Another Oregon Supreme Court Victory: Casey Nokes, Tommy Brooks and Clark Balfour Help Rockwood Water PUD Get Reversal

Thu 5 May, 2016 / by Cable Huston / Verdicts & Cases

The Oregon Supreme Court reversed the Court of Appeals, ruling that the City of Gresham’s attempt to raise right-of-way access fees from 5% to 7% of revenues was an improper intergovernmental tax on a fellow municipal entity, Rockwood Water People’s Utility District (“PUD”). In Northwest Natural Gas Co. v. City of Gresham, 359 Or 309 (2016), the City of Gresham enacted an ordinance increasing the fees it charges both investor-owned utilities (including Northwest Natural and Portland General Electric) and municipal entities (Rockwood Water PUD) for using Gresham’s streets. While both the investor-owned utilities and Rockwood Water PUD prevailed at the trial court on summary judgment, the Court of Appeals had reversed the judgment, concluding that all of the utilities were operating with a franchise and that an Oregon statute limiting privilege taxes to 5% did not apply. The Supreme Court affirmed the Court of Appeals with respect to the investor-owned utilities, although on different grounds, finding that the City of Gresham was not preempted by the privilege tax statute and had home rule authority under its municipal charter to enact an ordinance applying a privilege tax exceeding 5% with respect to the non-municipal utilities. But the Supreme Court reversed the Court of Appeals with respect to Rockwood Water PUD by adopting Rockwood’s alternative argument: a municipality, like the City of Gresham, lacks authority to tax another municipality, like a PUD, in the absence of express statutory authority. Because the statute at issue only provided Gresham express authority to tax a PUD up to 5%, the 7% tax – with respect to the municipal entity – was impermissible.