United States v. New Mexico

PETITIONER: United States
LOCATION: Turner Turnpike

DOCKET NO.: 80-702
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 455 US 720 (1982)
ARGUED: Dec 08, 1981
DECIDED: Mar 24, 1982

Daniel H. Friedman - on behalf of the respondent
George W. Jones - on behalf of the Petitioner

Facts of the case


Media for United States v. New Mexico

Audio Transcription for Oral Argument - December 08, 1981 in United States v. New Mexico

Audio Transcription for Opinion Announcement - March 24, 1982 in United States v. New Mexico

Warren E. Burger:

The judgment and opinion of the Court in United States against New Mexico will be announced by Justice Blackmun along with another opinion.

Harry A. Blackmun:

United States against New Mexico comes to us by way of certiorari to the United States Court of Appeals for the Tenth Circuit.

The issue is the extent to which a State may impose taxes on contractors that conduct business with the Federal Government.

New Mexico imposes a gross receipts tax and a compensating use tax on those who do business within that State.

The Sandia Corporation and the Zia Company have contracts with the Government to manage certain Government-owned atomic laboratories in New Mexico.

And Los Alamos Constructors has a contract for construction and repair work at one of the laboratories.

The contracts use an “advanced funding” procedure to meet costs and by this procedure, the contractor is allowed to pay creditors and employees also with drafts drawn on a special bank account in which federal funds are deposited.

The United States brought suit in federal courts seeking a declaratory judgment that the New Mexico taxes do not apply to these contractors.

The District Court granted summary judgment in favor of the Government.

And the Court of Appeals reversed.

It took the view that the relationships between the Government and the contractors did not so incorporate the latter into the Government structure as to make them "instrumentalities of the United States" immune from the New Mexico taxes.

In an opinion filed with the clerk today, we affirmed that judgment.

We hold that the contractors are not protected by the constitutions guarantee of federal supremacy despite the fact that the tax had an effect on the Federal Government and despite the fact that the United States shoulders the economic burden of the levy.

Immunity is appropriate only where the state levy falls on the United States itself or on an agency or instrumentality so closely connected to the Government that the two cannot realistically be viewed as separate entities.

That decision is unanimous.