Petition for Writ of Certiorari — Delta Air Lines, Inc., Petitioner v. Oregon Department of Revenue
Supreme Court briefNov 21, 2025
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No. 25-____
IN THE
Supreme Court of the United States
————
DELTA AIR LINES, INC.,
Petitioner,
v.
DEPARTMENT OF REVENUE, STATE OF OREGON,
Respondent.
————
On Petition for a Writ of Certiorari to the
Supreme Court of Oregon
————
PETITION FOR A WRIT OF CERTIORARI
————
BRAD S. DANIELS
Counsel of Record
STOEL RIVES LLP
760 SW Ninth Avenue
Suite 3000
Portland, OR 97205
(503) 224-3380
brad.daniels@stoel.com
Counsel for Petitioner
November 21, 2025
WILSON-EPES PRINTING CO., INC. – (202) 789-0096 – WASHINGTON, D.C. 20002
QUESTION PRESENTED
Whether the Equal Protection Clause of the
Fourteenth Amendment prohibits a state from
singling out a few businesses for taxation of their
intangible property, because it is administratively
convenient, when identical intangible property of all
other taxpayers is exempt from taxation.
(i)
ii
RULE 29.6 CORPORATE
DISCLOSURE STATEMENT
Petitioner Delta Air Lines, Inc. (“Delta”) is a publicly
held corporation that has no parent corporation, and
no publicly held company owns 10 percent or more of
Delta’s stock.
STATEMENT OF RELATED PROCEEDINGS
This case arises from the following proceedings:
Delta Air Lines, Inc. v. Oregon Department of
Revenue, No. SC070593 (Oregon Supreme Court),
opinion issued on July 24, 2025; and
Delta Air Lines, Inc. v. Oregon Department of
Revenue, No. 5409 (Oregon Tax Court), judgment
entered on October 31, 2023.
Four additional cases in the Oregon Tax Court were
consolidated for pretrial purposes with this case.
These cases, which are listed below, are held in
abeyance pending the resolution of this case, and no
final judgment has been entered in them.
Delta Air Lines, Inc. v. Oregon Department of
Revenue, No. 5418 (Oregon Tax Court);
Delta Air Lines, Inc. v. Oregon Department of
Revenue, No. 5433 (Oregon Tax Court);
Delta Air Lines, Inc. v. Oregon Department of
Revenue, No. 5452 (Oregon Tax Court); and
Delta Air Lines, Inc. v. Oregon Department of
Revenue, No. 5460 (Oregon Tax Court).
TABLE OF CONTENTS
Page
QUESTION PRESENTED ..................................
i
RULE 29.6 STATEMENT CORPORATE
DISCLOSURE STATEMENT .........................
ii
STATEMENT OF RELATED PROCEEDINGS .
ii
TABLE OF AUTHORITIES ................................
v
OPINIONS BELOW ............................................
1
JURISDICTION ..................................................
1
CONSTITUTIONAL AND
STATUTORY PROVISIONS INVOLVED ......
1
INTRODUCTION ................................................
1
STATEMENT OF THE CASE ............................
2
I.
Legal Background .....................................
2
A. Central
Assessment
and
Unit
Valuation ..............................................
3
B. The Taxation of Intangible Property ..
5
The Equal Protection Clause....................
7
III. Proceedings Below ....................................
8
A. Delta Appealed Its Oregon Property
Tax Assessment ...................................
8
B. The Oregon Tax Court Held that
Oregon’s Scheme Violates the Equal
Protection Clause ................................
9
C. The Oregon Supreme Court Held that
Oregon’s Scheme Does Not Violate the
Equal Protection Clause......................
10
II.
(iii)
iv
TABLE OF CONTENTS—Continued
Page
REASONS FOR GRANTING THE WRIT ..........
I.
12
The Oregon Supreme Court’s Opinion Is
Contrary to This Court’s Precedents and
to the Ninth Circuit’s Analysis of the
Same Tax Scheme .....................................
12
A. This Court Consistently Prevents States
from Singling Out Certain Taxpayers
and Property Owners for Unequal
Treatment Based on Invented
Excuses ................................................
12
B. The Oregon Supreme Court’s Opinion
Conflicts with This Court’s and the
Ninth Circuit’s Precedents ..................
15
1. The Oregon Supreme Court Invented Irrational Reasons for Patently
Unequal Property Taxation ...........
15
2. Central Assessment and Unit
Valuation Do Not Justify the
Intangible Property Tax ................
24
C The Oregon Supreme Court’s Reliance
on Adams Express and Carmichael Is
Misplaced .............................................
26
The Question Presented Is of Exceptional
Importance ................................................
30
III. This Case Is a Sound Vehicle to Resolve
the Question Presented ............................
32
CONCLUSION ....................................................
33
II.
APPENDIX
v
TABLE OF AUTHORITIES
CASES
Page(s)
AAA Oregon/Idaho Auto Source, LLC v.
Dep’t of Revenue,
423 P.3d 71 (Or. 2018) ..............................
22
Adams Express Co. v. Ohio State Auditor,
165 U.S. 194 (1897) ................................... 26-28
Adams Express Co. v. Ohio State Auditor,
166 U.S. 185 (1897) ................................... 26-28
Ala. Dep’t of Revenue v. CSX Transp., Inc.,
575 U.S. 21 (2015) .....................................
19
Allegheny Pittsburgh Coal Co. v.
County Commission of Webster County,
488 U.S. 336 (1989) ............................. 14, 16, 31
Allied Stores of Ohio, Inc. v. Bowers,
358 U.S. 522 (1959) ............................. 13, 18, 23
Armour v. City of Indianapolis,
566 U.S. 673 (2012) ......................... 7, 21, 23, 30
ASARCO Inc. v. Kadish,
490 U.S. 605 (1989) ...................................
1
BNSF Ry. Co. v. County of Alameda,
7 F.4th 874 (9th Cir. 2021) .......................
3, 4
BNSF Ry. Co. v. Or. Dep’t of Revenue,
965 F.3d 681 (9th Cir. 2020)........... 6, 18, 19, 23
Carmichael v. Southern Coal & Coke Co.,
301 U.S. 495 (1937) ............................. 26, 28, 29
Citizens Against Burlington, Inc. v. Busey,
938 F.2d 190 (D.C. Cir. 1991) ...................
26
Cleveland, C., C. & St. L. Ry. Co. v. Backus,
154 U.S. 439 (1894) ...................................
4
vi
TABLE OF AUTHORITIES—Continued
Page(s)
Comcast Corp. v. Dep’t of Revenue,
337 P.3d 768 (Or. 2014) .......................... 3, 4, 30
Cox Broad. Corp. v. Cohn,
420 U.S. 469 (1975) ...................................
1
Engquist v. Or. Dep’t of Agric.,
553 U.S. 591 (2008) ...................................
13
M’Culloch v. Maryland,
17 U.S. (4 Wheat.) 316 (1819)...................
31
Metro. Life Ins. Co. v. Ward,
470 U.S. 869 (1985)........................................
7
Nordlinger v. Hahn,
505 U.S. 1 (1992) ......... 13, 16, 18, 20, 21, 23, 26
Quinn v. Millsap,
491 U.S. 95 (1989) .....................................
20
Romer v. Evans,
517 U.S. 620 (1996) ................................... 13, 31
Schweiker v. Wilson,
450 U.S. 221 (1981) ...................................
13
Sioux City Bridge Co. v. Dakota County,
260 U.S. 441 (1923) ...................................
14
Village of Willowbrook v. Olech,
528 U.S. 562 (2000) ...................................
14
Williams v. Vermont,
472 U.S. 14 (1985) ......................... 13, 18, 20, 23
Zobel v. Williams,
457 U.S. 55 (1982) .....................................
20
vii
TABLE OF AUTHORITIES—Continued
CONSTITUTION
Page(s)
U.S. Const. amend. XIV,
§ 1 .............. 1, 7-11, 13, 16, 18, 19, 23, 28, 31-32
Or. Const. art. I, § 20....................................
11
Or. Const. art. I, § 32.................................... 8-11
Or. Const. art. IX, § 1 ................................... 8-11
Or. Const. art. IX, § 3a .................................
22
STATUTES
28 U.S.C. § 1257(a) .......................................
1
49 U.S.C. § 11501(b)(4).................................
6
Cal. Rev. & Tax Code § 110(d)(2) .................
25
Idaho Code § 63-602L(2)(a) ..........................
25
Idaho Code § 63-602L(2)(b) ..........................
25
Ky. Rev. Stat. § 132.096(9)...........................
30
Mont. Code Ann. § 15-6-218(3) ....................
25
Rev. Stat. Ohio (Giauque, ed. 1896), Tit.
XIII, ch. 1, § 2731 ......................................
28
Or. Code Ann., title LXIX, ch. 1, § 69-101
(1930) .........................................................
5
1909 Or. Laws, ch. 218, § 5 ..........................
4
1935 Or. Laws, ch. 54, § 1 (Spec. Sess.) .......
4
1977 Or. Laws, ch. 602, § 1 ..........................
5
1981 Or. Laws, ch. 623, § 4 ..........................
4
1993 Or. Laws, ch. 353, § 2 ..........................
5
2005 Or. Laws, ch. 94, § 30 ..........................
5
viii
TABLE OF AUTHORITIES—Continued
Page(s)
Or. Rev. Stat. § 307.020 ...............................
5
Or. Rev. Stat. § 307.020(1)(a).......................
6
Or. Rev. Stat. § 307.030(2) ...........................
5
Or. Rev. Stat. §§ 308.505—308.674 .............
5, 6
§ 308.505(14)(a) .........................................
6
§ 308.505(14)(c) ......................................... 6, 25
§ 308.515 ............................................... 4, 14, 19
§ 308.515(1) ...............................................
4, 9
§ 308.515(1)(e) ...........................................
8, 9
§ 308.555 ................................................... 3, 25
Or. Rev. Stat. § 319.530 ...............................
22
Or. Rev. Stat. § 319.535 ...............................
22
Or. Rev. Stat. § 803.585 ...............................
22
OPINIONS BELOW
The opinion of the Oregon Supreme Court (Pet. App.
1a-56a) is published at 573 P.3d 856.
The order of the Oregon Tax Court (Pet. App. 57a135a) granting summary judgment in Petitioner’s
favor is published at 25 Or. Tax 308.
JURISDICTION
The Oregon Supreme Court issued its opinion on
July 24, 2025. Pet. App. 1a-56a. Justice Kagan
extended the time to file a petition for writ of certiorari
until November 21, 2025.
The jurisdiction of this Court is invoked under
28 U.S.C. § 1257(a). See ASARCO Inc. v. Kadish, 490
U.S. 605, 611-12 (1989); Cox Broad. Corp. v. Cohn, 420
U.S. 469, 478-80 (1975).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
Section 1 of the Fourteenth Amendment to the
United States Constitution is reproduced at Pet.
App. 145a. The relevant provisions of Oregon law are
reproduced at Pet. App. 146a-56a.
INTRODUCTION
In Oregon, only a few businesses selected by the
legislature must pay property tax on their intangible
personal property (goodwill, customer lists, assembled
workforce, and intellectual property such as patents
and trademarks). The reason for that unequal
treatment has nothing to do with the characteristics of
the property itself. There is no relevant distinction
between a taxable trademark owned and used by one
taxpayer, and a non-taxable trademark owned and
used by a different taxpayer. The Oregon Department
2
of Revenue (“Department of Revenue”) has never
identified any such distinction, nor has it denied that
trademarks (and other intangible property) are the
same in all relevant respects. Rather, the only reason
that a small fraction of taxpayers (one-tenth of
1 percent) is singled out for unequal taxation is a
historical and arbitrary happenstance—the assignment of assessment responsibility to the state rather
than a local assessing authority.
Notwithstanding the lack of any plausible basis for
singling out one taxpayer’s intangible property over
another’s for taxation, the Oregon Supreme Court
blessed that unequal result by inventing reasons that
are directly at odds with this Court’s precedents, with
Equal Protection law generally, and with the Ninth
Circuit’s evaluation of the same tax regime. The state
court’s decision further entrenches an unconstitutional approach to property taxation that other states
do (and now can) pursue. This Court has consistently
policed states’ efforts to punish individual property
owners and should do so here to ensure that Oregon
and other states cannot continue patently unequal
property tax regimes based on nothing other than a
state’s desire to raise revenue from a select few taxpayers.
STATEMENT OF THE CASE
I. Legal Background
The background of this case involves two intersecting developments in property tax administration and
taxation: (1) central assessment—the assignment of
the administrative function of valuing the property of
certain companies to a state agency; and (2) Oregon’s
decision to tax intangible property (e.g., goodwill,
intellectual property, assembled workforce, and the
like) only when used or held for future use by
3
companies that happen to be centrally assessed. The
former is a decision as to who is best equipped to value
certain property. The latter is a separate decision that
is neither compelled by nor logically related to the
reasons for allocating authority for property assessment
to the state. The resulting unequal taxation of intangible
property only when used by taxpayers who happen to
be assessed by the Department of Revenue, rather
than by local county assessors, is completely arbitrary.
A. Central Assessment and Unit Valuation
As its name implies, central assessment refers to
centralizing the responsibility for assessing certain
property in the state rather than local county assessors.
The standard justification for central assessment is
that localities inconsistently valued real or personal
property used over several jurisdictions—such as
railroad property and telegraph lines which cross
jurisdictional lines and whose value may be directly
tied to their interconnectivity. Comcast Corp. v. Dep’t
of Revenue, 337 P.3d 768, 774 (Or. 2014). Centralizing
assessment of that property by a single assessor (a
state department of revenue), rather than multiple
assessors (county property tax authorities), made
assessments more consistent and accurate. Id.
Central assessment also allows (but does not require)
the assessor to use the so-called “unit valuation”
method. See Or. Rev. Stat. § 308.555. Under unit
valuation, an assessor calculates the total value of
a taxpayer’s entire enterprise as a whole, before
attributing an appropriate portion of that value to the
state and allocating it among the taxing districts
within the state. “The unit valuation method is meant
to account for the valuation of assets where the
component parts are valuable as a whole, but less
valuable in isolation.” BNSF Ry. Co. v. County of
4
Alameda, 7 F.4th 874, 881 (9th Cir. 2021). “For
example, in the railway context, ten miles of railroad
track would have a questionable value, other than as
scrap, without the benefit of the rest of the system as
a whole.” Id. (internal quotation marks, brackets, and
citation omitted). Unit valuation allows the taxing
authority to account for the “value created by and
resulting from the combined operation of all [the
railroad’s] parts as one continuous line.” Cleveland, C.,
C. & St. L. Ry. Co. v. Backus, 154 U.S. 439, 444 (1894).
In Oregon, central assessment was first adopted in
1909. 1909 Or. Laws, ch. 218, § 5. The original list of
centrally assessed businesses in Oregon included only
railroad-related businesses, oil and pipeline companies,
express, telegraph, and telephone companies, and
utilities. Id. § 15. Companies engaged in air transport
of passengers, freight, or express were added to the set
of centrally assessed businesses in 1935, and the
statutory description of those businesses was amended
in 1981 after the airline industry was deregulated.
1935 Or. Laws, ch. 54, § 1 (Spec. Sess.); 1981 Or. Laws,
ch. 623, § 4.
Currently, Oregon Revised Statutes section 308.515(1)
prescribes that the property of the following businesses
is to be centrally assessed: railroad transportation,
railroad switching and terminal, private railcars, private
railcar transportation, railway or air express, electric
rail transportation, inland water transportation, pipeline,
toll bridge, communication, heating, gas, electricity,
and air transportation. The threshold for central
assessment—whether a company’s property will be
assessed by the Department of Revenue as opposed to
county assessors—depends on whether the state views
the company as falling within one of the categories
listed in section 308.515. See Comcast, 337 P.3d at 771
5
(discussing decision to include companies providing
cable television and internet access services as “communications” companies subject to central assessment).
B. The Taxation of Intangible Property
At the time that Oregon adopted central assessment, the property subject to assessment and taxation
included all real and personal property, including
intangible property. Oregon Code Ann., title LXIX,
ch. 1, § 69-101 (1930). Thus, establishing central
assessment and selecting companies for central
assessment did not result in any difference in what
property would be taxable.
That began to change over time. After some definitional changes beginning in 1935 and then solidified in
1977, 1977 Or. Laws, ch. 602, § 1, in 1993, the legislature
expressly exempted all intangible property from
taxation, except that which is used by a small group of
companies—those subject to central assessment. 1993
Or. Laws, ch. 353, § 2 (“Except as provided in [the
central assessment statutes,] ORS 308.505 to 308.674,
intangible personal property is not subject to assessment and taxation.”). Then, in 2005, the legislature
clarified that the definition of intangible property
would be illustrative, not exhaustive, and would be as
broad as possible. 2005 Or. Laws, ch. 94, § 30
(amending Or. Rev. Stat. § 307.020). As amended, the
definition provided: “‘Intangible personal property’ or
‘intangibles’ [means and] includes but is not limited
to: . . . .” Id. (brackets and italics in original).
As a result, currently in Oregon intangible property
is generally not taxed when used or held for future use
by the overwhelming majority of taxpayers, including
businesses of all shapes, sizes, and interconnectivity.
“Intangible personal property” is defined to include
6
money at interest, bonds, notes, claims, shares of stock,
computer software, contracts and contract rights,
customer lists, assembled workforce, trade secrets,
patents, trademarks, copyrights, and goodwill. Or. Rev.
Stat. § 307.020(1)(a). No Oregon taxpayer—except
those subject to the central assessment statutes—
owes any property tax on any of these or any other type
of intangible property.
By contrast, for the subset of businesses that are
subject to the central assessment statutes (Oregon
Revised Statutes sections 308.505 through 308.674)
the term “property” is defined as “all property of any
kind, whether real, personal, tangible or intangible.”
Or. Rev. Stat. § 308.505(14)(a) (emphasis added). Most
types of intangible property used by businesses—
including patents, goodwill, trademarks, franchises,
and copyrights1—are subject to the property tax for
these businesses, but only because those businesses
happen to be assessed by the state. Pet. App. 6a.
Even among the set of centrally assessed businesses,
however, the businesses in six of Oregon’s statutory
categories can no longer be taxed on their intangible
property, because 49 U.S.C. § 11501(b)(4) prohibits
the imposition of discriminatory taxes on rail carriers.
See BNSF Ry. Co. v. Or. Dep’t of Revenue, 965 F.3d 681,
693 (9th Cir. 2020) (hereinafter, “BNSF”). Thus, the
only businesses that Oregon presently taxes on their
intangible property are businesses engaged in providing (1) inland water transportation, (2) pipeline,
1
Two types of intangible property are carved out from the
statutory definition of taxable “property” for these businesses,
namely, stock and secured or unsecured claims on other property.
Or. Rev. Stat. § 308.505(14)(c).
7
(3) toll bridge, (4) communication, (5) heating, (6) gas,
(7) electricity, and (8) air express and air transportation.
To put these classifications in perspective, even
before removing rail carriers, the statutory list of
centrally assessed businesses yielded only “approximately 513 centrally assessed companies in Oregon,
compared to more than 400,000 locally assessed
companies” for tax year 2017-2018. Id. at 684 n.1. In
other words, centrally assessed businesses represent
approximately one-tenth of 1 percent of Oregon’s
business taxpayers. At least 99.9 percent of Oregon’s
business taxpayers are not centrally assessed (and not
subject to taxation on their intangible property).
II. The Equal Protection Clause
The Equal Protection Clause of the Fourteenth
Amendment provides that a state may not “deny to
any person within its jurisdiction the equal protection
of the laws.” U.S. Const. amend XIV, § 1. A corporation
is a person entitled to the equal protection of the laws.
Metro. Life Ins. Co. v. Ward, 470 U.S. 869, 881 n.9 (1985).
Although a more stringent standard is employed where a
classification implicates a suspect class or burdens
fundamental rights, tax laws are generally subject to
rational-basis review. Armour v. City of Indianapolis,
566 U.S. 673, 680 (2012). The rational-basis standard
requires “a rational relationship between the disparity
of treatment and some legitimate governmental
purpose.” Id. (citation omitted).
8
III. Proceedings Below
A. Delta Appealed Its Oregon Property
Tax Assessment.
Delta is an international air carrier with extensive
property holdings, including intangible assets. Pet.
App. 57a. Because Delta is an “air transportation”
business, it is subject to central assessment. Or. Rev.
Stat. § 308.515(1)(e). Under section 308.515(1)(e), the
Department of Revenue may assess “any property
that has a situs in this state and that . . . is used or
held for future use by any company in performing or
maintaining” an air transportation business or one of
the other enumerated businesses.
For tax year 2019-2020, the Department of Revenue
determined that Delta’s system value was $50 billion,
of which $212,560,000 was attributed to property with
a situs in Oregon. Pet. App. 57a-58a. Some of that
amount represented intangible personal property
deemed to have a situs in Oregon. Delta and the
Department of Revenue stipulated that, if intangible
personal property were not included in the assessment
of Delta’s property, Delta’s assessed value would be
less than the assessed value as determined by the
Department of Revenue. Pet. App. 144a.
Delta timely paid Oregon property tax on the
assessed value of its property for tax year 2019-2020.
Delta also appealed the assessment to the Oregon
Tax Court. Delta asserted that the taxation of its
intangible property violated the Equal Protection
Clause of the Fourteenth Amendment and uniformity
clauses in the Oregon Constitution. Pet. App. 2a-3a.
9
B. The Oregon Tax Court Held that
Oregon’s Scheme Violates the Equal
Protection Clause.
On cross-motions for summary judgment on
stipulated facts, the Oregon Tax Court held that the
taxation of Delta’s intangible property violated both
the federal Equal Protection Clause and article I,
section 32 and article IX, section 1 of the Oregon
Constitution.2 Pet. App. 118a.
The court determined that Oregon’s tax scheme results
in two classes of intangible property: “(1) intangible
property used in a business listed in ORS 308.515(1)
(taxable), and (2) all other intangible property (not
taxable).” Pet. App. 75a. To determine whether a tax
classification has a rational basis and thus comports
with the Equal Protection Clause, the court explained
that “a rational basis exists if (1) the classification is
based on genuine differences, and (2) those differences
bear a reasonable relationship to the legislative
purpose.” Pet. App. 75a-76a (internal quotation marks
and citation omitted). The court also noted that while
unit valuation “enables a state to more effectively tax
intangible property,” it “does not require a state to tax
intangible property.” Pet. App. 88a.3 Although the
court noted that a classification is not impermissible
merely because the difference between the two sides of
2
The Oregon Tax Court reviewed the constitutionality of
taxing Delta’s intangible property as of the date of the assessment, rather than as of some earlier point in the evolution of the
tax scheme over the last century. Pet. App. 68a-69a.
3
The Oregon Tax Court noted, for example, that Oregon “stops
short of taxing all intangible property used in a business listed
for central assessment, having carved out several exceptions,”
including stocks, bonds, and FCC licenses and franchises held by
communications businesses. Pet. App. 88a.
10
a line is small, “[n]evertheless, courts require some
difference between subjects on one side of the line and
the other.” Pet. App. 114a.
Here, the court found that there was no genuine
difference between the rail, air, and water transportation
businesses in the statutory list and road transportation businesses that are omitted from the list. Pet.
App. 103a-07a, 116a. Similarly, the court found
no genuine difference between rail, air, and water
transportation businesses and other businesses that
operate property as a network over a large geographic
area, including household-name companies that
“derive more than 85 percent of their enterprise value
from intangible assets.” Pet. App. 107a-13a, 116a.
Accordingly, the court concluded that the statutory list
of businesses, as applied to Delta’s intangible property,
violates both the federal Equal Protection Clause and
the Oregon uniformity clauses, “because the court
finds no genuine differences between Delta’s (taxable)
use of intangible property in its transportation business and the (exempt) use of intangible property in
road transportation businesses or in other businesses
that rely on a network of property.” Pet. App. 118a.
The Oregon Tax Court entered judgment in Delta’s
favor. The Department of Revenue appealed to the
Oregon Supreme Court.
C. The Oregon Supreme Court Held that
Oregon’s Scheme Does Not Violate the
Equal Protection Clause.
The Oregon Supreme Court reversed the Oregon
Tax Court as to both the Equal Protection Clause and
Oregon’s uniformity clauses. The Oregon Supreme
Court held that “genuine differences” between two
classes are not an element of rational-basis review.
Instead, according to the Oregon Supreme Court,
11
“genuine differences” are a conclusion that results
from the review. “If there are differences between the
classes that are rationally related to a legitimate
governmental purpose, then those differences are
‘genuine differences.’” Pet. App. 37a.
Addressing the statutory scheme before it, the Oregon
Supreme Court began by analyzing whether this tax
scheme is permitted by the Oregon Constitution’s
uniformity clauses and equal privileges and immunities
clause. Pet. App. 25a-42a. In doing so, the court cited
federal Equal Protection principles and jurisprudence.
See Pet. App. 26a, 27a-28a, 30a-31a, 33a, 36a, 38a-42a.
Upon finding no violation of the state constitution,
the Oregon Supreme Court turned to the federal
Equal Protection question. It explained that “[a]ll the
points that led to our conclusion that the classification
is rational for purposes of equal privileges and
immunities [under the Oregon Constitution] also show
that the classification is rational for purposes of equal
protection.” Pet. App. 43a.
The Oregon Supreme Court readily conceded that
“intangible property is something that both classes
(centrally assessed businesses and locally assessed
businesses) have in common.” Pet. App. 35a. But the
Oregon Supreme Court concluded that the Equal
Protection Clause was not offended by taxing intangible
property in the hands of the former class while not
taxing the very same property when used by the latter.
As the court summarized:
The state has a legitimate purpose in obtaining
revenue, and the taxation of intangible property
is rationally related to that purpose. The
legislature’s decision to limit the taxation of
intangible property to centrally assessed businesses rationally promotes various legitimate
12
purposes, including administrative efficiency,
developing and keeping expertise in valuing
such businesses, promoting fairness among
the centrally assessed taxpayers, and balancing
the expected revenue return against limited
departmental resources.
Pet. App. 4a.
REASONS FOR GRANTING THE WRIT
I. The Oregon Supreme Court’s Opinion Is
Contrary to This Court’s Precedents and
to the Ninth Circuit’s Analysis of the Same
Tax Scheme.
If the Equal Protection Clause means anything, it
prevents states from imposing unequal burdens on a
select few of their citizens because it is convenient or
profitable to do so. The Oregon Supreme Court held
that Oregon could single out the intangible property of
a select few taxpayers for taxation not because their
intangible property is different in any respect from the
intangible property of all other taxpayers. Rather, the
court affirmed that unequal treatment because the
state could more effectively and efficiently administer
a patently unequal taxation regime. The Oregon
Supreme Court’s decision stands in direct conflict with
this Court’s decisions and with the Ninth Circuit’s
analysis of Oregon’s tax scheme.
A. This Court Consistently Prevents States
from Singling Out Certain Taxpayers
and Property Owners for Unequal
Treatment Based on Invented Excuses.
The Court’s Equal Protection law requires a court
to identify: (1) the classification; (2) the legitimate
purpose or government interest the classification is
13
intended to serve; and (3) the relationship, or “fit,”
between the classification and the asserted government interest. Engquist v. Or. Dep’t of Agric., 553 U.S.
591, 601 (2008) (“Our equal protection jurisprudence
has typically been concerned with governmental
classifications that ‘affect some groups of citizens
differently than others.’” (citation omitted)); Romer
v. Evans, 517 U.S. 620, 632 (1996) (Court “insist[s] on
knowing the relation between the classification
adopted and the object to be attained. The search for
the link between classification and objective gives
substance to the Equal Protection Clause” and “guidance
and discipline for the legislature.”); Schweiker v.
Wilson, 450 U.S. 221, 235 (1981) (classification must
“rationally advance[] a reasonable and identifiable
governmental objective”).
In the tax context, “the relationship of the classification to its goal” must not be “so attenuated as to render
the distinction arbitrary or irrational,” Nordlinger v.
Hahn, 505 U.S. 1, 11 (1992), and a state “may not resort
to a classification that is palpably arbitrary,” Allied
Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 527 (1959).
For example, in Williams v. Vermont, 472 U.S. 14
(1985), this Court recognized that a Vermont tax
scheme violated the Equal Protection Clause because
the owner’s residence at the time of purchasing a car
“is a wholly arbitrary basis on which to distinguish
among present Vermont registrants” for purposes of a
use tax collected when a car is registered in Vermont.
Id. at 23.
Those principles have equal force in the property tax
context. While the state can classify property for
taxation in any number of ways, once it does so, it must
treat property within those classes the same. Nordlinger,
505 U.S. at 10 (“The Equal Protection Clause does not
14
forbid classifications. It simply keeps governmental
decisionmakers from treating differently persons who
are in all relevant respects alike.”).
This Court has recognized as much. In Allegheny
Pittsburgh Coal Co. v. County Commission of Webster
County, 488 U.S. 336 (1989), West Virginia used the
purchase price of land to assess property taxes.
Because the last sale price established the assessed
property value, recent purchasers of land were taxed
up to 35 times more than neighbors who purchased
long ago. Id. at 340-41. The government argued
that its method of assessing taxes was facially valid
because there are at least some circumstances, such
as in the case of recently purchased land, in which
purchase price is a highly rational measure of property
value. Id. at 343. The Court rejected this rationale
because the taxation scheme generated disparities so
gross as to be arbitrary. Id. at 345-46; see also Sioux
City Bridge Co. v. Dakota County, 260 U.S. 441 (1923).
Those decisions are consistent with a broader point,
animated by fundamental fairness. Government
decisionmakers cannot intentionally impose unequal
burdens on certain property owners with respect
to their property when other, similarly situated
property owners are not so burdened. See Village of
Willowbrook v. Olech, 528 U.S. 562, 565 (2000).
Here, Delta established that the decision to tax its
intangible property violates those principles. The
state has not identified any distinction (as to location,
character, use, or otherwise) between the intangible
property of Delta and the same property of other
companies not enumerated in Oregon Revised Statutes section 308.515. Nor has the state identified a
purpose for distinguishing the intangible property of
Delta and taxing that property.
15
The comparison between Delta and other transportation companies confirms that point. Consider two
transportation businesses under common ownership
using the same trademarks, trade names, and customer
lists in their respective businesses. One business
provides overnight or two-day delivery of packages by
air, and the other provides express delivery of packages by ground. Taxation of the same intangible
property—whether a trademark, trade name, or customer
list—is dependent upon whether the primary use of
the intangible is by the air transportation business
or the ground transportation business. This is not
because of any genuine difference in the property; it is
the same property used by both companies. Rather, it
depends on whether the property of the company has
been designated by the legislature for central assessment.
The assignment of the administrative function of
assessment to the state becomes the sole basis on which a
business’s intangible property is taxed. That result is
completely arbitrary and lacks any relationship to a
legitimate legislative purpose.
B. The Oregon Supreme Court’s Opinion
Conflicts with This Court’s and the
Ninth Circuit’s Precedents.
Upon examination, the Oregon Supreme Court’s
opinion departs from the rational-basis standard in
multiple respects.
1. The Oregon Supreme Court Invented
Irrational Reasons for Patently
Unequal Property Taxation.
As a threshold matter, the Oregon Supreme Court
stated that, “[a]xiomatically, obtaining revenue is a
legitimate governmental purpose,” and “the taxation of
intangible property is rationally related to the purpose
16
of obtaining revenue.” Pet. App. 38a. But the tautology
that a tax generates revenue adds nothing to the
Equal Protection analysis in this case, where the state
has chosen to obtain revenue from a select few. If a
desire to raise revenue were a sufficient legislative
purpose, even for a targeted and unequal tax, then no
tax scheme would ever be held to violate the Equal
Protection Clause, and no analysis addressing such a
claim would need to be more than a few sentences
long. Contra Allegheny, 488 U.S. at 343-46 (holding
property tax valuations unconstitutional under Equal
Protection Clause); Nordlinger, 505 U.S. at 12-17
(devoting approximately five pages to analysis of
whether property tax system was constitutional under
Equal Protection Clause).
The Oregon Supreme Court’s analysis thus flunks
the first test of Equal Protection law out of the gate.
To be constitutional, the classification—the decision to
treat one group differently from another—must rationally
advance some legitimate government purpose. It is a
red herring to assert that taxing intangible property
generally advances the legitimate purpose of raising
revenue. That is not the challenged classification that
must be analyzed. The relevant question is what
legitimate government purpose exists for taxing only
intangible property owned by certain taxpayers and
not others. A desire to raise revenue does not answer
that question.
The Oregon Supreme Court claimed that there were
“conceivable, rational reasons why the legislature
would choose to limit the tax on intangible property to
centrally assessed businesses.” Pet. App. 38a-39a
(emphasis added). But none of the three reasons
proffered by the state court comports with logic,
common sense, or Equal Protection doctrine.
17
First, the Oregon Supreme Court stated that “the
legislature might have intended to promote efficiency
and fairness[4] in taxation by having a statewide
agency develop expertise in valuing the intangible
property of some or all of the listed businesses.” Pet.
App. 39a. But the court’s statement confuses the
administrative rationale for central assessment—
determining who should assess both tangible and
intangible property—with the separate and distinct
decision to tax only the intangible property of centrally
assessed companies. Assuming that a host of reasons
support a central assessment scheme, there is no fit
between those justifications and the taxation of intangible property only when used by centrally assessed
companies. In other words, central assessment supplies
the criteria for identifying whose intangible property
will be taxed, but not the rationale for doing so.
As a reason for unequal treatment, the court’s
statement is clearly insufficient. It is entirely circular
for the state to justify discrimination by assigning the
task of discriminating to an agency that can efficiently
do so. And a law is not rationally connected to a
legitimate purpose if it simply accomplishes the goal
of treating different groups differently or reflects an
intent to discriminate more efficiently. It is palpably
and wholly arbitrary to tax otherwise identical property
merely because it is more efficient, fair, or accurate
if a single assessor—rather than many assessors—
is responsible for performing the assessments. See
4
By the term “fairness,” the Oregon Supreme Court apparently
referred to fairness among the centrally assessed businesses, not
to fairness between the centrally assessed versus locally assessed
businesses. See Pet. App. 4a (listing “promoting fairness among
the centrally assessed taxpayers” in summary of reasons for tax
scheme).
18
Williams, 472 U.S. at 23 (“wholly arbitrary” tax
distinction violates Equal Protection Clause); Allied
Stores, 358 U.S. at 527 (state may not employ a tax
classification that is “palpably arbitrary”). Put another
way, the connection between classifying intangible
property as subject to tax only when used by a
centrally assessed business and the administrative
benefits of central assessment is “so attenuated” as to
be “irrational.” Nordlinger, 505 U.S. at 11.
The Oregon Supreme Court’s holding that the
advantages of central assessment (relative to local
assessment) constitute a rational reason to tax the
intangible property used by centrally assessed businesses (and not locally assessed businesses) also
squarely contradicts Ninth Circuit precedent. In the
BNSF case, the Ninth Circuit specifically rejected the
idea that there is any rational relationship between
the advantages of centrally assessing a business and
what property to tax:
[T]he Department [of Revenue] vaguely suggests
its differential treatment of railroads and
other centrally assessed companies is justified
by the underlying design and purpose of
central assessment itself. In other words,
geographically sprawling concerns are easier
to assess at the state versus local level. Sure,
but that “justification” bears no logical relationship to the differential treatment—Oregon’s
decision to levy an additional intangible personal
property tax on centrally assessed companies.
BNSF, 965 F.3d at 693 (emphasis added). And the
Ninth Circuit was correct. There is “no logical
relationship” between the two. Id.
19
BNSF addressed the rationale for very same aspect
of Oregon’s property tax at issue in this case, yet
remarkably, the Oregon Supreme Court felt free to
disregard BNSF. According to the Oregon Supreme
Court, because BNSF involved a federal statute rather
than an Equal Protection claim, “nothing the Court
said in BNSF undermines the conclusions that we
reach in this case.” Pet App. 46a (emphasis added). To
be sure, there are certain differences between the
statutory standard and the Equal Protection standard.
See Ala. Dep’t of Revenue v. CSX Transp., Inc., 575
U.S. 21, 28 (2015) (holding that the set of “‘similarly
situated’ individuals” is narrower under Equal Protection
Clause than under statute). But those distinctions are
irrelevant to the question in this case. The BNSF
decision did not depend on precisely how tight a
relationship the statute requires. Rather, BNSF held
that there was “no logical relationship”—period. 965
F.3d at 693 (emphasis added). That holding squarely
conflicts with the Oregon Supreme Court’s ruling that
the administrative advantages of using a central
assessor are a rational reason for the legislature to
prescribe which property to tax or not tax.
Second, the Oregon Supreme Court also held that it
would be rational for the legislature to limit the tax on
intangible properties to “industries that offer the
highest potential revenue return,” or to the industries
with the most favorable balance between “how difficult”
their intangible property is to assess compared to
“how much additional revenue” doing so would yield.
Pet. App. 39a. But the Oregon Supreme Court omitted
a crucial question: could the Oregon legislature
rationally have considered it true that the particular
14 industries enumerated in Oregon Revised Statutes
section 308.515 would offer the greatest revenue
return either in absolute terms or relative to the
20
difficulty of valuing their intangible property? To ask
that question is to answer it. It is inconceivable that
out of all the industries and all 400,000 business
taxpayers in Oregon (including all manner of national
and multinational corporations), the legislature could
rationally have believed that the tiny number of
taxpayers in this particular handful of industries—
including operators of toll bridges and inland water
taxis—would generate the greatest return if their
intangible property were taxed.
Nor is it logical or rational to conclude that only
companies operating in those 14 types of businesses
have intangible property that is particularly difficult
or easy to assess or more or less valuable. The state
never even attempted to identify any natural, real, or
genuine differences between Delta’s trademarks,
patents, or goodwill from the same intangible property
owned and used by other companies that operate in
Oregon—transportation companies that use ground
rather than air, delivery companies that deliver packages,
or retail and other businesses that operate using
vehicles to move supplies and goods. The state court’s
choice to ignore the requirement that the facts presumed
to underlie the classification must be such that they
“rationally may have been considered to be true by the
governmental decisionmaker,” Nordlinger, 505 U.S.
at 11, conflicts with this Court’s Equal Protection
decisions. See Quinn v. Millsap, 491 U.S. 95, 108 (1989)
(ability to grasp politics not logically connected to land
ownership); Williams, 472 U.S. at 24-25 (encouraging
Vermont residents to make in-state car purchases not
logical basis for tax on car that Vermont resident
purchased out of state before becoming Vermont
resident); Zobel v. Williams, 457 U.S. 55, 61-62 (1982)
(upholding Equal Protection challenge to Alaskan
program that gave oil money to residents who had
21
been in Alaska prior to 1980; identified state interests
were legitimate, but the program had no logical
connection to advancement of those goals).
Third, the Oregon Supreme Court additionally
stated that “the legislature might consider the administrative cost imposed on taxpayers who are required
to report the value of their intangible property, and
then selected those industries that—in the view of the
legislature—could best bear that expense.” Pet. App.
39a. But that reasoning fails on two levels. Again, the
state court did not address whether the legislature
could rationally have considered these 14 industries—
and no others—to be the ones that could best handle
the administrative expense of reporting their intangible property. See Nordlinger, 505 U.S. at 11. And
clearly no rational person could reach that conclusion,
given that companies large and small, sophisticated
and unsophisticated are centrally assessed, while the
locally assessed companies have the same size and
level of sophistication. In addition, even in Armour,
this Court did not suggest that a government may
choose which taxpayers to burden based on which taxpayers have enough resources to bear the brunt of
their own internal administrative costs. The Oregon
Supreme Court’s decision contravenes this Court’s
jurisprudence in this regard as well.
Having proffered those potential reasons for limiting
the tax on intangible property to centrally assessed
businesses—i.e., reasons for not taxing the intangible
property of any locally assessed taxpayer—the Oregon
Supreme Court then turned to “independent reasons”
not to tax the intangible property of particular locally
assessed businesses. The state court hypothesized
that the legislature “may have determined that ordinary
property taxes come close enough to capturing the
22
value of ” manufacturing, merchants, or bus and
trucking companies, on a theory that these may have
been considered to be “more heavily invested in capital
or physical products.” Pet. App. 40a. The court stated
that because revenues derived from taxing motor
vehicle fuel, motor vehicle use, or motor vehicle
ownership must be devoted to the specified purposes
in article IX, section 3a of the Oregon Constitution, the
legislature could rationally consider that a reason to
not tax bus and trucking companies’ intangible
property.5 Pet. App. 40a. The court explained that the
legislature might not tax the intangible property of
“certain industries” on a theory that the revenue from
doing so would be so meagre that it would “fail to offset
the total cost to the state” of assessing intangible
property in those industries. Pet. App. 41a. And the
legislature “could have concluded that a particular
industry faced additional regulatory burdens, or taxes,
or competition, that made an additional tax burden
inappropriate.” Pet. App. 41a.
5
Although the Oregon Constitution circumscribes how tax
revenues from taxes on fuel and motor vehicles can be spent,
Oregon does not tax bus and trucking companies on their fuel and
motor vehicles, and the use or ownership thereof, any differently
than it does other businesses. All vehicle owners pay a
registration fee for their motor vehicles in lieu of property tax on
the vehicles and a fuel tax or fee in lieu thereof, unless a specific
exemption applies. See Or. Rev. Stat. § 803.585; Or. Rev. Stat.
§ 319.530; Or. Rev. Stat. § 319.535. And income tax on a bus or
trucking company is not deemed to be a tax on fuel or vehicles, or
their use or ownership.
See Pet. App. 106a n.40; AAA
Oregon/Idaho Auto Source, LLC v. Dep’t of Revenue, 423 P.3d 71,
77 (Or. 2018). The Department of Revenue did not argue below
that a tax on the intangible property of bus or trucking companies
would be subject to the pertinent state constitutional restrictions
anyway. Pet. App. 105a-06a.
23
Similar to the other rationales advanced by the
court, none of these reasons stands up to even minimal
logical scrutiny. But even assuming that these proffered reasons would be a rational basis on which to
forgo taxing the intangible property of particular
industries, the Oregon Supreme Court did not claim
that they would be rational reasons to forgo taxing the
intangible property of all locally assessed taxpayers.
Thus, although they might rationally justify targeted
exemptions, they cannot rationally justify a blanket
decision to not tax 99.9 percent of businesses, many
of which possess substantial amounts of valuable
intangible property. See BNSF, 965 F.3d at 684 n.1;
Pet. App. 108a.
In sum, Oregon’s intangible property tax scheme
singles out approximately 0.1 percent of businesses for
this tax, either entirely arbitrarily or because it is
inherently easier and less expensive to collect a tax on
intangible property from just a few centrally assessed
businesses than from the other 400,000 companies in
the state. Both alternatives are squarely unconstitutional. As noted above, the Equal Protection Clause
forbids arbitrary tax classifications.
Nordlinger,
505 U.S. at 11; Williams, 472 U.S. at 23; Allied Stores,
358 U.S. at 527. And in Armour, this Court expressly
cautioned that administrative considerations “could
not justify such an unfair system” as extracting a tax
from just a few taxpayers “on the ground that it is
cheaper and easier to collect taxes from a few people
than from many.” 566 U.S. at 685-86. The conflict
between the Oregon Supreme Court’s decision and this
Court’s and the Ninth Circuit’s precedents is a strong
reason for granting the writ.
24
2. Central Assessment and Unit Valuation Do Not Justify the Intangible
Property Tax.
The points above establish the Oregon Supreme
Court’s fundamental error. Oregon has decided to
impose a tax on the intangible property of only certain
taxpayers whose property is designated for central
assessment, but their intangible property is identical
in all relevant respects to the property of locally
assessed taxpayers. None of the proffered reasons to
justify that unequal classification are sufficient.
The reasons supporting the legislature’s decision to
centrally assess certain property and, when appropriate, to use the unit valuation method do not supply
the necessary justification either. The value of real
and personal property of railroads and utilities, for
example, may be influenced by their interconnectivity
of and use across jurisdictions. But the decision
whether to tax intangible property is separate from
who assesses property or how that property is valued.
Employing a more efficient and effective means of
capturing intangible value does not support the
distinct decision to tax only property used by certain
businesses in the first place.
To the extent the Oregon Supreme Court suggests
otherwise, it erred. The Oregon Supreme Court
argued, for example, that central assessment and
unit valuation “developed specifically to permit states
to tax the intangible property of certain types of
businesses.” Pet. App. 38a. As demonstrated above,
however, the decision to centrally assess property of
certain companies occurred came at a time when all
property in Oregon was subject to assessment and
taxation and was independent of the later decision to
tax only those companies’ intangible property. See supra,
25
at 4-5. It would have been no less a constitutional
violation to single out the intangible property of centrally
assessed taxpayers in 1909 or 1935 than it is today.
The Oregon Supreme Court’s comments also appear
to reflect several misunderstandings about unit
valuation and tax history. The court confuses a form
of property (intangible property) with the intangible
value that certain tangible property possesses. As
numerous states recognize, taxation on tangible
property may sometimes capture the increased intangible value of tangible property when operating as
an integrated system or otherwise enhanced by the
presence of intangible assets or rights. But that is
different than directly imposing a tax on intangible
property as a separate class of taxable property. Here,
the Department of Revenue has never argued that
Delta’s airplanes are worth more because they bear
the Delta trademark or because Delta has experienced
employees to fly them; Oregon taxes Delta’s
intellectual property, contracts, and goodwill directly.
Finally, and importantly, central assessment and
unit valuation do not inherently tax all forms of
property. Many states exempt some or all types of
intangible property and back them out of a unit
valuation.6 Even Oregon must adjust the unit valuation of centrally assessed companies for certain forms
of intangible property that are statutorily exempt, as
well as for certain property that is locally assessed
despite being owned by a centrally assessed company.
See Or. Rev. Stat. § 308.505(14)(c); Or. Rev. Stat.
§ 308.555.
6
See, e.g., Cal. Rev. & Tax Code § 110(d)(2); Idaho Code § 63602L(2)(a), (b); Mont. Code Ann. § 15-6-218(3).
26
The Oregon Supreme Court characterized Delta as
a “part[] of industries very similar to railroads, the
classic centrally assessed business[es],” because railroads,
airlines, and utilities “are all heavily regulated
industries that use specific and limited corridors to
transport things.” Pet. App. 38a. But any similarity
between railroads and airlines is beside the point; it
does not explain why the intangible property used by
either or both should be taxed when the intangible
property of other businesses is not. Furthermore,
“‘under the Airline Deregulation Act of 1978, the
[Federal Aviation Administration] does not regulate
rates, routes, and services of air carriers’” and airlines
“‘are free to decide which cities to serve.’” Citizens
Against Burlington, Inc. v. Busey, 938 F.2d 190, 197
(D.C. Cir. 1991) (quoting FAA environmental impact
statement). Thus, at no time during the last 47 years
could the Oregon legislature rationally have considered it
true that now-deregulated airlines are bound to “specific
and limited corridors.” Pet. App. 38a; see Nordlinger,
505 U.S. at 11 (rational basis standard demands that
“the legislative facts on which the classification is
apparently based rationally may have been considered
to be true by the governmental decisionmaker”).
C. The Oregon Supreme Court’s Reliance
on Adams Express and Carmichael Is
Misplaced.
The Oregon Supreme Court relied on two decisions
by this Court that it believed confirm the constitutionality of Oregon’s tax scheme. But neither of those cases
supports the Oregon Supreme Court’s conclusion.
First, the Oregon Supreme Court treated Adams
Express Co. v. Ohio State Auditor, 165 U.S. 194 (1987)
(‘Adams I’), and Adams Express Co. v. Ohio State
Auditor, 166 U.S. 185 (1897) (‘Adams II’), as already
27
having rejected the contention that “some businesses
in the state cannot be taxed on their intangible
property when others are not.” Pet. App. 44a. Not so.
Indeed, the Oregon Supreme Court appears to have
fundamentally misunderstood the Equal Protection
claim at issue in Adams Express. The claim made by
the express companies was that it violated their Equal
Protection rights to assess their tangible property by a
different valuation method (unit valuation) than other
businesses, and thereby assign a greater value to their
tangible property than the tangible property of other
businesses. See Adams I, 165 U.S. at 215 (express
companies arguing that “any valuable franchises . . .
[and] every favorable contract with railroad companies
which increased the profits of its business, immediately added to the value of every horse, wagon and
harness” (emphasis added)); Adams II, 166 U.S. at 20911. The difference in valuation method was the
different “rule” to which the express companies
referred in the quote stressed by the Oregon Supreme
Court. See Pet. App. 44a (quoting Adams I, 165 U.S. at
206); see also Adams II, 166 U.S. at 210 (express
companies arguing that others are taxed “without the
slightest reference to the profits of their business” and
with “no inquiry . . . as to the par or market value of
its shares”). In fact, the premise of the express
companies was that under Ohio law, “the express
companies’ railroad contracts are not property” at all.
Adams II, 166 U.S. at 196 (emphasis in original). As
such, the express companies at no point contended
that Ohio was taxing a type of property when that
property belonged to them and not when the same type
of property belonged to others, nor did this Court so
28
hold. Instead, this Court rejected the premise that
Ohio’s property tax on any taxpayers was limited to
tangible property to begin with.
This Court
emphatically pronounced that intangible property
constitutes property and could be taxed as such.
Adams I, 165 U.S. at 221-20; Adams II, 166 U.S. at
218. And the Court held that using unit valuation to
assess the express companies’ tangible and intangible
property satisfied the Equal Protection Clause because,
“[c]onsidering, as we do, that the unit rule may be
applied to express companies without disregarding
any other Federal restriction, we think it necessarily
follows that this law is not open to the objection of
denying the equal protection of the laws.” Adams I,
165 U.S. at 229. Because Adams Express did not
involve any question of classifying identical property
as taxable or non-taxable according to whether it was
used by an express company versus other types of
businesses, the Oregon Supreme Court was mistaken
to conclude that it speaks to the question presented by
Delta here. As already noted above, Delta does not
challenge who assesses its property or by what
method, but rather what property is taxed.
7
The Oregon Supreme Court also miscast Carmichael
v. Southern Coal & Coke Co., 301 U.S. 495 (1937), as a
blanket endorsement that administrative inconvenience
and expense are always rational reasons to not tax
7
Unlike Oregon’s current system, Ohio did not define taxable
property differently for the express companies than for other
taxpayers. The property on which the tax was imposed was
identical for all taxpayers: “[a]ll property whether real or
personal in this state, and whether belonging to individuals or
corporations; and all monies, credits, investments in bonds,
stocks, or otherwise, of persons residing this this state . . . .” Rev.
Stat. Ohio (Giauque, ed. 1896), Tit. XIII, ch. 1, § 2731.
29
some taxpayers. See Pet. App. 41a-42a. To be sure, in
Carmichael, this Court recognized that administrative
inconvenience and expense could justify treating small
incomes or small taxpayers differently than larger
ones, or not imposing an unemployment benefits tax
on certain types of employers. 301 U.S. at 511-13. But
Carmichael never indicated that administrative inconvenience and expense would justify any classification,
only that the legislature could reasonably have concluded
that they could justify the particular classifications
in that case. And whereas in Carmichael, a line was
drawn between employers having fewer than eight
employees and those having eight or more, no one
contends that Oregon’s line has anything to do with
size. Rather, it is drawn by industries and makes no
effort to tax the intangible property of extremely large
companies with significant intangible value. Moreover,
unlike in Carmichael, where it was obvious that
“domestic employers, farmers, and family businesses”
in the 1930s were “not likely to maintain adequate
employment records,” id. at 513, here the Oregon
legislature could not possibly have believed that
businesses in the specified industries would maintain
records of their intangible property while the other
99.9 percent of Oregon businesses would not. And
again, Oregon’s tax scheme is not a matter of granting
exemptions to particular industries due to their
particular circumstances. See supra, at 23. It flips
Carmichael on its head to suggest that because
administrative inconvenience might warrant exempting
a few categories of taxpayers for common-sense reasons,
a state may therefore pass over the intangible property
of 99.9 percent of taxpayers in one fell swoop and
single out a disfavored few for taxation of identical
property. Oregon goes far beyond implementing reasonable goals by drawing imperfect lines, which are
30
common in tax systems; Oregon’s scheme of singling
out just 0.1 percent of taxpayers, if indeed adopted for
administrative ease, is exactly the kind of arbitrary
and profoundly unfair classification that Armour rejected.
II. The Question Presented Is of Exceptional
Importance.
The question presented is clearly critical to Delta
and other similarly situated taxpayers who are
uniquely burdened by Oregon’s unequal tax regime.
As with any corporation operating in many jurisdictions, the amount of Delta’s intangible property is
substantial, and Oregon’s decision to tax that property
imposes a significant unfair burden on it. And there is
no check on Oregon’s decision to single out others for
that treatment. For any number of reasons, Oregon
could choose tomorrow to centrally assess property
used in Oregon by any other taxpayer, and with a wave
of a wand, that taxpayer’s intangible property becomes
subject to taxation. See Comcast, 337 P.3d at 771
(discussing administrative decision to make Comcast
subject to central assessment, which more than doubled
the assessed value of property subject to taxation).
The significance of the question presented, however,
extends beyond Delta and beyond the hundreds of
other Oregon taxpayers who must bear the brunt of
Oregon’s approach. Oregon is not the only state with
a property tax scheme that taxes intangible property
only for centrally assessed taxpayers. For instance,
Kentucky has a similar system. See Ky. Rev. Stat.
§ 132.096(9) (exempting from property tax all intangible property except intangible property of certain
centrally assessed businesses and deposits in financial
institutions). But the fundamental principle at issue
here—that a taxing authority may not single out just
a tiny fraction of taxpayers while ignoring everyone
31
else and their identical property, income, privileges, or
activities—is not limited to this particular tax scheme.
This Court’s precedents appropriately instruct that
the Equal Protection Clause permits states certain
latitude in structuring and enforcing their taxes. See
Allegheny Pittsburgh Coal, 488 U.S. at 344. At the
same time, “the power to tax involves the power to
destroy,” M’Culloch v. Maryland, 17 U.S. (4 Wheat.)
316, 431 (1819) (Marshall, C.J.). The Oregon Supreme
Court’s decision presents a serious threat to taxpayers
nationwide, because it gives virtual carte blanche to
any government authority to engage in arbitrary and
discriminatory taxation based on facially illogical
reasons. It will always be administratively convenient
(and profitable) to impose a tax on property owned by
a few people, and to justify that choice by pointing to
agency expertise in administering an unequal system
and a desire to raise revenue from those who can
bear the cost. If left unchecked, legitimate taxation
reasonably tethered to rational bases will drift into
pure administrative convenience and unfair targeting,
as Oregon did here. Now is the time and this is the
case to provide much-needed balance and guidance.
The Oregon Supreme Court’s decision also has
implications well beyond the taxation context. As this
Court explained in Romer, the “search for the link
between classification and objective” is what “provides
guidance and discipline for the legislature, which is
entitled to know what sorts of laws it can pass.” 517
U.S. at 632. The Oregon Supreme Court grasped the
need to articulate a link, but in straining to do so it
hypothesized links that are illogical and facts that no
legislature could have believed to be true. Its rationalbasis review was all form and no true substance. By
directly flouting this Court’s precedents requiring at
least plausible and rational justification for patently
32
unequal treatment, the Oregon Supreme Court provides
a roadmap for denial of equal protection in any number
of contexts. It is exceedingly important that this Court
provide guidance to state and federal courts—and
thereby to legislatures—that the Equal Protection
Clause requires some shred of logic as well as facts
that reasonable legislatures could actually believe.
III. This Case Is a Sound Vehicle to Resolve the
Question Presented.
This case presents an ideal opportunity for this Court to
teach taxing authorities and legislatures that the Equal
Protection Clause does not write them a blank check.
First, the case cleanly presents the question without
any factual disputes. This appeal arose out of crossmotions for summary judgment on stipulated facts.
And the Equal Protection issue was squarely and
expressly decided by the Oregon Supreme Court in a
published opinion.
Moreover, there are no complications that could
prevent the Court from reaching the Equal Protection
issue. The Oregon Supreme Court held that the Oregon
Constitution permits the tax scheme at issue. Pet.
App. 46a. Thus, no independent and adequate state-law
grounds support its ruling that taxing Delta on its
intangible property (while not taxing other taxpayers on
identical intangible property) comports with the Equal
Protection Clause.
Finally, the question presented is outcome-determinative. If the Oregon Supreme Court is correct that
Oregon’s property tax scheme is constitutional, then
Delta is not entitled to an adjustment removing the
value of its intangible property from the tax assessment. On the other hand, if Delta is correct that the
Equal Protection Clause bars Oregon from singling
33
out air transportation and a few other businesses for
taxation of their intangible property, then the assessed
value of Delta’s property must be adjusted and an
appropriate refund paid.
CONCLUSION
For the foregoing reasons, the petition for a writ of
certiorari should be granted.
Respectfully submitted,
BRAD S. DANIELS
Counsel of Record
STOEL RIVES LLP
760 SW Ninth Avenue
Suite 3000
Portland, OR 97205
(503) 224-3380
brad.daniels@stoel.com
Counsel for Petitioner
November 21, 2025
APPENDIX
APPENDIX TABLE OF CONTENTS
Page
APPENDIX A: Opinion of the Oregon Supreme
Court (July 24, 2025) ...........................................
1a
APPENDIX B: Order of the Oregon Tax Court
(August 23, 2023) .................................................
57a
APPENDIX C: Opinion and Order of the
Oregon Department of Revenue (August 1,
2019) ..................................................................... 136a
APPENDIX D: Appellate Judgment and Supplemental Judgment of the Oregon Supreme Court
(September 9, 2025) ............................................. 139a
APPENDIX E: Joint Stipulation of Facts of the
Oregon Tax Court (December 11, 2020) ............. 142a
APPENDIX F: U.S. Const. amend. XIV, § 1 ..... 145a
APPENDIX G: Or. Rev. Stat. § 307.030............ 146a
APPENDIX H: Or. Rev. Stat. § 308.505 ........... 147a
APPENDIX I: Or. Rev. Stat. § 308.515 ............. 152a
1a
APPENDIX A
IN THE SUPREME COURT OF
THE STATE OF OREGON
[Filed: July 24, 2025]
————
(TC 5409)
(SC S070593)
————
DELTA AIR LINES, INC.,
Plaintiff-Respondent,
v.
DEPARTMENT OF REVENUE, STATE OF OREGON,
Defendant-Appellant.
————
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
appellant. 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.
*
25 OTR 308 (2023).
2a
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.
DESIGNATION OF PREVAILING PARTY AND
AWARD OF COSTS
Prevailing party: Appellant.
[ ] No costs allowed.
[X] Costs allowed, payable by: Respondent.
[ ] Costs allowed, to abide the outcome on remand,
payable by:
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 contend 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
3a
Oregon Constitution, and that the legislature’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 utilities,
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 reasoning 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
questions on appeal. The department appeals the Tax
Court’s holding that the tax on intangible property is
unconstitutional 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’ argu1
Although the case is captioned for Delta alone, we explain the
constitutional standard and address the arguments made by both
4a
ments 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
businesses is constitutional. The state has a legitimate
purpose in obtaining revenue, and the taxation of
intangible property is rationally related to that purpose.
The legislature’s decision to limit the taxation of
intangible property to centrally assessed businesses
rationally promotes various legitimate purposes, including administrative efficiency, developing 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 legislature may create. Accordingly, the tax
on intangible property imposed on both centrally
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 constitutionality 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).
5a
assessed businesses does not violate 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
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 subsection, if the private railcars are
rented, leased or used in railroad transportation
for hire.”
6a
“[a]ir transportation.” PacifiCorp is centrally assessed
under ORS 308.515(1)(k) because it sells electricity.
Among the ways in which centrally assessed
businesses are taxed differently is that they are taxed
on intangible 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 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 copyrights.’”
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) (contrasting intangible property with
tangible property).4
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) (definition 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
7a
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 is authorized to “value the entire property,
both within and without the State of Oregon, as a unit”).6
excluded some types of intangible property from central assessment. See ORS 308.505(14)(c) (intangible 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 150-3080260(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 identical
group of assets that are separate or not operational”).
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
8a
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 particular 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 63537 (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 deterBurden of Proof, 30 Cornell J L & Pub Pol’y 235, 242 (2020);
James C. Bonbright, 2 The Valuation of Property 633 n 1 (1937).
9a
mine 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 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 practical 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 interstate businesses only exacerbated the problems. It led
to popular demand for assessment methods to reach
intangible 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 socalled ‘cost values’ of the physical assets.” Id.
The “going concern” value is essentially another
name for modern unit valuation. Conceptually, unit
valuation 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 whatever 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
10a
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 thousands of
dollars. Does substance of right require that
it shall pay taxes only upon the thousands of
dollars of tangible 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
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
central 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.
11a
Today, Oregon’s choices of which particular businesses
to subject to central assessment and unit valuation do
not appear out of the ordinary nationally. Various
commentators have provided overarching summaries
of national laws regarding unit valuation, and those
summaries indicate as much:
“The companies which are usually subject
to unit valuation include both regulated and
unregulated public utilities and transportation companies. They are usually interstate,
capital-intensive businesses that employ
systems of interdependent 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) telecommunications
(telephone and other) public utilities, and
(3) regulated transportation companies (air,
motor, rail and water carriers).”
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 properties 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
12a
been largely confined to public-utility properties –
especially 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 taxation 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://documen
ts.ncsl.org/wwwncsl/State-Federal/NCSL-SALT-Prope
rty-Taxation-ofCommunications-Providers-April-202
4.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 assessment 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
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.
13a
property separate from its rights, franchises,
and privileges.”
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 companies “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
constitutionally 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 taxation, their taxing system
may be effectively taxing the property 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
taxation of intangible property, “[t]he problem * * * is
that under the guise of merely ‘considering’ intangible
values in determining the value of tangible property,
the intangible property is itself being taxed”). This
court has described other states’ attempts to use unit
valuation while excluding intangible 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 central assessment and unit valuation, or
in taxing the intangible property of those businesses,
that assumption is not well-founded.
14a
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 unconstitutional for
Oregon to tax the intangible property 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 constitutional
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 levying 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 assessment 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 ability to treat citizens differently. Oregon’s
8
The Tax Court consolidated Delta’s appeals for a number of
other tax years. See 25 OTR at 308 n 2.
15a
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 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
16a
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 collectively 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 levying 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 assessment 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 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
17a
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 territorial limits of the authority levying
the tax’ raised the principle of territorial uniformity to
that of an express constitutional 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 requirement);
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
constitutional 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,
9
We recognized in Jarvill that the provisions are not identical.
Article IX, section 1, does not expressly require territorial
uniformity, and it appears limited 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.”
18a
scientific, or charitable purposes, and others, all
listed.11
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 imposition
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 governmental
advantages provided to the taxpayer[.]”
112 Or at 335 (citations omitted). Jarvill, citing an
extensive 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,
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.”
19a
and the imposition of different rates of
taxation upon different classes of property.”
289 Or at 176-77.
Textually and historically, then, the uniformity
provisions 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 provisions 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 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 uniformity as well
as territorial uniformity is required.”).
20a
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 classification.” The cases that Mathias cited for
that proposition, however, 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
independent restrictions on classification beyond the
requirement 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.
Territorial uniformity, however, is not at issue in this
case. The statutes that tax the intangible property of
21a
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 taxpayers.” 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 property
tax is no longer being applied uniformly, relying on
federal case law interpreting a federal statute. Under
49 USC § 11501(b)(4), states are prohibited from
12
The prohibition on discriminatory enforcement under the
uniformity provisions 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”).
22a
imposing taxes that “discriminate[ ] against a rail
carrier” by treating it differently 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
commercial and industrial taxpayers generally. See
id. at 691-93 (rejecting department’s argument that
treatment of railroads should only be compared to
other centrally assessed businesses). PacifiCorp argues
that Oregon’s statutes 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
provisions prohibit only “an intentional and systematic pattern of discrimination.” Pacificorp Power, 340
Or at 219; see Meadowland Ranches v. Dept. of Rev.,
23a
277 Or 769, 776, 562 P2d 183 (1977) (claim of unconstitutional discrimination requires “arbitrary and
systematic discrimination” (internal quotation marks
and citations omitted)). Conceptually, an Act of
Congress is not the same as an assessor systematically
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 classifications as a whole under equal protection
and equal privileges 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:
“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
24a
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 similar 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 protection); 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
recognize some classifications – such as race, alienage,
or national origin – as “suspect,” requiring an extremely
strong justification before the classification will be
held to be constitutional. 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
reflecting ‘invidious’ social or political premises, that is
to say, prejudice or stereotyped prejudgments”).
Although federal equal protection recognizes a third
category of classification as subject to an intermediate
level of scrutiny – classifications 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).
25a
In this case, it is undisputed that the classifications
should be analyzed under the most lenient scrutiny
standards 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 federal 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 legitimate 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, 17476, 101 S Ct 453, 66 L Ed 2d 368 (1980) (reviewing
different formulations United States Supreme Court
had used over time for equal protection). Both tests
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.
26a
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
federal equal protection law. For purposes of this part
of the analysis, we cite United States Supreme Court
decisions for only their persuasive value as to why a
legislative classification might be rationally related to
a legitimate governmental 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 taxation. [The legislature] may
tax some kinds of property at one rate, and
others at another, and exempt others altogether,
and it may lay an excise on the operations of
a particular 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 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
27a
(state legislature “has the widest possible latitude”
regarding taxation (internal quotation marks and
citations omitted)).
To satisfy the “legitimate purpose” test, the legislature 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 dismissed, 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, 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 necessary that the basis of the classification
must be deducible 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,
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 omitted)); 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).
28a
the legislature 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 industry. 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
charities 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 establishment 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 interests.”);
Wittenberg, 203 Or at 446 (legislature “may make
distinctions of degree having a rational basis” (internal
quotation 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).
29a
The “rational” part of rational basis review requires
only that the classification drawn by the legislature
rationally 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 reasonable
relationship to the legislative purpose”). But the
classification 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 characteristics
typical of the affected class rather than by focusing on
selected atypical examples.” Huckaba, 281 Or at 30.
General rules that promote administrative efficiency
are permitted, even if the result might be “seemingly
arbitrary” in individual cases. Huckaba, 281 Or at 3031.15 In other words, a classification is not invalid
15
In Huckaba, the legislature taxed retirement benefits for
military service differently from retirement benefits for other civil
services, because military servicepeople 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 complexity of the Personal Income Tax
Act is to be administered with a modicum of efficiency,
even though application of the rule may produce
seemingly arbitrary 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
30a
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
legislature “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
classification having some reasonable basis does not
offend against the Federal Constitution or the
Constitution of this state merely because it is not
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.
31a
made with mathematical nicety or because in practice
it results in some inequality”).
The foregoing statements stand for the proposition
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 overinclusive 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).
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 property, and not in
who owns or uses the property. See id. at 60, 62-63.
Based on those parts of Mathias, the Tax Court
functionally understood the “genuine differences” test
to overshadow – if not substitute for – the rational
basis test. In other words, as the Tax Court approached
the analysis, the department was required to first
32a
identify “genuine” differences 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 unconstitutional
because there were no “genuine” differences in how
different industries used intangible property).
We acknowledge the difficulties that Mathias presents
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
property 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 for those lots.’” Id. (quoting ORS
308.205(3) (1989)). The taxpayers, who owned fewer
than four lots, argued that it was unconstitutional to
value their property higher than identical adjacent
33a
lots in the same subdivision. Id. Mathias ultimately
agreed with the taxpayers. Id. at 67.
The first point discussed in Mathias, “genuine
differences,” 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 governmental 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 different,
“but whether the differences between them are
pertinent 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.
34a
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 ownership. 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.
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
differences “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 legislature – “[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 suggests
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 subdividing 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
35a
already been refuted. Instead, the court concluded that
the characteristics of the owner (that is, how many
other properties he owned) were not rationally related
to the particular classification being challenged. The
department had proposed 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
subdivider or to bulk sales of subdivision lots.” Id. The
court did not find any indication that the legislature
intended to create a tax exemption “from which only
owners of four or more lots would benefit.” Id. The
statutory text, context, and legislative history did not
support the conclusion that the legislature had
intended to treat taxpayers differently. See id. at 66
(text has “no indication that the legislature intended
to require other taxpayers to pay a part of a
subdivider’s property taxes”); id. (“tax benefits for
individual landowners” 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
characteristics of a property owner can never be
considered in evaluating the rational basis for a
property tax, then the court would have had no need
to even discuss the proffered alternative justification.
The statute would have been unconstitutional even if
the legislature had expressly limited the valuation to
36a
developers and had expressly intended it to be a
partial tax exemption. Properly understood, therefore,
Mathias narrowly 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 charitable 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 consider 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 context
must always and only be justified by reference to the
nature or use of the property.
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 otherwise 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.
37a
c. Application
The Tax Court held that the relevant “classification”
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 intangible property (not taxable)”).
The parties largely do not dispute that classification,
and it is sufficient for purposes of this opinion. We
point out only that, while intangible property is the
thing being taxed differently, it is not something that
distinguishes the classes: intangible property is something 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
differences” between the intangible property held by
centrally assessed businesses and the intangible
property held by locally assessed businesses, either in
the nature of that property or how it is used. See id.
at 325-26 (discussing Mathias). We have explained,
however, that a showing of “genuine differences” 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.
38a
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 governmental purposes. There are rational
reasons why the legislature might legitimately choose
to (1) tax intangible property; (2) tax the intangible
property of centrally assessed 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 selfevidently 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 goodwill, 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
centrally assessed business: railroads, airlines, and
electrical utilities are all heavily regulated industries
that use specific 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
39a
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 intangible property of some or all of the
listed businesses, most of which are specialized in
nature and often subject to extensive governmental
regulation. But because the Department of Revenue
has limited resources, the legislature may reasonably
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.
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
property, 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.
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 differences,” and ultimately concluding that there were not).
40a
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
capturing 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 trucking companies pointed to
by Delta. For that reason, the legislature 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 prescribed in part by the Oregon
Constitution. See Or Const, Art IX, § 3a (tax revenues
obtained by taxing motor vehicle 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
individual parts of that system – such as whether to
tax the intangible 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.
41a
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 intangible 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
particular 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 employers having eight or more employees
while exempting certain 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 justification 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
“disproportionate 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 inconvenience in the
collection and verification of the tax than in the case
of larger employers,” id. Similarly, “[r]elatively great
42a
expense and inconvenience of collection may justify
the exemption from taxation of domestic employers,
farmers, and family businesses, not likely to maintain
adequate employment records, which are an important
aid in the collection and verification of the tax.” Id. at
513. Furthermore, the Court explained, reasons of
public policy would also justify the legislature in deciding to exclude particular industries: the legislature
may “withhold the burden of the tax in order to foster
what it conceives to be a beneficent enterprise” 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 businesses, 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 pedagogical 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 property from any taxation at all,
such as churches, libraries and the property
43a
of charitable institutions. It may impose
different specific taxes upon different trades
and professions, and may vary the rates of
excise upon various products; it may tax real
estate and personal property in a different
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
emphasize 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 classifications and drawing
lines which in their judgment produce reasonable
systems of taxation” (internal quotation marks and
citations omitted)).
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 protection 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.
44a
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 cannot 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 ownership. 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
different 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 situations 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 violated equal protection
because it taxed express companies differently from
“[m]erchants, manufacturers, banks, brokers, newspapers, gas companies, street railway companies, indeed
all persons and corporations engaged in business in
the State”).
45a
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 assessment for taxation” as it could
be for railroad, telegraph, and sleeping-car companies);
id. at 228-29 (rejecting equal protection argument);
Adams Express II, 166 US at 225 (denying 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 regarding
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 rationally 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 interpreting a
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.
46a
federal statute, 49 USC § 11501(b)(4), that prohibited
states from taxing railroads differently from other
commercial 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. 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 taxpayers 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 additional 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.
47a
JAMES, J., concurring.
I concur in the result and the reasoning of the
majority. 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 preferred
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 citizen, and second, to any class of
citizens.” Id. at 237 (quoting Article I, section 20).
“Class” is a term of art for Article I, section 20,
analysis. Disparate treatment implicates Article I,
section 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 distinction 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 characteristic[s],” Zockert v. Fanning, 310
Or 514, 523, 800 P2d 773 (1990), or by “antecedent
48a
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
exclusively) “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, section 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 “pseudoclass,” with pseudo-classes being outside the scope of
the state’s equal privileges clause. David Schuman,
The Right to Equal Privileges and Immunities: A
State’s Version of Equal Protection, 13 Vt L Rev 221,
232-33 (1988).20
20
Professor Schuman suggested that a “pseudo-class” was “any
group of people who would never have conceived of themselves as
a ‘class,’ and would not have been treated as a class, if the statute
49a
That “true class” distinction is an essential predicate
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, section 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, ellipses in original.)
I readily acknowledge that we have not articulated
the clearest test to assist litigants, or lower courts, in
sifting 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).21 That
or policy allegedly disadvantaging them did not exist.” Schuman,
13 Vt L Rev at 233.
21
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 characteristics 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
50a
similar standard to hold that a classification of victims
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’ compensation] claimants on the one hand,
and SAIF insureds and claimants on the other,’ are not
true classes); Norwest v. Presbyterian Intercommunity
Hosp., 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 classification 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] (victims 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
51a
difficulty may well explain why the parties have
ignored the issue. But to me, that is all the more reason
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
assuming without deciding.” State v. Taylor, 372 Or
536, 557, 551 P3d 924 (2024) (James, J., concurring).
My unease is particularly acute in the area of state
constitutional law. Unlike the majority of states that
employ a lockstep or interstitial 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 benefits,
but two in particular I highlight. First, rigorous
adherence to a full state constitutional analysis is
responsible for Oregon’s independent protection of
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,
section 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.
52a
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
person’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 breakwater
against rough federal seas.
53a
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).
Even when our state constitutional analysis differs
from federal constitutional analysis, consistently addressing 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
unconstitutional 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
54a
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 primarily
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 speeding demanded the maintenance
records of the radar sets 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 prosecution 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 additional
55a
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 attorney get
them for him. Defense counsel’s response was
that this might be so, b
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