Case Title: Oregon Telecommunications Assn. v. ODOT

Citation: 

Docket Number: S50709

State: oregon

Court: Oregon Supreme Court

Date: 2006-10-05T00:00:00Z

Document:
FILED: October 5, 2006
IN THE SUPREME COURT OF THE STATE OF OREGON
OREGON TELECOMMUNICATIONS ASSOCIATION,
COLTON TELEPHONE COMPANY,
CANBY TELEPHONE ASSOCIATION
and CASCADE UTILITIES, INC.,
Respondents,
v.
OREGON DEPARTMENT OF TRANSPORTATION,
Appellant.
(CC CCV0208620; S50709)
On appeal from the judgment of the Clackamas County Circuit
Court.
Harl H. Haas, Senior Judge.
Argued and submitted May 3, 2004.
Keith L. Kutler, Assistant Attorney General, Salem, argued
the cause and filed the briefs for appellant.  With him on the
briefs were Hardy Myers, Attorney General, and Mary H. Williams,
Solicitor General, Salem.
Richard A. Finnigan, Olympia, Washington, argued the cause
and filed the brief for respondents.  With him on the brief was
Jennifer Niegel, Duncan, Tiger & Niegel, P.C., Stayton.
Timothy J. Sercombe, Preston Gates & Ellis LLP, Portland,
filed the brief for amicus curiae Northwest Natural Gas Company.
Before Carson,* Chief Justice, and Gillette, Durham,
Riggs,** De Muniz,*** Balmer, and Kistler, Justices.
DURHAM, J.
The judgment of the circuit court is affirmed.
*Chief Justice when this case was submitted.
**Riggs, J., retired September 30, 2006, and did not
participate in the decision of this case.
***Chief Justice when this decision was rendered.
DURHAM, J. 
The issue in this case is whether Article IX, section 3a, of the Oregon
Constitution, which we quote below, authorizes the Oregon Department of Transportation
(ODOT) to use state highway funds to pay administrative expenses that ODOT incurs in
requiring the relocation of utility facilities within a public highway right-of-way. (1)  
Plaintiffs Colton Telephone Company, Canby Telephone Association, and
Cascade Utilities, Inc. (plaintiff utilities) are Oregon corporations that provide
telecommunications services in part through utility facilities installed, with the permission of
ODOT, in the rights-of-way of roads and highways over which ODOT has supervision.  They are
members of a trade association, plaintiff Oregon Telecommunications Association (OTA), that
represents local exchange telecommunication companies serving customers in Oregon.
ODOT began several projects to improve certain roads that it supervises.  In
connection with those projects, ODOT required plaintiff utilities to relocate their utility facilities
located in the rights-of-way of the affected roads.
When ODOT requires the relocation of utility facilities, it incurs expenses in
conducting planning activities concerning the relocation process.  To recover those expenses,
ODOT established by rule a schedule of fees that it charged to plaintiff utilities.  Pursuant to that
rule, OAR 734-055-0017, ODOT charged plaintiff utilities the following fees:
Plaintiffs filed this action to challenge the authority of ODOT to charge those fees
to the plaintiff utilities. (2)  They argued that the Oregon Constitution authorized ODOT to use
highway funds to recover its expenses incurred in requiring the relocation of utility facilities.  In
response, ODOT argued that it had no authority to use state highway funds for that purpose and
that state law authorized ODOT to recover its expenses from plaintiff utilities pursuant to
administrative rules.  The trial court rejected ODOT's argument and granted summary judgment
for plaintiffs.  ODOT appeals from that judgment.  For the reasons explained below, we affirm.
This court has exclusive jurisdiction over ODOT's appeal.  See Or Laws 2001, ch
664, § 4 (so stating). (3)  Because the trial court resolved this case by summary judgment, we
may affirm only if no genuine issues of material fact exist and the prevailing party is entitled to a
judgment in that party's favor as a matter of law.  See Jones v. General Motors Corp., 325 Or
404, 420, 939 P2d 608 (1997) (stating those standards).  Because no party asserts any dispute
over the material facts, we review the record to determine whether the circuit court committed an
error of law. 
The focus of this case is the Oregon Constitution, Article IX, section 3a, which
dedicates highway funds exclusively to certain uses related to public highways, roads, streets, and
roadside rest areas.  That section of the constitution provides, in part:
"(1) Except as provided in subsection (2) of this section, revenue from the
following shall be used exclusively for the construction, reconstruction,
improvement, repair, maintenance, operation and use of public highways, roads,
streets and roadside rest areas in this state:
"(a) Any tax levied on, with respect to, or measured by the storage,
withdrawal, use, sale, distribution, importation or receipt of motor vehicle fuel or
any other product used for the propulsion of motor vehicles; and
"(b) Any tax or excise levied on the ownership, operation or use of motor
vehicles.
"(2) Revenues described in subsection (1) of this section:
"(a) May also be used for the cost of administration and any refunds or
credits authorized by law."
Before addressing the meaning of that constitutional provision, we first discuss
several statutes that pertain to the constitutional issue that this case presents. ORS 758.010(1)
grants to plaintiff utilities a "right and privilege" to place utility facilities along the public roads
in Oregon or across rivers or lands owned by the state.  That statute provides, in part:
"Except within cities, any person or corporation has a right and privilege
to construct, maintain and operate its water, gas, electric or communication
service lines, fixtures, and other facilities along the public roads in this state, as
defined in ORS 368.001[ (4)] or across rivers or over any lands belonging to the
state, free of any charge other than charges allowed under section 2, chapter 664,
Oregon Laws 2001 [discussed below] * * *."
ODOT supervises Oregon's state highways.  ORS 366.205.  The legislature has
authorized ODOT under ORS 758.010(2)
"to designate the location upon [state highways], outside of cities, where lines,
fixtures and facilities described in this section may be located, and may order the
location of any such line, fixture or facility to be changed when such governing
body or department deems it expedient."
ORS 758.010(3) also authorizes ODOT to
"impose reasonable requirements for the location, construction, operation and
maintenance of the lines, fixtures and facilities on such land [under the
supervision of ODOT]."
Utilities must obtain written permission from ODOT to place their facilities in the
right-of-way of a state highway. (5)  ORS 374.305(1).  ORS 374.310(1) authorizes ODOT to
issue permits to utilities for their use of the right-of-way of a state highway.  
For many years, ODOT had used highway funds to pay for the agency's
administrative expenses in installing or relocating utility facilities in the right-of-way of state
highways.  However, on January 31, 2001, the Attorney General issued to ODOT  an informal
letter opinion that caused ODOT to reconsider its authority to use highway funds to pay for its
expenses in overseeing the installation of utilities in state highway rights-of-way.  The Attorney
General opined that, in two cases, this court had adopted a restrictive construction of Article IX,
section 3a.  The cases were Automobile Club v. State of Oregon, 314 Or
479, 840 P2d 674 (1992), and Rogers v. Lane County, 307 Or 534,
771 P2d 254 (1989).  The Attorney General concluded that the
collective rationale of those cases prohibited the expenditure of
highway funds to pay for ODOT's expenses in the permit process
for plan review, supervision, and the implementation of utility
facility installation or relocation.  
Following issuance of the informal letter opinion by
the Attorney General, the legislature enacted Oregon Laws 2001,
chapter 664, section 2(1), which authorized ODOT to 
"charge a permit fee to any person or corporation that,
in accordance with ORS 758.010, constructs, maintains
or operates water, gas, electric or communication
service lines, fixtures or other facilities in the
right of way of a state highway * * *." (6) 
However, the legislature also placed a condition on ODOT's
authority to impose a permit fee:  ODOT had no statutory
authority to charge a permit fee "if the costs to the department
of issuing the permit and administering its terms may legally be
paid from revenues described in section 3a(1), Article IX of the
Oregon Constitution."  Id. § 2(2).  The present case is an
outgrowth of the policy choice that that statute embodied.
We must determine the meaning of Article IX, section
3a, because ODOT had statutory authority to charge permit fees to
plaintiff utilities only if ODOT had no authority under Article
IX, section 3a, to use highway funds to cover its expenses. 
Stating the issues in the terms of Article IX, section 3a(1), we
must decide whether the expenses that ODOT incurs in this context
are "exclusively for the construction, reconstruction,
improvement, repair, maintenance, operation and use of public
highways, roads, streets and roadside rest areas," within the
meaning of section 3a(1), or constitute a "cost of
administration" within the meaning of section 3a(2)(a).  If
Article IX, section 3a, does authorize ODOT to use highway funds
to cover its expenses, then ODOT would have to look to highway
funds for payment of its expenses and would have no statutory
authority to charge permit fees to plaintiff utilities to cover
its expenses.   
The people of Oregon adopted Article IX, section 3a, in
1980 following referral by the legislature.  See Rogers, 307 Or
at 541-42 (explaining history of enactment).  This court
interprets a constitutional provision adopted through the
referral process by following the methodology established in
Roseburg School Dist. v. City of Roseburg, 316 Or 374, 851 P2d
595 (1993), and Ecumenical Ministries v. Oregon State Lottery
Comm., 318 Or 551, 871 P2d 106 (1994).  See Stranahan v. Fred
Meyer, Inc., 331 Or 38, 57, 11 P3d 228 (2000) (so holding).  As
part of our initial analysis under that methodology, we consider
the text of the provision that the voters adopted and the
relevant case law interpreting that provision.  Stranahan, 331 Or
at 61.  If the intent of the voters is not clear after that
inquiry, we then will examine the history of the provision. 
Coultas v. City of Sutherlin, 318 Or 584, 590, 871 P2d 465
(1994), Ecumenical Ministries, 318 Or at 559.  The history of the
provision includes "sources of information that were available to
the voters at the time the measure was adopted and that disclose
the public's understanding of the measure."  Id. at 560 n 8.   
We first turn to the text of Article IX, section 3a(1). 
ODOT argues that its expenses in administering the relocation of
utilities do not fall within the scope of that provision because
utility facilities are not an intrinsic element of a public
highway and, once placed in the right-of-way of a public highway,
do not become the public highway.  Plaintiffs assert that ODOT
improperly characterizes the issue and contend that the question
is whether ODOT's costs in administering "the utility's
relocation of its facilities during ODOT road reconstruction
projects can be paid for with highway funds."  Plaintiffs argue
that those costs arise from the kinds of construction activities
to which Article IX, section 3a(1) refers and, therefore, paying
for those costs is a permissible use of state highway funds.  
This court previously has interpreted section 3a(1). 
We will consider that prior case law as part of our analysis of
the constitutional text.  Stranahan, 331 Or at 61.  In Rogers,
this court considered whether Article IX, section 3a(1),
prohibited the use of state highway funds to pay for a parking
lot and a covered pedestrian walkway between the parking lot and
the terminal at the Eugene municipal airport.  307 Or at 534. 
Lane County argued that, although the parking lot and walkway
were not in themselves public roads, the expenditures associated
with the parking lot and walkway qualified under section 3a(1) as
those for the "improvement, * * * operation and use" of the
public roads.  
The opinion for a plurality of the court quoted the
relevant terms of the constitution and then proceeded to review
the legislative history of the Senate joint resolution and the
resulting ballot measure, including a joint legislative committee
argument in the voters' pamphlet favoring adoption, that
ultimately led to the voters' adoption of Article IX, section 3a. 
Rogers, 307 Or at 539-43.  The plurality opinion noted that the
voters' pamphlet statement said that it was "time to stop the
raid" on state highway funds.  Id. at 542-43.  According to the
voters' pamphlet statement, the referred measure would stop that
"raid" by requiring the state to use highway funds for the
purposes listed in the measure and by eliminating expenditures
for so-called "highway-related programs," such as state police
and parks.  Id.
The Rogers plurality determined that the voters'
pamphlet statement expressed the joint legislative committee's
intent to require
"* * * a narrow application of this new constitutional
provision to the specific purposes stated. 
Accordingly, we narrowly construe Article IX, section
3a.
"Because the language of Article IX, section 3a,
must be narrowly construed, expenditures of motor
vehicle and fuel taxes within the meaning of
'improvement, * * * operation and use' must be limited
exclusively to expenditures on highways, roads, streets
and roadside rest areas themselves and for other
projects or purposes within or adjacent to a highway,
road, street or roadside rest area right-of-way that
primarily and directly facilitate motorized vehicle
travel.  In the instant case, the proposed expenditure
of highway funds for the construction of an airport
parking lot and a covered walkway from the parking lot
to the airport terminal is simply a convenient 'raid'
on highway funds.  The expenditure does not fall within
these definitions, because the proposed expenditure is
an expenditure for the construction of an airport
parking lot and covered walkway, rather than an
expenditure for a highway, road, street or roadside
rest area itself.  Further, it is an expenditure
primarily for the operational convenience of an
airport, rather than for a project or purpose within or
adjacent to a highway, road, street or roadside rest
area right-of-way that primarily and directly
facilitates motorized vehicle travel."
Id. at 545.
In Automobile Club, the state collected a fee from
persons who received gasoline intended for resale and stored it
in an underground tank.  The state then used the fund derived
from the collected fees to assist rural gas stations struggling
financially to conform with federal environmental regulations. 
314 Or at 489.  This court determined that the fee was a "tax"
under Article IX, section 3a.  Id. at 491.  Applying the analysis
adopted in Rogers, this court held that the "fund clearly [did]
not provide for construction, improvement, repair, maintenance,
or use of highways" and that the subsidy did not "fall within the
meaning that this court has attached to 'operation and use' of a
highway, viz., it [did] not 'primarily and directly facilitate
motorized vehicle traffic'."  Automobile Club, 314 Or at 490-91 
(citing Rogers, 307 Or at 545).
ODOT urges us to apply several legal criteria that this
court, particularly in Rogers, drew from the views expressed in
the voters' pamphlet statement supporting adoption of the
referred measure that ultimately became Article IX, section 3(a). 
For example, the Rogers plurality stated that the wording of the
voters' pamphlet argument 
"demonstrates that the Joint Legislative Committee
clearly intended a narrow application of this new
constitutional provision to the specific purposes
stated.  Accordingly, we narrowly construe Article IX,
section 3a."
Rogers, 307 Or at 545 (emphasis added).  The consequence of the
perceived requirement of a "narrow" construction, said the Rogers
plurality, was that expenditures of highway funds "must be
limited exclusively to expenditures on highways, roads, streets
and roadside rest areas themselves and for other projects or
purposes within or adjacent to a highway, road, street or
roadside rest area right-of-way that primarily and directly
facilitate motorized vehicle travel."  Id. (emphasis
added). (7)
ODOT's argument is correct insofar as it emphasizes the
constitutional requirement that the state use highway funds
"exclusively" for the purposes that Article IX, section 3a,
identifies and no others.  However, the discussion in Rogers of
other legal criteria suggested by the voters' pamphlet statement
supporting the referred measure, but not reflected in the
constitutional text, was not intended by this court to serve as
the final word on the meaning of the constitutional text.  In
fact, neither Rogers nor Automobile Club undertook the
methodological examination of the intent behind Article IX,
section 3a, that this court follows at the present time.  That is
understandable; those cases predated this court's decisions in
Roseburg School Dist. and Ecumenical Ministries.  Automobile Club
purported only to repeat the various tests that the Rogers
plurality recited.  This case presents another opportunity to
examine the terms of Article IX, section 3a, in still another
factual context.  In doing so, we simply continue the analytical
work that Rogers and Automobile Club began. (8)  We turn now to
that task.
For ease of analysis, we repeat here the central
requirement in Article IX, section 3a, that highway funds
"shall be used exclusively for the construction,
reconstruction, improvement, repair, maintenance,
operation and use of public highways, roads, streets
and roadside rest areas in this state * * *."
Article IX, section 3a, does not provide special definitions for
the key terms that it uses.  Therefore, we accord those terms
their ordinary meaning.  Flavorland Foods v. Washington County
Assessor, 334 Or 562, 568, 54 P3d 582 (2002).
The processes of "construction, reconstruction,
improvement, repair, [and] maintenance" involve work on a public
highway that may range from a single, brief event to a long-term
construction project consisting of multiple stages.  Although
"construction," in context, most readily implies the initial
building and completion of a highway, "reconstruction,
improvement, repair, [and] maintenance" describe activities
performed on an existing public highway sometime after its
initial construction.
When given a straightforward reading, Article IX,
section 3a, limits the use of highway funds exclusively to a list
of processes or activities ("construction," "reconstruction,"
etc.) that bear a relation to public highways defined by the
preposition "of." (9)  In context, the term "of" requires that
the process or activity be "with reference to," "relating to," or
"about" the public highway.  Webster's Third New Int'l Dictionary
1565 (unabridged ed 2002).  Thus, contrary to ODOT's argument,
the focus of the text is on the connection between the process or
activity and the public highway, not the connection between the
process or activity and motor vehicle traffic that may from time
to time use the public highway.
ODOT also argues that the ultimate objective of Article
IX, section 3a, is the protection or enhancement of some benefit
to the traveling public.  According to ODOT, the removal of
utility facilities from a public highway arguably might afford
some benefit to the traveling public, but the relocation of
utility facilities within a public highway does not.
ODOT quite naturally focuses on what is perhaps the
most common use of public highways:  vehicular travel.  But,
precisely because of that focus, ODOT's argument invites us to
read into the constitutional text a qualification that does not
exist:  that the promotion of vehicular travel is the only
purpose for which the state may spend highway funds under Article
IX, section 3a.  We cannot imply that limitation from the
constitutional text.  The focus on the constitutional text is,
instead, on whether the state spends highway funds exclusively
for the construction, reconstruction, etc., of public
highways. (10)
The parties agree that ODOT ordered the relocation of
utility facilities here as part of two larger road projects
undertaken to improve the safety of the affected roads and to
enhance the ability of the public to travel on the affected
highways.  The resolution of this case does not require us to
provide a complete list of the processes and activities for which
the state may spend highway funds under Article IX, section 3a. 
Rather, it is sufficient to conclude, as we do, that the
administration of the relocation of utility facilities by ODOT in
connection with those road projects belongs on that list. (11)
Although several of the processes and activities
mentioned in Article IX, section 3a, arguably might characterize
the road projects in question, we think that the terms
"reconstruction" and "improvement" together describe the road
projects precisely.  "Reconstruction" means "the action of
reconstructing or state of being reconstructed."  Webster's at
1898.  "Improvement" means, as pertinent here:
"[T]he act or process of improving * * * the
enhancement or augmentation of value or quality * * * a
permanent addition to or betterment of real property
that enhances its capital value and that involves the
expenditure of labor or money and is designed to make
the property more useful or valuable as distinguished
from ordinary repairs * * *."
Id. at 1138.  The road projects here easily correspond to those
definitions.
Putting the matter in constitutional terms, ODOT's
review of plans, supervision of construction and related
activities regarding the required relocation of utility
facilities was an important aspect of the reconstruction and
improvement of the public highways within the meaning of Article
IX, section 3a.  As a factual matter, the utility facilities were
buried under the highway rights-of-way.  The parties agree that,
unless the plaintiff utilities relocated their utility facilities
during the road improvement projects, future repairs to the
utility facilities would disrupt travel on the roads.  As a
consequence, the planning and administration activities of ODOT
regarding the relocation of utility facilities were component
parts of the reconstruction and improvement of the roads in
question by ODOT.
It follows from the foregoing that the expense that
ODOT incurs in planning for the relocation of utility facilities
along a public highway is a cost for which ODOT may use highway
funds under Article IX, section 3a.  That conclusion obviates the
necessity of deciding, within our authority under Oregon Laws
2001, chapter 664, section 4(1), whether the expense of planning
the relocation of utility facilities constitutes a "cost of
administration" within the meaning of Article IX, section
3a(2)(a).  Because our review of the text and context of Article
IX, section 3a, makes clear the intent of the voters in adopting
that provision, we proceed no further.  Roseburg School Dist.,
316 Or at 378 ("[I]f the intent is clear based on the text and
context of the constitutional provision, the court does not look
further.").
The trial court determined that ODOT had no statutory
authority to charge a permit fee to the utilities because the
costs to ODOT of issuing the permit to relocate utility
facilities and to administer its terms "may legally be paid from
revenues described in section 3a(1), Article IX of the Oregon
Constitution."  Or Laws 2001, ch 664, § 2(2).  That conclusion
was correct.  Consequently, the trial court did not err in
granting plaintiffs' motion for summary judgment.
The judgment of the circuit court is affirmed.
1. In general, highway funds are the proceeds of taxes that the
legislature has levied on motor vehicle fuel and motor vehicle
ownership, operation, and use.  Utility facilities include pipes,
conduit, cables, wiring, and related fixtures that aid the
transmission of utility products and services.  Utilities
commonly locate their facilities underground and within public
highway rights-of-way.
2. In the trial court, the parties stipulated that the only costs in dispute are "ODOT's cost of
reviewing plans and administering the construction of utility facilities relocated at ODOT's
request."  Those disputed costs arise from "'Schedule B' permit fees" that ODOT assessed
pursuant to OAR 734-005-0017(1)(b) (describing fees applicable under Utility Facility Permit
Fee Schedule "B").
3. The legislature adopted Oregon Laws 2001, chapter 664, section 4, in 2001 as a
temporary provision.  See note preceding ORS 374.305 (quoting 2001 enactment).
4. ORS 368.001(5) defines "public road" as "a road over which the public has a right of use
that is a matter of public record."
5. The term "right-of-way," in this context, refers to "the strip of land devoted to or over
which is built a public road * * *."  Webster's Third New Int'l Dictionary 1956 (unabridged ed
2002).  The legislature has not supplied a special definition for that phrase.  Illustrating the scope
of the accepted legal meaning of that term, this court in Friends of Parrett Mountain v.
Northwest Natural, 336 Or 93, 113, 79 P3d 869 (2003), construed the phrase "public roads and
highways" in ORS 215.283(1)(L), stating that that phrase
"means the entire right-of-way within which those thoroughfares are constructed,
not just the hard surface upon which traffic travels.  As a result, Northwest
Natural could comply with ORS 215.283(1)(L) by burying a pipeline alongside a
hard road surface, so long as it remained within the thoroughfare's right-of-way."
6. The legislation that authorizes ODOT to charge the permit fee also repeals that authority
on January 2, 2008.  Or Laws 2005, ch 178, § 1.
7. The Rogers plurality used the term 'right-of-way' in its legal analysis, but that term does
not appear in Article IX, section 3a.  For present purposes, we accept that the Rogers plurality
was correct in assuming that, under that constitutional provision, "public highways, roads, [and]
streets" includes the entire right-of-way for those thoroughfares, and not just the surface on
which the public travels.
8. In noting those features of the reasoning employed in Rogers and Automobile Club, we do
not suggest that the ultimate holdings in those cases were erroneous.  Neither the parties nor
amicus curiae contend that this court wrongly decided those cases.
9. The thoroughfares to which Article IX, section 3a(1), refers are "public highways, roads,
[and] streets * * *."  Our analysis applies to each of those categories, but, for ease of discussion,
we refer here only to public highways.
10. Were the foregoing not correct, the use of highway funds, for example, to narrow or to
close a public highway would not expand or enhance the public's use of the highway for
vehicular travel per se and, therefore -- under ODOT's theory -- would be illegal.
11. The "project" under analysis here is the reconstruction of the highway, and not only the
aspect of the project, i.e., relocation of utility facilities, that gave rise to ODOT's administrative
costs.