Decision for Defendant rendered December 27, 2011.
This case is before the court on cross-motions for partial summary judgment. The parties have filed a partial stipulation of facts, the provisions of which are set forth below.
Plaintiffs (taxpayers) are municipal corporations created under the law of the State of Washington and generally operating within Washington. Each of the taxpayers entered into agreements with the Bonneville Power Administration (BPA) pursuant to which each taxpayer obtained the right to transmit power on the transmission system operated by BPA. The parties agreed at the hearing on this matter that those agreements (each referred to as a Capacity Ownership Agreement or COA) are in all material respects identical to the agreements at issue in Power Resources Cooperative v. Dept. of Rev., 330 Or. 24, 996 P.2d 969 (2000).
The exemption accomplished under the 2005 legislation was again the subject of legislative consideration in 2009. In that year, Senate Bill 495 (SB 495) was introduced in the Oregon Senate. As introduced, the bill would have broadened the exemption established in 2005 so as to have it apply to electric cooperatives. See SB 495 A-Engrossed (2009). After passage in the Oregon Senate, SB 495 proceeded to the Oregon House of Representatives where it was subjected to a "gut and stuff" procedure. The expanded exemption provisions were "gutted" and in their place were "stuffed" provisions repealing the exemptions adopted in 2005. See SB 495 B-Engrossed (2009). As so altered, the bill was passed by the Oregon House of Representatives and returned to the Senate, which concurred with the changes made in the House and passed the bill. SB 495, as amended by the House and passed by both legislative chambers was then signed by the Governor. See Or Laws 2009, ch 804.
In their filings with the court, taxpayers asserted that the Eugene Water and Electric Board (EWEB) was a party to a COA but not subject to tax. Taxpayers conceded at the hearing on this matter that EWEB is not a party to a COA. They further conceded that although EWEB is a party to some agreement with BPA, that agreement is not in this record.
Are either taxpayers or the department entitled to summary judgment on any or all of the following questions:
The Origination Clause of the Oregon Constitution provides:
Or Const Art IV, § 18 (2010).
The Origination Clause in Oregon closely parallels the Origination Clause in the United States Constitution. Cf. US Const, Art I, § 6, cl 1 ("All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills."). The parties agree that there is no governing precedent as to the precise issue in this case relating to origination of wholesale amendments by the House, either under Oregon law or under federal law.
The purposes of the Origination Clause are well understood. Bills raising revenue "are required to have their origin in the lower branch of the legislature because it is the more numerous of the two bodies, and, being oftener renewed by elections, presumptively it more closely and directly represents the people." Northern Counties Trust v. Sears, 30 Or. 388, 401, 41 P 931 (1895).
For purposes of this analysis, although the parties differ on this, the court will assume that SB 495 raises revenue. Taxpayers maintain that because SB 495 originated in the Senate, its revenue raising provisions cannot be enforced.
The court is of the view that taxpayers' position exalts form over substance. That is a concern in many cases, but it is of special concern when a court is reviewing the propriety of the acts of a coordinate branch of government. Oregon courts do not treat compliance with the Origination Clause as a political question beyond review, as would some. See U.S. v. Munoz-Flores, 495 U.S. 385, 401, 110 S.Ct. 1964, 109 L Ed 2d 384 (1990) (Stevens, J. concurring). However, the courts in Oregon have adopted deferential rules in the consideration of Origination Clause cases for the very reason that such rules are appropriate in judging the compliance of the legislature with procedural requirements in the legislative process. See Young v. Galloway, 177 Or. 617, 164 P.2d 427 (1945).
A virtually identical analysis was employed in Baines v. New Hampshire Senate President, 152 N.H. 124, 876 A.2d 768
As to the Origination Clause motions, the cross-motion of the department is granted and the motion of taxpayers is denied.
The attack by taxpayers in their motion and briefs was premised on there being differential treatment by Oregon of COAs to which foreign municipal corporations are parties and a COA to which EWEB, an Oregon municipal corporation, was a party. Given the concession of taxpayers that EWEB is not party to a COA and that the agreement that EWEB has with BPA is not part of this record, the motion of taxpayers on this issue must be denied.
As to its cross-motion on this issue, the department asks the court to issue a ruling based on an assumption, for purposes of this case, that an Oregon municipal corporation was a party to a COA and yet not subject to taxation by reason of the provisions of ORS 307.090. The court is of the view that such a ruling would be in the nature of an advisory opinion. Further, as to whether agreements of the type to which EWEB is a party present constitutional issues, the fact is that the court does not have in this record any agreement to which EWEB is a party. Accordingly, the cross-motion of the department on this issue is denied.
15 USC section 391 provides:
This statute must be read strictly as it purports to impinge on the power of sovereign states to impose taxation. See Ann Sacks Tile & Stone, Inc. v. Dept. of Rev., 20 OTR 377, (2011). The reading taxpayers propose, that a generally applicable tax on property is a "tax on or with respect to generation or transmission of electricity" is by no means a strict reading. The Oregon property tax is levied only on property, not on or in respect of business activities such as generation or transmission of electricity. The tax in question here has none of the features of the tax found to be violative of the statute in Arizona Public Service Co v. Snead, 441 U.S. 141, 60 L Ed 2d 106 (1979).
This court finds applicable and persuasive the reasoning and conclusions of the court in PP&L v. Dept. of Revenue, 773 P.2d 1186 (Mont 1989), cert den, 493 U.S. 1050 (1990). In addition, taxpayers have introduced no legislative history or other indication that in adopting 15 USC section 391, Congress sought to have it apply to an ad valorem property tax. It is simply the case that the tax levied on the property in question here would in no way be affected by reason of taxpayers here engaging or not engaging in any given level of generation or transmission.
The motion of taxpayers is denied on this issue and that of the department is granted.
Taxpayers argue that inherent in the Supremacy Clause is the principle that a federal law that conflicts with state law will preempt the state law. Preemption can occur explicitly or where Congress is considered to have so occupied a field that there is no room for contrary state legislation or other action. English v. General Electric Co., 496 U.S. 72, 110 S.Ct. 2270, 110 L Ed 2d 65 (1990). Taxpayers do
As to field preemption:
Id. at 79.
Property taxation is certainly an area that has been traditionally occupied by the states. Indeed, the provisions of Article I, section 9, clause 4 of the federal constitution prohibit, as a practical matter, the imposition of a property tax by the federal government. This court can find, in the materials with which it has been presented, no basis for concluding that there was a "clear and manifest" Congressional intent to displace the power of the states to levy ad valorem property taxes on property involved in the areas as to which Congress has legislated and which have been cited by taxpayers. Indeed, if this argument of taxpayers were to be successful, a levy of property taxes on the properties of investor owned utilities located, in all respects, in Oregon would be prohibited. That is not the law. Cf. PP&L v. Montana Dept of Rev, 237 Mont. 77, 773 P.2d 1176 (1989), cert den, 493 U.S. 1050 (1990) (upholding a state-imposed beneficial use tax on use of BPA-owned power lines by owners of electric generating plants).
As to this issue, the motion of taxpayers is denied and that of the department is granted.
Now, therefore,
IT IS ORDERED that as to the Origination Clause issue, Plaintiffs' motion is denied and Defendant's cross-motion is granted;
IT IS FURTHER ORDERED that as to the Commerce Clause issue both motions are denied;
IT IS FURTHER ORDERED that as to the Supremacy Clause issue Plaintiff's motion is denied and Defendant's cross-motion is granted.