B-108135, JUNE 25, 1953, 32 COMP. GEN. 574

B-108135, JUNE 25, 1953, 32 COMP. GEN. 574

TAXES - STATE AND LOCAL - SURPLUS PROPERTY OF GOVERNMENT CORPORATION THE DATE A GOVERNMENT CORPORATION DECLARES ITS TAXABLE REAL PROPERTY EXCESS TO ITS NEEDS, PURSUANT TO THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, IS THE DATE THE PROPERTY BECOMES IMMUNE TO STATE AND LOCAL TAXATION AS PROPERTY HELD BY AND FOR THE USE OF THE UNITED STATES AS DISTINGUISHED FROM CORPORATE OWNERSHIP, EVEN THOUGH THE CORPORATION CONTINUES TO HOLD BARREN LEGAL TITLE AND PHYSICAL CUSTODY OF THE PROPERTY PENDING ITS DISPOSITION.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, RECONSTRUCTION FINANCE CORPORATION, JUNE 25, 1953:

REFERENCE IS MADE TO LETTER DATED DECEMBER 5, 1952, FROM THE GENERAL COUNSEL, RECONSTRUCTION FINANCE CORPORATION, IN EFFECT REQUESTING RECONSIDERATION OF DECISION OF THIS OFFICE DATED OCTOBER 6, 1952, B 108135, 32 COMP. GEN. 164, TO THE SECRETARY OF THE INTERIOR, CONCERNING THE PAYMENT OF A GENERAL PROPERTY TAX ON THE ALUMINA PLANT AT LARAMIE, WYOMING, PLANCOR 1844.

A DECISION RENDERED BY THIS OFFICE TO AN OFFICIAL OF THE GOVERNMENT GENERALLY MAY NOT BE RECONSIDERED OR REVIEWED EXCEPT AT THE REQUEST OF THE OFFICIAL TO WHOM RENDERED, OR ON HIS BEHALF. ALSO, WITH RESPECT TO REQUESTS BY SUBORDINATE OFFICERS IN SUCH MATTERS, SEE GENERALLY, 26 COMP. GEN. 993. HOWEVER, SINCE THE GENERAL COUNSEL'S LETTER OF DECEMBER 5, 1952, INDICATES THAT THE BASIS FOR THE DECISION OF OCTOBER 6, 1952, MAY NOT BE ENTIRELY CLEAR, I SHALL ATTEMPT TO CLARIFY THE SEVERAL POINTS RAISED IN THE SAID LETTER.

THE REFERRED TO DECISION HELD IN MATERIAL PART THAT BY OPERATION OF FEDERAL LAW AND ADMINISTRATIVE ACTION ALL INCIDENTS OF OWNERSHIP, EXCEPT BARREN LEGAL TITLE, TO THE PLANT IN QUESTION, VESTED IN THE UNITED STATES WHEN IT WAS DECLARED EXCESS TO THE NEEDS OF THE RECONSTRUCTION FINANCE CORPORATION ON SEPTEMBER 14, 1950, THEREBY RELIEVING THE UNITED STATES OF ANY LIABILITY FOR LOCAL TAXES ON AND AFTER THAT DATE, NOTWITHSTANDING BARREN LEGAL TITLE WAS NOT TRANSFERRED TO THE GOVERNMENT UNTIL A QUITCLAIM DEED WAS RECORDED ON APRIL 8, 1952.

IN HIS LETTER OF DECEMBER 5, 1952, MR. HOROWITZ STATES THAT THE DECISION OF OCTOBER 6, 1952, APPEARS TO BE BASED UPON THE 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, DATED JULY 15, 1952, 123 C.CLS. 304. HOWEVER, THE SEDGWICK COUNTY CASE WAS CITED IN THE OFFICE DECISION SOLELY IN SUPPORT OF THE GENERAL RULE THAT THE AUTHORITY VESTED BY LAW IN GOVERNMENT-OWNED CORPORATIONS TO PAY LOCAL TAXES ON THEIR REAL PROPERTY IS CONTINGENT UPON THE CORPORATIONS BOTH HOLDING LEGAL TITLE TO, AND HAVING FULL CONTROL AND DOMINION OVER, SUCH PROPERTY, AND THE CONCLUSIONS REACHED IN THE OFFICE DECISION WERE NOT OTHERWISE NECESSARILY DEPENDENT THEREON.

IT WILL BE NOTED, AS POINTED OUT BY THE COURT ON PAGE 18 OF ITS OPINION IN THE SEDGWICK COUNTY CASE, THAT THE PROPERTY THERE INVOLVED WAS DECLARED SURPLUS UNDER THE SURPLUS PROPERTY ACT OF 1944, SECTION 11 (D) (58 STAT. 770) OF WHICH, AUTHORIZED DELAY IN THE DISPOSAL AGENCY ACCEPTING RESPONSIBILITY FOR THE PROPERTY AND HENCE MAKING THE DATE OF ACCEPTANCE OF THE SURPLUS PROPERTY BY THE DISPOSAL AGENCY, THE DATE WHEN THE CONSTITUTIONAL IMMUNITY TO TAXATION DESCENDED. NO SIMILAR PROVISION FOR DELAY IN ACCEPTING CUSTODY APPEARS IN THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, AND HENCE THE DATE OF DECLARING THE PROPERTY SURPLUS OR EXCESS APPEARS TO BE THE DATE UPON WHICH THE CONSTITUTIONAL IMMUNITY DESCENDS. ALSO, IN LETTER TO THIS OFFICE DATED MAY 22, 1952, THE ADMINISTRATOR OF GENERAL SERVICES REPORTED THAT " THE ALUMINA PLANT WAS CLASSIFIED AS SALE PROPERTY UNTIL THE BUREAU OF MINES ASKED PERMISSION TO USE IT FOR 18 MONTHS, WHICH LATER WAS CHANGED TO TWO YEARS.' SUCH ACTION APPEARS CLEARLY TO ESTABLISH THAT THE PLANT HAD BEEN DETERMINED TO BE SURPLUS TO THE NEEDS OF ALL FEDERAL AGENCIES WITHIN THE STATUTORY DEFINITION OF THAT TERM IN SECTION 3 (G) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 378, AND AS USED IN SECTION 203 OF THAT ACT, 63 STAT. 385. THE LATTER SECTION PROVIDES GENERALLY THAT (A) THE ADMINISTRATOR OF GENERAL SERVICES SHALL HAVE SUPERVISION AND DIRECTION OVER THE DISPOSITION OF SURPLUS PROPERTY AND (B) THE CARE AND HANDLING OF SURPLUS PROPERTY, PENDING ITS DISPOSITION, WHICH MAY BE PERFORMED BY THE GENERAL SERVICES ADMINISTRATION OR, WHEN SO DETERMINED BY THE ADMINISTRATOR, BY THE EXECUTIVE AGENCY IN POSSESSION OF THE PROPERTY.

THE VESTING IN THE SAID ADMINISTRATOR OF SUPERVISION AND DIRECTION OVER SURPLUS PROPERTY THUS CARRIES WITH IT FULL CONTROL, WHICH IS ONE OF THE PRIME INCIDENTS OF OWNERSHIP PASSING TO THE UNITED STATES BY THE DECLARATION OF EXCESS BY AN OWNING AGENCY AND A DETERMINATION BY THE ADMINISTRATOR THAT THE PROPERTY IS SURPLUS TO THE NEEDS OF ALL FEDERAL AGENCIES, CF. UNITED STATES V. SHOFNER IRON AND STEEL WORKS, 168 F.2D 286, CITED IN THE DECISION OF OCTOBER 6, 1952. THIS CONTROL IS NOT AFFECTED BY A DESIGNATION OF THE DECLARING AGENCY TO CONTINUE THE PERFORMANCE OF ROUTINE CARE AND HANDLING OF THE PROPERTY PENDING ITS DISPOSITION BY THE ADMINISTRATOR. IN THAT LIGHT THE RECONSTRUCTION FINANCE CORPORATION REMAINED IN PHYSICAL POSSESSION OF THE ALUMINA PLANT AT LARAMIE, WYOMING, AS CARETAKER AND NOT AS OWNER AS CONTENDED IN THE LETTER OF DECEMBER 5, 1952. THE ATTRIBUTES OF CORPORATE OWNERSHIP ESSENTIAL TO STATE AND LOCAL TAXATION PURSUANT TO THE RECONSTRUCTION FINANCE CORPORATION ACT, 47 STAT. 5, 15 U.S.C. 601, ET SEQ., HAD PASSED TO THE UNITED STATES ( GENERAL SERVICES ADMINISTRATION) BY VIRTUE OF THE DECLARATION OF EXCESS, SHOFNER CASE, SUPRA, AND THE FINDING PURSUANT TO THE 1949 ACT, THAT THE PLANT WAS SURPLUS TO THE NEEDS OF ALL FEDERAL AGENCIES AND THE CLOAK OF TAX IMMUNITY THEREUPON DESCENDED UPON THE PROPERTY.

THE LEGAL CONSEQUENCES OF THE CORPORATE AND ADMINISTRATIVE ACTIONS IN THIS CASE ARE CONTROLLED BY THE PROVISIONS OF THE ACT OF 1949, UNDER WHICH THE ACTIONS WERE TAKEN, AND, THEREFORE, ARE NOT AFFECTED BY THE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944, 58 STAT. 765, UNDER WHICH THE PROPERTY INVOLVED IN THE SEDGWICK COUNTY CASE, MENTIONED ABOVE, WAS DISPOSED OF. THE CONTROLLING PROVISIONS IN THE 1949 ACT WERE NOT APPLICABLE AND THEREFORE WERE NOT IN QUESTION IN THAT CASE. HENCE THE SPECIFIC RULING IN THE COURT CASE HAS NO BEARING ON THIS OR ANY OTHER PROPERTY BEING PROCESSED UNDER THE 1949 ACT, THE TERMS OF WHICH, WHEN CONSIDERED TOGETHER WITH THE LEGISLATIVE INTENTION SET FORTH IN SENATE REPORT NO. 2140, 81ST CONGRESS, AT PAGE 10, CLEARLY MAKE NO PROVISION FOR PAYMENT OF TAXES ON ANY PROPERTY DECLARED EITHER EXCESS OR SURPLUS UNDER THE ACT, AS AMENDED.

WITH REGARD TO THE STATEMENT IN THE LETTER OF THE GENERAL COUNSEL THAT THE LOCAL COUNSEL ADVISES THAT A LIEN FOR REAL ESTATE TAXES IN WYOMING ATTACHES ON THE FIRST DAY OF THE TAX YEAR OR JANUARY 1, IT IS NOTED THAT THE TAX BILL ITSELF QUOTES SECTION 115-2301 OF THE WYOMING COMPILED STATUTES, 1931 AND CHAPTER 72, SECTION 1, OF ITS SESSION LAWS OF 1933 (SECTIONS 32-1601 AND 32-1603 OF THE WYOMING COMPILED STATUTES, 194 WHICH PROVIDE THAT THE FIRST HALF YEARS' TAXES SHALL BE PAID ON OR BEFORE THE TENTH DAY OF NOVEMBER OF THE YEAR AND THE SECOND HALF ON OR BEFORE THE TENTH DAY OF MAY OF THE FOLLOWING YEAR AND MAKE THE TAXES LIENS ON THE PROPERTY AFTER SUCH DATES. THUS AS TO THE INSTANT PROPERTY, EVEN IF THE CLOAK OF TAX IMMUNITY DID NOT DESCEND UNTIL SEPTEMBER 28, 1951--- THE EFFECTIVE DATE OF THE PERMIT ISSUED TO THE BUREAU OF MINES--- NO LIEN HAVING ACCRUED ON ACCOUNT OF THE 1951 TAXES BY THAT DATE, NO AMOUNT WOULD APPEAR TO BE PROPERLY FOR PAYMENT ON ACCOUNT OF 1951 TAXES ON THE SAID PROPERTY.

I TRUST THAT THE FOREGOING WILL SERVE TO CLARIFY THE INSTANT MATTER, AND WILL BE HELPFUL IN COMPLIANCE BY YOUR CORPORATION WITH THE LAST PARAGRAPH OF OFFICE LETTER TO YOU DATED OCTOBER 6, 1952, B-108135.