PacifiCorp v. Dept. of Rev.

No. 25 	September 29, 2023 	419
IN THE OREGON TAX COURT
REGULAR DIVISION
PACIFICORP,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
State of Oregon,
Defendant.
(TC 5411)
In its motion for reconsideration, Plaintiff (PacifiCorp), an electric utility,
argued that it was not rational to subject its intangible property to taxation,
but not the intangible property of other rate-regulated public utilities, specif-
ically those providing water. Defendant presented legislative history suggest-
ing that the legislature removed “water” from the list of businesses listed in
ORS 308.515(1) because water utilities are small and likely to have the same
value whether they are locally or centrally assessed. The court concluded that
this explanation met the “genuine differences” requirement and found no basis
to change its decision. The court also rejected PacifiCorp’s argument that the
taxation of public utilities’ intangibles does not have a rational basis because it
burdens only ratepayers. The court granted reconsideration but adhered to its
previous order.
Submitted on parties’ motions for reconsideration.
David J. Crapo, Crapo Deeds LLP, Bountiful UT filed the
motion for Plaintiff.
Marilyn J. Harbur, Senior Assistant Attorney General,
Department 	of 	Revenue, 	Salem, 	filed 	the 	motion 	for
Defendant.
Decision rendered September 29, 2023.
ROBERT T. MANICKE, Judge.
This matter is before the court on PacifiCorp’s
Motion for Reconsideration, which is limited to the court’s
order on partial summary judgment dated August 23,
2023. PacifiCorp asks the court to determine as a matter
of law that rate regulation does not constitute a “genuine
difference” for purposes of the Oregon Uniformity Clauses,
because water supply businesses in Oregon are rate-reg-
ulated public utilities, yet their property is not centrally

420 	PacifiCorp v. Dept. of Rev.
assessed.1 However, as Defendant (the department) points
out in response, the legislature in 1995 removed “water”
businesses from the list of centrally assessed businesses
in ORS 308.515(1) for the apparent reason that those busi-
nesses were small, highly localized, and likely to have the
same value whether assessed locally or centrally (an indica-
tor that they had no significant intangible property). See Or
Laws 1995, ch 256, § 1 (amending ORS 308.515(1)(1995)).
The court finds no basis to change its decision. As stated in
the August 23 order, the absence of express criteria in ORS
308.515(1) to define the class of businesses subject to central
assessment and taxation of intangibles requires the court to
consider the possibility that the legislature had more than
one set of differences in mind when constructing the list. See
Delta Air Lines, Inc. v. Dept. of Rev., ___OTR ___ (Aug 23,
2023) (slip op at 45). The court concludes that the charac-
teristics identified in the legislative history supplied by the
department suffice as “genuine differences” that distinguish
the water businesses from PacifiCorp even though both the
water businesses and PacifiCorp are rate-regulated utili-
ties. See Jarvill v. City of Eugene, 289 Or 157, 180, 613 P2d 1
(1980) (“[I]f the 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 separate class.”).
PacifiCorp also challenges the court’s “rational
basis” reasoning on the ground that taxation of utility
intangibles ultimately burdens only ratepayers. The court
disagrees that singling out the rate-regulated businesses
listed in ORS 308.515(1) fails to clear the low bar of ratio-
nality. See Vance v. Bradley, 440 US 93, 111, 99 S Ct 939,
59 L Ed 2d 171 (1979) (“[T]hose challenging the legislative
judgment must convince the court that the legislative facts
on which the classification is apparently based could not rea-
sonably be conceived to be true by the governmental decision-
maker.”) (Emphasis added). To be sure, fair-minded persons
might argue that taxing the intangibles of that group is
improvident and an awkward mix of the powers of regula-
tion and taxation. But the court’s role is only to identify any
1 Capitalized terms and abbreviations have the meanings assigned in the
August 23, 2023, order.

Cite as 25 OTR 419 (2023) 	421
conceivable rational basis for the legislature’s action, not to
substitute the court’s policy judgment for that of the legisla-
ture. 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
railroads and other utilities with that separateness which
their distinctive characteristics and functions in society
make appropriate * * *.”).
The court grants reconsideration and, having done
so, adheres to its order of August 23, 2023. Now, therefore,
IT 	IS 	ORDERED 	that 	Plaintiff’s 	Motion 	for
Reconsideration is granted.