Charter Communications Holding Co. v. Dept. of Rev.

88 March 30, 2020 No. 6

IN THE OREGON TAX COURT

REGULAR DIVISION

CHARTER COMMUNICATIONS

HOLDING COMPANY, LLC,

a Delaware limited liability company;

Falcon Cable Systems Company II, L.P.,

a California limited liability partnership

(dba Charter Communications);

Falcon Community Cable, L.P.,

a Delaware limited partnership

(dba Charter Communications); and,

Falcon Cablevision, L.P.,

a California limited partnership

(dba Charter Communications),

Plaintiffs,

v.

DEPARTMENT OF REVENUE,

Defendant.

(TC 5361 (Control); TC 5362-69; TC 5394)

In this case concerning centrally assessed property, Plaintiffs (taxpayers)

objected to the Department of Revenue’s (the department’s) treatment of all their

property as “new property,” including property that had been centrally assessed

the prior year. The department argued for the dismissal of this argument on

“issue exhaustion” grounds because taxpayers had failed to raise the issue during

the administrative conferences with the department required by ORS 308.584.

The court, applying the framework set out in Tuckenberry v. Board of Parole,

365 Or 640, 451 P3d 227 (2019), held that issue exhaustion was not required in

this case. The court found “no legislative intent, or prudential consideration, that

would preclude litigation of issues not raised or fully addressed” in the process

described in ORS 308.584.

Oral argument on Defendant’s motion for partial dis-

missal was held January 10, 2020, in the courtroom of the

Oregon Tax Court, Salem.

Marilyn J. Harbur, Senior Assistant Attorney General,

Department of Justice, Salem, filed the motion and argued

the cause for Defendant Department of Revenue.

Daniel H. Schlueter, Eversheds Sutherland (US), LLP,

Washington, D.C., filed the response and argued the cause

for Plaintiffs.

Cite as 24 OTR 88 (2020) 89

Decision rendered March 30, 2020.

ROBERT T. MANICKE, Judge.

I. INTRODUCTION

In these consolidated cases involving centrally

assessed property, Defendant (the department) asks the

court to dismiss one of the claims of Plaintiffs (collectively,

“taxpayer”) on the ground that taxpayer failed to ade-

quately raise that claim in a conference before the depart-

ment’s director pursuant to ORS 308.584.1 The motion

applies to taxpayer’s claim that the department errone-

ously treated all of taxpayer’s property as “new property”

for Measure 50 purposes, including telephone property that

the department had centrally assessed for the prior year.2

Taxpayer acknowledges that some of its property was “new

property” under DISH Network, but taxpayer claims that

“the [d]epartment improperly included the value of [taxpay-

er’s] telephone property more than once in determining the

value of [taxpayer’s] maximum assessed value” for each of

the Subject Years. The department does not dispute that

taxpayer requested and participated in a conference in the

summer of each Subject Year during the annual statutory

window for doing so, starting in 2009,3 but the department

asserts that “plaintiff raised no issue” in any of the con-

ferences “in regard to [taxpayer’s] property not being ‘new

1

Unless otherwise indicated, citations to the Oregon Revised Statutes (ORS)

are to the 2009 edition. The periods at issue in the consolidated cases are the 10

tax years 2009-10 through 2015-16 and 2017-18 through 2019-20. (See Plaintiff’s

Table of Claims and Tax Years at Issue (“Table of Tax Years”).) There is a one-

year gap in the sequence because taxpayer filed no complaint for tax year 2016-17.

The Magistrate Division held all but the most recent cases in abeyance pending

the Oregon Supreme Court’s decisions in Comcast Corp. v. Dept. of Rev., 356 Or

282, 337 P3d 768 (2014), and DISH Network Corp. v. Dept. of Rev., 364 Or 254, 434

P3d 379 (2019). In 2019, after the Magistrate Division reactivated the cases, the

Regular Division accepted them for hearing by special designation.

2

The department’s motions to dismiss cover an eight-year subset of the 10

tax years, tax years 2009-10 through 2015-16 and 2017-18, and for purposes of

this order the court refers to that subset as the “Subject Years.” The claim that

the department seeks to dismiss appears as Claim 2 in the amended complaints

for tax years 2009-10 through 2013-14 and as Claim 4 in the amended complaints

for tax years 2014-15, 2015-16, and 2017-18.

3

For example, the department notes concessions it made upon receiving

additional information from taxpayer in response to the first notice of tentative

assessment it issued in 2009.

90 Charter Communications Holding Co. v. Dept. of Rev.

property’ 4 or double counting of such telephone property5 in

the department’s calculation of MAV.”

II. ISSUE

Should the court dismiss taxpayer’s claim on “issue

exhaustion” grounds?

A. Tuckenberry Framework

Tuckenberry provides a framework for analyzing

whether and how “issue exhaustion” applies where the leg-

islature has expressly required exhaustion of administra-

tive remedies. “Issue exhaustion” is “ ‘the requirement that

a party must have objected before the agency to errors he

asserts on judicial review * * *.’ ” Tuckenberry, 365 Or at 646

(quoting Marbet v. Portland Gen. Elect., 277 Or 447, 456, 561

P2d 154 (1977)). Issue exhaustion is not necessarily required

merely because a statute or a court requires exhaustion of

administrative remedies. See Sims v. Apfel, 530 US 103,

107, 120 S Ct 2080, 147 L Ed 2d 80 (2000) (rejecting govern-

ment’s argument that issue exhaustion is a corollary of any

requirement of exhaustion of administrative remedies).

Tuckenberry involved ORS 144.335, which allowed

an offender under the jurisdiction of the State Board of

Parole and Post-Prison Supervision to seek judicial review

of a board order if the person was aggrieved by the order

and had “exhausted administrative remedies as provided

by board rule.” Tuckenberry, 365 Or at 648 (quoting ORS

4

The department also asserts, as an alternative ground for dismissal of the

same claim, that the issue is moot because in the department’s answers to tax-

payer’s amended complaints the department asserted a lower maximum assessed

value than shown in its opinion and order. The court agrees with taxpayer that

the relatively modest reduction reflected in the department’s answers does not

render taxpayer’s claim of double-counting of telephone property moot in any of

the tax years.

5

Briefing on the department’s motion appears in several rounds of filings

in the record. Shortly after the decision in DISH Network, taxpayer moved to

amend its complaints, and the department resisted, raising objections similar to

those now before the court. The court allowed taxpayer to amend its complaints,

and the department included motions to dismiss in its answers to the amended

complaints. During the time for briefing on the department’s motion, the Oregon

Supreme Court issued its decision in Tuckenberry v. Board of Parole, 365 Or 640,

451 P3d 227 (2019), and this court directed the parties in this case to file addi-

tional briefs applying that decision.

Cite as 24 OTR 88 (2020) 91

144.335). The petitioner was an offender seeking relief from

a special condition of his release that he “not enter into or

participate in any intimate relationship” without permission

from his parole officer. Id. at 643. The petitioner asserted

that he sought to be a better father to his daughter and to

be in her life. Id. at 643-44. The board denied relief, and the

petitioner appealed on the grounds that the restriction was

overly broad and unconstitutionally vague.

The court applied the Gaines framework to deter-

mine to what extent the statute imposed an issue exhaustion

requirement. See State v. Gaines, 346 Or 160, 171-72, 206

P3d 1042 (2009). Starting with the text, the court concluded

that the administrative rules referred to in the statute

required an offender to identify to the board the “specific

ways” in which the offender thought the board had acted in

error. Tuckenberry, 365 Or at 649-50 (citing administrative

rule requiring offender to provide the board a “plain and

concise statement of the points for which the offender wants

review, specifically identifying” the board’s alleged errors).

Nonetheless, after examining the limited legislative history,

the court concluded that ORS 144.335 “does not impose a

statutorily required limitation on the issues that may be raised

on judicial review.” Id. at 652 n 4 (first emphasis in original;

second emphasis added). Instead, the court concluded that

“the statute’s issue-exhaustion requirement is not uniquely

and strictly fashioned for the board, but instead remains

flexible under general prudential exhaustion principles.”

Id. at 652.

Having found no legislative intention to deviate

from general prudential principles regarding the scope of

judicial review, the court next applied those principles to

determine whether judicial review of issues not expressly

raised before the board was precluded. The court first con-

sidered the rationale underlying the issue exhaustion doc-

trine. In litigation in the courts, the prudential requirement

of issue exhaustion serves two purposes: forcing development

of the evidentiary record and fostering procedural fairness.

Id. at 653. Because trial courts operate within an adversar-

ial system, each party is responsible to present the facts and

legal arguments that favor that party, and the exhaustion

requirement helps to ensure that each party fulfills that

92 Charter Communications Holding Co. v. Dept. of Rev.

responsibility. By contrast, the court found that proceed-

ings before the board generally were not fully adversarial,

because the board had broad authority to consider “evidence

of its own choosing,” which need not include an interview of

the offender, and because the board was not required to con-

duct a hearing. Id. at 653-54. The court concluded that the

rationale for requiring issue exhaustion was less applicable

to board proceedings.

The court declined to rely solely on the relatively

nonadversarial nature of board proceedings, however, and

turned instead to three prudential factors. First, the court

found that the offender “provided at least a general descrip-

tion of his concerns to the board”; this was all that could

be expected given the offender’s lack of representation and

limited education. Id. at 654-55. Second, the court found

that the offender raised “important issues of public inter-

est” concerning the scope of the board’s authority. Id. at 655.

Finally, the court found that raising the issues more specif-

ically would likely have been futile. Id. The court concluded

that the doctrine of issue preclusion did not bar judicial

review of the petitioner’s claim.

III. ANALYSIS

Taxpayer argues that (1) ORS 308.584 does not

require “issue exhaustion”; (2) in any event, taxpayer ade-

quately raised the issue in the conference before the depart-

ment’s director; (3) if issue exhaustion was required and

taxpayer did not adequately raise the issue, the court should

relax the issue exhaustion requirement; and (4) if taxpayer

does not prevail on any of its first three arguments the court

should remand the claim to the director, not bar taxpayer

from having it adjudicated. The department contests each

argument. The court considers these arguments within the

Tuckenberry framework.

B. Did the legislature intend to require issue exhaustion?

Taxpayer proffers a Gaines analysis of ORS 308.584,

arguing that the text, context, and legislative history show

that the legislature did not intend to bar a taxpayer from

litigating in this court an issue not raised in a director

Cite as 24 OTR 88 (2020) 93

conference. Enacted in 2007 and unchanged since then,

ORS 308.584 provides:

“(1) A person or company receiving a notice of tenta-

tive assessment under ORS 308.582 may make a request for

a conference on the reduction in valuation or modification of

the apportionment of a tentative assessment set forth in the

notice.

“(2) The request shall be made to the Director of the

Department of Revenue on or before June 15 of the assess-

ment year. If the Department of Revenue failed to properly

mail the notice described in ORS 308.582 to the person

or company, a request for a conference may be made on or

before June 25 of the assessment year, but may not be made

thereafter.

“(3) The director shall hold a conference under this sec-

tion as soon as is practicable following the date a request is

made and shall issue an order modifying the valuation or

apportionment of an assessment or affirming the tentative

assessment on or before August 1 of the tax year.

“(4) A conference with the director is an administrative

remedy that must be exhausted before an appeal of the val-

uation or apportionment of an assessment may be made to

the Oregon Tax Court. The valuation or apportionment of

an assessment under ORS 308.505 to 308.665 may not be

appealed to the tax court if the person or company does not

file a timely request for a conference under this section prior

to seeking an appeal before the tax court.

“(5) Subject to subsection (4) of this section, an appeal

to the tax court may be made under ORS 305.280.

“(6) A petition may not be filed with a county board of

property tax appeals for a reduction in value of property

assessed under ORS 308.505 to 308.681 or with respect to

any other matter arising under ORS 308.505 to 308.681.”

(Emphases added.)

Taxpayer acknowledges that ORS 308.584, like the

parole statute at issue in Tuckenberry, expressly requires

exhaustion of the process before the agency as a prerequi-

site to a judicial appeal. However, taxpayer focuses on sub-

section (4), arguing that that provision, in contrast to ORS

144.335(1)(b), contains complete instructions describing

94 Charter Communications Holding Co. v. Dept. of Rev.

what a centrally assessed taxpayer must do, namely “file a

timely request for a conference” and participate in it.6 The

court agrees with taxpayer that this instruction provides no

textual basis to conclude that ORS 308.584 bars a taxpayer

from asserting in this court specific issues that the taxpayer

did not raise before the director.

Turning to the context of ORS 308.584, taxpayer

traces the historical development of ORS 308.584, which

shows that the legislature expressly imposed, then elimi-

nated, and has never reinstated, an express issue exhaustion

requirement for director conferences. Before 1995, former

ORS 308.595(3) (1993) allowed a taxpayer subject to central

assessment to “appeal” from a notice of the department’s pro-

posed assessment. The statute provided: “The provisions of

ORS chapter 305 shall apply to appeals to the director and

to the Oregon Tax Court.” Former ORS 308.595(5) (1993). At

that time, before the legislature had created the Magistrate

Division, chapter 305 contained the statutes governing the

department’s administrative hearing process for the ini-

tial adjudication of all manner of disputes, including those

involving the valuation of locally assessed property, as well

as assessments of personal and corporate income taxes and

virtually all other taxes that the department administered.

See former ORS 305.275(5) (1993). An order of the depart-

ment resulting from such an appeal was subject to review in

this court. Former ORS 305.560(1) (1993). As to exhaustion

of remedies, former ORS 305.275(4) (1993) provided (subject

to exceptions not relevant here): “[N]o person shall appeal to

the Oregon Tax Court * * * unless the person first exhausts

the administrative remedies provided before the depart-

ment and the director.” And most importantly, former ORS

305.425(3) (1993) provided (again, subject to exceptions not

relevant here):

“In the case of [Tax Court] proceedings to set aside an order

or determination of the department, the issues of fact and

law shall be restricted to those raised by the parties in the

appeal to the department. If the court finds that other issues

are important to a full determination of the controversy, it

6

The department asserts, and taxpayer does not disagree, that the first sen-

tence of subsection (4) adds a requirement that a taxpayer participate in the

conference, not just request it.

Cite as 24 OTR 88 (2020) 95

shall remand the whole matter to the department for fur-

ther determination and the issuance of a new order * * *.” 7

(Emphasis added.)

The 1995 legislature deleted virtually all of the fore-

going portions of ORS chapter 305 in enacting the law that

created the Magistrate Division. See Or Laws, 1995, ch 650,

§ 7 (striking exhaustion of remedies provision in former ORS

305.275(4)); id. § 19 (striking restriction of issues of fact and

law provision in former ORS 305.425(3)). The same law also

changed the references to an “appeal” of a notice of central

assessment in former ORS 308.595 (1993), replacing them

with references to a “request for a conference” with the direc-

tor. Id. § 91. In the same section, the law struck from ORS

308.595 the statement that the provisions of ORS chapter

305 apply to “appeals to the director.” Id. The 1995 changes

thus eliminated not only the issue exhaustion requirement,

but also any statutory requirement of exhaustion of admin-

istrative remedies, in central assessment cases as in other

proceedings. See Hyundai Semiconductor America v. City

of Eugene, 332 Or 293, 300 n 8, 27 P3d 124 (2001) (“The

1995 Legislature amended ORS 305.275 and eliminated the

exhaustion requirement.”).

In 2007, the legislature enacted a law specific to

the department’s central assessment procedures. Or Laws

2007, ch 616. Among other changes, the law removed the

provisions for requesting a conference from ORS 308.595

and created what is now ORS 305.584, reprinted above.

Id. § 3. Taxpayer points out that, while the 2007 law rein-

stated a specific requirement to exhaust the administrative

remedy of a conference, the law does not reinstate an express

issue exhaustion requirement. The court agrees with taxpayer

that the prior existence of the express requirement of issue

7

The department cites tax cases in support of its issue exhaustion argument,

but those cases arose before the 1995 repeal of the foregoing provisions. See, e.g.,

Mullenaux v. Dept. of Rev., 293 Or 536, 540, 651 P2d 724 (1982). See Or Laws

1977, ch 873, § 29 (amending ORS 305.425 containing issue exhaustion require-

ment); id. § 35 (modifying director review statute by adding cross-reference to

appeal processes in ORS chapter 305). The cases do not cite the former statutory

issue exhaustion requirement, but the court finds their usefulness limited here,

because they also do not clearly distinguish between a general exhaustion of rem-

edies requirement and a specific requirement of issue exhaustion as discussed in

Tuckenberry.

96 Charter Communications Holding Co. v. Dept. of Rev.

exhaustion, and its repeal in 1995, provide important context

that tends to indicate that the legislature did not intend in

2007 to require issue exhaustion when it reinstated only a

general requirement to exhaust administrative remedies.

Both parties refer to the legislative history of the

2007 act.8 That act originated with a bill introduced at the

request of the department, HB 2239. The department’s rep-

resentative described the purposes of the bill as updating

archaic terminology, conforming descriptions of the steps in

the annual central assessment process to current practices,

importing “some due process parts” from other assessment

laws into central assessment, and changing the process for

correcting prior-year rolls.

Taxpayer points out that the chair of the Senate

Finance and Revenue Committee and at least one other

member referred to the 2007 bill as a “housekeeping” mea-

sure and voted it to the floor with little discussion. The

department points to the lengthier discussion before the

House Revenue Committee on February 6, 2007, where the

same representative explained the department’s intentions

for the exhaustion of remedies provision. The department

asserts that the language emphasized below shows a legis-

lative intention to impose an issue exhaustion requirement.

Taxpayer disputes this interpretation:

“John Phillips: Mr. Chair, one last comment and this is

the one that I’m going to flag for you as being an immedi-

ate perception of a change here. And I’d be happy to talk at

length here. It’s the one place in the bill that there may be

a perception of a change. We don’t think so, our legal advice

is that this is not a change, but you know in fairness to

everybody, that you’re aware and this is the part that deals

with the appeal process. And I believe it’s earlier in the bill,

and it is on page 2, Section 3. And in Section 3 particularly

looking at subsection (3), (4), (5) and (6), which are essen-

tially between lines 12 and 25. And in this section it talks,

it spells out in greater detail the process for disagreeing

8

The parties also discuss the legislative history of the 1995 act, but the

court finds little there of assistance, as most of the discussion centered on prob-

lems in the department’s general appeal process for matters other than cen-

trally assessed property. The legislature addressed those issues by creating the

Magistrate Division.

Cite as 24 OTR 88 (2020) 97

and resolving value and property. Historically the direc-

tor has held conferences, people file protective requests

for conferences or they show up. We discuss, we negotiate,

resolve issues and most of them are not appealed. Very—four

percent of the cases there’s an appeal and so we’re clarify-

ing that the request for conference is required, you have to

participate in a conference and work through these issues or

you’ve not completed or exhausted your administrative rem-

edies. What we don’t want to see and what we haven’t seen

because this is the way we’ve administered the law is peo-

ple jumping over that process and saying we’re not going to

talk to the director, we’re going to go to the—on appeal to

the Tax Court. We don’t see that, it hasn’t been done to my

knowledge and people understand that they need to have

the conversation, that’s why they file the protective appeal

or where they have the conversation. So this spells it out in

language that we think is crystal clear. Secondly—

“Chair Barnhart: Are there any cases on points? Has the

Tax Court sent something back because that conversation

didn’t take place?

“John Phillips: I’m not aware of any. I would have to ask

people that have been working in this longer.

“Chair Barnhart: Okay, thank you. Second place.

“John Phillips: Subsection (5) which is on line 21, that’s

the part that refers to subject to subsection (4) no appeal to

the Tax Court may be made under 305.280. In other words

this is the part that says, you know, you can’t appeal to the

Tax Court unless you’ve had your—it’s almost a restate-

ment of saying you needed to exhaust your administrative

remedies. And Section 6, goes without saying but it’s been

without saying and we’re offering that we actually spell it

out in the statute and say there’s no appeal to the Board

of Property Tax Appeals. To refresh your memory on your

orientation that Mary gave you, the Board of Property Tax

Appeals is a local board, there’s one at least in every county.

They meet February to April or May, they hear appeals. It’s

sort of the first appeal for non-centrally assessed compa-

nies. It’s the discussion part for them. Centrally assessed

companies don’t get an appeal to the Board of Property Tax

Appeals for a number of reasons. One, they get a conference

with the director. Two, which county would they appeal to?

Would they go to the board in every county? You know, I’ve

got twenty-five miles of wire or pipe in your county and I’ve

98 Charter Communications Holding Co. v. Dept. of Rev.

got a substation in your county, and so practically speaking

it doesn’t make a lot of sense to have a local board review

a network system and so this is the way we’ve operated.

To my knowledge we’ve had one appeal that was dropped

over the years. None that have ever[ ] gone to the tax—the

actual Board of Property Tax Appeals and—uh—that were

actually heard. And so we’re just putting it in statute so

everybody’s clear on what the policy is. So I’m drawing your

attention to that because that explicitly has not been in the

statute.

“Representative Butler: Mr. Chair, just a question about

the administrative—this is an administrative remedy,

does the administrator ever waive having the meeting so

that the folks can go directly to the Oregon Tax Court?

“John Phillips: Mr. Chair, Representative Butler, I’m not

aware of that. I would have to actually inquire with the

director and find out.

“Chair Barnhart: Thank you.”

The court finds that the department’s testimony

does not show an intention to preclude litigation of issues

not discussed in a director conference.9 The department’s

concern appears to have been focused on preventing tax-

payers from bypassing the conference process altogether, as

the following excerpt from Phillips’s testimony indicates:

“What we don’t want to see and what we haven’t seen

because this is the way we’ve administered the law is peo-

ple jumping over that process and saying we’re not going to

talk to the director, we’re going to go to the—on appeal to

the Tax Court. We don’t see that, it hasn’t been done to my

knowledge and people understand that they need to have

the conversation * * *.”

At most, the department, like the board in Tuckenberry, may

have wanted taxpayers to discuss every possible issue in the

conference, as that is normally a desirable outcome when

feasible. However, even if the court treats the statements

of the department’s representative as if they were uttered

by legislators, the court sees no intention to bar either tax-

payers or the department from raising in this court issues

9

The court also does not necessarily attribute to the committee members

the stated intentions of the department’s representative. See Landau, Oregon

Statutory Construction, 97 Or L Rev 583, 702 (2019).

Cite as 24 OTR 88 (2020) 99

not discussed in the director conference.10 Accordingly, the

court concludes that the legislature has not imposed a stat-

utory requirement of issue exhaustion.

C. Does the judicial doctrine of issue exhaustion require dis-

missal in this case?

The court now turns to the principles that the

Supreme Court considered in Tuckenberry: issue exhaus-

tion as a tool to force development of the evidentiary record

and to foster procedural fairness. As taxpayer points out,

Oregon law does not require the director to develop or main-

tain any record of the conference proceedings, other than

the resulting order, and neither the statute nor any admin-

istrative rule specifies any level of detail for the order. See

ORS 308.584(3). And in contrast to the provisions governing

trial court review of administrative procedures or those gov-

erning appellate court review of trial court procedures, this

court’s review of a director order under ORS 308.584 con-

sists of trial de novo. Compare ORS 183.482(7) (“Review of a

contested case shall be confined to the record, and the court

shall not substitute its judgment for that of the agency as to

any issue of fact or agency discretion.”) with ORS 305.425

(“(1) All proceedings before the judge of the tax court shall

be original, independent proceedings and shall be tried

without a jury and de novo. (2) If a statute provides for an

appeal to or a review by the court of an order, act, omission

or determination of the Department of Revenue * * * the pro-

ceeding shall be an original proceeding in the nature of a

suit in equity to set aside such order or determination or

correct the act or omission.”). Parties, including the depart-

ment, often rely on that fact to present new evidence or to

take new positions in this court that were not raised in the

director conference. E.g., Level 3 Communications, LLC III

v. Dept. of Rev., 23 OTR 440 (2019). The court therefore con-

cludes that the principle of developing the record before the

director does not weigh in favor of barring judicial review.

Turning to the second principle discussed in Tuckenberry,

the court believes that requiring a party to raise an issue

10

In fact, the testimony suggests that, with only four percent of cases being

appealed, the director conference process was functioning smoothly even before

the legislative change, when no statute imposed an exhaustion of remedies

requirement, much less a requirement of issue exhaustion.

100 Charter Communications Holding Co. v. Dept. of Rev.

early on in the proceedings generally promotes procedural

fairness. Specifically, issue exhaustion can prevent one

party from prejudicing later proceedings against another by

lying in wait with new facts or legal arguments until it is

too late for the other party to defend itself on appeal. Again,

however, where the next step is trial de novo, this principle

loses force and does not weigh in favor of barring judicial

review.11

The court now turns to prudential factors weighing

for or against applying issue exhaustion. Taxpayer raises

arguments involving the three factors that the court con-

sidered in Tuckenberry. The parties disagree whether, by

asserting in its petition that the tentative RMV was exces-

sive, taxpayer adequately raised the issue of the depart-

ment’s alleged prior inclusion of property in the centrally

assessed unit. While the court believes it is theoretically

possible that a narrow description of double-counting of tele-

phone property as contributing to an erroneous value could

have allowed the department to investigate and resolve the

point during the limited period allowed for a conference and

decision, the court is struck by the fact that taxpayer did

raise the issue with precision in its petition for at least the

most recent tax year following the Subject Years, only to have

the department reject the argument without explanation.

The department’s action for that tax year suggests that an

earlier, more specific allegation in taxpayer’s petition would

have been futile, another factor that the court considered in

Tuckenberry. With regard to the remaining factor discussed

in Tuckenberry (existence of an issue important to the public

interest), the court observes that the department appears

to take a legal position that no error occurred, or that any

error would have no consequence as to future tax years,

even if the department for the tax year 2009-10 did count as

“new property” telephone property that it also included in

the centrally assessed unit for the previous year. The court

considers this issue important to resolve, not merely because

the computation of maximum assessed value for tax year

2009-10 may affect taxpayer’s maximum assessed value

11

In light of these conclusions, the court does not address taxpayer’s argu-

ment that the conference process is properly classified as “non-adversarial” based

on the analysis in Tuckenberry.

Cite as 24 OTR 88 (2020) 101

for all later tax years, but also as a follow-on issue under

DISH Network that may affect other centrally assessed

taxpayers.

Finally, the court also finds persuasive taxpayer’s

argument that the short and inflexible deadlines prescribed

in statute weigh against imposing a judicial requirement

of issue exhaustion for director conferences. Centrally

assessed businesses include some of the largest property

taxpayers in the state: electric and gas companies, airlines,

railroads, and the expanded realm of communication com-

panies. See ORS 308.515(1). In some of these industries,

technologies and market participants are changing rapidly,

complicating the factual problem of determining the value

of their Oregon property. Oregon’s hundred-year-old system

of central assessment laws contains profound complexities

peculiar to this state, including the taxation of intangi-

ble property. The department and taxpayers must try to

apply these laws to a dramatically changed set of circum-

stances and integrate them with more recent overlays of all-

pervading constitutional limitation schemes. As recent cases

have demonstrated,12 in such a system it is all but inevita-

ble that new, fundamental issues with high-stakes conse-

quences will arise.13 The annual window to address them

12

See, e.g., Comcast, 356 Or 282 (resolving when cable companies engage

in “communication”); DISH Network, 364 Or 254 (resolving definition of “new

property” for companies new to central assessment); Northwest Natural Gas Co.

v. Dept. of Rev., 347 Or 536, 226 P3d 28 (2010) (application of exemptions to cen-

trally assessed property); Level 3 Communications, 23 OTR 440 (addressing defi-

nition of “property” of centrally assessed company); T-Mobile, USA, Inc. v. Dept.

of Rev., 24 OTR 22 (2020) (outlining statutory steps to determine which property

is excluded from the unit).

13

The department makes a policy argument in favor of issue exhaustion that

counties in which a centrally assessed taxpayer’s property is situated may bear

the cost of a high interest rate (see ORS 311.812(3)(a)) on any refund determined

after the director has finalized the annual tax roll, without the ability to mitigate

that cost by availing themselves of existing statutory relief measures. The court

declines to treat this argument as a prudential consideration. The legislature

in 2005 made clear its concern about the costs to local government of lengthy

appeal processes in industrial property and central assessment cases. See Or

Laws 2005, ch 345, § 13 (enacting ORS 305.487). However, just two years later

the legislature adopted ORS 308.584 without reinstating an issue exhaustion

requirement for the director conference. See Or Laws 2007, ch 616. Four years

after that, the legislature began adopting interest relief provisions (to which the

department refers without citation), beginning with the “deferred billing credit”

mechanism allowing counties to reduce the rate of interest on large potential

refunds. See Or Laws 2011, ch 112, § 1 (adopting ORS 305.286). Then in 2017, the

102 Charter Communications Holding Co. v. Dept. of Rev.

through a director conference is short. Communication com-

panies and other large centrally assessed businesses file

an annual statement containing facts about their business

property by March 15. ORS 308.520(1). The department

mails its notice of tentative assessment to the taxpayer no

later than May 25. ORS 308.582(1). A taxpayer generally

has about three weeks to request a conference to discuss

any disagreements. ORS 308.584(2) (no later than June 15).

The director then has approximately seven weeks, until

August 1, to hold a conference and issue the opinion and

order. ORS 308.584(3). Even taking into account the possi-

bility of informal dialogue between the department and a

company, which the department describes in this case, the

court finds it inappropriate to bar litigation over an emer-

gent issue that the parties fail to discuss, or to fully discuss,

during this short time.14

From this case and others,15 the court is aware that

both parties typically find value in the director conference

process and that they often succeed in resolving significant

issues there. The court encourages parties to continue to

use the conference process to the greatest extent possible.

However, the court finds no legislative intent, or prudential

consideration, that would preclude litigation of issues not

raised or not fully addressed in that process. Now, therefore,

IT IS ORDERED that Defendant’s motions for par-

tial dismissal are denied.

legislature converted that mechanism to the present “potential refund credit.”

Or Laws 2017, ch 541 (amending ORS 305.286). The court concludes that it must

leave to the legislature the difficult task of continuing to address legitimate local

fiscal concerns, including the availability of relief from statutory interest on

property tax refunds.

14

The court’s conclusion makes it unnecessary to reach taxpayer’s argu-

ments that the court should relax any judicially imposed requirement of issue

exhaustion, or that a finding of failure to comply with an issue exhaustion

requirement should cause the court to remand the issue rather than bar it. Nor

does the court reach taxpayer’s argument early in these proceedings that the

department is barred from asserting lack of exhaustion by its statement in its

opinions and orders for tax years 2011-12 onward that taxpayer “has exhausted

administrative remedies with the Director.”

15

As the department points out, dialogue between the parties in 2009 led

the department to reduce the original tentative assessment in this case by 35

percent.