Lawrence Cty. v. Lead-Deadwood Sch. Dist. - 469 U.S. 256, 105 S. Ct. 695 (1985)

Rule:

Even if Congress has not expressly pre-empted state law in a given area, a state statute may nevertheless be invalid under the Supremacy Clause if it conflicts with federal law or stands as an obstacle to the accomplishment of the full purposes and objectives of Congress.

Facts:

The Payment in Lieu of Taxes Act compensates local governments for the loss of tax revenues resulting from the tax-immune status of federal lands, such as wilderness areas and national parks, located in their jurisdictions, and for the cost of providing services associated with these lands. The Act in 31 U. S. C. § 6902(a) requires the Secretary of the Interior to make an annual payment to each unit of local government in which such lands are located, and further provides that the local unit "may use the payment for any governmental purpose." A South Dakota statute requires local governments to distribute federal payments in lieu of taxes in the same way they distribute general tax revenues. Since appellant county allocates 60% of its general tax revenues to its school districts, the state statute would require the county to give its school districts 60% of the § 6902(a) payments it receives. After the county refused to distribute the funds in accordance with the state statute, claiming that § 6902(a) gave it the discretion to spend the federal funds for any governmental purpose it chose, appellee School District filed a mandamus complaint in a State Circuit Court, seeking to compel the county to distribute the federal funds in accordance with the state statute. The Circuit Court held that the state statute conflicted with federal law and was therefore invalid under the Supremacy Clause. The South Dakota Supreme Court reversed, holding that the only limit § 6902(a) imposed on a local government is that the federal funds must be used for a "governmental purpose," and that since support of school districts is a valid governmental purpose, the state statute was consistent with federal requirements.

Issue:

Was the state statute regulating distribution of funds that units of local government in the state receive from the Federal Government in lieu of taxes under 31 USCS 6902 valid?

Answer:

No.

Conclusion:

The Court held that the statute violated the Supremacy Clause because: (1) the language of 31 U.S.C.S. § 6902(a) gave the county discretion in the spending of the funds; (2) the Department of the Interior, the agency that administered the statute, interpreted the statute as prohibiting state-imposed limitations on the use of the funds; and (3) the legislative history of the act indicated that Congress intended to give local governments discretion in spending the federal funds.