Kane County, Utah v. United States, 127 Fed. Cl. 696

Background

Kane County, Utah qualifies for Payment in Lieu of Taxes (PILT) payments because most county land is federally owned and the county provides services to federal lands.
PILT statute was amended in 2008 (and extended through 2013) to use mandatory language: eligible localities “shall be entitled to payment” and “sums shall be made available,” effectively requiring full funding for those years.
The Budget Control Act (2011) and the implementing Taxpayer Relief Act (2012) mandated across-the-board sequestration reductions for non‑exempt programs in fiscal 2013 and stated those reductions apply “notwithstanding any other provision of law.”
PILT was not listed among the programs exempted from sequestration in the Taxpayer Relief Act.
After sequestration, Kane County’s 2013 PILT payment was reduced by roughly five percent, creating a $54,793 shortfall; Kane sued seeking full payment and class certification for similarly affected counties.
The government moved to dismiss, arguing the later-enacted sequestration statute overrides earlier PILT funding guarantees; the court granted the motion and dismissed Kane’s claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether PILT’s 2008/2012 amendments created an unconditional, binding obligation to pay full PILT amounts despite sequestration	PILT’s mandatory language (“shall be entitled…sums shall be made available”) created an unconditional obligation and prior appropriations made the obligation valid and binding	The Taxpayer Relief Act’s sequestration language (effective 2013) applies “notwithstanding any other provision of law,” rescinding or limiting prior funding guarantees and requiring across‑the‑board reductions for non‑exempt programs	Held for defendant: the later sequestration statute controls and PILT payments could be reduced by sequestration; dismissal granted
Whether PILT is exempt from sequestration	PILT’s mandatory statutory language and prior appropriations establish an effective exemption from sequestration	PILT is not listed among statutory exemptions; express exclusions are presumed exclusive, so PILT is not exempt	Held for defendant: PILT was not exempt and is subject to sequestration
Whether later congressional acts can alter earlier funding guarantees	Kane contends earlier mandatory language binds later Congress	Government notes a later Congress may modify or override earlier statutes; later enactments control	Held for defendant: later statute (Taxpayer Relief Act) governs
Whether class certification or summary judgment were appropriate given legal conflict	Kane sought summary judgment and class certification based on statutory obligation	Government moved to dismiss arguing legal preemption by sequestration statute	Court denied summary judgment, found class motion moot, and dismissed the suit

Key Cases Cited

Greenlee County v. United States, 487 F.3d 871 (Fed. Cir. 2007) (addressed PILT funding limits and effect of sequestration on statutory payments)
Dorsey v. United States, 132 S. Ct. 2321 (2012) (later Acts of Congress can modify earlier statutes)
Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569 (Fed. Cir. 1997) (legislature cannot be bound by prior legislature; later statutes govern)
Ventas, Inc. v. United States, 381 F.3d 1156 (Fed. Cir. 2004) (interpretive principle that listed statutory exceptions are presumed exclusive)