Powerex Corp. v. Dept. of Rev.

146 	July 15, 2020 	No. 9
IN THE OREGON TAX COURT
REGULAR DIVISION
POWEREX CORP.,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
Defendant.
(TC 5339)
On cross-motions for partial summary judgment, Plaintiff argued that it
was not a “public utility” and therefore Oregon’s Uniform Division of Income for
Tax Purposes Act “ultimate destination” sourcing provisions applied to its sales.
After considering the text, context, and legislative history of the phrase “public
use,” the court concluded that a business is a public utility if the public has a
right to buy or use the commodities or services provided by the business. Plaintiff
was not a “public utility” under ORS 314.610(6) because no segment of the public
acquired any such right against it.
Oral argument on cross-motions for partial summary
judgment were held on September 9, 2019, in the courtroom
of the Oregon Tax Court, Salem.
Eric J. Coffill, Eversheds Sutherland (US) LLP, Sacramento,
filed the motion and argued the cause for Plaintiff Powerex
Corp.
Marilyn J. Harbur, Senior Assistant Attorney General,
Department of Justice, Salem, filed the cross-motion and
argued the cause for Defendant Department of Revenue.
Decision rendered July 15, 2020.
ROBERT T. MANICKE, Judge.
This case involves Oregon corporation excise tax
assessments against Plaintiff for the tax years ending
March 31, 2011 through March 31, 2015 (collectively, the
“Subject Years”).1 In prior litigation involving tax years end-
ing in 2002 through 2004 (the “Prior Years”), both parties
1 Federal income tax law, as incorporated by Oregon, generally allows cor-
porate taxpayers to elect a tax year other than the calendar year. See Bittker &
Eustice, Federal Income Taxation of Corporations and Shareholders ¶ 5.07; ORS
314.085. References to the Oregon Revised Statutes (ORS) are to the 2009 edition
unless otherwise indicated.

Cite as 24 OTR 146 (2020) 	147
took the position that Plaintiff was within the class of tax-
payers to which Oregon’s version of the Uniform Division
of Income for Tax Purposes Act (UDITPA) applied, and the
Oregon Supreme Court and this court decided various issues
relating primarily to whether Plaintiff’s sales at wholesale
of electricity and natural gas were “in this state” pursuant
to Oregon’s UDITPA. 2 See Powerex Corp. v. Dept. of Rev., 357
Or 40, 346 P3d 476 (2015), on remand, 22 OTR 222 (2016).
On cross-motions for partial summary judgment, this court
now must decide whether Oregon’s UDITPA applied to
Plaintiff for the Subject Years, or whether Plaintiff instead
was excluded as a “public utility.” If Plaintiff was a public
utility, the court must decide whether an administrative
rule that Defendant adopted in 2015 causes Plaintiff’s sales
for the Subject Years to have been in Oregon. If Plaintiff
was not a public utility under Oregon’s UDITPA, Plaintiff
prevails on its motion.
I. 	FACTS AND LEGAL BACKGROUND
During the Subject Years, as in the Prior Years,
Plaintiff’s principal business was the sale and purchase of
wholesale electricity and natural gas in Canada and the
United States. See Powerex, 357 Or at 42. Plaintiff was orga-
nized under the laws of British Columbia. 3 It is uncontested
that, during the Subject Years, all of Plaintiff’s sales of elec-
tricity and natural gas to purchasers in Oregon were at the
wholesale level. Plaintiff did not possess any license issued
by or for the State of Oregon for sales or delivery of electricity
or natural gas to the public. Plaintiff did hold certain licenses
and permits from Canadian and United States federal reg-
ulators to serve wholesale energy customers, including US
Department of Energy Permits and US Federal Energy
2 The court at times refers to “Oregon’s UDITPA” when discussing the 1965
act, Or Laws 1965, chapter 152, in distinction to the uniform law template
drafted by the National Conference of Commissioners on Uniform State Laws.
The 1965 Oregon Legislative Assembly’s few deviations from the uniform act are
discussed below.
3 The court notes that Plaintiff’s incorporation outside the United States
required it to compute its federal taxable income separately from its corporate
parent or any other affiliate, precluded it from joining in a consolidated federal
or Oregon return, and required that its Oregon taxable income be determined
separately. See StanCorp Financial Group, Inc. v. Dept. of Rev., 21 OTR 120, 125
(2013) (describing Oregon’s “water’s-edge” rule); ORS 317.715(3).

148 	Powerex Corp. v. Dept. of Rev.
Regulatory Commission Market-Based Rate Authorizations.
Plaintiff did not own or operate any equipment or facilities
used for the production or storage of electricity or gas in
Oregon, or sell or deliver, or offer for sale or delivery, any elec-
tricity or natural gas to any residential customers in Oregon.
Plaintiff was not classified as a public utility by the Oregon
Public Utility Commission, nor was it regulated as a public
utility by the Oregon Public Utility Commission. Plaintiff
was not forced or compelled to sell to anyone, including any
member of the public in Oregon, by the operation of law or
regulation or regulatory body, including the Oregon Public
Utility Commission, and freely chose its customers for its
sales of electricity and natural gas. Plaintiff did not, nor did
it hold itself out as willing to, serve or make sales of electric-
ity or natural gas to the public in Oregon. No member of the
public in Oregon had a right, including a legal or regulatory
right, to demand or receive purchases or delivery of electric-
ity or natural gas from Plaintiff.
The Oregon Supreme Court has previously described
Oregon’s two separate statutory regimes for allocating and
apportioning taxable income to Oregon. See Powerex, 357
Or at 42-43; Crystal Communications, Inc. v. Dept. of Rev.,
353 Or 300, 302-05, 297 P3d 1256 (2013). Oregon’s UDITPA,
codified in ORS 314.605 to 314.675, applies to the great
majority of businesses but does not apply to a “public utility”
or to a “financial institution,” as those terms are defined
in Oregon’s UDITPA. See ORS 314.615; ORS 314.610(4), (6).
Instead, special, generally industry-specific, administrative
rules that Defendant adopts pursuant to ORS 314.280 apply
to “[t]axpayers engaged in activities as a financial institu-
tion or public utility.” See generally OAR 150-314-0062 to
150-314-0090. The opinions in Powerex as to the Prior Years
focused on the Oregon UDITPA “sourcing” provisions in ORS
314.665, i.e., the provisions for determining whether “sales”
are “in this state” and thus are counted in the numerator
of the sales apportionment factor, increasing the share of
overall taxable income to which Oregon’s tax applies.4 The
4 For the Prior Years, the sales factor was the most heavily weighted frac-
tion, or “factor,” of three factors used to determine the percentage of overall tax-
able income attributable to Oregon. See Powerex, 357 Or at 42-43 & n 2. For the
Subject Years, the sales factor generally is the sole factor that determines the

Cite as 24 OTR 146 (2020) 	149
Supreme Court applied the Oregon UDITPA sourcing provi-
sions to all of Plaintiff’s sales, noting:
“Throughout this litigation, the Oregon Department of
Revenue has taken the position that UDITPA governs
the apportionment of Powerex’s income. We accept that
assumption for the purposes of deciding the department’s
claims on appeal. We express no opinion on whether ORS
314.280, if applicable, would lead to a different result.”
Powerex, 357 Or at 42 n 1. 5 The Supreme Court determined
that sales of electricity constituted sales of “tangible per-
sonal property” under the Oregon UDITPA binary system
of classification for sourcing purposes, reversing this court’s
conclusion that those sales were of “other than * * * tangible
personal property,” a category that generally includes sales
of intangible property and sales of services. See Powerex,
357 Or at 56-73. The Supreme Court also determined that
Oregon’s UDITPA requires that sales of tangible personal
property be sourced based on the “ultimate destination” of
the property, and not based on the state where the seller and
buyer agree that the property is “delivered.” See id. at 51.
The Supreme Court thus invalidated Defendant’s adminis-
trative rule that applied to all Oregon UDITPA taxpayers
selling natural gas and electricity, which defined such a sale
as “in this state” if the “contracted point of delivery” was in
Oregon. See id. at 55-56. On remand, this court concluded,
based on UDITPA’s “ultimate destination” principles, that
none of Plaintiff’s disputed sales were in Oregon because
the ultimate destination of the sales was outside Oregon,
generally California. See Powerex Corp. v. Dept. of Rev., 22
OTR 222, 231 (2016).
percentage of taxable income attributable to Oregon. ORS 314.650. An exception
allows certain “utilities” that provide electric power, gas and other listed com-
modities “through a permanent infrastructure of lines, mains and pipes” to elect
to apply a three-factor apportionment formula, but that exception is not at issue
here. See ORS 314.280(3).
5 In the instant case, Plaintiff supplied a declaration of its chief financial
officer, which Defendant has not contested, stating in part: “For [the Subject
Years] Plaintiff filed its Oregon Corporation Tax returns as a taxpayer subject
to [UDITPA], to apportion its income earned within and without Oregon. For
all tax years prior to the [Subject Years], including tax years ending March
2002 through March 2011, Plaintiff filed its returns as a UDITPA taxpayer, and
Defendant on audit never reclassified Plaintiff as a ‘public utility’ taxpayer under
ORS 314.280 and ORS 314.610(6) for any of those prior tax years.”

150 	Powerex Corp. v. Dept. of Rev.
In 2015, during the proceedings in this court on
remand as to the Prior Years, Defendant withdrew the elec-
tricity and gas sourcing rule that the Supreme Court had
invalidated under Oregon’s UDITPA. Defendant adopted a
rule, solely for “public utilities,” containing materially sim-
ilar text, including a test for sourcing based on the “con-
tractually specified point of physical delivery,” pursuant
to Defendant’s authority under ORS 314.280. See OAR
150-314-0090; ORS 314.280(1). At some point before 2017,
Defendant also determined that Plaintiff fit within the
Oregon UDITPA definition of a “public utility” and, follow-
ing an audit, in 2018 assessed a deficiency against Plaintiff
for the Subject Years on the theory that Plaintiff’s sales of
natural gas and electricity were in Oregon because the “con-
tractually specified point of physical delivery” of the gas and
electricity was in Oregon.
Plaintiff now seeks summary judgment on several
of its claims, asserting that (1) it was not a “public utility”
during the Subject Years and thus was entitled to con-
tinue to apply the Oregon UDITPA “ultimate destination”
sourcing provisions; (2) even if Plaintiff was a public utility,
Defendant’s 2015 rule applying the “contractually specified
point of physical delivery” test to Plaintiff is invalid because
of the way Defendant promulgated the rule; and (3) even if
the 2015 rule was validly promulgated, Defendant cannot
apply it to Plaintiff retroactively, under ORS 305.125 as well
as due process and equal protection principles. Defendant
has cross-moved for summary judgment with respect to the
same claims.
II. 	ISSUES
(1) 	Was Plaintiff a “public utility” within the meaning
of ORS 314.610(6)?
(2) 	If so, was Defendant barred from applying its 2015
administrative rule for the sourcing of sales of elec-
tricity and natural gas, either because Defendant
promulgated the rule through an invalid process or
because application of the rule to the Subject Years
would violate statutory or constitutional limitations
on retroactive rulemaking?

Cite as 24 OTR 146 (2020) 	151
III. 	ANALYSIS
A. 	Was Plaintiff a public utility?
The first issue requires the court to interpret the
statutory term “public utility” as defined in ORS 314.610(6).
To do so, the court examines the text of the statute, as well as
its context including any relevant legislative history, resort-
ing to maxims if necessary. See State v. Gaines, 346 Or 160,
171-73, 206 P3d 1042 (2009). During all of the Subject Years,
and indeed since its adoption in 1965, the statute has read
as follows:
“ ‘Public utility’ means any business entity whose prin-
cipal business is ownership and operation for public use of
any plant, equipment, property, franchise, or license for the
transmission of communications, transportation of goods
or persons, or the production, storage, transmission, sale,
delivery, or furnishing of electricity, water, steam, oil, oil
products or gas.”
ORS 314.610(6) (emphasis added). It is uncontested that
Plaintiff held no plant or equipment in Oregon. The parties
disagree whether, as to any other property Plaintiff may have
held in Oregon,6 Plaintiff owned or operated that property
“for public use.” Plaintiff argues that its activities—whole-
saling electricity and gas to resellers of Plaintiff’s own choos-
ing—did not involve any “public use” of any of its property.
Defendant contends that the fact that Plaintiff “is selling
power for the ultimate use by the public” (emphasis added)
brings Plaintiff’s activities within the scope of the definition.
The court begins with a textual analysis of “public use.”
1. 	Text of Oregon’s UDITPA definition
The court first seeks to determine whether the
1965 legislature intended “public use” as a “technical term”
with an established meaning. See, e.g., Comcast Corp. v.
6 The parties specifically disagree whether Plaintiff held any “licenses,”
within the meaning of ORS 314.610(6). Plaintiff asserts that the uncontested fact
that it possessed no license issued by Oregon for sales or delivery of electricity
or natural gas to the public is dispositive in Plaintiff’s favor. Defendant argues
that Plaintiff’s recognition by the Federal Energy Regulatory Commission as
a power marketer, along with Plaintiff’s permits from the Bonneville Power
Administration, satisfy the definition of a “license.” The court’s disposition below
of the “public use” requirement makes it unnecessary to reach the “license” issue.

152 	Powerex Corp. v. Dept. of Rev.
Dept. of Rev., 356 Or 282, 296, 337 P3d 768 (2014) (deter-
mining whether legislature used a “term of art”; applying
any such “technical” meaning as an “exception” in lieu of
“plain meaning” of a term). Defendant argues that the leg-
islature intended “public use” as a single term consisting of
“two words together” and refers to the edition of Black’s Law
Dictionary approximately contemporaneous with Oregon’s
adoption of UDITPA. The court interprets this as an argu-
ment that the phrase as a whole had an established mean-
ing as a legal term of art. Plaintiff does not specifically chal-
lenge the notion that the legislature intended “public use” as
a technical term; instead, Plaintiff rejects Defendant’s defi-
nitions as inapplicable and challenges Defendant’s interpre-
tation of them.
Defendant quotes two dictionary definitions, one of
which the court finds useful:7
“Public use, in constitutional provisions restricting the
exercise of the right to take private property in virtue of
eminent domain, means a use concerning the whole com-
munity as distinguished from particular individuals. But
each and every member of society need not be equally inter-
ested in such use, or be personally and directly affected by
it; if the object is to satisfy a great public want or exigency,
that is sufficient. Rindge Co. v. Los Angeles County, 43
S.Ct. 689, 692, 262 U.S. 700, 67 L.Ed. 1186. The term may
be said to mean public usefulness, utility, or advantage, or
what is productive of general benefit. Williams v. City of
Norman, 85 Okl. 230, 205 P. 144, 148. But it is not synony-
mous with public benefit. Ferguson v. Illinois Cent. R. Co.,
202 Iowa 508, 210 N.W. 604, 606. It may be limited to the
inhabitants of a small or restricted locality, but must be
in common, and not for a particular individual. Pocantico
7 The court finds inapposite Defendant’s second quoted definition:
“In patent law, a public use is entirely different from a use by the public.
Los Angeles Lime Co. v. Nye, C.C.A.Cal., 270 F. 155, 162. If an inventor allows
his machine to be used by other persons generally, either with or without
compensation, or if it is, with his consent, put on sale for such use, then it will
be in ‘public use’ and on public sale. David E. Kennedy v. United Cork Cos.,
C.C.A.N.Y., 225 F. 371, 372. Experimental use is never ‘public use’ if con-
ducted in good faith to test the qualities of the invention, and for no other
purpose not naturally incidental. Union Sulphur Co. v. Freeport Texas Co.,
D.C.Del., 251 F. 634, 651.”
Black’s Law Dictionary 1395 (4th ed 1968). The court does not discuss this defi-
nition further.

Cite as 24 OTR 146 (2020) 	153
Water Works Co. v. Bird, 130 N.Y. 249, 29 N.E. 246. The use
must be a needful one for the public, which cannot be sur-
rendered without obvious general loss and inconvenience.
Jeter v. Vinton-Roanoke Water Co., 114 Va. 769, 76 S.E.
921, 925, Ann.Cas. 1914C, 1029.”
Black’s Law Dictionary 1395 (4th ed 1968).
The legal dictionary definition involves the law of
eminent domain and identifies when a deprivation of prop-
erty is for a “public use” as required by the takings clause of
the state or federal constitution. The relevance of this defini-
tion to the concept of a public utility is obvious: On the same
page of the same dictionary appears a definition of “public
utility” that states in part: “[The term ‘public utility’] is syn-
onymous with ‘public use,’ and refers to persons or corpora-
tions charged with the duty to supply the public with the use
of property or facilities owned or furnished by them.” Black’s
at 1395 (emphasis added). 8 The connection between the two
8 The full definition of “public utility” in the fourth edition of Black’s reads:
“A business or service which is engaged in regularly supplying the pub-
lic with some commodity or service which is of public consequence and need,
such as electricity, gas, water, transportation, or telephone or telegraph ser-
vice. Gulf States Utilities Co. v. State, Tex.Civ.App., 46 S.W.2d 1018, 1021.
Any agency, instrumentality, business industry or service which is used or
conducted in such manner as to affect the community at large, that is which
is not limited or restricted to any particular class of the community. State
Public Utilities Commission v. Monarch Refrigerating Co., 267 Ill. 528, 108
N.E. 716, Ann.Cas. 1916A, 528. The test for determining if a concern is a pub-
lic utility is whether it has held itself out as ready, able and willing to serve
the public. Humbird Lumber Co. v. Public Utilities Commission, 39 Idaho 505,
228 P. 271. The term implies a public use of an article, product, or service,
carrying with it the duty of the producer or manufacturer, or one attempting
to furnish the service, to serve the public and treat all persons alike, without
discrimination. Highland Dairy Farms Co. v. Helvetia Milk Condensing Co.,
308 Ill. 294, 139 N.E. 418, 420. It is synonymous with ‘public use,’ and refers to
persons or corporations charged with the duty to supply the public with the use
of property or facilities owned or furnished by them. Buder v. First Nat. Bank in
St. Louis, C.C.A.Mo., 16 F.2d 990, 992. To constitute a true ‘public utility,’ the
devotion to public use must be of such character that the public generally, or
that part of it which has been served and which has accepted the service, has
the legal right to demand that that service shall be conducted, so long as it is
continued, with reasonable efficiency, under reasonable charges. Richardson
v. Railroad Commission of California, 191 Cal. 716, 218 P. 418, 420. The devo-
tion to public use must be of such character that the product and service is
available to the public generally and indiscriminately, or there must be the
acceptance by the utility of public franchises or calling to its aid the police
power of the state. Southern Ohio Power Co. v. Public Utilities Commission of
Ohio, 110 Ohio St. 246, 143 N.E. 700, 701, 34 A.L.R. 171.”
Black’s at 1395 (emphasis added).

154 	Powerex Corp. v. Dept. of Rev.
terms is further supported by contemporaneous treatises,
which indicate that the core concept of a public utility com-
monly has involved both a taking from the company, in the
form of rate regulation or other government control, as well
as taking authority vested in the company by statute. As
summarized in one such treatise:
“[A]lmost any layman would immediately * * * note the four
duties common to public utility industries: (1) the duty to
serve all comers, (2) the duty to render adequate service,
(3) the duty to serve at reasonable rates, and (4) the duty
to serve without unjust discrimination. He would also note
that the right of entry into the industry and extension of
facilities is controlled by public authority by means of a
franchise or certificate of convenience and necessity. In the
exercise of this right a public utility, like the government
itself, has the right of eminent domain, that is, the right
to take private property with compensation for a purpose
deemed to be in the public interest. It also has the right to
adequate compensation.”
Eli Winston Clemens, Economics & Public Utilities 13 (1950)
(emphasis in original); see also Francis X. Welch, Cases and
Text on Public Utility Regulation 82 (1961) (summarizing
public utility regulation as “the expression of the right of
the public, through the state, to obtain adequate service, at
reasonable rates from a responsible public utility agency, in
return for a grant of authority to such agency to operate
in a given territory”). Given the close relationship between
“public use” and “public utility,” and the fact that both terms
had established legal definitions, the court agrees with
Defendant that the Oregon legislature intended “public use”
as a technical term when defining “public utility” in ORS
314.610(6).
2. 	Meaning of technical term “public use”
The next question is what that term of art meant.
Again the court agrees with Defendant that the definition
of “public use” in Black’s is an appropriate place to begin.
See Comcast, 356 Or at 296 (referring, “for starters, at
least,” to legal dictionaries for meanings of legal technical
terms). Defendant interprets “public use” as requiring only
that Plaintiff’s activities not be “a ‘private affair,’ ” by which
Defendant seems to mean “selling power to itself or another

Cite as 24 OTR 146 (2020) 	155
related company for its own private use.” Under Defendant’s
theory, Plaintiff’s activity is for a public use if it “is selling
power for ultimate use by the public” (emphasis added). The
court finds Defendant’s proffered interpretation of “public
use” much broader than the dictionary definition. The dictio-
nary definition refers to a “use concerning the whole commu-
nity,” a use that is “in common.” As discussed below, some of
the cases cited in the definition indicate that a key element
of the term was that some segment of the public has a right
in common to buy or otherwise acquire the electricity, gas
or other commodity that the property being taken will pro-
duce. As described in the cases, the public right was against
the public body or company supplying the commodity to the
public. None of the cases cited in the Black’s definition, how-
ever, involves a wholesaler or other third party furnishing
commodities to the person supplying them to the public. The
court now briefly reviews the cited cases.
The first cited case, Rindge Co., involves Los Angeles
County’s taking of private land to build public roads. Rindge
Co. v. Los Angeles County, 262 US 700, 42 S Ct 1922, 67 L
Ed 1186 (1923). The specifics of the opinion shed little light
on this case, as Rindge Co. did not involve a public utility. 9
However, the case does illustrate the concept that a public
right is embedded within the meaning of “public use.” The
essence of a public road is that anyone is allowed to use it,
and the resistant landowner who was compelled to cede a
strip of land for its construction has no right to turn the
public away. One of the next cases cited in the Black’s defini-
tion describes the public right expressly,10 in the context of a
9 Although the proposed roads terminated entirely within private ranch
land, at the Ventura County line, the Court concluded that a public use justified
the eminent domain proceedings. The Court emphasized that the proposed roads
would be accessible to the general public because one of the roads would imme-
diately connect to an existing public road. Further, it was possible that Ventura
County would someday decide to authorize its own new public roads to connect at
the terminus. Rindge Co., 262 US at 706-07.
10 The first public utility case in the Black’s definition does not address the
concept of a right associated with public use. The dictionary cites Williams v. City
of Norman, 85 Okla 230, 205 P 144 (1922) for the proposition that “public use”
means “public usefulness, utility, or advantage, or what is productive of general
benefit.” The citation relates specifically to the court’s extensive internal quota-
tion of its earlier opinion in State v. Millar, 21 Okla 449, 96 P 747 (1908). Both
cases involved municipal utilities. The issue in both cases was whether a city’s
constitutional authority to issue bonds to construct, own, and operate a “public

156 	Powerex Corp. v. Dept. of Rev.
water utility. Pocantico Water-Works Co. v. Bird, 29 NE 246
(NY 1891), involved a privately owned company that sought
to acquire riparian and other rights from landowners after
contracting with a village to build and operate a dam and
other facilities to supply the village with water. The court
held that the company’s acquisitions were for “public use.”
Id. at 248. The court concluded that, because the company
had contracted with the village, “the inhabitants thereof
have the right to [the] common use [of the water] * * *.” Id.11
Jeter was another water works case, involving a
corporation that was granted condemnation authority and
a franchise to supply water to residents of a town and the
neighborhood of the town. Jeter v. Vinton-Roanoke Water
Co., 114 Va 769, 76 SE 921 (1913). The court concluded that
the corporation’s acquisition of property was for a public use,
summarizing the principle as follows: “The authorities also
agree that if the property of a corporation is devoted to fur-
nishing the general public or some definite portion of it with
a public utility, and the public has a definite and fixed use
in the property which cannot be gainsaid or denied, then the
property is devoted to a public use * * *.” 76 SE at 925-26
(emphasis added).12 Jeter also referred to an earlier railroad
case, stating: “ ‘Where a use is public, a trust attaches to the
subject condemned for the benefit of the public, of the enjoy-
ment of which it cannot be deprived by the company without
reasonable excuse, and the state retains the power to regu-
late and control the franchise and to fix rates.’ ” Id. at 925
utility” applied to certain public works projects: an electricity plant in City of
Norman and a sewer works in State v. Millar. The court in each case had no diffi-
culty concluding that the project would constitute a public utility as “conducive to
the health, comfort, and convenience of the inhabitants of a city or town.” Millar,
96 P at 753; see City of Norman, 205 P at 148.
11 To the point cited in Black’s, the court specifically noted that, although
“public use” “implies ‘the use of many,’ or ‘by the public,’ * * * it may be limited to
the inhabitants of a small or restricted locality, but the use must be in common,
and not for a particular individual.” Id.
12 The court quoted the California Supreme Court:
“ ‘The right of an individual to a public use of water is in the nature of
a public right possessed by reason of his status as a person ·of the class for
whose benefit the water is appropriated or dedicated. All who enter the class
may demand the use of the water, regardless of whether they have previously
enjoyed it or not.’ ”
Jeter, 76 SE at 927 (quoting Hildreth v. Montecito Creek Water Co., 139 Cal 22, 30,
72 P 395 (1903)).

Cite as 24 OTR 146 (2020) 	157
(quoting Zircle v. Southern Ry. Co., 102 Va 17, 21, 45 SE 802
(1903) (emphasis added).13
By contrast, in the remaining case cited in the
dictionary definition, the court found that “public use”
was lacking where a state tribunal, the Board of Railroad
Commissioners (board), purported to set the rent that a rail-
road could charge to an individual who leased land from the
railroad for the purpose of operating a coal storage shed.
Ferguson v. Illinois Cent. R. Co., 202 Iowa 508, 210 NW 604
(1926). The individual used the shed to sell coal “to his cus-
tomers.” 210 NW at 607. The court invalidated the board’s
order, concluding that it constituted a taking for private
use. Id. The court contrasted cases involving grain elevators
and warehouses because in those cases “grain was received
indiscriminately from the public for storage at great termi-
nal centers.” Id.; see Munn v. Illinois, 94 US 113, 121, 24
L Ed 77 (1876) (noting that warehousemen, “[l]ike common
carriers, * * * are required by law to receive grain from all
persons, and store the same upon equal terms and condi-
tions”). As in Pocantico Water-Works and Jeter, the court
stated as a general proposition: “The term ‘public use,’ as
employed in the constitutional provision, does not mean a
use which may properly be deemed a public benefit or advan-
tage, but it means that the public possesses, to some extent,
certain rights to the use of [sic] employment of the property.”
Ferguson, 210 NW at 606.
Based on the dictionary definition and the cases
cited there,14 the court concludes that the Oregon legislature
13 As to the requirement that the use be “needful,” as referred to in the dictio-
nary citation, the court emphasized that furnishing water promotes “the health
and comfort of the people” and is “indispensable to meet industrial progress, new
conditions, etc.” Id. at 926. The court rejected the contention that the existing
water supply was adequate and that the only reason for the condemnation was
to secure additional supply to serve a railroad customer. The court reasoned that
the company had the same duty to supply the reasonable demands of a railroad
customer as to serve private individuals. Id. at 927.
14 The court also has examined a second legal dictionary in existence in
1965 but found no material difference in the definition or the cases cited there.
See John Bouvier, Bouvier’s Law Dictionary 1003 (1934) (“PUBLIC USE. Under
Eminent Domain. Implies the use of many, or by the public. It may be limited to
the inhabitants of a small or restricted locality, but must be in common, and not
for a particular individual. Lewis, Em. Dom. c. 7; 180 N. Y. 249; 62 Cal. 182; 66
Hun 619. It arises when the sovereign power is essential to an enterprise, and is
for that reason therein exercised; 50 Fed. Rep. 812.” (Uppercase in original.)).

158 	Powerex Corp. v. Dept. of Rev.
would have intended “public use” to apply to the activities of
business entities that were obligated to sell, deliver or fur-
nish any of the listed commodities or services to anyone fit-
ting within a defined segment of the public. An entity that
could freely choose its customers would not be considered
to own and operate its property for public use. In this case,
Defendant does not contest Plaintiff’s factual assertions that
it “was not forced or compelled to sell to anyone, including
any member of the public in Oregon,” that it “freely chose
its customers,” and that “no member of the public in Oregon
had a right * * * to demand or receive purchases or deliv-
ery of electricity or natural gas from Plaintiff.” The court
tentatively concludes that Plaintiff did not own or operate
property for public use, subject to any new insights that the
statutory context and legislative history might provide.
3. 	Context
The context in which the legislature used the term
“public use” includes the statutory framework, Oregon
cases and administrative determinations, and cases from
other states of which the legislature is considered to have
been aware. See Powerex Corp. v. Dept. of Rev., 357 Or at
62 (examining context of “tangible personal property”). The
court has found no other occurrence of “public use” in the
Oregon income tax statutes as of 1965. The exact term did
not appear in the contemporaneous statute defining “public
utilities” for regulatory purposes, although that statutory
definition did include a requirement that the commodity
or service be delivered or furnished “directly or indirectly
to or for the public.”15 (The court briefly discusses other
15 ORS 757.005(1)(a) (1963) provided:
“[T]he term ‘public utilities’ means: Any corporation, company, individual,
association of individuals, or its lessees, trustees or receivers that owns,
operates, manages or controls all or a part of any plant or equipment in this
state for the conveyance of telegraph or telephone messages, with or without
wires, for the transportation of persons or property by street railroads or
other street transportation as common carriers, or for the production, trans-
mission, delivery or furnishing of heat, light, water or power, directly or indi-
rectly to or for the public, whether or not such plant or equipment or part
thereof is wholly within any town or city.”
(Emphasis added.) Section 2 of the statute excluded:
“(a) Any plant owned or operated by a municipality.
“(b) Any railroad, as defined in ORS 760.005 and 760.010, or any indus-
trial concern by reason of the fact that it furnishes, without profit to itself,

Cite as 24 OTR 146 (2020) 	159
elements of the Oregon public utility law below in reviewing
the legislative history of ORS 314.610(6).)
The court now turns to cases that the parties cited
in their briefings on the meaning of “public use.” The court
notes that the parties have presented no cases from Oregon
or other states—and the court has found none—that spe-
cifically address “public use” as that phrase is used in the
UDITPA definition.
a. 	Cases and other authorities as of 1965
Plaintiff has identified four Oregon authorities
addressing whether commodities were furnished for public
use. Defendant nowhere discusses these Oregon authorities.
In Central Or. Irr. Co. v. Public Serv. Com., 101 Or 442, 196
P 832 (1921), the court concluded that the use of irrigation
water was not a “public use,” where the users were limited
to certain “settlers” as prescribed by the 1894 federal appro-
priations provision commonly known as the Carey Act. See
43 USC § 641 et seq (codifying, as amended, chapter 301,
section 4, 53 Congress, 28 Stat 372-73 (1885-1895) (1894)).
The Carey Act imposed requirements of citizenship and
minimum age on persons wishing to become settlers on cer-
tain desert land that Congress granted to the state in order
to promote its reclamation. The state required prospective
settlers to apply to purchase tracts of the land. Separately,
the state contracted with the plaintiff company to build,
operate and maintain an irrigation system on the land. The
state required settlers buying the land to also contract with
the company to pay one-time “reclamation” fees and annual
“maintenance” fees in fixed dollar amounts as provided
in the company’s contracts with the state. Disputes arose
between the plaintiff company and water users regard-
ing whether the maintenance fee could be increased, and
whether the Public Service Commission had jurisdiction to
decide that issue. Central Or. Irr. Co., 101 Or at 450-53.
The company argued “that it is a public utility, that
the use of the water by the ‘settlers’ is a public use, and that
their contracts come under the terms and provisions of ‘The
heat, light, water or power to the inhabitants of any locality where there is no
municipal or public utility plant to furnish the same.”
ORS 757.005(2) (1963). The 1965 legislature made no change to ORS 757.005.

160 	Powerex Corp. v. Dept. of Rev.
Public Utilities Act.’ ” Id. at 456. The court accepted this
framing of the issue but held that there was no public use of
the water because “the right of a contract to purchase and
acquire title to land is confined and limited to a certain spec-
ified class of persons, and * * * is not inherent in the ‘settlers,’
and does not exist as a matter of public right.” Id. at 460-64.16
Plaintiff’s next case is a federal case decided under
Oregon law, De Pauw University v. Public Service Commis-
sion, 247 F 183 (D Or 1917). The De Pauw plaintiffs, bond-
holders in a company that owned an irrigation system, sued
to restrain the Public Service Commission from reducing
the water rates that the company charged. The company
and its predecessor had acquired a large tract of land in
Douglas County, and had sold off parcels pursuant to con-
tracts that also provided for furnishing of water at specified
rates, which the purchasers later complained were “exorbi-
tant.” 247 F at 185. In a ruling on a preliminary motion, the
court concluded: “[I]t is clear to my mind that [the Oregon
Public Utilities Act] can only apply to such companies as
are engaged in the general sale or rental of water to all who
may apply for it within a given area, and not to a private
corporation that has no dealings with the public, but which
merely undertakes to furnish water in fulfillment of pri-
vate contracts made with certain individuals selected by
it.” Id. (emphasis added). Consistent with that ruling, in a
later opinion following a trial, the court held that the Public
Service Commission lacked jurisdiction, stating:
“The evidence as taken on the trial shows clearly that
neither the plaintiff nor its predecessors in interest were
ever engaged in the business of selling or furnishing water
to all who might apply within a given area, nor did either
of them ever hold themselves out as ready and willing to
do so. They were engaged in selling their own land, agree-
ing to furnish water on certain terms and conditions to the
purchasers, and no others. They merely undertook to fur-
nish water in fulfillment of a private contract with certain
16 The court noted that the parties had stipulated that the plaintiff company
also engaged in supplying water for use in certain cities, but the court stated that
the question whether the company was a public utility as to those activities had
not been presented. Central Or. Irr. Co., 101 Or at 465. The court also noted that
the contract between the state and the plaintiff’s predecessor provided for even-
tual transfer of the irrigation system to a water users’ association to be owned by
all the settlers. Id.

Cite as 24 OTR 146 (2020) 	161
individuals selected by them, and not to the public gener-
ally, and therefore were not public utilities, and subject to
the jurisdiction of the Public Service Commission.”
De Pauw Univ. v. Pub. Serv. Commission, 253 F 848, 849-50
(D Or 1918).
Plaintiff also cites two opinions of the Oregon
Attorney General. In a 1926 opinion, the Attorney General
relied on Central Oregon Irrigation Co. and De Pauw in con-
cluding that water distribution rights granted as part of a
land sale contract were not for a “public use.” See 12 Op Atty
Gen 510 (1926) (“the essential features of a public use being
that it shall not be confined to the privileged individuals,
but open to the indefinite public”). In 1951, the Attorney
General examined the statutory definition of “public util-
ity” in the context of telephone companies. Quoting from a
legal reference work, the opinion states that “ ‘public utility’
implies a public use and service to the public * * *.” 25 Op
Atty Gen 145, 1951 WL 46057 (1951) (quoting 43 Am Jur
571, § 2). The Attorney General opined that
“[t]he essential element * * * is the holding out by the
company of its willingness to serve an indefinite public,
or a part thereof, which public has a right to demand or
receive the services. * * *
“* * * * *
“* * * [I]f the organization does not hold itself out as will-
ing to serve the public as a class, or a part thereof, and it
merely offers to serve only particular individuals of its own
selection, then such organization is not a public utility.”
Id. at *1-2.
These Oregon cases and opinions provide strong
contextual evidence that the 1965 Oregon legislature gener-
ally would have considered a business owning and operating
property for “public use” to refer to a business from which
at least some segment of the indefinite public had a right
to demand the commodity the business offered. A business
that sold only to particular customers “of its own selection”
generally would not have been considered to operate prop-
erty for public use. The court finds nothing in this context
that changes its tentative conclusions based on the plain
meaning of the technical term “public use.”

162 	Powerex Corp. v. Dept. of Rev.
Defendant presents a number of authorities from
other states. The court begins with the three that had been
decided as of 1965, as those opinions supply additional con-
text that may give insight on the Oregon legislature’s use of
the term. Of these, the first two do not involve wholesaling
and add nothing to the principles discussed above. Inland
Empire Rural Electrification, Inc. v. Department of Public
Service of Washington, 199 Wash 527, 92 P2d 258 (1939);
Rural Electric Co. v. State Board of Equalization, 57 Wyo
451, 120 P2d 741 (1942).
Inland Empire involved a nonprofit corporation
founded by a group of farmers to generate and distribute
electricity to its members at cost. It was financed by the fed-
eral Rural Electrification Administration. The court found
that the company functioned on a cooperative basis. There
was no evidence that it had “dedicated or devoted its facil-
ities to public use, nor has it held itself out as serving, or
ready to serve, the general public or any part of it.” 199 Wash
at 539. Accordingly, the court held that the corporation was
not a public utility. Defendant cites the opinion for its state-
ment that “[t]he test to be applied is whether or not the cor-
poration holds itself out, expressly or impliedly, to supply
its service or product for use either by the public as a class
or by that portion of it that can be served by the utility, or
whether, on the contrary, it merely offers to serve only par-
ticular individuals of its own selection.” (Quoting 199 Wash
at 537.) This court concludes that both the holding and the
quoted test align with the dictionary definition of “public
use” and do not alter the court’s tentative conclusion.
Rural Electric Co. involved a Wyoming statute that
imposed an excise tax on amounts paid to “public utilities,”
defined by reference to the public utility act as companies
“furnishing to or for the public” electricity and other listed
commodities. The plaintiff company argued that it was not
a public utility, and that the tax therefore did not apply to
amounts paid to it, because it was organized as a member-
ship corporation, not for gain, and sold electricity only to its
members. 120 P2d at 743. The court found, however, that
the company’s membership base amounted to approximately
2,000 individuals, and that the company had a monopoly
in the rural parts of the territory it served. Id. at 751. The

Cite as 24 OTR 146 (2020) 	163
company, therefore, was a public utility because it served “a
substantial portion of the public”17 within the meaning of
other cases discussing mutual and cooperative companies
serving a small customer base. Id.18 Defendant relies on
Rural Electric Co. for the principle that “ ‘The public does not
mean everybody all the time.’ ” (Quoting Terminal Taxicab
Co. v. Kutz, 241 US 252, 36 S Ct 583, 60 L Ed 984 (1916), in
Rural Electric Co., 120 P2d at 749.) However, this proposi-
tion is already contained in the definition in Black’s, which
states: “But each and every member of society need not be
equally interested in such use, or be personally and directly
affected by it. * * * It may be limited to the inhabitants of
a small or restricted locality, but must be in common, and
not for a particular individual.”19 By contrast, the uncon-
tested facts in this case are that “no member of the public
in Oregon had a right, including a legal or regulatory right,
17 Defendant states in briefing that “[t]he number of customers an entity
has was not a criteria for determining whether the entity was a public utility.”
This court disagrees. The Rural Electric Co. court took pains to tally the number
of members (180), then to estimate an average family size per member (4), and
finally to make the factual assumption (without citing any evidence in the record)
that the company served an equal population in two adjoining states. 120 P2d at
751. The court appeared to rely on the result of that calculation (“approximately
2,000 people”) in reaching its conclusion that the company “serves a substantial
portion of the public.” See id.
18 In its reply, Defendant also includes a lengthy quotation, which it misat-
tributes to the Wyoming Supreme Court, reading in part: “What appellant seeks
to do is to pick out certain industrial consumers in select territory and serve
them under special contracts to the exclusion of all others except such private or
domestic consumers as may suit its convenience and advantage.” This quotation
actually is from Industrial Gas Co. v. Public Utilities Commission of Ohio, 135
Ohio St 408, 412-13, 21 NE2d 166 (1939). That case involved a corporation that
originally was a regulated utility but changed its articles of incorporation and
sought to withdraw from regulation as a public utility. It continued to operate
a 50-mile pipeline and distribution network in four counties, entering into con-
tracts to supply gas to 19 industrial customers and refusing service to others. In
holding that the company was a public utility, the court concluded that the com-
pany operated in a “substantial part of the state” and remained within the defini-
tion of a “public utility” notwithstanding its attempt to withdraw. Industrial Gas
Co., 135 Ohio St at 412.
19 In Terminal Taxicab, the Court made the quoted remark in opining that a
taxi company acted as a public utility in the portion of its business that involved
fulfilling contracts with hotels to furnish enough taxis within certain hours to
reasonably meet the needs of the hotels. The Court noted the many variables that
might prevent the company from serving any particular customer but concluded
that the taxi company’s “service affects so considerable a fraction of the public”
that it was correctly classified as a public utility. Terminal Taxicab, 241 US at
254-55.

164 	Powerex Corp. v. Dept. of Rev.
to demand or receive purchases or delivery of electricity or
natural gas from Plaintiff.”
The first case that Defendant cites regarding whole-
sale activities is Dairyland Power Cooperative v. Brennan,
248 Minn 556, 82 NW2d 56 (Minn 1957). Dairyland was
a nonprofit cooperative association whose members were
exclusively other cooperatives, commercial public utilities
and municipalities. It was “organized primarily to serve as
a corporate vehicle in performing the specialized function
of furnishing at wholesale electric energy to member coop-
eratives who in turn distribute the energy at a lower volt-
age to ultimate consumers.” Dairyland, 248 Minn at 558. It
sold electricity only to its member cooperatives and thus had
no individual or ultimate consumers. Id. When Dairyland
sought to condemn property to expand its facilities, the
property owners challenged Dairyland’s status as a public
utility, arguing that the “general public must have a definite
and established right to use of the property appropriated,
not as a matter of favor or by consent of the owner, but as a
matter of right * * *.” Id. at 560. Because Dairyland was obli-
gated by its articles of incorporation to sell electricity only to
its members, the property owners claimed that the requisite
public use was absent, and that Dairyland could not be a
public utility. Id. at 561.
The court, however, found that “the established pol-
icy and consistent practice of Dairyland has been to extend
electric service to all distribution rural electric cooperatives
within its service area and to accept without discrimina-
tion applications for membership from all such cooperatives
which desire and need the service.” Id. at 562-63. The mem-
ber cooperatives themselves were under contractual obli-
gations with the United States to extend electricity service
to “all unserved persons” within their service areas. Id. at
563. Based on these facts, and based on Dairyland’s role
as a major regional power producer on which its members
depended for supply, the court held that Dairyland had emi-
nent domain authority and was “subject to the implied obli-
gation to make membership available without arbitrary or
unreasonable limitation to all coming within the purview of
the purpose for which it is created.” Id. at 568-69.

Cite as 24 OTR 146 (2020) 	165
Defendant cites Dairyland for the proposition that
the mere fact that a business sells a commodity at wholesale
does not mean that its property is not put to a public use. As
the court stated: “the fact that [Dairyland] does not directly
come in contact with the ultimate consumer does not deprive
it of its character as a public utility.” Dairyland, 248 Minn
at 568. Given the facts in Dairyland, this court finds the
holding and reasoning in that case unsurprising; however,
those facts are so different from those in this case that this
court takes little from the opinion except the bare proposi-
tion that Defendant offers. It may be reasonable to extend
the concept of “public use” to a cooperative that does not sell
its commodity to the public but is formed by and composed
of other cooperatives and obligated to sell to those members,
which do sell to the public. This is particularly understand-
able when the top-tier cooperative has a policy and practice
of making membership—and thereby its service—available
to all cooperatives and municipalities that apply. However,
the case has no practical application to the instant case, in
which Defendant never contests that Plaintiff “freely chose
its customers,” or that “no member of the public in Oregon
had a right, including a legal or regulatory right, to demand
or receive purchases or delivery of electricity or natural gas
from Plaintiff.”
Defendant’s next wholesaling case is Western Colorado
Power Co. v. Public Utility Commission, 159 Colo 262, 411
P2d 785 (1966), decided one year after the Oregon legisla-
ture adopted ORS 314.610(6). In that case, the Colorado-Ute
Electric Association, Inc. (Colorado-Ute), like Dairyland,
was a rural electric cooperative engaged in generating and
transmitting electricity as a wholesaler to its members. 20
Western Colorado, 411 P2d at 787. The court’s opinion implies
that all of Colorado-Ute’s members were other cooperatives,
except the Salt River Project Agricultural Improvement and
Power District, which was a “quasi-governmental organi-
zation.” Id. Colorado-Ute already operated within Colorado
and sought to build a new power plant known as the Hayden
plant, allowing Colorado-Ute to serve an expanded territory
20 As part of its proposal before the court, Colorado-Ute also would have dis-
tributed electricity to the federal Bureau of Reclamation, a nonmember. Id. at
787-88.

166 	Powerex Corp. v. Dept. of Rev.
within and without Colorado, including customers then sup-
plied by other sources. Id. at 788-89. Two public utilities in
Colorado opposed Colorado-Ute’s proposal. One issue was
whether a state law allowing the public utilities commis-
sion to regulate Colorado-Ute as a public utility violated the
state or federal constitution. Id. at 794. The 1961 legislature
had amended the public utility law by expressly declaring
wholesaling of electricity by a cooperative to its members to
be an activity subject to regulation as a public utility, add-
ing the following provision:
“Every cooperative electric association, or nonprofit electric
corporation or association, and every other supplier of elec-
trical energy, whether supplying electric energy for the use
of the public or for the use of its own members, is hereby
declared to be affected with a public interest and to be a
public utility and to be subject to the jurisdiction, control,
and regulation of the commission and to the provisions of
articles 1 to 7 of this chapter.”
Colo Laws 1961, ch 198, § 1 (amending CRS 11513) (empha-
sis added). Colorado-Ute had admitted in its application to
construct the Hayden plant that it was a public utility, and
both of the utilities opposing the construction in the case
before the court also agreed that Colorado-Ute was a public
utility. Western Colorado, 411 P2d at 795. The court cited
five decisions of other courts, stating: “There is an abun-
dance of authority to support the classification of a whole-
saler of energy to distributors as a public utility.” Id.21 The
21 Although Defendant discusses none of the five cases, the court notes that
each one was readily distinguishable from the instant case: either state law
defined the company’s wholesaling activities as those of a public utility (or granted
the company eminent domain authority), or the company’s activities apart from
wholesaling caused it to be classified as a public utility. See North Carolina Public
Service Co. v. Southern Power Co., 282 F 837 (4th Cir 1922) (electricity generation
and wholesaling company held eminent domain authority under state law, sought
to sell to its distribution affiliate at lower rates than to a competing independent
distribution company; held company required to sell to independent distribution
company at nondiscriminatory rates); Boone County Rural Electric Membership
Corp. v. Public Service Commission of Indiana, 239 Ind 525, 159 NE2d 121 (1959)
(plaintiff contested proposed electricity rate increase by its supplier, Public
Service Commission of Indiana, Inc.; no dispute that the supplier was a public
utility subject to rate regulation; see 1951 In Laws, ch 161, § 1); Orndoff v. Public
Utilities Commission, 135 Ohio St 438, 21 NE2d 334 (1939) (natural gas producer
selling to gas distribution company held a public utility under statute defining
“public utility” to include anyone “engaged in the business of supplying natural
gas to gas companies” (emphasis added)); Industrial Gas Co. (discussed above);

Cite as 24 OTR 146 (2020) 	167
court held that the act did not violate the state constitution,
stating:
“[Colorado-Ute] furnishes electrical energy which is used by
countless consumers in a very large segment of this state.
The widespread interest of the public is clearly shown, and
this court should not declare the legislative act to be void,
especially when the parties themselves admit that it is
valid and enforceable.”
Id. Accordingly, the court upheld Colorado-Ute’s status as a
public utility.
Ignoring the fact that Western Colorado had not
been decided when the Oregon legislature adopted ORS
314.610(6), the court does not find the case or its reason-
ing enlightening on the question in this case. Colorado-Ute,
like Dairyland, was a cooperative composed of and selling
to other cooperatives and public entities. Colorado-Ute also
was squarely classified as a public utility under state law
and had freely described itself as a public utility. In the
instant case, by contrast, there is no evidence that Plaintiff
has ever held itself out as a public utility or that the state
has defined it as such for regulatory purposes.
b. 	Defendant’s post-1965 cases
Because the court’s immediate task is to examine
ORS 314.610(6) in the context of cases decided at enactment,
the court perhaps could stop here. However, Defendant also
argues that the 1965 legislature “likely intended the term
‘public utility’ not to be a static definition, but rather to be
broad and flexible enough to adjust to changing circum-
stances as new electricity and natural gas sales possibili-
ties were developed (e.g., wholesale sales).” Without decid-
ing whether the legislature had this intention, the court
first reiterates that the string of five cases cited in Western
Colorado clearly shows that the general concept of wholesale
sales of electricity, gas and other commodities was not “new”
Wisconsin Traction Light, Heat & Power Co. v. Green Bay & Mississippi Canal
Co., 188 Wis 54, 205 NW 551, 555 (1925) (canal operator already leasing a hydro-
electric plant to a city at rental rate based on electric output, now proposing to
generate and sell electricity at wholesale, was within definition of “public utility,”
defined to include a corporation furnishing “power either directly or indirectly, to
or for the public.” (Emphasis added.)).

168 	Powerex Corp. v. Dept. of Rev.
in 1965. (Most of those cases date to the 1920s and 1930s. 22
)
Nevertheless, the court now pauses to discuss the two later
wholesaling cases that Defendant cites.
In Independent Energy Producers Assn., Inc. v. State
Board of Equalization, 125 Cal App 4th 425, 22 Cal Rptr 3d
562 (2004), the court held that independent electricity gener-
ation companies that sold electricity pursuant to long-term
contracts were “public utilities” for purposes of California’s
centrally assessed property taxation regime. The court con-
sidered it irrelevant that the companies were not regulated
as utilities. 125 Cal App 4th at 448. The court primarily
examined whether the companies, as private businesses,
had undertaken a “dedication to public use” as determined
under longstanding case law. 23 Id. at 442-43. The court
stated the test as: “The essential feature of a public use is
that it is not confined to privileged individuals, but is open to
the indefinite public. It is this indefiniteness or unrestricted
quality that gives it its public character.” Id. at 443 (inter-
nal references omitted). The court noted that many of the
facilities had been constructed with the assistance of public
funds and commitments from public agencies, and that all
22 Defendant presents at some length a narrative on the creation of the
Intertie starting in the mid-1960s and the subsequent development of long-
distance power transmission, which Defendant asserts enabled the wholesale
sale of electricity on a large scale. In that portion of its brief, Defendant repeat-
edly urges the court to read the definition of “public utility” expansively, to cap-
ture activities that the legislature could not have foreseen in 1965. Nowhere,
however, does Defendant explain what the facts it proffers have to do with the
requirement of a public right when evaluating whether wholesaling of electricity
or gas constitutes a “public use.” The court cannot simply ignore the term “public
use,” reset its focus on the broader term “public utility,” and resort to a general
maxim of determining “how the legislature would have intended the statute be
applied, had it considered the issue.” See Carlson v. Meyers, 327 Or 213, 225, 959
P2d 31 (1998).
23 Plaintiff seems to assert that California’s constitutional provision requiring
central assessment defines a public utility as a person furnishing power “directly
or indirectly” to or for the public. That is not literally correct; the central assess-
ment clause does not use the phrase “directly or indirectly” to define the compa-
nies subject to central assessment. See Cal Const, Art XIII, § 19. A definition of
“public utility” does appear in the article governing public utilities for regulatory
purposes, and that definition does state that a person operating a plant for the
furnishing of power “directly or indirectly to or for the public” is a public utility.
See Cal Const, Art XII, § 3. The taxing authority in Independent Energy Producers
apparently felt it appropriate to bridge the gap, applying a “directly or indirectly”
test, as shown by a passage of findings that the court quoted (reproduced in part
above). See Independent Energy Producers, 125 Cal App 4th at 443-44.

Cite as 24 OTR 146 (2020) 	169
had been constructed after site certification and regulation
by the California Energy Commission. Id. The court also
relied on findings by the taxing authority:
“In the Board’s view, there is no question that the gener-
ation facilities that would be [centrally] assessed under
the amended Rule will produce, generate, and/or transmit
power directly or indirectly to the public. For example, we are
advised by the staff of the California Energy Commission
that approximately 90% of the available generation capac-
ity of the plants subject to the long-term contracts with [the
California Department of Water Resources] are covered
by the contracts. That power was purchased by a public
agency on behalf of the public for transmission to the pub-
lic. Other generation facilities in question are operated for
the purpose of selling electricity in the competitive public
marketplace. The other facilities must use the statewide
grid to sell their power to the public.”
Id. at 443-44 (emphasis added). The court found that the
companies “submit[ted] no evidence” to show that they had
not dedicated their property to the public, nor did they
explain why the evidence that the taxing authority relied on
was insufficient. Id. at 444.
Although wholesaling of electricity was one activ-
ity in which at least some of the companies in Independent
Energy Producers engaged, 24 this court cannot rely on the
opinion to conclude that a wholesaler of electricity (or gas)
necessarily dedicates its property to a public use. First, all of
the companies also owned or operated the electricity genera-
tion facilities that created the electricity that the companies
sold at wholesale. As the court noted, some of those facilities
had been constructed with public funds, and all had been
constructed under close state regulation. Second, many of
the companies’ sales were pursuant to long-term contracts, 25
and nearly all of those sales were to a single public agency,
the Department of Water Resources. In this case, by con-
trast, there is no evidence that Plaintiff has invested in any
24 It is unclear to the court whether companies selling “in the competitive
public marketplace” as described in the quoted passage above sold at wholesale
or at retail.
25 It appears that 21 of 43 independent power producers had contracts with
the Department of Water Resources. Id. at 435.

170 	Powerex Corp. v. Dept. of Rev.
material plant or equipment financed by the public, or that
it depends on long-term contracts for sales to public entities
for its cash flow.26
Finally, Defendant refers the court to Delmarva
Power & Light Co. v. Division of Taxation, 23 NJ Tax 188
(2006). The taxpayer in that case (Delmarva) sold electricity
at retail as a regulated utility in three states other than
New Jersey. However, all of Delmarva’s New Jersey cus-
tomers were regulated public utilities, and Delmarva’s New
Jersey sales were solely at wholesale. See 23 NJ Tax at 192.
Delmarva had less than 10 percent of its property and none
of its payroll in New Jersey, and it derived two percent or
less of its revenue from sales to customers in New Jersey.
Id. at 192-95. The New Jersey public utility regulatory body
treated Delmarva as not subject to regulation.
The case involved which of two New Jersey taxes
applied to Delmarva, as between the Corporation Business
Tax (a net income tax) and the Franchise and Gross Receipts
Tax (the F&GRT). The F&GRT applied only if Delmarva was
within the definition of “public utility” pursuant to the public
utility statutes: “[E]very * * * corporation * * * that now or here-
after may own, operate, manage or control within this State
any * * * electricity distribution * * * system, plant or equip-
ment for public use, under privileges granted * * * by this State
* * *.” Id. at 198-99 (quoting NJ Statutes Annotated 48:2-13)
(emphasis added). Delmarva argued that it was a public
utility and thus subject to the F&GRT and exempt from the
Corporation Business Tax. 27 See Delmarva, 23 NJ Tax at
191.
The court found that it was not bound by the state
regulatory body’s conclusion that Delmarva was not subject
to regulation as a public utility. Id. at 199. Accordingly, the
court proceeded to analyze whether the company “owned”
an “electricity distribution * * * plant” within New Jersey
“for public use.” The court held that Delmarva fit within the
26 Plaintiff asserts, and Defendant does not contest, that it “did not own or
operate any equipment or facilities used for the production or storage of electric-
ity or gas in Oregon.” The limited data in the record regarding Plaintiff’s sales
say nothing about contractual terms.
27 Although it claimed to be “subject to” the F&GRT, Delmarva argued that
it had no liability for that tax because wholesale sales were exempt.

Cite as 24 OTR 146 (2020) 	171
definition, relying heavily on the fact that Delmarva’s prop-
erty in the state included a one percent interest, as a tenant
in common, in an electricity generation plant and transmis-
sion line in New Jersey, “both of which were employed in
public use * * *.” Id. at 200. The court stated:
“Although Delmarva only made wholesale sales of elec-
tricity to its customers in New Jersey, those sales were
employed for public use as the public was the end user of
the electricity. By virtue of its Certificate of Authority,
Delmarva was specifically authorized to carry on within
New Jersey, activities related to its business which was
primarily that of a public utility. It operated a part of its
public utility business in New Jersey, owning utility assets
which create the majority of Delmarva’s revenue. Its own-
ership in the [transmission facility] was also approved by
the [New Jersey Board of Public Utility Commissioners
(NJBPUC)]. * * * Delmarva had an actual presence in and
over New Jersey’s public streets. The conductor wires of the
[transmission facility], in which Delmarva had an owner-
ship interest, intersected and extended into and over those
streets and highways. The NJBPUC approved the transfer
to Delmarva of an ownership interest in these portions of
the [transmission facility]. In doing so, the NJBPUC neces-
sarily granted to Delmarva all of the privileges incident to
that ownership. Thus, I conclude that Delmarva was utiliz-
ing its corporate franchise and other privileges to conduct
its electric utility business in New Jersey, and therefore
was a New Jersey public utility for purposes of its sum-
mary judgment motion.”
Id. at 202-03. The court went on to resolve the ultimate issue
regarding the application of the two taxes. 28
As with Independent Energy Producers, this court
does not read Delmarva as holding that wholesale sales of
electricity, without more, necessarily cause a company to put
its property to “public use.” As the quoted passage shows,
the New Jersey Tax Court relied on multiple facts for its con-
clusion. That “the public was the end user of the electricity”
was one fact. The court gave far greater discussion, however,
28 The court held that Delmarva’s lack of retail sales made it not “subject to”
the F&GRT; therefore, Delmarva was not exempt from the Corporation Business
Tax, and the court denied Delmarva’s claim for a refund of that tax. Id. at 207;
211.

172 	Powerex Corp. v. Dept. of Rev.
to Delmarva’s partial ownership in New Jersey generation
and distribution facilities, even though its ownership inter-
est was small and its role was passive.
Plaintiff points out that, shortly after Independent
Energy Producers and Delmarva, the Oregon Public Utility
Commission 	determined 	that 	a 	company 	proposing 	to
own electricity transmission facilities to be leased to the
Bonneville Power administration (BPA) would not be a
“public utility” within the commission’s jurisdiction. The
BPA argued that no “public use” was present because the
company leased its facilities to the BPA rather than fur-
nishing transmission service to the public. The commission
agreed, concluding that “[t]here would be no ‘holding out’
of the facilities to the public * * *.” The commission relied
in part on Central Oregon Irrigation. Decl Ruling, Oregon
Public Utility Commission (May 9, 2007), available at 2007
WL 1415655. Although the ruling is brief and (just like
Independent Energy Producers and Delmarva) does not bind
this court, it tends to support Plaintiff’s point that a com-
pany does not put its property to public use when the public
has no right to buy the resulting commodity from the com-
pany itself.
Thus, even assuming that the 1965 legislature
intended its definition of “public utility” to incorporate a
“broad and flexible” definition of “public use” that would
adapt to changing business models (a proposition on which
the court expresses no opinion), none of the cases persuade
the court to change its conclusion based on the text and con-
temporaneous context. The court now turns to legislative
history for any final insights.
4. 	Legislative history
The court considers two bodies of legislative his-
tory: materials from the 1965 Oregon legislative session,
and comments and background materials from the draft-
ers of UDITPA. See Powerex, 357 Or at 64-65 (considering
both sets of materials). Because of the unusual nature of the
UDITPA definition of “public utility,” the court starts with
the materials from the UDITPA drafters, including their
published comments.

Cite as 24 OTR 146 (2020) 	173
The drafters generally attempted to provide a com-
plete, readymade bill for state adoption, including even
placeholder language to list the provisions of state law
being repealed and replaced, and an effective date. See
Copy of Uniform Division of Income for Tax Purposes Act,
Reproduced by Council of State Governments (Jan 1965) in
bill tracing materials for HB 1003 (1965) (“January 1965
UDITPA”). However, the drafters placed brackets around
two significant substantive provisions, the definition of
“public utility” and portions of the definition of “financial
organization,” which are the only two types of businesses
excluded from UDITPA. January 1965 UDITPA at 1-2. The
drafters’ official comment, which is included in the legisla-
tive record, states: “It is expected that ‘public utility’ will
be defined to include all taxpayers subject to the control of
the state’s regulatory bodies on the theory that separate
legislation will provide for the apportionment and alloca-
tion of the income of such taxpayers.” Id. at 2. Transcripts
of the proceedings of the drafters describe the exclusions as
optional to each state. Proceedings in the Committee of the
Whole, Uniform Division of Income for Tax Purposes Act
at 7 (Aug 22, 1956) in bill tracing materials for HB 1003
(1965) (“it was felt that most states would wish to exclude
the public utilities because they are presently governed by
special laws”) (statement of George V. Powell, presenter). 29
Committee chair Powell later added: “It is intended here
that the state will insert the definition of public utility
which appears in its regulatory statutes. For instance, the
language here relating to the sale of oil and oil products
does not intend to exempt a company operating service
stations. The intent is to cover the large companies which
approach public utilities and are subject to regulation. The
purpose is to indicate that this is the place where the busi-
nesses subject to regulation of one type or another are to
be excluded.” Proceedings in the Committee of the Whole,
Uniform Division of Income for Tax Purposes Act at 27-28
(July 9, 1957, morning).
29 Powell chaired the committee of the National Conference of Commissioners
on Uniform State Laws that drafted UDITPA. See Arthur D. Lynn, Jr., Formula
Apportionment of Corporate Income for State Tax Purposes: Natura Non Facit
Saltum, 18 Ohio St LJ 84, 95 n 36 (1957).

174 	Powerex Corp. v. Dept. of Rev.
This legislative history shows that the drafters
clearly expected and intended that states would insert their
own definitions corresponding to those that had evolved in
each state for regulatory purposes. In keeping with their
turnkey approach to drafting the uniform bill, however, the
drafters included a definition of “public utility” that they
apparently viewed as generic and thus likely to encompass
those companies subject to regulation in all or most states.
The court has found no discussion in the UDITPA drafters’
materials of the reference to “public use.” Nothing in those
materials changes the court’s conclusions based on the text
and context. Turning to the Oregon-specific legislative his-
tory, the Oregon legislature modified UDITPA’s definition of
“public utility” by essentially inserting the word “principal.”
The following comparison illustrates Oregon’s change to the
language of the UDITPA drafters:
“ ‘Public utility’ [means any business entity which owns or
operates whose principal business is ownership and opera-
tion for public use of any plant, equipment, property, fran-
chise, or license for the transmission of communications,
transportation of goods or persons, or the production, stor-
age, transmission, sale, delivery, or furnishing of electric-
ity, water, steam, oil, oil products or gas.]”
Compare January 1965 UDITPA with Or Laws 1965, ch 152,
§ 2 (strikethrough indicates text deleted by Oregon legisla-
ture; underscoring indicates text inserted by Oregon legis-
lature). Carlisle Roberts, then counsel to Defendant’s pre-
decessor the State Tax Commission, and later judge of this
court, testified at an early hearing of the House Committee
on Taxation. In summarizing several of the definitions now
codified in ORS 314.610, Roberts gave the following over-
view of the UDITPA definition of “public utility” and the pro-
posed change:
“Public utilities, as in Oregon law, are placed in a special
category. ‘Any business entity whose principal business is
ownership and operation for public use of any plant, equip-
ment, property, franchise, or license for the transmission
of communications, transportation of goods or persons, or
the production, storage, transmission’ and so on. Now we
changed one word in this. Under the Uniform Act, pub-
lic utility means ‘any business entity whose business is

Cite as 24 OTR 146 (2020) 	175
ownership * * *.’ The reason we changed it to principal busi-
ness is that in our curious state of Oregon you will find
a large paper mill, for example, acting as a public utility
for the town. But it’s not its principal business. Under the
Uniform Act, this would become a public utility and would
be subject, somebody might argue, to the—a tax upon its—
what we’d regard as its main business. So we made that
one change.”
Testimony, Carlisle Roberts, House Committee on Taxation,
Jan 22, 1965, Tape 1, Side 1 (emphases added). The com-
mittee raised no questions about this explanation, and the
court has found no further discussion of any part of the defi-
nition of “public utility.”
The court considers Roberts’ testimony in light of
the contemporaneous definition of “public utilities” for reg-
ulatory purposes. The court finds it striking that the only
change the 1965 legislature made to the UDITPA defini-
tion seems to conform to the “company town” exclusion from
“public utilities” in ORS 757.005(2)(b) (1963). That exclusion,
reprinted in a footnote above, applied to any “industrial
concern” that furnished heat, light, water or power to local
inhabitants without profit to itself. The remaining compo-
nents of the UDITPA definition, which the Oregon legisla-
ture adopted without change, otherwise appear to overlap
substantially with businesses then under the jurisdiction of
the Oregon Public Utility Commission: UDITPA’s reference
to “transmission of communications” encompasses the nar-
rower “conveyance of telegraph or telephone messages” in
ORS 757.005(1)(a) (1963). UDITPA’s “transportation of goods
or persons” seems to sweep in both “transportation of per-
sons or property by * * * street transportation as common
carriers” in ORS 757.005(1)(a) (1963) as well as transpor-
tation by “railroads” and “motor carriers” as defined and
regulated pursuant to ORS chapters 760 and 767 (1963),
respectively. UDITPA’s “production, storage, transmission,
sale, delivery, or furnishing of electricity, water, steam, oil,
oil products or gas” aligns broadly with “the production,
transmission, delivery or furnishing of heat, light, water or
power” in ORS 757.005(1)(a) (1963). 30
30 “Heat,” in ORS 757.005(1)(a) (1963), seems to have included natural gas. See
ORS 757.605(5) (defining “utility service” to include gas or electricity distribution

176 	Powerex Corp. v. Dept. of Rev.
Overall, the Oregon legislative history sheds little
light on this case. In context, Roberts’ statements seem to
indicate an intention to generally conform the new UDITPA
definition of “public utility” to the existing body of busi-
nesses subject to Oregon regulation. However, the Oregon
legislature clearly stopped short of requiring that a “public
utility” for UDITPA purposes actually be subject to regu-
lation by the Oregon Public Utility Commission. No words
or cross-references to existing statutes indicate such an
intention. Cf. ORS 305.655 (1967) (defining “public utility”
for purposes of Multistate Tax Compact based in part on
regulatory status). 31 The overlap between the terms in the
UDITPA definition and those in the regulatory definition
is substantial, but far from precise. The legislature seems
to have viewed the UDITPA definition it received from the
drafters as a black-letter expression of the concept of a pub-
lic utility, and it narrowed that expression so that the sole
type of taxable entity that was excluded from the regulatory
definition would also be excluded from the UDITPA defini-
tion. The court finds no basis to conclude that the legislature
meant the phrase “public use” within that definition to have
a meaning different from the dictionary definition discussed
above.
5. 	Conclusion on public utility status
The court concludes that the 1965 legislature used
the phrase “public use” in ORS 314.610(6) as a technical
term. Among other things, that term required that some seg-
ment of the public must acquire a right to buy or otherwise
use a company’s commodity or service before the company
systems for purposes of allocating service territories among providers). The court
notes that its comparisons of UDITPA and the former public utility statutes in
this paragraph are illustrative only; the court does not view any comparisons as
binding in future cases.
31
“‘Public utility’ means any business entity (1) which owns or operates
any plant, equipment, property, franchise, or license for the transmission
of communications, transportation of goods or persons, except by pipe line,
or the production, transmission, sale, delivery, or furnishing of electricity,
water or steam; and (2) whose rates of charges for goods or services have been
established or approved by a federal, state or local government or governmental
agency.”
Id. at Art IV, § 1(f) (emphasis added).

Cite as 24 OTR 146 (2020) 	177
could be considered to have put its property in public use.
The uncontested evidence in this case shows that no seg-
ment of the public has acquired any such right. Therefore,
Plaintiff was not a “public utility” within the meaning of
ORS 314.610(6).
B. 	Other Issues
Because the court concludes that Plaintiff was not
a public utility, Defendant erred in classifying Plaintiff as
such and subjecting it to Defendant’s 2015 administrative
rule, now codified as OAR 150-314-0090. Plaintiff was sub-
ject to Oregon’s UDITPA, and its sales must be sourced
according to the Oregon UDITPA rules. The court, there-
fore, need not reach whether Defendant improperly promul-
gated the rule or improperly applied it retroactively.
IV. 	CONCLUSION
Now, therefore,
IT IS ORDERED that Plaintiff’s cross-motion for
partial summary judgment is granted; and
IT 	IS 	FURTHER 	ORDERED 	that 	Defendant’s
motion for partial summary judgment is denied.