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U.S. Supreme Court

Lawrence County v. Lead-Deadwood S.D., 469 U.S. 256 (1985)

Lawrence County v. Lead-Deadwood School District No. 40-1

No. 83-240

Argued October 30, 1984

Decided January 9, 1985

469 U.S. 256


The Payment in Lieu of Taxes Act compensates local governments for the loss of tax revenues resulting from the tax-immune status of federal lands, such as wilderness areas and national parks, located in their jurisdictions, and for the cost of providing services associated with these lands. The Act in 31 U.S.C. § 6902(a) requires the Secretary of the Interior to make an annual payment to each unit of local government in which such lands are located, and further provides that the local unit "may use the payment for any governmental purpose." A South Dakota statute requires local governments to distribute federal payments in lieu of taxes in the same way they distribute general tax revenues. Since appellant county allocates 60% of its general tax revenues to its school districts, the state statute would require the county to give its school districts 60% of the § 6902(a) payments it receives. After the county refused to distribute the funds in accordance with the state statute, claiming that § 6902(a) gave it the discretion to spend the federal funds for any governmental purpose it chose, appellee School District filed a mandamus complaint in a State Circuit Court, seeking to compel the county to distribute the federal funds in accordance with the state statute. The Circuit Court held that the state statute conflicted with federal law, and was therefore invalid under the Supremacy Clause. The South Dakota Supreme Court reversed, holding that the only limit § 6902(a) imposed on a local government is that the federal funds must be used for a "governmental purpose," and that, since support of school districts is a valid governmental purpose, the state statute was consistent with federal requirements.

Held: The state statute is invalid under the Supremacy Clause. Pp. 469 U. S. 260-270.

(a) The language of § 6902(a) appears to endow local governments with the discretion to spend in-lieu payments for any governmental purpose. At the very least, the statute is ambiguous with respect to the degree of such discretion. But the Department of the Interior has consistently taken the view that local governments retain the discretion to spend the in-lieu payments for any governmental purpose they choose. And the legislative history evidences a congressional purpose to ensure that such payments would reach and be placed at the disposal of the

Page 469 U. S. 257

affected local governments to spend as they see fit. The South Dakota statute runs directly counter to this purpose. Pp. 469 U. S. 260-268.

(b) The South Dakota statute's intrusion on a county's discretion in spending § 6902(a) funds would not be negligible or even modest. To allocate such funds in the same proportion as local revenues would most likely result in a windfall for school districts and other entities that are already fully funded by local revenues, and the federal money would thus not serve its intended purpose of compensating local governments for extraordinary or additional expenditures associated with federal lands. As to any concerns of federalism, the Federal Government has not presumed to dictate the manner in which counties may spend state in-lieu-of-tax payments, but, rather, has merely imposed a condition that counties should not be denied the discretion to spend § 6902(a) funds for any governmental purpose. Pp. 469 U. S. 269-270.

334 N.W.2d 24, reversed.

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J.,and BRENNAN, MARSHALL, BLACKMUN, POWELL, and O'CONNOR, JJ., joined. REHNQUIST, J., filed a dissenting opinion, in which STEVENS, J., joined, post, p. 469 U. S. 270.

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