Brief for Appellees

TAX ANALYSTS, et al.,
Appellants
v.
SIMON, et al.,
Appellees

IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

ON APPEAL FROM THE ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

BRIEF FOR THE APPELLEES

STATEMENT OF THE ISSUES PRESENTED

1. Whether the District Court correctly held that plaintiffs, in their capacity as taxpayers, lacked standing to challenge, as unlawful, certain published and private rulings of the Internal Revenue Service allowing tax credits to oil companies for payments made to foreign countries in connection with oil extraction and production.

2. Whether the District Court also correctly held that plaintiff Thomas Field's acquisition (during the pendency of this suit) of the entire working interest in a domestic oil well producing 3 barrels of oil per month, did not transform Field into a domestic oil producer injured by the favorable rulings issued to foreign-operating companies, so as to allow Field standing to challenge the rulings as a competitor.

3. Whether, aside from the question of standing, the District Court lacked jurisdiction to entertain this suit because of the doctrine of sovereign immunity, the Anti-Injunction Act, and because of the tax exception to the Declaratory Judgment Act.

REFERENCES TO PARTIES AND RULINGS

Plaintiffs (Tax Analysts & Advocates and Thomas Field) filed their original complaint on June 17, 1974. An amended complaint was filed on August 13, 1974 to reflect the acquisition by Field of the working interest in a domestic oil well. (JA 1. 72.)¹ In these complaints, plaintiffs sought a declaratory judgment that published and private rulings of the Internal Revenue Service allowing tax credits to oil companies for payments made to foreign countries in connection with oil extraction and production are unlawful because they are allegedly contrary to Sections 901 and 903 of the Internal Revenue Code of 1954. (JA 72-73.) Plaintiffs also sought a permanent injunction (1) requiring the Internal Revenue Service to withdraw the rulings; (2) restraining the Service from permitting income tax credits for payments made to foreign countries in connection with oil extraction and production which are calculated on a fixed per barrel basis; and (3) requiring the Secretary of the Treasury and the Commissioner of Internal Revenue to assess and collect taxes from oil companies for all periods not barred by the statute of limitations in those cases where foreign tax credits were taken pursuant to these rulings. (JA 73.)

The Government on September 20, 1974, filed a motion to dismiss plaintiffs' action on the ground that they lacked standing to sue and on the grounds that their suit was prohibited by the doctrine of sovereign immunity, by Section 7421 of the Code, commonly referred to as the Anti-Injunction Act and by the tax exception to 28 U.S.C. Section 2201, commonly referred to as the Declaratory Judgment Act. (JA 1, 71, 50.) The District Court on February 5, 1975, filed its opinion holding that plaintiffs lacked standing to maintain their suit and, as part of that opinion, entered an order dismissing plaintiffs's complaint.² (JA 72-109.) Plaintiffs filed their notice of appeal on February 14, 1975.³ (JA 110.)

This case has not been before this Court before.

STATEMENT OF THE CASE

The relevant facts are not in dispute and are as follows: Plaintiff Tax Analysts & Advocates (TAA) is a nonprofit corporation organized under the laws of the District of Columbia in 1970 for the purpose of promoting tax reform through educating the public in federal tax matters and conducting a public interest legal practice concerned with federal tax matters. Plaintiff Thomas F. Field is the executive director of TAA. Defendant William E. Simon is Secretary of the Treasury for the United States. Defendant Donald C. Alexander is Commissioner of the Internal Revenue Service. These Government officials are charged with the responsibility of administering and enforcing the provisions of the Internal Revenue Code (26 U.S.C. Sections 7801 and 7802). (JA 73-75.)

In the interim between the filing of the original complaint and the filing of the amended complaint, plaintiff Field purchased the entire working interest in an oil well located in Pennsylvania at a cost of approximately $2,000. Field's oil well currently produces three barrels of crude oil per month and future production is anticipated at that level. The most recent price of that oil is $10.28 per barrel and future prices are expected to remain at that level. Gross receipts from the sale of the well's production are estimated to be $370.09 per year for the next five years. Under the purchase agreement of August 13, 1974, the owner of the land on which the well is located and the operator of the well together will receive a royalty of one-eighth of the proceeds of all oil produced from the well. These royalty payments are expected to amount to $46.32 per year for the next five years. Field's anticipated net profits before taxes are approximately $203.76 per year for the next five years. Between August 13, 1974 and October 31, 1974, Field actually earned net income of $42.47 from his well. (JA 74-75.)

Section 901(b)(1) of the 1954 Code allows qualified citizens of the United States and domestic corporations to claim a tax credit for the "amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country * * *." Section 903 provides that "the term 'income, war profits, and excess profits taxes' shall include a tax paid in lieu of a tax on income, war profits, or excess profits otherwise generally imposed by any foreign country * * *."

In 1955, the Internal Revenue Service published Revenue Ruling 55-296, 1955-1 Cum. Bull. 386, which allowed a foreign tax credit for income taxes paid to Saudi Arabia by virtue of Saudi Arabian Royal Decrees of November 4 and December 27, 1950. Subsequently, Rev. Rul. 68-352, 1968-2 Cum. Bull. 306 was promulgated allowing a foreign tax credit for income taxes imposed by Article 14(1)(a) of Libyan Petroleum Law No. 25 of 1955, as amended through November 20, 1965. In addition, the Internal Revenue Service issued several private rulings allowing foreign tax credits for income taxes imposed by Iran, Kuwait and Venezuela in connection with oil production in those countries. (JA 76.)

Plaintiffs instituted this action for the purpose of establishing that the above Rulings are unlawful because they are contrary to Sections 901(b) and 903. Essentially, plaintiffs' position on the merits is that the foreign income taxes involved in the disputed Rulings are, in substance, either royalties paid for the right to extract oil from land owned by these foreign countries, or excise, severance or similar taxes which are not creditable under Sections 901(b) or 903 or under any other provisions of the Code. Plaintiffs alleged in the Court below that, as a consequence of these Rulings, American oil companies operating abroad pay no tax to the United States Treasury on income derived from the extraction and production of oil, resulting in a revenue loss to the Treasury in 1976 of $3 billion (JA 78), and that this loss of revenue has the effect of increasing the annual tax burden of plaintiff Field and the other members of TAA. (JA 79.)

In addition, plaintiff Field alleged that as a "domestic oil producer" he suffers discriminatory tax treatment as a result of the Rulings, in that he is allowed only a deduction and not a credit for the payments he is required to make to his landowner in connection with the extraction of oil from his well, while American companies producing oil abroad receive tax credits for allegedly similar payments which they make to the sovereign countries owning the land on which their oil wells are located. (JA 78-79) Field further alleged that the effect of this discrimination was (1) to increase the value of foreign oil well investments and decrease the value of domestic wells, including his own, and (2) to enable American companies producing oil abroad to charge a lower price for the oil they sell in the United States thereby requiring Field to sell his oil at a price lower than he would otherwise charge. (JA 79.)

The District Court granted the Government's motion to dismiss the complaint on jurisdictional grounds. The court held that plaintiffs, in their capacity as taxpayers, lacked standing to maintain this suit. The Court further held that the acquisition of a domestic well by plaintiff Field during the pendency of this action did not give him standing under the Administrative Procedure Act to challenge the Rulings allowing foreign tax credits for oil companies operating abroad. (JA 72-109.)

This appeal followed.

SUMMARY OF ARGUMENT

Plaintiffs instituted this action to challenge the validity of Revenue Rulings issued by the Internal Revenue Service which allow tax credits to American oil companies operating abroad for payments they make to foreign countries in connection with the extraction and production of oil. In their origins, complaint; plaintiffs asserted that they had standing as federal taxpayers to maintain this action. Subsequent to the filing of that complaint, one of the plaintiffs (Thomas Field) purchased for $2,000 a domestic oil well producing 3 barrels of oil a month. Based upon that purchase, plaintiffs filed an amended complaint alleging that Field as a "domestic oil producer, and hence "competitor" of producers with foreign production, had standing to contest the Rulings under Section 10 of the Administrative Procedure Act. The District Court ruled that neither plaintiffs as federal taxpayers nor Field as an asserted competitor had standing to maintain this action. The District Court's determination with respect to the issue of standing is correct and should be affirmed. Further, as indicated below, there are several additional reasons why the District Court had no jurisdiction to entertain this suit.

1. The sole basis for plaintiffs' asserted standing as federal taxpayers is their allegation that, as a result of the tax credits permitted by the Rulings in question, there has been a loss of revenue of $3 billion to the Treasury which in turn has produced an increase in plaintiffs' annual tax burden. The Supreme Court, however, declared more than 50 years ago that the interest of a federal taxpayer in the actions of the Government is so comparatively minute and indeterminable as preclude standing to institute any challenge to those actions. Further, recent decisions of the Supreme Court and the lower courts make clear that, with the exception of certain types of suits challenging the constitutionality of a Congressional enactment, the absolute bar to taxpayer suits announced a half century ago remains intact. Since plaintiffs here have not raised any constitutional claims their action (to the extent based on taxpayer standing) is barred.

Plaintiffs' assertion that taxpayer standing is conferred by the APA is plainly misconceived. The APA has never been construed as providing an exception to the Supreme Court's decisions barring taxpayer suits. Moreover, even assuming arguendo that the APA was applicable, plaintiffs do not even satisfy the requirements for standing under that provision. The Supreme Court has held that in order to have standing under the APA a party must allege that he has been injured in fact by the action of an agency and must also establish that the interest he seeks to protect is within the zone of interests protected by the statute allegedly violated by the agency. Plaintiffs' assertion that the Internal Revenue Service's action has indirectly caused an increase in their annual tax burdens is not an allegation of specific injury in fact but rather is a generalized grievance shared by every other federal taxpayer. Similarly, it is clear that plaintiffs' interests as taxpayers are not within the zone of interests protected by Sections 901(b) and 903 of the Internal Revenue Code of 1954 — the statutes allegedly violated by the Internal Revenue Service in issuing the Revenue Rulings in issue. The purpose of those provisions was to protect American companies or citizens operating abroad from double taxation of their incomes. They afford no protection to plaintiffs' generalized interests as taxpayers.

2. Field's purchase of a domestic oil well was a patently contrived attempt to acquire a status for standing purposes other than as a federal taxpayer. It is obvious that Field's de minimis investment in a single well producing 3 barrels of oil per month does not make him a competitor in any meaningful sense of the companies with enormous foreign production involved in the disputed Rulings. In reality, Field's interest in this case, like that of plaintiff TAA, is simply as a federal taxpayer. This court, accordingly, should reject Field's transparent claim that he is a competitor and, as such, entitled to assert standing under the APA. To do otherwise, would be to undermine the Supreme Court's efforts to preclude all taxpayers' suits except where certain narrowly drawn constitutional claims are raised.

In any event, even if this Court were to conclude that Field's nominal investment in his domestic oil well is sufficient to transform his interest from that of a taxpayer to that of a competitor. Field nevertheless lacks standing under the APA to maintain this action. First, Field's allegations of injury in fact are not certain but rather are speculative and conjectural. Moreover, they are not capable of proof at trial. Field's allegation that the tax credits in issue make foreign oil well investments more valuable than domestic oil well investments does not indicate that he has suffered any injury in fact. Field did not purchase his domestic well until August of 1974 — years after the rulings in question were issued — and, therefore, he necessarily received the benefit of any depressant effect on the value of domestic investments caused by the Rulings in the form of a reduced purchase price for his well. Similarly, his allegation that the tax credits depress the price of foreign oil sold in the United States which in turn depress the price domestic producers, including himself, receive, is pure supposition. The price of oil sold in the United States is the result of many complex factors including Government regulation and it is impossible to determine in advance whether the elimination of the foreign tax credits would increase the selling price of Field's oil. Secondly, Field's asserted interest as a competitor, like the interest of plaintiffs as taxpayers, is plainly not within the zone of interests of the foreign tax credit provisions at issue or any other provision of the Internal Revenue Code. Thus, the District Court properly concluded that Field had no competitor standing under the APA.

3. The Article III case or controversy clause of the Constitution, in addition to imposing standing limitations on federal courts, also assures that the federal courts will not intrude into areas committed to another coordinate branch of Government. In the context of the imposition and collection of federal taxes, the Constitution has vested in the legislative branch the broad and compelling power to "lay and collect" taxes. To the extent that it has deemed appropriate. Congress has granted the executive branch, through the Treasury Department, basic and necessary autonomy in assessing and collecting the taxes which it has imposed. To the judicial branch, Congress has granted limited authority to review the Treasury actions, generally restricted to the adjudication of disputes between a citizen and the Treasury over the citizen's own tax or other financial account with the Treasury. Otherwise, Congress has wisely not granted citizens the right to invoke the judicial powers of the courts to direct the executive in the critical area of tax administration. It is true that application of these principles here would probably preclude any judicial review of the challenged Rulings. Yet "the absence of any particular individual or class to litigate these claims gives support to the argument that the subject matter is committed to the surveillance of Congress, and ultimately to the political process." United States v. Richardson, 418 U.S. 166, 179 (1974).

4. In addition to plaintiffs' lack of standing, the District Court was prohibited from entertaining plaintiffs' suit by the doctrine of sovereign immunity, the Anti-Injunction Act, and by the tax exception to the Declaratory Judgment Act. Although virtually identical Jurisdictional arguments were rejected by this Court in Eastern Kentucky Welfare Rights Org. v. Simon, 506 F. 2d 1278 (1974) the Supreme Court has granted the Government's petition for certiorari in that case (43 U.S. Law Week 3613 (May 20, 1975)). It is respectfully suggested that this Court not issue its opinion here until after the Supreme Court has handed down its decision. In any event, we submit that this Court's decision in Eastern Kentucky with respect to the jurisdictional questions was erroneous and respectfully request the Court to reconsider that decision.

ARGUMENT

THE DISTRICT COURT HAD NO JURISDICTION TO ENTERTAIN THIS SUIT

A. The District Court correctly held that plaintiffs in their capacity as taxpayers, had no standing to challenge Revenue Rulings allowing certain tax credits to oil companies operating in foreign countries

1. Plaintiffs lack standing as taxpayers since they fail to meet the Flast tests

The concept of standing involves a limitation placed on the federal courts by Article III of the Constitution, which limits the jurisdiction of federal courts to the adjudication of actual "cases" or "controversies". One of the purposes of Article III is to "limit the business of federal courts to questions presented in an adversary context and in a form historically viewed as capable of resolution through the judicial process.” Flast v. Cohen, 392 U.S. 83. 95 (1968).⁴ Standing thus initially focuses on the party seeking to get his complaint before a federal court and basically involves an inquiry into whether the complainant has shown that he has a ” personal stake in the outcome ” (Baker v. Carr, 369 U.S. 186, 204 (1962)), or has alleged that "the challenged action has caused him injury in fact” (Data Processing Service v. Camp, 397 U.S. 150, 152 (1970).

In the case at bar, plaintiffs assert that they have standing as taxpayers to challenge Revenue Rulings issued by the Internal Revenue Service (allowing tax credits for certain payments made by American oil companies operating in foreign countries) because the ultimate effect of these Rulings allegedly is an increase in the plaintiffs' annual tax burden. The Supreme Court, however, declared more than fifty years ago that taxpayer standing to challenge governmental action cannot be premised on the allegation that the wrongful action results in an increase in the complainant's federal tax liability. Frothingham v. Mellon, decided together with Massachusetts v. Bellon, 262 U.S. 447 (1923). In that case the plaintiff-taxpayer challenged as unconstitutional the Act of November 23, 1921, c. 135, 42 Stat. 224, commonly called the Maternity Act, which provided for federal appropriations to be apportioned among those states that accepted and complied with its provisions relating to the reduction of maternal and infant mortality. The essence of the plaintiff's complaint was that these federal appropriations would increase her future tax burden, and thereby take her property without due process of law.

The Court held that the plaintiff had no standing to maintain the suit for several reasons. First, the Court reasoned that the interest of any one taxpayer in the monies appropriated by the challenged statute was too remote, uncertain, and small to justify the taxpayer's suit (262 U.S., p. 487):

* * * the relation of a taxpayer of the United States to the Federal Government is very different. His interest in the moneys of the Treasury — partly realized from taxation and partly from other sources — is shared with millions of others; is comparatively minute and indeterminable; and the effect upon future taxation, of any payment out of the funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal to the preventive powers of a court of equity.

In the instant case this rationale even more forcefully bars plaintiffs' suit, for here there can be no showing that money is being taken from plaintiffs and appropriated to or for the oil companies. At most, plaintiffs can show a possible diminution of tax revenues by reason of the challenged Rulings and a possible consequent increase in their taxes. Of course, it is common knowledge that not every decrease in tax revenues is matched by increases in taxes collected from others.

Secondly, the Frothingham court reasoned that taxpayer standing must be barred to prevent a multiplicity of suits resulting in governmental chaos (262 U.S. p. 487):

The administration of any statute, likely to produce additional taxation to be imposed upon a vast number of taxpayers, the extent of whose several liability is indefinite and constantly changing, is essentially a matter of public and not of individual concern. If one taxpayer may champion and litigate such a cause, then every other taxpayer may do the same, not only in respect of the statute here under review but also in respect of every other appropriation act and statute whose administration requires the outlay of public money, and whose validity may be questioned. The bare suggestion of such a result, with its attendant inconveniences, goes far to sustain the conclusion * * * that a suit of this character cannot be maintained.

The circumstances of the instant case, involving a claim that one group of taxpayers is receiving favored administrative treatment at the expense of other taxpayers, presents the Frothingham court's fears in sharp relief. The essence of taxation is the determination of the relative tax burdens which will be borne by various societal groups or classes. "Taxes, * * * are a changing product of earnest efforts to have others pay them." Eisenstein, The Ideologies of Taxation, p. 11. Whether the complainant taxpayers urge constitutional or statutory bases for increasing the tax burdens of other taxpayers is immaterial; the effect of allowing such taxpayer suits in both instances would, as the Frothingham court feared, create administrative and judicial chaos.

Finally, the Frothingham court consented on the separation-of-powers problems which would flow from taxpayer suits, noting that taxpayer injunctive actions would not merely require that the court enjoin an unlawful official action respecting one or several complainants, but would require the court to issue broad injunctions intruding on Executive actions respecting the total citizenry, 262 U.S., p. 488. The Court, as the authoritative instrument of the Judicial Branch, wisely declined to exercise such power even where broad constitutional violations were alleged. A fortiori such general injunctive power should not be exercised here where it is alleged solely that the Executive has misinterpreted the Congressional enactments. Congress has reserved to itself the general review of Executive enforcement of the tax statutes. See Sections 8001 to 8023 of the Code, relating to the Joint Committee on Internal Revenue Taxation. (26 U.S.C.).

Frothingham, as the court below pointed out (JA 86), was regarded for 45 years as an absolute bar to federal taxpayer suits. In 1968, however, the Supreme Court reviewed the taxpayer standing issue again in Flast v. Cohen, supra. There plaintiffs as taxpayers sued to enjoin federal officials from applying a federal financial assistance program to religious institutions. Plaintiffs argued both that the aid was not authorized by the statutes, and that if authorized such aid would violate the Establishment Clause 392 U.S., p. 90. The Flast opinion announced a severely limited exception allowing standing only in cases allowing certain kinds of constitutional violations. The Court held (pp. 102-103) that a two-fart test should be applied:

First, the taxpayer must establish a logical link between that status and the type of legislative enactment attacked. Thus, a taxpayer will be a proper party to allege the unconstitutionality only of exercises of congressional power under the taxing and spending clause of Art. I, §8, of the Constitution. It will not be sufficient to allege an incidental expenditure of tax funds in the administration of an essentially regulatory statute. * * * Secondly, the taxpayer must establish a nexus between that status and the precise nature of the constitutional infringement alleged. Under this requirement, the taxpayer must show that the challenged enactment exceeds specific constitutional limitations imposed upon the exercise of the congressional taxing and spending power and not simply that the enactment is generally beyond the powers delegated to Congress by Art. I, §8.

The taxpayers in Flast were found to have satisfied these tests because (1) it was shown that their tax money was taken and directly expended in alleged violation of their Establishment Clause rights, not merely that the program involved “an incidental expenditure of tax funds in the administration of an essentially regulatory statute“; and (2) the Establishment Clause is a “specific limitation“ on the Article I spending power, 392 U.S., pp. 102-104. Tn this respect, the Court reaffirmed (392 U.S., p. 106) its Frothingham holding that a taxpayer does not have standing to:

employ a federal court as a forum in which to air his generalized grievances about the conduct of government or the allocation of power in the Federal System.

Plaintiffs in the present case do not make a constitutional challenge of any kind to Government action and therefore obviously fail to come within the Flast exception to Frothingham. And since the Supreme Court in the two recent decisions (United States v. Richardson, 418 U.S. 166 (1974) and Schlesinger v. Reservists to Stop the War, 418 U.S. 208 (1974)) has made clear that the Flast exception is the only exception on the absolute bar to taxpayer suits announced in Frothingham, plaintiffs' action (insofar as it is based on taxpayer standing) is plainly barred.⁵

In United States v. Richardson, supra, a federal taxpayer instituted suit to obtain a declaration that certain provisions of the Act of June 20, 1949. ch. 227, 63 Stat. 208 (50 U.S.C. §§402a-403j), commonly called the Central Intelligence Agency Act of 1949, permitting the CIA to account for its expenditures without itemization for public inspection were unconstitutional as violative of Article I, Section 9 of the Constitution which requires a regular statement and account of public funds. The plaintiff contended that he needed detailed information about CIA expenditure and thus its activities in order to follow intelligently the actions of Congress and the Executive branch. The Court held (pp. 176-177) that the plaintiff's allegations were insufficient to confer standing:

This is surely the kind of a generalized grievance described in both Frothingham and Flast since the impact on him is plainly undifferentiated and "common to all members of the public." Ex parte Levitt, 302 U.S. 633, 634 (1937); Laird v. Tatum, 408 U.S. 1, 13 (1972).

The Court went on to point out that although the plaintiff, as a taxpayer, had a genuine interest in the expenditure of federal funds, he had not alleged that, in his status as a taxpayer, he had suffered or was in immediate danger of suffering any specific concrete injury as a consequence of the operation of the disputed statute. The Court added (p. 175):

Respondent is seeking "to employ a federal court as a forum in which to air his generalized grievances about the conduct of the government." 92 U.S. at 106. Both Frothingham and Flast, supra, reject that basis for standing.”

Similarly, in the present case, plaintiffs, in their status as taxpayers', have not alleged they have suffered or are about to suffer, as the result of the challenged Government action, any particular concrete injury as opposed to a general injury incurred by every other federal taxpayer. As the District Court below aptly stated (JA 90): "Plaintiffs' complaint, as federal taxpayers, is no more than a generalized grievance shared by every taxpayer 'plainly undifferentiated and common to all members of the public.'"

The correctness of the District Court's determination that plaintiffs here lacked standing as taxpayers to maintain this action is further confirmed by the Supreme Court's decision in Schlesinger v. Reservists to Stop the War, supra. There plaintiffs, asserting standing as citizens and as taxpayers, challenged the membership of Congressmen in the Armed Forces Reserve as violative of the Incompatibility Clause of Article I, Section 6 of the Constitution. After rejecting plaintiffs' asserted standing as citizens the Court went on to sustain the District Court's rejection of taxpayer standing stating (418 U.S., p. 228):

Here, the District Court, applying the Flast holding denied respondents' standing as taxpayers for failure to satisfy the nexus test. We agree with that conclusion since respondents did not challenge an enactment under Art. I, 58, but rather the action of the Executive Branch in permitting Members of Congress to maintain their Reserve status.

The Court in Schlesinger thus made it clear that a taxpayer suit challenging administration action of the Executive Branch (such as is involved here) can never meet the Flast tests and therefore is barred under Frothingham.

2. Plaintiffs, as taxpayers, have no standing under the Administrative Procedure Act

Plaintiffs (Br. 23), apparently conceding that they cannot meet the stringent requirements for taxpayer standing laid down in Flast, contend that these requirements need be met only when a constitutional challenge to Government action is made. They assert that with respect to nonconstitutional attacks or the activities of a federal agency, like that involved here, taxpayer standing is conferred by Section 10 of the Administrative Procedure Act,⁶ c. 324, 60 Stat. 237 (5 U.S.C. §702). Plaintiffs' argument, however, is clearly misconceived.

In rejecting plaintiffs' contention that they can avoid the severe limitations on taxpayer standing by means of the APA, the District Court aptly pointed out (JA 93-94) that:

Section 10 of the Administrative Procedure Act. 5 U.S.C. §702 (1970), has never been construed as an exception to the Flast doctrine, nor has it been interpreted to provide standing to an allegedly aggrieved party who has no basis for bringing a suit other than his status as a federal taxpayer. It is highly doubtful that this judicial review provision of the APA will ever evolve to the point where it grants standing to an individual whose grievance is shared by every federal taxpayer.

It is true that most of the Supreme Court's decisions (discussed above) on taxpayer standing have involved constitutional challenges to Congressional or Executive activities. Nonetheless, it is significant that in Flast, where both statutory and constitutional violations were alleged (390 U.S., p. 90)⁷ only the constitutional allegation was held to furnish a basis for standing. Since Flast held that not even most constitutional allegations — such as a usurpation of Tenth Amendment States' rights — would support taxpayer standing (Flast, 390 U.S. p. 195), a fortiori cases such as that here involving alleged misinterpretation of a statute should not justify taxpayer standing. If the Executive Branch is erroneously administering the tax laws, it is the function of Congress to correct the situation with respect to taxpayers generally. It may cause the practice to be changed through its Joint Committee on Internal Revenue taxation, or it may enact clarifying amendments to the statute. The Judiciary's function, by contrast, is not to oversee revenue administration generally, but to hear appeals from decisions of the Treasury respecting "the claims and accounts subsisting between the United States and particular citizens." (Remarks of James Madison, 1 Annals of Congress, p. 612.)

Plaintiffs here can cite no authority whatsoever allowing taxpayer standing in suits challenging revenue administration.⁸ In every case of which we are aware in which nonconstitutional claims have been asserted, taxpayer standing has been rejected. South Hill Neighborhood Assn. v. Romney, 421 F. 2d 454, 460 (C.A. 6, 1969), cert. denied, 397 U.S. 1025 (1970); South Suburban Safeway Lines, Inc. v. City of Chicago, 416 F. 2d 535, 536-537 (C.A. 7. 1969); see also Warth v. Seldin, 495 F. 2d 1187, 1191 and fn. 5 (C.A. 2, 1974); Gibson & Perin Co. v. City of Cincinnati, 480 F. 2d 936 (C.A. 6, 1973), cert. denied, 414 U.S. 1068 (1973). Indeed in Schlesinger, the Supreme Court summarily rejected the plaintiffs' claimed taxpayer standing to challenge alleged unconstitutional activities by the Executive Branch because under Flast a constitutional challenge to a Congressional enactment is a prerequisite to taxpayer standing. Under plaintiffs' theory here, however, the plaintiffs in Schlesinger could have avoided that result had they couched their complaint in terms of statutory rather than constitutional violations by the Executive Branch. It is apparent that plaintiffs' position would undermine the Supreme Court's careful efforts to preclude taxpayer suits in all but the most limited circumstances.

In any event, even if this Court were to conclude that plaintiffs need only satisfy the lesser requirements for standing under the APA, it is clear, as the court below held (JA 94-95), that plaintiffs failed to meet even those standards. In order to have standing under the APA to challenge an agency's action, a party must not only allege that he has suffered a specific injury in fact as a result of that action, but must also establish that the interest he seeks to protect is arguably within the zone of interests protected by the statute in question. Data Processing Service v. Camp, 397 U.S. 150 (1970); see Barlow v. Collins, 397 U.S. 159 (1970).

Here, plaintiffs as taxpayers have not alleged a concrete injury in fact but instead have asserted a generalized grievance — suffered by every other federal taxpayer — that action by the Internal Revenue Service has (to some unspecified extent) increased their annual tax burden. This general complaint is not analogous to the specific injury in fact alleged by the plaintiffs in United States v. SCRAP, 412 U.S. 669 (1973), as plaintiffs here contend. Moreover, unlike the situation in SCRAP where it was undisputed that the plaintiffs were within the zone of interests protected by the NEPA statute alleged to have been violated by the ICC, plaintiffs in this case, as taxpayers have failed to point to any statutory provision which protects their interests in ensuring that the maximum of taxes are succeed. Indeed, Sections 7801 and 7802 of of the Treasury and the Commissioner of Internal Revenue, and Section 7401 expressly prohibits revenue collection actions except upon the authorization of the Secretary and the Attorney General.

Plaintiffs' complaint alleges that certain revenue rulings issued by the Internal Revenue Service are contrary to the provisions of Sections 901(b) and 903 of the Internal Revenue Code of 1954. The purpose of these provisions, however, is to prevent double taxation, (see Burnet v. Chicago Portrait Co. 285 U.S. 1 (1932)), not to increase tax revenues. Obviously, the generalized interests which plaintiffs as taxpayers seek to protect in this action are not within the zone of interests protected by these statutory provisions. Plaintiffs, however, in a patently strained attempt to avoid this fatal defect in their asserted taxpayer standing, argue (Br. 30-31) that the zone of interests test should be applied in the context of the Internal Revenue Code as a whole. They further contend that one of the purposes of the Code is to assure the equitable treatment of all taxpayers and that consequently their asserted interests are within this purported broad zone of interests protected by the Code. Needless to say, plaintiffs' interpretation of the zone of interests test renders that test meaningless. Under plaintiffs' view of the test, every taxpayer would have standing to challenge every administrative decision made by the Internal Revenue Service thereby, in effect, shifting the responsibility for the administration of the tax laws from the Internal Revenue Service to the courts. Such a result is plainly untenable.

B. The District Court also correctly held that plaintiff Field did not have standing as a "domestic oil producer" to maintain this action

1. Plaintiff Field is not a bona fide competitor of the oil companies involved in the challenged Rulings

In a patently contrived attempt to acquire a status for standing purpose other than as a federal taxpayer, plaintiff Thomas Field purchased (subsequent to the institution of this action) a domestic oil well producing 3 barrels of oil a month for approximately $2,000. Based upon this acquisition, plaintiffs filed an amended complaint alleging that Field, as a domestic oil producer and hence competitor of the American oil companies operating abroad, had standing under the APA to challenge the Revenue Rulings allowing those companies foreign tax credits. As indicated below, the District Court correctly determined that Field failed to satisfy the requirements for competitor standing under the APA. We initially submit, however, that Field should not be permitted to use his de minimis investment in a domestic oil well to transform what is inherently a taxpayer suit into a competitor suit.

Under any realistic view, Field is not a competitor of the oil companies involved in the challenged Rulings. Field's annual income of $200 from his well is trivial by any standard. Even in SCRAP, where the plaintiffs' basis for standing was somewhat tenuous, there was no indication that it was contrived, as is the case here. If Field's acquisition here is deemed sufficient to convert his interest from one of a taxpayer to that of a competitor, then virtually any other taxpayer could similarly acquire competitor status by means of a nominal investment. For example, a group of taxpayers could chip in to purchase a single share of stock in General Motors and thereby assert competitor standing to challenge any Revenue Rulings issued to other automobile manufacturers. Surely, the Supreme Court never contemplated that its painstaking efforts to restrict taxpayer suits would be circumvented in this manner. On the contrary, the Court's decisions in Richardson and Schlesinger leave no doubt that the Court intended that the narrow circumstance delineated in Flast would be the only one in which a taxpayer could escape the absolute bar to taxpayer suits declared in Frothingham.

This Court, accordingly, should reject Field's transparent effort to assert standing as a competitor. In reality, Field's interest in this case is based on his status as a federal taxpayer and his standing to maintain this action should be determined on that basis. While cases may arise in which it will be difficult to draw a line between a bona fide competitor and one whose asserted interest as a competitor is merely nominal, this is certainly not such a case. Wherever the line be drawn, Field's de minimis and contrived basis for competitor standing must be deemed insufficient.

2. In any event, Field lacks standing under the Administrative Procedure Act since he failed to satisfy the injury in fact and zone of interests tests

Assuming, arguendo, that Field's purchase of a domestic oil well is deemed sufficient to characterize his interest in this case as that of a competitor, he nevertheless lacks standing to maintain this action under the APA since he failed to allege that he sustained a concrete injury in fact and since he failed to demonstrate that the interest he seeks to protect is within the zone of interests protected by the Internal Revenue Code provisions in issue. See Data Processing Service, supra; Sierra Club v. Morton, 405 U.S. 727, 733 (1972).

a. Field's allegations of injury are insufficient since they are speculative rather than certain

In speaking of the injury in fact requirement for standing under the APA, the Supreme Court in SCRAP, supra, stated (412 U.S., pp. 688-689):

Of course, pleadings must be something more than an ingenious academic exercise in the conceivable. A plaintiff must allege that he has been or will in fact be perceptibly harmed by the challenged agency action, not that he can imagine circumstances in which he could be affected by the agency's action. And it is equally clear that the allegations must be true and capable of proof at trial.

Consistent therewith, the Fifth Circuit in State of Florida v. Weinberger, 492 F. 2d 488, 494 (1974), stated that in order to satisfy the injury in fact, test "* * * [the] injury to the interest must, in the event of a decision adverse to the position of the party asserting standing, be not conjectural or speculative out certain.” Cf. Roe v. Wade, 410 U.S. 113, 128 (1973); Linda R.S. v. Richard D., 410 U.S. 614, 618 (1973); O'Shea v. [TEXT MISSING]

Here, Field's amended complaint can only be described as an "academic exercise in the conceivable." The injuries alleged therein are purely speculative and conjectural rather than certain. Field first alleged that because of the tax credits granted to oil companies operating abroad, foreign oil production yields higher investment returns than domestic oil production, which in turn has the effect of increasing the value of foreign oil well investments and decreasing the value of domestic oil well investments. Thus, it was alleged that the Rulings caused Field injury because they depress the value of his investment in his domestic well. Even assuming arguendo that the Rulings make foreign oil well investment relatively more valuable than domestic investments, as Field alleged, it is apparent from the allegation itself that Field is not among the injured. Field purchased his well on August 13, 1974, year: after the Rulings permitting the foreign tax credits were promulgated. Consequently, to the extent these credits have a depressant effect on the value of domestic oil well investments. Field necessarily must have received the benefit of that effect in the form of a reduced purchase price for his well.

Similarly, Field's second allegation of injury in fact was equally deficient. The [TEXT MISSING] of that allegation was that the lower [TEXT MISSING] resulting from the tax credits allow [TEXT MISSING] It was therefore alleged that Field was injured in that he receives a lower price for his domestic oil production. Once again, even accepting the dubious premise of the allegation that the tax credits ultimately reduce the price received by Field for his oil, it is far from certain that Field suffered any injury in fact. The purchase price for Field's well no doubt reflected the prevailing price for domestic oil on the date of purchase and the anticipated production of the well. Had oil prices been higher, anticipated earnings for the well would have been higher, and therefore Field's acquisition cost for the well would have increased. Thus, from the pleadings it is impossible to determine whether, on balance, the allegedly lower prices have worked to detriment or to the benefit of Field.⁹

Moreover, Field's assumption that revocation of the foreign tax credits would increase the price of foreign oil sold in the United States was pure supposition. The oil companies might voluntarily choose to absorb the resulting increase in United States corporate income taxes rather than increase prices or they might be prevented from passing on the increased taxes by the Federal Energy Administration. Numerous other factors could interact to preclude any increase in the price of foreign oil.

In all events, it is evident from the hypothetical and conjectural nature of Field's alleged injuries that such allegations were not "capable of proof at trial" as required by the Supreme Court in SCRAP.

Further, the three lower court cases relied on by Field (Br. 15-17) to support the sufficiency of his allegations of injury are distinguishable. In Eastern Kentucky Welfare Rights Org. v. Shultz, 370 F. Supp. 325 (D.C. D.C., 1973), rev'd on other grounds, 506 F. 2d 1278 (D.A. DC., 1974), cert. granted, 43 U.S. Law Week 3613 (Sup. Ct., May 20, 1975), the plaintiffs challenged the issuance of an Internal Revenue Service Ruling allowing hospitals to qualify for tax-exempt status as charitable organizations without providing free or reduced cost medical care to indigents. The District Court had no trouble finding injury in fact pointing out that prior to the issuance of the disputed ruling Internal Revenue Service policy had conferred a cognizable benefit on indigent persons which the challenged ruling stripped away. The Court added that it did not "consider itself engaged in wild speculation" by assuming that modification of the requirements for tax-exempt status would necessarily affect hospital policy with respect to the treatment of indigents. Here, Field had no prior conferred benefit or interest which has been taken away by the rulings in issue. And unlike the situation in Eastern Kentucky, his allegations on their face leave great doubt as to whether he has suffered any injury in fact.

Nor do the decisions in Green v. Kennedy, 309 F. Supp. 1127 (D.C. D.C., 1970) and McGlotten v. Connally, 338 F. Supp. 448 (D.C. D.C., 1972) support Field's assertion (Br. 15) that purely speculative allegations of injury are sufficient for standing purposes. The plaintiffs in McGlotten alleged not only that tax benefits conferred by the Federal Government enabled segregated fraternal orders to maintain their racially discriminatory membership policies, but also that such tax benefits represented an endorsement or approval of blatantly discriminatory organizations by the Federal Government. Thus, regardless of whether the segregated institutions could have survived without tax-exempt status, the plaintiffs suffered actual injury from the "stamp of approval" connoted by the granting of tax-exempt status. The same is true of the plaintiffs in Green who challenged tax exemptions granted to segregated private schools.

b. Field's interest is not within the "zone of interests" protected by the statutes alleged to have been violated by the Internal Revenue Service

As previously indicated, a party asserting standing under the APA to challenge an agency's action must not only allege that he has suffered injury in fact as a result of that action but must also establish that the interest he seeks to protect is arguably within the "zone of interests” protected by the statute alleged to have been violated by the agency. Date Processing Service, supra; Sierra Club v. Morton, supra, p. 733. Field, as shown above, failed to satisfy the injury in fact requirement and for this reason alone lacks standing under the APA. In addition, Field lacks standing because his asserted interest as a competitor is obviously not within the zone of interests of Sections 901(b) and 903 of the Internal Revenue Code of 1954 — the statutes alleged to have been violated by the Internal Revenue Service in issuing the disputed Revenue Rulings.

Indeed, Field does not dispute the District Court's determination that his interest is not one which was intended to be protected by Sections 901(b) and 903 but instead asserts (Br. 20) that the court erred in focusing its attention on the purpose of those foreign tax credit provisions rather than looking at the general equitable purpose of the Code as a whole. As previously pointed out in connection with plaintiffs' asserted standing as federal taxpayers (pp. 25), this interpretation of the proper application of the zone of interests test renders that test meaningless. Under Field's view of the test, a plaintiff in any action involving a Federal statute could argue that as a general principle of common law the statute should be equitably interpreted and applied and that therefore his asserted interest (whatever its nature) was within the zone of interests protected by the statute.

Moreover, contrary to Field's assertion, no court has ever subscribed to the view that such an ill-defined and generalized assertion of a protected interest as is made here is sufficient to pass muster under the zone of interests test. In both Data Processing Service, and SCRAP, the interests asserted by the respective plaintiffs were determined to be within the zone of interests protected by the specific statutory provisions in issue. Similarly, in Armco Steel Corp, v. Stans, 431 F. 2d 779 (C.A. 2, 1970), a domestic steel corporation was determined to have standing to challenge action of the Foreign Trade Zones Board establishing a duty-free trade zone in the New Orleans, Louisiana area. The court noted that the statute challenged. Section 3 of the Act of June 18, 1934, (19 U.S.C. § 81c), had initially prohibited creation of trade zones for imported goods in order to protect domestic manufacturers, and then had been amended to allow limited manufacture of imported goods in such zones, and concluded that Section 3, together with the tariff laws generally, "are demonstrably intended to protect the competitive interest of the entire class of domestic steel producers." 431 F. 2d, p. 784.¹⁰ Field's asserted general equitable interest under the Code is hardly synonymous with the protected interest of the plaintiff in Armco Steel under Section 3 of the Act. Nor can this Court's decision in Constructores Civiles de Centroamerica, S.A. v. Hannah, 459 F. 2d 1183 (1972), be read as approving the application of the zone of interests test urged here. There the plaintiff was determined to be an intended beneficiary of a specific provision, i.e., Section 102 of the Act for International Development of 1961, (22 U.S.C. § 2151.) This is far different from Field's attempt to claim protection under an entire title of the United States Code.

Apparently recognizing the weakness of his reliance on the entire Code, Field attempts to show that Code Section 7805(b) (26 U.S.C.) specifically introduces a purpose to protect competitors into the Code. That statute provides that the Treasury "may prescribe the extent, if any, to which any ruling or regulation, relating to the internal revenue laws, shall be applied without retroactive effect." This statute was enacted in order to simplify tax administration by allowing the Commissioner to change rules and Regulations without applying the change to previously settled cases,¹¹ and to allow more equitable treatment of taxpayers who had relied on earlier Regulations or Rulings.¹²

Since the legislative history of the statute contains scarcely a word respecting competitor interests. Field places exclusive reliance on International Business Machines Corp. v. United States, 343 F. 2d 914 (Ct. Cl., 1965), cert. denied, 382 U.S. 1028 (1966). The holding there is extremely narrow and is completely inapplicable to the instant case. In IBM, the court held that, where the Treasury had failed to apply retroactively a Ruling taxing certain products of IBM's only major competitor (Remington) in the highly concentrated computer industry, it would be an abuse of discretion to apply the Ruling retroactively to IBM. By contrast, the instant case does not involve the degree of retroactivity of Rulings, and in later cases the courts have refused to apply the IBM holding beyond its own peculiar facts.¹³ Bookwalter v. Brecklein, 357 F. 2d 78 (C.A. 8, 1966); Shakespeare Co. v. United States, 389 F. 2d 772, 777 (Ct. Cl., 1968); Bornstein v. United States, 345 F. 2d 558, 564 (Ct. Cl., 1965), Timpte, Inc. v. United States, unreported order filed December 6, 1973, approved by the Court, No. 770-71, March 24, 1974.

Simply stated, Field's asserted interest as a competitor is not one which is protected by the statutory provisions in issue nor is it one which is protected by any other provision of the Internal Revenue Code of 1954. Accordingly, Field has no standing to maintain this action.

In sum, Field's attempt to circumvent the recent holdings of the Supreme Court on taxpayer standing must fail, because his oil producer status is contrived, and in any event he cannot satisfy the tests for competitor standing.

C. The issuance of Rulings and related aspects of tax administration are committed to the Treasury Department and are not subject to review

We briefly alluded earlier (pp. 13) to the fact that the Article III case or controversy limitation on federal court jurisdiction involves two aspects — first, the party seeking to invoke the judicial power must have standing to do so and, second, that judicial power cannot be exercised in violation of the separation of powers doctrine. Flast v. Cohen, 392 U.S. 83 (1968). We now take up the second aspect of the limitation.

As articulated by the Court in Flast, the second aspect of the case or controversy doctrine is a recognition that the judiciary functions in a system where there is a "tripartite allocation of power”, and is thus intended to "assure that the federal courts will not intrude into areas committed to the other branches of government." Id., p. 95. While this element of justiciability can be illustrated by various doctrines under which the federal courts have refused to take jurisdiction.¹⁴ it remains true that it is "'not a legal concept with a fixed content or susceptible of scientific verification. Its utilization is the resultant of many subtle pressures * * *'" Flast, p. 95, quoting Poe v. Ullman, 367 U.S. 497, 508 (1961). "Deciding whether a matter has in any measure been committed * * * to another branch of government * * * is itself a delicate exercise in constitutional interpretation” which must be resolved through a "case-by-case inquiry.” Baker v. Carr, 369 U.S. 186, 211 (1962). We submit that, except for certain carefully circumscribed judicial review procedures, there is a "textually demonstrable constitutional commitment of the issue (of all aspects of tax administration] to a coordinate political department * * *." Id., p. 217.

The principle weakness of the central Government under the Articles of Confederation was its lack of power to levy taxes. E.g., Hamilton, The Federalist, No. 30 (Wright ed. 1972). It is not surprising, therefore, that the members of the Federal Constitutional Convention were almost unanimous in their insistence that Congress should have bread powers over fiscal affairs. See Mason and Beaney, American Constitutional Law 15th ed.), p. 263. Thus, heading the list of enumerated powers [TEXT MISSING] Article I, Section 8, is the provision that "Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States * * *." The significant aspect of this constitutional provision is that Congress is vested both with the power to impose taxes and with the power to provide for the collection of those taxes. The executive's sole constitutional function in this critical area is limited to its general Article II power to execute the mandates imposed by Congress, while the judiciary's power is limited under Article III to the jurisdiction granted to it by Congress.

Working within the constitutional system. Congress early established the Department of the Treasury and created the office of Secretary of the Treasury, whose duties included the power "to superintend the collection of the revenue." Act of September 2, 1789, c. 12, 1 Stat. 65, Sec. 2. Debates surrounding the creation of this office illustrate, however, that some members of Congress were extremely fearful of surrendering such broad powers to a single individual, since the Constitution mentioned no such officer. 1 Annals of Congress, pp. 384-389. But the early experiment apparently proved successful, since, when the War Between the States created the need for additional revenues. Congress established a second executive position (the Commissioner of Internal Revenue) and charged the newly created office with the duty of "preparing all the instructions, regulations, directions * * *, and all other matters pertaining to the assessment and collection of the duties, stamp duties, licenses, and taxes." Act of July 1, 1862, c. 119, 12 Stat. 432, Sec. 1. These two executive department offices have survived to the present day and are charged with the general revenue collection and administration functions. See Revised Statutes, Sec. 248 (31 U.S.C. §1002); Sections 6301, 7801 and 7802 of the Internal Revenue Code of 1954 (26 U.S.C.).

Indeed, Section 7801(a) of the Code (26 U.S.C.) expressly provides that "Except as otherwise expressly provided by law, the administration and enforcement of this title (26 U.S.C.) shall be performed under the supervision of the Secretary of the Treasury." Section 6201 of the Code (26 U.S.C.) gives to the Secretary or his delegate the vital and sweeping authority "to make the inquiries, determinations and assessments of all taxes * * * imposed by this title." To make it clear that this responsibility is not to be shared, the Code further provides in Section 7401 (26 U.S.C.) that "No civil action for the collection or recovery of taxes * * * shall be commenced unless the Secretary or his delegate authorizes or sanctions the proceedings and the Attorney General or his delegate directs that the action be commenced." See United States v. Western Pac. R. Co., 190 F. 2d 243 (C.A. 9, 1951); cf. Sullivan v. United States, 348 U.S. 170 (1954). While the plaintiffs in the present action do not in terms seek an order requiring the Commissioner to institute suits, they clearly would displace the authority and responsibility of the Commissioner by requiring him to make demands of taxpayers larger than those contemplated by his Rulings.

While the Congress has vested broad powers over the administration of the tax laws in the executive branch, it maintains a watchful eye over the executive functions through the legislatively created and designed Joint Committee on Internal Revenue Taxation. See Sections 8001, 8002, 8021 and 8022 of the Internal Revenue Code (26 U.S.C.). Additionally, it requires that large tax refunds or credits be reported to it, through the Joint Committee, by submission of the name of the person to whom the payment is to be made, the amount of the payment, and a summary of the facts surrounding the refund or credit. See Section 6405 of the Code (26 U.S.C.). Thus, as can be seen, the administration and enforcement of the tax laws is primarily a carefully delineated joint endeavor between the legislative and executive branches.

The Judiciary's function in this system has also been carefully circumscribed by Congressional enactments. These mandates generally implement the concept of James Madison that the Judiciary's role is to hear appeals from decisions of the Treasury respecting "the claims and accounts subsisting between the United States and particular citizens." (1 Annals of Congress, p. 612.) No judicial review of broad policy disputes between citizens and the Treasury, such as is here contended for, was ever contemplated. See generally, 1 Annals of Congress, pp. 386-389, 592-602, 612-613.

Accordingly, Congress has granted the District Courts and the Court of Claims jurisdiction to determine the merits of tax refund actions, provided the taxpayer has first filed a claim for refund with the Internal Revenue Service, and had it denied or not acted upon for six months. Sections 6532 and 7422 of the Code; 28 U.S.C. §§1346, 1491. The Tax Court has been granted jurisdiction to review deficiency determinations with respect to a person's income, estate or gift tax liability, and under limited circumstances, to grant declaratory judgments with respect to the qualification of retirement plans under chapter 1, subchapter D of the Code. Sections 6212, 6213 and 7476¹⁵ of the Code. Additionally, persons claiming an interest in property which has been levied upon by the Internal Revenue Service, and persons claiming an interest in the Comptroller General's actions with respect to the presidential election campaign fund, may also invoke the power of the judiciary under specified circumstances. Sections 7426 and 9011 of the Code. But in order to confine all litigation with respect to federal taxes to these narrow statutory channels. Congress has prohibited "any person" from maintaining a "suit for the purpose of restraining the assessment or collection of any tax” (Section 7421 of the Code, Appendix, infra, commonly referred to as the Anti-Injunction Act) and withheld declaratory relief in actions "with respect to Federal taxes" (28 U.S.C., §2201).

The Supreme Court has consistently interpreted both the statutory authorizations and prohibitions respecting judicial review so as stringently to limit jurisdiction of the federal courts in the review of tax matters.¹⁶ Indeed, on three recent occasions, the Court steadfastly refused to allow a judicial erosion of these statutory prohibitions.¹⁷ Moreover, the Court has refused to allow general grants of jurisdiction, such as the grant of jurisdiction to the Court of Claims to hear and determine all claims founded upon any law of Congress, to supercede the carefully planned statutory system. Nichols v. United States, 7 Wall, 122 (1868). Alluding to the exclusivity of the statutory system for challenging tax determinations, the Court has thus continually rejected attempts to expand the jurisdiction of the federal courts in tax matters beyond those areas specifically delineated by Congress.

We think it clear, therefore, that the legislative branch, although vested with the fundamental constitutional power to "lay and collect" taxes, has granted the Treasury a basic and necessary autonomy in assessing and connecting the Nation's revenues. To the extent that it deemed judicial review of the Treasury's actions appropriate and necessary, it has authorized certain persons, under carefully circumscribed conditions, to bring actions co vindicate their property interests from alleged unlawful governmental action. Congress has wisely, we believe, not granted citizens the right generally to invoke the judicial power of the courts to direct the Treasury in the exercise of its revenue collecting function. Rather, Congress has itself elected to maintain surveillance of the Treasury's action, and thus has ultimately committed the function to the politic.4 process. See United States v. Richardson, supra; see Schlesinger v. Reservists to Stop the War, supra.

Even more than in most other areas of Government, tax administration demands an extraordinary level of coordination, expertise, and practicality. If taxpayers, citizens, interested parties, or public interest groups are permitted to challenge tax administration policies generally, apart from disputes respecting their own tax liabilities, the result will be chaos. The words of the Court in United States v. Richardson, 418 U.S., p. 179, decrying attempts to operate a government by litigation, apply even more forcefully to injunctive actions such as that here involving tax administration:

It can be argued that if * * * [plaintiff] is not permitted to litigate this issue, no one can do so. In a very real sense, the absence of any particular individual or class to litigate these claims gives support to the argument that the subject matter is committed to the surveillance of Congress, and ultimately to the political process. Any other conclusion would mean that the Founding Fathers intended to set up something in the nature of an Athenian democracy or a New England town meeting to oversee the conduct of the National Government by means of lawsuits in federal courts. The Constitution created a representative Government with the representatives directly responsible to their constituents at stated periods of two, four, and six years; that the Constitution does not afford a judicial remedy does not, of course, completely disable the citizen who is not satisfied with the "ground rules" established by the Congress for reporting expenditures of the Executive Branch. * * * Slow, cumbersome and unresponsive though the traditional electoral process may be thought at times, our system provides for changing members of the political branches when dissatisfied citizens convince a sufficient number of their fellow electors that elected representatives are delinquent in performing duties committed to them.

D. This suit is barred by the doctrine of sovereign immunity, by the Anti-Injunction Act and by the tax exception to the Declaratory Judgment Act

In addition to plaintiffs lack of standing, there are three other reasons why the District Court did not have jurisdiction to entertain this action seeking injunctive and declaratory relief: (1) the suit constitutes an unconsented action against the United States and is therefore barred by sovereign immunity; (2) Congress has, through the Anti-Injunction Act (Section 7421(a) of the Code), expressly withdrawn jurisdiction from the courts to exercise their injunctive powers in tax assessment or collection matters; and (3) through the tax exception to the Declaratory Judgment Act, 28 U.S.C., Section 2201, Congress has prohibited declaratory judgment suits "with respect to Federal taxes,” together with injunctions in aid thereof. We recognize that these three jurisdictional arguments are virtually identical to those rejected by this Court in Eastern Kentucky, supra. The Supreme Court, however, on May 20, 1975, granted the Government's petition for certiorari in that case and has agreed to review this Court's decision with respect to these jurisdictional issues. Accordingly, it is respectfully suggested that this Court not issue its opinion in this case until after the Supreme Court has handed down its decision in Eastern Kentucky.

In any event, we respectfully submit that this Court's holding in Eastern Kentucky that the District Court had jurisdiction to entertain the plaintiffs' suit is erroneous. The Government's position on this jurisdiction question was fully set out in our briefs in that case and we do not believe it would be appropriate to reiterate those arguments here. We instead refer the Court to our briefs in Eastern Kentucky, (Br. 22-62; Reply Br., 1-9) and respectfully request that the Court reconsider its position.¹⁸

CONCLUSION

For the above stated reasons, the order of the District Court is correct and should be affirmed.

Respectfully submitted,

SCOTT P. CRAMPTON,
Assistant Attorney General.

GILBERT E. ANDREWS,
LEONARD J. HENZKE, JR.,
RICHARD FARBER,
Attorneys,
Tax Division,
Department of Justice,
Washington, D.C. 20530.

Of Counsel:

EARL J. SILBERT,
United States Attorney.

JUNE, 1974.