not have articulated its legislative purpose; it suffices
if the court can conceive of “ ‘some legitimate end.’ ” Crocker,
332 Or at 55 (quoting Romer, 517 US at 631). The court will
discuss this standard in greater detail below, before evalu-
ating the parties’ arguments regarding classification.
Although the Oregon Uniformity Clauses and the
federal Equal Protection Clause have been held to share
the same standard, Oregon’s “first-things-first” doctrine
requires the court to analyze taxpayer’s Uniformity Clause
claims first. See Hughes v. State of Oregon, 314 Or 1, 12,
838 P2d 1018 (1992). Doing so also safeguards against the
possibility that developments in the federal standard, or its
application, might confuse the court’s interpretation of the
Oregon Clauses. See Tharalson v. State Dept. of Rev., 281 Or
9, 15 n 10, 573 P2d 298 (1978) (“Even when the verbal ‘tests’
are similar, however, a state’s application of its own con-
stitution is independent of federal review and of changing
applications of the fourteenth amendment, as have occurred
since Standard Lumber Co. v. Pierce, [112 Or 314, 228 P 812
(1924)].”).
Accordingly, this court will first apply precedent
under Oregon’s Uniformity Clauses, before turning to the
larger body of Equal Protection case law for any different or
supplemental points.

314 	Delta Air Lines, Inc. v. Dept. of Rev.
B. 	Central Assessment and Treatment of Intangible Property
The Oregon Supreme Court has charted the origins
and nature of the “central assessment” of property used in
certain businesses. See Northwest Natural Gas Co. v. Dept. of
Rev., 347 Or 536, 538-39, 226 P3d 28 (2010); Comcast Corp.
v. Dept. of Rev., 356 Or 282, 289-93, 337 P3d 728 (2014);
DISH Network Corp. v. Dept. of Rev., 364 Or 254, 257-83, 434
P3d 379 (2019); see also Level 3 Communications LLC III v.
Dept. of Rev., 23 OTR 440, 458-78 (2019), aff’d 368 Or 303,
490 P3d 149 (2021). In 1909 the legislature adopted the four
basic elements of the statutory scheme, which remained in
effect for the years at issue here:
(1) 	“Unit valuation” of the system of property, within and
without Oregon, used in a listed business. See ORS 308.555
(“[The Department] may value the entire property, both
within and without the State of Oregon, as a unit.”).
(2) 	The inclusion of intangible property in the definition
of property to be valued. See ORS 308.505(14) (defining
“Property” as including “all property of any kind, * * * tan-
gible or intangible”). 8
(3) 	The use of formulas to allocate a portion of the system
value to the “property that has a situs in this state,” and
to further apportion that value to localities within Oregon.
See ORS 308.550 (describing allocation to state); ORS
308.565 (describing apportionment to counties).
(4) 	“Centralizing” the task of valuing the property used in
the listed businesses in one statewide agency while retain-
ing “local assessment” by county assessors for all other
property. See ORS 308.210(1) (instructing county asses-
sor to assess value of all taxable property in county); ORS
308.515 (instructing the department to assess property
used in listed businesses).
The legislature has always identified businesses for
central assessment of property by means of a list. Except
for uncodified findings adopted by the 2009 legislature as
discussed below, the legislature has never stated an express
8 The 1909 definition expressly included “franchises and special franchises”;
the 1913 legislature added “tangible and intangible.” Or Laws 1909, ch 218, §1;
Or Laws 1913 ch 193, § 5.

Cite as 25 OTR 308 (2023) 	315
test for selecting businesses for central assessment. 9 The list
has changed over the years. The table below shows the busi-
nesses on the original 1909 list and those on the list in effect
for the tax years at issue in this case.
1909 Central Assessment
List
Central Assessment List
in ORS 308.515(1)
Railroad Companies 	Railroad Transportation
Sleeping Car Companies 	Railroad Switching and Terminal
Union Station and Depot
Companies
Electric Rail Transportation
Electric and Street Railway
Companies
Air Transportation
Express Companies 	Water Transportation upon Inland
Water of the State of Oregon
Telegraph Companies 	Air or Railway Express
Telephone Companies 	Communication
Refrigerator Car Companies 	Heating
Oil and Tank Line Companies 	Gas
Heat, Light, Power, Water, Gas,
and Electric Companies
Electricity
Pipeline
Toll Bridge
Private railcars of all companies not
otherwise listed in this subsection, if the
private railcars are rented, leased, or
used in railroad transportation or hire
9 The legislature’s use of a list in ORS 308.515(1) contrasts with the more
typical approach of stating a definition based on express criteria. An example
of the latter is the three-factor definition of a “unitary business” for purposes of
taxing the income of a multistate enterprise. See ORS 317.705(3). Derived from
the same case law that approved unit valuation for property tax purposes, the
unitary business principle allows a state to determine taxable income as an
apportioned share of the entire net income if the business is characterized by
“centralized management,” “economies of scale,” and “functional integration.” See
generally Hellerstein & Hellerstein, 1 State Taxation at ¶ 8.05 (“The unit rule is
the progenitor of the contemporary ‘unitary business principle’ that underlies the
use of formulary apportionment [for state income tax purposes].”) (citing State
Railroad Tax Cases, 92 US 575, 608, 2 Otto 575, 23 L Ed 663 (1875)).

316 	Delta Air Lines, Inc. v. Dept. of Rev.
Since 1935 the taxation of intangible property has
been a feature unique to central assessment. See Or Laws
ch 274, § 1; ORS 307.030(2) (stating intangible property not
used in a business listed in ORS 308.515(1) is “not subject to
assessment and taxation”).10 As the Oregon Supreme Court
recently discussed, the inclusion of intangible property for cen-
tral assessment and taxation also distinguishes Oregon from
states that bar the taxation of intangible property. See DISH
Network, 364 Or at 291-92 (contrasting California approach).
A comparative timeline in the attached Appendix
shows relevant developments in (1) the taxation of intangi-
ble property, (2) central assessment, and (3) the Uniformity
Clauses.11
C. 	Standard of Review
The court will grant a motion for summary judg-
ment if the pleadings, “declarations, and admissions on file
show that there is no genuine issue as to any material fact
and that the moving party is entitled to prevail as a matter
of law.” Tax Court Rule (TCR) 47 C; Christensen II v. Dept.
of Rev., 23 OTR 155, 162 (2018). When considering each
party’s cross motion, the court reviews the evidence “in a
manner most favorable to the adverse party.” TCR 47 C; see
10 For all purposes other than central assessment, ORS 307.020(1)(a) defines
intangible property as follows:
“(a) Intangible personal property’ or ‘intangibles’ includes but is not limited
to:
“(A) Money at interest, bonds, notes, claims, demands and all other evidences
of indebtedness, secured or unsecured, including notes, bonds or certificates
secured by mortgages.
“(B) All shares of stock in corporations, joint stock companies or associations.
“(C) Media constituting business records, computer software, files, records
of accounts, title records, surveys, designs, credit references, and data con-
tained therein. “Media” includes, but is not limited to, paper, film, punch
cards, magnetic tape and disk storage.
“(D) Goodwill.
“(E) Customer lists.
“(F) Contracts and contract rights.
“(G) Patents, trademarks and copyrights.
“(H) Assembled labor force.
“(I) Trade secrets.”
11 The court appreciates the parties’ contribution to this timeline through
supplemental briefing at the court’s request following oral argument.

Cite as 25 OTR 308 (2023) 	317
Two Two v. Fujitech America, Inc., 355 Or 319, 331, 325 P3d
707 (2014) (stating standard under analogous Oregon Rule
of Civil Procedure 47 C). The moving party will prevail as a
matter of law if no “objectively reasonable” factfinder could
find for the adverse party. TCR 47 C; Christensen II, 23 OTR
at 163.
V. 	ANALYSIS
A. 	Timing for Application of Constitutional Test
Because the relevant statutes have evolved over the
course of approximately 100 years, there is some room to
debate at what point the legislature fully enacted the differ-
ence in treatment at issue in this case. This raises the follow-
ing issue: As of when in the course of this evolution should
the court test the constitutional rationality of the statutes?
Taxpayer argues that the court should apply the tests to
the law as of the date of enforcement, i.e. January 1, 2019,
through January 1, 2022, but taxpayer also asserts that the
law lacked a rational basis when enacted. The department
argues that the appropriate testing date is the effective date
of 1935 legislation that exempted intangible property from
local assessment and taxation, but the department also
asserts that the same concerns that motivated the legisla-
ture’s actions in 1935 still exist.
Following the Oregon Supreme Court’s opinion in
Leathers v. City of Burns, 251 Or 206, 444 P2d 1010 (1968),
the court will apply the tests for validity under the Oregon
and federal constitutions as of the applicable assessment
dates. Leathers applied a rationality test to two local gaso-
line delivery or storage ordinances.12 The court invalidated
one of the ordinances, which prescribed a maximum capac-
ity for gasoline storage tanks, based on the facts as of the
date of trial. See also U. S. v. Carolene Products Co., 304 US
144, 153, 58 S Ct 778, 82 L Ed 1234 (1938) (“[T]he consti-
tutionality of a statute predicated upon the existence of a
particular state of facts may be challenged by showing to
the court that those facts have ceased to exist.”). Leathers
has not been overturned. But see Ag West Supply v. Hall, 126
12 In Leathers, the plaintiff asserted violations of the Due Process and Equal
Protection Clauses of the United States Constitution, as well as “comparable pro-
visions of the Constitution of Oregon.” 251 Or at 218.

318 	Delta Air Lines, Inc. v. Dept. of Rev.
Or App 475, 481-82, 869 P2d 383 (1994) (applying rational
basis tests13 to state cardlock gasoline dispensing laws as of
the date of enactment because plaintiff claimed that stat-
utes were unconstitutional when enacted).14
B. 	What Is the Class?
The court’s next task is to define the legislative clas-
sification that taxpayer challenges. The parties offer differ-
ing views. Taxpayer presents intangible property as one of
three major classes of property, intrinsically distinct from
the classes of real property and tangible personal property.
Taxpayer asserts that the central assessment laws invalidly
subdivide the class of intangible property into the classes of
taxable and nontaxable, based on whether the property is
used in a business listed in ORS 308.515(1).15
The department takes the position that the only rel-
evant classification is between centrally assessed property
and locally assessed property, arguing in its briefing that “[a]
ll centrally assessed property is valued and taxed; no distinc-
tion is made between types of property. There is no ‘intangi-
ble property tax’ as such. * * * Therefore, tax is not imposed
on intangible property as a separate class.” (Argument of
Marilyn Harbur, Oral Argument, Jan 18, 2022, 2:14-2:15.)
According to the department, having drawn that classifica-
tion, the legislature is free to tax the property differently
within each of the two classes: the legislature may exempt
intangible property on the locally assessed side of the line,
13 In Ag West the plaintiffs asserted violations of Article I, section 20, of
the Oregon Constitution, and the Equal Protection Clause of the Fourteenth
Amendment to the United States Constitution. 146 Or App at 477.
14 The Court of Appeals applied the reasoning of then-retired Justice Hans
Linde in a law review article written during his tenure as a law professor. See
Hans Linde, Due Process of Lawmaking, 55 Neb L Rev 197, 215-22 (1976)). Linde’s
article criticized Leathers, pointing out that the city in that case had adopted its
ordinance some 16 years before the plaintiff’s facts arose, yet “[n]o one stopped to
question the original validity of the ordinance under the conditions of 1949; only
the conditions at the date of trial were considered.” Linde, 55 Neb L Rev at 218.
15 Taxpayer emphasizes that it does not challenge the application of any of
the other features of central assessment, including unit valuation and formu-
lary allocation and apportionment as a valid method for determining the value
of taxpayer’s Oregon property subject to taxation. For purposes of its motion,
taxpayer disputes only the notion that central assessment requires or justifies
taxing its intangible property when similar intangible property, not subject to
central assessment, is not taxed.

Cite as 25 OTR 308 (2023) 	319
while taxing intangible property on the centrally assessed
side of the line. (Id.) At times, the department claims that
the class of centrally assessed property is indivisible; there-
fore, intangible property subject to central assessment must
be taxed.
The court analyzes the two principal statutes,
applying the framework in State v. Gaines, 346 Or 160,
171-72, 206 P3d 1042 (2009). The first principal statute is
ORS 307.030, which the Oregon Supreme Court has found
applicable to both centrally and locally assessed property.
See Northwest Natural Gas, 347 Or at 546 n 8 (stating ORS
307.030 contains “the provisions that subject [a centrally
assessed] taxpayer’s property to assessment and taxation.”).
ORS 307.030 states:
“(1) 	All real property within this state and all tangible per-
sonal property situated within this state, except as other-
wise provided by law, shall be subject to assessment and
taxation in equal and ratable proportion.
“(2) 	Except as provided in ORS 308.505 to 308.674, intan-
gible personal property is not subject to assessment and
taxation.”
(Emphasis added.) The text thus purports to state a general
rule, that “all” real and tangible personal property is assess-
able and taxable, while intangible property is not. The text
supports the first part of taxpayer’s position, namely, that
the legislature generally distinguishes among three classes
of property: real property, tangible personal property, and
intangible personal property. Under subsection (1), the first
two classes (all real and tangible personal property) gener-
ally are taxable, barring an exception “otherwise provided
by law.” Id. Under subsection (2), the third class (intangible
property) generally is not taxable, barring an exception “as
provided in [the central assessment statutes].” Id.
The 	text 	of 	the 	other 	principal 	statute, 	ORS
308.505(14), defines “property,” as used in the central assess-
ment statutes, as follows:
“As used in ORS 308.505 to 308.681:
“* * * * *

320 	Delta Air Lines, Inc. v. Dept. of Rev.
“(14) 	‘Property’:
“(a) 	Means all property of any kind, whether real, per-
sonal, tangible or intangible, that is used or held by a
company as owner, occupant, lessee or otherwise, for
the performance or maintenance of a business or ser-
vice or for the sale of a commodity, as described in ORS
308.515;
“(b) 	Includes, but is not limited to, the lands and
buildings, rights of way, roadbed, water powers, vehi-
cles, cars, rolling stock, tracks, office furniture, tele-
phone and transmission lines, poles, wires, conduits,
switchboards, machinery, appliances, appurtenances,
docks, watercraft irrespective of the place of registry or
enrollment, merchandise, inventories, tools, equipment,
machinery, franchises and special franchises, work in
progress and all other goods or chattels; and
“(c) 	Does not include items of intangible property that
represent:
“(A) Claims on other property, including money
at interest, bonds, notes, claims, demands or
any other evidence of indebtedness, secured
or unsecured; or
“(B) 	Any shares of stock in corporations, joint
stock companies or associations.”
ORS 308.505(14) (emphasis added). The text of this defini-
tion of “property,” applicable solely to the central assessment
statutes, creates the kind of exception referred to in ORS
307.030(2) by including “intangible” property (other than
stocks and debt instruments) within the definition of “prop-
erty” that is required to be centrally assessed if used in one
of the businesses listed in ORS 308.515(1).
The court sees nothing in the text of these two stat-
utes that eliminates the classes of real property, tangible
personal property, and intangible property when property is
centrally assessed. On the contrary, the definition of “prop-
erty” for purposes of central assessment refers to “all prop-
erty of any kind, whether real, personal, tangible or intan-
gible.” ORS 308.505(14)(a) (emphasis added). The text of the
central assessment statute thus recognizes and preserves

Cite as 25 OTR 308 (2023) 	321
the classification made in ORS 307.030 among real property,
tangible personal property, and intangible property.16
The court turns to statutory context. The court
readily identifies at least three statutes that undermine
the department’s position that, within the class of centrally
assessed property, there is no distinction among real prop-
erty, tangible personal property, and intangible property.
Exemptions or exclusions solely for intangible property that
otherwise would be centrally assessed are found in ORS
308.505(14)(c) 	(excluding, 	generally, 	“items 	of 	intangible
property that represent” stocks and bonds from definition of
“property”) (emphasis added);17 ORS 308.674(1) (capping over-
all real market value by reference to the cost of “real property
and tangible personal property”) (emphasis added); and ORS
308.671(2) (exempting from taxation “licenses” granted by
the Federal Communications Commission, as well as “fran-
chises” held by companies in the communication business).18
These statutes illustrate that the class of intangible property
is not subsumed or eliminated merely because the property
also is within the class of centrally assessed property.
The Oregon Supreme Court’s decision in Northwest
Natural Gas is consistent with taxpayers’ position and
inconsistent with the department’s position in this case. In
Northwest Natural Gas, the court held that an exemption for
“inventory” in ORS 307.400 (2005) applied to the taxpayer’s
stores of gas held underground for sale to customers. 347 Or
at 563. The definition of “inventory” was expressly limited
16 In other words, the text reveals two sets of classifications relevant to this
case: (1) the classification that divides property into the three classes of (a) real
property, (b) tangible personal property, and (c) intangible property; and (2) the
classification that divides property into the two classes of (a) locally assessed
property and (b) centrally assessed property. Each set of classifications (1) and (2)
is superimposed simultaneously over the larger category of “property”; both sets
of classifications remain distinct, and neither set obscures the other. The result
is to overlay a grid consisting of six squares, one of which contains property that
is both “intangible” and “centrally assessed.” Property within that square is tax-
able by operation of ORS 307.030(2) and ORS 308.505(14).
17 The Oregon Supreme Court referred to this “exclu[sion from] central
assessment” in Northwest Natural Gas; at that time the exclusion was codified as
ORS 308.510(1) (2005). See Northwest Natural Gas, 347 Or at 554.
18 The statute specifies a value (book value, less accrued, reserved deprecia-
tion) that is exempt. ORS 308.671(3).

322 	Delta Air Lines, Inc. v. Dept. of Rev.
to “[i]tems of tangible personal property.” ORS 307.400 (2005)
(emphasis added); see ORS 307.400 (same).
The court concludes that the classification at issue
in this case incorporates both the division between centrally
and locally assessed property and the division among the
three classes of real property, tangible personal property,
and intangible property. The resulting classes at issue here
are those of (1) intangible property used in a business listed
in ORS 308.515(1) (taxable), and (2) all other intangible
property (not taxable).
C. 	Uniformity Clauses Require a Two-Part Analysis
Having established the relevant classification, the
court must now identify any “rational basis” for taxing or
not taxing intangible property according to its use (or not) in
the particular businesses listed in ORS 308.515(1). As sum-
marized above, a rational basis exists if (1) the classification
is based on “genuine differences,” and (2) “those differences
bear a reasonable relationship to the legislative purpose.”
Knapp, 342 Or at 276 (internal quotations omitted). The
court examines these two requirements in greater detail.
1. 	“Genuine differences” require objectively determin-
able features or uses relevant to the subject of the
classification.
As to the first requirement, in Knapp the court
concluded that genuine differences existed between “devel-
oped property,” on which the city of Jacksonville’s ordinance
imposed certain water surcharges, and undeveloped prop-
erty, to which the surcharges did not apply. Id. The ordinance
specified that the obligation to pay the surcharge “ ‘arises
when a person responsible uses or otherwise benefits from
Public Safety services,’ which was presumed to occur when-
ever a property was developed property.” Knapp I, 18 OTR
at 27 (quoting Jacksonville Public Safety Act § 3.01.040(3)
(2003)). There appears to have been no disagreement among
the parties about the meaning of “developed property.” 19
19 Other provisions in the ordinance referred to each “ ‘residential unit’ ” and
each “ ‘nonresidential unit,’ ” defined terms that included references to “ ‘living
facilities’ ” and a “ ‘non-residential structure which provides facilities for one or
more businesses * * *’ ” respectively. Id. (quoting Jacksonville Public Safety Act
§ 3.01.040(2) (as amended Oct 7, 2003).

Cite as 25 OTR 308 (2023) 	323
In Jarvill, the uniformity issues were whether the
city of Eugene could (1) create a special geographically
defined district for the downtown core and impose new
property, sales, and gross receipts taxes solely within that
district, and (2) within that district, impose flat taxes on
professional businesses while taxing other businesses on a
percentage of sales or gross receipts. The court upheld the
new taxes. The court discussed two types of qualitative dif-
ferences that could distinguish land in different geographic
areas: “natural qualities” (such as annual rainfall) and
“politically imposed qualities,” including those resulting
from economic or human conditions. Jarvill, 289 Or at 180.
The court concluded that the downtown area was charac-
terized by distinct economic or human conditions, including
“difficulty of access, scarcity of parking, density, degenera-
tion of physical plant, loss of consumer patronage, esthetic
depreciation, concentration of polluting agents, declining
value and other * * * economic and physical factors of con-
temporary urban life * * *.” Id. at 181 (quoting Jarvill v. City
of Eugene, 40 Or App 185, 196, 594 P2d 1261 (1979)). The
court also concluded that the downtown district was distinct
because the city, by amendment of its charter through a vote
of the people, had “committed itself to providing services
and programs that patently and physically distinguish the
District from any other area of the city.” Id.
From these two cases, this court concludes that the
existence of objectively determinable features intrinsic to
the property can support a finding of “genuine differences”
for purposes of the rational basis analysis. Objectively
determinable features may include economic or politically
imposed attributes.
Other longstanding cases establish a difference
in use as an additional kind of “genuine difference” for
Uniformity Clause purposes. Ten years after the Uniformity
Clauses had been amended, the Oregon Supreme Court
interpreted them to uphold a statute classifying as exempt
from tax “such real estate belonging to [literary, benevolent,
charitable and scientific institutions] as shall be actually
occupied for the purposes for which they were incorporated.”
Oregon Laws, title XXIX, ch II, § 4235 (1920) (emphasis

324 	Delta Air Lines, Inc. v. Dept. of Rev.
added); see Corporation of Sisters of Mercy v. Lane Co.,
123 Or 144, 261 P 694 (1927). The court reasoned that the
“adoption of a legislative policy exempting hospitals from
taxation is predicated upon the theory that the establish-
ment and maintenance of charitable hospitals serves the
public welfare.” Sisters of Mercy, 123 Or at 164 (emphasis
added). As a second example, in People’s Util. Dist. et al v.
Wasco Co. et al, the taxpayer was a people’s utility district,
a local government entity, whose property was subject to
tax. 210 Or 1, 305 P2d 766 (1957); Or Laws 1939 ch 387,
§ 10 (subjecting property to tax if “owned, used, operated or
controlled by any people’s utility district in or for the pro-
duction, transmission, distribution or furnishing” of elec-
tric power). The taxpayer argued that the law violated the
Uniformity Clauses because “ ‘[t]he property of a PUD is the
only property in Oregon of any municipality or public cor-
poration dedicated to a public purpose which is subject to
ad valorem property taxation.’ ” People’s Util. Dist., 210 Or
at 21. The court upheld the classification based on two con-
ceivable differences:
“The first is that people’s utility districts have as their pri-
mary province the furnishing of utility services, in this
case, electricity. Those municipalities which operate power
plants do so, on the other hand, as an incident to their
main function of operating a local governmental structure.
Another factor settles around the use to which the electric
power is put. Although both people’s utility districts and
municipalities provide service to paying customers, munic-
ipalities provide power for themselves to assist in their own
operations, such as lighting streets and illuminating and
providing power for municipal buildings.”
Id. at 22. Both rationales rely on differing uses to determine
whether otherwise identical property is taxable. In the first
rationale, the distinction turns on whether power produc-
tion is an incidental part of a larger municipal purpose. In
the second, the distinction is between use of the property to
generate electricity solely for sale versus for both sale and
for operation of city-owned light fixtures.
From the Sisters of Mercy and People’s Util. Dist.
cases, this court concludes that the legislature may, without
running afoul of the Uniformity Clauses, subject otherwise

Cite as 25 OTR 308 (2023) 	325
identical property to different tax treatment based on a
difference in use. That difference in use may have nothing
to do with the intrinsic characteristics of the property. In
the case of real property, Sisters of Mercy teaches that the
Uniformity Clauses permit the same hospital building and
grounds to be taxed or not, depending on factors such as
whether the persons running the facility use it to treat only
paying patients or also those who cannot pay. See 123 Or
at 151 (recounting hospital superintendent testimony: “If
people have it, we ask for it. If not, we don’t.”). Similarly,
People’s Util. Dist. establishes that the same electricity gen-
eration plant and equipment can be taxed or not, depending
on whether the public operator uses it to generate power for
sale or uses substantial amounts of the power to light public
facilities without charge.
Finally, the Oregon Supreme Court’s decision in
Mathias establishes by implication that “genuine” differ-
ences include only those that are relevant to the classifica-
tion and the purpose it serves. In Mathias (the only case in
which the Oregon Supreme Court has invalidated a tax clas-
sification for violation of the Uniformity Clauses),20 the clas-
sification at issue was the so-called “developer’s discount,”
which was a statutory requirement to value a group of four
or more vacant lots in the same subdivision differently,
depending on whether they were held by the same owner.
See ORS 308.205(3) (1989) (added by Or Laws 1989, ch 796,
§ 30 (HB 2338)) (“If the property consists of four or more lots
within one subdivision, and the lots are held under one own-
ership, the lots shall be valued under a method which rec-
ognizes the time period over which those lots must be sold
in order to realize current market prices for those lots.”).
20 Redfield et al. v. Fisher et al. mentions the Uniformity Clauses but reaches
a conclusion under federal Equal Protection. See 135 Or 180, 201-04, 292 P 813
(1930). On rehearing, the court specifically declined to construe the amended
Uniformity Clauses. See Redfield et al. v. Fisher et al., 135 Or 205, 207-08, 295
P 461 (1931) (stating that the previous decision “nowhere attempted to construe
the amended sections of our [state] Constitution). The court, under federal Equal
Protection, invalided a tax on intangibles because the treatment of individuals
and corporations was different. See Redfield, 135 Or at 199. The court’s reasoning
in Redfield was based on Quaker City Cab Co. v. Penna., 277 US 389, 48 S Ct 553,
72 L Ed 927 (1928), which has since been overruled as “a relic of a bygone era” in
Lehnhausen v. Lake Shore Auto Parts Co., 410 US 356, 365, 93 St Ct 1001, 35 L Ed
2d 351 (1973). Tharalson, 281 Or at 17 n 12.

326 	Delta Air Lines, Inc. v. Dept. of Rev.
The court invalidated the classification statute because
the court found that all the parcels of vacant land at issue,
whether or not under common ownership, were, “identically,
‘lots’ in subdivisions, not properties of inherently different
kinds or uses.” Mathias, 312 Or at 61 (emphasis added). By
referring to the lots as “identical[ ],” the court implicitly put
no significance on the fact that every lot necessarily differs
from any other lot, as no piece of land can occupy the space
of any other piece of land. Each lot in Mathias must have
had a unique location and at least detectable differences in
view, as well as different proximity to corners, cross streets,
and improvements such as fire hydrants. The court focused
instead on identifying any differences relevant to the pur-
pose of the classification: determining the property’s market
value. Finding no relevant differences, the court invalidated
the “developer’s discount” classification as not based on “gen-
uine difference[s].” Id. at 62-63.
The court thus restates the elements of the “gen-
uine differences” requirement. “Genuine differences” are
objectively determinable features relevant to the purpose of
the classification, which may include physical, economic, or
political features of the kind or use of the property. Applying
this requirement, the court will look for differences relevant
to the taxation or exemption of intangible property, keep-
ing in mind that the legislature is free to create subclasses
or to aggregate items together under one general classifi-
cation for different reasons. See Jarvill, 289 Or at 180 (“[I]
f a subterritory is different in quality compared to the rest
of the territory, then article I, section 32, does not prohibit
a taxing authority from defining the subterritory as a sepa-
rate class.”). In other words, any one, or any grouping, of the
fourteen types of business listed in ORS 308.515(1) could
have its own distinct set of genuine differences relevant to
the taxation of intangible property. 21
21 For comparison, ORS 307.030(1) classifies all real property and all tangi-
ble personal property either as “subject to assessment and taxation” or as exempt
from taxation if “otherwise provided by law.” Within the class of exempt property,
both art museums and sewage treatment facilities are eligible for exemption from
property tax, but each for different reasons and under different sets of classify-
ing requirements. See ORS 307.130(2) (art museums and “literary, benevolent,
charitable and scientific institutions”); ORS 307.118 (exempting certain sewage
and wastewater treatment facilities); see, e.g., Fox v. Galloway, 174 Or 339, 148

Cite as 25 OTR 308 (2023) 	327
2. 	The court may infer the legislative purpose and the
“reasonable relationship” to genuine differences.
Turning to the second requirement, in Knapp the
purpose of the sewer and water surcharge ordinance was
to “help pay for the benefits conferred on [c]ity residents
and businesses by the provision of an adequate program of
public safety * * *.” Knapp, 342 Or at 271 (internal citations
omitted). The Oregon Supreme Court determined that
the city “ ‘could have correctly concluded that safety needs
increase when property is developed.’ ” Id. at 276 (quot-
ing Knapp I, 18 OTR at 38). That determination supplied
the reasonable relationship justifying the surcharges. In
Jarvill, the court implicitly concluded that the city had the
public purpose of “ ‘economic promotion and development
for the district,’ ” as stated in the charter amendment. 289
Or at 159 (quoting Eugene City Charter, ch VII, § 48(70)
(1973)). The trial court found that the taxes raised would
be expended on free parking and advertising services that
would revitalize the downtown district and benefit the city
as a whole. See id. at 170. The Supreme Court implicitly
relied on this finding in upholding the constitutionality of
the ordinance.
These cases are consistent with the approach in
other “rational basis” cases, in which the court considers
public purposes expressly stated in the law (as in Jarvill) or
capable of being inferred from the facts (as in Knapp), that
lawmakers “rationally could believe” would be promoted by
the classification. See Crocker, 332 Or at 55 (“A legislator
rationally could believe that households in which the par-
ents do not live together might need judicial assistance in
making educational decisions, because the absence of cohab-
itation itself likely reflects a lack of harmony and consensus
in parental decision-making.”).
The court now applies the two-part analysis in
Knapp to the parties’ positions.
P2d 922 (1944) (upholding in part, against uniformity and equal protection chal-
lenges, privilege tax, at different rates, on operation of coin-operated games,
jukeboxes, and penny-operated amusement devices).

328 	Delta Air Lines, Inc. v. Dept. of Rev.
D. 	Taxpayer’s Argument: Taxing Intangibles Only When
Used in Centrally Assessed Businesses Fails Mathias’s
“Inherent Differences” Requirement and Impermissibly
Classifies Property Based on Characteristics of its User
Citing Mathias, taxpayer argues: “There are no
‘inherent, qualitative, genuine, rational differences’ between
the intangibles used by [taxpayer] and the same intangibles
used by other businesses whose property in Oregon is locally
assessed, as there must be to comply with the uniformity
requirement.” As to the first part of this argument, the court
agrees that there is no difference in kind as between centrally
and locally assessed intangible property. All intangible prop-
erty is either exempt or taxable depending on whether it is
used in a business listed in ORS 308.515(1), with the excep-
tion of stocks and bonds, which are effectively exempt from
tax regardless whether they otherwise would be centrally
or locally assessed. 22 No party has argued that any mate-
rial difference in kind exists between the items constituting
intangible property for local or central assessment purposes.
Likewise, the court sees nothing in the law that suggests
any such difference. The express, non-exclusive definition
in ORS 307.020(1)(a)(D) to (I) for local assessment purposes
refers to goodwill; customer lists; contracts and contract
rights, patents, trademarks, and copyrights; assembled labor
force; and trade secrets. For central assessment purposes,
the legislature did not define “property” or “intangible” in
ORS 308.505(14), but the plain meaning of “intangible prop-
erty” is “property having no physical substance apparent to
the senses: incorporeal property (as choses in action) often
evidenced by documents (as stocks, bonds, notes, judgments,
franchises) having no intrinsic value or by rights of action,
22 Debt instruments and stocks not used in a business listed in ORS
308.515(1) are “intangible personal property” under ORS 307.020 and therefore
are “not subject to assessment and taxation” under ORS 307.030(2). See ORS
307.020(1)(a)(A) (referring to “[m]oney at interest, bonds, notes, claims, demands
and all other evidences of indebtedness, secured or unsecured, including notes,
bonds or certificates secured by mortgages”), (B) (referring to “[a]ll shares of stock
in corporations, joint stock companies or associations”). A materially identical
list of such items is excluded from the definition of “property” for purposes of
central assessment. See ORS 308.505(14)(c)(A) (referring to “[c]laims on other
property, including money at interest, bonds, notes, claims, demands or any other
evidence of indebtedness, secured or unsecured”), (B) (referring to “[a]ny shares
of stock in corporations, joint stock companies or associations”).

Cite as 25 OTR 308 (2023) 	329
easements, goodwill, trade secrets.” Webster’s Third New Int’l
Dictionary 1173 (unabridged ed 2002); see also Appellant’s
Opening Brief at 6-7, Tektronix, Inc. v. Dept. of Rev., 354 Or
531, 316 P3d 276 (2013) (SC S060912) (listing, as “items of
intangible property,” “[i]nstalled base,” “[d]istribution chan-
nel,” “[e]xisting technology,” “[i]n-[p]rocess R&D,” “[t]rade-
name/trademarks,” “[a]ssembled workforce,” and “[g]ood-
will”); Tektronix, Inc. v. Dept. of Rev., 354 Or 531, 533 n 1,
316 P3d 276 (2013) (treating the listed items as intangible
assets; declining to decide whether they were distinct from
taxpayer’s label of “goodwill”).23
In contrast to the facts in Mathias, however, the
court does find a clear difference in use between centrally
and locally assessed property. The uses that cause intangible
property to be subject to assessment and taxation are those
fourteen types of business uses listed in ORS 308.515(1).
Taxpayer at times seeks to equate the list of businesses with
a list of different owners of the property, invoking Mathias’s
observation that “[c]lassifications for property tax purposes
based purely upon characteristics of the owner have been
declared invalid * * *.” Mathias, 312 Or at 62, n 8. This court
concludes that taxpayer’s argument fails because the cen-
tral assessment statutes, and their interpretation by the
Oregon Supreme Court, make clear that central assessment
is triggered by use, not by ownership. See ORS 308.515(1)
(requiring the department to centrally assess property
“used or held for future use by any company in perform-
ing or maintaining” any of the businesses listed); Pacificorp
Power Marketing v. Dept. of Rev., 340 Or 204, 217-218, 131
P3d 725 (2006) (holding taxpayer’s rights to use city-owned
power plant in taxpayer’s electricity business caused facility
to be assessed to taxpayer, despite taxpayer’s lack of out-
right ownership).
23 The court notes that certain kinds of “media” are defined as intangible
property for local assessment purposes, while their status as tangible or intan-
gible is less clear under the undefined term used for central assessment pur-
poses; however, no party has raised an issue as to such media. Compare ORS
307.020(1)(a)(C) (“[I]ntangible personal property” for local assessment purposes
includes “[m]edia constituting business records, computer software, files, records
of accounts, title records, surveys, designs, credit references, and data contained
therein.”) with OAR 150-314-0435(4)(c)(B) (defining “software” as tangible per-
sonal property for purposes of income tax apportionment).

330 	Delta Air Lines, Inc. v. Dept. of Rev.
The court rejects taxpayer’s argument regarding
the lack of inherent differences in the property, apart from
characteristics of the property’s owners. The court finds
this argument unique to property tax and the Uniformity
Clauses. Federal Equal Protection case law presented by the
parties does not address this argument. 24
E. 	Department’s Argument: Intangible Property Should Be
Taxed When a Taxpayer’s Property Is Subject to Unit
Valuation by Department Personnel
The department implies that its authority under
ORS 308.555 to apply unit valuation to property used
in a business listed in ORS 308.515(1) provides sufficient
justification under the Uniformity Clauses and the Equal
Protection Clause to tax the intangibles used in such a
business. The department cites the United States Supreme
Court’s decision in Adams Express, decided some 12 years
before the legislature adopted the 1909 central assessment
law. That decision states:
“Now, whenever separate articles of tangible property are
joined together, not simply by a unity of ownership, but in
a unity of use, there is not infrequently developed a prop-
erty, intangible though it may be, which in value exceeds
the aggregate of the value of the separate pieces of tangible
property.
“* * * * *
“Suppose an express company is incorporated to transact
business within the limits of a state, and does business only
within such limits, and, for the purpose of transacting that
business, purchases and holds a few thousands of dollars’
worth of horses and wagons, and yet it so meets the wants
of the people dwelling in that state, so uses the tangible
property which it possesses, so transacts business therein,
that its stock becomes in the markets of the state of the
24 The court finds the paucity of federal authority unsurprising, because the
federal government only rarely has imposed ad valorem taxes on property. Such
a tax would likely be considered a “direct” tax, required to be “apportioned among
the several States” based on population, under US Const, Art I, §9 and Art I, § 2.
See Boris Bittker & Lawrence Lokken, Federal Taxation of Income, Estates and
Gifts, ¶ 1.2 (3d ed 2023) (“[A]pportionment of a real property tax requires a differ-
ent rate for every state in order to insure that the aggregate amount paid by each
state is proportional to its population rather than to the value of the property
within its borders.”).

Cite as 25 OTR 308 (2023) 	331
actual cash value of hundreds of thousands of dollars. To
the owners thereof, for the purposes of income and sale,
the corporate property is worth hundreds of thousands of
dollars. Does substance of right require that it shall pay
taxes only upon the thousands of dollars of tangible prop-
erty which it possesses? Accumulated wealth will laugh at
the crudity of taxing laws which reach only the one, and
ignore the other; while they who own tangible property, not
organized into a single producing plant, will feel the injus-
tice of a system which so misplaces the burden of taxation.”
Adams Express Co. v. Ohio State Auditor, 166 US 185, 219-
21, 17 S Ct 604, 41 L Ed 965 (1897).
There is no doubt that Adams Express and other
longstanding decisions of the United States Supreme Court
make clear that unit valuation enables a state to more effec-
tively tax intangible property. See Comcast, 356 Or at 290
(“Central assessment also allowed assessors to capture
additional value inherent in certain property. In particular,
central assessment made possible assessments which would
reach those large intangible values, called franchise value or
good will, which could not be effectively taxed by local asses-
sors.”) (quoting Union Pacific Railway Co. v. Cheyenne, 113 US
516, 522, 5 S Ct 601, 28 L Ed 1098 (1885). This is because, as
the quoted passage in Adams Express recites, many kinds of
intangible property are created by the operation of real prop-
erty and tangible personal property together, having been
assembled and put to a common use as a unit. However, unit
valuation does not require a state to tax intangible property,
and some states that use unit valuation do not tax intangi-
ble property. 25 See DISH Network, 364 Or at 291-92 (describ-
ing California’s regime that taxes intangible property “ ‘to
the extent that the [intangible] property enhances the value
25 Furthermore, the statutory overlap between central assessment and the
taxation of intangible property is not absolute. Oregon stops short of taxing all
intangible property used in a business listed for central assessment, having
carved out several exceptions to the taxation of otherwise centrally assessable
intangible property, as noted above. See ORS 308.505(3) (2021) (excluding tele-
vision and radio stations that primarily use earth-based transmitters from the
definition of “communication”); ORS 308.505(14)(c) (excluding items of intangi-
ble property representing stocks and bonds from definition of “property”); ORS
308.674(1) (capping real market value at percentage exceeding original cost of
real property and tangible personal property); ORS 308.671(2) (exempting from
FCC licenses and franchises held by companies in the communications business).

332 	Delta Air Lines, Inc. v. Dept. of Rev.
of tangible, taxable property which is subject to unit valua-
tion’ ”) (quoting Bruce A. Fowler, Unit Valuation: Oklahoma’s
Illegal Tax on Intangible Property, 31 Tulsa L J 367, 381-82
(1995); Cal R ev & Tax Code § 212(c) (West 2023) (“Intangible
assets and rights are exempt from taxation and, except as
otherwise provided in the following sentence, the value of
intangible assets and rights shall not enhance or be reflected
in the value of taxable property. Taxable property may be
assessed and valued by assuming the presence of intangi-
ble assets or rights necessary to put the taxable property
to beneficial or productive use.”); Cal R ev & Tax Code § 723
(West 2023) (“The [California State Board of Equalization]
may use the principle of unit valuation in valuing prop-
erties of an assessee that are operated as a unit in a pri-
mary function of the assessee.”); Western States Association
of Tax Administrators Committee on Centrally Assessed
Property, Appraisal Handbook: Unit Valuation of Centrally
Assessed Properties, VI-1 to VI-6 (2009) (discussing intangible
personal property exemptions in unitary valuation regimes).
The rationale stated in Adams Express and the practice of
other states make clear that unit valuation is the means,
while taxing intangible property is the end. The department
may not rely on the former as a rational basis for the latter.
Stated in terms of Knapp and Jarvill, unit valuation is not
a “genuine difference” on which a classification of intangible
property for taxation rationally may be based because both
are parts of the same central assessment regime; unit valu-
ation is not a separate, objectively determinable fact. Delta,
in its post oral argument reply brief, stated “In effect, the
department avers that, if a rational classification exists for a
scheme of central assessment, then it justifies any different
treatment of the two groups so classified.”26
Similarly, the court rejects any notion that intan-
gible property may be taxed merely because it is assessed
centrally by department personnel, rather than by local
assessors. 27 There is no question that “administrative con-
26 Indeed, the court in Mathias stated that even a “regulatory” classification
that exists outside the tax at issue cannot necessarily be “borrowed and trans-
ferred to an ad valorem tax setting.” Mathias, 312 Or at 62.
27 The court posited this theory in its November 8, 2021 letter to the parties
and invited their comment.

Cite as 25 OTR 308 (2023) 	333
venience” may serve as a valid legislative purpose for a clas-
sification. See, e.g., Carmichael v. Southern Coal Co., 301
US 495, 511, 57 S Ct 868, 81 L Ed 1245 (1937) (upholding,
against federal Equal Protection challenge, state unemploy-
ment insurance tax exemption for employers of fewer than
eight employees; legislature rationally could have been con-
cerned about “administrative cost and burden” to state of
taxing all small employers). However, there must first be
“genuine differences” in the relevant characteristics or use
of property, akin to the difference in Carmichael between
seven employees and eight employees. Id. at 510-11. Central
assessment is no more a “genuine difference” in the use of
property than unit valuation; both are features of the provi-
sions first enacted in 1909 to enhance the state’s ability to
tax intangible property.
F. 	Department’s Argument: the Same Underlying Reasons
that Support a Central Assessment Regime Also Support
Taxing Intangibles
The department also argues that the businesses
listed in ORS 308.515(1) share characteristics that consti-
tute “genuine differences” when compared to other uses of
intangible property.
1. 	Analysis of 2009 Legislative Findings
The principal source on which the department
relies to describe the objectively determinable facts unify-
ing the list of businesses in ORS 308.515(1) is the legisla-
ture’s 2009 findings, which characterize property subject
to central assessment as “utility property, transportation
company property, similar business property that has
inherent value due to the capacity of the property to be
operated as a network over a large geographic area and
other property that is appropriate for central assessment
* * *.” Or Laws 2009, ch 128, § 1. The department relies
heavily on the term “network” as an essential element
of the class of property used in the listed businesses.
Taxpayer disputes, however, that the listed businesses
use property as a “network” in any manner that is distin-
guishable from other businesses. Taxpayer points to sev-
eral examples of companies in other lines of business that

334 	Delta Air Lines, Inc. v. Dept. of Rev.
describe themselves in public filings as having assembled
a “network” to transport or distribute goods. (Argument
of David Crapo, Oral Argument Jan 18, 2022, at 2:33
(referring to a trucking logistics company, two express
companies with both air and road-based operations, and
a national retail chain).) Taxpayer claims that there is no
genuine difference between intangible property used in
those businesses and intangible property in a business
listed in ORS 308.515(1).
To begin, the court considers whether and how to
apply the Oregon Supreme Court’s framework for analyzing
statutes pursuant to Gaines, 346 Or at 171-72. Courts typi-
cally use that framework when interpreting a statute whose
application is at issue in the case, such as a tax statute that
imposes a tax or creates an exemption. See, e.g., AKS LLC
v. Dept. of Rev., 23 OTR 300, 307-09 (2019) (applying frame-
work to statute imposing tax); Bert Brundige, LLC v. Dept.
of Rev., 23 OTR 353, 354-56 (2019) (applying Gaines frame-
work to tax exemption statute). In this case, however, the
2009 findings do not create the classification at issue; it is
ORS 307.030 and ORS 308.515(1) that create the classifica-
tion. Rather, the 2009 findings are the opening section of a
law that purports to “modernize and clarify” the existing
central assessment statutes while making no “change in the
policies of the State of Oregon with respect to the central
assessment system * * *.” Or Laws 2009, ch 128, §1. The leg-
islature wrote the 2009 findings 100 years after enacting
the first central assessment law, and nearly 75 years after
enacting the exemption for intangible property now in ORS
307.030(2). The court cannot, therefore, treat the 2009 find-
ings as a statement of the intention of the legislature that
drafted the statutes at issue. See DeFazio v. WPPSS, 296 Or
550, 561, 679 P2d 1316 (1984) (“The views legislators have
of existing law may shed light on a new enactment, but it is
of no weight in interpreting a law enacted by their predeces-
sors.”); cf. Oregon Cable Telecommunications v. Dept. of Rev.,
237 Or App 628, 641, 240 P3d 1122 (2010) (stating that the
preamble to bill enacting law at issue “further informs our
understanding of the legislature’s intention”); but see City of
Portland v. Tidyman, 306 Or 174, 185, 759 P2d 242 (1988)
(placing no reliance on ordinance’s list of findings that the

Cite as 25 OTR 308 (2023) 	335
court determined were “vague and conclusory”). However,
as explained above, the court’s inquiry in this case is not
limited to discerning the intention of the legislature that
adopted the statutes at issue; rather, the court need only
supply any conceivable rationale for creating the particular
list of businesses that exists today. The court will consider
whether the 2009 findings supply a rational basis for taxing
intangible property when used in a business listed in ORS
308.515(1); the court will apply the Gaines framework sim-
ply as a tool to determine the meaning of the findings.
The court starts with the text of the 2009 find-
ings, which lists four types of property comprising centrally
assessed property:
(1) 	“utility property”;
(2) 	“transportation company property”;
(3) 	“similar business property that has inherent value
due to the capacity of the property to be operated as a
network over a large geographic area”; and
(4) 	“other property that is appropriate for central
assessment.”
Or Laws 2009, ch 128, § 1(1).28
28 Section 1 of chapter 128 states in full:
“SECTION 1. (1) The Legislative Assembly finds that the central assessment
by the Department of Revenue of utility property, transportation company
property, similar business property that has inherent value due to the capac-
ity of the property to be operated as a network over a large geographic area
and other property that is appropriate for central assessment is a fair, equi-
table and efficient way to determine value for property tax purposes and to
apportion that value among local taxing districts.
“(2) The Legislative Assembly further finds that central assessment of these
types of property has occurred for more than 80 years and that the central
assessment system continues to operate in a fair, equitable and efficient
way, but that the statutory law upon which the central assessment system
is based contains obsolete or confusing language, references to antiquated
technologies and disorganized structure.
“(3) The Legislative Assembly declares that the purpose of the amendments
to statutes by sections 2 to 15 of this 2009 Act is to modernize and clarify the
central assessment statutory law, while continuing the central assessment
system as it currently operates.
“(4) The Legislative Assembly further declares that the amendments to stat-
utes by sections 2 to 15 of this 2009 Act do not constitute a change in the
policies of the State of Oregon with respect to the central assessment system

336 	Delta Air Lines, Inc. v. Dept. of Rev.
a. 	“Utility property”
Neither the 2009 law nor the central assessment
statutes as in effect in 2009 or for the tax year[s] at issue
define “utility.” The plain meaning of “utility,” as of 2009
and today, includes “public utility” as a synonym, which in
turn is defined as “a business organization deemed by law
to be vested with public interest usu[ally] because of monop-
oly privileges and so subject to public regulation such as
fixing of rates, standards of service and provision of facili-
ties.” Webster’s Third New Int’l Dictionary 2525 (unabridged
ed 2002) (defining “utility”); id. at 1836 (defining “public
utility”). The technical legal definition of “public utility” is
similar. See Black’s Law Dictionary 1686 (9th ed 2009) (“A
business enterprise that performs an essential public ser-
vice and that is subject to governmental regulation. - public
utility. (1895) 1. A company that provides necessary services
to the public, such as telephone lines and service, electric-
ity, and water. • Most utilities operate as monopolies but
are subject to governmental regulation. 2. A person, corpo-
ration, or other association that carries on an enterprise for
the accommodation of the public, the members of which are
entitled as a matter of right to use the enterprise’s facilities.”)
(emphasis in original); Black’s Law Dictionary 1859 (11th ed
2019) (same). The court concludes that the plain and techni-
cal legal meanings are essentially the same, each contain-
ing the elements of public interest, monopoly privileges, and
rate regulation. The legal definition merely fleshes out the
plain meaning by adding the element of the public’s right to
use a utility’s facilities, as well as some examples of services
commonly provided by a public utility: telephone, electric,
and water services.
For context, the court turns to other central assess-
ment statutes in place in 2009. The central assessment stat-
utes used the term “utility” in two places. 29 First, a “per-
son” or “company,” whose use of property in a listed business
and the administration of the central assessment system by the Department
of Revenue.”
Or Laws 2009, ch 128, §1(1).
29 Then, as now, the list of businesses in ORS 308.515(1) does not use the
term “utility” or purport to limit the listed businesses to public utilities.

Cite as 25 OTR 308 (2023) 	337
may cause the property to be subject to central assessment,
included a “people’s utility district,” a term left undefined
in the central assessment statutes but provided for in ORS
chapter 261 (2009). 30 ORS 308.505(8) (2009). Second, ORS
308.515(8) (2009) referred to the making of electricity sales
to “an electric utility, as defined in ORS 758.505,” as one
criterion for excluding certain small biomass-fueled electric-
ity generation facilities from central assessment. In turn,
ORS 758.505(4) (2009) defined an “electric utility” as either
a “public utility” (i.e., one regulated by the Oregon Public
Utility Commission (OPUC) under ORS chapter 757 (2009))
or a “nonregulated utility” (i.e., a people’s utility district, a
municipal utility operating under ORS chapter 225, or an
electric cooperative organized under ORS chapter 62). Based
on these references, the court considers the various contem-
poraneous statutes dealing with regulated public utilities,
people’s utility districts, and municipally owned plants to
be relevant context in interpreting “utility” as used in the
2009 findings. It is readily apparent that “public utilities”
regulated by the OPUC had the hallmarks of the plain and
technical legal definitions of “utility” set forth above.31 The
lines of business regulated by the OPUC were “heat, light,
water or power” (ORS 757.005(1)(a)(A) (2009)), as well as cer-
tain “telecommunications” services (ORS 759.005 (2009)). 32
30 ORS 261.050(1) (2009) generally provided for the assessment and taxation
of people’s utility district property “in the same manner” as property of “private
corporations or individuals for the purpose of furnishing electricity or electric
service to the public.”
31 Subject to numerous exceptions, regulated public utilities were allowed to
operate within exclusive service territories. See ORS 758.305 (2009) (water); ORS
758.435 (2009) (electricity and gas); ORS 759.500(1) (2009) (telecommunications).
The OPUC was charged with setting “fair and reasonable” rates that public utili-
ties charge customers. ORS 756.040(1) (2009); ORS 759.015 (2009) (“just and rea-
sonable”). Heat, light, water, and power companies have and had condemnation
authority under ORS 772.210 (2009), as have telecommunications utilities under
ORS 759.075 to 759.080 (2009).
32 Subsection (7) of ORS 759.005 (2009) defined “telecommunications” as
“the transmission of information chosen by a person, between or among points
specified by the person, without change in the form or content of the informa-
tion sent or received.” Subsection (8) defined “telecommunications service” as
“telecommunications that are offered for a fee to the public, or to such class of
users as to be effectively available to the public, without regard to the facili-
ties used to provide the telecommunications.” “Telecommunications service” did
not include services provided by radio common carrier; one-way transmission of
television signals; private telecommunications networks; or communications of
the customer that take place on the customer side of on-premises equipment.

338 	Delta Air Lines, Inc. v. Dept. of Rev.
Also meeting the dictionary definitions of a “utility” was
any petroleum “pipeline company that is a common car-
rier and that is regulated as to its rates or practices by the
United States.” ORS 772.510 (2009) (granting condemnation
authority). 33
Based on the plain and legal meanings of “utility,”
as well as the context found in other Oregon statutes, the
court concludes that the 2009 findings use that term to refer
to the four businesses listed in ORS 308.515(1)(i) through
(L): heating, gas, electricity, and pipeline; as well as any
“communication” businesses under ORS 308.515(1)(h) that
are “telecommunications” services under ORS 759.005. The
court does not rule out the possibility that additional busi-
nesses listed in ORS 308.515(1) could, upon factual exam-
ination, be found to share some or all of the characteristics
of a utility: rate regulation, territorial monopoly, and ele-
ments of public interest such as condemnation authority.
b. 	“Transportation company property”
The court turns to “transportation company prop-
erty,” the second type of property listed in the 2009 find-
ings. The 2009 act amended an existing definition of “trans-
portation” in ORS 308.505. Because the findings state that
“the amendments [in] this 2009 Act do not constitute a
change in the policies of the State of Oregon with respect
See also ORS 759.005(9) (2009) (defining “telecommunications utility”). Cf. ORS
308.505(3) (2009) (defining “communication” as used in ORS 308.515(1)(h) as
“includ[ing] telephone communication and data transmission services by what-
ever means provided”).
33 The lines of business that are rate-regulated utilities have not changed
since 2009; for the tax years at issue (2019-20, through 2022-23), the lines of busi-
ness regulated by the OPUC remain “heat, light, water or power” providers and
certain “telecommunications” businesses. ORS 757.005(1)(a)(A) (providing that
“public utility” means an entity providing “heat, light, water or power”); ORS
757.005(1)(a)(A) (2019) (same); ORS 757.005(1)(a)(A) (2021) (same); ORS 759.005
(regulating certain “telecommunications” utilities); ORS 759.005 (2019) (same);
ORS 759.005 (2021) (same).

Cite as 25 OTR 308 (2023) 	339
to the central assessment system and the administration
of the central assessment system,” the court considers both
the pre-amendment definition of “transportation” and the
as-amended definition. Or Laws 2009, ch 128, § 1.
The pre-amendment definition provided:
“ ‘Transportation’ includes the carrying, conveying or mov-
ing of passengers, commodities, freight, mail, rolling stock,
cars, vehicles, equipment or any other property from one
place to another.”
ORS 308.505(5) (2007). 34 The defined term “trans-
portation” appeared in six of the types of business listed
in ORS 308.515(1): “[r]ailroad transportation,” “[e]lectric
rail and trackless trolley transportation,” “[p]rivate railcar
transportation,” “[a]ir transportation,” “[w]ater transpor-
tation upon inland water of the State of Oregon,” and “[p]
rivate railcars of all companies not otherwise listed in this
subsection, if the private railcars are rented, leased or used
in railroad transportation for hire.” ORS 308.515(1) (2007).
As amended by the 2009 act, the definition of “trans-
portation” provided:
“ ‘Transportation’ means carrying, conveying or moving
passengers or property from one place to another.”
Or Laws 2009, ch 129, § 3. The 2009 law did not change the
list of businesses in ORS 308.515(1), except to delete the ref-
erence to “trackless trolley” in paragraph (c).
Based on the definitions of “transportation” and
their use in the pre- and post-amendment versions of ORS
308.515(1), the court concludes that “transportation com-
pany property,” as used in the 2009 findings, refers to prop-
erty that companies use to carry, convey, or move passen-
gers or property from one place to another. These companies
34 As used in that definition, “car” “include[d] any vehicle adapted to the
rails of a railroad” (ORS 308.505(1) (2007)), and “vehicle” “mean[t] any wheeled
or tracked device used in transportation under, on or in connection with the phys-
ical surface of the earth” (ORS 308.505(6) (2007)). The 2009 act did not change
these definitions materially; the definition of “car” was amended to add “rail-
car” as a synonym for “car,” and to change “includes” to “means.” Or Laws 2009,
ch 128, § 3. The central assessment statutes did not define other terms in the
definition of “transportation.”

340 	Delta Air Lines, Inc. v. Dept. of Rev.
include, but are not necessarily limited to, those carrying on
the eight businesses listed in ORS 308.515(1)(a) – (g) and (n).
In contrast to “utility property,” the court has found nothing
in the term “transportation company property” that requires
that transportation company businesses be subject to regu-
lated rates, have exclusive service districts or condemnation
authority, or have other characteristics of a utility. 35
c. 	“Similar business property that has inherent
value due to the capacity of the property to be
operated as a network over a large geographic
area”
The court turns to the third category of property
in the 2009 findings: “similar business property that has
inherent value due to the capacity of the property to be
operated as a network over a large geographic area * * *.”
Or Laws 2009, ch 128, § 1(1). 36 The department refers fre-
quently in its briefing to the term “network” as the key
determinant of inclusion in this third category. The plain
meaning contemporaneous to 2009 included both physical
networks of tangible property (e.g., networks of fabric, high-
ways, roots, computers connected by lines) and intangible
networks consisting only of incorporeal relationships (net-
works of alliances or friends) or ideas (a network of beliefs).
See Webster’s Third New Int’l Dictionary 1520 (unabridged
ed 2002). 37 A “network” of radio or television stations might
35 The court has found that certain railway construction companies, as well
as those formed to construct sewers, canals, ditches, or flumes, had condemnation
and similar powers in some circumstances. See ORS 772.010 to 772.105 (2009).
36 The court assumes that “similar” refers to both of the two prior terms
“utility property” and “transportation company property.” See Jack L. Landau,
Oregon Statutory Interpretation, 97 Or L Rev 583, 670-72 (2019) (discussing rule
of last antecedent and other grammar-based rules of construction).
37 The full definition of “network” in Webster’s Third New International
Dictionary is:
“1: a fabric or structure of threads, cords, or wires that cross each other at
regular intervals and are knotted or secured at the crossings<ribbons, lace
and embroidery wrought together in a most curious piece of [network] —
Joseph Addison>
2: a system of lines or channels that interlace or cross like the fabric of a
net<a [network] of highways><a [network] of rivers><a [network] of veins><a
[network] of roots><a [network] of nerves>
3a: an interconnected or interrelated chain, group, or system<a [network] of
secret agents><a [network] of alliances><a [network] of beliefs>

Cite as 25 OTR 308 (2023) 	341
be linked either tangibly “by wire” or by “radio relay.” Id.38
Contemporaneous Oregon statutes refer to intangible net-
works, such as a “provider network” for medical insurance
purposes (ORS 742.424)(1) (2009)). The court concludes that
the 2009 findings do not limit the meaning of “network” to
physical systems connected by tangible personal property
or real property, such as continuous lines of track, wire,
or pipe. The legislature used the term in a way that could
equally encompass incorporeal networks of contractual and
other relationships.
The businesses listed in ORS 308.518(1) could have
either or both kinds of networks. Any of the six listed busi-
nesses involving “rail” necessarily relies on physical lines of
track, but railroad companies also have long relied on the
ability to contract with each other to transport goods over
long distances. See Southern Pacific Trans. Co. v. Dept. of
Rev., 302 Or 582, 585, 732 P2d 18 (1987) (describing conti-
nental rail transportation system as including “bridge” rail-
roads serving other carriers in specific areas). A utility might
have both a tangible network of transmission lines and dis-
tribution lines for the delivery of electricity, gas, or water,
as well as an intangible network of contracts to procure the
b: a system of computers, terminals, and data bases connected by communi-
cations lines
4: a system of electrical conductors in which conduction takes place between
certain points by more than one path
5a: a group of local radio or television stations linked by wire or radio relay
for the usually simultaneous broadcasting or televising of the same program
b: a radio or television company that produces programs to be relayed to local
stations for broadcast by radio or television<sold the show to a big [network]>
6: a usually informally interconnected group or association of persons (such
as friends or professional colleagues)<During my years of travel in Asia … I’d
developed an extensive [network] of friends. — Alison Wright, Yoga Journal,
May/June 2005>”
Webster’s Third New International Dictionary 1520 (unabridged ed 2002).
38 The court notes that the 2021 legislature amended ORS 308.505 to
exclude from the definition of a centrally assessed “communication” business “the
services of television and radio stations licensed by the Federal Communications
Commission that use primarily earth-based transmitters to broadcast program-
ming via radio waves to television or radio receivers that use indoor or outdoor
antennas for reception * * *.” Or Laws 2021, ch 421, § 1 (HB 2331) (adding ORS
308.505(3)(b) (2021)). The staff measure summary accompanying the bill stated:
“The Department has not historically centrally assessed television and radio sta-
tion property, but is likely to going forward.” Staff Measure Summary, House
Committee on Revenue, HB 2331, Apr 13, 2021, 1-2.

342 	Delta Air Lines, Inc. v. Dept. of Rev.
commodity from others and franchises to sell within a spec-
ified service territory. An air transportation, air or railway
express, or water transportation company might have a net-
work consisting solely of intangible contract rights and per-
missions that allow the business to move physically uncon-
nected airplanes or vessels from one point to another. 39
The court finds that the third category in the 2009
findings, adopting the foregoing broad definition of “net-
work,” appears to encompass all of the businesses listed in
ORS 308.515(1) (with the possible exception of toll bridges).
d. 	“Other property that is appropriate for central
assessment”
The fourth category of property in the 2009 findings
is a catch-all that purports either to ensure that property is
considered part of the class even if it does not fit within the
descriptions in categories one through three, or to reserve a
right in the legislature to expand the list in ORS 308.515(1)
to encompass additional categories of property. As such the
fourth category adds nothing to the analysis, and the court
does not consider it further.
2. 	Parties’ arguments under 2009 findings
The court now seeks to apply the foregoing under-
standing of the 2009 findings to the parties’ arguments in
applying the “genuine differences” test under the Uniformity
Clauses.
a. 	Omission of bus and trucking businesses from
ORS 308.515(1)
According to taxpayer, a principal example of a busi-
ness not listed in ORS 308.515(1), yet indistinguishable from
those on the list, is bus and trucking companies. Taxpayer
argues that, not only does the property of these companies
have “inherent value due to the capacity of the property to
be operated as a network over a large geographic area” (cat-
egory three of the 2009 findings), but bus and trucking com-
panies also “carry, convey, or move passengers or property
from one place to another” and thus fit squarely within the
39 The parties have not identified a network of either type used by a toll
bridge. See ORS 308.515(1)(m).

Cite as 25 OTR 308 (2023) 	343
definition of “transportation” in ORS 308.505(12) (category
two). The department does not seriously dispute these con-
tentions. Rather, the department responds that the legisla-
ture rationally could have excluded bus and trucking com-
pany property from central assessment because the Oregon
Constitution has created a separate system of taxation that
more specifically affects those businesses. The department
points out:
• 	The constitution requires that “[a]ny tax or excise lev-
ied on the ownership, operation or use of motor vehi-
cles” is to be “used exclusively” for road construction,
repair, maintenance, operation and use, and certain
related purposes. Furthermore, any such taxes or
excises imposed by the state must be generated in a
manner that ensures that the share of revenues paid
for light vehicles and for heavy vehicles is “fair and pro-
portionate to the costs incurred for the highway system
because of each class of vehicle.” Or Const, Art IX, § 3a.
• 	Vehicles are required to be registered, and “the reg-
istration fees under the vehicle code are in lieu of all
other taxes and licenses, * * * to which such vehicles
or the owners thereof may be subject.” ORS 803.585.
Exceptions include municipal license fees, ad valorem
tax on “fixed load” vehicles, and the motor vehicle priv-
ilege tax and its complementary use tax imposed under
ORS chapter 320. See id.
The department describes these provisions as a “special sys-
tem for raising revenues with respect to vehicles that use
Oregon’s roads.” Excluding from central assessment the
subset of transportation companies “whose primary busi-
ness consists in use of motor vehicles on public roadways”
is, according to the department, “rationally related to the
end the people and legislature have chosen as the means to
funding the public highway system in Oregon.”
Restating the department’s arguments in the two-
part framework of Knapp, the court understands the depart-
ment to argue that the imposition of vehicle registration fees
in lieu of property tax is a genuine difference that separates
bus and trucking companies from other businesses listed in
ORS 308.515(1), including transportation companies defined
in ORS 308.505(12). From there, the department posits that

344 	Delta Air Lines, Inc. v. Dept. of Rev.
the dedication of funds to road purposes in Article IX, sec-
tion 3a (3), of the Oregon Constitution, expresses a policy
goal, and that the exclusion from central assessment (and
along with it, the exclusion of tax on intangibles) is reason-
ably related to that policy goal.
Taxpayer contends that the department’s theory
disintegrates on close examination. The decision to exempt
all vehicles from property tax, in order to subject them to
road-dedicated license fees pursuant to a constitutional
requirement, may indeed have a rational basis, but the deci-
sion at issue here, to exempt a bus or trucking company’s
intangible property, is separate. In considering taxpayer’s
point, the court observes that the department does not argue
that imposing ad valorem property tax on the intangible
property of bus and trucking companies would constitute a
“tax or excise levied on the ownership, operation or use of
motor vehicles” that would trigger the dedication and appor-
tionment requirements under Article IX, section 3a, of the
Oregon Constitution.40 Assuming that Article IX, section 3a
does not so restrict the taxation of intangible property, then
the court finds the link the department proffers between
the exemption of vehicles and the exemption of intangible
property to be illusory. The department’s reasoning would
impute to the legislature a rationale along the following
lines: “We already exempt your vehicles from property tax;
therefore, we will exempt your intangible property also.”
The court finds this a non sequitur, particularly because
the law provides no special exemption from property tax
for real property or other tangible personal property that a
bus or trucking company might use (truck yards, garages,
40 The logic of such a hypothetical position by the department—essentially
asking the court to look through the intangibles to the vehicles that give rise to
them—arguably would preclude subjecting a bus or trucking company to other
taxes without dedicating the revenues to roads, such as taxes on net income or
the corporate activity tax. See ORS chs 317, 317A (providing no exemption for
bus or trucking companies). The Oregon Supreme Court has rejected that logic.
See AAA Oregon/Idaho Auto Source v. Dept. of Rev., 363 Or 411, 421, 423 P3d 71
(2018) (“[A]s used in Article IX, section 3a, taxes ‘on’ the ownership of a motor
vehicle are limited to those based on the fact of ownership itself—that is, own-
ership qua ownership—and they do not include taxes based on all actions that
an owner might take, such as selling or buying.”); id. at 424 (stating legislative
history of Article IX, section 3a “does not indicate” that the provision applies to
all taxes (for example, any business, license, regulatory, income or property tax)
imposed on a status or activity involving motor vehicles).

Cite as 25 OTR 308 (2023) 	345
maintenance 	facilities, 	office 	or 	dispatch 	facilities 	and
equipment). Recognizing that nearly any logical connection
between the two exemptions would suffice under a rational
basis analysis, the court nevertheless cannot conceive of one
here. The business of operating a bus or trucking company
is squarely within the definition of “transportation” under
ORS 308.505(12), and is otherwise so similar to the listed
businesses in its reliance on a network that the court finds
no “genuine difference” in use.
b. 	Omission 	of 	other 	businesses 	from 	ORS
308.515(1): “genuine differences”
Taxpayer cites other examples of businesses not
listed in ORS 308.515(1) that operate property as a network
over a large geographic area, such as “distribution compa-
nies, retail companies, [and] restaurant chains.” (See also
Argument of David Crapo, Oral Argument, Jan 18, 2022
at 2:33.) A multistate retail chain, for example, may have
centralized purchasing arrangements with manufacturers
and food processors, operate its own regional warehouses
and distribution centers, and use branded trucks to stock
branded retail stores, all of which depends on centralized
inventory control and nationwide advertising and market-
ing. Multistate restaurant chains may have similar facil-
ities and arrangements for the procurement and move-
ment of food and supplies and, in addition, operate under
franchise arrangements with substantial intangible value.
Manufacturers of consumer goods may operate their own
retail stores in multiple states, in which the same intangible
brand is associated with both the real property and the tan-
gible personal property being sold. Service businesses such
as banks can operate property as a network over a large
geographic area as well, due, in some cases, to deregulation
that has occurred since the list in ORS 308.515(1) was cre-
ated. See, e.g., Pub L 103-328, §109, 108 Stat 2338 (1994)
(allowing bank branches across state lines). 41 As a result,
41 Other service businesses readily come to mind, including professional ser-
vice entities, but also hospital systems and others with large investments in real
property and equipment. See Or Laws 1987, ch 94, § 174 (repealing former ORS
58.235, which provided, “No professional corporation organized under any law
other than the law of this state shall transact business in this state.”); Patrick P.
T. Jeurissen, et al., For-Profit Hospitals Have Thrived Because of Generous Public
Reimbursement Schemes, Not Greater Efficiency: A Multi-Country Case Study,

346 	Delta Air Lines, Inc. v. Dept. of Rev.
taxpayer argues, many household-name companies, includ-
ing many with distribution networks or other kinds of net-
works, derive more than 85 percent of their enterprise value
from intangible assets.
In its final briefing, the department responds by
distinguishing the listed businesses as
“hav[ing] value only from operations over some geograph-
ical area, typically large and under some type of pub-
lic franchise or ‘certificate of convenience and necessity.’
(Railroads, airlines, electricity generation and transmis-
sion, communication, gas and oil transmission). * * * These
businesses could not exist or operate if confined to a single
location.”
By contrast, in its surreply, the department describes locally
assessed property as
“hav[ing] value from operations in a physical location, typi-
cally involving manufacture and sales of tangible personal
property or services delivered at a particular location. (e.g.,
hotels, shoe manufacturing and sales, technical software
and hardware manufacturing and sales, banking, ‘big-box’
sale of goods, restaurants). * * * Although businesses with
locally assessed property may own property in many loca-
tions, the business can be conducted from each location, e.g.,
Walgreens.”
Applying Knapp, the court restates the department’s theory
as follows:
(1) 	Property used in a business listed in ORS 308.515(1)
has the “genuine difference” that it has value only if it is
used in a system or network over a (typically large) geo-
graphic area. By contrast, property used for a purpose not
listed in ORS 308.515(1) has value even if it is not used in a
system or network over a (typically large) geographic area.
(2) 	A conceivable policy purpose exists that the legisla-
ture reasonably could believe is furthered by taxing intan-
gible property only if used in a business whose property
51(1) Int’l J of Health Services 67, 72 (2021) (describing growth of investor-owned
hospital chains in United States); Steven Findlay, Can a Community Hospital
Stick to Its Mission When It Goes For-Profit?, NPR (Jul 19, 2018, 9:26 a.m.),
https://www.npr.org/sections/health-shots/2018/07/19/629675648/can-a-commu-
nity-hospital-stick-to-its-mission-when-it-goes-for-profit 	(discussing 	for-profit
and nonprofit hospital ownership and trends).

Cite as 25 OTR 308 (2023) 	347
has value only if used in a system or network over a (typi-
cally large) geographic area.
The department’s asserted “genuine difference” has
some initial, intuitive appeal. The department’s example of
an oil and gas pipeline calls up an image of sections of pipe
that have no obvious purpose unless connected together
and joined to a source of supply at one end and some distri-
bution system at the other end, coupled with other equip-
ment along the way to ensure pressure and safety. Other
examples might include individual railroad ties, lengths of
rail, and communication poles and towers. All are special-
ized pieces of equipment designed for a particular function
within a larger whole. However, the court rejects as hyper-
bolic the department’s literal assertion that these individual
components of a system have “value only” from operations
over a large geographic area, or that they “must” be used
in that manner. Even the early cases that establish the
principle that the value of a functioning unit may exceed
the value of the sum of its component parts do not rely on
a notion that individual parts lack all standalone value.
See Adams Express, 165 US at 222-23 (“Considered as
distinct subjects of taxation, a horse is, indeed, a horse;
a wagon, a wagon; a safe, a safe; a pouch, a pouch. But
how is it that $23,430 worth of horses, wagons, safes,
and pouches produces $275,446 in a single year? * * * The
answer is obvious.”); Henderson Bridge Co. v. Kentucky,
166 US 150, 158, 17 S Ct 532, 41 L Ed 953 (1897) (“The
bridge company was assessed by the local county officials
on the bridge and other tangible property the sum of
[$649,735.54]. The board of valuation assessed the com-
pany for the franchise tax, under the laws above stated
in the sum of [$865,157.46].”). The question of value must
be one of degree; a different conclusion would ignore the
“rational” part of the rational basis test.42 See, e.g., FCC
v. Beach Communications, Inc., 508 US 307, 315, 113 S Ct
2096, 124 L Ed 2d 211 (1993) (“[A] legislative choice is
42 Another question of degree in the department’s argument is the refer-
ence to a “large” geographic area. Delta and PacifiCorp point out that rail lines,
power plants, and other property used in the listed businesses may serve small
territories. The legislature’s original requirement that “property,” to be centrally
assessed, must cross state or county lines was removed in 1913. Or Laws 1913,
ch 193, § 4.

348 	Delta Air Lines, Inc. v. Dept. of Rev.
not subject to courtroom factfinding and may be based on
rational speculation unsupported by evidence or empiri-
cal data.”) (emphasis added); Vance v. Bradley, 440 US 93,
111, 99 S Ct 939, 59 L Ed 2d 171 (1979) (“[T]hose challeng-
ing the legislative judgment must convince the court that
the legislative facts on which the classification is appar-
ently based could not reasonably be conceived to be true
by the governmental decisionmaker.”) (emphasis added).
And if the court interprets the department’s argument
to mean that property used in a business listed in ORS
308.515(1) has more value when operated as part of a net-
work over a large geographic area than when used other-
wise, the argument becomes a truism. Under the logic of
Adams Express, even ordinary, fungible items can gener-
ate intangibles and enhanced value when used as part of
a network. See 165 US at 222-23 (horses, wagons, safes,
pouches). The court rejects the first part of the depart-
ment’s “genuine differences” argument.
The court also is skeptical as to the second part of
the department’s genuine differences argument, that prop-
erty used in a business not listed in ORS 308.515(1) has
just as much value even if not used in a network. The court
readily pictures a vertically integrated, high-technology
manufacturing business that sends its products around the
world to various facilities at different stages of production,
sourcing materials in one place, forging or milling them in
another, fabricating components elsewhere, and performing
assembly, finishing, and testing in still other locations.43 A
particular facility in Oregon might be built to perform one
stage of the process, containing highly specialized equip-
ment that is designed for that particular stage and that par-
ticular product. The total property used worldwide, under
the control of one company, may have a unit value greater
than the sum of the facilities and equipment in each loca-
tion when valued on a standalone basis. And the facility in
43 The manufacturer may own some of the facilities outright and “use” other
facilities owned by independent businesses, within the meaning of “use” for cen-
tral assessment purposes. See ORS 308.515(1) (stating test for central assess-
ment includes use, not ownership); Pacificorp Power Marketing, 340 Or at 206-08,
220 (upholding central assessment of electricity business taxed on power plant
owned by city and subject to various contract rights for the benefit of taxpayer).

Cite as 25 OTR 308 (2023) 	349
Oregon may have very little value unless used as part of the
manufacturer’s network.
The court also can easily imagine that some big-
box store buildings may likewise have substantially greater
value when used in a system or network over a (typically
large) geographic area. A single building might be easy to
rebrand for use by a different chain, and thus have a stand-
alone value that can be determined by reference to compara-
ble sales; however, the building’s size or other features may
be designed to turn over a high volume of inventory that
only the branding of some national or large regional chain
with “networked” distribution can support. This, too, is a
question of degree, but at some point it may be just as accu-
rate to describe such a building as having value “only” when
operated as part of a network over a large geographic area
as to say the same about gas pipes and power lines. See gen-
erally, e.g., Powell Street I v. Multnomah County Assessor, 365
Or 245, 253-54, 445 P3d 297 (2019) (describing $4.71 million
in improvement costs necessary to fill “anchor tenant” space
in shopping center, in addition to ancillary upgrade costs
triggered by those improvements).
c. 	Omission 	of 	other 	businesses 	from 	ORS
308.515(1): “line-drawing problems”
The department seems to acknowledge the possi-
bility that property used in businesses not listed in ORS
308.515(1) can be “strongly integrated,” but the department
quickly dismisses that point as a “line-drawing problem.” In
its response to the court’s questions, the department states,
“This is not to say that the legislature could not reasonably
have classified for central assessment other types of busi-
nesses whose property is used as part of a strongly inte-
grated enterprise. But that is fundamentally a line-drawing
problem for the legislative branch * * *.”
Line-drawing cases, whether under the Oregon
Uniformity Clauses or under the Equal Protection Clause,
involve some difference—sometimes quite small—between
the items on either side of the line. See, e.g. Standard Lbr.
Co., 112 Or at 336 (allowing graduated income tax rates
based on tiers or brackets with specified dollar cutoffs);

350 	Delta Air Lines, Inc. v. Dept. of Rev.
Huckaba, 281 Or at 30-31 (upholding minimum age of 65 for
tax benefit for civil service pensions for military veterans).
And under the highly deferential rational basis standard, a
line is not irrational merely because some subjects fall “just
short of qualifying” as members of the favored or disfavored
class.44 Mathews v. Diaz, 426 US 67, 83, 96 S Ct 1883, 48
L Ed 2d 478 (1976).45
Nevertheless, 	courts 	require 	some 	difference
between subjects on one side of the line and the other. In
Mathews, for example, the Court was able to conclude that
Congress intended to favor a class consisting of “citizens
and those who are most like citizens,” implying that those
outside the class were different because they were less like
citizens. 426 US at 83 (emphasis added). To carry out that
intent, Congress drew a line that excluded some who had
an “almost equally strong claim to favored treatment.” Id.
(emphasis added); see also U.S. Railroad Retirement Bd.
v. Fritz, 449 US 166, 178, 101 S Ct 453, 66 L Ed 2d 368
(1980) (upholding law phasing out “windfall” retirement
benefits based on, among other things, specific number of
years served and other criteria designed to favor those with
a “greater equitable claim”); Carmichael 301 US at 510 (“It
is argued here * * * that there can be no reason for a dis-
tinction, for purposes of taxation, between those who have
only seven employees and those who have eight. Yet, this is
the type of distinction which the law is often called upon to
make.”).
In this case, the legislature has exercised its pre-
rogative to draw the classification line by means of a list
rather than by specifying criteria. It thus falls to the court
44 See, e.g., Metropolis Theatre Co. v. Chicago, 228 US 61, 69-70, 33 S Ct
441, 57 L Ed 730 (1913) (upholding city tax on theaters of $1,000 per year if price
charged for any one ticket during the year exceeded $1).
45 Mathews involved immigration law, an area that, like taxation, requires
the most deferential application of the rational basis test. 426 US at 81-82 (“The
reasons that preclude judicial review of political questions also dictate a narrow
standard of review of decisions made by the Congress or the President in the area
of immigration and naturalization.”) (footnote omitted); cf Nordlinger v. Hahn,
505 US 1, 11, 112 S Ct 2326, 120 L Ed 2d 1(1992) (“[The rational basis] standard
is especially deferential in the context of classifications made by complex tax
laws.”).

Cite as 25 OTR 308 (2023) 	351
to infer the criteria from the list, a task for which the court
has sought the parties’ help.
After much diligent effort by all counsel involved,
the court concludes that the final version of the line prof-
fered by the department reveals businesses on both sides of
the line that fit the criteria equally and thus have no “genu-
ine difference.”
G. 	Other Arguments
The department argued early on in briefing that a
difference between centrally assessed companies and locally
assessed companies was that “many” centrally assessed
companies are publicly traded stock companies while “most”
locally assessed properties are not. The department did not
pursue this argument further and the court rejects it with-
out further discussion.
H. 	“Transportation 	Company 	Property” 	and 	“Utility
Property” as Separate Subclasses
Based on the parties’ arguments, the court has con-
cluded above that the third category in the 2009 findings
does not identify a set of “genuine differences” that unifies
all businesses listed in ORS 308.515(1) and distinguishes
them from other businesses that have a “network” of prop-
erty. Nor do the parties present other reasonably conceivable
theories that distinguish the list of businesses as a group
from other businesses. The court must consider the possibil-
ity that the list in ORS 308.515(1) does not describe a single
class, but rather, more than one class, each class based on a
different set of classification criteria and perhaps serving a
different legislative purpose. Cf. Jarvill, 289 Or at 180 (“[I]
f a subterritory is different in quality compared to the rest
of the territory, then article I, section 32, does not prohibit
a taxing authority from defining the subterritory as a sepa-
rate class.”).
With this in mind, the court returns to the first and
second categories in the 2009 findings. The second, “trans-
portation company property,” already has been addressed.
The court has concluded above that no genuine differ-
ences distinguish the rail, air, and water transportation

352 	Delta Air Lines, Inc. v. Dept. of Rev.
businesses on the list in ORS 308.515(1) from road trans-
portation businesses, which are omitted from the list. The
taxation of intangible property used in the businesses listed
in ORS 308.515(1)(a)-(g) and (n) and the exemption of other,
materially identical, transportation company property vio-
lates the Uniformity Clauses.
By contrast, as to the first category, “utility prop-
erty,” the court readily finds genuine differences between
property used in a rate-regulated business and property
used otherwise. In the former, the property is “vested with
public interest” because it is used in providing a “necessary
public service.” This difference in use is analogous to the
difference between use of hospital property for a charita-
ble purpose, which can support a claim for exemption from
tax, as opposed to a private purpose, which does not. See
NW Medical Lab. v. Good Samaritan Hospital, 309 Or 262,
786 P2d 718 (1990) (addressing procedural issues in case
brought by taxable medical laboratory against tax-exempt
hospitals allegedly performing same functions). Under the
Uniformity Clauses, the court considers this difference a
“politically imposed” or “economic” difference in use that
exists independently of the taxation regime. See Jarvill,
289 Or at 180. The United States Supreme Court has rec-
ognized the difference in use of utility property as a valid
ground of distinction for Equal Protection Clause purposes.
See Nashville, C. & St. L. Ry. v. Browning, 310 US 362, 368,
60 S Ct 968, 84 L Ed 1254 (1940) ( “[A state] may treat rail-
roads and other utilities with that separateness which their
distinctive characteristics and functions in society make
appropriate * * *.”).
The court considers the second part of the test
articulated in Knapp: whether the classification of intangi-
ble property used in a “utility” business as taxable is rea-
sonably related to a conceivable legislative purpose. One
conceivable purpose is to enhance the existing regulatory
regime by redistributing for public purposes a portion
of any value that might build up over time in goodwill or
other intangible property as the utility charges regulated
fees to customers and delivers a regulated return to inves-
tor-owners. In the trial in PacifiCorp’s case, the department

Cite as 25 OTR 308 (2023) 	353
presented evidence purporting to show that the price paid
for utilities historically has exceeded the “book” value of
utility property as determined for regulatory purposes. See
PacifiCorp v. Dept. of Rev., ___ OTR ___ (July 17, 2023) (slip
op at 33-35; 73) (discussing the department’s “market-to-
book ratio” studies). As explained in the opinion, for valua-
tion purposes the court rejected the department’s evidence
based on evidentiary and other reasons, and the court here
neither validates nor invalidates the studies, including their
methodologies and their results. However, under a rational
basis analysis, the court cannot reject the concept that the
legislature might wish to impose ad valorem property tax on
a utility’s intangibles as a kind of check against the poten-
tial buildup of such value. See Beach Communications, Inc.,
508 US at 315, (“[A] legislative choice is not subject to court-
room fact-finding and may be based on rational speculation
unsupported by evidence or empirical data.”). Presuming,
as it must, the existence of such a conceivable purpose, the
court concludes that a subset of businesses listed in ORS
308.515(1), consisting of “public utilities,” is a constitution-
ally valid class, and that intangible property used or held
for future use in those businesses reasonably may be singled
out for taxation. See ORS 174.040 (stating that statutes are
generally severable).
VI. 	CONCLUSION
Based on the foregoing, the court concludes that the
list of businesses in ORS 308.515(1) violates the Uniformity
Clauses and the federal Equal Protection Clause as to Delta,
because the court finds no genuine differences between
Delta’s (taxable) use of intangible property in its transporta-
tion business and the (exempt) use of intangible property in
road transportation businesses or in other businesses that
rely on a network of property. However, the court concludes
that the list in ORS 308.515(1) does not violate the Uniformity
Clauses as to PacifiCorp, because the court finds genuine
differences between PacifiCorp’s (taxable) use of intangible
property in its business as a regulated public utility and
(exempt) uses of intangible property in non-regulated busi-
nesses, and because the court further concludes that the
legislature could have determined that taxing the value of

354 	Delta Air Lines, Inc. v. Dept. of Rev.
intangible property of a utility complements the regulatory
scheme by redistributing for public purposes some value
that accrues through regulated operation and that other-
wise would inure to investor-owners. The court will grant
Delta’s Motion for Partial Summary Judgment and deny the
department’s Cross-Motion for Partial Summary Judgment.
By separate order, the court will deny PacifiCorp’s Motion
for Partial Summary Judgment and grant the department’s
Cross-Motion for Partial Summary Judgment, with respect
to PacifiCorp’s second claim for relief as pled in its Amended
Complaint. Now, therefore,
IT IS ORDERED that Delta’s Motion for Partial
Summary Judgment is granted; and
IT IS FURTHER ORDERED that the depart-
ment’s Cross-Motion for Partial Summary Judgment is
denied.

Cite as 25 OTR 308 (2023) 	355
APPENDIX
COMPARATIVE TIMELINE AND
LIST OF LAW CHANGES
The timeline below shows relevant developments in
the statutes governing the taxation of intangibles and cen-
tral assessment, as well as the original and amended text of
Oregon’s Uniformity Clauses.
Date 	Taxation of
Intangibles
Central
Assessment
Uniformity
Clauses
Before
1906
Property subject
to taxation is “all
property, real and
personal, within this
state, not expressly
exempted”
“personal property”
includes certain
debts, stocks and
capital
“real property”
includes “rights
and privileges”
appertaining to land
and improvements 46
1906 report: “the
assessment of intan-
gible property in
the State of Oregon
has not been and
is not now the rule.
Attempts to assess
such property have
been very rare and
confined to a few iso-
lated assessments”47
None; all property
assessed by local
county assessors
1906 report includes
draft bills and
recommendations
to establish central
assessment
Constitution of 1859
Art I, § 32
“No tax or duty shall
be imposed without
the consent of the
people, or their repre-
sentatives in the legis-
lative assembly; and
all taxation shall be
equal and uniform.”
Art IX, § 1
“The Legislative
Assembly shall
provide by law, for a
uniform, and equal
rate of assessment
and taxation, and
shall prescribe such
regulations as shall
secure a just valua-
tion for taxation of all
property, both
46 The Codes and Statutes of Oregon, title XXX, ch I, §§ 3037, 3038, 3057
(Bellinger & Cotton 1901).
47 Report of the Board of Commissioners Appointed Under the Provisions
of Chapter 90, Laws of 1905, for the Purpose of Examining and Reporting on
Matters of Assessment and Taxation, etc., 17 (Jun 30, 1905), available at https://
archive.org/details/reportboardcomm00mulkgoog/page/n5 	(accessed 	Jan 	11,
2023).

356 	Delta Air Lines, Inc. v. Dept. of Rev.
Date 	Taxation of
Intangibles
Central
Assessment
Uniformity
Clauses
1907-
1913
1907 act adds to
“real property”
“all franchises and
privileges” granted
by Oregon or locality
“other than the right
to be a corporation”48
1909 act establishes
central assessment
by department’s
predecessor
1909 act defines
“property” for
central assessment
purposes as
including “all
property, real and
personal, * * * and
all franchises and
special franchises”49
1913 act amends
definition of
“property” for
central assessment
purposes; now
includes “all
property, real and
personal, tangible
and intangible”50
1913 act removed
the requirement
that centrally
assessed property
“be doing business
as one system,
partly within this
state and partly
without, or so doing
business in more
than one county of
the state.” 51
real, and personal,
excepting such
only for municipal,
educational, literary,
scientific, religious, or
charitable purposes,
as may be specially
exempted by law.”
48 Or Laws 1907, ch 268, § 2; see also id. § 3 (amending definition of “personal
property”).
49 Or Laws 1909, ch 218, § 5; see also id. § 9 (adding to valuation provision
that “said franchises and special franchises [are] not to be directly assessed, but
to be taken into consideration in determining the value of the other property”).
50 Or Laws 1913, ch 193, § 5 (adding italicized phrase).
51 Or Laws 1913, ch 193, § 4 (removing phrase).

Cite as 25 OTR 308 (2023) 	357
Date 	Taxation of
Intangibles
Central
Assessment
Uniformity
Clauses
1917
1929-
1931
1927 act exempts
stock and
bonds issued by
corporations other
than banks from
property tax 52
1929 acts adopt
personal and
corporate net income
taxes, plus separate
tax on gross income
from intangibles
later declared
unconstitutional53
1931 act imposes
new tax on income
from intangible per-
sonal property “in
lieu of the archaic
and impracticable
ad valorem tax on
the property itself”;
defines “intangi-
bles” as evidences
of indebtedness and
shares of stock 54
1931 act exempts
centrally assessed
corporations, but
not other business
corporations, from
tax on income
from intangible
property 55
As amended in 1917
Art I, § 32
“no tax or duty shall
be imposed with-
out the consent of
the people or their
representatives in the
legislative assembly;
and all taxation shall
be equal and and
uniform on the same
class of subjects within
the territorial limits of
the authority levying
the tax.” 56
Art IX, § 1
“The Legislative
Assembly shall, and
the people through the
initiative may, provide
by law for a uniform,
52 Or Laws 1927, ch 317
53 Or Laws 1929 chs 427 (creating corporation excise tax—on net income,
including from intangibles; excluding corporations whose property is centrally
assessed), 448 (creating personal income tax—on net income; excluding gross
income taxed under ch 429); 429 (taxing individuals on gross interest and divi-
dends); see Redfield et al. v. Fisher et al., 135 Or 180, 292 P 813 (1931) (invalidat-
ing Or Laws 1929, ch 429).
54 Or Laws 1931, ch 335, § 2 (defining “intangibles”). Measured by “net
income,” which is defined as net of deductions for interest and other specified
items. Id. §§ 3, 10.
55 Or Laws 1931, ch 335, §§ 2.2, 2.10, 12(b); see Or Laws 1927, ch 427, § 11(k)
(exempting centrally assessed companies); Oregon Laws, Title XXIX, ch I, § 4187
(15) (1920) (defining centrally assessed companies).
56 Or Const, Art I, § 32 (showing deletions and insertions with strikethrough
and italics, respectively)

358 	Delta Air Lines, Inc. v. Dept. of Rev.
Date 	Taxation of
Intangibles
Central
Assessment
Uniformity
Clauses
and equal rate rules
of assement and
taxation, and shall
prescribe such regu-
lations as shall secure
a just valuation for
taxation of property,
both real, and per-
sonal, excepting such
only for municipal,
educational, literary,
scientific, religious, or
charitable purposes,
as may be specially
exempted by law.
All taxes shall be
levied and collected
under general laws
operating uniformly
throughout the
State.” 57
1935 	1935 act redefines
property subject
to taxation as all
“real property” and
“tangible personal
property” within
Oregon “except as
may otherwise be
specifically exempted
provided by law58
1935 act leaves
unchanged the defi-
nition of “property”
subject to central
assessment (“all
property, real and
personal, tangible
and intangible”) 59
1935 act adds
“aircraft com-
panies” to list of
centrally assessed
companies 60
1977 	1977 act adds subsection to definitions of
“intangible personal property” and “tangi-
ble personal property,” declaring those defi-
nitions inapplicable to centrally assessed
taxpayers 61
57 Or Const, Art IX, § 1 (strikethrough and italics showing deletions and
insertions).
58 Or Laws 1935, ch 274, § 1 (showing deletions and insertions with strike-
through and italics, respectively).
59 See Oregon Code, title LXIX, ch IV, § 69-406 (1930) (defining “property” to
be centrally assessed unchanged).
60 Or Laws 1935, ch 54, § 1 (Spec Sess).
61 Or Laws 1977, ch 602, § 1 (amending ORS 307.020).

Cite as 25 OTR 308 (2023) 	359
Date 	Taxation of
Intangibles
Central
Assessment
Uniformity
Clauses
1993 	1993 act adds subsection to local assess-
ment statute, declaring “except as provided
in [central assessment statutes], intangible
personal property is not subject to assess-
ment and taxation.” 62
1997 	Failed HB 2062 would have exempted
intangible property for centrally assessed
taxpayers.63
1999 	Vetoed HB 2050 would have exempted
intangible property for centrally assessed
taxpayers.64
2009 	2009 act includes
“housekeeping”
amendments to
central assessment
statutes, with pre-
amble containing
findings referring
to “capacity of
[centrally assessed]
property to be
operated as a net-
work over a large
geographic area” 65
2015 	2015 act generally
exempts the portion
of the real market
value of a centrally
assessed property
that exceeds 130%
of cost of real and
tangible personal
property 66
62 Or Laws 1993, ch 353, § 1 (amending ORS 307.030). In addition to the cen-
tral assessment statutes, the amendment also excepted the statutes governing a
gross receipts tax on certain rural telephone exchanges.
63 HB 2062 (1997).
64 HB 2050 (1999) (vetoed).
65 Or Laws 2009, ch 128, § 1.
66 Or Laws 2015, ch 23, § 3 (codified as ORS 307.674).

360 	Delta Air Lines, Inc. v. Dept. of Rev.
Date 	Taxation of
Intangibles
Central
Assessment
Uniformity
Clauses
2021 	2021 act excludes
television and
radio stations
that primarily use
earth-based trans-
mitters to broadcast
programming from
the definition of
“communication” for
central assessment
purposes 67
The following paragraphs note additional develop-
ments not covered in the comparative timeline. 	In 1939,
“pipe line companies, toll bridge companies, heating compa-
nies * * * people’s utility districts” were added to the list.68
In 1949, “water transportation companies engaged in the
business of transporting freight or passengers for hire upon
the rivers in or adjoining the state of Oregon” were added.69
In 1951, the legislature added a statement before the list
that the tax applied to the property used in those businesses
67 Or Laws 2021, ch 421, § 1.
68 The full text of the law as amended in 1939 was:
“To make an annual assessment, upon an assessment roll to be prepared by
said commission, of the property having a situs in this state, as hereinafter
defined, of all railroad companies, sleeping car companies, union station and
depot companies, electric and street railway companies, express companies,
telegraph companies, telephone companies, refrigerator car companies, tank
line companies, private car companies, pipe line companies, toll bridge com-
panies, heating companies, water, gas and electric companies, people's util-
ity districts and aircraft companies engaged in air transport of passengers,
freight, express or mail.”
Or Laws 1939, ch 343, § 1.
69 The full text of the law as amended in 1949 was:
“To make an annual assessment, upon an assessment roll to be prepared by
said commission, of the property having a situs in this state, as hereinafter
defined, of all railroad companies, sleeping car companies, union station and
depot companies, electric and street railway companies, express companies,
telegraph companies, telephone companies, refrigerator car companies, tank
line companies, private car companies, pipe line companies, toll bridge com-
panies, heating companies, water, gas and electric companies, people's utility
districts, aircraft companies engaged in air transport of passengers, freight,
express or mail and water transportation companies engaged in the business
of transporting freight or passengers for hire upon the rivers in or adjoining
the state of Oregon.”
Or Laws 1949, ch 414, § 1.

Cite as 25 OTR 308 (2023) 	361
“whether in domestic or interstate commerce or both.” Or
Laws 1951, ch 586, § 2. The revisions also rearranged the
list and added an exception for property of businesses that
are centrally assessed, but that is not used in one of the
activities that triggered central assessment.70 Id. In 1953,
the central assessment provisions were codified in ORS
chapter 308, and the list of centrally assessed companies
became codified in ORS 308.515. In 1955, the legislature
reorganized the statute slightly.71 Or Laws 1955, ch 735, § 1.
70 The full text of the law as amended in 1951 was:
“To make an annual assessment, upon an assessment roll to be prepared by
said commission, of the property having a situs in this state, as hereinafter
defined, of all companies engaged in performing or maintaining any of the
following businesses or services, whether in domestic or interstate commerce
or both, and whether mutually, or for hire, sale or consumption by other per-
sons: Railroad transportation; railroad switching and terminal; electric rail
and trackless trolley transportation; sleeping car; refrigerator car; private
car; tank car; air transportation on certificated flight or by letter of reg-
istration; water transportation upon inland waters of the State of Oregon
including interstate rivers and standing waters, and tide waters extending
to the ocean bar, but not when incidental to transportation upon the high
seas; express; telegraph communication; telephone communication including
cooperative telephone districts; heating; water, gas and electric companies
including people's utility districts; pipe line; toll bridge; and all companies
to the extent that they own, operate or maintain refrigeration, tank or pri-
vate cars for their own use. Any corporation included within the foregoing
provisions, to the extent that it actively engages in any business or service
not described therein or not incidental to any business or service described
therein, shall not to that extent be deemed a corporation whose properties
are assessed under the provisions of this Act.”
Or Laws 1951, ch 586, § 2.
71 The full text of the law as amended in 1955 was:
“(1) The State Tax Commission shall make an annual assessment, upon an
assessment roll to be prepared by the commission, of the following property
having a situs in this state:
“(a) The property of all companies engaged in performing or maintaining any
of the following businesses or services, whether in domestic or interstate com-
merce or both, and whether mutually, or for hire, sale or consumption by other
persons: Railroad transportation; railroad switching and terminal; electric
rail and trackless trolley transportation; sleeping car; refrigerator car; private
car; tank car; air transportation on certificated flight or by letter of registra-
tion; water transportation upon inland waters of the State of Oregon, except
as provided in subsection (2); express; telegraph communication; telephone
communication including cooperative telephone districts; heating; water, gas
and electric companies including people's utility districts; pipe line; toll bridge.
“(b) Refrigeration, tank and private cars of all companies not included in
subsection (a) hereof, where such cars are rented, leased or used in railroad
transportation for hire.

362 	Delta Air Lines, Inc. v. Dept. of Rev.
In 1957, the legislature added “air or railway
express” to the list of centrally assessed companies. Or Laws
1957, ch 711, § 3. The legislature also reorganized subsec-
tion (2), dealing with water transportation, and added sub-
sections (5), about gas in containers, and (6), about entities
not yet engaged in a centrally assessed business.72 Id. The
“(2) Water transportation companies whose watercraft ply exclusively (a) on
the high seas, or (b) between the high seas and inland water ports or termini,
or (c) a combination of (a) and (b), shall not be assessed under subsection (1).
“(3) For the purposes of this section, ORS 308.255 and 308.550, ‘inland
water’ or ‘inland waters’ shall mean all water or waters within the State of
Oregon, all interstate rivers touching Oregon and all tidewaters extending
to the ocean bars.
“(4) Any corporation included within subsection (1) of this section, to the
extent that it actively engages in any business or service not described
therein or not incidental to any business or service described therein, shall
not to that extent be deemed a corporation whose properties are assessed
under ORS 308.505 to 308.660.”
Or Laws 1955, ch 735, §1.
72 The full text of the law as amended in 1957 was:
“(1) The State Tax Commission shall make an annual assessment, upon an
assessment roll to be prepared by the commission, of the following property
having a situs in this state:
“(a) Except as provided in subsection (2) of this section, any property held for or
used by any company in performing or maintaining any of the following busi-
nesses or services or in selling any of the following commodities, whether in
domestic or interstate commerce or both, and whether mutually, or for hire, sale
or consumption by other persons: Railroad transportation; railroad switching
and terminal; electric rail and trackless trolley transportation; sleeping car;
refrigerator car; private car; tank car; air transportation on certificated flight
or by letter of registration; water transportation upon inland waters of the
State of Oregon; air or railway express; telegraph communication; telephone
communication: heating; water; gas; electricity; pipe line; toll bridge.
“(b) Refrigeration, tank and private cars of all companies not included in
paragraph (a) of this subsection, where such cars are rented, leased or used
in railroad transportation for hire.
“(2) There shall not be assessed under subsection (1) of this section:
“(a) Any property used by or for water transportation companies whose
watercraft ply exclusively (A) on the high seas, or (B) between the high seas
and inland water ports or termini, or (C) a combination of (A) and (B), or (D)
as ferries operating directly across interstate rivers; or
“(b) Any property used by or for water transportation companies exclusively
for booming and rafting; dredging; log or marine salvage; ship berthing,
maintenance, sludge removal, cleaning or repair; or marine or water-based
construction.
“(c) Any property used by or for interstate ferries.
“(3) For the purposes of this section, ORS 308.255 and 308.550, ‘inland
water’ or ‘inland waters’ shall mean all water or waters within the State of

Cite as 25 OTR 308 (2023) 	363
legislature made additional changes in 1959 and 1965. Or
Laws 1959, ch 109, § 1 (adding “for hire by other persons”
and “or guide service” to ORS 308.515(2)(b) (1959), adding
“whether or not through pipe in a gaseous form” and replac-
ing “industrial or liquified gas” with “undiluted liquefied or
industrial gas” in ORS 308.515(5) (1959)); Or Laws 1965, ch
175, § 1 (replacing “on certificated flight or by letter of regis-
tration” with “certificated by the Civil Aeronautics Board for
scheduled air service”). Two 1973 bills impacted the central
assessment statutes. The first defined “communication” in
ORS 308.505 (1973) as “include[ing] telephone communica-
tion, telegraph communication and data transmission ser-
vices by whatever means provided” and replaced “telegraph
communication; telephone communication” with “communi-
cation” in ORS 308.515 (1973). Or Laws 1973, ch 102, §§ 1-2.
The other added “division of the department charged with
property taxation administration” to ORS 308.515(1) (1973)
and replaced “held for or used” with “used or held for its
own future use” in ORS 308.515(1)(a) (1973). Or Laws 1973,
ch 402, § 8. Another minor change was made in 1981. Or
Laws 1981, ch 623, § 4 (replacing “certificated by the Civil
Aeronautics Board” with “using aircraft in excess of 75,000
pounds gross taxi weight.”
Oregon, all interstate rivers touching Oregon and all tidewaters extending
to the ocean bars.
“(4) Any corporation included within subsection (1) of this section, to the
extent that it actively engages in any business or service not described
therein or not incidental to any business or service or sale of a commodity
described therein, shall not to that extent be deemed a corporation whose
properties are assessed under ORS 308.505 to 308.660.
“(5) Any company, to the extent that it furnishes industrial or liquefied gas
in bottles or similar containers, is not a gas company under subsection (1) of
this section. Any company, to the extent that it furnishes water for commer-
cial irrigation, is not a water company under subsection (1) of this section.
Any company which generates electricity primarily for its own use, but which
makes incidental sales of its surplus electricity, is not an electric company
under subsection (1) of this section.
“(6) The provisions of ORS 308.505 to 308.660 shall be construed to subject
to assessment by the commission the property owned, leased or occupied by
a legal entity not yet engaged in a business, service or sale of commodity
enumerated in ORS 308.515, which is intended for operation or use in such a
business, service or sale of commodity.”
Or Laws 1957, ch 711, § 3.

364 	Delta Air Lines, Inc. v. Dept. of Rev.
In 1983, the legislature added an exemption for
Amtrak property. Or Laws 1983, ch 600, § 1 (adding ORS
308.515(2)(d) (1983): “Any property of the National Railroad
Passenger Corporation so long as federal law prohibits
such company from paying ad valorem taxes. All unpaid
ad valorem taxes levied prior to the effective date of this
1983 Act are void and the taxes shall be removed from the
assessment and tax rolls.”). In 1987, another exemption was
added, this time for certain aircraft. Or Laws 1987, ch 601,
§ 1 (adding ORS 308.515(2)(e) (1987): “Any aircraft that is
required to be registered under ORS 493.080 for all or any
part of the calendar year, and which is not used to provide
scheduled passenger service.”). Some deletions were made
in 1995 and 1997. Or Laws 1995, ch 256, § 1 (deleting “[a]ny
company, to the extent that it furnishes water for commer-
cial irrigation, is not a water company under subsection (1)
of this section” from ORS 308.515(5) (1995)); Or Laws 1997,
ch 154, § 33 (deleting references to ORS 308.705 and ORS
308.730 (repealed)). Also in 1997, the definition of what is
not an electric company was revised. Or Laws 1997, ch 656,
§ 2 (revising definition of what does not constitute an elec-
tric company and adding reference to definition of “electric
utility” in ORS 758.505). In 1999, revisions were made in
308.515(1). Or Laws 1999, ch 223, § 1 (replacing “sleeping
car; refrigerator car; private car; tank car” with “private
railcar transportation” in ORS 308.515(1)(a) (1999) and
replacing “[r]efrigeration, tank and private cars” with “[p]
rivate railcars” in ORS 308.515(1)(b) (1999)).
A 2005 technical corrections bill made nonsubstan-
tive changes to the list of centrally assessed businesses. Or
Laws 2005, ch 94, § 53. Apart from two minor changes, the
text of the statute has remained the same since 2006.73
73 The text of the 2017 version of 308.515 is:
“(1) The Department of Revenue shall make an annual assessment of
any property that has a situs in this state and that, except as provided
in subsection (3) of this section, is used or held for future use by any
company in performing or maintaining any of the following businesses
or services or in selling any of the following commodities, whether in
domestic or interstate commerce or in any combination of domestic and
interstate commerce, and whether mutually or for hire, sale or consump-
tion by other persons:
(a) Railroad transportation;

Cite as 25 OTR 308 (2023) 	365
Or Laws 2009, ch 128, § 5 (replacing “both” with “in any
combination of domestic and interstate commerce” in ORS
308.515(1) (2009) and deleting ORS 308.515(4) (2007)); Or
Laws 2012, ch 103, §1 (moving definition of what is not
(b) Railroad switching and terminal;
(c) Electric rail transportation;
(d) Private railcar transportation;
(e) Air transportation;
(f) Water transportation upon inland water of the State of Oregon;
(g) Air or railway express;
(h) Communication;
(i) Heating;
(j) Gas;
(k) Electricity;
(L) Pipeline;
(m) Toll bridge; or
(n) Private railcars of all companies not otherwise listed in this subsection,
if the private railcars are rented, leased or used in railroad transportation
for hire.
(2) The assessment described in subsection (1) of this section shall be made
on an assessment roll that is prepared by the division of the department
charged with property tax administration.
(3) There may not be assessed under subsection (1) of this section:
(a) Any property used by or for water transportation companies whose water-
craft ply exclusively on the high seas, or between the high seas and inland
water ports or terminals, or any combination thereof.
(b) Any property used by or for water transportation companies exclusively
for hire by other persons for booming and rafting, dredging, log or marine
salvage, ship berthing, maintenance, sludge removal, cleaning or repair,
marine or water-based construction, or guide service.
(c) Any property used by or for interstate ferries or by or for water transpor-
tation companies as ferries operating directly across interstate rivers.
(d) Any property of the National Railroad Passenger Corporation.
(e) Any aircraft that is required to be registered under ORS 837.040 for all
or any part of the calendar year and that is not used to provide scheduled
passenger service.
(4) Any corporation included within subsection (1) of this section, to the extent
that it actively engages in any business or service not described therein or
not incidental to any business or service or sale of a commodity described
therein, may not to that extent be deemed a corporation whose properties are
assessed under ORS 308.505 to 308.681.
(5) The department shall assess property owned, leased or occupied by a
legal entity not yet engaged in a business, service or sale of a commodity that
is described in subsection (1) of this section if the property is intended for
operation or use in the business, service or sale of the commodity.
ORS 308.515.

366 	Delta Air Lines, Inc. v. Dept. of Rev.
considered a gas bottle company and an electric company to
ORS 308.516).