Nw. Natural Gas Co. v. City of Gresham
| Decision Date | 02 July 2014 |
| Docket Number | 110708422,A150990. |
| Citation | 264 Or.App. 34,330 P.3d 65 |
| Parties | NORTHWEST NATURAL GAS COMPANY, an Oregon corporation; and Portland General Electric Company, an Oregon corporation, Plaintiffs–Respondents, and Rockwood Water People's Utility District, Intervenor–Respondent, v. CITY OF GRESHAM, a municipality and public body within the state of Oregon, Defendant–Appellant. |
| Court | Oregon Court of Appeals |
OPINION TEXT STARTS HERE
David R. Ris argued the cause and filed the briefs for appellant.
Jeffrey G. Condit argued the cause for respondents Northwest Natural Gas Company and Portland General Electric Company. With him on the brief was Miller Nash LLP.
Casey M. Nokes argued the cause for respondent Rockwood Water People's Utility District. With him on the brief were Clark I. Balfour, Jon W. Monson, and Cable Huston Benedict Haagensen & Lloyd LLP.
Before ARMSTRONG, Presiding Judge, and HADLOCK, Judge, and EGAN, Judge.
Plaintiffs Northwest Natural Gas (NW Natural), Portland General Electric (PGE), and Rockwood Water People's Utility District (Rockwood) brought this declaratory relief action challenging a City of Gresham resolution that increased plaintiffs' utility-license fees from five percent to seven percent of the gross revenue that plaintiffs receive from their Gresham operations. Plaintiffs contended that the city could not impose the increased fee because ORS 221.450 preempted the city's authority to charge a fee of more than five percent. The city responded that the statute did not apply because the ordinance imposed a utility-license fee and not a “privilege tax,” as the latter term is used in ORS 221.450. On cross-motions for summary judgment, the trial court concluded that the statute did apply and declared the city's resolution void and unenforceable. On appeal, we conclude that the city's fee increase was not preempted by ORS 221.450 because plaintiffs are not operating “without a franchise from the city,” as that phrase is used in the statute. Accordingly, we reverse and remand.
The case was litigated below on stipulated facts and exhibits, from which we relate the following. The city is a home-rule municipality, which, under its charter, “has all powers [that] the constitution, statutes, and common law of the United States and of this state expressly and impliedly grant or allow municipalities as fully as though this charter specifically enumerated each of those powers.” Gresham Charter of 1978, ch II, § 5.
In 2001, the city enacted ordinances 1523 and 1524, which established the city's Utility Licensing Ordinance. See City of Gresham Revised Code (GRC), arts. 6.30, 6.35. The city's stated purposes for the ordinance are, among other things, to permit and regulate reasonable access to the public rights-of-way by entities providing utility services in the city and to assure that the city is fairly and reasonably compensated for permitting that use. GRC 6.30.020. All public and private utilities operating within the city that occupy the public rights-of-way are required to obtain a license from the city, and, unless otherwise specified, a license has a term of 10 years. GRC 6.30.070. The ordinance also sets out the terms under which a utility may operate in the public rights-of-way, including terms regulating the location, construction, relocation, and removal of utility facilities; requiring permits and fees for work in the rights-of-way; and covering other general regulatory matters, such as indemnity, mapping, and enforcement. See generally GRC arts 6.30, 6.35.
Under the ordinance, each utility licensee must pay a license fee:
GRC 6.30.110(1)(a). In accordance with that provision, the city passed a resolution in 2001 establishing a utility-license fee of five percent of utility gross revenues, but it exempted city-owned and special-district-owned utilities from paying the fee. By resolutions passed in 2002 and 2003, the city made the five percent fee applicable to user fees collected by city-owned utilities and Rockwood.
The city passed the resolution at issue in this case in 2011. That resolution increased the utility-license fee from five percent to seven percent. Before imposing the fee, the city notified plaintiffs of the increase and told them that the city had increased the fee “[t]o avoid further service reductions in the police and fire departments.”
Plaintiffs, all of which were operating under licenses from the city, brought this action challenging the city's authority to increase the utility-license fee from five to seven percent. Plaintiffs argued that the city's resolution is void because ORS 221.450 limits the city to charging a maximum fee of five percent.1 Rockwood also argued, in the alternative, that the city could not charge its increased fee against Rockwood because, as a municipal corporation, Rockwood cannot be taxed by the city without express state authorization to do that.
On the parties' cross-motions for summary judgment, the trial court agreed with plaintiffs that the city's fee increase was preempted by ORS 221.450, and, consequently, the court did not reach Rockwood's alternate argument. In a lengthy letter opinion, the court concluded that the city's utility-license fee was a privilege tax under ORS 221.450, and, accordingly, the city was prohibited from charging more than the five percent tax authorized under that statute.
The court then entered a general declaratory judgment for plaintiffs, as follows:
The city appeals the general judgment and assigns as error both the grant of plaintiffs' motions for summary judgment and the denial of its motion for summary judgment.2
“In an appeal from a judgment that results from cross-motions for summary judgment,if both the granting of one motion and the denial of the other are assigned as error, then both are subject to review.” Eden Gate, Inc. v. D & L Excavating & Trucking, Inc., 178 Or.App. 610, 622, 37 P.3d 233 (2002). Because there are no disputed issues of material fact, we must determine whether any moving party is entitled to judgment as a matter of law. ORCP 47 C.
When reviewing the validity of an enactment by a home-rule municipality, such as the city, we follow the methodology set out in La Grande/Astoria v. PERB, 281 Or. 137, 142, 576 P.2d 1204, adh'd to on recons.,284 Or. 173, 586 P.2d 765 (1978). In La Grande/Astoria, the Oregon Supreme Court held that “the validity of local action depends, first, on whether it is authorized by the local charter or by a statute * * *; second, on whether it contravenes state or federal law.” See also AT & T Communications v. City of Eugene, 177 Or.App. 379, 389, 35 P.3d 1029 (2001), rev. den.,334 Or. 491, 52 P.3d 1056 (2002) (). Here, plaintiffs do not dispute that the city could enact its resolution and impose its increased fee pursuant to the broad, general powers granted to the city by its home-rule charter.3 What all plaintiffs argued—and what was the basis for the trial court's decision below—was that the city's fee increase contravened ORS 221.450, viz., that the resolution was preempted by state law under the second analytical step in La Grande/Astoria.
The court explained in La Grande/Astoria that, in determining whether a local law is preempted by state or federal law, “the first inquiry must be whether the local rule in truth is incompatible with the legislative policy, either because both cannot operate concurrently or because the legislature meant its law to be exclusive.” 281 Or. at 148, 576 P.2d 1204. In making that determination, we are required to interpret the local enactment, “if possible, to be intended to function consistently with state laws.” Id. We recently emphasized that “we will not determine a local ordinance to be preempted by implication—the legislative's preemptive intent must be apparent—that is, ‘clear and unequivocal’—or the concurrent operation of the local and state law must be impossible.” Rogue Valley Sewer Services v. City of Phoenix, 262 Or.App. 183, 192, 329 P.3d 1 (2014). Accordingly, the parties' arguments require us to determine the intention of the legislature in enacting ORS 221.450, and, thus, we look to the text of that statute in context, along with any legislative history that is useful to our analysis. See State v. Gaines, 346 Or. 160, 171–72, 206 P.3d 1042 (2009).
A brief discussion of the historical development of ORS 221.450, as well as of ORS 221.420, is a useful starting point. In 1911, in what would eventually become ORS 221.420, the legislature enacted a statute that expressly gave municipalities the power to regulate utilities. See Or. Laws 1911, ch. 279, § 61....
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