Opinion ID: 835432
Heading Depth: 1
Heading Rank: 5

Heading: definition of profit in money

Text: To answer that question, we must construe the phrase profit in money in ORS 215.203(2)(a) and the terms profitability and gross farm income in OAR XXX-XXX-XXXX(5). In interpreting a statute, this court's task is to give effect to the legislature's intent. PGE v. Bureau of Labor and Industries, 317 Or. 606, 610, 859 P.2d 1143 (1993). To do so, we begin by considering the text and context of the statute, id. at 610-11, 859 P.2d 1143, giving words of common usage    their plain, natural, and ordinary meaning. Id. at 611, 859 P.2d 1143. A statute's context includes other provisions of the same statute and other related statutes, as well as the preexisting common law and the statutory framework within which the law was enacted[.] Denton and Denton, 326 Or. 236, 241, 951 P.2d 693 (1998) (internal citations omitted). This court does not look at one subsection of a statute in a vacuum; rather, we construe each part together with the other parts in an attempt to produce a harmonious whole. Lane County v. LCDC, 325 Or. 569, 578, 942 P.2d 278 (1997). In construing administrative rules, our task is the same: we must discern the meaning of the words used, giving effect to the intent of the body that promulgated the rule. Tye v. McFetridge, 342 Or. 61, 69, 149 P.3d 1111 (2006). To do so, we follow the same methodology for interpreting rules as for construing statutes. Id. We begin with the text of the statute itself. The legislature did not define profit, as that term is used in ORS 215.203(2)(a). Similarly, LCDC did not define profitability or gross farm income in the rule that it adopted to implement Goal 3. Moreover, this court has not interpreted any of those terms in the context of the statutes and rules at issue in this case. [11] We therefore begin by looking to the dictionary for the plain, natural, and ordinary meaning of the term profit. As is so often the case, the dictionary offers several plausible definitions: 1: an advantage, benefit, accession of good, gain, or valuable return esp. in financial matters, education, or character development    2: the excess of returns over expenditures in a transaction or series of transactions: as a: the excess of the price received over the price paid for goods soldopposed to loss b: the excess of the price received over the cost of purchasing and handling or of producing and marketing goods 3a (1): net income (as in a business) usu. for a given period of time (2): a benefit or advantage accruing from the management, use, or sale of property, from the carrying on of any process of production, or from the conduct of business b: the income of invested property not including an appreciation in market value.   . Webster's Third New Int'l Dictionary 1811 (unabridged ed. 2002). As used in the statutory definition of farm use, the word profit is modified by the words in money. For that reason, we reject the first definition quoted above, under which profit could be any advantage or benefit, because that definition would include a sentimental or psychological benefit to the ownership of land, which the statute, by using the words profit in money, clearly excludes. The second sense of the word profit quoted above includes both the concepts of monetary returns or price received and the expenditures or cost associated with producing those returns or receipts, and defines profit as the excess of the former over the latter. The third sense similarly incorporates the concept of revenues minus expenses by referring to net income, which the dictionary defines as the balance of gross income remaining after deducting related costs and expenses usu[ally] for a given period and losses allocable to the period. Id. at 1520. Although several of the specific subsenses of profit provided by the dictionarysuch as those referring to the purchase and resale of goods or the income of invested propertydo not apply to the employment of land for farm use, the second and third senses described in the dictionary demonstrate that profit in money must include some consideration of expenses or costs, as well as of revenues or income. Two other definitions are also relevant here. Profitability means the quality or state of bringing or yielding benefits or gains, id. at 1811, and its specific meaning in the context of this case turns on the proper definition of profit. Gross in conjunction with income means consisting of an overall total exclusive of deductions. Id. at 1002. Applying those definitions to the statute and rule at issue, we conclude that in determining whether land is suitable for farm usedefined in ORS 215.203(2) as the current employment of the land for the primary purpose of obtaining a profit in money by engaging in specified farm or agricultural activitiesa local government may not be precluded from considering the costs or expenses of engaging in those activities. Each of the relevant definitions of profit discussed above uses that word to mean the excess or the net of the gain or receipts from the particular activity over the associated costs or expenditures, and we conclude that the statute refers to profit in that sense. We therefore reject the alternative definitions offered by the Court of Appeals and by petitioners. Nothing in the words of ORS 215.203(2)(a) requires, or provides any support for, the Court of Appeals' definition of the word profit to mean gross income. Evidence of the gross income that has been or could be generated from the farm use of a parcel of land may well be relevant in determining whether the land is or could be employed for the primary purpose of obtaining a profit, but, to put it bluntly, profit does not mean gross income. [12] Similarly, petitioners' proposed definition of profit to mean only net operating profit also is inconsistent with ORS 215.203(2)(a), because it focuses on current or potential profitability in a tax or accounting sense, while that statute and Goal 3 require the local government to determine whether the land is suitable for current use for the primary purpose of obtaining a profit in money through certain agricultural or farm activities. (Emphasis added.) As this court has been careful to recognize, [l]and use laws reflect different policies than tax laws. King Estate Winery, Inc. v. Dept. of Rev., 329 Or. 414, 422, 988 P.2d 369 (1999). With respect to farm use determinations for tax purposes, the legislature has stated its intent, in part, to ensure that  bona fide farm properties be assessed    at a value that is exclusive of values attributable to urban influences or speculative purposes. ORS 308A.050 (emphasis added). In such a context, strictly defining profit as a current year income-after-expenses accounting calculation is appropriate, because it allows for a more precise description of the discrete class of properties that are entitled to certain tax benefits due to their current operation as bona fide farms. In contrast, the identification of land that is suitable for farm use under Goal 3 can involve the consideration of factors as diverse as soil type, water availability, land use patterns, required energy inputs, and accepted farming practices. [13] Land can be suitable for economically successful and sustainable farm use and yet the landowner, because of tax and accounting concepts such as accelerated depreciation and loss carry-forwards, legitimately may show a net operating loss from such use. For those reasons, petitioners' proposed tax-based definition of profit in money to mean only net operating income after deducting operating expenses is inconsistent with the text and context of ORS 215.203(2)(a). Nevertheless, as set forth above, petitioners are correct to the extent that they argue that net operating profit properly can be considered in determining whether land can be employed for the primary purpose of obtaining a profit in money. We further conclude that the meaning of profitability, as used in OAR XXX-XXX-XXXX(5), essentially mirrors that of profit. For the reasons described above, that rule's prohibition of any consideration of profitability in agricultural land use determinations conflicts with the definition of farm use in ORS 215.203(2)(a) and Goal 3, which permit such consideration. OAR XXX-XXX-XXXX(5) is therefore invalid, because it prohibits consideration of profitability. The factfinder may consider profitability, which includes consideration of the monetary benefits or advantages that are or may be obtained from the farm use of the property and the costs or expenses associated with those benefits, to the extent such consideration is consistent with the remainder of the definition of agricultural land in Goal 3. Finally, the prohibition in OAR XXX-XXX-XXXX(5) of the consideration of gross farm income in determining whether a particular parcel of land is suitable for farm use also is invalid. As discussed above, profit is the excess or the net of the returns or receipts over the costs or expenses associated with the activity that produced the returns. To determine whether there is or can be a profit in money from the current employment of [the] land    by raising, harvesting and selling crops[,] a factfinder can consider the gross income that is, or could be, generated from the land in question, in addition to other considerations that relate to profit or are relevant under ORS 215.203(2)(a) and Goal 3. We therefore hold that, because Goal 3 provides that farm use is defined by ORS 215.203, which includes a definition of farm use as the current employment of land for the primary purpose of obtaining a profit in money[,] LCDC may not preclude a local government making a land use decision from considering profitability or gross farm income in determining whether land is agricultural land because it is suitable for farm use under Goal 3. Because OAR XXX-XXX-XXXX(5) precludes such consideration, it is invalid. [14] Accordingly, on remand, LUBA must reconsider its decision with respect to the county's land use determinations at issue here in light of that conclusion and our interpretation of the applicable statutes and rules. Although profitability and gross farm incomeboth actual and potentialmay be considered in determining whether land is suitable for farm use, we do not address the weight to be given to those considerations in any particular land use decision. In their arguments before LUBA, the Court of Appeals, and this court, the parties and amici appear to assume, at times, that, if particular land currently is profitable or produces gross farm income, then that land necessarily meets the farm use test and is properly classified as agricultural land under Goal 3, whereas if the land is unprofitable for farming or produces no gross farm income, then it necessarily is not agricultural land under Goal 3. The case before us, in its particular posture, does not present those issues. The determination that a particular parcel of land is agricultural land turns instead on the local government's conclusion, subject to review by LUBA and the courts, that the land is  suitable for farm use, taking into consideration the factors identified in Goal 3. The only issue that we decide today is whether profitability or gross farm income can be considered by the local government in making its land use decision, and our decision is limited to holding that the rule prohibiting the local government even from considering such evidence is invalid. The decisions of the Court of Appeals are affirmed in part and reversed in part. The decisions of the Land Use Board of Appeals are reversed, and the cases are remanded to the Land Use Board of Appeals for further proceedings.