Western Rivers Conservancy v. Stevens County
37516-1
| Wash. Ct. App. | Jul 1, 2021Background
- In 2015 Western Rivers sold a Stevens County timber tract to the U.S. Forest Service (USFS) for addition to the Colville National Forest and public recreation.
- The land had been designated "forestland" (eligible for preferential treatment under RCW 84.33); the county removed that designation and assessed a $194,652.18 compensating tax at closing, citing sale to a tax-exempt buyer and that the land was no longer primarily used for timber.
- RCW 84.33.140(13)(d) exempts compensating tax for sales to the Washington State Parks and Recreation Commission when for park and recreation purposes; the statute does not expressly exempt sales to federal agencies.
- Western Rivers paid the tax under protest, sued for refund arguing the county’s action violated the Supremacy Clause via the doctrine of intergovernmental tax immunity (discriminatory tax treatment of federal transactions).
- Spokane County Superior Court granted summary judgment for Western Rivers, ordering refund with prejudgment interest; Stevens County appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the compensating tax violated intergovernmental tax immunity (Supremacy Clause) | Taxary exemption for sales to State Parks must extend to substantially similar sales to federal agencies; the county’s tax discriminates against federal transactions | The statutory exemption targets a specific state agency (Parks); USFS duties differ from Parks so sales to USFS are not similarly situated | Exemption is defined by purpose (sales for recreation). Sale to USFS met that purpose; discriminatory tax invalid under intergovernmental tax immunity. |
| Whether a genuine factual dispute existed about USFS’s recreation purpose for the land | Western Rivers produced an uncontested USFS letter showing intent to acquire and manage the land for public recreation | County asserted factual dispute but pointed to no contrary evidence in the record | No material factual dispute; summary judgment appropriate because evidence of recreational purpose was unrebutted. |
| Whether prejudgment interest should run on the entire refunded amount | The entire assessed tax was constitutionally invalid and void; prejudgment interest on full amount proper | Court should first determine any lawful portion of the tax before awarding interest | Entire tax was unconstitutional and void; awarding prejudgment interest on full refund affirmed. |
Key Cases Cited
- McCulloch v. Maryland, 17 U.S. 316 (establishes intergovernmental tax immunity doctrine)
- Davis v. Michigan Dep't of Treasury, 489 U.S. 803 (immunity bars discriminatory taxation of private parties for dealing with the federal government; requires "significant differences" to justify disparate treatment)
- Dawson v. Steager, 139 S. Ct. 698 (applies the significant-differences test; state exemptions must extend to similarly situated federal beneficiaries)
- Moses Lake Homes, Inc. v. Grant County, 365 U.S. 744 (a constitutionally invalid tax may not be collected)