S45799 Power Resources Cooperative v. Dept. of Rev.

SUPREME COURT CASES

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State: Oregon

Docket No: OTC4032

Case Date: 03/03/2000

Filed: March 3, 2000

IN THE SUPREME COURT OF THE STATE OF OREGON

POWER RESOURCES COOPERATIVE,

Appellant,

DEPARTMENT OF REVENUE,
State of Oregon,

Respondent.

(OTC 4032; SC S45799)

On appeal from the Oregon Tax Court.*

Argued and submitted October 14, 1999.

I. Franklin Hunsaker, Portland, argued the cause and filed the briefs for appellant. With him on the briefs were Stephen B. Hill, R. Erick Johnson, and Bullivant Houser Bailey.

James E. Wallace, Assistant Attorney General, Salem, argued the cause and filed the brief for respondent. With him on the brief were Hardy Myers, Attorney General, and Marilyn H. Harbur, Assistant Attorney General.

Before Carson, Chief Justice, and Gillette, Van Hoomissen, Durham, Leeson, and Riggs, Justices.**

GILLETTE, J.

The judgment of the Tax Court is affirmed.

*14 OTR 479 (1998).

**Kulongoski, J., did not participate in the consideration or decision of this case.

GILLETTE, J.

In this direct appeal from a decision of the Tax Court, the issue is whether a part of the real and personal property that makes up the electric transmission system known as the "Pacific Northwest Intertie" (the Intertie) should be included in the assessed value of taxpayer's property. Taxpayer is entitled to use the Intertie under a form of contract called a "Capacity Ownership Agreement." The Department of Revenue (Department) ruled, and the Tax Court agreed, that taxpayer's right to use the Intertie was subject to taxation. We agree with the Department and the Tax Court that, under the agreement, taxpayer "holds" a share of the Intertie within the meaning of the pertinent statute, and that the Department therefore properly assessed taxpayer for a part of the Intertie's value.

Taxpayer is an electrical cooperative that owns shares in a number of electrical generation facilities, including the Boardman Coal Plant. In 1992, taxpayer entered into a long-term power sale agreement to sell electricity from the Boardman plant to a California irrigation district. The agreement required taxpayer to use its "best efforts" to transmit the power via the Intertie. The Intertie, an electric power transmission system that runs from Canada to the United States-Mexico border, is owned largely by the Bonneville Power Administration (BPA), an agency of the United States government.

In 1994, in an apparent effort to meet its obligations under the foregoing power sale agreement, plaintiff entered into an "Intertie Capacity Ownership Agreement" with BPA. Under that agreement, plaintiff received 50 megawatts (MW) of transmission capacity for the physical life of the Intertie, in exchange for a lump sum payment of approximately $10.75 million in advance (1) and a promise to pay a proportionate share of the Intertie's operating, maintenance, and replacement expenses. (2) The agreement defines taxpayer's capacity ownership share in terms of the number of MW of BPA's rated transfer capability over the Intertie that was "owned by [taxpayer] pursuant to this agreement."

Under the Capacity Ownership Agreement, BPA retains all rights to operate, maintain, and manage the Intertie. Although taxpayer is entitled to 50 MW of capacity of the Intertie at any given time, it must schedule its electrical transmissions with BPA in advance and must abide by BPA's scheduling procedures. An amendment to the Capacity Ownership Agreement clarifies that taxpayer has a right to use its capacity share to "wheel" electricity for other entities. It also clarifies BPA's responsibilities with regard to any part of taxpayer's 50 MW that taxpayer fails to use, i.e., schedule, at any given time. The agreement permits BPA to use that unscheduled capacity, but requires BPA to compensate taxpayer for its use.

In 1996, the Department assessed taxpayer's property for the 1996-97 tax year at an amount in excess of $45 million, which included nearly $11 million as the value of taxpayer's share of the Intertie. Taxpayer appealed that assessment to the Tax Court, arguing that it should not be assessed for its capacity ownership share in the Intertie. The Department responded that taxpayer's share of capacity of the Intertie was taxable, either as "[r]eal and personal property of the United States * * * held by any person under a lease or other interest or estate less than a fee simple" under ORS 307.060 or as "intangible property" under ORS 308.510(1). (3) Both parties moved for summary judgment.

The Tax Court granted the Department's motion for summary judgment, denied taxpayer's motion, and entered judgment affirming the Department's assessment order. The Tax Court concluded that taxpayer had exclusive control, subject to reasonable limitation, over a part of the Intertie and, therefore, "held" that part of the Intertie within the meaning of ORS 307.060. (4) The present appeal followed.

ORS 307.060 sets out an exception to a more general statute, ORS 307.040, that exempts all property of the United States from taxation. ORS 307.060 provides, in part: "Real and personal property of the United States or any department or agency thereof held by any person under a lease or other interest or estate less than a fee simple * * * shall be assessed and taxed as for the full assessed value thereof subject only to deduction for restricted use."

(Emphasis added.)

Taxpayer contends that the Tax Court's reliance on ORS 307.060 was error. In ORS 307.060, taxpayer argues, the term "hold" denotes some kind of actual physical possession and occupation of the property at issue, along with control of the property and an ability to exclude others from it. Taxpayer maintains that only BPA can be said to "hold" the property that makes up the Intertie and that BPA's physical possession or occupancy of the system prevents anyone else, including taxpayer, from also "holding" it in the same sense. Taxpayer concludes that, although it has a right to use a part of the capacity of the Intertie under the Capacity Ownership Agreement, it does not "hold" any portion of the physical property that makes up the Intertie within the meaning of that statute.

Taxpayer relies primarily on Sproul et al v. Gilbert et al, 226 Or 392, 359 P2d 543 (1961). In Sproul, this court considered the meaning of ORS 307.060 in connection with a dispute about the taxation of rights to graze on United States Forest Service land. The court compared two types of grazing arrangements: (1) grazing permits, which gave ranchers a nonexclusive right to graze their cattle within a designated grazing district; and (2) grazing leases, which gave ranchers an exclusive right to graze their cattle on designated land that was not part of an official grazing district. The court held that grazing leases were taxable under ORS 307.060, while suggesting that grazing permits were not. Id. at 400.

The Sproul court reasoned that ORS 307.060 applies only to possessory interests:

"The question then is whether ORS 307.060 was intended to embrace derivative interests from the federal government other than possessory interests, i.e., to include as being taxable interests easements, profits and other incorporeal interests. Considered separately, the term 'or other interest' is broad enough to include non-possessory interests. However, we do not think that the term was used in ORS 307.060 in this broad sense. The statute provides that the interests described 'shall be assessed and taxed as for the full true cash value thereof subject only to deduction for restricted use.' * * * We do not think that the legislature intended that one who has a mere incorporeal interest such as an easement or a profit is to be taxed the 'full true cash value' of the land with a deduction for the 'restricted use.' We believe that the statute was intended to apply where the person holding under the United States had an interest of such dignity that it could be regarded as tantamount to a present temporary ownership warranting an assessment of it to him on the basis of its 'full true cash value.' * * * We construe the statute to include only interests which are capable of possession."

Id. at 423-24 (original emphasis omitted). Ultimately, the Sproul court concluded, grazing lessees have a sufficient possessory interest in the designated grazing land to implicate ORS 307.060, primarily because their use of the parcel is relatively exclusive and because the restrictions imposed on their use are consistent with a leasehold arrangement. On the other hand, the court suggested that grazing permittees, who held only a right to run a certain number of cattle within a shared grazing district, lacked a sufficient possessory interest in the land that made up the grazing district to trigger ORS 307.060. Sproul, 226 Or at 397-420.

Taxpayer contends that, under the reasoning of Sproul and a later case, Ore. Summer Hm. Owners v. Johnson, 265 Or 544, 510 P2d 344 (1973), (5) its interest in the Intertie is not the type of property that is taxable under ORS 307.060. Taxpayer contends that its rights under the Capacity Ownership Agreement are like those conferred by a grazing permit: Taxpayer's right to use the Intertie is shared with others, and taxpayer does not occupy physically or control any definable part of the Intertie. Finally, taxpayer notes that even its use of the Intertie is subject to stringent scheduling and advance notice provisions. Ultimately, taxpayer argues, all that it has under its Capacity Ownership Agreement with BPA is a prepaid, long-term transmission service agreement, not a possessory interest in the real and personal property that comprises the Intertie.

We disagree. Although it is true that, under Sproul, ORS 307.060 applies only to "possessory" interests in property, that concept of possession is more flexible than taxpayer suggests. The Sproul court expressly noted that "possession" is a variable term that has different meanings in different circumstances:

"A part of the variability in the meaning of possession arises out of the fact that possession has meaning only in terms of actual or potential use and because the uses to which land may be put vary from parcel to parcel. When the property is amenable to many uses, the right to use it for a single limited purpose might not constitute possession; yet, the same right to use may well be regarded as possessory if the land in question is susceptible to only a limited number of uses."

226 Or at 404. In a related vein, the Sproul court added:

"There is no exact judicial gauge which can be set against the facts to prove our conclusion with mathematical precision. The exclusiveness of one's occupancy is a matter of degree. We can only compare the respective ownership interests - principally the usufructuary rights - of the transferor and the transferee, and if we find that the transferee has been granted the privilege of occupancy together with a sufficient share of these interests we describe his right as 'possession.'"

Id. at 405-06.

The foregoing paragraphs from Sproul make two points that extend beyond the specific facts of that case and that are relevant to the present controversy: (1) although a "possessory" interest always is marked by some degree of control and some degree of exclusivity, neither absolute control nor absolute exclusivity is required; and (2) the test for the existence of a possessory interest necessarily varies with the nature of the property at issue.

With the foregoing points in mind, we turn to taxpayer's contention that its right to use the Intertie is nonpossessory because that right is shared with others and is subject to various restrictions. We begin with the fact that the particular type of right that taxpayer has in the Intertie, i.e., to transmit electricity over it, is a right to use the Intertie for its only apparent beneficial use. See Sproul, 226 Or at 404-05 (where plaintiff's use of government land for grazing embraced substantial part of all the land's practical uses, that use was relatively exclusive).

Taxpayer is correct in stating that it must share the transmission capacity of the Intertie with others. However, even if taxpayer does not have exclusive rights to the entire transmission capacity of the Intertie, it does have an exclusive right to a definable part, viz., 50 MW. Moreover, taxpayer has a great deal of control over that 50 MW share. Taxpayer may choose to use the 50 MW in whatever manner it wishes, i.e., it may choose to transmit its own electrical output, or it may, instead, "wheel" electricity that is produced by others. Morever, and even if taxpayer chooses not to use all its capacity share to transmit electricity, it retains a palpable right to the entire 50 MW: If BPA "borrows" any capacity that taxpayer has failed to schedule at any given time, then it must reimburse taxpayer for such use. Finally, taxpayer's 50 MW share exists for the lifetime of the Intertie; it is not revocable; and it cannot be diminished, for example, by the addition of more capacity owners. Taxpayer argues that those interests, taken together, cannot be deemed to constitute a possessory interest in the Intertie, because its use of the Intertie is subject to various scheduling requirements. However, those requirements appear to us to be precisely the kind of restrictions that a joint owners or lessees of this kind of property would impose on themselves in the interest of orderly operation. Such restrictions are consistent with a possessory interest. Cf. Avis v. Dept. of Rev., ___ Or ___, ___ P2d ___ (decided this date) (slip op at 4-5) (decided under parallel statute; reservation to others of right to use leased property did not change lease into some lesser interest).

The foregoing discussion leaves us with taxpayer's primary assertion, viz., that possession requires exclusive physical occupation and control of property that is defined in space. In that regard, taxpayer notes that, in Sproul, the court suggested that a grazing permit would not confer a possessory interest in United States Forest Service land, because permittees do not have exclusive use of specific area of land. Sproul, 226 Or at 400. Taxpayer argues that, in like manner, it does not possess any part of the property that makes up the Intertie, because the Capacity Ownership Agreement does not confer on it any exclusive right to occupy or control a spatially defined portion of that property.

That argument factually is accurate, but it misses the point. Sproul might suggest that relatively exclusive control over a defined area is a necessary component of possession of the kind of property that was involved in that case and for the purposes to which that property was to be used, but it also teaches that the notion of "possession" varies with the property at issue. See also Avis, ___ Or at ___ (slip op at 4-5) (demonstrating flexibility of the concept of a taxable possessory interest). The property involved in this case -- an electric transmission grid -- cannot physically be divided usefully among its owners. However, that limitation has not prevented taxpayer from investing in the expansion of the system, sharing the costs of its upkeep, and thereby obtaining an exclusive right to use and control the system to the extent necessary to permit transmission of 50 MW of electricity for taxpayer's own benefit. In this context, that is sufficient; taxpayer's 50 MW capacity ownership share in the Intertie is a possessory interest in that entity. Put differently, taxpayer "holds" a share of the property that makes up the Intertie and may be assessed and taxed for that share to the extent provided in ORS 307.060.

Taxpayer contends that, even if it does "hold" a proportionate share of the Intertie within the meaning of ORS 307.060, application of that statute in this case violates the principle of intergovernmental tax immunity and, consequently, the United States Constitution. (6) Taxpayer notes that, under the Department's administrative rule OAR 150-307.110, state and local property may be taxed to a nonexempt party only if the property is occupied by the party and the party has been granted "exclusive possession of a definitely described area for a specified period of time." (7) Taxpayer contends that that rule would preclude the Department from assessing users of state property who operate under contracts that are similar to its "capacity ownership" contract with BPA and that the constitutional principle of intergovernmental tax immunity prohibits any different treatment with respect to contract users of federal property. (8)

OAR 150-307.110 is the Department's interpretation of a related statutory provision, viz., ORS 307.110. ORS 307.110 pertains to the taxation of nonexempt parties who hold state and local, rather than federal, government property. However, with respect to the particulars that are relevant in this proceeding, ORS 307.110 is almost identical to ORS 307.060: It provides for assessment or taxation of government property that is "held under a lease or other interest or estate less than a fee simple" by any nonexempt party. See generally Avis (illustrating scope and application of ORS 307.110). Although the rule might suggest that the Department tentatively has held a different view, we have no reason to believe that the legislature intended that the Department use different standards for determining whether a party "holds" government property, depending on whether the property is owned by the state, a local government, or the United States. Moreover, the rule is not being applied in this case and is not an authoritative statement of the way ORS 307.110 should be interpreted. In short, taxpayer's suggestion that it would have been treated differently under the tax laws of this state, if its interest in the Intertie had been acquired from the state government rather than from BPA is speculative, and we are not persuaded by it. We hold that application of ORS 307.060 to taxpayer's interests under its "Capacity Ownership Agreement" with BPA does not violate the doctrine of intergovernmental tax immunity. (9)

The judgment of the Tax Court is affirmed.

1. Taxpayer entered into the Capacity Ownership Agreement with BPA at a time when BPA was engaged in a significant expansion of the Intertie to accommodate new capacity owners. Taxpayer's initial lump sum payment represented a percentage, based on taxpayer's capacity ownership share, of the "actual capital and related costs" of that expansion.

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2. At present, 50 MW represents a little more than one percent of the Intertie's total capacity of 4800 MW.

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3. ORS 308.510(1) defines "property" for purposes of assessment of designated utilities as including intangible property used or held by the company for or in the performance or maintenance of its business.

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4. The Tax Court did not rule on the Department's alternative theory that taxpayer's Capacity Ownership Share in the Intertie is taxable as intangible property under ORS 308.510(1).

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5. Ore. Summer Hm. Owners involved the Department's decision to tax owners of summer homes that were built on United States Forest Service land for the value of the land that they occupied. This court concluded that the homeowner's permits conveyed possessory interests in the land that were comparable to the grazing leases in Sproul, primarily because they could exercise a high degree of control and exclusivity over the properties. The court concluded, therefore, that the permittees were subject to taxation for the land that their homes occupied under ORS 307.060. 265 Or at 550.

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6. The doctrine of intergovernmental tax immunity forbids direct taxation of one sovereign by another as well as indirect taxation that discriminates against those with whom the sovereign deals. See Vogl v. Dept. of Rev., 327 Or 193, 197 n 1, 960 P2d 373 (1998) (describing principle of intergovernmental tax immunity).

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7. OAR 150-307.110, provides, in part:

"(1) Qualifying Conditions. The assessor shall assess and tax publicly owned real or personal property for the real market value thereof uniformly with real property of nonexempt ownerships when the following conditions of a lease or other interest or estate less than fee simple are met. A lease or other possessory interest exists if the occupant is granted exclusive possession of a definitely described area for a specified period of time (term).

"(2) Exclusive Possession. The test is whether the occupant has sufficient control over the premises to warrant the label of possession. If the occupant can exclude others, including the owner (except for inspection, making repairs, etc.) the occupant has possession. But, if the premises must be shared with others, such as a common pasture, the occupant does not have a possessory interest."

(Emphasis added.)

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8. Taxpayer cites Phillips Chemical Co. v. Dumas School Dist., 361 US 376, 80 S Ct 474, 4 L Ed 2d 384 (1960), for the proposition that the principle of intergovernmental tax immunity can apply in this situation. Phillips pertained to a Texas statute that subjected to state taxation any part of federal property "which is used and occupied by any person [or business] in its private capacity, or which is being used or occupied in the conduct of any private business or enterprise" -- without regard to the terms of such usage. Id. at 378, 4 L Ed 2d at 387. The Supreme Court compared that statute, as it had been construed and applied to the appellant, to another state statute that permitted taxation of property leased from the state only if the lessee held the property under a lease for a term of three years or more. The Supreme Court concluded that the former statute unlawfully discriminated against the United States and its lessees because it authorized taxation of lessees of federal, but not state, land, when the lease at issue is subject to termination at the option of the lessor. Id. at 381-82, 4 L Ed 2d at 388-89.

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9. Taxpayer also argues that the assessment at issue violates the Supremacy Clause of Article VI, of the United States Constitution. Because taxpayer did not raise that argument before the Tax Court, we do not consider it here.

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Filed: June 30, 2011 IN THE SUPREME COURT OF THE STATE OF OREGON In Re: Complaint as to the Conduct of J. MARK LAWRENCE, Accused. (OSB 08-115; SC S058778) En Banc On review of the decision of a trial panel of the Disciplinary Board. Argued and submitted May 2, 2011. Paula Lawrence, McMinnville, argued and cause and filed the briefs for accused. Stacy Hankin, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the brief for the Oregon State Bar. PER CURIAM The complaint is dismissed. PER CURIAM The issue in this lawyer disciplinary proceeding is whether the accused, by releasing a partial transcript of a juvenile hearing to the press, violated Rule of Professional Conduct (RPC) 8.4(a)(4), which prohibits a lawyer from engaging in conduct that is prejudicial to the administration of justice. A trial panel found the accused guilty of violating RPC 8.4(a)(4) and suspended him for 60 days. We review the decision of the trial panel de novo. ORS 9.536(2); BR 10.6. Because we conclude that

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the Bar failed to prove by clear and convincing evidence that the accused's conduct caused prejudice to the administration of justice, we dismiss the complaint. The facts are straightforward and largely undisputed. In 2007, the accused represented a juvenile male who, along with another male friend, allegedly had touched or swatted several female classmates on the buttocks and had danced in front of the females in a lascivious manner. The incident occurred at the students' middle school. After being informed of the youths' behavior, the vice principal and a police officer interviewed the victims. Based on those interviews, the accused's client and his friend were arrested by a McMinnville Police Officer on February 22, 2007. On February 23, the Yamhill County Juvenile Department filed a delinquency petition alleging that the accused's client had committed acts that, if done by an adult, would have constituted five counts of first-degree sexual abuse and five counts of third-degree sexual abuse. At an initial detention hearing that same day, the court ordered the youths to remain in custody. The events giving rise to this disciplinary action arose out of a second detention hearing held on February 27, 2007, before Judge John Collins. The accused called two of the victims to testify on behalf of his client. The female victims testified that the youths were their friends and that they did not find the youths to be threatening in any way. Regarding the alleged sexual abuse, the female victims testified that the touching or swatting was not sexual in nature but rather was mere horseplay. The victims also testified that they felt pressured by the vice principal and the police officer to make the touching sound hurtful and uncomfortable when it was not. By the second detention hearing, the case was receiving substantial media 2

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attention. Judge Collins allowed the press to attend the detention hearing, but prohibited the press from recording the proceedings. The parties dispute whether the judge prohibited only video recordings or also prohibited audio recordings.1 A number of newspaper and television stories reported the events and testimony at the hearing. After the hearing, the accused obtained a copy of the official audio recording of the hearing and had a partial transcript prepared that contained the victims' testimony. In March 2007, a reporter contacted the accused about the February 27 hearing. The reporter, who was not present at the hearing, expressed disbelief that the female victims had felt pressured by the vice principal and the police officer to make the youths' actions seem sexual. The accused offered to give the reporter a copy of the partial transcript when it was available. The accused believed that it would have been improper to give the reporter the official audio recording of the hearing but thought that the transcript could be released. The accused contacted Deborah Markham, the deputy district attorney handling the case, to see if she objected to releasing the transcript. Markham told the accused that she believed that the court would have to consent. The accused then released the transcript to the reporter without obtaining permission from Judge Collins. Deputy District Attorney Deborah Markham testified that Judge Collins prohibited video recording. Judge Collins testified that he might have prohibited the press from recording the detention hearing, but that he did not remember whether he did so or not. He did remember allowing video recording at a later hearing in the proceeding. The accused testified that Judge Collins prohibited video recording but that he could not remember if the judge prohibited audio recording.
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When Judge Collins learned that the transcript had been released -following news reports that cited the transcript -- he called a meeting with Markham and the accused and told them to release no other transcripts. The testimony from the accused, Markham, and Judge Collins differs regarding that meeting. The accused described the meeting as relaxed and said that Judge Collins had stated that the release of the transcript was permissible. Markham testified that Judge Collins was "very concerned" about the release of the transcript and that Judge Collins said that the accused's disclosure violated the law. Judge Collins testified that the accused did not get his consent to release the transcript, but that he was not sure if the accused needed to do so under the circumstances of the case, particularly given the presence of the press at the hearing. In Judge Collins's description, the meeting was not contentious; although he requested that the parties refrain from releasing any additional transcripts, he did not "feel like [he] needed to be firm" and so did not issue an order barring further releases. In April 2008, several months after the juvenile case was resolved, Tim Loewen, director of the Yamhill County Juvenile Department, reported the accused's action of releasing the transcript to the Bar. After investigating the matter, the Bar charged the accused with violating RPC 8.4(a)(4)2 by releasing to the press "information
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RPC 8.4(a) provides, in relevant part: "It is professional misconduct for a lawyer to: "* * * * * "(4) engage in conduct that is prejudicial to the administration of

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appearing in the record" of a juvenile case without court consent, in violation of ORS 419A.255(1) and (3).3 The Bar alleged that the accused had "usurped" Judge Collins's authority to control the proceeding by not seeking the court's consent before releasing the transcript, and thereby had caused prejudice to the administration of justice. In the proceeding before the trial panel, the accused argued that his release of the transcript did not violate ORS 419A.255 for each of three independent reasons: (1) the transcript that he had prepared was not a part of the record of the case and so was not subject to ORS 419A.255; (2) Judge Collins had consented to the release of the information contained in the transcript when he allowed the press to attend and report on

justice[.]"
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ORS 419A.255 provides, in relevant part:

"(1) The clerk of the court shall keep a record of each case, including therein the summons and other process, the petition and all other papers in the nature of pleadings, motions, orders of the court and other papers filed with the court, but excluding reports and other material relating to the child, ward, youth or youth offender's history and prognosis. The record of the case shall be withheld from public inspection but is open to inspection by the child, ward, youth, youth offender, parent, guardian, court appointed special advocate, surrogate or a person allowed to intervene in a proceeding involving the child, ward, youth or youth offender, and their attorneys. The attorneys are entitled to copies of the record of the case. "* * * * * "(3) Except as otherwise provided in subsection (7) of this section, no information appearing in the record of the case or in reports or other material relating to the child, ward, youth or youth offender's history or prognosis may be disclosed to any person not described in subsection (2) of this section without the consent of the court * * * ."

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the hearing; and (3) the information in the transcript could be released under ORS 419A.255(5)(b) and (d), which list certain exceptions to the confidentiality of juvenile records. Even assuming that he did violate ORS 419A.255, the accused asserted, he did not violate RPC 8.4(a)(4), because his conduct was not prejudicial to the administration of justice. That was so, according to the accused, because the defendant and the victims supported releasing the transcript and because the information contained in the transcript had already been made public as a result of the press attending and reporting on the hearing. Thus, in the accused's view, no harm -- actual or potential -- resulted from his conduct. The trial panel found by clear and convincing evidence that the accused had violated RPC 8.4(a)(4) and suspended the accused from the practice of law for 60 days. The trial panel first determined that ORS 419A.255(3) prohibited the accused from releasing the partial transcript to the press without the consent of the trial court and that the accused had violated the statute in doing so. With little discussion, the trial panel then found that the evidence that the accused had violated the statute also was sufficient to show prejudice to the administration of justice and thus that the accused had violated RPC 8.4(a)(4). The accused sought review in this court. To prove a violation of RPC 8.4(a)(4), the Bar must prove (1) that the accused lawyer's action or inaction was improper; (2) that the accused lawyer's conduct occurred during the course of a judicial proceeding; and (3) that the accused lawyer's conduct had or could have had a prejudicial effect upon the administration of justice. See In re Kluge, 335 Or 326, 345, 66 P3d 492 (2003) (citing In re Haws, 310 Or 741, 746-48, 6

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801 P2d 818 (1990)) (so stating for identically worded former DR 1-102(A)(4)). Because we find the issue to be dispositive, we begin by examining the third element -- whether the accused's conduct had or could have had a prejudicial effect on the administration of justice -- and assume, without deciding, that the accused's conduct violated ORS 419A.255(3) and otherwise satisfied the test set out in Kluge and Haws. Prejudice to the administration of justice "may arise from several acts that cause some harm or a single act that causes substantial harm to the administration of justice." Kluge, 335 Or at 345. This court has identified two components to the "administration" of justice: "1) The procedural functioning of the proceeding; and 2) the substantive interest of a party in the proceeding." Haws, 310 Or at 747. "A lawyer's conduct could have a prejudicial effect on either component or both." Id. The Bar argues that the accused's conduct, a single act, resulted in prejudice to the administration of justice because it had the potential to cause substantial harm to the procedural functioning of the court. The Bar asserts, "Substantial potential harm to the administration of justice occurs whenever a lawyer interferes in or usurps the court's ability to do its job in a proceeding pending before it." The Bar states that the accused "usurped" the court's authority by not seeking Judge Collins's consent prior to releasing the transcript. The Bar cites three disciplinary cases to support its position that the accused's conduct resulted in substantial potential harm to the administration of justice. First, in In re Eadie, 333 Or 42, 36 P3d 468 (2001), this court found a violation of former DR 1-102(A)(4) where the accused lawyer submitted a proposed order containing a 7

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misrepresentation that was intended to influence the judge in changing the trial date. Id. at 58. That conduct substantially harmed the procedural functioning of the court because it resulted in the judge acquiescing to a trial date preferred by the accused and made it necessary for the judge to resolve a dispute resulting from the accused's misrepresentation and to redraft an order. Id. Second, in In re Morris, 326 Or 493, 953 P2d 387 (1998), this court concluded that the accused lawyer had engaged in a single act of conduct that had the potential to cause substantial harm, either to the procedural functioning of the court or to the substantive interests of the parties, when she knowingly filed a notarized document that she had altered. Id. at 502-03. Third, in In re Thompson, 325 Or 467, 940 P2d 512 (1997), this court found a violation of former DR 1-102(A)(4) where the accused lawyer physically confronted a judge after receiving an adverse decision. That conduct caused substantial harm to the administration of justice because the accused's ex parte communication with the judge "unfairly attack[ed] the independence, integrity, and respect due a member of the judiciary." Id. at 475. The conduct also had the potential to cause substantial harm, because it could have influenced the judge to change her decision or to recuse herself from the case. Id. In each of the preceding cases, the accused lawyer engaged in conduct that had the potential to disrupt or to improperly influence the court's decision-making process, Thompson, 325 Or at 475; that created unnecessary work for the court, Eadie, 333 Or at 58; or that had the potential to mislead the court, Morris, 326 Or at 503. Moreover, in Eadie and Morris, the accused lawyers made knowing misrepresentations to the court. Similarly, in Kluge, the accused lawyer's conduct in knowingly filing an 8

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untimely motion to disqualify the trial judge and then failing to serve the motion on opposing counsel caused prejudice to "the procedural functioning of the judicial system by imposing a substantial burden upon both opposing counsel and [the trial judge] to undo the accused's actions." 335 Or at 346. In this case, the Bar has made no showing, as required by Kluge and Haws, that the accused's conduct harmed the procedural functioning of the judicial system, either by disrupting or improperly influencing the court's decision-making process or by creating unnecessary work or imposing a substantial burden on the court or the opposing party. Nor has the Bar shown that his conduct had the potential to result in any of the above. Certainly, Judge Collins did not testify that the accused's actions interfered with Judge Collins's conduct of the juvenile proceeding. Although the Bar correctly asserts that ORS 419A.255 gives the trial court control over the release of protected information in a juvenile record -- and, as noted, we assume without deciding that the accused acted improperly in not seeking the trial court's consent -- the Bar's theory fails to take into account the fact that the information contained in the partial transcript that the accused released was presented in open court and had already been reported by the press.4 It is difficult to see how the accused's release of the same information, in the context of this case, had the potential to cause any harm to the proceeding, much less substantial harm.

Article I, section 10, of the Oregon Constitution grants members of the public, including the press, the right to attend juvenile hearings. State ex rel Oregonian Pub. Co. v. Deiz, 289 Or 277, 284-85, 613 P2d 23 (1980).

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See Kluge, 335 Or at 345 (prejudice to the administration of justice may arise from "several acts that cause some harm or a single act that causes substantial harm"). Indeed, the Bar makes no effort to show that the accused's conduct could have resulted in new information being made public or that the release of the partial transcript itself had any potential impact on the proceeding. In fact, after the press attended the hearing and the accused released the transcript, Judge Collins allowed members of the press to listen to the official audio recording of the hearing. Nevertheless, the Bar asserts that Judge Collins was sufficiently "concerned" about the release of the information to call the accused and Markham to his chambers to discuss the incident. The fact that Judge Collins was "concerned" and met with the accused and Markham does not, by itself, demonstrate the potential for substantial harm to the procedural functioning of the court. Judge Collins himself stated that, although "in a perfect world," he probably would not have wanted the transcript released, in the context of this case and the open court provision of Article I, section 10, of the Oregon Constitution, the release of the partial transcript was likely permissible without his consent because "if [the press is] * * * going to know the information and report the information, at least get it right." Judge Collins's testimony, then, does not demonstrate that the accused's conduct impacted the procedural functioning of the court, even if the accused's conduct was cause for "concern." Nor does the Bar offer any evidence to prove that the release of the partial transcript harmed the substantive interests of the accused's client, the victims, or the state. The accused released the transcript, with the support of his client, in response to an 10

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inquiry from the media and in order to respond to inaccuracies appearing in some media reports. The accused maintained the confidentiality of the victims' names in the transcript, referring to them by their initials, consistent with an earlier order by Judge Collins. In this proceeding, the accused also submitted letters from the two victims who testified (and their parents) that stated their support for the release of the partial transcript. Finally, there was no testimony from the Yamhill County Juvenile Department that the release of the partial transcript had any effect on its substantive interests or its ability to prosecute the case. The Bar appears, instead, to take the position that virtually any violation of a statute, rule, or court order that occurs during the course of a court proceeding and relates to the conduct or any procedural aspect of that proceeding necessarily is prejudicial to the administration of justice. The Bar asserts, in effect, that "substantial potential" harm is implicit in the accused's conduct. Our cases, however, require proof by clear and convincing evidence that an accused's conduct in a specific judicial proceeding caused actual or potential harm to the administration of justice and, when only one wrongful act is charged, that actual or potential harm must be "substantial." Kluge, 335 Or at 345; Haws, 310 Or at 748. Here, the Bar's evidence did not prove that substantial harm resulted or could have resulted from the accused's conduct. We conclude that the Bar has not proved by clear and convincing evidence that the accused violated RPC 8.4(a)(4). The accused's conduct did not result in such prejudice, because there is no evidence that the release of the partial transcript, which contained solely information already presented in open court and reported by the press, 11

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harmed the procedural functioning of the judicial system. Nor is there any evidence that the substantive rights of the accused's client, the other juvenile defendant, the victims, or the state were harmed. "Prejudice to the administration of justice" requires such a showing. Haws, 310 Or at 747-48. The complaint is dismissed.

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