The Novato Fire Protection District detached the former Hamilton Air Force Base in 1977, but last month the Ninth U.S. Circuit Court of Appeals ruled the detachment was an illegal attempt to tax the federal government. The court said the fire district is obliged to serve the former base, now occupied by the Navy, the Coast Guard, other federal agencies and even some private entities. The unanimous three-judge appeals court upheld Northern California District Judge Fern Smith's ruling that the detachment was invalid under state law. However, the appeals court never considered state law. Instead, the Ninth Circuit said the detachment violated the Supremacy Clause of the U.S. Constitution. Because the federal government does not pay property tax, the district removed Hamilton from inside its boundaries so the district could charge a fee for emergency services. However, Circuit Court Judge Sidney Thomas wrote that the district has an obligation to serve the area and "the district cannot now contrive to tax the United States through gerrymandering." The district intends to seek a rehearing before the entire 9th Circuit Court of Appeals, said George Silvestri Jr., one of the district's lawyers. "We can't afford to sit back and let this decision stand," he said. "It raises some very frightening possibilities about the instability of the boundaries of local government entities in California." Hamilton Field had always been in the Novato Fire Protection District, but the Air Force maintained its own fire department. When the Air Force decommissioned the facility in 1974, it left Hamilton with minimal fire protection. The Navy then contracted with the district for fire protection and emergency services on portions of Hamilton managed by the Navy. The contract provided for payment of a flat fee equal to the amount the district would have received in property tax had the Navy's land been privately owned. Concerned that this arrangement might constitute an illegal intergovernmental tax, the district commenced detachment proceedings. "The stated purpose of the proposed detachment was to ensure that the district would continue to ‘receive compensation for any services it provided to the currently tax-exempt properties,'" according to Thomas's opinion. The Navy and Air Force lodged protests, but the district went forward anyway. In November of 1977, the district's voters approved the detachment, which the Marin County Local Agency Formation Commission and the California Secretary of State subsequently recognized. The district continued to provide service for a flat fee. But by October of 1996, the Coast Guard had assumed control of some property formerly managed by the Navy. The Coast Guard refused to pay the fire district, so the district sought a declaration of the detachment's validity in Marin County Superior Court. The Coast Guard moved the case to federal district court, which granted the federal government's motion for summary judgement on the grounds that the detachment was invalid because the election was improper. On appeal, the district did not dispute Hamilton's tax immunity. The district argued that the 1977 election was legal. But the appellate panel sidestepped the question of state election law. Instead, the court decided the district had violated the Supremacy Clause. "When the district assessed a fee equivalent to a theoretical property tax as a condition for providing fire and emergency medical services, its action clearly ran afoul of the Supremacy Clause," Judge Thomas wrote. Judge Thomas continued, "This is not to say that the United States cannot be charged reasonable fees related to the cost of government services provided, such as payment for metered water usage. However, the contractual fees that the district charged the government in exchange for continued fire and emergency medical protection were based not upon the actual cost of services provided to Hamilton Field, but rather upon the value of the property in question." The fee "clearly constituted an impermissible tax," the court concluded. Furthermore, the district intended to circumvent Hamilton's tax immunity, the court said. "We cannot allow a municipality to initiate a detachment action with the purpose of charging the federal government a flat fee for basic services that the municipality otherwise has a duty to provide." The court also said the statute of limitations for challenging the 22-year-old detachment is not binding when the federal government asserts a federally created right. Concerned about the stability of local government boundaries, the California Association of Local Agency Formation Commissions argued in an amicus brief that a 180-day statute of limitations existed. Silvestri, the fire district's lawyer, said the ruling raises questions about how far back the federal government may reach to challenge elections. The decision also throws into question contracts between the district and federal agencies, and the status of millions of dollars the Navy paid the district, he said. The Case: Novato Fire Protection District v. United State of America, No. 98-15441, 99 C.D.O.S. 5410, 1999 Daily Journal D.A.R. 6903, filed July 7, 1999. The Lawyers: For the fire district: George Silvestri Jr., (415) 883-8800. For the U.S.: Mary Beth Uitti, Department of Justice, (415) 436-7200.