Arizona County Sues Feds to Recover Underpayments

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Greenlee County, a small rural county in Southeastern Arizona, has brought suit against the federal government, seeking payment of $2.4 million that it alleges that it is entitled to but was never paid.

Greenlee County, a small rural county in Southeastern Arizona, has brought suit against the federal government, seeking payment of $2.4 million that it alleges that it is entitled to but was never paid. The funds were part of moneys which the government was to have paid Greenlee pursuant to a statute enacted in 1976 called the Payment in Lieu of Taxes (PILT) Act. Under the Act, the federal government, a large landowner in many counties, promised to pay those counties for providing police, search and rescue and other services just as other property taxpayers in the counties do.

"Greenlee County consists of only 8% private land. In fact 77% of Greenlee County is owned and managed by the federal government," said Hector Ruedas, chairman of the Greenlee County Board of Supervisors. "That means that although we provide services throughout the entire county, we cannot tax any of the land owned by the federal government to help pay for those services. Many county services we provide benefit out-of-county tourists and visitors to federal lands. When the feds under-fund their PILT obligation, to which the county is entitled, it makes it very tough to continue to provide services. We have had our budget stretched to the limit," Mr. Ruedas added.

Under PILT, Congress obligated the United States to make annual payments to Greenlee and the other 1900 PILT counties pursuant to a very detailed formula based on the number of acres of federal land in each county, its population and the amount of money it gets under other federal programs. The intended purpose is to compensate local governments for the loss of tax revenues resulting from the tax-immune status of federal lands located in their jurisdictions, and for the cost of providing services related to these lands. Greenlee County Attorney Derek Rapier indicated that, "Since 1995, despite the purpose of the statute, the obligations contained in it, and the counties’ reliance on the government’s fulfilling its obligations, Congress has simply failed to appropriate enough money to do so. Increasing financial pressures on county government combined with the failures to fully fund PILT have left the county hard pressed." "We believe that filing this suit is one of the very few options we have left," Rapier added.

As a result, Greenlee County has commenced litigation on behalf of itself and all other similarly situated counties throughout the country seeking the money that the federal government owes the counties. The litigation is being handled by the Washington D.C. law firm of Saltman & Stevens P.C. (a firm that specializes in complex federal litigation) and the Portland, Oregon firm of Sussman Shank (also a firm with substantial expertise in litigation). Lead counsel, Alan Saltman stated that, "It is very unfortunate that the government has not lived up to its obligations," and that, "while there is a lot of money at stake, over 700 of the 1900 affected counties (mostly those in the East) have claims of less than $25,000. Because of this fact, class action status, which Greenlee County has sought for the case, is the only practical way that most of counties can recover what they are owed."

"What appears to have happened here is that Congress, pressed for money to fund all of the programs that it has enacted, simply lost sight of the fact that the federal government has a legal obligation to provide PILT counties with the amounts specified in the statute that are necessary to pay for the services which the counties provide," noted Rapier.

"We feel that we have a very strong case," Ruedas stated, adding that, "Our lawyers have spent a lot of time researching and refining the legal bases for our case. We feel confident in our position."

For more information contact:

Alan I. Saltman, Esq., Saltman & Stevens P.C., (202) 452-2140, Asaltman@saltmanandstevens.com or

Barry P. Caplan, Esq., Sussman Shank LLP, (503) 227-1111, barry@sussmanshank.com

Derek D. Rapier, Greenlee County Attorney, (928) 865-4108, drapier@co.greenlee.az.us

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Alan I. Saltman, Esq.
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