No. 25 July 16, 2015 437

IN THE SUPREME COURT OF THE

STATE OF OREGON

ROGUE VALLEY SEWER SERVICES,

an Oregon municipality,

Petitioner on Review,

v.

CITY OF PHOENIX,

an Oregon municipality,

Respondent on Review.

(CC 103450E2; CA A148968; SC S062277)

On review from the Court of Appeals.*

Argued and submitted February 15, 2015.

Tommy A. Brooks, Cable Huston, LLP, Portland, argued 

the cause and filed the briefs for petitioner on review. With 

him on the brief were Casey M. Nokes and Clark I. Balfour.

J. Ryan Kirchoff, James Holmbeck Kirchoff, LLC, Grants 

Pass, argued the cause and filed the brief for respondent 

on review. With him on the brief was Kurt H. Knudsen, 

Jacksonville.

C. Robert Steringer, Harrang Long Gary Rudnick P.C., 

Portland, filed the brief for amici curiae Clackamas River 

Water and Special Districts Association of Oregon.

Harry Auerbach, Chief Deputy City Attorney, Portland, 

argued the cause for amicus curiae League of Oregon Cities. 

Chad A. Jacobs, Beery, Elsner & Hammond, LLP, Portland, 

filed the brief for amicus curiae League of Oregon Cities. 

With him on the brief were Harry Auerbach, Portland, and 

Sean E. O’Day, Salem.

H. M. Zamudio, Huycke O’Connor Jarvis, LLP., Medford, 

filed the brief for amicus curiae City of Central Point.

______________

* Appeal from Jackson County Circuit Court, G. Philip Arnold, Judge. 262 

Or App 183, 329 P3d 1 (2014).
438 Rogue Valley Sewer Services v. City of Phoenix

Before Balmer, Chief Justice, and Kistler, Walters, 

Linder, Landau, and Baldwin, Justices,**

BALMER, C. J.

The decision of the Court of Appeals and the judgment of 

the circuit court are affirmed.

Case Summary: The City of Phoenix, a home-rule city, passed an ordinance 

imposing a five-percent franchise fee on Rogue Valley Sewer Services (RVS). The 

trial court ruled that the ordinance was valid, and the Court of Appeals affirmed. 

Held: (1) The ordinance provided for a fee, rather than a tax, and therefore any 

principle forbidding intergovernmental taxation did not apply; (2) RVS’s status 

as a type of local government under Oregon law did not prevent the city from 

passing the ordinance, because the ordinance did not impose a duty on or impair 

the power of another governmental entity; (3) applying the normal home-rule 

analysis, the ordinance was authorized by the city charter and not preempted by 

state statute; and (4) RVS failed to properly raise the issue of the reasonableness 

of the fee.

The decision of the Court of Appeals and the judgment of the circuit court 

are affirmed.

______________

** Brewer, J., did not participate in the consideration or decision of this case.
Cite as 357 Or 437 (2015) 439

BALMER, C. J.

In this declaratory judgment action, we consider 

whether a home-rule city can impose a five-percent franchise fee on a sanitary authority with overlapping jurisdiction. The trial court concluded that the city had authority to 

impose the fee at issue in this case, but declined to reach an 

additional question whether the amount of the fee was reasonable, because that issue was not presented by the pleadings. The Court of Appeals affirmed, concluding that the 

city had authority to enact the ordinance providing for the 

fee and that the sanitary authority’s argument about reasonableness was unpreserved. Rogue Valley Sewer Services 

v. City of Phoenix, 262 Or App 183, 202, 329 P3d 1 (2014). 

On review, we conclude that the home-rule doctrine is the 

proper framework for analyzing the fee at issue in this case 

and that, under that framework, the imposition of the fee 

was within the authority granted to the city by its charter 

and was not preempted by state law. We also conclude that 

the sanitary authority failed to raise the issue of the reasonableness. We therefore affirm.

I. BACKGROUND

Rogue Valley Sewer Services (RVS) owns, operates, 

and manages equipment for the transmission of sewage. As 

a “sanitary authority” organized under ORS chapter 450, 

RVS is a type of local government entity called a local service 

district. See ORS 174.116(2)(r) (“[A]s used in the statutes 

of this state[,] ‘local service district’ [includes a] sanitary 

authority ** * organized under ORS 450.600 to 450.989.”). 

Local service districts are municipal corporations and local 

governments. See ORS 198.605 (“Local service districts, as 

defined by ORS 174.116, are municipal corporations.”); ORS 

174.116(1)(a) (“[A]s used in the statutes of this state[,] ‘local 

government’ means all cities, counties and local service districts located in this state[.]”).

Since 2004, RVS has provided sewer services to residents of the City of Phoenix (city)—also a local government 

under Oregon law, ORS 174.116(1)(a)—although the relationship between RVS and the city has changed over time. In 

2004, the city and RVS entered into an intergovernmental 
440 Rogue Valley Sewer Services v. City of Phoenix

agreement that established the services that RVS would 

provide and the rates that RVS would charge. At that time, 

the city was not within the political boundaries of RVS. RVS 

notes that, under that 2004 contract, it had the right—but 

not the obligation—to use the city’s facilities to provide 

sewer services.

In 2006, a ballot measure asked voters of the city 

whether the city should be annexed into the service area of 

RVS. The ballot indicated to voters that the City Council 

and the RVS Board of Directors had already “unanimously 

adopted resolutions supporting this annexation” and that 

“service rates will not be increased as a result of this annexation.” (Emphasis in original, underscoring omitted.) The 

voters’ pamphlet statements with respect to the ballot measure did not mention whether the city would or could impose 

a franchise fee or tax on RVS. The residents of the city voted 

to annex the city into the service area of RVS. As a result, 

RVS became obligated to provide sewer services to the residents of the city because, for the purposes of sewer services, 

the residents were now within RVS’s jurisdiction.

In 2009, the city held a special election, and the

voters approved a home-rule city charter. The charter provides that the city “has all powers that the constitutions, 

statutes, and common law of the United States and of this 

state now or hereafter expressly or impliedly grant or allow,” 

and that the charter is to “be liberally construed so the city 

may exercise fully all powers possible under this charter 

and under United States and Oregon law.” City of Phoenix 

Charter, § 4-5.

In 2010, the city passed Ordinance No. 928 (the 

ordinance) imposing a “franchise fee in an amount equal to 

five percent (5%) of the annual Gross Revenue of RVS * ** 

in addition to taxes or fees, if any, owed to the City.”1

 The 

1 Ordinance No. 928 defines “Gross Revenue” as “any revenue, as determined 

in accordance with generally accepted accounting principles, received by RVS[] 

from the operation of its business,” with a few items of revenue excluded. Later, 

in 2010, to “clarify an issue that has been raised in pending litigation between 

RVS[] and the City,” the city modified the ordinance to clarify that the fee is 

applicable solely to gross revenue “received by RVS[] from the operation of its 

business within the City limits.” Ordinance No. 931, Sept 7, 2010. For clarity, we 

refer to “the ordinance,” although both Ordinance No. 928 and Ordinance No. 931 

are at issue in this case.
Cite as 357 Or 437 (2015) 441

ordinance directed RVS to pay the fee on a monthly basis 

starting the first month after adoption of the ordinance.

The ordinance declares that the “primary purpose 

of the collection of a franchise fee from RVS is to regulate 

and reimburse the City for its costs associated with RVS, 

and not to raise revenue.” The ordinance elaborates that it 

was passed for the purposes of “maintenance and operation 

of the public rights of way” and “recoupment of the full costs 

and full impacts associated with the use, occupation, and 

other activities and effects by sanitary authorities and other 

utilities on the public rights of ways.” The ordinance cites 

costs, including “additional oversight and associated costs 

incurred from City administration, maintenance and repair 

of City-owned facilities within City right-of-ways, special 

services performed by the City, and office and field-related 

costs.” Overall, the ordinance declares that there is a “direct 

relationship between the fee charged and the burden produced by the fee payer, RVS[].”

RVS projected that the five-percent franchise fee, as 

assessed on the gross revenues that RVS received from residents of the city, would have totaled approximately $30,741 

per year. RVS calculated that, “to be fair to all other customers” living outside the city, it would have to raise its rates for 

single-family residences in the city from $15.90 per month 

to $16.70 per month.

 RVS filed a complaint in circuit court seeking a 

declaratory judgment and an injunction. Specifically, RVS 

asked the court to:

“1. Declar[e] whether the ordinance *** is valid and 

whether RVS is required to collect and pay over the fee 

described in said ordinance.

“2. Grant an injunction prohibiting [the city] from collecting the franchise fee * **.

“3. For other such relief as the court may deem 

equitable.”

In the trial court, as part of cross-motions for summary 

judgment discussed further below, the city reaffirmed the 
442 Rogue Valley Sewer Services v. City of Phoenix

factual assertions set out in the ordinance. The city claimed 

that it incurs a variety of costs due to the direct impact of 

RVS’s operations in city streets. Although the direct costs 

of the paving and construction work are borne by RVS, the 

city argued that there are additional short-term and longterm impacts that the city bears. Short-term impacts are 

associated primarily with coordination and include review 

of plans, inspection during construction, locating utilities, 

processing encroachment permits, providing water from 

city fire hydrants for flushing sewer lines, and designing 

other city utility contracts to avoid RVS facilities. Longterm impacts include costs of maintenance and repair of the 

streets. Whenever a street surface is cut, a slight differential 

settlement of the repaired surface is expected, and the joint 

between the surfaces is more likely to be an entry point for 

water. Over time, the city Public Works Department expects 

to fill cracks and make minor repairs on cut streets, until it 

becomes necessary to conduct a complete asphalt overlay of 

the street. The city also asserted that, as a direct impact of 

its relationship with RVS, it incurs general administrative 

expenses, such as the costs of general administration and 

oversight, budgeting, coordination of services, interactions 

with the public, and other expenses. Together, the city estimated that the cost of those impacts for 2009 was $29,425. 

As such, the city asserted that the five-percent franchise 

fee—at around $30,000 per year—was a reasonable estimate of the annual cost to the city. Additionally, the city 

pointed out that the five-percent fee was consistent with 

franchise fees that it imposes on other utilities operating in 

city streets, including the local gas, telephone, power, and 

cable television companies.

For its part, RVS disputed the existence of any 

direct relationship between the franchise fee and the costs 

that RVS’s operations impose on the city. RVS argued that 

the costs that the city identified are part of the normal operations of a city public works department—such as receiving 

phone calls from citizens—and therefore are not caused by 

RVS’s operations, while other alleged costs are negligible or 

nonexistent. RVS asserted that, when it proposes a project 

within the city, it first submits a plan to the city’s Public 
Cite as 357 Or 437 (2015) 443

Works Department for review and comment, and generally 

receives a phone call or brief letter in response. The city typically observes any paving work to ensure that it meets the 

city’s standards, but, as noted, RVS bears the cost of the 

paving and construction work associated with its projects. 

At the time of summary judgment, only one project in the 

city had required any street cutting or repaving, and only 

one was planned for the upcoming year. RVS also argued 

that the costs of its operations in the city are covered by various fees that the city charges—for example, a right-of-way 

encroachment fee charged to cover the cost of plan review 

for projects that impact the right-of-way.

Further, in its motion for summary judgment, RVS 

argued that the city’s home-rule authority to impose a franchise fee was preempted by state law because franchise fees 

are controlled by state statute. RVS also stated in its brief—

although in the “Background Facts” section rather than as 

a legal argument—that, “even assuming that [the city] has 

authority to impose a franchise fee on RVS, the Ordinance 

as worded relies upon an improper interpretation of Oregon 

statutes, is too broadly written and has no rational basis 

to support the rate.” The city filed a cross-motion for summary judgment, arguing that it had authority to enact the 

ordinance and that the fee “represents a reasonable estimate of the annual cost to the City of the many impacts of 

RVS identified in the Ordinance,” and concluding that “[t]he

5% fee is reasonable by all standards.”

The trial court articulated the issue presented as 

“whether or not the City *** under its home rule charter 

can charge a franchise fee on sewer operations provided by 

[RVS].” The court found that “the analysis of the [city] in 

its motion and in its response to [RVS’s] motion is correct in 

that it has the authority to impose the fee.” Therefore, the 

court granted the city’s motion for summary judgment and 

denied RVS’s motion for summary judgment.

The city then submitted a proposed general judgment. RVS objected to the proposed judgment on the ground 

that the trial court’s order resolved only the issue whether 

the city had authority to charge the fee, but did not resolve 
444 Rogue Valley Sewer Services v. City of Phoenix

the issue of the reasonableness of the fee. RVS argued that 

a question of fact existed as to the reasonableness of the fee 

that precluded summary judgment and pointed to “competing affidavits” on the issue. RVS suggested that a limited 

judgment—addressing only the issue of the city’s authority 

to impose the assessment—would be more appropriate. In 

response, the city argued that the amount of the fee should 

be left to the discretion of the city and was not at issue in the 

case.

The trial court overruled RVS’s objection to the 

proposed general judgment, concluding that “there [was] 

nothing left for the Court to adjudicate” because “nothing 

in the complaint [or in RVS’s motion for summary judgment 

suggested that] RVS[] also challenged the reasonableness of 

the fee in the event [the city’s] authority was upheld.” In so 

holding, the court concluded:

“To be sure, in arguing the ordinance is too broad, RVS 

cited the amount of the fee, but any such argument is subsumed within the argument about the propriety of the 

ordinance (assuming [the city] had the authority to enact 

it), and the Court’s decision upholding [the city]’s authority to impose the fee, the content of the ordinance, and the 

imposition of the fee, disposed of RVS’ argument about the 

amount of the fee.”

The court entered a general judgment in the city’s favor.

RVS appealed, arguing that “the trial court erred 

in concluding that the city was authorized to impose the 

five percent franchise fee, and, alternatively, that the court 

erred in granting summary judgment because genuine 

issues of material fact exist regarding calculation of the 

fee.” Rogue Valley, 262 Or App at 187. As to the first argument, the Court of Appeals concluded that RVS’s status as 

a local government did not circumscribe the city’s authority 

as a home-rule municipality and that the city’s home-rule 

authority to enact the fee was not preempted by state law. 

Id. at 188, 199. As to the second argument, the Court of 

Appeals concluded that RVS had not preserved its argument 

regarding the reasonableness of the amount of the fee and 

rejected RVS’s argument that the parties had tried the issue 

by consent. Id. at 201-02. RVS petitioned for review in this 

court, and we allowed the petition.
Cite as 357 Or 437 (2015) 445

II. ANALYSIS

Ordinarily, when a “petitioner[’s] arguments implicate the authority of [a] city, we begin with * ** the authority of such local governments” under the “home-rule” provisions of the Oregon constitution. Gunderson, LLC v. City of 

Portland, 352 Or 648, 658-59, 290 P3d 803 (2012). “‘Home 

rule’ itself is not a constitutional term, and the actual constitutional terms differ from state to state. But ‘home rule’ has 

been described as the ‘political symbol’ for the objectives of 

local authority.” LaGrande/Astoria v. PERB, 281 Or 137, 140 

n 2, 576 P2d 1204, adh’d to on recons, 284 Or 173, 586 P2d 

765 (1978). Home rule is the authority granted to Oregon’s 

cities by Article XI, section 2, and Article IV, section 1(5), of 

the Oregon Constitution—adopted by initiative petition in 

1906—to regulate to the extent provided in their charters. 

Article XI, section 2, provides, in part, “The legal voters of 

every city and town are hereby granted power to enact and 

amend their municipal charter, subject to the Constitution 

and criminal laws of the State of Oregon[.]” In the same 

1906 election, voters “reserved” initiative and referendum 

powers “to the qualified voters of each municipality and district as to all local, special and municipal legislation of every 

character in or for their municipality or district.” Or Const, 

Art IV, § 1(5).

RVS argues, however, that the home-rule analysis 

does not apply—or does not apply in the same way—in the 

context of a fee or tax that one governmental entity imposes 

on another and that the Court of Appeals erred in concluding that RVS’s status as a local government has no impact 

on the city’s home-rule authority. As noted above, RVS is 

a sanitary authority, and the legislature has expressed its 

intention that sanitary authorities be considered municipal 

corporations and a type of local government under Oregon 

law. For those reasons, RVS claims, the trial court erred in 

granting the city’s motion for summary judgment based on 

its home-rule authority. We review the trial court’s rulings 

on summary judgment “to determine whether ‘there is no 

genuine issue as to any material fact’ and whether ‘the moving party is entitled to prevail as a matter of law.’” Bagley v. 

Mt. Bachelor, Inc., 356 Or 543, 545, 340 P3d 27 (2014) (citing 

ORCP 47 C).
446 Rogue Valley Sewer Services v. City of Phoenix

A. Intergovernmental Taxation

RVS first argues that this is not a “home rule” 

case because it involves “intergovernmental taxation.” RVS 

argues that the city must first have unmistakable, express 

statutory authority before it can impose taxes or fees on 

another local government. RVS draws that rule from three 

of this court’s cases: Portland v. Multnomah County, 135 Or 

469, 296 P 48 (1931); Portland v. Welch et al., 126 Or 293, 

269 P 868 (1928); and Cent. Lincoln PUD v. State Tax Com., 

221 Or 398, 351 P2d 694 (1960). The city responds that this 

case concerns a fee, rather than a tax, and therefore that 

that case law is inapplicable.

All three of the cases upon which RVS relies concern 

the imposition of a tax. In Welch, a city had offered land for 

sale, but had not yet sold that land, and this court held that 

the county in which the land was located could not impose 

otherwise applicable property taxes on that land. 126 Or at 

294-97. In Multnomah County, the opposite occurred: the 

property was in private ownership on “tax day” when taxes 

were assessed, but a city bought the property before any tax 

had been levied. 135 Or at 470. This court held the property 

was nonetheless “clearly exempt from taxation.” Id. at 473. 

In Central Lincoln, this court held that plaintiff, a people’s 

utility district (PUD), was subject to a utility corporation 

excise tax. 221 Or at 401, 407. However, the court concluded 

that its interpretation of the statute at issue did not necessarily extend the tax to municipal corporations because 

“[t]he intention to tax a municipality is not to be inferred, 

but must be clearly manifested by an affirmative legislative 

declaration.” Id. at 406. In that case, a clear legislative declaration of the intention to tax PUDs existed, because PUDs 

were specifically included in the statute. Id.

“A tax is any contribution imposed by government 

upon individuals, for the use and service of the state. A fee, 

by contrast, is imposed on persons who apply for or receive 

a government service that directly benefits them.” McCann 

v. Rosenblum, 355 Or 256, 261, 323 P3d 955 (2014) (internal quotation and citation omitted). In McCann, this court 

quoted Qwest Corp. v. City of Surprise, 434 F3d 1176, 1183 

(9th Cir 2006), in support of the rule that the distinction 
Cite as 357 Or 437 (2015) 447

between a tax and a fee is whether the “charge is expended 

for general public purposes, or used for the regulation or benefit of the parties upon whom the assessment is imposed.” 

McCann, 355 Or at 261-62. Thus, the ballot measure at issue 

in that case, which would have imposed a markup on wholesale alcohol sales, was properly labeled a “tax,” because the 

revenues generated by the markup would be distributed to 

the state’s general fund, as well as to the general funds of 

cities and counties, and would be available for general government use. Id. at 261-62; see also Dennehy v. Dept. of Rev., 

305 Or 595, 605-06, 756 P2d 13 (1988) (state statute did 

not contravene constitutional limits on property taxation, 

because “[u]rban renewal financing is not a single, statewide tax to fund public structures or services unrelated to 

the source of funding”; rather, it “places the cost of urban 

renewal on the property that benefits from the expenditure 

of the funds so raised”).

A fee, then, is imposed on particular parties and 

is used to regulate or benefit those parties rather than 

being used for general public purposes or to raise revenue 

for such purposes. In this case, the ordinance applies to 

one particular party only, RVS, and the ordinance directs 

that the city will “allocate money collected from RVS only 

for costs and reimbursement connected with proper regulatory purposes.” The money collected from the franchise fee 

is to be used to cover “the full costs and full impacts associated with [RVS’s] use, occupation, and other activities” 

in the city’s rights-of-ways, including “the additional oversight and associated costs incurred from City administration, maintenance and repair of City-owned facilities within 

City right-of-ways, special services performed by the City, 

and office and field-related costs.” Although RVS expresses 

skepticism as to whether the fee actually will be directed 

towards regulatory purposes related to sanitary services, as 

the city claims, nothing in the record indicates that the fee 

will be used for general government purposes, rather than 

for appropriate regulatory purposes.

In sum, the record establishes that the city will use 

the money collected from the franchise fee to regulate and 

benefit the party from whom the fee is collected and to cover 
448 Rogue Valley Sewer Services v. City of Phoenix

costs directly imposed on the city by that party. That “distribution scheme” and the “uses to which that money [can] 

be put” demonstrate that the ordinance provides for the collection of a fee, rather than a tax. McCann, 355 Or at 262 

(wholesale alcohol markup properly labeled a “tax,” because 

not “used to provide services that directly benefit wholesalers” but, rather, distributed to state, cities, and counties 

for general government use). Because we conclude that the 

ordinance provides for the collection of a fee, and not a tax, 

RVS’s arguments based on the prohibition of intergovernmental taxation discussed in some of our cases are inapposite here.2

B. Regulation of Other Public Entities

RVS next argues that the city cannot justify the 

franchise fee based on its home-rule authority because regulation of another governmental entity is different from

regulation of private entities under the city’s home-rule

powers. To allow regulation of other government entities, 

RVS argues, would create a hierarchy among local governments that has no support in the law and would allow a city 

to exercise authority beyond its boundaries. It contends that 

such “extramural” or “extramunicipal” activity is not within 

the scope of a city’s home-rule powers and is impermissible 

unless authorized expressly by statute.

RVS is correct that this court has recognized some 

limits on a local government’s authority to compel or coerce 

another government to take some affirmative action. See 

2 At oral argument, RVS also argued that the ordinance cannot be said to 

provide for a “use fee” because such fees are charged in exchange for some service, 

right, or privilege. RVS claims that the city had already transferred the right to 

use the right-of-way to RVS by consenting to the annexation. See ORS 450.815(7) 

(a sanitary authority has the power to “[l]ay its sewers and drains in any public 

street, highway or road in the county, and for this purpose enter upon it and 

make all necessary and proper excavations, restoring it to its proper condition”). 

That is, RVS argues, no benefit is conferred on RVS in exchange for the franchise 

fee, and therefore the ordinance cannot be characterized as a fee. We disagree. 

As noted, a fee is “used for the regulation or benefit of the [assessed] parties.” 

McCann, 355 Or at 262. Although there may be circumstances where the terms of 

conferring the benefit on an assessed party precludes the later imposition of a fee 

in the name of regulation, that is not the situation in this case. Even if we were 

to accept RVS’s argument that authority to use the right-of-way was transferred 

with the annexation, the ordinance provides for a fee for “regulation” of RVS; 

there is no requirement that the ordinance also confer some additional benefit. 
Cite as 357 Or 437 (2015) 449

City of Eugene v. Roberts, 305 Or 641, 649-650, 756 P2d 630 

(1988) (home rule did not provide city with authority “to 

compel action by state and county officials” to put an advisory question on the state primary election ballot); DeFazio 

v. WPPSS, 296 Or 550, 582, 679 P2d 1316 (1984) (cities lack 

authority to “assert coercive authority over persons or property outside [their] boundaries”). For example, in Kiernan 

v. Portland, 57 Or 454, 111 P 379, recons den, 57 Or 454, 

112 P 402 (1910), dismissed for lack of jurisdiction, 223 US 

151, 32 S Ct 231, 56 L Ed 386 (1912), the City of Portland 

amended its charter to provide for construction of the 

Broadway Bridge and that, “upon completion of the bridge[,] 

the executive board shall surrender and deliver the possession thereof to the county court of Multnomah County.” Id. 

at 462. This court held that it was “beyond the power of the 

[C]ity [of Portland] to impose the care and maintenance 

of a public bridge upon Multnomah County without the 

county authorities[’] consent thereto.” Id. at 463. That was 

so because Portland was attempting to compel Multnomah 

County to assume a new governmental function—bridge 

maintenance—and local governments cannot interfere with 

another government’s exercise of its own governmental 

power and functions. See also Orval Etter, Municipal Home 

Rule On and Off: “Unconstitutional Law in Oregon” Now and 

Then 103 (Sourcebook ed 1991) (describing Kiernan as “the 

first ruling that home rule does not enable a city to change a 

power or duty of a governmental entity other than the city”); 

Letter of Advice dated December 24, 1985, to Senator Ken 

Jernstedt (OP-5863) (concluding that city could impose an 

excise tax or municipal surcharge on bridge tolls, but could 

not compel the port to collect a tax on tolls because “a municipality, absent statutory authority, may not impose a duty 

upon any other political subdivision or agency of the state to 

collect municipal taxes”).

Those principles, however, do not go so far as to prohibit the city’s fee in this case. While City of Eugene and 

Kiernan demonstrate that a city cannot, on the basis of its 

home-rule authority, impose a duty on or impair a power of 

another governmental entity, nothing in those cases would 

prevent a city from exercising the same kind of regulatory 

authority over specific services provided by another local 
450 Rogue Valley Sewer Services v. City of Phoenix

government entity on the same basis as services provided 

within the city by a private business. In this case, the franchise fee of five percent of RVS’s revenue places RVS on an 

equal footing with other utilities operating within the city. 

As discussed further below, the legislature has provided a 

framework for cities to collect a franchise fee from utilities, 

both public and private, operating within their rights-ofway. See ORS 221.420; ORS 221.450. Where cities and utilities have not entered into an agreement for a different fee 

arrangement, the legislature provides for a five-percent fee. 

ORS 221.450. Although RVS correctly points to limits on 

the home-rule doctrine that prohibit local governments from 

compelling affirmative conduct by other government entities, the limitations that it has identified do not restrict the 

city’s authority to pass the ordinance at issue in this case.

C. Home Rule

Under a city’s home-rule authority, “the validity of 

local action depends, first, on whether it is authorized by the 

local charter or by a statute[, and] second, on whether it contravenes state or federal law.” LaGrande/Astoria, 281 Or at 

142. The parties do not contend that the ordinance was not 

authorized by the city’s charter, which provides that the “city 

has all powers that the constitutions, statutes, and common 

law of the United States and of this state now or hereafter 

expressly or impliedly grant or allow” and that the charter 

is to “be liberally construed so the city may exercise fully all 

powers possible under this charter and under United States 

and Oregon law.” City of Phoenix Charter, § 4-5. Therefore, 

we must determine “whether the local rule in truth is incompatible with the legislative policy, either because both cannot operate concurrently or because the legislature meant 

its law to be exclusive.” LaGrande/Astoria, 281 Or at 148.

In making that determination, we assume that “the 

legislature does not mean to displace local civil or administrative regulation of local conditions by a statewide law 

unless that intention is apparent.” LaGrande/Astoria, 281 

Or at 148-49 (footnote omitted). A state statute will displace 

the local rule where the text, context, and legislative history of the statute “unambiguously expresses an intention 

to preclude local governments from regulating” in the same 
Cite as 357 Or 437 (2015) 451

area as that governed by the statute. Gunderson, 352 Or at 

663 (emphasis added); see also US West Communications v. 

City of Eugene, 336 Or 181, 186, 81 P3d 702 (2003) (applying 

standard statutory interpretation methodology to a question 

of home-rule city’s authority to impose fee on telecommunications company).

RVS argues that ORS 221.420 and ORS 221.450 

establish a comprehensive, statewide scheme that the legislature intended to be the exclusive basis for city imposition 

of fees upon utilities for using public rights-of-way. The city 

responds that those statutes do not address sanitary authorities and, therefore, the legislature has not unambiguously 

expressed any intention to preempt the ordinance at issue 

here.

ORS 221.420(2)(a) provides that a city may:

“Determine by contract or prescribe by ordinance or otherwise, the terms and conditions, including payment of 

charges and fees, upon which any public utility, electric 

cooperative, people’s utility district or heating company, or 

Oregon Community Power, may be permitted to occupy the 

streets, highways or other public property within such city 

and exclude or eject any public utility or heating company 

therefrom.”

RVS, as a sanitary authority organized under ORS 

chapter 450, is not a “public utility” under ORS 221.420. 

ORS 221.420(1)(a) provides that “public utility” is to be given 

the meaning provided in ORS 757.005, which defines “public 

utility” to include only those entities furnishing “heat, light, 

water or power.” ORS 757.005(1)(a)(A). RVS does not provide 

heat, light, water or power; it provides sanitation services. 

Therefore, ORS 221.420(2)(a) does not affirmatively provide 

authority for the city to impose the fee at issue in this case, 

but neither does it, standing alone, unambiguously preclude 

the city from imposing the fee.

RVS also points to ORS 221.450, which provides:

“[E]very incorporated city may levy and collect a privilege 

tax from Oregon Community Power and from every electric cooperative, people’s utility district, privately owned 

public utility, telecommunications carrier as defined in 

ORS 133.721 or heating company. The privilege tax may 
452 Rogue Valley Sewer Services v. City of Phoenix

be collected only if the entity is operating for a period of 

30 days within the city without a franchise from the city 

and actually using the streets, alleys or highways, or all 

of them, in such city for other than travel on such streets 

or highways. The privilege tax shall be for the use of those 

public streets, alleys or highways, or all of them, in such 

city in an amount not exceeding five percent of the gross 

revenues of the cooperative, utility, district or company 

currently earned within the boundary of the city. However, 

the gross revenues earned in interstate commerce or on 

the business of the United States Government shall be 

exempt from the provisions of this section. The privilege 

tax authorized in this section shall be for each year, or part 

of each year, such utility, cooperative, district or company, 

or Oregon Community Power, operates without a franchise.” 

(Emphasis added.) Like ORS 221.420, ORS 221.450 does not 

explicitly apply to sanitary authorities like RVS.

Read together, RVS argues, ORS 221.420 and ORS 

221.450 provide statutory authority that, for the enumerated entities to which they apply, permits a city to either 

enter into a franchise agreement with a utility or impose a 

privilege tax in lieu of negotiating a franchise agreement. 

The legislative history of House Bill (HB) 3021—the 1987 

revision to ORS 221.420 and ORS 221.450—suggests that 

the legislature was told that the statutes would operate so 

that ORS 221.450 functioned as a “penalty clause,” such 

that,

“if * ** [y]ou, as a private utility * ** don’t sit down and 

negotiate a franchise regulation ordinance or agreement so 

that we’re working together, then you’re going to pay more. 

You’re going to pay five percent. If you come in and get a 

franchise, and you sit down at the table * ** and we mutually regulate it together, basically, then [you pay less].”

Tape Recording, House Committee on Environment and 

Energy, HB 3021, April 22, 1987, Tape 122, Side B (statement of Larry Shaw).

RVS argues, therefore, that the legislature intended 

to occupy the field and preempt cities from imposing fees 

on public utilities other than through the comprehensive 

scheme established by ORS 221.420 and ORS 221.450. In 
Cite as 357 Or 437 (2015) 453

particular, RVS argues that the legislature intended the 

list of utility service providers in ORS 221.420(2)(a) to be 

construed as an exclusive list of utility service providers 

that a city may target for such charges and fees—and that 

all other nonenumerated entities cannot be charged similar charges or fees. Put differently, from those affirmative 

statutory authorizations of privilege taxes that a city may 

charge for certain utilities operating within the city, RVS 

draws the negative implication that a city may not impose 

such taxes or fees on other utilities.

Even if ORS 221.420 and ORS 221.450 establish a 

comprehensive scheme as to municipal regulation of some 

entities—an issue that we do not decide—that conclusion 

would not preclude the city’s fee in this case. RVS essentially argues that, because sanitary authorities are not 

specifically enumerated in ORS 221.420, the legislature 

intended to exempt sanitary authorities from franchise fees. 

Although RVS does not explicitly use the Latin term, that 

argument invokes the logic of expressio unius est exclusio 

alterius, literally “the expression of one is the exclusion of 

others.” See Black’s Law Dictionary 701 (10th ed 2014) (“A 

canon of construction holding that to express or include one 

thing implies the exclusion of the other, or of the alternative. 

For example, the rule that ‘each citizen is entitled to vote’ 

implies that noncitizens are not entitled to vote.”). Expessio 

unius arguments are most powerful when there is reason 

to conclude that a list of enumerated terms was intended to 

be exhaustive. See Colby v. Gunson, 224 Or App 666, 671, 

199 P3d 350 (2008) (“the expressio unius guide to legislative intent corroborates, rather than supplies, meaning to a 

statute”).

To show that the legislature intended the list to be 

exhaustive, RVS points to legislative history from HB 3021 

relating to a proposal to add certain publically owned utilities to the lists of already-enumerated privately owned entities in ORS 221.420 and ORS 221.450. In the hearings on 

HB 3021, a representative wondered whether the bill would 

apply to telephone cooperatives and was told it would not 

“affect” entities that fell outside the definition of “public 

utility.” Tape Recording, House Committee on Environment 

and Energy, HB 3021, April 22, 1987, Tape 122, Side B 
454 Rogue Valley Sewer Services v. City of Phoenix

(statement of Larry Shaw). From that slim legislative history, RVS concludes that the franchise fee at issue here is 

invalid because, if the statutes were not intended to apply 

to telephone cooperatives, they also were not intended to be 

applied to other nonenumerated public entities.

A party that challenges a home-rule city’s authority as preempted by state law is required to show that the 

legislature “unambiguously” expressed its intent—a high 

bar to overcome. Gunderson, 352 Or at 663. As noted above, 

in the context of the home-rule doctrine, we begin with 

the assumption “that the legislature does not mean to displace local civil or administrative regulation of local conditions by a statewide law unless that intention is apparent.”

LaGrande/Astoria, 281 Or at 148-49. Only where the legislature “unambiguously expresses an intention to preclude 

local governments from regulating” in the same area governed by an applicable statute can that presumption against 

preemption be overcome. Gunderson, 352 Or at 663 (emphasis added); cf. State ex rel Haley v. City of Troutdale, 281 Or 

203, 211, 576 P2d 1238 (1978) (because any legislative intent 

to preempt local action exceeding state “minimum” construction standards was “not unambiguously expressed[,] local 

requirements compatible with compliance with the state’s 

standards are not preempted”).

The legislative history of HB 3021 does not rise to 

the level of “unambiguously” expressing legislative intent to 

occupy the field. See State v. Gaines, 346 Or 160, 172-73 n 9, 

206 P3d 1042 (2009) (reliance on “the beliefs of a single legislator or witness” is “fraught with the potential for misconstruction”). Notably, the legislature has expressly preempted 

local regulation of certain areas of law by using the word 

“preempt” itself. See ORS 731.840(4) (“[t]he State of Oregon 

hereby preempts the field,” and “[n]o county, city, district, 

or other political subdivision or agency in this state shall so 

regulate”); ORS 203.090 (“The[se] provisions *** preempt 

any laws of the political subdivisions of this state relating 

to the regulation of private security providers.”). In other 

statutes, it has expressed its disapproval of conflicting local 

laws in equally clear terms. See ORS 461.030(1) (“no local 

authority shall enact any ordinances, rules or regulations 
Cite as 357 Or 437 (2015) 455

in conflict with the provisions hereof”). However, we see no 

reason to imply such broad preemption of the entire field of 

utility regulation from the explicit authorization of regulation of certain other utilities.

Further, ORS 221.420 and ORS 221.450 do not create a statutory scheme that prevents the state law and local 

ordinance from operating concurrently. LaGrande/Astoria, 

281 Or at 148. Rather, the state regulates less extensively 

than the local ordinance, and leaves it to cities to enact reasonable conditions of consent for sanitary authorities. See

ORS 450.815(7); cf. State ex rel Haley, 281 Or at 205, 211 

(state building code providing for single wall construction 

did not indicate that legislature intended to prevent cities 

from enacting additional safeguards—such as requiring 

double wall construction—and at minimum such an intention was not “unambiguously expressed”); Thunderbird 

Mobile Club v. City of Wilsonville, 234 Or App 457, 474, 228 

P3d 650 (2010), rev den, 348 Or 524, 236 P3d 152 (2010) 

(“Under LaGrande/Astoria, * ** the occupation of a field of 

regulation by the state has no necessary preemptive effect 

***. Instead, a local law is preempted only to the extent

that it ‘cannot operate concurrently’ with state law, i.e., the 

operation of local law makes it impossible to comply with a 

state statute.”).

That conclusion is strengthened by two other 

expressions of the legislature’s intent. First, in HB 3021 

the legislature provided that, by enacting ORS 221.420 and 

ORS 221.450, it was simply “reaffirm[ing] the authority of 

cities to regulate use of municipally owned rights of way” 

and that it “recognize[ed] the independent basis of legislative authority granted to cities in this state by municipal 

charters.” ORS 221.415 (emphasis added).3

 That is, the legislature apparently thought that HB 3021 was not necessary to provide cities with authority to impose taxes and 

fees because they already possessed that authority. Rather, 

the legislature passed that bill in response to a then-recent 

3 Although ORS 221.415 goes on to also affirm the authority of cities to 

“impose charges upon publicly owned suppliers of electrical energy, as well as 

privately owned suppliers,” we do not read that subordinate clause as negating 

the broader affirmation of the authority of cities to regulate their rights-of-way.
456 Rogue Valley Sewer Services v. City of Phoenix

circuit court decision that had held to the contrary with 

respect to a people’s utility district.4

Second, in a different statute, the legislature appears

to have anticipated the kind of fee at issue in this case 

and provided that such conditions on the use of the public 

rights-of-way by a sanitary authority are appropriate. ORS 

450.815(7), in defining the powers of a sanitary authority, 

provides that a sanitary authority may:

“Lay its sewers and drains in any public street, highway or 

road in the county, and for this purpose enter upon it and 

make all necessary and proper excavations, restoring it to 

its proper condition. However, the consent of the proper city, 

county or state authorities, as the case may be, shall first be 

obtained and the conditions of such consent complied with.”

(Emphasis added.) The legislature apparently intended 

that use of public rights-of-way by a sanitary authority be 

contingent upon its compliance with reasonable conditions 

imposed by a city.

Because neither ORS 221.420 nor ORS 221.450 

unambiguously express a legislative intent to preempt local 

4 Specifically, the legislature was reacting to the then-recent circuit court 

decision in Columbia River People’s Utility District v. City of St. Helens et al, No. 

85-2236 (Columbia County Circuit Court, July 15, 1986). In that case, the circuit 

court held that “the legislature has declared by inference that People’s Utility 

Districts are not subject to franchise fees (excise taxes) such as defendant cities 

desire to impose.” Id. at 3. The legislature passed HB 3021 “just [as] a legislative emergency fix for the problem [presented by the circuit court case] and [did 

not go] beyond that.” Tape Recording, House Committee on Environment and 

Energy, HB 3021, April 22, 1987, Tape 122, Side B (statement of Larry Shaw). 

Specifically, the legislature was told that the “bill only affects electrical utilities” 

and that other entities, such as telephone cooperatives, were “not affected by this 

bill at all.” Id. Because Columbia River was pending before the Court of Appeals 

at the time, a representative noted that, if the cities wanted to continue their 

appeal “on a home rule issue that says that the city has the right to [impose a 

fee]—that’s up to them—but that issue stands aside from this bill. The home 

rule issue is a little broader, I think, than what we are dealing with here.” Tape 

Recording, Senate Agriculture and Natural Resources Committee, HB 3021, 

April 29, 1987, Tape 138, Side A (statement of Rep Bruce Hugo). Therefore, it 

appears that the legislature did not intend HB 3021 to impact the home-rule 

authority of cities, but, instead, merely to clarify that such a fee could be imposed 

on People’s Utility Districts. See also ORS 221.415 (“Recognizing the independent 

basis of legislative authority granted to cities in this state by municipal charters, 

the Legislative Assembly intends *** to reaffirm the authority of cities to regulate use of municipally owned rights of way and to impose charges upon publicly 

owned suppliers of electrical energy, as well as privately owned suppliers for the 

use of such rights of way.”).
Cite as 357 Or 437 (2015) 457

action, and also because the statutes and legislative history 

suggest that the legislature in fact did not intend to preempt 

local governments from imposing such conditions on the use 

of their rights-of-way by sanitary authorities, we conclude 

that the franchise fee at issue in this case is not preempted 

by state law.

D. Reasonableness of the Fee

 Finally, RVS argues that the Court of Appeals 

erred in ruling that its argument challenging the reasonableness of the franchise fee was not preserved. RVS asks 

that we remand the case to the trial court to resolve material questions of fact relating to the amount of the fee that 

may be imposed. See Eugene Theatre et al. v. Eugene et al., 

194 Or 603, 613, 243 P2d 1060 (1952) (fee “far in excess of 

what might be deemed reasonably necessary for purposes 

of regulation” is invalid). The city responds that the issue is 

unpreserved because RVS’s complaint did not state a separate claim for relief regarding the amount of the fee and 

RVS’s motion for summary judgment focused on whether 

the city had authority to impose the fee, not whether the fee 

was reasonable. On that basis, the city argues that the trial 

court and the Court of Appeals properly declined to reach 

the issue whether the amount of the fee was reasonable.

Even if the affidavits and cross-motions for summary judgment in this case “might provide a basis for an 

amendment to the pleadings to make it an issue,” a court 

may not “award relief outside the issues of the case.” Heintz v. 

Sinner et ux, 232 Or 529, 533, 376 P2d 478 (1962). As noted, 

RVS did not seek a declaration that the fee was unreasonable in amount. Rather, RVS’s complaint asked the court to:

“1. Declar[e] whether the ordinance *** is valid and 

whether RVS is required to collect and pay over the fee 

described in said ordinance.

“2. Grant an injunction prohibiting [the city] from collecting the franchise fee * **.

“3. For other such relief as the court may deem 

equitable.”

Moreover, RVS did not seek to amend its complaint during 

or after the summary judgment proceedings.
458 Rogue Valley Sewer Services v. City of Phoenix

Here, as the trial court stated, “nothing in the 

complaint * * * challenged the reasonableness of the fee, in 

the event [the city’s] authority was upheld.” This court has 

explained that

“a decree or judgment must be responsive to the issues 

framed by the pleadings and a trial court has no authority 

to render a decision on issues not presented for determination. In absence of amendment of the pleadings, evidence 

received without objection will not provide a basis for such 

a decree.”

Brown v. Brown, 206 Or App 239, 248, 136 P3d 745 (2006), 

rev den, 341 Or 449 (2006) (internal quotation and citation omitted); see also Central Oregon Fabricators, Inc. v. 

Hudspeth, 159 Or App 391, 403, 977 P2d 416, rev den, 329 

Or 10, 334 P2d 119 (1999) (trial court erred in granting 

relief on unpleaded theory, where plaintiffs never sought 

leave to amend pleadings). Because RVS did not move to 

amend the pleadings, it was not error for the trial court to 

overrule RVS’s objection to the proposed judgment.5

 We conclude that the trial court correctly declined to rule on an 

issue not properly before it.

III. CONCLUSION

We hold that the city was authorized, under its 

home-rule authority, to adopt the ordinance at issue in this 

case. The franchise fee that the ordinance prescribes is not 

preempted by state law. RVS did not present the issue of the 

5 Although RVS acknowledges that its complaint did not state a separate 

claim for relief regarding the amount of the fee, and that it did not otherwise 

amend its pleading, it nevertheless argues that that issue was tried by consent 

during the summary judgment proceedings. Under ORCP 23 B, “When issues 

not raised by the pleadings are tried by express or implied consent of the parties, 

they shall be treated in all respects as if they had been raised in the pleadings.” 

ORCP 23 B (emphasis added); Navas v. City of Springfield, 122 Or App 196, 201, 

857 P2d 867 (1993) (“Generally, a trial court has no authority to render a decision 

on an issue not framed by the pleadings. *** ORCP 23 B states a limited exception to this rule: if the parties expressly or impliedly consent, they may try issues 

not raised in the pleadings.”). Here, the amount of the fee was discussed in the 

summary judgment proceedings in connection with characterizing the ordinance 

as a tax or fee, but not in seeking a declaration as to whether the amount of a fee 

was reasonable. We therefore agree with the Court of Appeals that the issue of 

the reasonableness of the fee was not tried by express or implied consent of the 

parties. Rogue Valley, 262 Or App at 201. 
Cite as 357 Or 437 (2015) 459

reasonableness of the amount of the fee to the trial court in 

its pleadings.

The decision of the Court of Appeals and the judgment of the circuit court are affirmed.