PacifiCorp v. Dept. of Rev.

No. 35 September 18, 2025 189

IN THE SUPREME COURT OF THE

STATE OF OREGON

PACIFICORP,

Plaintiff-Appellant,

Cross-Respondent,

v.

DEPARTMENT OF REVENUE,

State of Oregon,

Defendant-Respondent,

Cross-Appellant.

(TC 5411) (SC S070564)

En Banc

On appeal from the Tax Court.*

Robert T. Manicke, Judge.

Argued and submitted September 26, 2024.

David J. Crapo, Crapo Deeds PLLC, Bountiful, Utah,

argued the cause and filed the briefs for plaintiff-appel-

lant/cross-respondent. Also on the briefs was Dustin T. Till,

PacifiCorp, Portland.

Christopher A. Perdue, Assistant Attorney General,

Salem, argued the cause and filed the briefs for defendant-re-

spondent/cross-appellant. Also on the briefs were Ellen F.

Rosenblum, Attorney General, and Benjamin Gutman,

Solicitor General.

GARRETT, J.

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

is remanded to the Tax Court for further proceedings.

______________

* 25 OTR 227 (2023); and 25 OTR 367, modified and adh’d to as modified on

recons, 25 OTR 419 (2023).

190 PacifiCorp v. Dept. of Rev.

Cite as 374 Or 189 (2025) 191

GARRETT, J.

This case involves an appeal and cross-appeal from

a final judgment of the Tax Court. Taxpayer PacifiCorp has

appealed the aspect of the Tax Court’s decision memorial-

ized in PacifiCorp v. Dept. of Rev., 25 OTR 367, modified and

adh’d to as modified on recons, 25 OTR 419 (2023). In those

opinions, the Tax Court rejected PacifiCorp’s contention

that the state unconstitutionally taxed PacifiCorp’s intan-

gible property. We described the Tax Court’s ruling in more

detail, and addressed the merits of PacifiCorp’s contentions,

in Delta Air Lines, Inc. v. Dept. of Rev., 374 Or 58, ___ P3d

___ (decided July 24, 2025). For the reasons explained in

that opinion, see 374 Or at 61 (summarizing this court’s con-

clusion), we affirm as to PacifiCorp’s appeal without further

discussion.

This opinion otherwise concerns the Department

of Revenue’s cross-appeal from the Tax Court’s determi-

nation of PacifiCorp’s real market value for tax year 2020-

21. PacifiCorp v. Dept. of Rev., 25 OTR 227 (2023). In that

opinion, the Tax Court concluded that it was not bound by

an administrative rule promulgated by the Department of

Revenue that prescribes methods and practices for calcu-

lating real market value. The department asserts that the

rule is valid and binding and that the Tax Court erred in

concluding otherwise.

For the reasons that follow, we agree with the depart-

ment. The Tax Court’s conclusion that it was not required to

“defer” to the rule was legally erroneous. Absent a deter-

mination that the rule is invalid facially or as applied, the

department’s rule is law, and it must be given legal effect.

Because it appears that the Tax Court’s legal error may

have affected how it evaluated the evidence, we reverse the

Tax Court’s decision and remand for the court to reconsider

the case, applying the correct legal standard.

I. BACKGROUND

The issue in this case turns on the validity of a par-

ticular administrative rule setting out methods to be used to

determine real market value in certain tax cases. We begin

192 PacifiCorp v. Dept. of Rev.

by providing an overview of the principles of administrative

law that govern the validity of rules.

A. Determining Validity of Administrative Rules

This court has previously explained that a court

properly analyzes the validity of an agency action by a

sequence of steps:

“In the proper sequence of analyzing the legality of

action taken by officials under delegated authority, the

first question is whether the action fell within the reach

of their authority, the question which in the case of courts

is described as ‘jurisdiction.’ If that is not in issue, * * * the

question is whether the action was taken by procedures

prescribed by statute or regulation. Assuming that proper

procedures were followed, the next question is whether

the substance of the action, though within the scope of the

agency’s or official’s general authority, departed from a

legal standard expressed or implied in the particular law

being administered, or contravened some other applicable

statute.”

Planned Parenthood Assn. v. Dept. of Human Res., 297 Or

562, 565, 687 P2d 785 (1984); see Nay v. Dept. of Human

Services, 360 Or 668, 680-82, 385 P3d 1001 (2016) (apply-

ing that framework). “These steps are designed to assure

that the challenged action * * * in fact was authorized by the

state’s or local government’s politically accountable policy

makers.” Planned Parenthood, 297 Or at 565.

Those steps also apply to determining the validity

of an administrative rule, although the rule challenge may

take one of two forms. We have described those as a “facial”

challenge and an “as applied” challenge. Nay, 360 Or at 679

(noting “facial challenge” terminology); Oregon Newspaper

Publishers v. Dept. of Corrections, 329 Or 115, 118-19, 988

P2d 359 (1999) (using “as applied” terminology). In a “facial”

challenge to the validity of a rule, the court does not exam-

ine the facts of any particular case. Instead, the court

considers only the rule and the statutes at issue (and, if

appropriate, evidence regarding compliance with rulemak-

ing procedures). ORS 183.400(3) (limiting what court may

examine on judicial review of administrative rule); see Wolf

v. Oregon Lottery Commission, 344 Or 345, 354, 182 P3d 180

Cite as 374 Or 189 (2025) 193

(2008) (“judicial review under ORS 183.400 is limited to the

face of the rule and the law pertinent to it” (internal quo-

tation marks, emphasis, and citations omitted)).1 In an “as

applied” challenge, the court considers whether the agen-

cy’s application of the rule to a particular factual situation

may violate statutory or constitutional requirements. See

AFSCME Local 2623 v. Dept. of Corrections, 315 Or 74, 84,

843 P2d 409 (1992) (in holding facially valid a rule that per-

mitted the Department of Corrections to search employees

entering prison, court noted that propriety of factual claim

that the department was “allowing itself” to conduct body

cavity searches would have to be challenged in the proper

forum (internal quotation marks omitted)); Criminal Justice

Reform Clinic v. Board of Parole, 313 Or App 592, 597,

496 P3d 688 (2021) (in holding facially valid rules regard-

ing parole consideration for certain juveniles convicted of

aggravated murder, court explained that a claim that the

rules might sometimes affect juveniles in ways that ille-

gally failed to consider their age could be addressed by “as

applied” challenge).

Regardless of whether the challenge is facial or as

applied, the courts will consider substantively whether the

agency’s rule is inconsistent with the commands of statu-

tory or constitutional law.

But if an administrative rule is valid—that is, if

it was adopted through lawful procedures and is neither

invalid on its face nor invalid as applied—then it is law, and

a court is bound by it. That is exemplified by this court’s

decision in U. P. R. R. Co. v. Tax Commission, 240 Or 628,

402 P2d 519 (1965). There, the State Tax Commission had

enacted a rule that prohibited the taxpayers from deduct-

ing interest as an expense. Id. at 629. The Tax Court had

“construed the regulatory powers of the [c]ommission nar-

rowly,” id. at 630, and it had ordered the commission to give

refunds, id. at 629. This court reversed the Tax Court:

1

We note that, under the circumstances presented here, ORS 183.400 could

properly be invoked in the Tax Court. Although the first part of that statute

gives the Court of Appeals jurisdiction over rule challenges, ORS 183.400(1),

other courts may also consider the validity of a rule when the question before the

court involves “enforcement of such rule * * * in the manner provided by law,” ORS

183.400(2).

194 PacifiCorp v. Dept. of Rev.

“We hold that the regulation was duly promulgated

under specific legislative authority, and that it has the

force of law. Since we cannot say as a matter of law that

the Commission exceeded its authority, we hold that the

regulation was valid as applied. Accordingly, it was error

to allow the refunds.”

Id. at 632 (citation omitted). Or, as this court stated more

broadly in Bronson v. Moonen, 270 Or 469, 476, 528 P2d

82 (1974), “[a]dministrative rules and regulations are to be

regarded as legislative enactments having the same effect

as if enacted by the legislature as part of the original stat-

ute.”

B. Central Assessment, Valuation, and “Real Market Value”

This case involves the calculation of property tax

for a business that is centrally assessed under Oregon law,

meaning that it is assessed by the department rather than

by local assessors. See ORS 308.515(1) (listing businesses

subject to centrally assessment). Generally speaking, the

central assessment process involves calculating the value of

the taxpayer as a whole and then taxing the taxpayer on

the fraction of that value attributable to Oregon. See ORS

308.555 (prescribing unit valuation generally); ORS 308.550

(addressing allocation methods for taxpayer operating both

inside and outside Oregon); Comcast Corp. v. Dept. of Rev.,

356 Or 282, 290-93, 337 P3d 768 (2014) (describing process).

The goal of the valuation process is to determine

“real market value” as that term is defined by both the

Oregon Constitution and by statute.2 Article XI, section

11(11)(a)(A), of the Oregon Constitution provides:

“The real market value of property shall be the amount

in cash that could reasonably be expected to be paid by an

informed buyer to an informed seller, each acting without

compulsion in an arm’s length transaction occurring as of

the assessment date for the tax year, as established by law.”

2

The central assessment statutes themselves often refer only to “value.” See

ORS 308.555 (“for the purpose of arriving at the assessed value of the property,”

department “may value the entire property, both within and without the State of

Oregon, as a unit”). It seems clear from other provisions of the central assessment

statutes, however—as well as context—that the legislature meant “real market

value” as defined. See ORS 308.674 (authorizing exemption based in part on “real

market value” of centrally assessed businesses).

Cite as 374 Or 189 (2025) 195

The legislature essentially repeated that definition

in ORS 308.205(1):

“Real market value of all property, real and personal,

means the amount in cash that could reasonably be

expected to be paid by an informed buyer to an informed

seller, each acting without compulsion in an arm’s-length

transaction occurring as of the assessment date for the tax

year.”

As the quoted text of the constitutional provision

shows, it contemplates that the legislature may expand on

that definition (“as established by law”). The legislature did

so in ORS 308.205(2):

“Real market value in all cases shall be determined by

methods and procedures in accordance with rules adopted

by the Department of Revenue and in accordance with the

following:

“(a) The amount a typical seller would accept or the

amount a typical buyer would offer that could reasonably

be expected by a seller of property.

“(b) An amount in cash shall be considered the equiv-

alent of a financing method that is typical for a property.

“(c) If the property has no immediate market value, its

real market value is the amount of money that would justly

compensate the owner for loss of the property.

“(d) If the property is subject to governmental restric-

tion as to use on the assessment date under applicable law

or regulation, real market value shall not be based upon

sales that reflect for the property a value that the property

would have if the use of the property were not subject to the

restriction unless adjustments in value are made reflecting

the effect of the restrictions.”

More than one method exists for calculating real

market value. Appraisers generally recognize three such

methods: comparable sales (the market approach), capital-

ization of income (the income approach), and cost (the cost

approach). Chapin v. Dept. of Rev., 290 Or 931, 936, 627 P2d

480 (1981); Swenson v. Dept. of Rev., 276 Or 1, 4, 553 P2d

351 (1976); see Dept. of Rev. v. River’s Edge Investments, LLC,

359 Or 822, 827, 377 P3d 540 (2016) (valuation of real prop-

erty). “The cost approach estimates value from the cost that

196 PacifiCorp v. Dept. of Rev.

would be needed to construct a similar property; the income

approach estimates value from the income that the prop-

erty could be expected to generate; and the comparable sales

approach estimates value from the prices paid for similar

properties.” River’s Edge, 359 Or at 827.

The ultimate decision about which approach to

use—or whether to use a combination of approaches—is a

question of fact that depends on how the record developed in

the case. See Pacific Power & Light Co. v. Dept. of Rev., 286 Or

529, 533, 596 P2d 912 (1979) (so stating); Brooks Resources

Corp. v. Dept. of Revenue, 286 Or 499, 503-04, 595 P2d 1358

(1979) (same). If more than one approach is used, then the

value indications produced by the different approaches must

be reconciled. Powell Street I v. Multnomah County Assessor,

365 Or 245, 250, 445 P3d 297 (2019); River’s Edge, 359 Or

at 827; see Medical Building Land Co. v. Dept. of Rev., 283

Or 69, 72 n 2, 582 P2d 416 (1978) (discussing concept under

prior term “correlation”).

C. Administrative Rule and WSATA Handbook

As mentioned above, the legislature has given the

department authority to make rules prescribing the “meth-

ods and procedures” to be used to determine real market

value “in all cases.” ORS 308.205(2) (providing that, “in all

cases,” real market value “shall be determined by methods

and procedures in accordance with rules adopted by the

Department of Revenue”). The legislature has also given

the department specific authority to make rules that apply

to central assessment. ORS 308.655 (“The Department of

Revenue may prescribe directions, rules and regulations to

be followed in answering any requirement of ORS 308.505

to 308.674.”).

The department’s valuation rule at issue in this

case is OAR 150-308-0690. It provides in its entirety:

“The 2009 Western States Association of Tax

Administrators Appraisal Handbook: Unit Valuation

of Centrally Assessed Properties is adopted as the offi-

cial valuation guide for property assessed by the Oregon

Department of Revenue under ORS 308.505 to 308.665 for

ad valorem tax purposes.”

Cite as 374 Or 189 (2025) 197

The handbook that the rule incorporates by refer-

ence—Western States Association of Tax Administrators

Committee on Centrally Assessed Property, Appraisal

Handbook: Unit Valuation of Centrally Assessed Properties

(2009), generally called the “WSATA Handbook”—is as

lengthy as the rule is short. The Tax Court’s opinion gave

the following summary:

“The ‘WSATA Handbook’ consists of approximately 350

pages of guidance, in varying degrees of depth, about meth-

ods and tools for unit valuation and value allocation with

respect to utility property and other centrally assessed

property. It ‘serves as the primary textbook * * * to train

state government appraisers of centrally assessed prop-

erties.’ WSATA Handbook at vi. As such it ‘incorporates

WSATA’s opinion of the current state of academic and

appraisal theory’ as applicable to centrally assessed prop-

erty. Id. at I-I. * * * [T]he authors of the WSATA Handbook

identify strengths and weaknesses in various valuation

methods and theories; they rarely mandate or entirely con-

demn the use of a particular method, but they express rea-

sons to prefer some techniques and to reject others.”

PacifiCorp, 25 OTR at 230 (first omission in original).

The WSATA Handbook’s valuation methods broadly

match those discussed above, providing details as to each of

the three standard approaches: comparable sales, capital-

ization of income, and cost. See WSATA Handbook at II-1

et seq. (cost approach); id. at III-1 et seq. (income approach);

id. at V-1 et seq. (comparable sales approach).3 Furthermore,

the WSATA Handbook’s valuation methods are directed to

obtaining a value, the definition of which is substantially

equivalent to Oregon’s definition of “real market value.”

Compare WSATA Handbook at I-2 (goal is “a value equiv-

alent to a transaction where open market conditions exist,

including a willing buyer and a willing seller, both parties

knowledgeable as to the likely and permitted uses of the

property (both presently and prospectively), no undue pres-

sure or force to buy or sell, reasonable time exposure of the

property to the market, and arm’s-length negotiations”), with

3

The WSATA Handbook also includes an approach called the “stock and debt

indicator,” which is “a surrogate or substitute for the sales comparison indicator

of value.” Id. at IV-1.

198 PacifiCorp v. Dept. of Rev.

ORS 308.205(1) (“real market value” means “the amount

in cash that could reasonably be expected to be paid by an

informed buyer to an informed seller, each acting without

compulsion in an arm’s-length transaction occurring as of

the assessment date for the tax year”).

II. FACTS AND HOLDING BELOW

A. Facts and Procedural Posture

PacifiCorp is an electric utility that operates both

inside and outside Oregon. As an electricity business,

PacifiCorp is centrally assessed under ORS 308.515(1)(k).

The issue in this case involves PacifiCorp’s valu-

ation for tax year 2020-21. At trial before the Tax Court,

PacifiCorp presented expert testimony arguing that its

overall value was $14.85 billion, with $2.23 billion attrib-

utable to Oregon, while the department countered with

expert testimony asserting that PacifiCorp’s overall value

was $22.50 billion, with $3.71 billion attributable to Oregon.

As relevant on review, the department contended that

PacifiCorp’s appraisal deviated from the WSATA Handbook

in two respects, one involving the cost approach and the

other involving the income approach. Specifically, as to the

cost approach, the department argued that PacifiCorp’s

appraiser had been incorrect in including a deduction for

“obsolescence” from the value that PacifiCorp had submitted

in certain federal regulatory filings. The WSATA Handbook

states that “generally” the value from those filings should not

be adjusted for obsolescence, because obsolescence was, “in

theory,” already included in the figure. WSATA Handbook

at II-12; see 25 OTR at 252-55 (discussing and quoting rele-

vant provision of WSATA Handbook).

As to PacifiCorp’s income approach, the department

asserted that the appraiser had been incorrect in using

what is called a “no-growth model.” See PacifiCorp, 25 OTR

at 262 (so noting). The WSATA Handbook strongly discour-

ages using a no-growth model, because it requires a num-

ber of potentially questionable assumptions; an appraiser

who offers a no-growth model “must be able to defend all

these assumptions with actual market evidence.” WSATA

Handbook at III-16. In addition, the WSATA Handbook

Cite as 374 Or 189 (2025) 199

noted that the no-growth model leads to values that are

“almost always” below actual sale prices. Id.

B. Tax Court’s Ruling

The Tax Court ultimately issued an 80-page opin-

ion addressing the various arguments presented by the par-

ties. PacifiCorp, 25 OTR 227.

The court began by addressing, as a threshold mat-

ter, the “level of deference” that the court should accord the

WSATA Handbook. 25 OTR at 230; id. at 231 (same). It noted

that the department had argued that the WSATA Handbook,

adopted as an administrative rule, was controlling and so, in

the department’s view, the Tax Court was required to reject

at least some parts of PacifiCorp’s appraisal evidence. See

25 OTR at 231 (quoting department’s arguments, includ-

ing assertion that there was no need for court to “ ‘engage

in debate over the theoretical propriety’ ” of certain asser-

tions, because “ ‘the administrative rule [incorporating the

WSATA Handbook] answers the questions’ ”). PacifiCorp, by

contrast, asserted that the Tax Court’s de novo review of the

proceedings4 meant that the Tax Court was free to ignore

the WSATA Handbook entirely. Id.

The Tax Court concluded that the appropriate “level

of deference” owed to the handbook would be determined by

applying the framework from Springfield Education Assn.

v. School Dist., 290 Or 217, 223-30, 621 P2d 547 (1980), to

the statutes that authorized the department to enact the

rule. See PacifiCorp, 25 OTR at 231-34. Although the court

examined three statutes, most of its analysis focused on

the rulemaking authority in ORS 308.205(2): “Real market

value in all cases shall be determined by methods and proce-

dures in accordance with rules adopted by the Department

of Revenue[.]” 25 OTR at 237-44.

The Tax Court’s opinion does not make it entirely

clear how the court thought that Springfield might apply

to ORS 308.205(2). Despite the text of the statute, the

court seemed concerned that perhaps the legislature had

4

ORS 305.425(1) provides that “[a]ll proceedings before the judge or a mag-

istrate of the tax court shall be original, independent proceedings and shall be

tried without a jury and de novo.”

200 PacifiCorp v. Dept. of Rev.

not intended to give the department any “discretion” at all.

See 25 OTR at 243 (absent prior case law, court suggested

appropriate analysis would turn on whether the statutory

phrase “in accordance with” conferred “a ‘range of discre-

tion’ upon [the department],” and if it did confer discretion,

whether department had abused that discretion by adopting

WSATA Handbook “to the exclusion of any other method of

determining real market value”).

The Tax Court explained, however, that it was not

“writing on a blank slate,” in light of this court’s decision

in Portland Canning Co. v. Tax Com., 241 Or 109, 404 P2d

236 (1965). Portland Canning addressed the extent to which

the State Tax Commission could by rule require value to

be determined using replacement cost rather than market

value. This court said that, “[w]hile the [state tax] commis-

sion has been given power to make regulations setting forth

procedures as to how this may be done, it cannot vary the

mandate of the law under this guise.” 241 Or at 113. Relying

on Portland Canning, the Tax Court concluded that the

administrative rules cannot override the statutory or con-

stitutional definitions of “real market value.” As the court

framed it, the department’s rules cannot

“compel the use of methods and procedures that fail to

result in real market value in a particular case. Stated

positively, a taxpayer remains free to argue that a value

determined in accordance with [the department’s] rules is

inconsistent with the definition of real market value in sub-

section (1) of ORS 308.205, and the court is not bound to

accept a value determined under [the department’s] rules

if the court finds that another value, determined under

methods or procedures not in accordance with [the depart-

ment’s] rules, is correct.”

25 OTR at 244.

In short, the Tax Court concluded that the depart-

ment’s rule adopting the WSATA Handbook did not bind the

court in its determination of real market value. The court did

not identify any provision of the WSATA Handbook as being

inconsistent with the constitutional or statutory definitions

of “real market value.” To the contrary, the court expressly

noted that the WSATA Handbook “rarely mandate[s] or

Cite as 374 Or 189 (2025) 201

entirely condemn[s] the use of a particular method.” Id. at

230. Nevertheless, the court went on to conclude that it need

not “defer” to the administrative rule regarding any “meth-

ods and procedures”:

“The court concludes that it need not defer to OAR 150-

308-0690 with respect to methods and procedures of deter-

mining the real market value of [PacifiCorp’s] system, to

the extent that the source of the rule’s authority is ORS

308.205(2).”

25 OTR at 244. The court added in a footnote that its hold-

ing “does not render the WSATA Handbook, or any other

rules, meaningless,” because the WSATA Handbook would

still bind the department and local assessors. 25 OTR at

244 n 11 (“[the department’s] rules under ORS 308.205

bind not only [the department], but also the assessors in all

counties”).

That broad conclusion was echoed later in the Tax

Court’s opinion regarding the specific appraisal evidence

offered by the parties. Regarding the cost approach and

PacifiCorp’s deduction for obsolescence, the Tax Court relied

on its conclusions regarding deference to hold that it was

not required to follow the WSATA Handbook “as a matter of

law,” provided that a taxpayer “can persuade the court that

a value determined pursuant to the WSATA Handbook is

not the real market value of the property.” 25 OTR at 255.

Ultimately, however, the Tax Court was not persuaded to

accept PacifiCorp’s proposed deduction for obsolescence as

part of the cost approach—and in the end, declined to give

weight to the cost approach entirely. See id. at 257 (“The

court finds that the preponderance of the evidence does

not support [PacifiCorp’s] proffered economic obsolescence

adjustment to net book value.”); id. at 259 (“[T]he court finds

no factual basis to assign any weight to either party’s cost

indicator of value.” (Footnote omitted.)).

The Tax Court’s conclusion that it was not bound

by the WSATA Handbook appears to have been more sig-

nificant in the case of the income approach. The court noted

that the WSATA Handbook was critical of no-growth mod-

els. Id. at 262. It then reviewed evidence that supported

PacifiCorp’s no-growth position, as well as the department’s

202 PacifiCorp v. Dept. of Rev.

contrary appraisal evidence. Id. at 262-68. The Tax Court

characterized both parties’ approaches as “imperfect mea-

sures,” and it critiqued PacifiCorp’s essentially “theoretical”

approach that it could never have growth because it was a

regulated utility. Id. at 269. In the end, however, the court

agreed to accept PacifiCorp’s no-growth model. Id.

In light of those determinations, as well as many oth-

ers, the Tax Court ultimately determined that PacifiCorp’s

overall value was $17.24 billion, with $2.84 billion attribut-

able to Oregon. See id. at 307 (summarizing conclusion).

III. ANALYSIS

A. Issue and Standard of Review

On appeal, the department presents a narrow legal

issue: whether the Tax Court erred in concluding that it

was not bound by the WSATA Handbook as incorporated by

administrative rule. As the department summarized it in its

reply brief: “[T]his cross-appeal reduces to a simple claim:

Lawfully promulgated administrative rules have the force

of law. Courts must apply them as they would apply statutes

or constitutional provisions.” Because the issue before us is

fundamentally one of law, we review the Tax Court’s conclu-

sions for errors of law. ORS 305.445.

B. Department’s Authority to Enact Rule

Under the Planned Parenthood sequence of analysis,

we begin by considering whether the department had statu-

tory authority to adopt the WSATA Handbook as an admin-

istrative rule. See 297 Or at 565 (“whether the action fell

within the reach of [the agency’s] authority”); ORS 183.400(4)

(b) (rule is invalid if it “[e]xceeds the statutory authority of

the agency”).5

We do not understand PacifiCorp to contend that

the department lacked statutory authority to promulgate

the rule or to adopt the handbook. Moreover, the depart-

ment’s authority to do so is readily established by the plain

5

ORS 183.400 is a provision of the Administrative Procedures Act (APA).

Although the legislature has exempted the department from some provisions of

the APA, it did not exempt the department from ORS 183.400. See ORS 183.315(1)

(listing those provisions of APA that do not apply to Department of Revenue).

Cite as 374 Or 189 (2025) 203

text of ORS 308.205(2). Again, the relevant text provides

that “[r]eal market value in all cases shall be determined by

methods and procedures in accordance with rules adopted by

the Department of Revenue[.]” (Emphases added.) It is not

disputed here that the WSATA Handbook sets out “methods

and procedures,” and that those methods and are directed

toward determining the substantive equivalent of “real

market value” as defined in Oregon.

We further note that the legislature has given the

department rulemaking authority in the specific context of

central assessment. ORS 308.655 provides:

“The Department of Revenue may prescribe directions,

rules and regulations to be followed in answering any

requirement of ORS 308.505 to 308.674 [the central assess-

ment statutes].”

One requirement of the central assessment statutes is to

determine the real market value of the real, personal, and

intangible property of centrally assessed businesses.

We need not decide whether ORS 308.655, if it

stood alone, would be sufficient to authorize the department

to prescribe the methods and procedures to determine the

real market value of centrally assessed businesses, because

it does not stand alone. ORS 308.205(2) gives the depart-

ment that authority for “all cases” involving real market

value, and nothing in ORS 308.655 limits that authority as

it applies to central assessment.

The Tax Court appears to have reasoned that the

department’s statutory authority to adopt the handbook

may be limited to proceedings before the department and

cannot “bind” a court. To the extent that the Tax Court

adopted that view for textual reasons, that conclusion is not

consistent with ORS 308.205. Textually, nothing limits the

department’s rulemaking authority to proceedings before

the department alone. The Tax Court is determining “real

market value,” and statutory text provides that real mar-

ket value “shall be determined” “in accordance with” the

department’s rules regarding methods and procedures.

Moreover, the statute as a whole sets out legal stan-

dards that apply to the courts as well as the department.

204 PacifiCorp v. Dept. of Rev.

The definition of “real market value” in ORS 308.205(1) cer-

tainly applies to the courts. But that thread continues into

ORS 308.205(2), which provides:

“Real market value in all cases shall be determined by

methods and procedures in accordance with rules adopted

by the Department of Revenue and in accordance with the

following:

“(a) The amount a typical seller would accept or the

amount a typical buyer would offer that could reasonably

be expected by a seller of property.

“(b) An amount in cash shall be considered the equiv-

alent of a financing method that is typical for a property.

“(c) If the property has no immediate market value, its

real market value is the amount of money that would justly

compensate the owner for loss of the property.

“(d) If the property is subject to governmental restric-

tion as to use on the assessment date under applicable law

or regulation, real market value shall not be based upon

sales that reflect for the property a value that the property

would have if the use of the property were not subject to the

restriction unless adjustments in value are made reflecting

the effect of the restrictions.”

Setting aside for the moment the reach of the depart-

ment’s rulemaking authority, there seems little doubt that

every other paragraph of subsection (2) would apply to the

courts. “Real market value” must accord with the amount

that a typical seller would accept or a typical buyer would

offer (subsection (2)(a)); amounts in cash must be considered

the equivalent of typical financing methods (subsection (2)

(b)); if there is no immediate market value, then just com-

pensation may be used (subsection (2)(c)); and, when valu-

ing a property subject to a governmental restriction, market

values for properties not subject to that restriction either

cannot be used, or must be adjusted to account for the dif-

ference (subsection (2)(d)).

In other words, every other part of ORS 308.205

addressing “real market value” applies to the courts. We see

no textual reason to conclude that the one exception to that

application is a rule, promulgated pursuant to ORS 308.205,

Cite as 374 Or 189 (2025) 205

prescribing the “methods and procedures” to be used to

determine “real market value.”

PacifiCorp contends that ORS 305.412 supports the

Tax Court’s conclusion that the WSATA Handbook, as an

administrative rule, is not legally binding on appeal to the

courts. ORS 305.412 provides:

“When the determination of real market value * * * is

an issue before the tax court, the court has jurisdiction to

determine the real market value or correct valuation on the

basis of the evidence before the court, without regard to the

values pleaded by the parties.”

The Tax Court did not rely on that provision, nor

are we persuaded by PacifiCorp’s argument. On its face,

ORS 305.412 simply makes it clear that the Tax Court is

not bound by the “values pleaded by the parties.” It sheds no

light on whether the Tax Court is bound by validly promul-

gated administrative rules.6

In sum, under the first step of the Planned

Parenthood analysis, the department had authority to adopt

6

PacifiCorp cites decisions from other jurisdictions in support of its position,

but they are distinguishable.

In Morgan Cnty. Bd. of Equalization v. Indorama Ventures Xylenes & PTA,

LLC, 400 So 3d 596, 602 (Ala 2024), the Alabama Supreme Court upheld a circuit

court’s refusal to follow a valuation manual issued by the county board of equal-

ization. But it did so because the manual was just an administrative handbook;

the provisions of that manual “are not rules, regulations, or general orders of [an]

administrative authority that have the force of law.” Id. (alteration in original;

internal quotation marks and citations omitted).

The decision in PacifiCorp, Inc., et al. v. Utah State Tax Comm’n, Case No.

180903986 (Ut 2d Jud Dist Ct, Tax Div, Jan. 23, 2020) (available online at https://

www.utcourts.gov/content/dam/courts/dist/tax / PacifiCorp_et_al_v_USTC-

Decision_and_Order-180903986.pdf, accessed Sept 11, 2025), appears similar.

The trial court declined to follow an administrative rule, Utah Admin Code

R884-24P-62, but that was because it provided “internal guidance” for the tax

commission regarding how to value centrally assessed businesses. Id. at 4 (inter-

nal quotation marks and citation omitted); see Utah Admin Code R884-24P-62(1)

(a) (purpose of rule is to “specify consistent * * * methodologies to be used by the

[Utah Tax Commission’s] Property Tax Division”).

PacifiCorp also references the United States Supreme Court’s decisions in

Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 US 837, 104 S Ct 2778, 81

L Ed 2d 694 (1984), and its overruling in Loper Bright Enterprises v. Raimondo,

603 US 369, 144 S Ct 2244, 219 L Ed 2d 832 (2024). They are beside the point.

So-called “Chevron deference” “is foreign to the administrative law of this state.”

Friends of Columbia Gorge v. Columbia River (S055722), 346 Or 366, 378, 213 P3d

1164 (2009) (footnote omitted).

206 PacifiCorp v. Dept. of Rev.

the WSATA Handbook prescribing the “methods and proce-

dures” to be used to determine “real market value.”

The second step under Planned Parenthood would

ordinarily be to consider whether the department had com-

plied with rulemaking procedures in adopting the WSATA

Handbook. 297 Or at 565; see ORS 183.400(4)(c) (same). That

step is unnecessary here, as the Tax Court did not call into

question the department’s compliance with rulemaking pro-

cedures, nor does PacifiCorp on appeal.

C. Validity of Rule

We now turn to the third step in Planned Parenthood

and consider whether the WSATA Handbook, as an admin-

istrative rule, is invalid because it “contravened some other

applicable statute [or constitutional provision].” 297 Or at

565; see ORS 183.400(4)(a), (b) (agency rule will be invalid if

it “[v]iolates constitutional provisions” or “[e]xceeds the stat-

utory authority of the agency”). In this case, constitutional

and statutory boundaries constrain what the department

may do through its valuation “methods and procedures”: the

methods and procedures must lead to results consistent with

the constitutional and statutory definitions of “real market

value.” See Or Const, Art XI, § 11(11)(a)(A); ORS 308.205(1);

ORS 308.205(2)(a) - (d).

Beginning with the question of facial validity: We

see no basis here for declaring the rule invalid on its face,

nor do we understand the Tax Court to have reasoned other-

wise. There is no argument that the WSATA Handbook is

directed toward a substantive goal inconsistent with “real

market value” as Oregon defines it. Nor is there any conten-

tion that the WSATA Handbook prescribes something other

than “methods or procedures” for determining that value.

Thus, if there is to be a reason for not applying the

WSATA Handbook in this case, it must be that the depart-

ment’s rule is invalid “as applied.” The focus of that analysis

is whether following any prescribed “methods and proce-

dures” of the WSATA Handbook would—on the facts and

evidence before the court—have led to a result inconsistent

with real market value as Oregon defines it.

Cite as 374 Or 189 (2025) 207

As a practical matter, we observe that the nature

of the WSATA Handbook means that it would rarely meet

the criteria to be invalid as applied. That is so because the

WSATA Handbook itself generally recognizes that partic-

ular facts may require different methods and procedures.

Again, as the Tax Court recognized, the WSATA Handbook

generally only “identif[ies] strengths and weaknesses in var-

ious valuation methods and theories”; it “rarely mandate[s]

or entirely condemn[s] the use of a particular method,”

instead “express[ing] reasons to prefer some techniques and

to reject others.” PacifiCorp, 25 OTR at 230. For the WSATA

Handbook to be invalid as applied, it presumably would

have to compel the use of some method or procedure despite

particular facts that caused that method or procedure to

generate a result inconsistent with Oregon’s definition of

real market value. Or, to put it the other way around: If the

WSATA Handbook does not go so far as to compel a method

or procedure despite particular facts, then it is difficult to

see how it would be invalid as applied, because it would not

require a result inconsistent with Oregon real market value.

As an example, consider one matter addressed in

the Tax Court: PacifiCorp’s deduction of obsolescence from

the value shown in the regulatory filing as part of its cost

approach. See 25 OTR at 253-55. The WSATA Handbook

does not prohibit deducting obsolescence. It only strongly

recommends against it, and it explains why: The WSATA

Handbook expects the value shown in the regulatory filing

to already have deducted obsolescence, and so deducting it

a second time would be double-counting. WSATA Handbook

at II-12 (“The practice of not adjusting * * * for perceived

obsolescence does not mean that obsolescence has not been

considered and measured, since as noted previously, regula-

tory depreciation should, in theory, reflect all forms of obso-

lescence.”); see 25 OTR at 255 n 20 (quoting that provision).

If that assumption was not true in a particular case—if the

value shown in the filing did not already have obsolescence

deducted—then the handbook’s rationale would no longer

apply.

The Tax Court does not appear to have considered

whether the WSATA Handbook was invalid as applied to

208 PacifiCorp v. Dept. of Rev.

the facts of PacifiCorp’s case. Rather, the court’s threshold

conclusion that the WSATA Handbook was not entitled to

“deference”—that it does not bind a court at all—meant that

the court, as we understand its opinion, did not consider

whether particular provisions of the WSATA Handbook,

when applied to the evidence here, might be inconsistent

with the constitutional and statutory limits on “real market

value.”

The Tax Court’s focus on whether the court owed

“deference” to the rule, and on whether the rule had bind-

ing effect beyond proceedings within the department itself,

seems to have originated from its emphasis on the frame-

work from Springfield. But that framework is inapposite.

Springfield set out the analytical framework used

to determine the “[a]llocation between agencies and courts of

responsibility for giving specific meaning to statutory terms.”

290 Or at 221 (emphasis added). The Springfield framework

identified “three classes of statutory terms,” distinguished

by where the legislature intended to place the “responsibil-

ity” to interpret those terms. Id. at 223. “Exact terms,” or

“terms of precise meaning,” are terms such as “21 years of

age”; they require only agency factfinding, and interpreta-

tion rests with the courts. Id. “Inexact terms” are those that

“embody[ ] complete expressions of legislative meaning, even

though that meaning may not always be obvious.” Id. at 224.

With such terms, the legislature has “made a complete pol-

icy statement,” and again, “the court ultimately discerns

and applies that meaning as a matter of law.” Id. at 225. By

contrast, “delegative terms”—statutory terms such as “good

cause”—are terms that “express non-completed legislation

which the agency is given delegated authority to complete.”

Id. at 228. In that case,

“[t]he delegation of responsibility for policy refinement

under such a statute is to the agency, not to the court. The

discretionary function of the agency is to make the choice[,]

and the review function of the court is to see that the agen-

cy’s decision is within the range of discretion allowed by the

more general policy of the statute.”

Id. at 229.

Cite as 374 Or 189 (2025) 209

Springfield does not materially aid the analysis

here, because, as we have explained, there is no genuine

issue concerning the authority that the legislature gave

the department. ORS 308.205(2) expressly authorizes the

department to promulgate “methods and procedures” that

are to be used to determine “real market value.” It is undis-

puted that the WSATA Handbook’s provisions qualify as

“methods and procedures,” and it is undisputed that those

methods and procedures are directed toward the goal of

identifying substantially the “real market value” as that

term is defined in Oregon.

The Tax Court, in its reliance on Portland Canning,

also appears to have reasoned that the department’s statu-

tory rulemaking authority cannot extend so far as to pre-

clude a court from using whatever method it determines

best for determining real market value. Portland Canning

does not reach so broadly. In that case, the then-version of

ORS 308.205 permitted the use of replacement cost only

for “ ‘property which has no immediate market value.’ ” 241

Or at 112 (emphasis added; quoting ORS 308.205 (1963)).

Pursuant to a rule, the State Tax Commission in that case

had valued taxpayer’s property using replacement cost. Id.

at 111. The record established, however, that there was

in fact a market for the underlying property, making the

“immediate market value” readily ascertainable. Id. at 113-

14. On that record, this court held that the Tax Commission

had erred, because the commission’s rule could not override

the statutory directive to seek the actual market value:

“Clearly the dominant note of the legislation is that, if

possible, value is to be ascertained in accordance with mar-

ket value. While the commission has been given power to

make regulations setting forth procedures as to how this

may be done, it cannot vary the mandate of the law under

this guise. If a market existed for the kind of property being

assessed, the property had to be evaluated by the market

data approach. The commission has no power to permit the

evaluation of the property by the exclusive means of the

cost approach to determine the value to the owner when a

market in fact exists.”

Id. at 113.

210 PacifiCorp v. Dept. of Rev.

Portland Canning thus held that the department’s

rule must give way if it conflicts with the constitutional

and statutory definition of “real market value.” That inva-

lidity depends on there being a true conflict, as existed on

the unique facts of that case, where there actually was an

“immediate” market for the underlying property, making

the determination of real market value ascertainable with-

out resort to the methods and practices that are intended

for use when no such market exists. Although it did not use

these words, Portland Canning can thus be understood to

have concluded that the commission’s rule was invalid as

applied. Absent such a conflict, Portland Canning does not

stand for the proposition that a court is not as bound by a

valid administrative rule as it is by other law. Nor does it

support the proposition that, where methods and practices

must be used to make a determination of real market value

(because an “immediate market” for the property does not

exist, as in Portland Canning), a court may use methods

or practices contrary to the methods and practices validly

adopted by the department, to which the legislature has

entrusted the task.7

Given the Tax Court’s legal error regarding the

validity of the WSATA Handbook, we conclude that its deci-

sion should be reversed and remanded. If the Tax Court had

applied the correct legal standard that we have described,

it might have reached a different result on one or more fac-

tual issues in this case. As we have explained, the WSATA

Handbook generally allows for some flexibility, which means

that the Tax Court might have arrived at the same factual

determinations that it reached even if it had treated the

Handbook as binding. However, we cannot say with cer-

tainty, on this record, that the Tax Court would have done

so. Accordingly, because the court used the wrong legal

standard, we reverse its decision, and we remand for the

7

The Tax Court also cited this court’s decision in Alsea Veneer, Inc. v. Dept. of

Rev., 297 Or 512, 687 P2d 137 (1984). See 25 OTR at 241-42. Although the Alsea

court discussed both the applicable version of ORS 308.205 and the department’s

relevant rule, 297 Or at 516-17, the facts make it distinguishable. In rejecting the

department’s contention that the Tax Court was required to follow the rule but

had failed to do so, this court explained that the Tax Court had acted consistently

with the rule. See id. at 517 (“What was anticipated by the rule is precisely what

occurred here.”).

Cite as 374 Or 189 (2025) 211

court to apply the correct legal standard to the evidentiary

questions.

We emphasize the limited nature of this holding.

Our decision does not preclude a taxpayer from arguing

that application of the handbook (or any other statute or

rule) would lead to a result that is at odds with the Oregon

Constitution. Nor is the Tax Court compelled to adopt a val-

uation resulting from application of a departmental rule

if that valuation would be inconsistent with the constitu-

tional and statutory definitions of real market value. If the

Tax Court had treated the WSATA Handbook as a relevant

source of law and found that it required a finding of real

market value at odds with how the constitution or statutes

define “real market value,” that would, in essence, be a rul-

ing that the rule was invalid as applied.

As we read the record, that is not what occurred

here. PacifiCorp argued that, in this de novo proceeding,

the Tax Court did not need to even consider the handbook

because its legal effect was limited to proceedings internal

to the department. It appears that the Tax Court agreed,

couching its reasoning in terms of whether the rule was

“binding” or entitled to “deference.” In other words, we do

not understand the Tax Court to have applied the rule and

determined that such application would produce a problem-

atic outcome; instead, it seems to have concluded that the

department’s rule had no role to play in the court’s analysis.

We hold only that the court erred by failing to treat the

department’s rule as a relevant source of law that controls

unless, if applied in fact, it would compel a result contrary

to the constitution or statute.

The judgment of the Tax Court is reversed, and the

case is remanded to the Tax Court for further proceedings.