12 [93 Op. Att’y

FEDERAL ENCLAVES

TAXATION – PROPERTY TAX – IMPACT FEES – WHETHER PRIVATE

INTERESTS N REAL PROPERTY IN AN ENCLAVE OF EXCLUSIVE

FEDERAL JURISDICTION ARE SUBJECT TO STATE AND LOCAL

PROPERTY TAXES AND IMPACT FEES

January 29, 2008

Elizabeth F. Harris, Esquire

Office of the Governor

You have requested our opinion on three questions that arise

from the federal government’s implementation of the base

realignment and closure (“BRAC”) process in Maryland. That

process is expected to result in significant development at certain

military bases in the State, including Fort Meade and Aberdeen

Proving Ground. First, you ask whether real property located within

an area of exclusive federal jurisdiction on a military installation, but

leased to and developed by a private entity, will be subject to

Maryland property taxes. Second, you pose the same question as to

real property within an enclave of exclusive federal jurisdiction, but

not on a military installation. Finally, you ask whether, in either

context, impact fees may be assessed against the private developer to

offset the enhanced costs for schools, transportation, and other public

infrastructure. 

Property within an enclave of exclusive federal jurisdiction

would not normally be subject to the taxing jurisdiction of a state.

However, the federal government can waive its immunity from local

taxation and, therefore, the answers to your questions depend on

whether the federal government has waived its immunity from local

taxation with respect to the property interests created under the

leases, and the extent of any such waiver. The same analysis applies

whether the area of exclusive federal jurisdiction is located on a

military installation or located elsewhere, although some waivers

may apply only on military installations. In order to determine

whether the federal government has made such a waiver, and the

extent of any waiver, one ordinarily looks to the law that authorizes

the lease of federal property. If federal immunity has been waived,

Maryland law then determines whether the property interest is subject

to a tax or is exempt from that tax. 
Gen. 12] 13

 In this context, the term “jurisdiction” refers to legislative 1

jurisdiction. See United States Constitution, Article I, §8, cl. 17; see also

Offutt Housing Co. v. County of Sarpy, 351 U.S. 253, 256 (1956).

With respect to impact fees, it is first necessary to determine

whether the particular impact fee is properly categorized as a tax or

a regulatory fee. If it is a tax, the question then is whether the federal

government has waived immunity for that type of tax. If it is a

regulatory fee, the question is whether the regulatory regime

involving the fee existed and remained applicable as federal law at

the time that the State ceded jurisdiction over the property to the

federal government or, if the State regulatory regime was a later

enactment, whether Congress has expressly subjected the enclave to

that type of state regulation.

For example, we understand that land at Aberdeen Proving

Ground was recently leased to a private developer pursuant to 10

U.S.C. §2667, which authorizes Enhanced Use Leases (“EULs”) of

land on military bases. That statute specifically waives the federal

immunity from local property taxation for the private interests in real

property created under an EUL. Accordingly, those private interests

are subject to State and local taxation, unless Maryland law otherwise

exempts the property. However, in our view, the federal statute does

not waive federal immunity with respect to an impact fee that would

be considered a tax. Nor does it appear that local impact fees existed

at the time the State ceded jurisdiction of this land to the federal

government.

I

Background

A. Taxation of Property Interests in Exclusive Federal Enclaves

When the federal government acquires real property in a state,

federal jurisdiction over that property can range from exclusive

jurisdiction to various levels of concurrent jurisdiction shared with

the state to simple ownership. The determination of the extent of 1

federal jurisdiction depends in part on the extent to which a state has

ceded jurisdiction to the federal government. See Annotated Code of

Maryland, State Government Article (“SG”) §14-101(ceding

jurisdiction over land needed by the federal government); see also 63

Opinions of the Attorney General 332 (1978); 61 Opinions of the
14 [93 Op. Att’y

Attorney General 441 (1976). The federal government retains

exclusive jurisdiction even if it allows private parties to operate

within the enclave. Humble Pipe Line Co. v. W.E. Waggonner, 376

U.S. 369, 372-73 (1964).

The federal government is exempt from state and local taxation;

moreover, none of the property in an enclave of exclusive federal

jurisdiction would normally be subject to the taxing jurisdiction of

the state. Offutt Housing Co. v. County of Sarpy, 351 U.S. 253, 256-

57 (1956). While this exemption extends to private property located

in an area of exclusive federal jurisdiction, Congress may allow such

interests to be subject to local taxation. Id.

B. BRAC

The BRAC process is intended to increase the efficiency of the

military services, by periodically closing redundant facilities and

consolidating operations within a reduced number of military bases.

See United States Department of Defense, Base Realignment and

Closure, Frequently Asked Questions, <www.defenselink.mil/ The

current process is expected to result in a significant increase in

population and operations at some of the bases selected for

consolidation. Several of the selected locations are in Maryland,

including Anne Arundel County (Fort Meade) and Harford County

(Aberdeen Proving Ground). 

C. Enhanced Use Leases

We understand that, as part of the implementation of BRAC,

the federal government is leasing land at military installations to

private developers pursuant to 10 U.S.C. §2667, which authorizes

Enhanced Use Leases (“EULs”). For example, a master lease for

Aberdeen Proving Ground includes a ground lease authorized by the

EUL statute. See, e.g., Master Agreement to Lease for Enhanced Use

Leases, Aberdeen Proving Ground (Maryland Boulevard Site)

between United States of America, Acting by and through the

Secretary of the Army as the Government and OPUS East, L.L.C. as

the Developer (September 25, 2006). The ground lease also indicates

that the improvements will be owned by the private developer for the

term of the lease. 
Gen. 12] 15

We also understand that some of the leased sites at Fort Meade

will be on federally owned land within the enclave of exclusive

federal jurisdiction, but outside of the secured area and will be totally

or partially accessible by the general public. Under the lease, the

private developer will construct and operate various types of

improvements on that land. These improvements will be made

available to private defense contractors, as well as other sublessees

who may be unrelated to the military operations and the defense

contractors. 

Since the EULs will create private interests in federally owned

property, you have asked whether any of the private interests in real

property within the military installations will be subject to property

tax or impact fees. You have also posed the same question as to nonmilitary sites of exclusive federal jurisdiction.

II

Taxation of Private Interests in 

Real Property in Federal Enclaves

A. Whether the Federal Government Has Consented to State

Taxation

No federal law generally waives immunity as to state and local

property taxes. Thus, to determine whether federal tax immunity has

been waived with respect to a lease of property within a federal

enclave to a private party, one must look to the law governing the

particular lease. For example, Congress has consented to the taxing

of private interests in federal property in the statute authorizing EULs

at military installations. It provides, among other things, that:

The interest of a lessee of property leased

under this section may be taxed by State or

local governments. A lease under this section

shall provide that, if and to the extent that the

leased property is later made taxable by State

or local governments under an Act of

Congress, the lease shall be renegotiated.

10 U.S.C. §2667(f).
16 [93 Op. Att’y

 The predecessor of SG §14-102(a) was originally enacted in 2

1943. See Chapter 687, Laws of Maryland 1943 originally codified as

Article 96, §41.

 This date describes acquisitions made prior to the effective date 3

of the predecessor of SG §14-102(a). See note 2 above.

B. Whether Maryland Has Retained Jurisdiction to Tax

At one time in Maryland, the State generally ceded exclusive

jurisdiction over federal enclaves without significant reservations.

See 63 Opinions of the Attorney General 332, 333 (1978). Currently,

the State retains jurisdiction over federal enclaves to the extent

permitted by federal law and consistent with federal purposes,

subject to any other State law governing a specific federal

acquisition. The State’s reservation of jurisdiction is set forth in

statute as follows:

With respect to land that the United States or

any of its units leases or otherwise holds in the

State, the State reserves jurisdiction and

authority over the land and over persons,

property, and transactions on the land to the

fullest extent that is permitted by the United

States Constitution and that is not inconsistent

with the governmental purpose for which the

land is held. 

SG §14-102(a) (emphasis supplied). By reserving “jurisdiction and 2

authority ... over the land” and “over ... property,” the State reserved

the power to impose property tax on the property interests in federal

enclaves to the fullest extent permitted by federal law.

Excepted out of the general statement in SG §14–102(a) are

acquisitions of land in Maryland by the United States on or before

May 31, 1943, for which the State ceded jurisdiction under specified 3

laws. The statute lists those laws as follows:

(1) Chapter 193, §§ 3 and 4, of the Acts

of the General Assembly of 1874;

(2) Chapter 395, §§ 13 and 14, of the

Acts of the General Assembly of 1874;
Gen. 12] 17

Aberdeen Proving Ground was originally ceded to the federal

4

government in 1917 with additional parcels acquired thereafter. We have

been advised that the parcels which make up the Maryland Boulevard Site,

which is the site of the EUL, were acquired from April 1940 thru October

1942. Letter of Robert J. Penn, Assistant Chief, Real Estate Division of

the Baltimore District, U.S. Army Corps of Engineers, Department of

Army to David M. Lyon, Assistant Attorney General (October 21, 2005).

Therefore, that property would have been acquired with exclusive

jurisdiction under existing state law. 

Fort Meade was also originally ceded to the federal government in

1917. In the late 1990's, approximately 265 additional acres were ceded

to Fort Meade as a security buffer. SG §14-102(a). Our review of the

EUL sites indicate that they were part of the original transfer and that

therefore the State would have ceded exclusive jurisdiction to the federal

government. 

(3) Chapter 67, § 21, of the Acts of the

General Assembly of 1900;

(4) Chapter 743, §§ 2 and 3, of the Acts

of the General Assembly of 1906;

(5) Chapter 194 of the Acts of the

General Assembly of 1908; or

(6) any other act that gave consent for the

acquisition of property and ceded jurisdiction

with respect to that property.

SG §14-102(b). To our knowledge, most of the real property at Fort

Meade and Aberdeen Proving Ground was obtained by the federal

government prior to May 31, 1943, and likely falls within one of

these categories.4

However, even with respect to property that falls within one of

the six categories under SG §14-102(b), the State has asserted

authority to tax to the fullest extent permitted by federal law. In

particular, the relevant statute provides:
18 [93 Op. Att’y

 This statute was originally enacted as emergency legislation in 5

1945. Chapter 71, Laws of Maryland 1945, originally codified as Article

81, §6(1).

The case involved property in four other federal enclaves in 6

Maryland, although the Court only described leases at Fort Meade.

 The EUL law was then codified at 10 U.S.C. §1270d, the 7

predecessor to 10 U.S.C. §2667.

Property subject to assessment and tax under

this article includes property owned or leased

by the United States or any agency or

department of the United States, to the fullest

extent possible under the Constitution of the

United States and the laws of the United

States. 

Annotated Code of Maryland, Tax-Property Article (“TP”), §6-

101(a)(2) (emphasis supplied). At the time this provision was 5

enacted, the General Assembly made clear that it superseded the

exemptions for the acquisitions set forth in SG §14-102(b)(1)-(6) by

providing “[t]hat any and all public general laws or public local laws

or any part or parts thereof inconsistent with the provisions of this

Act are hereby repealed to the extent of any such inconsistency.”

Chapter 71, §2, Laws of Maryland 1945. 

Accordingly, for property tax purposes, State law authorizes the

taxing of the private interests in all federal property whenever

permissible under federal law. 

C. Meade Heights

The relationship between the federal EUL statute and the

Maryland property tax law was addressed by the Court of Appeals in

a case involving property at Fort Meade. Meade Heights, Inc. v. 6

State Tax Commission, 202 Md. 20, 95 A.2d 280 (1953). In that

case, the military had leased land in an area of exclusive federal

jurisdiction within Fort Meade to a private developer under an EUL.

The developer built and owned military housing units on that land.

The Court first noted that the EUL statute that authorized the leases 7

had explicitly waived tax immunity for the leasehold interests. 202

Md. at 24. Citing the predecessor of current TP §6-101(a)(2), the

Court then observed that Maryland law provided for the assessment
Gen. 12] 19

and taxation of real property owned by the federal government,

including leasehold interests in that property, to the fullest extent

permitted by federal law. Id. at 25-28. The Court concluded that “it

is ... clear that private interests in government property are taxable to

their full value.... In the instant case, Congress has definitely

consented to the taxation of the lessee’s interest, whatever that may

be.” Id. at 28 (citations omitted). Accordingly, the private interests

in the improvements located at Fort Meade were taxable. 

Following the Meade Heights decision, the Legislature enacted

a statute explicitly setting forth the tax treatment of private interests

in federally-owned property. Chapter 884, Laws of Maryland 1961,

now codified as TP §6-102(e). That provision now reads, in relevant

part: 

Unless exempted under [TP] §7-211, §7-211.1,

or 7-501..., the interest or privilege of a person

in property that is owned by the federal

government, ... or an agency or instrumentality

of the federal government, ... is subject to

property tax as though the lessee or the user of

the property were the owner of the property, if

the property is leased or otherwise made

available to that person:

(1) by the federal government, ... or an

agency or instrumentality of the federal

government ...; and

(2) with the privilege to use the property in

connection with a business that is conducted

for profit.

TP §6-102(e); see also United States v. City of Detroit, 355 U.S. 466

(1958) (holding that similar Michigan statute was constitutional).

Thus, a private interest created pursuant to an EUL for a for-profit

entity in federally owned property in an exclusive federal enclave is

taxable in Maryland, unless State law provides an exemption from

taxation.
20 [93 Op. Att’y

 TP §6-102(e) would not apply if the private party was acting 8

simply as the agent of the federal government carrying out a specific

government purpose under direct control of the government and without

discretion even as to the daily activities and if it is ultimately the

government which is responsible for the activity satisfying a legal

obligation. See Letter from Norman E. Parker, Jr., Deputy Attorney

General, and Jack Schwartz, Chief Counsel, Opinions and Advice to

Ronald W. Wineholt, Director of SDAT (November 22, 1996). That

restriction rarely applies and does not seem applicable to the current leases

under consideration at Fort Meade and Aberdeen Proving Ground, as we

understand them. 

D. Exemptions under Maryland Law

Assuming that a particular private property interest falls within

the waiver to federal tax immunity set out above, the next step is to

determine if the property interest is exempt under Maryland tax law.

Several tax exemptions could apply.

TP §7-210 exempts all government-owned property devoted to

a governmental use or purpose. However, as noted above, TP §6-

102(e) creates an exception to that rule and imposes a tax on

government owned property that is leased or otherwise made

available to a private, for-profit entity using it for business purposes.

Accordingly, the land leased to the private party would be taxable

under TP §6-102(e) to the lessee as if that lessee were the owner.8

TP §§7-211 and 7-501 provide exemptions to property otherwise

taxable under TP §6-102(e).

TP §7-211(a) exempts an interest in federally owned property

if the property is located within defined boundaries of a military

installation and is used for national defense, which includes

homeland security, or military housing. Since the purpose of 10

U.S.C. §2667 is to authorize the lease of nonexcess military land,

some of the property leased under an EUL may fall within this

exemption. 

TP §7-211(c) creates an exemption when there is a payment in

lieu of tax agreement (PILOT). Thus, if the federal government were

to enter into a PILOT with the taxing authorities, the interest of the

private party in the federally owned property would be exempt from

property taxes.
Gen. 12] 21

TP §7-501(a) authorizes certain counties (including Anne

Arundel County) to create by law an exemption from county property

tax for property that would otherwise be subject to tax under TP §6-

102(e). We are not aware of any current local law that creates such

an exemption in Anne Arundel County. 

TP §7-501(b) creates another PILOT-related exemption. It

allows the governing body of any municipality or of any county

(other than Worcester County) to authorize by law an exemption for

property that would be taxable under TP §6-102(e), if a PILOT is

executed with the local governing body. 

TP §7-211.2 creates a related exemption which is only

applicable when the federal government owns a partial interest (at

least 50%) in the property – or in the entity which owns the property

– and the property is located on federally owned land within a

military installation and used for national defense purposes or

military housing.

In sum, one cannot draw a definitive conclusion whether a

particular private interest in federal property is taxable under TP §6-

102(e) until the applicability of the exemptions listed above has been

analyzed. That determination depends on the terms of the lease and

other instruments governing the relationship between the lessee and

federal government, any PILOT with the State or local government,

related local laws, and information about the activities of the lessee

on the property. 

E. Taxability of Privately Owned Improvements on Federal

Land

It is our understanding that, under the EUL lease at Aberdeen

Proving Ground, the private entity that leases the federal land will

construct and own the improvements on that land for the term of the

lease. See Part I.C. of this opinion. Thus, those improvements will

be privately-owned property, not a private interest in governmentowned property. That is a critical distinction that affects the

application of some of the State tax provisions and exemptions

outlined in the previous section of this opinion. 
22 [93 Op. Att’y

 As outlined in Part II.C-D above, an exception to the ownership 9

rule is established in TP §6-102(e) when the government owns the

property and either leases it or otherwise makes it available to a private

entity for use in a business for profit. Mayor of Baltimore v. Boitnott, 356

Md. 605, 741 A.2d 1079 (1999). That property then becomes taxable to

the private lessee, unless an exemption applies. 

See also Dollar Thrifty Automotive Group, Inc., et al. v. 10

Supervisor of Assessments of Anne Arundel County, Md. Tax Court Case

Nos. 06-RP-AA-0216 through 0220 (August 14, 2007) (denying

exemption under TP §7-211(b) sought by lessee of government-owned

land for the improvements owned by lessee because taxation was based on

legal title being in the lessee).

Under TP §6-101, all real property is generally taxable to the

owner. However, government-owned property devoted to a

governmental use is exempt under TP §7-210. That exemption does 9

not apply to privately owned improvements regardless of whether

they are located on government land. The exemptions set forth in TP

§§7-501 and 7-211 apply to government property made taxable by

§6-102(e) and do not apply to privately owned property located on

government owned property. See 55 Opinions of the Attorney

General 339, 343 (1970) (privately owned cargo handling facility on

land owned by Maryland Port Authority was taxable); Allied

Hangars, Inc. v. Supervisor of Assessments of St. Mary’s County,

(Case No. 1856 Sept. Term, 2002) (Court of Special Appeals, August

19, 2003) (unreported) (privately owned hangars located on county

owned airport held taxable).10

 

The privately owned improvements constructed at the EUL

sites would be taxable to the private owner under the general

taxability of all property (TP §6-101) and the exemptions in TP §7-

210 and TP §7-211 would not apply. Accordingly, there would be no

exemption applicable to privately owned improvements located on

federal property unless the ultimate use fell within another exemption

or credit otherwise authorized by the Tax-Property Article.

F. Summary

When real property in an enclave of exclusive federal

jurisdiction in Maryland is leased to a private developer, the

leasehold interest in that property is subject to State and local

property taxes if the federal government has waived its tax immunity

and if the property interests are not otherwise exempt from tax under
Gen. 12] 23

 A military website acknowledges that taxability of developments 11

under an EUL “is a case by case, locality by locality determination.”

http://eul.army.mil/faqs.htm. See also 4 United States General

Accounting Office, Principles of Federal Appropriations Law Ch. 16, §2

(2d ed. March 2001), available at 2001 WL 34038479 (EUL statute

permits state and local taxation of interests of lessees); Memorandum from

R. Chuck Mason, Legislative Attorney, American Law Division of the

Congressional Research Service to the Honorable C.A. Ruppersberger

(December 11, 2007).

Maryland law. Under 10 U.S.C. §2667, the federal government has

waived tax immunity with respect to EULs on military bases.

Whether the same result pertains in leases of property outside

military reservations depends on the statute governing the particular

leases.11

III

Applicability of Impact Fees in Federal Enclaves

You also asked whether a private lessee of real property within

an exclusive federal enclave would be required to pay impact fees to

the local government. 

A. Impact Fees

An impact fee is typically imposed by a local government on a

development to help defray the cost of infrastructure improvements

and public facilities necessary to support the new development. See

Riverwalk Apartments, LLC v. Twigg, 396 Md. 527, 532 n.3, 914

A.2d 770 (2007); 89 Opinions of the Attorney General 212, 213

(2004). May a local government assess such a fee against a

development in an area of exclusive federal jurisdiction? A threshold

question is whether a particular impact fee is properly characterized

as a regulatory fee or a tax – and, if a tax, what type of tax. If the

impact fee is a tax, there must be a determination – similar to the

analysis in the previous section of this opinion – whether and to what

extent the federal government has waived its tax immunity. If the

impact fee is a regulatory fee, there must be an analysis of the extent

to which the State regulatory regime applies to the federal enclave.

B. Characterization of Impact Fee as Fee or Tax
24 [93 Op. Att’y

 The label given to a charge by state or local law is not 12

controlling under federal law. National Railroad Passenger Co v. City of

New York, 882 F.2d 710, 715 (2 Cir. 1989). nd

 The Massachusetts case concerned the annual aircraft 13

registration tax imposed by the federal government under the Airport and

Airway Revenue Act on all aircraft using the national airways. The

revenue generated by the tax was paid to the Airport and Airway Trust

fund which was dedicated to the expansion, improvement and

maintenance of the air transportation system. The case involved the

question whether imposition of the tax on police helicopters violated the

implied immunity of the states from federal taxation. 

Applying the three-part test outlined in the text above, the Supreme

Court concluded that the registration tax represented a user fee that was

fairly applied to all users of the national airways, including the states, that

did not exceed the cost of the benefits received by the user, and that was

structured to produce revenue less than the cost of the program. 

 This test is somewhat different from the criterion applied in 14

Maryland. Under Maryland law, the characterization of a development

related charge as a tax or a fee depends on whether the purpose of the

enactment is primarily revenue raising or regulatory. Eastern Diversified

Properties, Inc. v. Montgomery County, 319 Md. 45, 570 A.2d 850

(1990). 

If a development is totally within a federal enclave, federal law

would control the determination whether a charge is a regulatory fee

or a tax. In Massachusetts v. United States, 435 U.S. 444 (1978), 12

the Supreme Court set forth a test used to distinguish fees from taxes

for the purpose of determining whether an intergovernmental

immunity applied. That test involved an examination of three

questions: (1) Does the charge discriminate against the user ? (2) 13

Does it represent a fair approximation of the cost of the benefits

received by the user from the program? and (3) Is the aggregate

collection excessive in relation to the cost of the benefits provided by

the program? See also Maine v. Department of Navy, 973 F.2d 14

1007, 1012-13 (1st Cir. 1992) (applying Massachusetts case in

context of State fees charged against a federal agency).

Impact fees that are designed to offset general infrastructure

costs probably do not sufficiently benefit a development within a

federal enclave to be deemed a regulatory fee and, therefore, would

be considered a tax. Cf. Eastern Diversified Properties, Inc. v.

Montgomery County, 319 Md. 45, 570 A.2d 850 (1990)
Gen. 12] 25

(characterizing impact fee as tax under Maryland law because

primary purpose was to raise revenue). However, any decision

would have to be based on the purpose and method of imposition of

the specific impact fee. 

C. Analysis of Impact Fee as a Tax

1. Type of Tax

If an impact fee is determined to be a tax, further analysis is

necessary to determine the type of tax. This analysis is necessary

because the federal government may have waived immunity as to one

type of tax, but not another. For example, Congress has allowed the

imposition of certain taxes for activity within an enclave under the

Buck Act, 4 U.S.C. §§104 -110, which addresses sales, use and

income taxes. And, as seen above, in 10 U.S.C. §2667, Congress has

tailored a specific waiver for a private lessee’s interest in federal

property – i.e., a waiver as to property taxes.

If properly characterized as a tax, an impact fee clearly would

not be an income tax or sales and use tax. An impact fee might be

characterized as a property tax or an excise tax. While a property tax

is imposed upon one’s general ownership of property, an excise tax

is one imposed “upon a particular use of property or the exercise of

a single power over property incidental to ownership.” See Bromley

v. McCaughn, 280 U.S. 124, 136 (1929); Murphy v. IRS, 493 F.3d

170, 184-85 (D.C. Cir. 2007), cert. filed, 76 USLW 3324 (Dec 13,

2007).

A similar analysis is used under State law. In Waters Landing

Ltd. Partnership v. Montgomery County, 337 Md. 15, 650 A.2d 712

(1994), the Court of Appeals used a three-part test to determine

whether an impact fee was a property tax or excise tax. First, the

Court considered the label given to the charge by the legislative body

that enacted it. While the title of the charge is not conclusive, the

label chosen by the legislative body is entitled to considerable

deference. 337 Md. at 25.

Second, the Court indicated that the “actual operation and

practical effect” of the tax must be evaluated. A property tax is

charged based on ownership alone while an excise tax is imposed

upon the performance of an act, the engagement in an occupation, or

the enjoyment of a privilege. Id. at 25-26.
26 [93 Op. Att’y

 It is not possible or appropriate to catalog in this opinion the 15

myriad laws that govern the application of State law in a federal enclave.

See, e.g., Assimilative Crimes Act, 18 U.S.C. §§7, 13. Rather, we focus

in this section on laws pertinent to State and local impact fees. 

Third, the method of computing the tax must be considered. If

it is based strictly on value and creates a lien on the property, it is a

property tax. If it is measured by the extent to which a privilege is

exercised without consideration of value, it is an excise tax. Id. at

26.

2. Local Excise Taxes in Federal Enclaves

Based on both the State and federal test, it seems likely that an

impact fee would be considered an excise tax as it is generally

triggered and measured by the development of the property and not

based on the general ownership of the property. However, the

activity that triggers the impact fee occurs entirely within the enclave.

The constitutional grant of exclusive legislative authority within a

federal enclave precludes state jurisdiction to impose an excise tax

on property within the enclave unless there is a specific

congressional deferral to state authority or the state reserved such

authority at the time it ceded jurisdiction. Surplus Trading Co. v.

Cook, 281 U.S. 647 (1930). Therefore, the exclusiveness of the

federal jurisdiction within the enclave would preclude state

imposition of a tax on an activity carried out entirely within the

enclave unless that authority has been reserved at the time of federal

acquisition or Congress subsequently waived tax immunity. There

is no general waiver by Congress that would allow a state to impose

an excise tax on development within an enclave.

D. Analysis of Impact Fee as a Regulatory Fee

1. General Rule

As a general rule, if Congress has exclusive legislative 15

authority over a federal enclave, federal instrumentalities or property

in that enclave are not subject to state regulation “without a clear

expression or implication to that effect” by Congress. Hancock v.

Train, 426 U.S. 167, 179 (1976). In Hancock, the Court stated:
Gen. 12] 27

 In Hancock, the federal Clean Air Act required federal 16

installations to meet state environmental standards. A federal installation

in Kentucky satisfied the requirements, but the federal government refused

to seek a permit from the state. The State of Kentucky argued that an

application was required because that was the method for collecting

information to develop emission standards and to monitor compliance.

The Supreme Court held that there was no clear statement that Congress

wanted the federal government to participate in the local process other

than meeting the requirements. Without a clear statement, the Court

refused to expand state regulatory authority over an exclusive federal

enclave. 

 For example, in response to Hancock, Congress amended the 17

Clean Air Act and, using a clear, precise statement, required the federal

government to not only meet local environmental standards, but also to

comply with the local regulatory process, including the payment of

regulatory fees. Clean Air Act, 42 U.S.C. §7418. 

Because of the fundamental importance of the

principles shielding federal installations and

activities from regulation by the States, an

authorization of state regulation is found only

when and to the extent there is a clear

congressional mandate, specific congressional

action that makes this authorization of the state

regulation clear and unambiguous. 

Id. (internal quotation marks and footnote omitted); see also Paul 16

v. United States, 371 U.S. 245, 263 (1963) (“The cases make clear

that the grant of ‘exclusive’ legislative power to Congress over

enclaves that meet the requirements of Art. I, s 8, cl. 17, by its own

weight, bars state regulation without specific congressional action”).

While Congress has consented to particular types of regulation by the

states, we are not aware of any overarching statement consenting to 17

local impact fees. Additionally, a state reservation of other

jurisdictional authority, such as taxing authority, would not authorize

the enforcement of an ordinance involving the permit for, and control

of, construction because that would be outside the reservation and,

therefore, outside of the state’s jurisdiction. West River Electric

Association, Inc. v. Black Hills Power and Light Company, 918 F.2d

713 (8 Cir. 1990); City of Birmingham v. Thompson, 200 F.2d 505 th

(5 Cir. 1952). th
28 [93 Op. Att’y

2. Continuation of State Regulation at Time of Federal

Acquisition

Even when the federal government obtains exclusive

jurisdiction over an area, local laws that existed at the time the

federal government acquired exclusive jurisdiction remain in effect

as law of the federal territory unless they were specifically rejected

or abrogated by legislative action or are inconsistent with other

federal law. James Stewart & Co. v. Sadrakula, 309 U.S. 94, 99-104

(1940); Paul, supra, 371 U.S. at 265. “This assures that no area

however small will be left without a developed legal system for

private rights.” James Stewart, 309 U.S. at 100. However, a

subsequent enactment by the local government would normally not

be effective within the federal enclave without congressional action.

Id.

3. Application to Aberdeen Proving Ground and Fort

Meade

Impact fees are a relatively recent government response to the

public costs of new development and most likely did not exist when

the federal government first obtained exclusive jurisdiction of most

of its enclaves in Maryland. Therefore, they would probably not be

part of the existing law that remained applicable in the enclave at the

time the property was ceded to the federal government. However, if

they were, there would still have to be a determination that the

regulatory scheme that included those fees was not inconsistent with

the federal authority authorizing the construction.

It is our understanding that the properties that are the subject of

EULs at both Aberdeen Proving Ground and Fort Meade are in areas

of exclusive federal jurisdiction ceded by the State prior to 1943. See

Part II. B of this opinion and footnote 4 above.

Impact fees were not authorized in Harford County until

authorized by the General Assembly by Chapter 389, Laws of

Maryland 2004 and implemented by Bill No. 05-21 which became

effective on June 10, 2005. That ordinance authorized school related

impact fees imposed only on new residential development, not

commercial development. Accordingly, impact fees were not in

effect at the time of the transfer of exclusive jurisdiction to the

federal government and even currently, would not apply to the

development planned under the EULs under review. Consequently,

impact fees cannot be effectively imposed now at the Aberdeen

Proving Ground. 
Gen. 12] 29

Impact fees were originally authorized in Anne Arundel County

by Chapter 350, Laws of Maryland 1986 and implemented in 1987

as Bill No. 50-87, authorizing fees related to schools and

transportation. Therefore, impact fees as a regulatory fee could not

be imposed at the Fort Meade site. 

4. Summary

 Impact fees that are a prerequisite to development would be

triggered by events occurring entirely within an enclave of exclusive

federal jurisdiction. Accordingly, regardless of whether the

development was being done by the government or a private party,

imposition of impact fees on development within an enclave of

exclusive federal jurisdiction would not be permitted unless that

regulatory scheme fell within the jurisdiction reserved by the State,

had become part of the law for that enclave at the time the property

was ceded to the federal government, or was otherwise permitted by

congressional action.

IV

Conclusion

It is our opinion that real property located within an area of

exclusive federal jurisdiction on a military base and leased to a

private developer is subject to State and local taxation to the extent

that the federal government has waived its tax immunity – as it has

in the statute authorizing EULs on military installations. Whether the

property interest is taxable or exempt from taxation is then

determined under Maryland law. 

Whether a development within a federal enclave of exclusive

jurisdiction would trigger impact fees may depend on whether the

federal government has waived immunity as to excise taxes.

Alternatively it may depend on whether the State regulatory regime

including the impact fee existed at the time the property was ceded

to the federal government or whether Congress later consented to that

regulatory regime.
30 [93 Op. Att’y

The same analysis would apply to real property in an enclave

of exclusive federal jurisdiction that is not on a military base,

although some waiver provisions may apply only on military

installations. 

Douglas F. Gansler

Attorney General

David M. Lyon

Assistant Attorney General

Robert N. McDonald

Chief Counsel

 Opinions and Advice