United States v. Nye County Nevada Bernie C. Merlino, Nye County Assessor

The United States challenges Nye County’s imposition of a tax on Areata Associates, Inc. (Areata), a defense contractor. The United States argues that the tax violates the Constitution because it, in effect, is a tax upon property of the United States. The district court entered judgment for the United States, enjoined further assessments of the tax by the County and adjudged the County liable for the taxes previously paid. We hold that the tax Nye County levied on Areata is an ad valorem tax on property owned by the United States government. As such, the supremacy clause and McCulloch v. Maryland, 4 Wheat. 316 , 4 L.Ed. 579 (1819), render the tax unconstitutional. We therefore affirm.

FACTS

Areata is an independent federal contractor. 1 It maintains and operates government-owned electronic equipment used by the United States Air Force to simulate Soviet defense systems at the Tolicha Peak Electronic Combat Range and the Tonopah Electronic Combat Range in Nye County, Nevada. The Air Force uses these systems and devices to train Air Force pilots. Pursuant to its contract with Areata, the United States reimburses Areata for all costs incurred by the company and, in addition, pays…

dissenting:

The classic case in this area is, of course, McCulloch v. Maryland, 4 Wheat. 316 , 4 L.Ed. 579 (1819). The path from McCulloch to United States v. New Mexico, 455 U.S. 720 , 102 S.Ct. 1373 , 71 L.Ed.2d 580 (1982), has been neither straight nor clear. The precedents have been “confusing.” Id. at 733 , 102 S.Ct. at 1382 . The lines drawn were “excessively delicate.” Id. at 730 , 102 S.Ct. at 1381 . New Mexico defined the approach that should be taken today to a state tax on an entity using property of the United States. Less than ten years after New Mexico was decided by a unanimous Court, however, the present majority embarks again on the course that New Mexico tried to block of letting “wooden formalism” determine the great constitutional issue of the allocation of taxing power between the federal government and the states.

In so many words, the Court in New Mexico declared that “where a use tax is involved, immunity cannot be conferred simply because the State is levying the tax on the use of federal property in private hands.” Id. at 734 , 102 S.Ct. at 1383 . “In such a situation the contractor’s use of the property ‘in connection with commercial activities carried…

938 F.2d 1040 37 Cont.Cas.Fed. (CCH) 76,145 UNITED STATES of America, Plaintiff-Appellee, v. NYE COUNTY NEVADA; Bernie C. Merlino, Nye County Assessor, Defendants-Appellants. No. 90-15128. United States Court of Appeals, Ninth Circuit. Argued and Submitted April 8, 1991. Decided July 15, 1991. Rex Jemison, Beckley, Singleton, De Lanoy, Jemison & List, Las Vegas, Nev. for defendants-appellants. Shirley Peterson, Asst. Atty. Gen., U.S. Dept. of Justice, Washington, D.C., for the plaintiff-appellee. Appeal from the United States District Court for the District of Nevada. Before PREGERSON, NOONAN and THOMPSON, Circuit Judges. DAVID R. THOMPSON, Circuit Judge: 1 The United States challenges Nye County's imposition of a tax on Arcata Associates, Inc. (Arcata), a defense contractor. The United States argues that the tax violates the Constitution because it, in effect, is a tax upon property of the United States. The district court entered judgment for the United States, enjoined further assessments of the tax by the County and adjudged the County liable for the taxes previously paid. We hold that the tax Nye County levied on Arcata is an ad valorem tax on property owned by the United…