Opinion
TC 5252 TC 5271TC 5292 TC 5313TC 5350 TC 5395
05-18-2021
TESORO LOGISTICS NORTHWEST PIPELINE LLC, Plaintiff, v. DEPARTMENT OF REVENUE, State of Oregon, Defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR RECONSIDERATION
Robert T. Manicke Tax Court Judge
Defendant Department of Revenue (the "Department'*) has filed a Motion for Reconsideration asking the court to reconsider or clarify its Order Granting Plaintiffs Motion for Summary Judgment and Denying Defendant's Cross-Motion for Summary Judgment dated February 19, 2021. Plaintiff ("Taxpayer") resists the Department's Motion for Reconsideration and asks the court to make a factual finding that no adjustments are required to the MAV for tax year 2014-15 as determine din the court's order.
This order uses abbreviations and other defined terms in the court's order of February 19, 2021.
The order determines that "[s]ubject to any adjustments that maybe required for new property or new improvements, the MAV of the Property in Plaintiffs account [for tax year 2014-15] is $10,786,200." (Order at 17.) The Department asserts that, as adjusted under the order, the MAV is $45,839,200. (Def s Reply Recons at 2.) Taxpayer asserts that no adjustments are required and that the MAV, therefore, is $ 10, 786, 200. (Ptf's Resp at 7.)
As noted below, this is an increase compared to the MAV the Department sought on summary judgment: $38,723,000. (See Def s Cross-Mot Summ J; Decl of Harbur, Ex D at 1.)
The Department's motion, and particularly its reply brief, brings into sharper focus the Department's reliance on its interpretation of ORS 308. l42(1)(b):
Unless otherwise noted, the court's references to the Oregon Revised Statutes ("ORS”) are to 2013.
"For purposes of determining whether the assessed value of property exceeds the property's maximum assessed value permitted under section 11, Article XI of the
Oregon Constitution:
" (1) 'Property' means:
"(a) All property included within a single property tax account; or
"(b) In the case of property that is centrally assessed under ORS 308.505 to 308.665, the total statewide value of all property assessed to a company or utility that is subject to ORS 308.505 to 308.665." (Emphasis added.)
The Department asserts that, when applying the order, this definition causes any increase in the Oregon-allocated value of the worldwide valuation unit, compared to the RMV assigned to Chevron's account for tax year 2013-14, to be "new property" that must be added to the Property's MAV. (See Def's Reply Recons at 2.) The Department argues that this allocated share of value was never part of Chevron's account for tax year 2013-14 and thus was not carried over ("changed") to Taxpayer's account under ORS 308.162(1). (See Def s Mot Recons at 1-2.) Therefore, according to the Department, even if ORS308.162(1)had the "clear practical effect" of preserving the 2013-14 MAV because Taxpayer acquired the entire centrally assessed "unit of property" from Chevron, the fact that the Oregon share of Taxpayer's valuation unit was worth more than the Oregon share of Chevron's valuation unit in the prior year required the Department to add additional new property to the MAV, over and above the 2013-14 MAV applied to Chevron's account.
DISH Network Corp. v. Dept. of Rev., 364 Or 254, 285 n 32, 434 P.3d 379 (2019).
The Department's argument on summary judgment was based on this same interpretation of the definition of "property" under ORS 308. l42(1)(b). (See Def s Reply Summ J at 4, Order at 13 n 10). However, the Department reads the order as now requiring the amount of the MAV increase to be recalculated in a manner that raises the total MAV of the Property from $38,723,000, as the Department originally sought, to $45,839,200. The Department also continues to maintain its original position "that a new account was created for Tesoro's property [and that] this property value had no prior MAV." (Def s Reply Recons at 1 n 1.) Therefore, the court reads the Department's Motion for Reconsideration as seeking one of two alternatives: either a complete correction of the order that sets the Property's MAV at $38,723,000 based on the Department's original legal theory and computation, or a clarification that the MAV is $45,839,200 based on the Department's understanding and application of the order. Both alternatives rely on the Department's interpretation of ORS 308.142(1)(b).
The Department's original calculation treated the entire Property in Taxpayer's account for tax year 2014-15 as "new property," rejecting the notion that ORS 308.162(1)required that the 2013-14 MAV be carried over to Taxpayer's account. Because the parties stipulated that the Property had a 2014-15 RMV of $38,723,000, and the changed property ratio under QRS 308.153(1)(b) was 1.0, the Department originally assigned the property a 2014-15 MAV of $38,723,000 ($38,723,000x 1.0 = $38,723,000). (see Def's Cross-Mot Summ J at 5.) On reconsideration, the Department reads the court's order as requiring Taxpayer to (1) carry over the MAV assigned to Chevron for tax year 2013-14 ($10,786,200) and (2) add to that MAV a "new property" value consisting of (a) the Property's RMV for tax year 2014-l5 ($3 8, 723, 000), less (b) the amount shown as the RMV in Chevron's account for tax year 2013-14 ($3,670,000) multiplied by the changed property ration of 1.0. (See Def's Reply Recons at 1-2.) The Department thus asserts that the Property's 20l4-l5 MAV is $45, S39, 200 ($10,786,200 + (($38,723,000-$3,670,000)x 1.0)). (Id.).
Taxpayer contests the Department's premise, asserting that only the addition of property with a situs in Oregon could constitute "property" or'"new property" for Measure 50 purposes. (Ptf's Resp at 1.) With its response on reconsideration. Taxpayer submitted a declaration, which the Department has not contested, alleging that the only property with a situs in Oregon are lines of pipe that were included in Chevron's account for tax year 2013-14, and that the "control center improvements" that Taxpayer made after the acquisition and before the January 1, 2014, assessment date were improvements to property in Utah. (Ptf's Decl of Fraser Recons at l.) Because Taxpayer added no property with a situs in Oregon, Taxpayer argues that there is no basis to change the MAV earned over from Chevron's account. (Ptf's Resp at 1 -2.) For the reasons discussed below, the court agrees with Taxpayer.
These facts provided by Taxpayer's declaration on reconsideration fully resolve the only factual issue left open in the court's order regarding tax year 2014-15. The Department mentions two other facts in its reply brief on reconsideration, but the Department has not asserted in briefing or in oral argument that any genuine issue of material fact remains. First, the Department describes differences in the ways Chevron and Taxpayer expressed the computations required in their respective annual statements, but those computations have to do with value. (See Def's Reply on Recons at 3.) Nothing in the Department's discussion alleges that Taxpayer added lines of pipe or other real property or personal property (tangible or intangible) sitused in Oregon. Nor does the Department allege that either company reported incorrectly. (See also Statement of Marilyn Harbur, Oral Argument, May 12, 2021, 2:49:45-2:51:10 p.m. (stating that the Department "has no reason to believe" that Chevron did not report its Oregon system value as "they believed it was").) Second, the Department's Motion for Reconsideration asserts that Taxpayer failed to provide documents showing how Taxpayer allocated its purchase price among the it ems it acquired from Chevron. (Def's Mot for Recons at 2.) However, Taxpayer's declaration on reconsideration identifies where in the public record the purchase price allocation is located, and the Department's reply does not contest that the allocation information is available to it. (See Ptf's Decl of Fraser Recons at 1-2; Ptf's Resp at 6.) The court finds that there is no dispute of material fact.
The court believes that a focused analysis of ORS 308.142(1)(b), applying the framework in State v. Gaines, will address the Department's argument on reconsideration and clarify the court's order. See 346 Or. 160, 171-72, 206 P.3d 1042 (2009) (courts to interpret statutes based on text, context and legislative history, with potential resort to general maxims). The court will grant the Department's motion and will modify and adhere to its February 19, 2021 order, as shown at the end of this order.
The Department emphasizes the word "value" within ORS 308. l42(1)(b). (See Def s Reply Recons at 1 ("The 'property' assessed in Oregon is an allocated percentage of the system value."); id. ("The Oregon property is the Oregon allocated value.").) In essence, the Department argues that the dollar amount of value that results from allocating a portion of the value of the worldwide valuation unit to Oregon under ORS 308.550 is the "unit of property" that has a MAV under the opening sentence of Measure 50. See Or Const Art XI, § 11(1)(a) ("each unit of property in this state shall have a maximum assessed value * * *.").
Starting with the statutory text, the court looks to contemporaneous dictionary definitions to find the plain meanings of the relevant terms in ORS 308.142(1)(b): "value," "property," and "means." See OR-OSHA v. CBI Services, 356 Or 577, 589, 341 P.3d7Ol (2014) (courts "assume that the legislature intended words of common usage to be given their ordinary meanings"; referring to dictionaries to discover plain meaning). Webster's defines "value" in relevant part as follows:
"1 a: the amount of a commodity, service, or medium of exchange that is the equivalent of something else: a fair return in goods, services, or money <the method of merchandising is to give the buyer good [value] at the right price - Wall Street Jour.>* * * b: valuable consideration <for [value] received><a holder or purchaser for [value] 2: the monetary worth of something: marketable price usu. In terms of a medium of exchange <his holdings increase in [value] >"Webster's Third New Int'l Dictionary 2530 (unabridged ed 1993). The definition that the court finds most closely on point states that "value"is the "amount of a * * * medium of exchange that is the equivalent of something else." Id. (emphasis added). By this definition, value cannot be property, because property is "something else." Rather, "value"is an a mount in dollars (the "medium") that can be "exchange[d]" for property.
The plain meaning of "property/' on the other hand, is, in relevant part:
"2 a: something that is or may be owned or possessed: wealth, goods; specif: a piece of real estate <the house . . . surrounded by the [property] -G.G. Weigend> b: the exclusive right to possess, enjoy, and dispose of at thing: a valuable right or interest primarily a source or element of wealth: ownership * * * c: something to which a person has a legal title: an estate in tangible assets (as lands, goods, money) or intangible rights (as copyrights, patents) in which or to which a person has a right protected by law"Id. at 1818. As "something that is or may be owned or possessed," or something in which a person may have "a valuable right or interest," property is indeed "something else" that may be associated with a value in money but is not identical to its value in money. The court concludes that the terms "value" and "property" are fundamentally different.
The court therefore examines the term "means" to ascertain the degree of relationship that the legislature could have intended when it wrote that"'[p]roperty' means * * * the total statewide value of all property" assessed to a centrally assessed company. Webster's defines the verb "mean" as:
"1: to have in the mind esp. as a purpose or intention: purpose, design, intend <houses are meant for use> <[mean]s to make it difficult for you> <meant\o come home early> 2: to serve or intend to convey, show, or indicate: signify, denote, express <what do you [mean] by such conduct> <those words [mean] nothing to me> 3: to have significance or importance to the extent or degree of: count for <health [meaw]everything> <a happy home [mean]smuch to a child> <music [mean]s little to me><success without recognition [mean]snothing to him> <her happiness meant the world to him>"Id. at 1398. The court is struck by the absence of a definition that forces the reader to equate "value" with "property," as the Department suggests. By using the transitive verb "means, "the legislature intended the term "property" to "convey, show or indicate" something. These terms may, but do not necessarily always, imply a complete overlap between the subject (property) and the object (value of property).
Based on these definitions, the court concludes that the legislature may have intended ORS 308.142 (1)(b) as something other than a direction to mechanically substitute the word "value" each time the word "property" appears in the Measure 50 statutes.
Th e contemporaneous technical definitions are not materially different. See EAN Holdings, LLC v. Dept. of Rev., ___ OTR ___ (Aug 12, 2020) (slip op at 4) ('If the court discovers a technical meaning that differs from the plain meaning, the court will examine usage in context to determine whether the legislature intended to use the term in that different, technical sence")(citing DCBS v. Muliro, 359 Or 736, 745-46, 380 P.3d 270 (2016)). Although Blacks has multiple entries for different types of value and property, the technical definitions of the general terms "value" and"property" are substantially the same as their plain meanings:
"Value. The utility of an object in satisfying, directly or indirectly, the needs or desires of human beings, called by economist 'value in use, 'or its worth consisting in the power of purchasing other objects, called value in exchange.' * * *Also the estimated or appraised worth of any objector property, calculated in money. To estimate the worth of; to rate at a certain price; to appraise; or to place a certain estimate of worth on in a scale of values."Black's Law Dictionary 1551 (6thed 1990) (emphasis added).
"Properly. That which is peculiar or proper to any person; that which belongs exclusively to one. In the strict legal sense, an aggregate of rights which are guaranteed and protected by the government.*** The term is said to extend to every species of valuable right and interest. More specifically, ownership; the unrestricted and exclusive right to a thing; the right to dispose of a thing in every legalway, to possess it, to use it, and to exclude everyone else from interfering with it. That dominion or in definite right of use or disposition which one may lawfully exercise over particular things or subjects. The exclusive right of possessing, enjoying, and disposing of a thing. The highest right a man can have to an3tfiing; being used to refer to that right which one has to lands or tenements, goods or chattels, which noway depends on another man's courtesy.
"The word is also commonly used to denote everything which is the subject of ownership, corporeal or incorporeal tangible or intangible, visible or invisible, real or personal; everything that has an exchangeable value or which goes to makeup wealth or estate. It extends to every species of valuable right and interest, and in eludes real and personal property, easements, franchises, an din corporeal hereditaments, and includes every invasion of one's property rights by actionable wrong. * * *.
"Property embraces everything which is or may be the subject of ownership, whether a legal ownership, or whether beneficial, or a private ownership "Id. at 1216 emphasis added). Black's does not have an entry for the verb form of mean."
The court proceeds to statutory context. Within the same 1997 law implementing Measure 50, the legislature adopted not only ORS 308. l42(2)(b), but also a second definition of "property" that was codified as an amendment to one of the central assessment statutes. The court reprints both:
This second definition, in ORS 308.510(5), is virtually identical to the definition in ORS 30 8.142 (1)(b), except that ORS 308.510(5) cannot be read to define "property" as "value." It does not mention value, except within the phrase "maximum assessed value." The 1997 legislature added the definition in ORS 308.510(5) at the end of the statute that generally defined "property," real and personal property, and the "use" of property, for purposes of central assessment. See Or Laws ch 541, § 203 (amending ORS 305.510)). The placement of ORS 308.510(5) suggests that its function is to alert or remind the reader that the Measure 50 statutes, codified apart from the central assessment statutes, add an overlying regime that limits the growth of property values and requires its own special-purpose definition for the determination of MAV. The court sees no indication in the text that the legislature intended ORS 308.510(5) and ORS 308.142(1)(b) to have meanings differing from each other; rather, ORS 308.510(5) is a signpost pointing to the Measure5O statutes and re stating the definition of property there.
ORS 308.142(1), Or Laws 1997 ch 541, § 7
ORS 308.510(5), Or Laws 1997 ch 541, § 203
For purposes of determining whether the assessed value of property exceeds the property's maximum assessed value permitted under section 11, Article XI of the Oregon Constitution: (1) "Property" means: (a) All property included within a single property tax account; or (b) In the case of property that is centrally assessed under ORS 308.505 to 308.665, the total statewide value of all property assessed to a company or utility that is subject to ORS 308.505 to 308.665.
For purposes of determining the maximum assessed value of property under section 11, Article XI of the Oregon Constitution, "property" means all property assessed to each company that is subject to assessment under ORS 308.505 to 308.665.
In 2009 the legislature, among other changes, moved the general definition of"property'`for central assessment purposes from ORS 308.510(1) to ORS 3 OS. 5 05, which contains other general definitions. Or Laws 2009, ch 128, §3.
Based on that understanding, the court concludes that the lack of any reference to "value" in ORS 308.510(5) undermines the Department's argument. Rather than read ORS 308.142 (1)(b) as redefining property as something else, the court believes the more plausible interpretation is to read ORS 308. U2(1)(b) and ORS 308.510(5) together as performing two functions. First, these provisions define the assessable and taxable unit of property for Measure 50 purposes as "all" property assessed to a business listed in ORS 308.515, as opposed to treating component parts as separate units of property, such as land, or improvements, or tangible personal property, or intangible property. The word "total" in ORS 308.142 (1)(b) emphasizes this point. Second, by referring to property "assessed to" a listed business, both provisions limit the unit of property to property in Oregon. Although the property tax statutes nowhere define the term "assess, " the statutes make clear that the Department has no power to "assess" property not situsedm Oregon. ORS 308.515(1) ('The Department of Revenue shall make an annual assessment of any property that has a situs in this state * * *.") (emphasis added). ORS 308.142(1)(b) emphasizes that point by referring to the "statewide" value of property.
This court has defined"assessment generally, for locally assessed property, as the annual process of valuing property and recording specified information about it on the roll. See Gray v. Dept of Rev. , 23 OTR 220, 230-32(2018). For centrally assessed property a similar working definition would seem to apply. See ORS 308540 (Department to prepare assessment roll annually, showing assessed value of centrally assessed property); ORS 3 08.5 60(2) (specifying additional information to be shown on central assessmentroll); see generally Northwest Natural Gas Co. v. Dept. of Rev., 347 Or. 53 6, 5 53 (2010) (declining to "engage in the complicated and nuanced analysis of whether and when "assessment' is' taxation'").
This reading of paragraph (b) of ORS 308.142(1) squares exactly with the definition of "unit of property" under Measure 50, as determined by the Supreme Court in Flavorland Foods v. Washington County Assessor, 334 Or. 562, 591, 54 P.3d 582 (2002) ("We conclude that the voters intended the phrase "each unit of property in this state' to refer to all the property in a property tax account which, in this case, includes both land and improvements.") (emphasis added). This same reading also fits with the definition of "property" that is locally assessed, in the preceding paragraph of the same statute: "'Property' means * * * all property included within a single property tax account." ORS 308. l42(1)(a) (emphasis added).
This latter definition in paragraph (a) of ORS 308. 142(1) might haveresolved the issue in Flavorland foods, which involved locally assessed property. However, for tax year 1998-99 at issue in that case, ORS 3 OS.215(1) contained a contradictory instruction. See Flavorland Foods, 334 Or at565n 2. Although the legislature eliminated the contradiction by amending ORS 308.215 in a l999technical corrections bill, the Supreme Court chose to not rely on either statute. See id.; see also Testimony, House Revenue Committee, HB 2129, March 16, 1999, Ex 3 (statement of James Manary, Department of Revenue) (describing Measure 5 0 "clean-up" provisions).
Additional relevant context is in the provisions governing "new property or new improvements"-the statutes most directly at issue in the case, which the legislature also enacted as part of the Measure 50 implementation law. See ORS 308.149(6) (defining "new property or new improvements"); 308.153 (applying same); Or Laws 199 7 ch 5 41, §§ 9, 11. The court observes first that the definition in ORS 308.149(6)(a) refers repeatedly to physical activities such as "rehabilitation" of property. These terms would be difficult to apply to the abstract concept of "value," yet no provision in ORS 308.149(6) suggests that a centrally assessed taxpayer is protected from a potential MAV increase when it holds property that undergoes construction or any of the other listed changes.
The statutory definition of "new property or new improvements" begins by declaring: "'New property or new improvements' means changes in the value of property as the result of * * * [n]ew construction * * *." ORS 308.149(6) (emphasis added.) Here too, the legislature seems at first blush to define "property" as something else ("changes" or "changes in value"). But the court must, if possible, read the statute consistently with the portion of Measure 50 that the statute interprets. See Salem College & Academy, Inc. v. Employment Div., 298 Or. 471, 481, 695 P.2d 25 (1985). Section 11 (9)(a) of Measure 50 defines "improvements" in terms that reflect the ordinary meaning of "property":
The first entry listed in Webster's defines the noun "change" as the"action of making something different inform, quality or state * * *." Webster's at 3l4.
"'Improvements' includes new construction, reconstructions, major additions, remodeling, renovation and rehabilitation, including installation, but does not include minor construction or ongoing maintenance and repair."Or Const Art XI, § 11 (9)(a). And the next subsection in Measure 50 states:
"In calculating the addition to value for new property and improvements, the amount added shall be net of the value of retired property."Or Const Art XI, § 11(9)(b). The references in subsection (b) to the value "for" or "of property show that the legislature in framing Measure 50, and the people in adopting it, understood property as different from value or changes in value, undermining any interpretation of ORS 30 8.149 (6) that would equate those terms.
The court is a ware of one other instance in which resort to con text is required in order to understand whether the legislature intended to refer to "property" as opposed to the "value" of property. ORS 308.550(1) states in part:" p]f the department values the en tire property with in and without this state as a unit, it may ascertain the property subject to taxation in Oregon by the proportion" of miles of rail, wire, pipe or lines in Oregon vs. everywhere. On its face, subsection (1) seems to support the Department's view that the allocated system "value"/ s the "property subject to taxation in Oregon" However, the legislature's intent becomes clear in subsection (2), which describes th e function of subsection (1) as determining" the value of any property having a situs in th is state." ORS 3 08.5 50(2) (emphasis added).