Qwest Corp. v. City of Portland

Under ORS 221.515(1), in order to qualify as a privilege tax, a municipality must tax a telecommunications carrier that actually uses municipal rights-of-way in order to deliver services.

Qwest Corporation (Qwest) appealed a trial court judgment granting the City of Portland (Portland) declaratory relief, assigning error to the trial court’s ruling that that the “Utility License Fee” (ULF) imposed by Portland is not preempted by ORS 221.515(1), which caps the amount of “privilege taxes” a municipality may levy on telecommunications carriers for use of municipal rights-of-way. On appeal, Qwest argued that the ULF, in spite of its nomenclature, functions as a “privilege tax” and is thus preempted by ORS 221.515(1). Under Oregon’s “home rule” regime, a local law is valid unless it is preempted by a state law, or contravenes state or federal laws. A local law may be preempted if the state regulation expressly preempts local regulation, or is such that the state regulation “occupies the field,” or if the state and local law cannot operate concurrently. Under ORS 221.515(1), municipalities "may levy and collect from every telecommunications carrier operating within the municipality and actually using the streets, alleys or highways" except for travel. The Court held that in order to be a “privilege tax” under ORS 221.515(1), the tax must be levied against carriers actually using municipal rights-of-way. The Court held that as the ULF taxes both carriers that do and do not use municipal rights-of-way it is not a “privilege tax,” and thus the ULF does not conflict with ORS 221.515(1) in its operation. Affirmed.