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

58 July 24, 2025 No. 31

IN THE SUPREME COURT OF THE

STATE OF OREGON

DELTA AIR LINES, INC.,

Plaintiff-Respondent,

v.

DEPARTMENT OF REVENUE,

State of Oregon,

Defendant-Appellant.

(TC 5409) (SC S070593)

En Banc

On appeal from the Oregon Tax Court.*

Robert T. Manicke, Judge.

Argued and submitted September 26, 2024.

Christopher A. Perdue, Assistant Attorney General,

Salem, argued the cause and filed the briefs for appel-

lant. Also on the briefs were Ellen F. Rosenblum, Attorney

General, and Benjamin Gutman, Solicitor General.

Brad S. Daniels, Stoel Rives, LLP, Portland, argued the

cause and filed the brief for respondent, Delta Air Lines, Inc.

GARRETT, J.

The judgment of the Tax Court is reversed, and the case

is remanded to the Tax Court for further proceedings.

James, J., concurred and filed an opinion, in which

Bushong, J., joined.

______________

* 25 OTR 308 (2023).

Cite as 374 Or 58 (2025) 59

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

GARRETT, J.

Under Oregon law, most businesses have the value of

their property—and thus the amount of their tax—determined

by the county assessor. Some businesses, however, are

assessed centrally, by the Department of Revenue itself.

When the county assessor does the assessment, the amount

of the tax is calculated based on the value of the taxpayer’s

real and tangible personal property, but not its intangible

property. When a business is centrally assessed, however, the

amount of the tax is calculated on the value not just of real

and tangible personal property, but also intangible property.

The taxpayers in two closely related cases—Delta

Air Lines, Inc., and PacifiCorp—are businesses subject to

central assessment. As relevant here, both taxpayers con-

tend that taxing centrally assessed businesses on intangible

property violates the state and federal constitutions, because

locally assessed businesses are not taxed on their intangible

property. Specifically, the taxpayers argue that such a tax is

not uniform as required by Article I, section 32, and Article

XI, section 1, of the Oregon Constitution, and that the leg-

islature’s classification violates the Equal Privileges and

Immunities Clause of the Oregon Constitution (Article I,

section 20), or the Equal Protection Clause of the Fourteenth

Amendment to the United States Constitution.

The Tax Court did not consolidate the cases, but it

addressed both taxpayers’ arguments on the constitutional

questions in a single opinion: Delta Air Lines, Inc. v. Dept. of

Rev., 25 OTR 308 (2023). The court agreed with Delta and

held that it is unconstitutional to tax the intangible property

of air transportation businesses such as Delta. See id. at 351-

52 (summarizing conclusion). However, the court reached a

different conclusion regarding the intangible property of util-

ities, and so it rejected PacifiCorp’s constitutional claim. See

id. at 352-53 (also summarizing conclusion). As to PacifiCorp,

the court issued a short separate opinion adopting the reason-

ing and explanation it had set out in Delta. PacifiCorp v. Dept.

of Rev., 25 OTR 367, adh’d to on recons, 25 OTR 419 (2023).

We are now presented with the constitutional ques-

tions on appeal. The department appeals the Tax Court’s

Cite as 374 Or 58 (2025) 61

holding that the tax on intangible property is unconstitu-

tional as to air transportation businesses such as Delta,

while PacifiCorp appeals the Tax Court’s holding that the

tax on intangible property is constitutional as to utilities

such as itself.

For the reasons that follow, we reverse the Tax

Court’s conclusion that the tax is unconstitutional as to

Delta, and, in a separate opinion to follow, affirm the

Tax Court’s conclusion that the tax is constitutional as to

PacifiCorp.1 As we will explain, taxpayers’ arguments are

best understood to challenge the constitutionality of the

legislature’s classifications under Oregon’s Equal Privileges

and Immunities Clause and the United States Constitution’s

Equal Protection Clause. The test under both clauses is

similar: whether the legislative classification is rationally

related to a legitimate legislative purpose. We conclude that

the tax on the intangible property of centrally assessed busi-

nesses is constitutional. The state has a legitimate purpose

in obtaining revenue, and the taxation of intangible prop-

erty is rationally related to that purpose. The legislature’s

decision to limit the taxation of intangible property to cen-

trally assessed businesses rationally promotes various legit-

imate purposes, including administrative efficiency, devel-

oping and keeping expertise in valuing such businesses,

promoting fairness among the centrally assessed taxpayers,

and balancing the expected revenue return against limited

departmental resources.

The uniformity provisions of the Oregon Constitution—

Article I, section 32, and Article IX, section 1—do not impose

any relevant additional limits on the classes that the legisla-

ture may create. Accordingly, the tax on intangible property

1

Although the case is captioned for Delta alone, we explain the constitu-

tional standard and address the arguments made by both Delta and PacifiCorp.

Those taxpayers have appealed from cases that were not consolidated below,

the Tax Court reached different conclusions as to the different taxpayers, and

the taxpayers present somewhat different arguments regarding constitutional-

ity here. Accordingly, we follow the Tax Court’s lead and write a single opinion

regarding the constitutional questions. We will issue a separate opinion that

incorporates our resolution here and otherwise addresses the department’s cross-

appeal, which makes an unrelated challenge to the Tax Court’s valuation holding

regarding the 2020-21 tax year. See PacifiCorp v. Dept. of Rev., 25 OTR 227 (2023)

(addressing valuation issue).

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

imposed on both centrally assessed businesses does not vio-

late the uniformity provisions.

I. BACKGROUND

A. Central Assessment and Intangible Property

1. Current Oregon law

In general, most property taxes are assessed at the

county level by the county assessor. ORS 308.210(1). Some

industries, however, are centrally assessed—that is, they

are assessed by the Department of Revenue directly. The

businesses that Oregon centrally assesses are listed in ORS

308.515(1).2 Delta is centrally assessed under ORS 308.515

(1)(e) because it provides “[a]ir transportation.” PacifiCorp is

centrally assessed under ORS 308.515(1)(k) because it sells

electricity.

Among the ways in which centrally assessed busi-

nesses are taxed differently is that they are taxed on intan-

gible property. In general, “intangible personal property is

not subject to assessment and taxation,” except as directed

in the central assessment statutes, ORS 308.505 to 308.674.

ORS 307.030(2). The central assessment statutes confirm

that centrally assessed businesses are taxed on intangible

property. See ORS 308.505(14)(a) (defining “property” for

2

ORS 308.515(1) identifies the following centrally assessed business types:

“(a) Railroad transportation;

“(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 subsec-

tion, if the private railcars are rented, leased or used in railroad transporta-

tion for hire.”

Cite as 374 Or 58 (2025) 63

purposes of central assessment as “all property of any kind,

whether real, personal, tangible or intangible”).

The legislature has not defined “intangible property”

in the context of central assessment.3 For purposes of this case,

it is sufficient to rely on the general principles that we have

articulated in past cases: intangible property is “ ‘property

representative of a right rather than a physical object,’ ” such

as “ ‘patents, * * * goodwill, trademarks, franchises, and copy-

rights.’ ” Tektronix, Inc. v. Dept. of Rev., 354 Or 531, 543-44,

316 P3d 276 (2013) (quoting definition of “intangible assets”

in West’s Tax Law Dictionary 570 (2013)); see also Powerex

Corp. v. Dept. of Rev., 357 Or 40, 61, 346 P3d 476 (2015) (con-

trasting intangible property with tangible property).4

When valuing centrally assessed businesses, the

department uses a method known as unit valuation. The

term itself broadly means valuing a business as a unit—as

a “going concern”5 —instead of by adding together the value

of individual properties. See, e.g., Michael T. Raymond,

Why Federal Preemption Is Needed to End Discriminatory

Taxation of Telecommunications Property, 6 St & Loc Tax

Lawyer 15, 22 (2001); Bruce A. Fowler, Unit Valuation:

Oklahoma’s Illegal Tax on Intangible Property, 31 Tulsa LJ

367, 370 (1995). In Oregon, unit valuation is authorized by

ORS 308.555 (for centrally assessed businesses, department

3

ORS 307.020 defines “intangible personal property” fairly precisely, but

since 1977 that definition no longer applies to the central assessment statutes.

ORS 307.020(1)(a) (defining “intangible personal property”); ORS 307.020(2) (defi-

nition does not apply to central assessment statutes); see Or Laws 1977, ch 602, § 1

(amending prior version of statute to make inapplicable to central assessment).

4

Those broad outlines of intangible property are sufficient for purposes

of our decision. Note, however, that the legislature has excluded some types of

intangible property from central assessment. See ORS 308.505(14)(c) (intangi-

ble property excludes “[c]laims on other property, including money at interest,

bonds, notes, claims, demands or any other evidence of indebtedness, secured or

unsecured” and “[a]ny shares of stock in corporations, joint stock companies or

associations”). The Tax Court’s opinion also identified other types of intangible

property that are not taxed for various reasons. See Delta, 25 OTR at 331 n 25.

5

Broadly speaking, “going concern” valuation “considers a company’s market

value as a whole and does not, either in practice or in theory, purport to assess the

various component parts that go into that whole.” DISH Network Corp. v. Dept. of

Rev., 364 Or 254, 292, 434 P3d 379 (2019). Cf. OAR 150-308-0260(2) (in valuing

industrial property, “[t]he going concern concept recognizes that the value of an

assembled and operational group of assets usually exceeds the value of an identi-

cal group of assets that are separate or not operational”).

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

is authorized to “value the entire property, both within and

without the State of Oregon, as a unit”).6

2. Historical context

The Tax Court implied that Oregon is unusual in

listing the industries subject to central assessment, rather

than setting out a series of factors used to identify who is

subject to central assessment. See 25 OTR at 315 n 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.”); id. at 350 (“the legislature has exercised

its prerogative to draw the classification line by means of a

list rather than by specifying criteria”). Implicitly, the Tax

Court raises an important question: Why were these partic-

ular industries chosen to be centrally assessed and to have

their intangible property taxed?

Oregon’s central assessment law is not out of the

ordinary among the states in terms of the industries to which

it applies. Unit valuation and central assessment proceeded

across the nation, beginning in the nineteenth century.

Central assessment came as a response to the challenges

associated with having local taxing districts attempt to

fairly apportion the value of property owned by entities that

might span numerous districts, such as railroads. Before

the second half of the nineteenth century, local assessment

mechanisms were already showing their inadequacy to meet

the challenges presented by railroads, because even local

railroads often spanned multiple taxing districts. James C.

Bonbright, 2 The Valuation of Property 635-37 (1937); see

Comcast Corp. v. Dept. of Rev., 356 Or 282, 289-91, 337 P3d

768 (2014). Local assessors could assess the value at the

replacement cost of the railroad property located in their

district, or they could determine the “going concern” value

of the entire railroad, then attempt to apportion that value

to the part of the railroad that lay in their taxing district.

Bonbright, 2 Valuation at 635. The courts, however, were

6

Some authorities use the term to refer not just to the valuation of a business

as a going concern, but also to the apportionment of the appropriate share of

that valuation to the taxing state. See K.E. Powell, Identifying Exempt Intangible

Assets in State Property Tax: Urging Stricter Application of Burden of Proof, 30

Cornell J L & Pub Pol’y 235, 242 (2020); James C. Bonbright, 2 The Valuation of

Property 633 n 1 (1937).

Cite as 374 Or 58 (2025) 65

often very skeptical of the fairness of having local assessors

value the going concern, and so sometimes required local

assessors to use the lower replacement cost instead. Id. at

635-37; see Comcast, 356 Or at 289-90. Besides which, local

assessment was simply not amenable to unit valuation. See

Bonbright, 2 Valuation at 637 (“So serious are the practi-

cal difficulties of applying the unit rule to separate railroad

assessments by small political subdivisions, that the rule

itself could hardly have developed under this procedure.”).

The consolidation of the railroads into large inter-

state businesses only exacerbated the problems. It led to

popular demand for assessment methods to reach intangi-

ble values, including goodwill, that could not effectively be

reached by local assessors. Bonbright, 2 Valuation at 637.

“Hence, statutes were passed which set up state boards of

assessment and which directed these boards to include the

entire values of the railroads as distinct from, or in addition

to, the so-called ‘cost values’ of the physical assets.” Id.

The “going concern” value is essentially another

name for modern unit valuation. Conceptually, unit valua-

tion reflects the fact that some industries have substantially

more value than their tangible assets alone may reflect. “[I]t

is a cardinal rule which should never be forgotten that what-

ever property is worth for the purposes of income and sale

it is also worth for purposes of taxation.” Adams Express

Company v. Ohio, 166 US 185, 220, 17 S Ct 604, 41 L Ed 965

(1897) (Adams Express II) (upholding a state property tax

that used unit valuation to reach such intangible property

as goodwill). “Substance of right demands that whatever be

the real value of any property, that value may be accepted

by the State for purpose of taxation, and this ought not to

be evaded by any mere confusion of words.” Id. at 221. The

Court went on to set out precisely why a state was entitled

to tax both tangible and intangible property:

“To the owners [of the business], for the purposes of income

and sale, the corporate property is worth hundreds of thou-

sands of dollars. Does substance of right require that it

shall pay taxes only upon the thousands of dollars of tan-

gible property 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

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

property, not organized into a single producing plant, will

feel the injustice of a system which so misplaces the burden

of taxation.”

Id.

Although central assessment and unit valuation

began in the 19th century with railroads, even before the

end of that century the states had expanded those doctrines

to reach telegraph companies and express companies. See

Bonbright, 2 Valuation at 648-57 (reviewing developments

only through 1900).

“Oregon’s original central assessment scheme was

consistent with the development of unit valuation and cen-

tral assessment statutes nationally.” Comcast, 356 Or at

291. In Comcast, we reviewed the various business types

subject to unit valuation and central assessment in Oregon.

Id. at 291-93. The Tax Court also did so here in a lengthy

appendix to its decision. Delta, 25 OTR at 355-66.

Today, Oregon’s choices of which particular busi-

nesses to subject to central assessment and unit valuation

do not appear out of the ordinary nationally. Various com-

mentators have provided overarching summaries of national

laws regarding unit valuation, and those summaries indi-

cate as much:

“The companies which are usually subject to unit valua-

tion include both regulated and unregulated public utilities

and transportation companies. They are usually interstate,

capital-intensive businesses that employ systems of inter-

dependent interrelated assets in multiple jurisdictions.

Although the businesses were historically almost always

publicly regulated utilities, this is no longer necessarily

true due to extensive deregulation.”

Fowler, 31 Tulsa LJ at 371 (internal quotation marks and

footnote omitted).

“Traditionally, the ‘regulated industries’ have fallen

primarily into three categories: (1) energy (gas, electric

and pipeline) and water public utilities, (2) telecommuni-

cations (telephone and other) public utilities, and (3) regu-

lated transportation companies (air, motor, rail and water

carriers).”

Cite as 374 Or 58 (2025) 67

James A. Amdur, Property Taxation of Regulated Industries,

40 Tax Lawyer 339, 339 (1987); see also Powell, 30 Cornell

J L & Pub Pol’y at 248 (“Today, centrally assessed proper-

ties include not only public utilities, but also more broadly

multi-jurisdictional properties such as railroads; telegraph,

telephone, and telecommunications companies; pipelines;

and airlines.”); Bonbright, 2 Valuation at 634-35 (“In ad

valorem taxation * * *, assessments under the unit rule have

been largely confined to public-utility properties—espe-

cially to railroad, telegraph, long-distance telephone, pipe

line, and express properties.” (Footnote omitted.)). Oregon’s

list of businesses subject to unit valuation and central

assessment almost entirely overlaps with those standard

categories.7

As the Tax Court also noted, some states at least

purport to exclude intangible property from the taxa-

tion of centrally assessed businesses. See 25 OTR at 331-

32; National Conference of State Legislatures, Property

Taxation of Communications Providers, A Primer for State

Legislatures 4 (April 2024), https://documents.ncsl.org/

wwwncsl/State-Federal/NCSL-SALT-Property-Taxation-of-

Communications-Providers-April-2024.pdf (accessed July

17, 2025); Fowler, 31 Tulsa LJ at 376; Walter Hellerstein,

State and Local Taxation of Intangibles Generates Increasing

Controversy, 80 J Tax’n 296, 302 (1994).

The extent to which that is actually true is less

clear. As indicated above, unit valuation and central assess-

ment were tools specifically intended in part to facilitate the

assessment of intangible property. Moreover, it is difficult

to engage in unit valuation without considering the value of

intangible property. As the Wisconsin Supreme Court noted

over 100 years ago:

“One might as well try to value the life-blood of a horse,

or his capacity to breathe, as try to place a value upon the

visible part of railroad property separate from its rights,

franchises, and privileges.”

7

We additionally note that listing specific business types instead of abstract

criteria may help remove initial questions—and potential litigation—over which

taxing body should be assessing a particular business. It thus promotes certainty

for taxpayers, local assessors, and the department alike.

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

Chicago & N.W. Ry. Co. v. State, 128 Wis 553, 621-22, 108

NW 557, 573 (1906). States that claim not to tax intangible

property have been criticized for doing so indirectly through

the mechanism of unit valuation. See National Conference

of State Legislatures, Property Taxation of Communications

Providers at 4 (unit valuation of telecommunication compa-

nies “can result in taxation of more than the actual value of

tangible property by including significant intangible value,

even in states where intangibles are statutorily or constitu-

tionally exempt from taxation”); Fowler, 31 Tulsa LJ at 379

(“Although a majority of states have made a public policy

decision to exclude intangible property from property taxa-

tion, their taxing system may be effectively taxing the prop-

erty through the application of unit valuation techniques

in assessing public service companies.”); Hellerstein, 80 J

Tax’n at 302 (although many states purport to prohibit tax-

ation of intangible property, “[t]he problem * * * is that under

the guise of merely ‘considering’ intangible values in deter-

mining the value of tangible property, the intangible prop-

erty is itself being taxed”). This court has described other

states’ attempts to use unit valuation while excluding intan-

gible property as an “artificial focus on tangible property.”

DISH Network Corp. v. Dept. of Rev., 364 Or 254, 292, 434

P3d 379 (2019).

In sum: To the extent that Delta’s and PacifiCorp’s

arguments are predicated in part on an assumption that

Oregon is an outlier in the businesses that it subjects to cen-

tral assessment and unit valuation, or in taxing the intan-

gible property of those businesses, that assumption is not

well-founded.

B. Tax Court Proceedings

Both Delta and PacifiCorp filed actions in the Tax

Court challenging the department’s assessments: Delta

challenged the assessment for tax year 2019-20,8 while

PacifiCorp challenged the assessment for tax year 2020-21.

Both actions challenged the department’s determination of

the property values used to calculate their tax liability. In

addition, Delta and PacifiCorp both contended that it was

8

The Tax Court consolidated Delta’s appeals for a number of other tax years.

See 25 OTR at 308 n 2.

Cite as 374 Or 58 (2025) 69

unconstitutional for Oregon to tax the intangible prop-

erty only of centrally assessed businesses, and not locally

assessed businesses. Both taxpayers raised the issues

in their respective cases by motions for partial summary

judgment.

Both taxpayers ultimately relied on four constitu-

tional provisions. The first two both relate specifically to

uniformity of taxation. First, Article I, section 32, of the

Oregon Constitution provides, in part:

“* * * [A]ll taxation shall be uniform on the same class of

subjects within the territorial limits of the authority levy-

ing the tax.”

Second, Article IX, section 1 reads:

“The Legislative Assembly shall, and the people through

the initiative may, provide by law uniform rules of assess-

ment and taxation. All taxes shall be levied and collected

under general laws operating uniformly throughout the

State.”

The second two constitutional provisions at issue

are not tax-specific but, instead, limit the government’s abil-

ity to treat citizens differently. Oregon’s Equal Privileges

and Immunities Clause, Article I, section 20, provides:

“No law shall be passed granting to any citizen or class

of citizens privileges, or immunities, which, upon the same

terms, shall not equally belong to all citizens.”

Finally, the Equal Protection Clause of the Fourteenth

Amendment to the United States Constitution provides, in

part:

“No State shall make or enforce any law which shall

* * * deny to any person within its jurisdiction the equal

protection of the laws.”

US Const, Amend XIV, § 1.

Under all four provisions, the Tax Court concluded

that the governing legal standard required it to consider

whether the state’s decision to tax the intangible property

only of centrally assessed businesses satisfied the so-called

“rational basis test.” See 25 OTR at 312-13. The Tax Court

also concluded, however, that any tax classification is subject

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

to a preliminary requirement that there must be “genuine

differences” in the nature or use of the property being taxed,

before the court will consider whether the rational basis test

has been met. See id. at 322-27; id. at 353. Based on that

understanding, the Tax Court concluded that there were no

such genuine differences between the intangible property of

centrally assessed air transportation businesses and that

of locally assessed bus and trucking companies, and so the

tax was unconstitutional as to Delta. Id. at 344-45, 350-51.

But the court concluded that there were genuine differences

between the intangible property used by a rate-regulated

utility and the intangible property used by other businesses,

and so the tax was constitutional as to PacifiCorp. Id. at

352-53.

II. DISCUSSION

A. Uniformity Provisions: Article I, Section 32, and Article IX,

Section 1

1. Overview

Two of the provisions of the Oregon Constitution

raised by the taxpayers relate to taxes specifically: Article I,

section 32, and Article IX, section 1. We refer to them col-

lectively as the uniformity provisions. Both were part of the

original Oregon Constitution, but both were substantially

rewritten by amendment in 1917.

We begin with the text. As noted, the relevant part

of Article I, section 32, currently provides:

“[A]ll taxation shall be uniform on the same class of

subjects within the territorial limits of the authority levy-

ing the tax.”

Article IX, section 1, currently reads:

“The Legislative Assembly shall, and the people through

the initiative may, provide by law uniform rules of assess-

ment and taxation. All taxes shall be levied and collected

under general laws operating uniformly throughout the

State.”

Textually, Article I, section 32, requires only that a

tax be uniform within whatever class the taxing authority

creates, provided that it is uniform “within the territorial

Cite as 374 Or 58 (2025) 71

limits of the authority levying the tax.” See Tharalson v. State

Dept. of Rev., 281 Or 9, 16, 573 P2d 298 (1978) (uniformity

provisions were intended to allow legislature to allow taxes

“so long as the tax was uniform geographically and within

one ‘class of subjects’ ”); Standard Lbr. Co. v. Pierce et al., 112

Or 314, 335-36, 228 P 812 (1924) (Standard Lumber) (noting

the distinction). “[T]he use of the phrase ‘within the territo-

rial limits of the authority levying the tax’ raised the prin-

ciple of territorial uniformity to that of an express consti-

tutional requirement.” Jarvill v. City of Eugene, 289 Or 157,

177, 613 P2d 1, cert den, 449 US 1013 (1980); see id. at 170-78

(detailing origin and nature of territorial uniformity require-

ment); Orval Etter, Municipal Tax Differentials, 37 Or L Rev

1, 40-41 (1957) (while legislature can use “many factors” to

classify property for taxation, property’s location “apparently

is ruled out explicitly and completely by the requirement of

territorial uniformity in the Oregon [C]onstitution”).

Article IX, section 1, is similar, save that it does not

refer to classes at all. “We have held that these two consti-

tutional provisions requiring tax uniformity are to be read

together.” Jarvill, 289 Or at 171 n 15 (citing State ex rel v.

Malheur County Court, 185 Or 392, 411, 203 P2d 305 (1949)).9

The present text of both provisions was enacted in

1917. In the original 1859 Oregon Constitution, Article I,

section 32, had required taxes to be not just uniform,

but also equal.10 Original Article IX, section 1, similarly

required equality and uniformity, but it further limited the

reasons why the legislature could exempt an entity from a

tax—to such things as educational, scientific, or charitable

purposes, and others, all listed.11

9

We recognized in Jarvill that the provisions are not identical. Article IX,

section 1, does not expressly require territorial uniformity, and it appears lim-

ited to statewide taxes. 289 Or at 171 n 15. The parties here do not rely on those

textual differences, and we need not address them here.

10

Specifically, the relevant part of the 1859 text read, “[A]ll taxation shall be

equal and uniform.”

11

The 1859 text read:

“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 valuation for taxation of all property, both real and personal,

excepting such only for municipal, educational, literary, scientific, religious,

or charitable purposes as may be specially exempted by law.”

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

Those 1859 restrictions applied only to property

taxes, not to other forms of taxes, but there were concerns

that the limits might be read more expansively. See Standard

Lumber, 112 Or at 334-35 (so noting). The 1917 amendments

were intended to remove most of the existing restrictions

and allow the legislature to classify people and property for

tax purposes. Standard Lumber summarized the reasoning

of the voters:

“Demand was made for removal of those constitutional

restrictions, which prevented the classification of property

in respect to its nature, condition or class, and the impo-

sition thereon of different rates of taxation upon different

classes of property; and which excluded considerations of

faculty or ability to pay, equality of sacrifice or governmen-

tal advantages provided to the taxpayer[.]”

112 Or at 335 (citations omitted). Jarvill, citing an exten-

sive list of cases and contemporary sources, agreed that the

amendments

“were intended to permit the reasonable classification of

subjects of taxation, the exemption of certain property from

taxation, and the imposition of different rates of taxation

upon different classes of property.”

289 Or at 176-77.

Textually and historically, then, the uniformity pro-

visions would not seem to limit the types of classifications

that the government can use in taxation, provided that the

classifications are consistent within the territorial limits of

the relevant lawmaking body. In fact, the uniformity provi-

sions were amended specifically to remove existing limits,

with Article I, section 32, changed to permit classifications,

and Article IX, section 1, changed to remove limits on tax

exemptions. Within whatever class the taxing authority

may create, if the tax applies uniformly across the territory

of the taxing jurisdiction, and if the tax is applied uniformly

across that territory, then the uniformity provisions have

been satisfied:

“Selecting and classifying incomes and fixing different

rates and exemptions does not violate section 32 of Article 1,

or section 1 of Article IX of the Oregon Constitution as the

taxes are uniform on the same classes of subjects and are

Cite as 374 Or 58 (2025) 73

collected under general laws and are uniform throughout

the state.”

McPherson v. Fisher, 143 Or 615, 622, 23 P2d 913 (1933);

see Standard Lumber, 112 Or at 335-36 (“[T]he Constitution

* * * places no restraint upon the power of the legislature in

the matter of taxation which was not already enforced upon

it by the 14th Amendment to the federal Constitution, with

this qualification, * * * that among the members or objects

included in a class selected by the legislature, inherent uni-

formity as well as territorial uniformity is required.”).

Nevertheless, some of our cases have suggested that

the uniformity provisions themselves also require that the

classification be rational. It is possible that those statements

were merely conflating the requirements of the uniformity

provisions with the requirements of equal protection and/or

equal privileges, as those provisions are all usually at issue

at the same time. For example, Mathias v. Dept. of Rev., 312

Or 50, 59, 817 P2d 272 (1991), stated that “a classification, to

survive the protections of the uniformity in taxation clauses

of the state constitution, must be based on real differences

between the subjects disparately treated by the classifica-

tion.” The cases that Mathias cited for that proposition, how-

ever, explicitly referenced only equal protection principles.

See Jarvill, 289 Or at 180; Huckaba v. Johnson, 281 Or 23,

25-26, 573 P2d 305 (1978); Dutton Lbr. Corp. v. Tax Com.,

228 Or 525, 539, 365 P2d 867 (1961).

For purposes of this opinion, we do not need to

resolve whether the uniformity provisions impose any inde-

pendent restrictions on classification beyond the require-

ment of territorial uniformity. Even if they do, neither the

text, the history, nor that prior case law suggests that the

requirement would be different from, or more stringent than,

the requirements imposed by equal protection and equal

privileges and immunities. Thus, our analysis of Oregon’s

Equal Privileges and Immunities Clause and the federal

Equal Protection Clause—discussed below—would also

fully address any such rationality standard under Oregon’s

uniformity provisions.

The only legal principle unique to the uniformity

provisions is the requirement of territorial uniformity.

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

Territorial uniformity, however, is not at issue in this case.

The statutes that tax the intangible property of centrally

assessed businesses apply uniformly across the state.

2. As applied

Although it is questionable whether the uniformity

provisions themselves restrict the permissible classifications,

the uniformity provisions do prohibit taxing authorities from

choosing to apply that law to taxpayers in a way that violates

uniformity. “The taxing authorities may not single out one

taxpayer for discriminatory, or selective, enforcement of a tax

law that should apply equally to all similarly situated tax-

payers.” Penn Phillips Lands v. Tax Com., 247 Or 380, 385-86,

430 P2d 349 (1967); see Pacificorp Power Marketing v. Dept.

of Rev., 340 Or 204, 219, 131 P3d 725 (2006) (quoting Penn

Phillips).12 The uniform reduction of all assessments save that

of a single taxpayer would state such a claim, see Reynolds

Metals Co. v. State Tax Com., 227 Or 467, 471-73, 362 P2d 705

(1961), but evidence that a few tracts had been undervalued

would not, see Robinson et ux v. State Tax Com., 216 Or 532,

537, 339 P2d 432 (1959) (otherwise, “[i]t would be a rare case

in which undervaluation in a few tracts could not be pointed

out” (internal quotation marks and citation omitted)).

PacifiCorp asserts that Oregon’s intangible prop-

erty tax is no longer being applied uniformly, relying on fed-

eral case law interpreting a federal statute. Under 49 USC

§ 11501(b)(4), states are prohibited from imposing taxes that

“discriminate[ ] against a rail carrier” by treating it differ-

ently from other “commercial and industrial property in

the same assessment jurisdiction.” In BNSF Railway Co. v.

Oregon Department of Revenue, 965 F3d 681 (9th Cir 2020),

the Ninth Circuit held that that statute prohibits Oregon

from taxing the intangible property of railroads, because

Oregon law treats railroads differently from Oregon com-

mercial and industrial taxpayers generally. See id. at

691-93 (rejecting department’s argument that treatment

12

The prohibition on discriminatory enforcement under the uniformity pro-

visions seems functionally identical to the similar prohibitions imposed by equal

protection and equal privileges and immunities. See Penn Phillips, 247 Or at 385-

86 (explaining that “[a]rbitrary or systematic discrimination in assessment” not

only violates equal protection and equal privileges and immunities, but it “also

offends the uniformity clauses of our own constitution”).

Cite as 374 Or 58 (2025) 75

of railroads should only be compared to other centrally

assessed businesses). PacifiCorp argues that Oregon’s stat-

utes direct the state to tax the intangible property of a class

that includes railroads, but railroads are no longer being

taxed on their intangible property. Because the tax is no

longer being applied to all members of the class listed in the

Oregon statutes, PacifiCorp contends that the tax violates

the uniformity provisions.

We are not persuaded. Congress has, by federal

law, prohibited Oregon from including railroads in the class

of businesses taxed on intangible property. Pursuant to

the Supremacy Clause of the United States Constitution,

that law is controlling. See US Const, Art VI, cl 2 (“This

Constitution, and the Laws of the United States which shall

be made in Pursuance thereof * * *, shall be the supreme Law

of the Land; and the Judges in every State shall be bound

thereby, any Thing in the Constitution or Laws of any State

to the Contrary notwithstanding.”). Our “as applied” cases

under the uniformity provisions do not consider actions at

the level of lawmaking; instead, they focus on the actions of

the “taxing authorities,” as to which the uniformity provi-

sions prohibit only “an intentional and systematic pattern of

discrimination.” Pacificorp Power Marketing, 340 Or at 219;

see Meadowland Ranches v. Dept. of Rev., 277 Or 769, 776,

562 P2d 183 (1977) (claim of unconstitutional discrimination

requires “arbitrary and systematic discrimination” (inter-

nal quotation marks and citations omitted)). Conceptually,

an Act of Congress is not the same as an assessor system-

atically refusing to properly assess the properties of certain

taxpayers. The nature of PacifiCorp’s argument seems more

properly addressed as a challenge to the validity of the clas-

sifications as a whole under equal protection and equal priv-

ileges and immunities, and we will return to it later in this

opinion.

B. Federal and State Constitutional Limits on Classification

One limit on the legislature’s authority to create

classifications comes from Oregon’s Equal Privileges

and Immunities Clause, Article I, section 20. As noted, it

provides:

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

“No law shall be passed granting to any citizen or class

of citizens privileges, or immunities, which, upon the same

terms, shall not equally belong to all citizens.”

Another limit comes from the Equal Protection

Clause of the Fourteenth Amendment to the United States

Constitution:

“No State shall make or enforce any law which shall

* * * deny to any person within its jurisdiction the equal

protection of the laws.”

Although both those provisions involve questions

of equality, they differ not just in their text, but also in

their history and in how they have been interpreted. We

have described Oregon’s Equal Privileges and Immunities

Clause as the “ ‘antithesis’ ” of the federal Equal Protection

Clause: The latter was adopted to prevent the government

from unfairly disadvantaging classes, while the former was

adopted to prevent the government from unfairly favoring

classes. E.g., Hewitt v. SAIF, 294 Or 33, 42, 653 P2d 970

(1982) (citations omitted; discussing and citing authorities).

That is not to say that the provisions are unrelated;

in fact, both provisions often require the courts to apply sim-

ilar analytical schemes. Under both, most classifications will

be held constitutional on very minimal showings. See, e.g.,

Cleburne v. Cleburne Living Center, Inc., 473 US 432, 440,

105 S Ct 3249, 87 L Ed 2d 313 (1985) (federal equal protec-

tion); Kramer v. City of Lake Oswego, 365 Or 422, 454-57,

446 P3d 1, adh’d to as modified on recons, 365 Or 691, 455

P3d 922 (2019) (discussing and rejecting higher standards of

scrutiny under equal privileges and immunities). But both

federal equal protection and state equal privileges also recog-

nize some classifications—such as race, alienage, or national

origin—as “suspect,” requiring an extremely strong justifi-

cation before the classification will be held to be constitu-

tional. See, e.g., Cleburne, 473 US at 440 (such classifications

“are so seldom relevant to the achievement of any legitimate

state interest that laws grounded in such considerations are

deemed to reflect prejudice and antipathy”); Hewitt, 294 Or at

45 (classification is “ ‘suspect’ when it focuses on ‘immutable’

personal characteristics,” which “can be suspected of reflect-

ing ‘invidious’ social or political premises, that is to say,

Cite as 374 Or 58 (2025) 77

prejudice or stereotyped prejudgments”). Although federal

equal protection recognizes a third category of classification

as subject to an intermediate level of scrutiny—classifica-

tions based on gender being one of these—Oregon subjects

such classifications to the same scrutiny as other “suspect”

classifications. See Kramer, 365 Or at 454-56 (so noting).

In this case, it is undisputed that the classifications

should be analyzed under the most lenient scrutiny stan-

dards of state and federal law. In keeping with our traditional

practice, we first consider the Oregon Constitution’s Equal

Privileges and Immunities Clause before we turn to the fed-

eral Equal Protection Clause. See State v. Babson, 355 Or

383, 432-33, 326 P3d 559 (2014) (discussing court’s practice).

1. Oregon’s Equal Privileges and Immunities Clause

a. General

As noted, the parties agree that this case does not

involve any “suspect” class, and so our analysis should apply

the most lenient standards that exist under both state equal

privileges and immunities law and federal equal protection

law.13 As to the former, this court has concluded that the test

is whether the classification is rationally related to a legiti-

mate governmental purpose. See Kramer, 365 Or at 456-57

(reviewing different tests this court has used over time for

equal privileges and immunities); id. at 461 (summarizing

test). That framing matches similar terms used to describe

the lenient test under federal equal protection law. See U.S.

Railroad Retirement Bd. v. Fritz, 449 US 166, 174-76, 101

S Ct 453, 66 L Ed 2d 368 (1980) (reviewing different formu-

lations United States Supreme Court had used over time for

equal protection). Both tests may thus be described as the

“rational basis test” or “rational basis review.”

In the following discussion, we will cite numerous

United States Supreme Court decisions interpreting fed-

eral equal protection law. For purposes of this part of the

13

Our prior cases have indicated that a classification defined by the statute

itself is not a “true class,” and that such classifications do not violate Article I,

section 20, for that reason alone. Because the parties agree that the classification

here is subject to rational basis review, and we conclude that it satisfies that test,

we need not decide in this case whether the classification creates a “true class”

for purposes of Article I, section 20.

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

analysis, we cite United States Supreme Court decisions for

only their persuasive value as to why a legislative classifica-

tion might be rationally related to a legitimate governmen-

tal purpose. We will address the Equal Protection Clause

separately later in this opinion.

Rational basis review is especially lenient in the

context of tax classifications. This court has explained that

neither Oregon’s Equal Privileges and Immunities Clause

nor the federal Equal Protection Clause requires

“a formula of rigid uniformity in framing measures of tax-

ation. [The legislature] may tax some kinds of property at

one rate, and others at another, and exempt others alto-

gether, and it may lay an excise on the operations of a par-

ticular kind of business, and exempt some other kind of

business closely akin thereto.”

Garbade and Boynton v. City of Portland, 188 Or 158, 192,

214 P2d 1000 (1950) (internal quotation marks and citation

omitted), overruled in part on other grounds by Multnomah

County v. Mittleman, 275 Or 545, 556-57, 552 P2d 242 (1976);

see Wittenberg et al v. Mutton et al, 203 Or 438, 447, 280 P2d

359 (1955) (quoting Garbade and Boynton with approval); see

also Knight v. Dept. of Rev., 293 Or 267, 271, 646 P2d 1343

(1982) (“The legislature has wide discretion in classifying

subjects of taxation.”); Jarvill, 289 Or at 178 (“we have also

recognized and expressly held that a taxing authority has

a wide range of discretion to classify subjects of taxation”);

Wittenberg, 203 Or at 446-47 (state legislature “has the wid-

est possible latitude” regarding taxation (internal quotation

marks and citations omitted)).

To satisfy the “legitimate purpose” test, the legisla-

ture need not have actually stated its purpose; it is sufficient

if the court can conceive of one. See Smith et al v. Columbia

County et al, 216 Or 662, 684, 341 P2d 540 (1959), appeal dis-

missed, 362 US 215 (1960) (citing cases for the proposition that

“the legislature is not required to give any index or catalog of

its reasons for the classification”); Garbade and Boynton, 188

Or at 192 (explaining that city council did not need to “record

a complete catalogue of the considerations which moved its

members to enact” the ordinances (internal quotation marks

omitted)); Standard Lumber, 112 Or at 328 (“it is not neces-

sary that the basis of the classification must be deducible

Cite as 374 Or 58 (2025) 79

from the nature of the things classified”); see also Huckaba,

281 Or at 26 (court will uphold statute under rational basis

review if “any conceivable state of facts * * * would support

it”); Carmichael v. Southern Coal Co., 301 US 495, 509, 57

S Ct 868, 81 L Ed 1245 (1937) (articulating same principle for

equal protection).14

Any number of legitimate purposes can support tax

classifications drawn by the legislature. For example, the leg-

islature may draw lines for administrative convenience or

efficiency. Huckaba, 281 Or at 30-31; see Carmichael, 301 US

at 511. It may want to protect or foster a particular indus-

try. State v. Pyle, 226 Or 485, 490, 360 P2d 626 (1961); see

Carmichael, 301 US at 512; Etter, 37 Or L Rev at 42. It may

want to encourage publicly desirable enterprises such as char-

ities and educational institutions. See Corporation of Sisters

of Mercy v. Lane Co., 123 Or 144, 161-64, 261 P 694 (1927)

(legislature did not violate equal privileges and immunities

by granting tax exemption to hospitals, because “the estab-

lishment and maintenance of charitable hospitals serves the

public welfare”); see also Carmichael, 301 US at 512 (noting

general principle in equal protection context). It may choose to

tax one industry rather than another because of downstream

economic effects. See Thomas M. Cooley, A Treatise on the Law

of Taxation 124-25 (1st ed 1876) (giving example of a tax on

breadstuffs, which would disproportionately harm the poor).

The classification is not required to serve a single

purpose or be derived from a single rule. The legislature can

create a general rule for one reason and an exemption for a

different reason. See Pyle, 226 Or at 489 (“The mere fact that

the principal purpose of the legislation was to preserve the

highways does not mean that the legislature may not also

have had other considerations in mind.”); id. (“Legislation

usually is the product of the adjustment of various inter-

ests.”); Wittenberg, 203 Or at 446 (legislature “may make

14

See, e.g., Knapp v. City of Jacksonville, 342 Or 268, 276, 151 P3d 143 (2007)

(upholding differing surcharges for developed property because of something

the city “could have” concluded (internal quotation marks and citation omit-

ted)); People’s Util. Dist. et al v. Wasco Co. et al, 210 Or 1, 22, 305 P2d 766 (1957)

(upholding tax statute based on “possible bases for the enactments”); State v.

Kozer, 116 Or 581, 588-90, 242 P 621 (1926) (upholding classification because the

legislature “might well” have classified commercial vehicles, based on a policy

“apparent” from the motor vehicle statutes).

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

distinctions of degree having a rational basis” (internal quo-

tation marks and citation omitted)); see also Carmichael, 301

US at 510-14 (noting that state may decide not to include a

group within a tax because it is administratively difficult or

unduly expensive, or because it chooses to protect or foster

specific industries).

The “rational” part of rational basis review requires

only that the classification drawn by the legislature ratio-

nally serve the purpose(s). See Knapp v. City of Jacksonville,

342 Or 268, 276, 151 P3d 143 (2007) (differences must have

“reasonable relationship to the legislative purpose” (internal

quotation marks omitted)); Huckaba, 281 Or at 26 (requiring

both that there be differences between groups of taxpayers

treated differently, and that those differences have “a reason-

able relationship to the legislative purpose”). But the classifi-

cation need not be perfect. “A legislature is not bound to tax

every member of a class or none.” Wittenberg, 203 Or at 446

(internal quotation marks and citation omitted). “The broad

legislative classification must be judged by reference to char-

acteristics typical of the affected class rather than by focus-

ing on selected atypical examples.” Huckaba, 281 Or at 30.

General rules that promote administrative efficiency are per-

mitted, even if the result might be “seemingly arbitrary” in

individual cases. Huckaba, 281 Or at 30-31.15 In other words, a

15

In Huckaba, the legislature taxed retirement benefits for military service

differently from retirement benefits for other civil services, because military ser-

vicepeople could retire earlier and thus might be able to start a new career. The

plaintiff argued that the distinction failed rational basis review because some civil

servants also could retire early. Rejecting the argument, this court explained:

“General rules are essential if a system of the magnitude and complex-

ity of the Personal Income Tax Act is to be administered with a modicum of

efficiency, even though application of the rule may produce seemingly arbi-

trary consequences in some cases. A nonmilitary federal retiree may, in fact,

after retirement obtain employment and create an additional retirement

fund. Or conversely an Armed Forces retiree may be unable to enter a new

career and be required to subsist on his military retirement pay. Making

these determinations would require individualized proof as each income

exclusion was claimed. The legislature could reasonably choose between a

system of individualized inquiry and a general rule based on the source of the

retirement benefit. The former method would introduce complexities in the

administration of an already complex tax system and increase the expense of

administration. The choice between these competing policies is a legislative

determination and the decision to accord the benefit on the basis of an easily

ascertainable criterion does not offend constitutional principles.”

Huckaba, 281 Or at 30-31.

Cite as 374 Or 58 (2025) 81

classification is not invalid merely because a better one could

be made. School Dist. No. 12 v. Wasco County, 270 Or 622,

629, 529 P2d 386 (1974); see Cooley, Taxation at 125 (“[A] tax

cannot be attacked on averment and proof that some other

tax for the same purpose would have been more just and

more equal.”).

A legislative solution may be rational even if it

does not fully address the problem. As Justice Holmes once

explained regarding the Equal Protection Clause, it “is not

a pedagogical requirement of the impracticable”; a legisla-

ture “may do what it can to prevent what is deemed an evil

and stop short of those cases in which the harm to the few

concerned is thought less important than the harm to the

public that would ensue if the rule laid down were made

mathematically exact.” Dominion Hotel v. Arizona, 249 US

265, 268, 39 S Ct 273, 63 L Ed 597 (1919); see, e.g., Mallatt

v. Luihn et al., 206 Or 678, 702, 294 P2d 871 (1956) (citing

Dominion Hotel with approval and holding that “a classifi-

cation having some reasonable basis does not offend against

the Federal Constitution or the Constitution of this state

merely because it is not made with mathematical nicety or

because in practice it results in some inequality”).

The foregoing statements stand for the proposi-

tion that legislative judgments in the area of taxation are

granted a degree of flexibility. They do not represent carte

blanche permission for any classification that the legislature

may make or any end that the legislature may seek. For

example, a law may be drawn so broadly, or so narrowly,

that it fails to rationally promote any legitimate end. See

State ex rel Huddleston v. Sawyer, 324 Or 597, 629, 932 P2d

1145, cert den, 522 US 994 (1997) (“A law may be so over-

inclusive or underinclusive that no rational relationship

can be detected.”); Romer v. Evans, 517 US 620, 633, 116

S Ct 1620, 134 L Ed 2d 855 (1996) (striking law down under

rational basis review because it was “at once too narrow

and too broad”); see generally Ronald D. Rotunda and John

E. Nowak, 3 Treatise on Constitutional Law—Substance &

Procedure § 18.2(b) (Westlaw July 2024 update) (discussing

rational basis review of overinclusive and underinclusive

laws).

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

b. Mathias and “genuine differences”

The Tax Court’s analysis appears to have rested on

two parts of this court’s opinion in Mathias, 312 Or at 50.

The first was Mathias’s reference to “genuine differences” as

an aspect of the rational basis test. See, e.g., id. at 60, 62-63.

The second was Mathias’s suggestion that, in property tax

classifications, courts may consider only differences in prop-

erty, and not in who owns or uses the property. See id. at 60,

62-63. Based on those parts of Mathias, the Tax Court func-

tionally understood the “genuine differences” test to over-

shadow—if not substitute for—the rational basis test. In

other words, as the Tax Court approached the analysis, the

department was required to first identify “genuine” differ-

ences between the intangible property of centrally assessed

businesses and locally assessed businesses. See 25 OTR at

322 (concluding that the analysis was a two-step process

beginning with whether there were “genuine” differences). If

there were no “genuine” differences between the intangible

property of those business classes, or in how those business

classes used their intangible property, then the tax would be

unconstitutional—without further need to consider whether

the tax was rationally related to a legitimate governmental

purpose. See id. at 353 (concluding that statute was uncon-

stitutional because there were no “genuine” differences in

how different industries used intangible property).

We acknowledge the difficulties that Mathias pres-

ents to any court attempting to discern its rationale. This

case, however, does not require us to revisit all the details of

Mathias’s reasoning or result. Instead, we address only the

two points that, in our view, misdirected the Tax Court’s

analysis.

Mathias considered the constitutionality of a prop-

erty tax statute that applied to subdivision lots. In general,

all properties were assessed at their market value. 312 Or at

52. Under the statute, however, a different valuation method

was used for some lots, depending on how many other lots

the taxpayer owned. If one person owned four or more lots

in a subdivision, then those lots would be valued using a

method that “ ‘recognizes the time period over which those

lots must be sold in order to realize current market prices

Cite as 374 Or 58 (2025) 83

for those lots.’ ” Id. (quoting ORS 308.205(3) (1989)). The tax-

payers, who owned fewer than four lots, argued that it was

unconstitutional to value their property higher than identi-

cal adjacent lots in the same subdivision. Id. Mathias ulti-

mately agreed with the taxpayers. Id. at 67.

The first point discussed in Mathias, “genuine dif-

ferences,” was drawn from Jarvill and Huckaba. See id. at 59

(quoting both decisions). Those cases show, however, that this

court’s references to “genuine differences” were not intended

as an independently meaningful concept but were merely a

restated part of the rational basis test. A classification is not

valid merely because some difference between the classes

exists; those differences must somehow relate to the gov-

ernmental purpose. See Jarvill, 289 Or at 180 (attributing

source of “genuine differences” to Huckaba); Huckaba, 281 Or

at 25-26 (discussing principle of federal equal protection law);

see also Metropolitan Co. v. Brownell, 294 US 580, 583, 55

S Ct 538, 79 L Ed 1070, reh’g den, 295 US 767, 55 S Ct 647,

79 L Ed 1708 (1935) (question is not whether classes are dif-

ferent, “but whether the differences between them are perti-

nent to the subject with respect to which the classification is

made”; if “those differences have any rational relationship to

the legislative command, the discrimination is not forbidden”

(citations omitted)); Power Co. v. Saunders, 274 US 490, 493-

94, 47 S Ct 678, 71 L Ed 1165 (1927) (equal protection requires

“that the classification be not arbitrary but based on a real

and substantial difference having a reasonable relation to

the subject of the particular legislation”; a valid classification

“must rest on differences pertinent to the subject in respect

of which the classification is made”). “Genuine differences”

thus is not a substitute for the rational basis test. Instead, it

merely emphasizes that the rational basis test requires more

than identifying some difference between the classes.

The second point addressed in Mathias was the

extent to which a classification for property taxes required

courts to narrowly consider only differences in the classes

of property being taxed, as opposed to differences in owner-

ship. That appears to us to be, at least in part, a function of

the order in which the opinion addressed the department’s

proposed reasons for the classification.

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

After reviewing the constitutional principles, Mathias

had stated in passing that, in the context of ad valorem

property taxes, classifications must be based on genuine dif-

ferences “between the classes of property” that were being

treated differently. 312 Or at 60 (emphasis added). The

court then rejected the department’s initial contention that

there were differences in the property being classified for

purposes of the tax. Id. at 60-65. The court explained that

the particular distinguishing characteristic used by the leg-

islature—“[t]he amount of other property that a taxpayer

owns”—was not rationally related to the characteristics of

the property. Id. at 62 (adding a footnote identifying two

cases that had struck down classifications based purely on

characteristics of the owner). Arguably, that statement sug-

gests that characteristics of ownership are not pertinent.

Those statements earlier in the opinion, however,

must be considered in the context of later parts of the

analysis. Mathias went on to address an “alternative” basis

for the classification proposed by the department: an intent

“to encourage investment and effort by those engaged in sub-

dividing land by providing them a tax incentive or subsidy.”

Id. at 65. If the court had intended its earlier statements to

mean that property tax classifications can be justified only

by differences in the nature or use of property, then that

alternative proposed basis for the classification would have

already been refuted. Instead, the court concluded that the

characteristics of the owner (that is, how many other prop-

erties he owned) were not rationally related to the particu-

lar classification being challenged. The department had pro-

posed that the justification was to encourage developers, but

“the benefits of the statute [were] not limited to subdividers

or developers or to property being developed.” Id. Moreover,

the court explained, the valuation of multiple lots was not

limited to “such ownerships still held by the original subdi-

vider or to bulk sales of subdivision lots.” Id. The court did

not find any indication that the legislature intended to cre-

ate a tax exemption “from which only owners of four or more

lots would benefit.” Id. The statutory text, context, and leg-

islative history did not support the conclusion that the leg-

islature had intended to treat taxpayers differently. See id.

at 66 (text has “no indication that the legislature intended

Cite as 374 Or 58 (2025) 85

to require other taxpayers to pay a part of a subdivider’s

property taxes”); id. (“tax benefits for individual landown-

ers” were not being considered). The court concluded:

“The argument that the legislature intended partial

exemption or subsidy for those owning four or more lots at

the expense of other property taxpayers, including those

owning fewer lots, is not supportable.”

Id. at 67.

Again, if Mathias had meant to hold that the charac-

teristics of a property owner can never be considered in eval-

uating the rational basis for a property tax, then the court

would have had no need to even discuss the proffered alter-

native justification. The statute would have been unconstitu-

tional even if the legislature had expressly limited the valua-

tion to developers and had expressly intended it to be a partial

tax exemption. Properly understood, therefore, Mathias nar-

rowly held that the characteristics of the owner were, in that

particular instance, insufficient to justify the classification

method used to value some subdivision lots differently.

That narrow reading is supported by our prior case

law concluding that a tax exemption for property held by char-

itable organizations was rationally related to a legitimate

governmental purpose, and thus constitutional. Corporation

of Sisters of Mercy, 123 Or at 161-64; see Carmichael, 301 US

at 512 (noting that equal protection permits “the exemption

of charitable institutions” from taxation).

Having explained what we understand to be the

proper reading of Mathias, we have no further reason to con-

sider whether that case correctly applied those principles.16

Insofar as this case is concerned, however, Mathias does not

establish that “genuine differences” must be identified as a

preliminary step before applying the rational basis test. Nor

does Mathias require that classifications in the property tax

16

There are reasons to question whether it did. Among other things, Mathias

asserted that land use statutes and regulations cannot support a constitutional

classification. 312 Or at 61. Jarvill had expressly held that they could. 289 Or

at 180-81. Mathias’s additional assertion that “[t]he amount of other property

that a taxpayer owns is not a rational basis for distinguishing between other-

wise identical lots for tax purposes,” 312 Or at 62, would seem to contradict the

long-standing precedent allowing taxes to be graduated based precisely on such

numerical amounts as income.

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

context must always and only be justified by reference to the

nature or use of the property.

c. Application

The Tax Court held that the relevant “classifica-

tion” in this case is between intangible property used by a

centrally assessed business and intangible property used by

a locally assessed business. See 25 OTR at 322 (concluding

that classes were “(1) intangible property used in a business

listed in ORS 308.515(1) (taxable), and (2) all other intangi-

ble property (not taxable)”). The parties largely do not dis-

pute that classification, and it is sufficient for purposes of

this opinion. We point out only that, while intangible prop-

erty is the thing being taxed differently, it is not something

that distinguishes the classes: intangible property is some-

thing that both classes (centrally assessed businesses and

locally assessed businesses) have in common.

As noted earlier, the Tax Court had concluded that

Mathias required a prerequisite showing of “genuine dif-

ferences” between the intangible property held by centrally

assessed businesses and the intangible property held by

locally assessed businesses, either in the nature of that prop-

erty or how it is used. See id. at 325-26 (discussing Mathias).

We have explained, however, that a showing of “genuine dif-

ferences” is not a prerequisite to rational basis review. If

there are differences between the classes that are rationally

related to a legitimate governmental purpose, then those

differences are “genuine differences.”

Moreover, as we also have explained, rational basis

review is not limited to differences in the nature of the

intangible property held by those businesses, or in how those

businesses use that property. The rational basis test does

not require the legislature to put on such limiting blinders

when making policy choices about taxation.

We turn, then, to how the rational basis test applies

here. As we will explain, we conclude that the legislature’s

classifications are rationally related to legitimate govern-

mental purposes. There are rational reasons why the legis-

lature might legitimately choose to (1) tax intangible prop-

erty; (2) tax the intangible property of centrally assessed

Cite as 374 Or 58 (2025) 87

businesses; and (3) not tax the intangible property of locally

assessed businesses.

Axiomatically, obtaining revenue is a legitimate

governmental purpose. Moreover, the taxation of intangible

property is rationally related to the purpose of obtaining

revenue. That proposition seems self-evidently true, nor do

we understand taxpayers to contend otherwise.

Furthermore, as we have explained in some detail,

unit valuation and central assessment are intertwined. They

developed specifically to permit states to tax the intangible

property of certain types of businesses. In the judgment of

the legislature, those businesses have substantial amounts

of their value bound up in such intangible property as good-

will, and the nature of those businesses—often distributed

across multiple taxing jurisdictions—makes it particularly

likely that that value would escape taxation. Taxpayers are

parts of industries very similar to railroads, the classic cen-

trally assessed business: railroads, airlines, and electrical

utilities are all heavily regulated industries that use spe-

cific and limited corridors to transport things within and

without the state (railroads mainly transport cargo; Delta

mainly transports people; PacifiCorp transports electricity).

We also conclude that there are conceivable, rational

reasons why the legislature would choose to limit the tax on

intangible property to centrally assessed businesses.17

To begin with, the legislature might have intended

to promote efficiency and fairness in taxation by having a

statewide agency develop expertise in valuing the intangi-

ble property of some or all of the listed businesses, most of

which are specialized in nature and often subject to exten-

sive governmental regulation. But because the Department

of Revenue has limited resources, the legislature may rea-

sonably have concluded that central assessment and the

associated tax on intangible property should be limited to

those industries that offer the highest potential revenue

return to Oregon.

17

The Tax Court appears not to have reached that question, having had

held that there were no “genuine differences” in the nature or use of intangible

property. See 25 OTR at 342-51 (considering whether there were “genuine differ-

ences,” and ultimately concluding that there were not).

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

Relatedly, different industries may vary both in how

difficult it is to assess their intangible property and in how

much additional revenue would be generated by doing so.

The legislature could rationally balance those considerations

in choosing certain industries to be centrally assessed and

taxed on their intangible property. Further, the legislature

might consider the administrative cost imposed on taxpayers

who are required to report the value of their intangible prop-

erty, and then selected those industries that—in the view

of the legislature—could best bear that expense. All those

considerations would rationally serve legitimate purposes.

Beyond all that, the legislature may conceivably

have had independent reasons not to tax the intangible

property of various other businesses.

For example, the legislature may have determined

that ordinary property taxes come close enough to captur-

ing the value of what the legislature may have considered to

be businesses more heavily invested in capital or physical

products—manufacturing, merchants, or the bus and truck-

ing companies pointed to by Delta. For that reason, the leg-

islature might have declined to add the extra complication

of taxing their intangible property.

As for bus and trucking companies specifically, the

department has noted that bus and trucking companies are

already subject to a different taxation scheme that is pre-

scribed in part by the Oregon Constitution. See Or Const,

Art IX, § 3a (tax revenues obtained by taxing motor vehi-

cle fuel, or use or ownership of motor vehicles, must be put

toward construction and maintenance of public roads and

related works). The legislature could rationally consider the

entirety of the tax system applicable to the bus and trucking

industries when making policy decisions about the individ-

ual parts of that system—such as whether to tax the intan-

gible property of that industry.18

18

The Tax Court rejected the department’s argument regarding the separate

taxation scheme applicable to motor vehicles. See 25 OTR at 343-45. The court’s

reasons for doing so appear to have depended heavily on its having understood

Mathias to mean that the legislature, when deciding which businesses to tax on

intangible property, could not give any consideration to how bus and trucking

companies were subject to a separate tax system for tangible property (motor

vehicles). We have now clarified that Mathias does not go so far.

Cite as 374 Or 58 (2025) 89

Or the legislature could have decided not to tax the

intangible property of certain industries on the ground that

the revenue obtained from taxing that industry as a whole

was not worth the cost. That is, the legislature might have

believed that the total revenue gained by taxing the intan-

gible property of all businesses within a particular industry

might, on average, fail to offset the total cost to the state of

assessing the intangible property of all the businesses in

that industry.

Or the legislature could have concluded that a par-

ticular industry faced additional regulatory burdens, or

taxes, or competition, that made an additional tax burden

inappropriate as a matter of public policy.

In identifying those conceivable purposes, we are

simply echoing similar conceivable reasons that the

United States Supreme Court recognized and approved

in Carmichael, when it held that Alabama might lawfully

restrict its tax for unemployment insurance to those employ-

ers having eight or more employees while exempting cer-

tain types of employers. The Court first explained that

“[a]dministrative convenience and expense in the collection

or measurement of the tax are alone a sufficient justifica-

tion for the difference[.]” 301 US at 511. The state legislature

might have concluded that “the expense and inconvenience

of collecting the tax from small employers” would be “dis-

proportionate to the revenue obtained,” id.; “that generally

the number of employees bears a relationship to the size of

the payroll and therefore to the amount of the tax,” id.; and

that “the large number of small employers and the paucity

of their records of employment would entail greater incon-

venience in the collection and verification of the tax than

in the case of larger employers,” id. Similarly, “[r]elatively

great expense and inconvenience of collection may justify

the exemption from taxation of domestic employers, farm-

ers, and family businesses, not likely to maintain adequate

employment records, which are an important aid in the col-

lection and verification of the tax.” Id. at 513. Furthermore,

the Court explained, reasons of public policy would also jus-

tify the legislature in deciding to exclude particular indus-

tries: the legislature may “withhold the burden of the tax

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

in order to foster what it conceives to be a beneficent enter-

prise” or “to aid a depressed industry such as shipping.” Id.

at 512.

Neither equal protection nor equal privileges and

immunities require the legislature to draw “mathematically

exact” lines. Dominion Hotel, 249 US at 268; see Mallatt, 206

Or at 702 (“mathematical nicety” not required). In deciding

to tax the intangible property of centrally assessed busi-

nesses, the legislature did not need to identify and weigh a

set of controlling criteria, then “spreadsheet” every industry

in the entire economy, accurately placing each on the proper

side of the line, on penalty of any error rendering the entire

classification invalid. Any such requirement would indeed

convert equal protection and equal privileges into “a peda-

gogical requirement of the impracticable.” Dominion Hotel,

249 US at 268; Mallatt, 206 Or at 702.

2. Federal Equal Protection Clause

We turn now to the Equal Protection Clause of the

United States Constitution. As long ago as 1890, the United

States Supreme Court noted the leniency granted the states

in making classifications for tax purposes:

“[A state] may, if it chooses, exempt certain classes of prop-

erty from any taxation at all, such as churches, libraries

and the property of charitable institutions. It may impose

different specific taxes upon different trades and profes-

sions, and may vary the rates of excise upon various prod-

ucts; it may tax real estate and personal property in a dif-

ferent manner; it may tax visible property only, and not tax

securities for payment of money; it may allow deductions

for indebtedness, or not allow them.”

Bell’s Gap R’d Co. v. Pennsylvania, 134 US 232, 237, 10 S Ct

533, 33 L Ed 892 (1890). The Court continues to empha-

size the breadth of permissible classifications. See, e.g.,

Nordlinger v. Hahn, 505 US 1, 11-12, 112 S Ct 2326, 120

L Ed 2d 1 (1992) (equal protection standard “is especially

deferential in the context of classifications made by complex

tax laws”; “the States have large leeway in making classifi-

cations and drawing lines which in their judgment produce

reasonable systems of taxation” (internal quotation marks

and citations omitted)).

Cite as 374 Or 58 (2025) 91

Beyond that, we see little to add to what we have

already said. Our analysis of Oregon’s Equal Privileges

and Immunities Clause had cited numerous United States

Supreme Court decisions for their persuasive authority (and

in fact many of our older cases relied heavily on equal pro-

tection principles). The decisions of the Court are controlling

in the context of the federal Equal Protection Clause, but

the fundamental analysis under the federal standard is

very similar to that which applies under state law. All the

points that led to our conclusion that the classification is

rational for purposes of equal privileges and immunities

also show that the classification is rational for purposes of

equal protection.

We would add that the primary arguments made

here—that property cannot be classed based purely on who

holds or uses it, and that some businesses in the state can-

not be taxed on their intangible property when others are

not—were rejected by the United States Supreme Court in

the nineteenth century. In the Adams Express cases, express

companies had contended that it violated equal protection

for the State of Ohio to tax their intangible property such

as goodwill, when other businesses in Ohio were not subject

to such a tax. The express companies’ arguments, which are

printed only in the United States Reports and the Lawyer’s

Edition, contended that the law violated equal protection

because

“[p]roperty cannot be classified in respect to mere owner-

ship. The same kind and character of property devoted to

the same uses, within the same taxing districts, cannot be

taxed by one rule against one class of persons and by a dif-

ferent rule against another class.”

Adams Express Company v. Ohio, 165 US 194, 206, 17 S Ct

305, 41 L Ed 683 (1897) (Adams Express I); see id. (arguing

that “the property owned by express companies within the

State of Ohio is not different in its character, uses or sit-

uations from other similar property within the State, nor

is there any greater difficulty in ascertaining its value for

purposes of taxation”); Adams Express II, 166 US at 209-

10 (on rehearing, express companies asserted that law vio-

lated equal protection because it taxed express companies

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

differently from “[m]erchants, manufacturers, banks, bro-

kers, newspapers, gas companies, street railway companies,

indeed all persons and corporations engaged in business in

the State”).

The Court rejected those contentions, holding that

Ohio’s tax did not violate the Equal Protection Clause. See

Adams Express I, 165 US at 221-22 (the property of the

express companies, “whether represented in tangible or

intangible property, * * * possessed a value in combination

* * * which could as rightfully be recognized in the assess-

ment for taxation” as it could be for railroad, telegraph, and

sleeping-car companies); id. at 228-29 (rejecting equal pro-

tection argument); Adams Express II, 166 US at 225 (deny-

ing petition for rehearing without further addressing equal

protection). Delta’s similar contentions do not appear more

persuasive today than they were when the Court decided

Adams Express.19

Finally, we return to PacifiCorp’s argument regard-

ing the Ninth Circuit’s holding in BNSF. PacifiCorp asserts

that the holding in BNSF amounts to a determination by a

federal court that the classification at issue here is not ratio-

nally related to a legitimate governmental purpose. The

Ninth Circuit, however, was not applying the rational basis

test; it was applying a more restrictive test prescribed by

statute. As we mentioned previously, BNSF was interpret-

ing a federal statute, 49 USC § 11501(b)(4), that prohibited

states from taxing railroads differently from other commer-

cial and industrial taxpayers. 965 F3d at 684; id. at 686; id.

at 691-93. The rational basis test for equal protection uses

a substantially less restrictive test, as the United States

Supreme Court explained in Alabama Dept. of Revenue v.

19

Ten years ago, the Court suggested that the same principles remain valid.

In a case focused on a different issue, the Court offhandedly rejected (in dictum)

the claim that it would be unconstitutional to tax a railroad differently from a

motor carrier:

“It would be permissible—as far as the Equal Protection Clause is concerned—

for a State to tax a rail carrier more than a motor carrier, despite the seeming

similarity in their lines of business.”

Alabama Dept. of Revenue v. CSX Transp., 575 US 21, 28, 135 S Ct 1136, 191

L Ed 2d 113 (2015). It would be difficult to understand why equal protection

would permit different treatment for railroads and motor carriers, but prohibit

different treatment for airlines and motor carriers.

Cite as 374 Or 58 (2025) 93

CSX Transp., 575 US 21, 27-28, 135 S Ct 1136, 191 L Ed 2d

113 (2015) (noting that construing 49 USC § 11501(b)(4) to

use the looser equal protection standard would “deprive [the

statute] of all real-world effect, providing protection that

the Equal Protection Clause already provides”). The Court

emphasized how forgiving the test for equal protection was:

“In the Equal Protection Clause context, very few tax-

payers are regarded as similarly situated and thus entitled

to equal treatment. There, a State may tax different lines

of businesses differently with near-impunity, even if they

are apparently similar.”

Id. at 27-28. As a result, nothing the Court said in BNSF

undermines the conclusions that we reach in this case.

III. CONCLUSION

The tax at issue here is rationally related to any

number of legitimate purposes. Our analysis under Oregon’s

Equal Privileges and Immunities Clause shows that the

tax is valid. Moreover, the tax also is constitutional under

the Equal Protection Clause. The tax presents no addi-

tional issues under the uniformity provisions of the Oregon

Constitution.

The judgment of the Tax Court is reversed, and the

case is remanded to the Tax Court for further proceedings.

JAMES, J., concurring.

I concur in the result and the reasoning of the major-

ity. I write separately, however, to address an issue that I

perceive as an essential predicate step of our analysis under

Article I, section 20, of the Oregon Constitution: whether

a “true class” exists. The majority omits that step because

the parties did not address it in their briefing; the majority

therefore assumes it, without deciding it. I would have pre-

ferred that we address it.

Article I, section 20, prohibits granting privileges

or immunities to one citizen or class of citizens that are not

equally available to all citizens. As we explained in State

v. Clark, 291 Or 231, 237, 630 P2d 810, cert den, 454 US

1084 (1981), the clause “forbids inequality of privileges or

immunities not available ‘upon the same terms,’ first, to any

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

citizen, and second, to any class of citizens.” Id. at 237 (quot-

ing Article I, section 20).

“Class” is a term of art for Article I, section 20,

analysis. Disparate treatment implicates Article I, sec-

tion 20, only when it involves a “true class.” State ex rel

Huddleston v. Sawyer, 324 Or 597, 610, 932 P2d 1145, cert

den, 522 US 994 (1997). In attempting to describe precisely

what is meant by a “true class,” our cases draw a distinc-

tion between classes that are created by the challenged law

or government action itself and classes that are defined

in terms of characteristics that are shared apart from the

challenged law or action.

We have referred to “true classes” as denoted by “ad

hominem characteristic[s],” Van Wormer v. City of Salem,

309 Or 404, 408, 788 P2d 443 (1990), by “personal charac-

teristic[s],” Zockert v. Fanning, 310 Or 514, 523, 800 P2d 773

(1990), or by “antecedent personal or social characteristics

or societal status,” Hale v. Port of Portland, 308 Or 508, 525,

783 P2d 506 (1989), abrogated on other grounds by Smothers

v. Gresham Transfer, Inc., 332 Or 83, 23 P3d 333 (2001). We

have described “true class” characteristics as (not exclu-

sively) “sex, ethnic background, legitimacy, past or present

residency or military service.” Clark, 291 Or at 240-41.

In contrast, we have recognized that

“every law itself can be said to ‘classify’ what it covers from

what it excludes. For instance, the rule of this court that

limits the time for filing a petition for review * * * ‘classifies’

persons by offering the ‘privilege’ of review to those who file

within 30 days and denying it to those who file later.”

Id. at 240. Those types of classes do not invoke Article I, sec-

tion 20, at all. Huddleston, 324 Or at 610. As we explained,

“[a]ttacks on such laws as ‘class legislation’ therefore tend to

be circular and * * * have generally been rejected whenever

the law leaves it open to anyone to bring himself or herself

within the favored class on equal terms.” Clark, 291 Or at

241. Later commentary framed the question as whether the

classification represents a “true class” or a “pseudo-class,”

with pseudo-classes being outside the scope of the state’s

equal privileges clause. David Schuman, The Right to

Cite as 374 Or 58 (2025) 95

Equal Privileges and Immunities: A State’s Version of Equal

Protection, 13 Vt L Rev 221, 232-33 (1988).1

That “true class” distinction is an essential predi-

cate step of an Article I, section 20, analysis. As we said in

Sealey v. Hicks, 309 Or 387, 397, 788 P2d 435, cert den, 498

US 819 (1990),

“[i]n evaluating whether a class exists under Article I, sec-

tion 20, we must first determine whether the class ‘is created

by the challenged law itself’ or ‘by virtue of characteristics

* * * apart from the law in question.’ [Clark, 291 Or at 240].

Classes of the first type are entitled to no special protection

and, in fact, are not even considered to be classes for the

purposes of Article I, section 20.”

(Emphasis added; ellipsis in original.)

I readily acknowledge that we have not articulated

the clearest test to assist litigants, or lower courts, in sift-

ing true classes from non-true classes. The Court of Appeals

has expressed “frustration” with its inability to identify the

principles that would harmonize our decisions on the point.

See Neher v. Chartier, 124 Or App 220, 225 n 3, 862 P2d

1307 (1993), rev’d on other grounds, 319 Or 417, 879 P2d 156

(1994).2 That difficulty may well explain why the parties

1

Professor Schuman suggested that a “pseudo-class” was “any group of peo-

ple who would never have conceived of themselves as a ‘class,’ and would not have

been treated as a class, if the statute or policy allegedly disadvantaging them did

not exist.” Schuman, 13 Vt L Rev at 233.

2

In that footnote in Neher, the Court of Appeals gave the following review of

the case law as it then existed:

“We share plaintiff’s frustration in attempting to discern the correct

analysis for Article I, section 20, challenges. The [Oregon] Supreme Court’s

opinions have been inconsistent regarding what is a ‘true class.’ In [Clark,

291 Or at 240], the court said that classes are based on personal characteris-

tics that persons or groups have apart from the law itself, such as sex, ethnic

background, legitimacy, residency or military service. In [Hale, 308 Or at

525], the court applied a similar standard to hold that a classification of vic-

tims of governmental torts is not an identifiable class, because it is not based

on ‘antecedent personal or social characteristics or societal status.’ However,

in [Sealey, 309 Or at 387], the court held that persons injured by products do

constitute a class for purposes of Article I, section 20, because the class exists

apart from the statute. Compare [Van Wormer, 309 Or at 408 n 7] (persons

who suffered governmentally inflicted wrongful death not true class); Eckles

v. State of Oregon, 306 Or 380, 387, 760 P2d 846 (1988), cert dismissed, 490

US 1032 (1989) (‘’classes’ of private insurers, insureds and [workers’ compen-

sation] claimants on the one hand, and SAIF insureds and claimants on the

other,’ are not true classes); Norwest v. Presbyterian Intercommunity Hosp.,

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

have ignored the issue. But to me, that is all the more rea-

son for us to engage with that aspect of our Article I, section

20, analysis, and perhaps offer clarity.

In the evidentiary context, I recently wrote of my

growing unease with our “worn-threadbare tactic of assum-

ing without deciding.” State v. Taylor, 372 Or 536, 557, 551

P3d 924 (2024) (James, J., concurring). My unease is partic-

ularly acute in the area of state constitutional law. Unlike

the majority of states that employ a lockstep or intersti-

tial approach to constitutional questions, Oregon employs

an independent state constitutional model. As we have

explained, our “first things first” doctrine requires a court

to consider state law claims first because “the state does not

deny any right claimed under the federal Constitution when

the claim before the court in fact is fully met by state law.”

Sterling v. Cupp, 290 Or 611, 614, 625 P2d 123 (1981).

Our “first things first” approach yields many bene-

fits, but two in particular I highlight. First, rigorous adher-

ence to a full state constitutional analysis is responsible for

293 Or 543, 652 P2d 318 (1982) (children of disabled parents not a class under

Article I, section 20); with State ex rel Adult & Fam. Ser. v. Bradley, 295 Or

216, 666 P2d 249 (1983) (illegitimacy is a true class); Hewitt v. SAIF, 294 Or

33, 653 P2d 970 (1982) (gender is a true class). The court also has not been

clear about what analysis applies if there is a ‘true class’ involved. Compare

[Hewitt, 294 at 33] (gender classification reviewed for whether it was based

on intrinsic differences between the sexes) with Seto v. Tri County Metro.

Transportation Dist., 311 Or 456, 814 P2d 1060 (1991) (geographic classifica-

tion reviewed for rational basis) and [Hale, 308 Or at 524] (rational basis test

‘has been superseded’). Further, it is unclear whether there is any judicial

scrutiny at all if the class not a ‘true class,’ but is created by the statute itself.

See, e.g., [Sealey, 309 Or at 397] (classes ‘created by the challenged law itself’

are ‘entitled to no special protection and, in fact, are not even considered to

be classes for the purposes of Article I, section 20’); [Hale, 308 Or at 525] (vic-

tims of governmental torts are not an identifiable class based on personal or

social characteristics and, therefore, there is no violation of Article I, section

20); [Eckles, 306 Or at 387] (classes that exist only by virtue of the statute

do not violate Article I, section 20); but see [Clark, 291 Or at 240] (attacks on

classes created by the legislative scheme itself have generally been rejected

whenever the law leaves it open to anyone to join); Cole v. Dept. of Rev., 294 Or

188, 655 P2d 171 (1982) (law not directed at true class passed Article I, sec-

tion 20, challenge because the privilege was available upon the same terms

equally to all citizens); Hunter v. State of Oregon, 306 Or 529, 761 P2d 502

(1988) (grant of post-conviction relief to persons convicted of a state crime but

not to persons convicted of a municipal crime is a classification created by the

statute itself, but it does not violate Article I, Section 20, because the same

standard applies to all).”

Neher, 124 Or App at 225 n 3.

Cite as 374 Or 58 (2025) 97

Oregon’s independent protection of civil rights and liberties

above the federal floor. See, e.g., State v. McCarthy, 369 Or

129, 153-54, 501 P3d 478 (2021) (explaining that this court

has rejected federal law construing the Fourth Amendment

as a “reasonable expectations of privacy” test because “ ‘the

privacy protected by Article I, section 9, is not the privacy

one reasonably expects but the privacy to which one has a

right’ ” (quoting State v. Campbell, 306 Or 157, 164, 759 P2d

1040 (1988) (emphasis in Campbell)); State v. Dixson, 307 Or

195, 766 P2d 1015 (1988) (concluding that unlike the Fourth

Amendment, the protections of Article I, section 9, could, in

some circumstances, extend beyond the curtilage of a per-

son’s home); State v. Henry, 302 Or 510, 515, 732 P2d 9 (1987)

(recognizing that the protections Article I, section 8, provides

to Oregonians are “broader” than the First Amendment to

the United States Constitution.)

Second, as former Justice Carson noted, “reliance

on state law [helps to] eliminate the practical consequences

of the troublesome effects of shifts in the United States

Supreme Court’s interpretation of the federal constitution.”

Wallace P. Carson, Jr., “Last Things Last”: A Methodological

Approach to Legal Arguments in State Courts, 19 Willamette

L Rev 641, 648-49 (1983); see also State v. Caraher, 293 Or

741, 750, 653 P2d 942 (1982) (“The resolution of this case

under the federal analysis provides no guidance for the next.

* * * The goal of simplification is, in our view, better served

by relying on Article I, section 9 of our own Constitution * * *

than by hypothesizing how the U.S. Supreme Court would

consider this case in light of its past decisions and then

deciding whether to adopt that rule.” (Footnote omitted.)). In

short, rigorously applied state constitutionalism is a break-

water against rough federal seas.

As former Justice Linde cautioned, “when a court

ties a state constitutional guarantee as a tail to the kite

of the corresponding federal clause, it may simply find the

state ground ignored on certiorari[.] * * * [T]he habit that

developed in the 1960’s of making a federal case of every

claim and looking for all law in Supreme Court opinions

dies hard.” Hans Linde, First Things First: Rediscovering the

States’ Bill of Rights, 9 U of Baltimore L Rev 379, 390 (1980).

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

Even when our state constitutional analysis differs

from federal constitutional analysis, consistently address-

ing and applying those differences may be important to

establishing a claim of independent adequate state grounds.

When analysis of the state constitutional ground is tied too

closely to related federal constitutional grounds, federal

courts might not treat the state constitutional ground as

independent. As the United States Supreme Court cautioned

in Michigan v. Long:

“Apart from its two citations to the state constitution, the

court below relied exclusively on its understanding of [Terry

v. Ohio, 392 US 1, 88 S Ct 1868, 20 L Ed 2d 889 (1968),]

and other federal cases. Not a single state case was cited

to support the state court’s holding that the search of the

passenger compartment was unconstitutional. Indeed, the

court declared that the search in this case was unconstitu-

tional because ‘[t]he Court of Appeals erroneously applied

the principles of Terry * * * to the search of the interior of

the vehicle in this case.’ [Michigan v. Long, 413 Mich 461,

471, 320 NW2d 866, 869 (1982)]. The references to the state

constitution in no way indicate that the decision below

rested on grounds in any way independent from the state

court’s interpretation of federal law. Even if we accept that

the Michigan constitution has been interpreted to provide

independent protection for certain rights also secured

under the Fourth Amendment, it fairly appears in this case

that the Michigan Supreme Court rested its decision pri-

marily on federal law.”

463 US 1032, 1043-44, 103 S Ct 3469, 77 L Ed 2d 1201 (1983)

(emphases in original).

In espousing first things first, Justice Linde related

two anecdotes, that I recount here in full:

“[L]awyers once came to our court trying to fit a woman’s

right to operate a day care center within the due process

analysis of Goldberg v. Kelly[, 397 US 254, 90 S Ct 1011, 25

L Ed 2d 287 (1970)]. Only after the argument did our own

examination show that she was entitled to prevail under

the state administrative procedure act, which counsel

apparently had not read.

“In another recent case, a defendant charged with speed-

ing demanded the maintenance records of the radar sets

Cite as 374 Or 58 (2025) 99

used by the Portland police. The case was argued below

and in our court as a federal due process claim under the

Supreme Court’s rule in Brady v. Maryland, [373 US 83, 83

S Ct 1194, 10 L Ed 2d 215 (1963),] which dealt with pros-

ecution suppression of evidence favorable to the defense.

After the argument, it occurred to us that the records

were apparently available to anyone on request under the

state’s public records law. We asked the parties for addi-

tional memoranda. The state agreed that the records were,

indeed, available; all defendant had to do was pick them up

for himself instead of demanding that the district attor-

ney get them for him. Defense counsel’s response was that

this might be so, but that the ‘threshold question’ in the

case was the duty of the state in light of the United States

constitutional standards; the merits of other legal ways of

getting the information were irrelevant.

“As I say, that perspective dies hard. In both of these cases,

we happened to notice on our own motion that the state law

protected the interest at stake. But if we had not noticed

the state issues on our own, the shaky federal due process

claims might well have failed.

“What this should mean in practice is simply good lawyer-

ing, both at the bar and on the bench. If we expect to get

careful attention to a state statute, we should give equally

careful attention to the state constitution.”

Linde, 9 U of Baltimore L Rev at 390-91.

I share Justice Linde’s perspective—preserving the

independence of our Oregon Constitutional approach is a

community effort. We all must do our part. Lawyers must

address the state constitutional claim, and do so fully, giving

each step attention and analysis. And courts, likewise, must

do their part, resisting attempts by litigants to short cir-

cuit the state constitution, or an aspect of our state constitu-

tional analysis. And, in my view, appellate courts should be

very reticent to omit consideration of the state constitution,

or an aspect of our state constitutional analysis, even when

the parties have failed to brief it. To that end, I call upon

lawyers to be mindful of addressing all the steps of our state

constitutional analysis, and I call upon this court to resume

our historical practice of asking for supplemental briefing

from parties who fail to address the state constitution, or a

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

state constitutional step, rather than continuing our trend

of assuming without deciding such matters.

However, in this case, because the parties have not

briefed the issue of whether the tax law affects a true class,

and because this court did not require supplemental brief-

ing by the parties to address that missing analysis, I will

reserve my resolution of that question for a future case. I am

therefore able to concur in the rest of the reasoning of the

majority and join its result.

I respectfully concur.

Bushong, J., joins in this concurring opinion.