03-13141. Payments in Lieu of Taxes Under the Atomic Energy Act of 1954; Guidelines

AGENCY:

Office of Management, Budget and Evaluation/Chief Financial Officer, Department of Energy (DOE).

ACTION:

Notice.

SUMMARY:

DOE publishes policy guidelines it uses to guide decisions with regard to applications by State or local jurisdictions for discretionary payments in lieu of taxes with regard to eligible real property that is not subject to State and local taxation because it is owned by the United States, is under the custody and control of DOE, and is used to carry out activities authorized by the Atomic Energy Act of 1954, as amended.

EFFECTIVE DATE:

The guidelines in this Notice are effective May 27, 2003.

FOR FURTHER INFORMATION:

You may contact Mary L. Rosicky, ME-11, U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585, telephone [phone], e-mail, [e-mail].

SUPPLEMENTARY INFORMATION:

Pursuant to the Atomic Energy Act of 1954 (AEA), DOE carries out a variety of national defense and energy research and development activities at sites that are located in various States and are owned by the United States Government. Section 168 of the AEA (42 U.S.C. 2208) authorizes DOE to provide discretionary payments to State or local government authorities where AEA sites are located. These payments are in lieu of real property taxes that State and local jurisdictions may not collect because they are precluded by the United States Constitution from taxing real property owned by the Federal Government. These discretionary financial assistance payments in lieu of taxes, which are subject to the availability of funds, are commonly referred to as “PILT payments”.

In the past, DOE has decided, on a case-by-case basis, whether an application for PILT assistance should be approved and, if so, how much the annual PILT payments should be. In making such decisions, DOE has employed a policy consisting largely of internal procedures, application content criteria, evaluation criteria, and standard provisions for assistance agreements. The application content and evaluation criteria have either implemented requirements of section 168 or have been the result of case-by-case decisions.

The purpose of this notice is to state publicly, and without significant change, the policies regarding PILT payments that DOE has been applying to PILT applicants and recipients, and intends to continue to apply, on a case-by-case basis.

The Secretary of Energy has approved issuance of this notice.

Issued in Washington, DC on May 8, 2003.

James T. Campbell,

Acting Director, Office of Management, Budget and Evaluation/Acting Chief Financial Officer.

Guidelines for Payments in Lieu of Taxes Under the Atomic Energy Act of 1954

I. Purpose and Scope

These guidelines set forth policies that DOE intends to apply when making case-by-case determinations on applications for payments in lieu of taxes (PILT) under section 168 of the Atomic Energy Act of 1954 (42 U.S.C. 2208). PILT is discretionary financial assistance that DOE may provide subject to the availability of funds. PILT is not an entitlement.

II. Authority

These guidelines are authorized by sections 161 and 168 of the Atomic Energy Act of 1954 (42 U.S.C. 2201, 2208).

III. Applicability

A. These guidelines apply to any DOE facility (including facilities of the National Nuclear Security Administration) located on real property owned by the United States, under the custody and control of DOE, and at which activities authorized or required under the Atomic Energy Act of 1954 are carried on, if the real property was subject to State and local taxation immediately prior to acquisition by the United States.

B. These guidelines do not affect existing agreements between DOE and State or local governments that preclude PILT on all or part of real property under custody and control of DOE.

C. These guidelines apply to an initial application for PILT that is submitted to DOE, and to an application or request to change the basis for or amount of a PILT payment under an existing agreement between DOE and a State or local government. DOE will treat any application or request to change the basis for or amount of a PILT payment under an existing agreement as an initial application under these guidelines.

IV. Definitions

As used in these guidelines:

A. “Condition In Which It Was Acquired” means the physical description, definition, and real property classification used to determine the assessed valuation of the real property in the last year that such property was on the State or local tax rolls prior to acquisition by the Federal Government.

B. “Revised PILT Payment” means a change in PILT payment that is based on a reclassification of the property to a new tax classification or category, an increase or decrease in the amount of land used to calculate the PILT payment, or other significant change in the method of calculating the PILT payment. “Revised PILT Payment” does not mean a PILT payment that is changed solely because of Taxing Authority jurisdiction-wide adjustments to tax assessments or to tax rates.

C. “Taxing Authority” means an entity empowered under State law to render a separate tax bill based on the value of real property.

V. Application Content Criteria

In an application for PILT, DOE expects to see the following information:

A. Basis for calculating the PILT amount being sought;

B. Description of the real property, including non-Federal Government improvements existing at the time the Federal Government acquired the property and which still exist;

C. Date that the Federal Government acquired the real property and the date the real property was removed from the tax rolls because of its acquisition by the Federal Government;

D. Classification of real property by the Taxing Authority (if applicable) and zoning of such property in the last year it was on the tax rolls;

E. Tax rate, assessment, and total PILT payment proposed, net of applicable exclusions or offsets under these guidelines;

F. Current tax rate and assessment placed on real property with the same zoning and/or use classification, as reported by the Taxing Authority under paragraph V.D. of these guidelines;

G. Other Federal Government payments received or expected to be received by the applicant Taxing Authority which may duplicate payments made under these guidelines for the same identifiable, discrete purpose and use by the Taxing Authority; and

H. A statement that the Taxing Authority agrees to execute and deliver to DOE a valid and binding release or settlement of claims for payments related to DOE's land or property.

VI. Evaluation Criteria

On a case-by-case basis, DOE plans to evaluate applications for PILT, and to calculate PILT payments, using the following guidelines:

A. The real property for which a PILT payment is sought currently must be used for activities authorized by the Atomic Energy Act of 1954;

B. The real property must have been on the tax rolls of the applicant Taxing Authority immediately prior to acquisition of the real property by the Federal Government;

C. DOE will not make PILT payments for any tax year prior to the tax year during which a complete application for PILT is filed with DOE;

D. Approval of applications for PILT, as well as payments pursuant to an approved application, are subject to the availability of funds, and amounts available for PILT are subject to the same reductions or other budgetary restrictions that may be applied to other DOE programs;

E. DOE will not make PILT payments that exceed the tax payment to which the Taxing Authority would be entitled if the real property had remained on the tax rolls in the Condition in Which It Was Acquired;

F. Property value for real property addressed in an initial application or an application for a Revised PILT Payment will be determined on the basis of the highest and best use of the real property in the same zoning classification and Taxing Authority-assigned-use classification at the time the real property was acquired by the Federal Government. The property value will exclude the value of improvements made after the Federal Government acquired the real property. The current tax rate and assessment values will be the same as those applied to comparable properties with the same use and/or tax classification in the jurisdiction of the Taxing Authority;

G. In calculating PILT payments, DOE will deduct from a PILT payment otherwise calculated by the applicant Taxing Authority an amount equal to any payment(s) by the Federal Government that will be used by the State or local jurisdiction for the same identifiable, discrete purpose; and

H. Such other relevant criteria as DOE deems appropriate in light of the information provided in the application for PILT. In order for DOE to approve or pay a Revised PILT Payment, a Taxing Authority must submit a complete application as if the Taxing Authority were a new applicant for PILT assistance, and all aspects of the application will be evaluated as if the Taxing Authority were a new applicant for such assistance.

VII. Intergovernmental Assistance Agreement

A. Before a Taxing Authority may receive PILT payments from DOE, the Taxing Authority's application for PILT under these guidelines must be approved in writing by the DOE Chief Financial Officer who may not delegate this authority.

B. Upon approval of an application for PILT by the DOE Chief Financial Officer and satisfaction of any conditions attached to such approval, and prior to making any PILT payments to the relevant Taxing Authority applicant, DOE will enter into an intergovernmental assistance agreement with the applicant Taxing Authority that is satisfactory to DOE under these guidelines.

C. The standard terms of such an agreement should include, but are not limited to, provisions stating:

1. That the agreement does not apply to any tax year prior to the tax year in which a complete application for PILT was filed with DOE;

2. The date that the first payment is due;

3. That PILT payments are subject to the availability of funds;

4. That PILT payments are subject to legislative or administrative reductions in funding levels;

5. That PILT payments are subject to suspension during the pendency of any lawsuit filed by the Taxing Authority which seeks from the Federal Government any real property taxes or their equivalent; and

6. That PILT is not an entitlement, and, accordingly, nothing in the agreement and no conduct of DOE under or relating to the agreement shall be interpreted to preclude or place any limitations or conditions on the Secretary of Energy's exercise of his discretion under section 168 of the Atomic Energy Act of 1954, including his discretion to unilaterally terminate the agreement with reasonable notice.