PILT Explained: Payments in Lieu of Taxes and the $17 Million Case for Local Governments

The federal government owns roughly 640 million acres of American land — national parks, forests, military installations, federal office complexes. That land pays no local property tax, no matter how much it relies on county roads, schools, and emergency services. Congress addressed the gap in 1976 with the Payment in Lieu of Taxes Act, known as PILT: annual federal payments to the local governments that host untaxable federal land. Most people have never heard of the program. For the counties that depend on it, it is a budget line that matters.

PILT, codified at 31 U.S.C. § 6901 et seq., directs annual payments to 'units of general local government' — counties and equivalent jurisdictions — under a statutory formula that accounts for the acres of qualifying federal land within their borders, population, and per-acre rates fixed by law. The money is unrestricted: local governments use it for schools, road maintenance, law enforcement, and emergency services.

The formula, however, is only half the story. PILT payments are funded through congressional appropriations, and for years the appropriated amounts fell short of what the statutory formula produced — leaving local governments with checks smaller than the statute said they were owed. Whether the government could simply pay less because Congress appropriated less became a question worth litigating.

That question reached the U.S. Court of Federal Claims — the specialized court that hears money claims against the United States — in consolidated proceedings brought by Kane County, Utah, Nos. 17-739C and 17-1991C. The plaintiffs sought the full statutory PILT amounts for fiscal years 2015, 2016, and 2017, irrespective of the appropriations shortfall, on behalf of a class covering every unit of general local government that received PILT payments in those years — 1,256 local governments nationwide.

The outcome is a matter of public record. The court's September 25, 2019 opinion, which awarded attorney's fees out of the recovered funds, documents a class-wide recovery of $17,221,821 for those 1,256 local governments (public opinion, PDF). Individually, each government's underpayment was modest. Collectively, they added up to eight figures — a reminder that small statutory shortfalls, multiplied across thousands of jurisdictions, are worth enforcing.

Class actions against the United States are unusual, and they live in a procedural world of their own: the Court of Federal Claims has its own rules, its own class-action procedure, and exclusive jurisdiction over most money claims against the federal government above the small-claims threshold. Choosing that forum — and getting the jurisdictional analysis right — is the first strategic decision in any claim against the government.

As noted in her biography, Jeanne Harrison conducted federal-jurisdiction research connected to this litigation while an attorney at Smith Currie & Hancock. Matters like it sit at the intersection of federal jurisdiction, statutory interpretation, and class procedure — the same skill set our team brings to disputes involving government entities.

For Tennessee counties hosting federal land — the Great Smoky Mountains, the Cherokee National Forest, federal facilities of every kind — PILT is real revenue, and the lesson generalizes: know what your jurisdiction is owed, verify each payment against the statutory formula rather than assuming it is correct, and remember that claims for money owed by the United States follow their own forum and their own rules.

Whether the question is a payment dispute with a government entity or a claim on behalf of one, forum and strategy come first. Our team litigates disputes involving federal, state, and local governments — including payment claims on federal construction projects — and the consultation is free.

This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Representative experience does not guarantee similar outcomes.