---
kind: "section"
citation: "16 U.S.C. § 831l"
title: "16"
title_heading: "Conservation"
number: "831l"
heading: "Financial assistance to States and local governments in lieu of taxation; apportionment; limitation on contracts for sale of power to municipalities; report to Congress"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/16/831l"
units:
  - "Chapter 12A — Tennessee Valley Authority"
---

# §831l. Financial assistance to States and local governments in lieu of taxation; apportionment; limitation on contracts for sale of power to municipalities; report to Congress


In order to render financial assistance to those [States](/usc/16/544.md?p=r) and local governments in which the power operations of the Corporation are carried on and in which the Corporation has acquired properties previously subject to [State](/usc/16/590q.md?p=a) and local taxation, the Board is authorized and directed to pay to said [States](/usc/16/544.md?p=r), and the [counties](/usc/16/544.md?p=d) therein, for each fiscal year, beginning July 1, 1940, the following percentages of the gross proceeds derived from the sale of power by the Corporation for the preceding fiscal year as hereinafter provided, together with such additional amounts as may be payable pursuant to the provisions hereinafter set forth, said payments to constitute a charge against the power operations of the Corporation: For the fiscal year (beginning July 1) 1940, 10 per centum; 1941, 9 per centum; 1942, 8 per centum; 1943, 7½ per centum; 1944, 7 per centum; 1945, 6½ per centum; 1946, 6 per centum; 1947, 5½ per centum; 1948 and each fiscal year thereafter, 5 per centum. “Gross proceeds”, as used in this section, is defined as the total gross proceeds derived by the Corporation from the sale of power for the preceding fiscal year, excluding power used by the Corporation or sold or delivered to any other department or agency of the Government of the United States for any purpose other than the resale thereof. The payments herein authorized are in lieu of taxation, and the Corporation, its property, franchises and income, are expressly exempted from taxation in any manner or form by any [State](/usc/16/590q.md?p=a), county, municipality, or any [subdivision](/usc/16/539m–1.md?p=15) or district thereof.

The payment for each fiscal year shall be apportioned among said [States](/usc/16/544.md?p=r) in the following manner: One-half of said payment shall be apportioned by paying to each [State](/usc/16/590q.md?p=a) the percentage thereof which the gross proceeds of the power sales by the Corporation within said [State](/usc/16/590q.md?p=a) during the preceding fiscal year bears to the total gross proceeds from all power sales by the Corporation during the preceding fiscal year; the remaining one-half of said payment shall be apportioned by paying to each [State](/usc/16/590q.md?p=a) the percentage thereof which the book value of the power property held by the Corporation within said [State](/usc/16/590q.md?p=a) at the end of the preceding fiscal year bears to the total book value of all such property held by the Corporation on the same date. The book value of power property shall include that portion of the investment allocated or estimated to be allocable to power: Provided, That the minimum annual payment to each [State](/usc/16/590q.md?p=a) (including payments to [counties](/usc/16/544.md?p=d) therein) shall not be less than an amount equal to the two-year average of the [State](/usc/16/590q.md?p=a) and local ad valorem property taxes levied against power property purchased and operated by the Corporation in said [State](/usc/16/590q.md?p=a) and against that portion of reservoir lands related to dams constructed by or on behalf of the United States Government and held or operated by the Corporation and allocated or estimated to be allocable to power. The said two-year average shall be calculated for the last two tax years during which said property was privately owned and operated or said land was privately owned: Provided further, That the minimum annual payment to each [State](/usc/16/590q.md?p=a) in which the Corporation owns and operates power property (including payments to [counties](/usc/16/544.md?p=d) therein) shall not be less than $10,000 in any case: Provided further, That the corporation[^1] shall pay directly to the respective [counties](/usc/16/544.md?p=d) the two-year average of county ad valorem property taxes (including taxes levied by taxing districts within the respective [counties](/usc/16/544.md?p=d)) upon power property and reservoir lands allocable to power, determined as above provided, and all payments to any such county within a [State](/usc/16/590q.md?p=a) shall be deducted from the payment otherwise due to such [State](/usc/16/590q.md?p=a) under the provisions of this section. The determination of the Board of the amounts due hereunder to the respective [States](/usc/16/544.md?p=r) and [counties](/usc/16/544.md?p=d) shall be final.

The payments above provided shall in each case be made to the [State](/usc/16/590q.md?p=a) or county in equal monthly installments beginning not later than July 31, 1940.

Nothing herein shall be construed to limit the authority of the Corporation in its contracts for the sale of power to municipalities, to permit or provide for the resale of power at rates which may include an amount to cover tax-equivalent payments to the municipality in lieu of [State](/usc/16/590q.md?p=a), county, and municipal taxes upon any distribution system or property owned by the municipality, or any agency thereof, conditioned upon a proper distribution by the municipality of any amounts collected by it in lieu of [State](/usc/16/590q.md?p=a) or county taxes upon any such distribution system or property; it being the intention of Congress that either the municipality or the [State](/usc/16/590q.md?p=a) in which the municipality is situated shall provide for the proper distribution to the [State](/usc/16/590q.md?p=a) and county of any portion of tax equivalent so collected by the municipality in lieu of [State](/usc/16/590q.md?p=a) or county taxes upon any such distribution system or property.

The Corporation shall, not later than January 1, 1945, submit to the Congress a report on the operation of the provisions of this section, including a statement of the distribution to the various [States](/usc/16/544.md?p=r) and [counties](/usc/16/544.md?p=d) hereunder; the effect of the operation of the provisions of this section on [State](/usc/16/590q.md?p=a) and local finances; an appraisal of the benefits of the program of the Corporation to the [States](/usc/16/544.md?p=r) and [counties](/usc/16/544.md?p=d) receiving payments hereunder, and the effect of such benefits in increasing taxable values within such [States](/usc/16/544.md?p=r) and [counties](/usc/16/544.md?p=d); and such other data, information, and recommendations as may be pertinent to future legislation.


## Footnotes

[^1]: So in original. Probably should be capitalized.

## Source credit

(May 18, 1933, ch. 32, § 13, 48 Stat. 66; June 26, 1940, ch. 432, § 39, 54 Stat. 626; Pub. L. 108–447, div. C, title VI, § 603(a)(2), Dec. 8, 2004, 118 Stat. 2966.)

## Notes

### Editorial Notes

### Amendments

2004—Pub. L. 108–447 substituted “Board” for “board” in first and second pars.

1940—Act June 26, 1940, amended section generally.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2004 Amendment

Amendment by Pub. L. 108–447 effective on the later of the date on which at least three persons nominated under section 604(a) of Pub. L. 108–447 take office or May 18, 2005, see section 604(b) of Pub. L. 108–447, set out in an Appointments; Effective Date; Transition note under section 831a of this title.