Board of County Commissioners v. Federal Housing Finance Agency
754 F.3d 1025
D.C. Cir.2014Background
- Fannie Mae and Freddie Mac are federally chartered, privately owned entities placed in conservatorship under FHFA.
- Each entity’s statutory charter provides they are "exempt from all taxation . . . by any State [or] county," except that their real property is taxable "to the same extent as other real property." (12 U.S.C. §§1452(e), 1723a(c)(2), 4617(j)(1)-(2)).
- Oklahoma imposes a documentary stamp or "Transfer Tax" on conveyances of real property, measured by the property's value and payable by the seller upon conveyance.
- Kay County sued the Entities seeking declaratory relief and damages, alleging the Entities unlawfully refused to pay the Transfer Tax on property transfers.
- The district court dismissed, holding the statutory "all taxation" exemptions cover the Transfer Tax and that the Transfer Tax is not a real-property tax falling within the real-property exception.
- The County appealed; the D.C. Circuit affirmed, applying Federal Land Bank of St. Paul v. Bismarck Lumber Co. and distinguishing United States v. Wells Fargo Bank.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "all taxation" exemption covers excise/transfer taxes | "All taxation" is a term of art limited to direct taxes; does not include indirect excises like the Transfer Tax | Plain meaning: "all taxation" includes all taxes borne by the entity, including excises; Bismarck supports entity-level immunity | Exemption covers the Transfer Tax; dismissal affirmed |
| Whether the Transfer Tax falls within the real-property exception | Transfer tax is "intimately connected" to real property (transfer is a stick in the bundle) and thus within the real-property exception | Transfer Tax is an excise triggered by conveyance, distinct from ad valorem property tax; statute separately taxes real property | Transfer Tax is not a real-property tax; exception does not apply |
| Applicability of Wells Fargo precedent | Wells Fargo shows "all taxation" historically limited to direct/property taxes | Wells Fargo addressed exemptions of property, not entities; Bismarck governs entity exemptions | Wells Fargo inapplicable; Bismarck controls |
| Constitutional challenge (Commerce Clause/preemption) | Congress lacked authority or clear statement to preempt state taxation through Commerce Clause; exemption invalid | County forfeited constitutional challenge by not raising it below; also statutory immunity resolves case | Court declined to address constitutional claim due to forfeiture; statutory grounds sufficient |
Key Cases Cited
- Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95 (1941) (entity-level exemption reached state sales tax paid in purchases by federal land bank)
- United States v. Wells Fargo Bank, 485 U.S. 351 (1988) (interpreting "all taxation" in context of property exemptions to exclude certain transfer/use taxes)
- County of Oakland v. FHFA, 716 F.3d 935 (6th Cir. 2013) (concluding FHFA/Fannie/Freddie statutory exemptions cover transfer taxes)
- DeKalb County v. FHFA, 741 F.3d 795 (7th Cir. 2013) (same)
- Hennepin County v. Fed. Nat’l Mortg. Ass’n, 742 F.3d 818 (8th Cir. 2014) (same)
- Delaware County v. FHFA, 747 F.3d 215 (3d Cir. 2014) (same)
- Montgomery County v. Fed. Nat’l Mortg. Ass’n, 740 F.3d 914 (4th Cir. 2014) (same)