B-108135, OCTOBER 6, 1952, 32 COMP. GEN. 164

B-108135: Oct 6, 1952

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APPROPRIATION AVAILABILITY - REAL ESTATE TAXES - GOVERNMENT-OWNED EXCESS PROPERTY TRANSFERRED TO INTERIOR DEPARTMENT THE AUTHORITY VESTED IN GOVERNMENT-OWNED CORPORATIONS UNDER THE RECONSTRUCTION FINANCE CORPORATION ACT TO PAY LOCAL TAXES ON REAL PROPERTY IS CONTINGENT UPON THE CORPORATIONS HOLDING LEGAL TITLE AND HAVING FULL CONTROL AND DOMINION OVER THE PROPERTY. SO THAT THE PROPERTY TRANSFERRED TO THE BUREAU OF MINES BY A GOVERNMENT-OWNED CORPORATION AFTER IT WAS DECLARED EXCESS UNDER FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949. APPROPRIATIONS OF THE BUREAU OF MINES ARE NOT AVAILABLE FOR THE PAYMENT OF LOCAL TAXES. 1952: REFERENCE IS MADE TO LETTER OF THE ASSISTANT SECRETARY OF THE * INTERIOR.

B-108135, OCTOBER 6, 1952, 32 COMP. GEN. 164

APPROPRIATION AVAILABILITY - REAL ESTATE TAXES - GOVERNMENT-OWNED EXCESS PROPERTY TRANSFERRED TO INTERIOR DEPARTMENT THE AUTHORITY VESTED IN GOVERNMENT-OWNED CORPORATIONS UNDER THE RECONSTRUCTION FINANCE CORPORATION ACT TO PAY LOCAL TAXES ON REAL PROPERTY IS CONTINGENT UPON THE CORPORATIONS HOLDING LEGAL TITLE AND HAVING FULL CONTROL AND DOMINION OVER THE PROPERTY, SO THAT THE PROPERTY TRANSFERRED TO THE BUREAU OF MINES BY A GOVERNMENT-OWNED CORPORATION AFTER IT WAS DECLARED EXCESS UNDER FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, BECOMES BY OPERATION OF LAW PROPERTY HELD BY AND FOR USE OF UNITED STATES, AND THEREFORE, APPROPRIATIONS OF THE BUREAU OF MINES ARE NOT AVAILABLE FOR THE PAYMENT OF LOCAL TAXES, EVEN THOUGH BARREN LEGAL TITLE TO THE PROPERTY REMAINED IN THE CORPORATION.

ACTING COMPTROLLER GENERAL YATES TO THE SECRETARY OF THE INTERIOR, OCTOBER 6, 1952:

REFERENCE IS MADE TO LETTER OF THE ASSISTANT SECRETARY OF THE * INTERIOR, DATED FEBRUARY 15, 1952, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER APPROPRIATIONS OF THE BUREAU OF MINES, DEPARTMENT OF THE INTERIOR, ARE AVAILABLE FOR THE PAYMENT OF A GENERAL PROPERTY TAX ON THE ALUMINA PLANT AT LARAMIE, WYOMING, FROM AND AFTER SEPTEMBER 27, 1951, THE DATE ON WHICH THE FACILITY WAS MADE AVAILABLE TO THE DEPARTMENT OF THE INTERIOR FOR OPERATION BY THE BUREAU OF MINES.

IT IS REPORTED THAT THE PLANT WAS CONSTRUCTED BY THE DEFENSE PLANT CORPORATION DURING WORLD WAR II AND THAT ALL RIGHTS AND RESPONSIBILITIES OF OWNERSHIP THEREIN, EXCEPT RECORD TITLE, PASSED FROM THE DEFENSE PLANT CORPORATION, A SUBSIDIARY OF THE RECONSTRUCTION FINANCE CORPORATION, TO THE LATTER CORPORATION BY THE PROVISIONS OF THE ACT OF JUNE 30, 1945, 59 STAT. 310. THE RECONSTRUCTION FINANCE CORPORATION, ON SEPTEMBER 14, 1950, DECLARED THE PROPERTY EXCESS TO ITS NEEDS PURSUANT TO THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 201, ET SEQ. THE GENERAL SERVICES ADMINISTRATION ISSUED A PERMIT DATED SEPTEMBER 27, 1951, EFFECTIVE SEPTEMBER 28, 1951, FOR THE USE OF THE PLANT BY THE BUREAU OF MINES, DEPARTMENT OF THE INTERIOR, REQUIRING SUCH BUREAU TO PAY "TAXES AND OTHER OBLIGATIONS WHICH MAY BE LEVIED AND ASSESSED AGAINST THIS FACILITY OR UPON THE USE THEREOF, DURING THE LIFE OF THIS PERMIT AND FOR ONE YEAR BEYOND.' ON OCTOBER 29, 1951, THE DEPARTMENT OF THE INTERIOR ACKNOWLEDGED TRANSFER OF ACCOUNTABILITY FOR THE PLANT FROM THE RECONSTRUCTION FINANCE CORPORATION SUBJECT TO THE AVAILABILITY OF APPROPRIATED FUNDS FOR THE PAYMENT OF TAXES. THE DEFENSE PLANT CORPORATION AND ITS SUCCESSOR IN INTEREST, THE RECONSTRUCTION FINANCE CORPORATION, APPARENTLY HAVE PAID TAXES ASSESSED ON THE PROPERTY BY THE LOCAL TAXING AUTHORITIES IN ALBANY COUNTY, WYOMING, THROUGH THE FIRST HALF OF 1951.

THE SPECIFIC QUESTION POSED IN THE LETTER OF FEBRUARY 15 IS WHETHER THE APPROPRIATION FOR " CONSERVATION AND DEVELOPMENT OF MINERAL RESOURCES" CONTAINED IN THE DEPARTMENT OF THE INTERIOR APPROPRIATION ACT, 1952, PUBLIC LAW 136, APPROVED AUGUST 31, 1951, 65 STAT. 259, IS AVAILABLE FOR THE PAYMENT OF THE PRO RATA TAX FOR THE PERIOD SUBSEQUENT TO SEPTEMBER 27, 1951, UNDER THE TERMS OF THE APPROPRIATION OR UNDER AUTHORITY OF THE ADMINISTRATIVE PROVISIONS OF THE ACT APPLICABLE TO APPROPRIATIONS FOR THE BUREAU OF MINES. ALSO, HAVING IN MIND THE DECISION OF THIS OFFICE DATED MARCH 30, 1948, 27 COMP. GEN. 560, YOU REQUEST TO BE ADVISED WHETHER FUTURE STATE AND LOCAL TAXES ON THE PLANT ARE PAYABLE IN VIEW OF THE DECLARATION BY THE RECONSTRUCTION FINANCE CORPORATION THAT THE PLANT WAS EXCESS TO ITS NEEDS.

THE ABOVE-NAMED APPROPRIATION WAS MADE "FOR EXPENSES NECESSARY FOR PROMOTING THE CONSERVATION, EXPLORATION, DEVELOPMENT AND UTILIZATION OF MINERAL RESOURCES" AND IS AVAILABLE FOR REASONABLE AND NECESSARY EXPENSES INCURRED IN CARRYING OUT ITS PURPOSES. HOWEVER, TO DETERMINE WHETHER THE PAYMENT OF GENERAL PROPERTY TAXES LEVIED BY A STATE OR POLITICAL SUBDIVISION ON THIS PLANT IS A NECESSARY ITEM OF EXPENSE, THERE FIRST MUST BE ESTABLISHED THE LIABILITY OF THE UNITED STATES FOR THE PAYMENT OF SUCH TAXES.

IT WAS NOT APPARENT FROM THE INFORMATION AVAILABLE HERE ON RECEIPT OF THE ASSISTANT SECRETARY'S LETTER OF FEBRUARY 15, WHY STEPS HAD NOT BEEN TAKEN TO TRANSFER THE RECORD TITLE TO THIS PLANT FROM THE DEFENSE PLANT CORPORATION TO THE RECONSTRUCTION FINANCE CORPORATION, AND THENCE TO THE GENERAL SERVICES ADMINISTRATION SO THAT THE STATE AND COUNTY RECORDS WOULD SHOW OWNERSHIP THEREOF IN THE NAME OF THE UNITED STATES INSTEAD OF A GOVERNMENT-OWNED CORPORATION. ACCORDINGLY, BY OFFICE LETTER DATED APRIL 1, 1952, B-108135, THE VIEWS OF THE ADMINISTRATOR OF GENERAL SERVICES WERE REQUESTED WITH RESPECT THERETO. IN HIS REPLY, THE ADMINISTRATOR EXPRESSED THE OPINION THAT THE BARREN LEGAL TITLE TO PROPERTY DECLARED EXCESS BY THE RECONSTRUCTION FINANCE CORPORATION REMAINS IN THAT CORPORATION, CITING UNITED STATES V. SHOFNER IRON AND STEEL WORKS, 168 F.2D 286, AND STATED THAT THE STATE AND LOCAL TAXING AUTHORITIES HOLD BARREN LEGAL TITLE AND RECORD TITLE ARE ONE AND THE SAME FOR TAX PURPOSES AND THAT LOCAL LAWS PROVIDE FOR ASSESSMENT OF PROPERTY IN THE NAME OF THE RECORD OWNER. STATED FURTHER THAT, WHILE THERE APPEARS NO LEGAL IMPEDIMENT TO TRANSFERRING TITLE FROM THE CORPORATION TO THE UNITED STATES IN SUCH CASES, THE POLICY OF THE GENERAL SERVICES ADMINISTRATION AND THAT OF ITS PREDECESSOR, THE WAR ASSETS ADMINISTRATION, HAS BEEN TO LEAVE THE RECORD TITLES TO SUCH PROPERTY IN THE NAME OF THE CORPORATION UNTIL SOLD OR ASSIGNED FOR USE BY AN AGENCY OF THE GOVERNMENT. IT IS STATED THAT THIS POLICY WAS INITIATED BECAUSE SOME 1500 PLANTS OTHERWISE WOULD HAVE BEEN TAKEN OFF THE STATE ROLLS IMMEDIATELY AND, ALSO, IN ORDER THAT EFFECT MIGHT BE GIVEN TO THE STATUTORY AUTHORITY TO PAY SUMS IN LIEU OF TAXES ON PROPERTY DECLARED SURPLUS UNDER THE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944, 58 STAT. 765. HOWEVER, IT WAS REPORTED THAT THE GENERAL SERVICES ADMINISTRATION OBTAINED A QUIT-CLAIM DEED TO THE PROPERTY INVOLVED, WHICH WAS RECORDED IN ALBANY COUNTY, WYOMING, ON APRIL 8, 1952.

FROM THE EARLIEST DAYS OF THE REPUBLIC, IT UNIFORMLY HAS BEEN RECOGNIZED THAT PROPERTY OF THE UNITED STATES GENERALLY IS NOT SUBJECT TO STATE AND LOCAL TAXATION. MCCULLOCH V. MARYLAND, 4 WHEAT 316; VAN BROCKLIN V. TENNESSEE, 117 U.S. 151. HOWEVER, IN AUTHORIZING FEDERAL PROGRAMS TO BE CONDUCTED UNDER PRACTICES EMPLOYED BY PRIVATE CORPORATIONS, THE CONGRESS CREATED OR AUTHORIZED TO BE CREATED BY THE RECONSTRUCTION FINANCE CORPORATION ACT, 15 U.S.C. 601, ET SEQ., GOVERNMENT-OWNED CORPORATIONS WITH POWER TO HOLD LEGAL TITLE TO, AND EXERCISE FULL CONTROL AND DOMINION OVER, REAL PROPERTY AND TO PAY STATE AND LOCAL TAXES THEREON TO THE SAME EXTENT AS OTHER REAL PROPERTY IS TAXED. THE AUTHORITY THUS VESTED IN GOVERNMENT-OWNED CORPORATIONS TO PAY LOCAL TAXES ON THEIR REAL PROPERTY IS, HOWEVER, CONTINGENT UPON THE CORPORATIONS BOTH HOLDING LEGAL TITLE TO, AND HAVING FULL CONTROL AND DOMINION OVER, SUCH PROPERTY. SEE UNITED STATES V. SHOFNER IRON AND STEEL WORKS, SUPRA, AND DECISION OF THE COURT OF CLAIMS IN THE CASE OF THE BOARD OF COUNTY COMMISSIONERS OF SEDGWICK COUNTY, STATE OF KANSAS V. UNITED STATES, NO. 50117, DECIDED JULY 15, 1952.

BY THE ACT OF JUNE 30, 1945, 59 STAT. 310, COMPLETE LEGAL TITLE TO, FULL CONTROL OVER AND RESPONSIBILITY FOR THE PROPERTY HERE IN QUESTION WERE VESTED IN THE RECONSTRUCTION FINANCE CORPORATION ON JULY 1, 1945, AND REMAINED THERE UNTIL THE PLANT WAS DECLARED EXCESS TO THE NEEDS OF THAT CORPORATION ON SEPTEMBER 14, 1950. AT THAT LATTER DATE, ALL INCIDENTS OF OWNERSHIP, EXCEPT BARREN LEGAL TITLE, VESTED IN THE UNITED STATES AND THE MERE FAILURE TO SECURE AND RECORD IN THE LOCAL LAND RECORDS UNTIL A LATER DATE--- APRIL 8, 1952--- A DEED TRANSFERRING BARREN LEGAL TITLE TO THE UNITED STATES, DOES NOT OPERATE TO CREATE OR CONTINUE ANY LIABILITY FOR LOCAL TAXES, SINCE BY THE OPERATION OF FEDERAL LAW AND ADMINISTRATIVE ACTION THEREUNDER THE PROPERTY WAS HELD BY AND FOR THE USE OF THE UNITED STATES IN A NONTAXABLE STATUS ON AND AFTER SEPTEMBER 14, 1950.

WHILE APPROPRIATIONS MADE TO CARRY OUT THE SURPLUS PROPERTY ACT OF 1944, PROVIDE FOR THE PAYMENT OF AMOUNTS IN LIEU OF TAXES ON PROPERTY DECLARED SURPLUS BY GOVERNMENT-OWNED CORPORATIONS UNDER THAT ACT AND SUCH AUTHORITY WAS CONTINUED BY SECTION 210 (A) (9) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED BY THE ACT OF SEPTEMBER 5, 1950, 64 STAT. 581, NO PROVISION HAS BEEN MADE BY LAW FOR SIMILAR PAYMENTS WITH RESPECT TO PROPERTY DECLARED EITHER EXCESS OR SURPLUS AFTER JUNE 30, 1949, UNDER THE 1949 ACT. SEE IN THIS CONNECTION, SENATE REPORT NO. 2140, 81ST CONGRESS, AT PAGE 10, ON S. 3959, WHICH BECAME THE ACT OF SEPTEMBER 5, 1950, IN WHICH IT IS PLAINLY STATED THAT SUCH AUTHORITY "WOULD NOT EXTEND TO ANY PROPERTIES DECLARED EXCESS OR SURPLUS ON OR AFTER JULY 1, 1949.' THIS CLEAR AND UNEQUIVOCABLE EXPRESSION OF PURPOSE AND INTENT LEAVES NO ROOM FOR DOUBT BUT THAT ANY SUCH PROPERTIES MUST BE CONSIDERED AS HELD BY AND FOR THE USE OF THE UNITED STATES FREE FROM THE PAYMENT OF TAXES OR AMOUNTS IN LIEU THEREOF, NOTWITHSTANDING THE BARREN LEGAL TITLE MAY REMAIN IN A GOVERNMENT-OWNED CORPORATION.

ACCORDINGLY, IT MUST BE HELD THAT PAYMENT OF CURRENT AND FUTURE TAXES ON THE ALUMINA PLANT, PLANCOR 1844, UNDER THE PERMIT DATED SEPTEMBER 27, 1951, OR OTHERWISE, WOULD NOT CONSTITUTE A PROPER ITEM OF EXPENDITURE UNDER ANY OF THE EXISTING *APPROPRIATIONS TO THE BUREAU OF MINES.

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