DIRECTOR OF REVENUE OF MISSOURI v. COBANK ACB, as successor to the NATIONAL BANK FOR COOPERATIVES

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316 OCTOBER TERM, 2000
Syllabus
DIRECTOR OF REVENUE OF MISSOURI v. COBANK
ACB, as successor to the NATIONAL BANK FOR
COOPERATIVES
certiorari to the supreme court of missouri
No. 99–1792. Argued November 28, 2000—Decided February 20, 2001
The Farm Credit Act of 1933 created various lending institutions within
the Farm Credit System—including banks for cooperatives—and ad-
dressed their taxation. Each of these institutions is designated as a
federally chartered instrumentality of the United States. E. g., 12
U. S. C. § 2121. Respondent CoBank ACB is the successor to all rights
and obligations of a bank for cooperatives. In 1996, CoBank filed
amended returns on behalf of that bank, requesting an exemption from
all Missouri corporate income taxes and refunds on the taxes it paid for
1991 through 1994. CoBank asserted that the Supremacy Clause ac-
cords federal instrumentalities immunity from state taxation unless
Congress has expressly waived this immunity, and that, because the
Act’s current version does not expressly do so, banks for cooperatives
are exempt from Missouri’s corporate income tax. The State denied
the request, but the State Supreme Court reversed, stating that because
the Act’s current version is silent as to such banks’ tax immunity, Con-
gress cannot be said to have expressly consented to state income taxa-
tion and, thus, the banks are exempt.
Held: Banks for cooperatives are subject to state income taxation.
Pp. 321–325.
(a) Congress has provided that banks for cooperatives are subject to
state taxation. The 1933 Act subjected such banks to state taxation
except when the Unites States held stock in the banks. As soon as
governmental investment in the banks was repaid (as it was by 1968),
the banks had to pay state income taxes because the exemption from
such taxation no longer applied. Congress did not change that rule
when it amended the Act in 1971. Nor did various 1985 amendments—
which discontinued the Government’s authority to own stock in banks
for cooperatives and deleted the two sentences within 12 U. S. C. § 2134
that exempted such a bank from state taxation when the Government
held stock in the bank—expressly change the taxation of banks for coop-
eratives. And, it would be surprising, indeed, if Congress had elimi-
nated the States’ ability to collect revenue from the banks sub silentio.
The more logical interpretation, and one that accords with the Act’s
more than 50-year history, is that Congress merely deleted language in

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317 Cite as: 531 U. S. 316 (2001)
Syllabus
§ 2134 that had become superfluous once the United States no longer
owned, and no longer could own, stock in banks for cooperatives.
Pp. 321–324.
(b) The Act’s structure confirms that banks for cooperatives are sub-
ject to state taxation. With respect to each lending institution in the
Farm Credit System, the Act contains a taxation provision that specifi-
cally delineates that entity’s tax immunity. Banks for cooperatives
have been granted only limited tax exemptions. Had Congress in-
tended to confer upon them the more comprehensive exemption it pro-
vided for other types of institutions, it would have done so expressly.
Pp. 324–325.
10 S. W. 3d 142, reversed and remanded.
Thomas, J., delivered the opinion for a unanimous Court.
James R. Layton, State Solicitor of Missouri, argued the
cause for petitioner. With him on the briefs were Jeremiah
W. (Jay) Nixon, Attorney General of Missouri, and Gail Vas-
terling and David Lieber, Assistant Attorneys General.
David C. Frederick argued the cause for the United States
as amicus curiae urging reversal. With him on the brief
were Solicitor General Waxman, Acting Assistant Attor-
ney General Junghans, Deputy Solicitor General Wallace,
David English Carmack, and Donald B. Tobin.
Richard A. Hanson argued the cause for respondent.
With him on the brief was Theodore R. Bots.*
*Briefs of amici curiae urging reversal were filed for the State of Ohio
et al. by Betty D. Montgomery, Attorney General of Ohio, Edward B.
Foley, State Solicitor, and Robert C. Maier, Assistant Solicitor, and by the
Attorneys General for their respective States as follows: Bruce M. Botelho
of Alaska, Janet Napolitano of Arizona, Robert A. Butterworth of Florida,
Thurbert E. Baker of Georgia, Earl I. Anzai of Hawaii, James E. Ryan
of Illinois, Karen M. Freeman-Wilson of Indiana, Richard P. Ieyoub of
Louisiana, J. Joseph Curran, Jr., of Maryland, Jennifer M. Granholm of
Michigan, Mike Moore of Mississippi, Joseph P. Mazurek of Montana, Don
Stenberg of Nebraska, Philip T. McLaughlin of New Hampshire, Eliot
Spitzer of New York, Heidi Heitkamp of North Dakota, W. A. Drew Ed-
mondson of Oklahoma, Hardy Myers of Oregon, Mark Barnett of South
Dakota, William H. Sorrell of Vermont, and Christine O. Gregoire of
Washington; for the American Bankers Association by John J. Gill III,

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318 DIRECTOR OF REVENUE OF MO. v. COBANK ACB
Opinion of the Court
Justice Thomas delivered the opinion of the Court.
In this case we are asked to decide whether the National
Bank for Cooperatives, which Congress has designated as a
federally chartered instrumentality of the United States, is
exempt from state income taxation. We hold that it is not.
I
In the Farm Credit Act of 1933, 48 Stat. 257, as amended,
12 U. S. C. § 2001 et seq., Congress created various lending
institutions within the Farm Credit System to meet the spe-
cific credit needs of farmers. Among these institutions were
banks for cooperatives, one in each of 12 farm credit districts,
and a Central Bank for Cooperatives. These banks were
designed to make loans to cooperative associations engaged
in marketing farm products, purchasing farm supplies, or
furnishing farm services.
Today, the Farm Credit System includes banks for cooper-
atives, production credit associations, farm credit banks, and
federal land bank associations. § 2002(a). By statute, each
of these institutions is designated as a “federally chartered
instrumentalit[y] of the United States.” § 2121 (banks for
cooperatives and Central Bank for Cooperatives); § 2141
(National Bank for Cooperatives); §§ 2071(a) and (b)(7) (pro-
duction credit associations); § 2011(a) (farm credit banks);
§§ 2091(a) and (b)(4) (federal land bank associations). The
Farm Credit Act also addresses the taxation of these institu-
tions. The provision applicable to a bank for cooperatives,
the institution at issue in this case, states:
“Each bank for cooperatives and its obligations are
instrumentalities of the United States and as such any
and all notes, debentures, and other obligations issued
by such bank shall be exempt, both as to principal and
interest from all taxation (except surtaxes, estate, inher-
Michael F. Crotty, and Mark R. Baran; and for the Multistate Tax Com-
mission by Paull Mines and Frank D. Katz.

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Opinion of the Court
itance, and gift taxes) now or hereafter imposed by the
United States or any State, territorial, or local taxing
authority, except that interest on such obligations shall
be subject to Federal income taxation in the hands of
the holder.” § 2134.
Respondent CoBank ACB is the successor to all rights and
obligations of the National Bank for Cooperatives, which had
been formed in 1989 through the consolidation of 10 district
banks for cooperatives and the Central Bank for Coopera-
tives.1 The National Bank for Cooperatives filed Missouri
corporate income tax returns for the years 1991 through 1994
and paid the taxes shown on those returns. In March 1996,
CoBank filed amended returns on behalf of the National
Bank for Cooperatives, requesting an exemption from all
state income taxes and refunds on the taxes paid—errone-
ously, it alleged—for 1991 through 1994. Relying on the
doctrine of implied tax immunity that originated in McCul-
loch v. Maryland, 4 Wheat. 316 (1819), CoBank asserted that
the Supremacy Clause of the Constitution accords federal
instrumentalities immunity from state taxation unless Con-
gress has expressly waived this immunity. CoBank argued
that, because the current version of the Farm Credit Act
does not expressly waive this immunity, banks for coopera-
tives are exempt from Missouri’s corporate income tax. The
Director of Revenue of Missouri denied the request.
On appeal, the Administrative Hearing Commission upheld
the Director of Revenue’s assessment of corporate income
tax, because the National Bank for Cooperatives had not es-
tablished that it was a federal instrumentality statutorily
exempt from state taxation of its income. The commission
determined that Congress did not provide expressly that
1 CoBank is an “agricultural credit bank,” which the Farm Credit
Administration recognizes as having the combined authority of a bank
for cooperatives and a farm credit bank. See 12 CFR §§ 618.8005(c),
619.9020 (2000).

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320 DIRECTOR OF REVENUE OF MO. v. COBANK ACB
Opinion of the Court
banks for cooperatives, in contrast to farm credit banks and
federal land bank associations, would have immunity from
state income taxation. The commission reasoned that had
Congress intended to confer upon banks for cooperatives the
same immunity that was provided to farm credit banks and
federal land bank associations, it would have done so ex-
pressly. For jurisdictional reasons, the commission did not
decide CoBank’s constitutional claim.
The Missouri Supreme Court reversed the commission’s
decision and held that banks for cooperatives are exempt
from state income taxation.2 Production Credit Assn. of
Southeastern Mo. v. Director of Revenue, 10 S. W. 3d 142,
143 (2000). The Missouri Supreme Court held that the Su-
premacy Clause of the Constitution provides federal instru-
mentalities immunity from state taxation unless Congress
has expressly waived this immunity. According to the Mis-
souri Supreme Court, because the current version of the
Farm Credit Act is silent as to such institutions’ immunity
from state taxation, Congress cannot be said to have ex-
pressly consented to state income taxation and, thus, the
institutions are exempt from state income taxes. The
Missouri Supreme Court noted that other courts that had
addressed the issue of state taxation of member institutions
of the Farm Credit System also had concluded that the
States could not tax such institutions. Id., at 143–144 (citing
Farm Credit Servs. of Central Ark., PCA v. Arkansas, 76
F. 3d 961, 964 (CA8 1996), rev’d on other grounds, 520 U. S.
821 (1997); State v. Farm Credit Servs. of Central Ark., 338
Ark. 322, 327, 994 S. W. 2d 453, 456 (1999), cert. denied, 529
U. S. 1036 (2000); Northwest La. Production Credit Assn. v.
State, 98–1995 (La. App. 11/5/99), 746 So. 2d 280).
The New Mexico Court of Appeals and the Indiana Su-
preme Court have reached the opposite conclusion with
2 In this consolidated appeal, the Missouri Supreme Court also ad-
dressed the taxation of production credit associations and held that such
institutions are exempt from state taxation.

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Opinion of the Court
respect to state taxation of production credit associations.
See Production Credit Assn. of Eastern N. M. v. Taxation
and Revenue Dept., 2000 NMCA–021 ¶ 26, 999 P. 2d 1031,
1038, cert. denied, 128 N. M. 688, 997 P. 2d 820 (2000); Indi-
ana Dept. of State Revenue v. Farm Credit Servs. of Mid-
America, ACA, 734 N. E. 2d 551, 560 (Ind. 2000). Since the
statutory history and provisions regarding the taxation of
production credit associations and banks for cooperatives are
virtually identical, compare 12 U. S. C. § 2077 with § 2134;
compare Farm Credit Act of 1971, § 2.17, 85 Stat. 602, with
§ 3.13, 85 Stat. 608; compare Farm Credit Amendments Act
of 1985, § 205(d)(16), 99 Stat. 1705, with § 205(e)(10), 99 Stat.
1705,3 we granted certiorari to resolve this conflict. 530
U. S. 1260 (2000).
II
Congress has expressly designated banks for cooperatives
as “instrumentalities of the United States.” 12 U. S. C.
§ 2121. We have held, in addressing state taxation of con-
tractors conducting business with the United States, that an
instrumentality is entitled to implied tax immunity only
when it is “so closely connected to the Government that the
two cannot realistically be viewed as separate entities.”
United States v. New Mexico, 455 U. S. 720, 735 (1982). Re-
lying on New Mexico, the Director of Revenue argues that
banks for cooperatives are not “so closely connected” to the
United States as to be indistinguishable from the United
States, and that banks for cooperatives thus are not entitled
to immunity from state taxation. CoBank disagrees with
this characterization and asks us to conclude that banks for
cooperatives are indeed virtual arms of the United States,
worthy of implied tax immunity under McCulloch.
We need not, however, reach this implied immunity ques-
tion. Implied immunity becomes an issue only when Con-
gress has failed to indicate whether an instrumentality is
3 See also Farm Credit Act of 1933, § 63, 48 Stat. 267.

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322 DIRECTOR OF REVENUE OF MO. v. COBANK ACB
Opinion of the Court
subject to state taxation. In this case, Congress has pro-
vided that banks for cooperatives are subject to state taxa-
tion. To be sure, Congress did not include an express state-
ment in the current version of § 2134. However, nothing
in the statute indicates a repeal of the previous express
approval of state taxation, and the structure of the Farm
Credit Act indicates by negative implication that banks for
cooperatives are not entitled to immunity.
A
Upon their creation in 1933, banks for cooperatives were
subject to state income taxation except during periods when
the United States held stock in the banks. Farm Credit Act
of 1933, § 63, 48 Stat. 267 (“Such banks, . . . and their income,
shall be exempt from all taxation now or hereafter imposed
by the United States or by any State, Territorial, or local
taxing authority . . . . The exemption provided herein shall
not apply . . . with respect to . . . any . . . Bank for Coopera-
tives, or its property or income after the stock held in it by
the United States has been retired”). Under this statute, as
soon as governmental investment in a bank for cooperatives
was repaid (as it was for all such banks by 1968), the bank
had to pay state income taxes because the exemption from
such taxation no longer applied.
When Congress amended the Farm Credit Act in 1971, it
did not change the rule that banks for cooperatives are sub-
ject to state taxation unless the United States holds stock in
the banks. Farm Credit Act of 1971, § 3.13, 85 Stat. 608.
Although all banks for cooperatives were at the time pri-
vately owned, Congress provided that the Governor of the
Farm Credit Administration had the authority on behalf of
the United States to purchase stock in banks for cooperatives
“as a temporary investment in the stock of the institution to
help one or several of the banks . . . to meet emergency credit
needs of borrowers.” § 4.0, 85 Stat. 609. The 1971 version
of § 2134 therefore provided, in relevant part:

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“Such banks . . . and their income shall be exempt from
all taxation now or hereafter imposed by the United
States or by any State, territorial, or local taxing
authority . . . . The exemption provided in the preced-
ing sentence shall apply only for any year or part thereof
in which stock in the bank for cooperatives is held by
the Governor of the Farm Credit Administration.”
§ 3.13, 85 Stat. 608–609.
In 1985, Congress enacted various amendments to the Act.
Among other things, these amendments eliminated the posi-
tion of Governor of the Farm Credit Administration, discon-
tinued the Farm Credit Administration’s authority to own
stock in banks for cooperatives, and included numerous
“Technical and Conforming Amendments.” Farm Credit
Amendments Act of 1985, § 201, 99 Stat. 1688; § 101, 99 Stat.
1678; § 205, 99 Stat. 1703–1707. One of these technical and
conforming amendments was the deletion of the two sen-
tences within § 2134 that, first, exempted a bank for coopera-
tives from state taxation and, second, limited that exemption
to periods when the Governor held stock in the bank.
§ 205(e)(10), 99 Stat. 1705, as amended, 12 U. S. C. § 2134.
CoBank argues that the deletion of these two sentences
altered the States’ ability to tax the income of banks for
cooperatives. According to CoBank, because the deletion
eliminated the express statutory authorization for such taxa-
tion, Congress intended banks for cooperatives to be immune
from state taxation under McCulloch’s implied immunity
doctrine. We do not share CoBank’s interpretation as to the
effect of this amendment, because there is no indication that
Congress intended to change the taxation of banks for coop-
eratives with the 1985 amendments. Since 1933, the States
could collect revenue from banks for cooperatives. Nothing
in the 1985 amendments expressly changes this. And, it
would be surprising, indeed, if Congress had eliminated this
important fact sub silentio.

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324 DIRECTOR OF REVENUE OF MO. v. COBANK ACB
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CoBank’s interpretation would mean that Congress made
a radical—but entirely implicit—change in the taxation of
banks for cooperatives with the 1985 amendment to § 2134.
The amendment to § 2134 was merely one of numerous “tech-
nical and conforming amendments” to the Farm Credit Act.
Farm Credit Amendments Act of 1985, § 205, 99 Stat. 1703–
1707 (section entitled “Technical and Conforming Amend-
ments”). In fact, the deletion of the sentence within § 2134
referring to the Governor was one of more than 30 deletions
of references to the Governor, a position eliminated by the
1985 amendments to the Act. Ibid. The more logical inter-
pretation of this amendment to § 2134 is that Congress
merely deleted language that had become superfluous once
the United States no longer owned, and no longer could own,
stock in banks for cooperatives. This explanation accords
with the more than 50-year history of the Farm Credit Act,
permitting the States to tax banks for cooperatives except
when there was governmental investment in the banks.
Had Congress simply deleted the final sentence of § 2134 that
limited the exemption while retaining the sentence granting
the exemption, we would have no trouble concluding that
Congress had eliminated the States’ ability to tax banks for
cooperatives. Short of this act, however, we find Congress’
silence insufficient to disrupt the 50-year history of state tax-
ation of banks for cooperatives.
B
In addition, the structure of the Farm Credit Act confirms
that banks for cooperatives are subject to state taxation.
With respect to each lending institution in the Farm Credit
System, the Act contains a taxation provision that specifi-
cally delineates the immunity from taxation enjoyed by that
entity. For example, farm credit banks and federal land
bank associations receive the type of immunity from state
taxation that the Missouri Supreme Court held to be implied
here for banks for cooperatives. See 12 U. S. C. § 2023 (“The

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Opinion of the Court
Farm Credit Banks and the capital, reserves, and surplus
thereof, and the income derived therefrom, shall be exempt
from Federal, State, municipal, and local taxation . . .”);
§ 2098 (“Each Federal land bank association and the capital,
reserves, and surplus thereof, and the income derived there-
from, shall be exempt from Federal, State, municipal, and
local taxation . . .”).
By contrast, since their creation in 1933, banks for cooper-
atives have been granted only limited exemptions from taxa-
tion. Had Congress intended to confer upon banks for coop-
eratives the more comprehensive exemption from taxation
that it had provided to farm credit banks and federal land
bank associations, it would have done so expressly as it had
done elsewhere in the Farm Credit Act. Thus, in light of
the structure of the Farm Credit Act—and the explicit grant
of immunity to other institutions within the Farm Credit
System—Congress’ silence with respect to banks for cooper-
atives indicates that banks for cooperatives are subject to
state taxation.
* * *
The judgment of the Missouri Supreme Court is reversed,
and the case is remanded for further proceedings not incon-
sistent with this opinion.
It is so ordered.