IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE WESTERN RIVERS CONSERVANCY, Respondent,

v. STEVENS COUNTY, Appellant. ) ) ) ) ) ) ) ) ) No. 37516

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PUBLISHED OPINION

P ENNELL , C. J.

— Stevens County assessed a ta x 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 P arks and R ecreation C ommission 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 J ULY 1, 202 1 In the Office of the Clerk of Court WA State Court of Appeal s, Division IIINo. 37516

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2 government. Western Rivers then filed suit in Spokan e County S uperior C ourt , successfully obtain ing 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 immun it y , 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 he re was substantially similar to sales to the parks and

recre ation 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 Cons ervancy sold a large tract of Stevens County timberlan d to the USFS . The USFS intended to add the property to the Colville National
Forest and route a portion of a nationa l scenic trail through it . The property had been designated by the county assessor as “ forestland, ” and therefore subject to a lower tax ra te 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
de signation for two reasons. First was the sale of the property to the USFS , an entityNo. 37516

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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 un der protes t 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 s upremacy c lause of the United States Constitution. U.S. C ONST . art. VI, cl. 2. Western Rivers pointed out that t hose who sell forestland to the Washington State P arks and R ecreation C ommission for recreation purposes are exempted from paying the compensating tax. A s 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 orde red Stevens County to

re fund the tax , with pre judgment intere st on the entire sum previously collected. Stevens County now a ppeals the trial court’s adverse summary judgment order

. ANALYSIS We review a summary judgment order de novo. Colo

. Structures, In c. 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 n onmoving party, revealsNo. 37516

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4 a ge nuine issue of material fact for trial

. Keck v. Collins , 184 Wn.2d 358, 370, 35 7 P.3d 1080 (2015). If there are no material factual disputes , summary judgment is appropriate as a matter of law. Id. 1
Th is case turns on the validity of the compensating tax imposed on Western Rivers when it sold timber land to the USFS. Washing ton pro tects 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 lan d “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 sel l 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 c ounty

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 summar y judgment proceedings, that are unchallenged and therefore binding on appeal. This assertion mi sapprehends the summary judgment standard

. Factual findings on contested issues are not proper in th e 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. K

wang Ho Baek , 175 Wn.2d 1, 6, 282 P.3d 1083 (2012). W e therefore owe no deference to the trial court’s assessment of the evidence.No. 37516

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5 eventual ly supplied two reasons for the removal: ( 1) the la nd was being sold to

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

not being managed by Western Rivers for the grow th and harvest of timber (RCW 84.33.140(5)(e) (i) ). Neither basis for tax ation would have applied had West ern Rivers sold the timberland “to the parks and recreation commission for park and recreation purposes.” RCW 84.33.140(13)(d) ; s ee 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, u nder 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 s upremacy c lause by imposing a discriminatory tax on those who deal with the federal government

. Western Rive rs’s legal argument falls under a doctrine known as intergovernmental tax immunity. See M c Culloch 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 ta xation on a separate sovereign , it also prohibits taxation on a private entity based o n the entity’s dealings with a separate sovereign

. Davis v. Michigan Dep’tNo. 37516

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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 8 15

- 16. The tax immunity doctrine’s “significant differences test ” requires identifying and analyzin g the definitional rule used by a sov ereign to carve out a tax

- protected class. Once the definitional rule is identified, it s protections must be extended to foreign entities

o n transactions meeting the same rule

. For example, a s tate law exempting all lan d 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 reti red police officers, firefighters and sheriff’s deputies. 139 S. Ct. at 705. Mr. Dawson, a retired U nited 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 o f the doctrine of intergovernmental tax immunity in relation to the taxation of federal employees. Id

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7 contended this difference in treatment was discriminatory. Id

. at 702. The United States Supreme C ourt agreed.
Dawson recognized that, to be valid, West Virginia’s tax exemption for state retirees must be extended to similarly situated f ederal ret irees. 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 exemp tion. The Supreme Court determined West Virginia defined the prot ected 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

. T he tax immunity do ctrine therefore required the
exemp tion be extended to Mr. Dawson. Id . at 706. With these legal principles in mind, we turn to the case at hand. T he applicable tax exemption involves forest land sales to the Washington State P arks and R ecreation C ommission for recreation purposes. RCW 84.33.140(13)(d). By its plain terms, this statute favors land sales to a n entity of the state over sales to the f ederal government.
T he tax immunity doctrine therefore requires the state’s exemption be extended to federal lan d sales so long as there are no significant differences between the state’s exempted land sales and sales to the federal government.No. 37516

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8 Stevens County claims there are significant differences in this case justify ing disparate tax treatment. According to Stev ens 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 P arks and R ecreation C ommission from compensating taxes. While t his prote ction is facially discriminatory, Stevens County claims it is not discriminatory as to the USFS. Because the duties of the USFS and the parks and recreat ion 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 84.33.14 0 (13)(d) . The statute does not exempt from taxation all forestland sales to the parks and recreation commiss ion. Only sales for parks and recreation purposes are protected. This specificity reveals that t he true definition al 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 Washing ton 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 purpose s. 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

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9 the definitional rule set by RCW 84.33.140(13)(d). We recognize the statute treats the USFS the same as s tate agencies other than the parks and recreation commission. But th e “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 s tate 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 doct rine 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, Wester n Rivers produced evidence showing the land sale

to the USFS was for re creation 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 questio ns 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 pro ducedNo. 37516

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10 uncontested evidence showing its land sale met the definitional purpose of a tax exemption under RCW 84.33.14 0 (13)(d), summary judgment was proper. As a final matter, Stevens County con tends that , even if Western Rivers was entitled to summary judgment, the tr ial court erred by applying pre judgment interest on the entirety of the collected compensating t ax. According to Stevens County, t he trial court should have first conducted an inqui ry into the amount of tax Western Rivers should have la wfully paid before imposing pre judgment 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 t o 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 fo rth above, the entire compensating tax assessed against Western Rivers was discriminatory and t herefore unlawful. Western Rivers was properly granted summary judgment and awarded reimbursement of the tax, together with interest from the date of payment. Se e RCW 84.68.030.No. 37516

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11 CONCLUSION The order o f summary judgment and refund award are affirmed

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_________________________________ Pennell , C.J. WE CONCUR:

______________________________ Siddoway, J.

______________________________ Fearing , J.