IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION THREE

WESTERN RIVERS CONSERVANCY,

Respondent,

v.

STEVENS COUNTY,

Appellant.

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No. 37516-1-III

PUBLISHED OPINION

PENNELL, C.J. — Stevens County assessed a tax against Western Rivers 

Conservancy when Western Rivers sold a tract of timberland to the United States Forest 

Service (USFS) for recreational purposes. The tax would not have applied if the land had 

been sold to the Washington State Parks and Recreation Commission for the same 

purpose. Western Rivers paid the tax under protest, claiming it violated the supremacy 

clause of the United States Constitution by discriminating against land sales to the federal 

FILED

JULY 1, 2021

In the Office of the Clerk of Court

WA State Court of Appeals, Division III
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

2

government. Western Rivers then filed suit in Spokane County Superior Court,

successfully obtaining an order of summary judgment finding the tax invalid and void,

and reimbursing the tax with interest.

We agree Western Rivers is entitled to summary judgment. Under the doctrine of 

intergovernmental tax immunity, if the State provides a tax break for a land sale to one of 

its own entities, the same tax break must be afforded to a substantially similar land sale to 

a foreign sovereign. The land sale here was substantially similar to sales to the parks and 

recreation commission that are protected from taxation. Given this comparability, the tax 

assessment against Western Rivers based on its land sale to the USFS cannot stand.

FACTS

In 2015, Western Rivers Conservancy sold a large tract of Stevens County 

timberland to the USFS. The USFS intended to add the property to the Colville National 

Forest and route a portion of a national scenic trail through it. The property had been 

designated by the county assessor as “forestland,” and therefore subject to a lower tax rate 

than normal property taxes. As the sale to the USFS drew to a close, Stevens County 

issued a notice that it was removing the forestland designation from the property, 

triggering the imposition of a $194,652.18 compensating tax. The county removed the 

designation for two reasons. First was the sale of the property to the USFS, an entity 
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

3

exempt from taxation. Second, the county determined the property was no longer being 

primarily used for the growth and harvesting of timber. Western Rivers paid the tax under 

protest on the day the property was sold to the USFS.

Western Rivers brought suit against Stevens County for a refund of the 

compensating tax. It argued imposition of the tax violated the doctrine of 

intergovernmental tax immunity under the supremacy clause of the United States 

Constitution. U.S. CONST. art. VI, cl. 2. Western Rivers pointed out that those who sell 

forestland to the Washington State Parks and Recreation Commission for recreation 

purposes are exempted from paying the compensating tax. As the exemption did not apply 

to the sale to the USFS, Western Rivers contended the exemption unlawfully 

discriminated against those who deal with the federal government. The trial court agreed 

and granted summary judgment to Western Rivers. The court ordered Stevens County to 

refund the tax, with prejudgment interest on the entire sum previously collected.

Stevens County now appeals the trial court’s adverse summary judgment order.

ANALYSIS

We review a summary judgment order de novo. Colo. Structures, Inc. v. Blue 

Mountain Plaza, LLC, 159 Wn. App. 654, 661, 246 P.3d 835 (2011). The question is 

whether the evidence, viewed in the light most favorable to the nonmoving party, reveals 
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

4

a genuine issue of material fact for trial. Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 

1080 (2015). If there are no material factual disputes, summary judgment is appropriate as 

a matter of law. Id.1

This case turns on the validity of the compensating tax imposed on Western Rivers 

when it sold timberland to the USFS. Washington protects privately held timber and 

forestlands from standard ad valorem property taxes. See chapter 84.33 RCW. To qualify 

for protection, the property must meet the definition of “forestland” as set forth in 

RCW 84.33.035(5). Forestland property is land “devoted primarily to growing and 

harvesting timber.” Id. If property is removed from the forestland designation, with some 

exceptions a compensating tax is imposed. Former RCW 84.33.140(11) (2014).

Shortly after Western Rivers announced the plan to sell its forestland to the USFS, 

Stevens County issued a notification that it was removing the forestland designation

and imposing a compensating tax for each parcel involved in the sale. The county

 1 Stevens County claims the trial court made factual findings, as part of a

December 2018 letter to the parties explaining its ruling in the initial summary judgment

proceedings, that are unchallenged and therefore binding on appeal. This assertion 

misapprehends the summary judgment standard. Factual findings on contested issues are 

not proper in the summary judgment context. Hemenway v. Miller, 116 Wn.2d 725, 731, 

807 P.2d 863 (1991). Our de novo analysis is the same as the trial court. Ruvalcaba v. 

Kwang Ho Baek, 175 Wn.2d 1, 6, 282 P.3d 1083 (2012). We therefore owe no deference 

to the trial court’s assessment of the evidence. 
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W. Rivers Conservancy v. Stevens County

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eventually supplied two reasons for the removal: (1) the land was being sold to

a buyer that was exempt from taxation (RCW 84.33.140(5)(c)), and (2) the land was 

not being managed by Western Rivers for the growth and harvest of timber (RCW 

84.33.140(5)(e)(i)). Neither basis for taxation would have applied had Western Rivers 

sold the timberland “to the parks and recreation commission for park and recreation 

purposes.” RCW 84.33.140(13)(d); see RCW 84.33.140(5)(e)(i). But because the USFS 

is not our state’s parks and recreation commission, Stevens County assessed the tax. 

Western Rivers acknowledges that, under the plain terms of the statute, its sale to 

the USFS is not exempt from the compensating tax. Nevertheless, Western Rivers argues 

the compensating tax must be exempted as a matter of law. According to Western Rivers,

imposition of the tax would violate the supremacy clause by imposing a discriminatory 

tax on those who deal with the federal government. Western Rivers’s legal argument falls 

under a doctrine known as intergovernmental tax immunity. See McCulloch v. Maryland, 

17 U.S. (4 Wheat.) 316, 425-37, 4 L. Ed. 579 (1819).

The tax immunity doctrine restricts the imposition of taxes by one sovereign (such 

as a state) on another sovereign (such as the federal government). The doctrine not only 

forbids direct taxation on a separate sovereign, it also prohibits taxation on a private 

entity based on the entity’s dealings with a separate sovereign. Davis v. Michigan Dep’t 
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

6

of Treasury, 489 U.S. 803, 813, 109 S. Ct. 1500, 4 L. Ed. 891 (1989). The tax immunity 

doctrine requires equal tax treatment unless there are significant differences between 

those who deal with one sovereign and those who deal with the other. Id. at 815-16.

The tax immunity doctrine’s “significant differences test” requires identifying and 

analyzing the definitional rule used by a sovereign to carve out a tax-protected class. 

Once the definitional rule is identified, its protections must be extended to foreign entities 

on transactions meeting the same rule. For example, a state law exempting all land sales 

to state agencies from taxation would have a broad definitional rule, applicable to all land 

sales. To comport with the tax immunity doctrine, a similarly broad exception would need 

to extend to land sales to all federal agencies. See id. at 816.

The recent case of Dawson v. Steager, __ U.S. __, 139 S. Ct. 698, 203 L. Ed. 2d 

29 (2019) illustrates the significant differences test in practice.2 Dawson concerned a

West Virginia tax exemption on pension benefits afforded to a subset of the state’s retired 

police officers, firefighters and sheriff’s deputies. 139 S. Ct. at 705. Mr. Dawson, a 

retired United States Marshall living in West Virginia, was denied the exemption because 

his pension was derived from work as a federal law enforcement officer. Mr. Dawson 

 2 Dawson specifically involved the application of 4 U.S.C. § 111. 139 S. Ct. 

at 702. That statute is simply a codification of the doctrine of intergovernmental tax 

immunity in relation to the taxation of federal employees. Id.
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W. Rivers Conservancy v. Stevens County

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contended this difference in treatment was discriminatory. Id. at 702. The United States 

Supreme Court agreed.

Dawson recognized that, to be valid, West Virginia’s tax exemption for state 

retirees must be extended to similarly situated federal retirees. Id. at 703-04. Given this 

imperative, Mr. Dawson could only be denied the tax exemption if his circumstances 

were significantly different from the state retirees who received the exemption. The 

Supreme Court determined West Virginia defined the protected class of retirees by job 

type, i.e. work in law enforcement. Id. at 705. Because Mr. Dawson’s pension was from 

work in law enforcement, there was no significant difference between him and the 

recipients of the state exemption. Id. The tax immunity doctrine therefore required the 

exemption be extended to Mr. Dawson. Id. at 706.

With these legal principles in mind, we turn to the case at hand. The applicable tax 

exemption involves forestland sales to the Washington State Parks and Recreation 

Commission for recreation purposes. RCW 84.33.140(13)(d). By its plain terms, this 

statute favors land sales to an entity of the state over sales to the federal government. 

The tax immunity doctrine therefore requires the state’s exemption be extended to federal 

land sales so long as there are no significant differences between the state’s exempted

land sales and sales to the federal government.
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

8

Stevens County claims there are significant differences in this case justifying

disparate tax treatment. According to Stevens County, RCW 84.33.140(13)(d)’s 

definitional rule focuses on the type of organization protected from taxation. Specifically, 

the statute exempts land sales to the Washington State Parks and Recreation Commission 

from compensating taxes. While this protection is facially discriminatory, Stevens County 

claims it is not discriminatory as to the USFS. Because the duties of the USFS and the 

parks and recreation commission differ,

3 the county argues the tax immunity doctrine 

does not require exempting the sale of timberland to the USFS from a compensating tax.

We disagree with Stevens County’s characterization of the definitional rule set by 

RCW 84.33.140(13)(d). The statute does not exempt from taxation all forestland sales to 

the parks and recreation commission. Only sales for parks and recreation purposes are 

protected. This specificity reveals that the true definitional feature of the tax exemption in 

RCW 84.33.140(13)(d) is an exemption based on a land sale for recreational purposes.

The fact that Washington favors recreational land sales to its parks and recreation

commission over similar sales to other state agencies does not change our assessment of 

 3 The powers and duties of the parks and recreation commission are narrowly 

tied to maintaining parks and parkways for aesthetic and recreational purposes. Former 

RCW 79A.05.030 (2005); RCW 79A.05.035. The USFS has broader duties, including 

administrating lands for “recreation, range, timber, watershed, and wildlife and fish 

purposes.” 16 U.S.C. § 528.
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

9

the definitional rule set by RCW 84.33.140(13)(d). We recognize the statute treats the 

USFS the same as state agencies other than the parks and recreation commission. But the 

“relevant question” for tax immunity purposes “isn’t whether [federal land sales] are 

similarly situated to [state land sales that] don’t receive a tax benefit; the relevant 

question is whether they are similarly situated to those [that] do.” Dawson, 193 S. Ct. at 

705. The simple fact is our state law confers a tax benefit to a portion of land sales to the 

parks and recreation commission, a state agency. As a result, the tax immunity doctrine 

requires substantially similar sales to a federal agency, such as the USFS, be treated 

equally for tax purposes as sales to the protected state agency.

At summary judgment, Western Rivers produced evidence showing the land sale 

to the USFS was for recreation purposes. Western Rivers produced a letter from the 

USFS announcing its intent to acquire the land and manage it for public access and 

recreation. Stevens County complains there are questions of fact as to whether USFS’s 

stated intent was accurate. But Stevens County points to no evidence in the record to

support this position. After a moving party submits sufficient evidence to justify summary 

judgment, relief cannot be denied on the basis of speculation or argumentative assertions. 

White v. State, 131 Wn.2d 1, 9, 929 P.2d 396 (1997). Because Western Rivers produced 
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

10

uncontested evidence showing its land sale met the definitional purpose of a tax 

exemption under RCW 84.33.140(13)(d), summary judgment was proper.

As a final matter, Stevens County contends that, even if Western Rivers was 

entitled to summary judgment, the trial court erred by applying prejudgment interest on 

the entirety of the collected compensating tax. According to Stevens County, the trial

court should have first conducted an inquiry into the amount of tax Western Rivers should 

have lawfully paid before imposing prejudgment interest on the excess collected. Western 

Rivers answers that the entire tax was invalid and void as a matter of law, and thus it was 

unnecessary for the court to inquire into whether any of the tax was lawfully paid. We 

agree with Western Rivers. Moses Lake Homes, Inc. v. Grant County, 365 U.S. 744, 752, 

81 S. Ct. 870, 6 L. Ed. 2d 66 (1961) (constitutionally invalid tax may not be exacted).

For the reasons set forth above, the entire compensating tax assessed against 

Western Rivers was discriminatory and therefore unlawful. Western Rivers was properly 

granted summary judgment and awarded reimbursement of the tax, together with interest 

from the date of payment. See RCW 84.68.030.
No. 37516-1-III

W. Rivers Conservancy v. Stevens County

11

CONCLUSION

The order of summary judgment and refund award are affirmed.

_________________________________

Pennell, C.J.

WE CONCUR:

______________________________

Siddoway, J.

______________________________

Fearing, J.