Regan v. Wright Petition for Writ of Certiorari

    No.

In %  (tart of tlyp Huttrfc States
O ctober  T e r m , 1981

D o n a ld  T . R e g a n ,
Se c r e ta r y  of  t h e  T r e a su r y , e t  a l ., p e t it io n e r s

v.

I n e z  W r ig h t , e t  a l .

PETITION FOR A WRIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS FOR THE 

DISTRICT OF COLUMBIA CIRCUIT

Rex E. Lee
Solicitor General

John F. Murray
Acting Assistant Attorney General

Stuart A. Smith 
Assistant to the Solicitor General

Michael L. Paup 
Ernest J. Brown 
Robert S. Pomerance 

Attorneys
Department of Justice 
Washington, D.C. 20530 
(202) 633-2217



QUESTION PRESENTED

Whether federal courts may entertain equity suits 
against the Secretary of the Treasury brought by 
persons seeking to have the Treasury revise the 
rules under which it determines the eligibility of 
private schools for tax-exempt status, and to deny or 
revoke tax-exempt status of private schools claimed 
to have insufficient minority enrollment, where the 
plaintiffs allege no actual injury to themselves either 
by any private school or by the Treasury.

(i)



( i l



TABLE OF CONTENTS
Page

Opinions be low ......................................................................  1
Jurisdiction.... ................. -......-..................................... ........  2
Constitutional provisions, statutes and regulations

involved - ..... .................. - ......... -......-................................  2

Statement:
A. Background ........—......-......-.........-.......................... 2
B. The proceedings in this case-------------------- ------  5

Reasons for granting the petition.---------------—...............  H

Conclusion ---------------------- ------ -.........................................  24

Appendix..... -.....-..................... —................... -.............. -...... ^a

TABLE OF AUTHORITIES
Cases:

American Jewish Congress V. Vance, 575 F.2d 939- 10
American Society of Travel Agents V. Blumenthal,

566 F.2d 145, cert, denied, 435 U.S. 947 .... . 10
Angelus Milling Co. V. Commissioner, 325 U.S, 293.. 20
Baker V. Carr, 369 U.S. 186 --------------------------------  16
Boh Jones University V. Simon, 416 U.S. 725------  17, 20
Bob Jones University V. United States, 639 F.2d

147, cert, granted, No. 81-3 (Oct. 13, 1981)------  4, 23
Coit V. Green, 404 U.S. 997, aff’g Green V. Con­

nolly, 330 F. Supp. 1150......................---------------  10
Enochs V. Williams Packing Co., 370 U.S. 1 ---------  20
Flast V. Cohen, 392 U.S. 8 3 ...... ................. ................  16
Flora V. United States, 362 U.S. 145 -------------------- 20
Gilmore V. City of Montgomery, 417 U.S. 556---- 10,17,18
Goldsboro Christian Schools, Inc. V. United States,

cert, granted, No. 81-1 (Oct. 13, 1981) -------------  4
Green v. Kennedy, 309 F. Supp. 1127, continued,

330 F. Supp. 1150, aff’d, 404 U.S, 997 ...... ........— 16
Laird V. Tatum, 408 U.S. 1 --------- ------- ------- --------  19
Louisiana V. McAdoo, 234 U.S. 627 ---------------------  20

(HI)



Cases— Continued
IV

Page

Moose Lodge No. 107 V. Irvis, 407 U.S. 163---------- 15
Norwood V. Harrison, 413 U.S. 455 .........— ......... -  10,17
O’Shea V. Littleton, 414 U.S. 488 ------------------- ---- 15
Prince Edward School Foundation V. Commis­

sioner, 478 F. Supp. 107, aff’d by unpublished 
order, No. 79-1622 (D.C. Cir. June 30, 1980),
cert, denied, No. 80-484 (Feb. 23, 1981) ---------  4

Schlesinger V. Reservists to Stop the War, 418 U.S.
208 .................................................... -........- .......... -  16,19

Sierra Club V. Morton, 405 U.S. 727 --------------------  15
Simon V. Eastern Ky. Welfare Rights Organiza­

tion, 426 U.S. 26 ............ ........... -8, 9,11,12,13, 14,16, 20
Tax Analysts & Advocates V. Blumenthal, 566 F.2d

130, cert, denied, 434 U.S, 1086 —........ - ......-....... 10
United States V. Felt & Tarrant Co., 283 U.S.

269 ................................................................-.............  20
United States V. Richardson, 418 U.S. 166---- 15,19, 21, 23
Warth V. Seldin, 422 U.S. 490 _____________ 13,15,16,18

Constitution and statutes:
United States Constitution:

Article II, Section 3 -------------------------------------  19
Article III ------------ ----------------- -------------2,11,15, la
Fifth Amendment____ ____ —------------------------  2
Fourteenth Amendment  ------- -------------- ----- 2

Anti-Injunction Act, 26 U.S.C. 7421(a)   ........ —  20
H.R. J. Res. 644, of Dec. 16, 1980, Pub. L. No. 96- 

536, 94 Stat. 3166, Section 101(a) (1) and (4 ), 
as amended by Supplemental Appropriations and 
Rescission Act, 1981, Pub. L. No. 97-12, Section
401, 95 Stat. 95 - ----- ------------ --------------------------  22

H.R. J. Res, 325, Pub. L. No. 97-51, 95 Stat. 958.... 23
Internal Revenue Code o f 1954 (26 U .S.C.):

Section 170(a) 
Section 170 (c)(2 ) 
Section 501(a) .... 
Section 501(c) (3)
Section 6212 ------
Section 6213 ------
Section 6532 .........

............... . 2, la
_______ 2, 3,12, 2a
.................. 2
2, 3, 4, 9,12,17,19
__________  20
__________  20
..................... 19



V

Constitution and statutes— Continued Page

Section 7422 ......    19
Section 7801 (a) ________________ ___________ 19
Section 7805(a) .............................. ......... ........ . 19
Sections 8021-8023 ______________________   19

28 U.S.C. 1346 ________________ ____ ________ _ 19
28 U.S.C. 1491......................     19
28 U.S.C. 2201 _________________________    20
Treasury, Postal Service, and General Government 

Appropriations Act of 1980, Pub. L. No. 96-
74, 93 Stat. 559 ........................................... ..............  5

Section 103, 93 Stat. 562 _______________ 2 ,5 ,9 ,22
Section 615, 93 Stat. 577 _______ ___ ___ 2, 5, 9, 22

Rev. Stat. 1977 (1878 ed.) (42 U.S.C. 1981) _____  2

Miscellaneous:
4 Administration, Internal Revenue Manual

(CCH ), im 341.11-341.13 ______ ___ ________ ____ _ 3
127 Cong. Rec. H5392 (daily ed. July 30, 1981).... 22-23 
127 Cong. Rec. H6698-H6699, H6702 (daily ed.

Sept. 30, 1981) _______ _______ _____________ _ 23
H.R. 4121, 97th Cong., 1st Sess. § 616 (1981) ____  22
H.R. Rep. No. 94-1656, 94th Cong., 2d Sess.

(1976) ........................ ............ ............. .....................  20
H.R. Rep. No. 96-248, 9th Cong., 1st Sess. (1979).. 22
Rev. Proc. 75-50, 1975-2 Cum. Bull. 587 __________2, 3, 23

§2.02 ............................................................. ........  3
Rev. Rul. 71-447, 1971-2 Cum. Bull. 230 __________ 4
Rev. Rul. 75-231, 1975-1 Cum. Bull. 158 ________  4
S. Rep. No. 94-996, 94th Cong., 2d Sess, (1976)___ 20
Tax-Exempt Status of Private Schools: Hearings 

Before the Subcomm. on Oversight of the House 
Comm, on Ways and Means, 96th Cong., 1st 
Sess. (1979) 21



3n % ̂ KpYmv (Emtrt 0! th? Imteft 01at̂
October  T e r m , 1981

No.

D o n a ld  T . R e g a n ,
Se c r e ta r y  of t h e  T r e a su r y , et  a l ., pe t it io n e r s

v.

I n e z  W r ig h t , e t  a l .

PETITION FOR A W RIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS FOR THE 

DISTRICT OF COLUMBIA CIRCUIT

The Solicitor General, on behalf of the Secretary 
of the Treasury, and the Commissioner of Internal 
Revenue, petitions for a writ of certiorari to re­
view the judgment of the United States Court of 
Appeals for the District of Columbia Circuit in this 
case.

OPINIONS BELOW

The opinion of the district court (Interv. Pet. App. 
A  la -lS a )1 is reported at 480 F. Supp. 790. The 
opinion of the court of appeals (Interv. Pet. App. 
B lb-58b) is reported at 656 F.2d 820.

1 “ Interv. Pet”  refers to the petition for a writ of certiorari 
(No. 81-757) filed by the intervener W. Wayne Allen, Chair­
man of the Board of Trustees of the Briarcrest School Sys­
tem in Memphis, Tennessee.

(1)



2

JURISDICTION

The judgment of the court of appeals was entered 
on June 18, 1981. The orders of the court of ap­
peals denying the petition for rehearing (Interv. 
Pet. App. C) with suggestion for rehearing en 
banc (Interv. Pet. App. D) were entered on Au­
gust 26, 1981. A petition for a writ of certiorari 
(No. 81-757) was filed on behalf of the intervenor 
W. Wayne Allen on October 20, 1981. The jurisdic­
tion of this Court is invoked under 28 U.S.C. 
1254(1).

CONSTITUTIONAL PROVISIONS, STATUTES 
AND REGULATIONS INVOLVED

The Fifth and Fourteenth Amendments to the 
United States Constitution, Section 501(a) and 
(c) (3) of the Internal Revenue Code of 1954 (26 
U.S.C.), Rev. Stat. 1977 (1878 ed.) (42 U.S.C. 
1981), and Sections 103 and 615 of the Treasury, 
Postal Service, and General Government Appropria­
tions Act of 1980, Pub. L. No. 96-74, 93 Stat. 562, 
577, are set forth at Interv. Pet. 2-4. The relevant 
provisions of Article III of the Constitution and Sec­
tion 170(a) and (c ) (2 )  of the Internal Revenue 
Code of 1954 (26 U.S.C.) are set forth in Appendix 
A , infra.

Revenue Procedure 75-50, 1975-2 Cum. Bull. 587, 
the Proposed Revenue Procedure, and the Modified 
Proposed Revenue Procedure are set forth respec­
tively at Interv. Pet. App. E le-12e, F lf-13f, and 
G lg-14g.

STATEMENT 

A. Background

Since 1970, the Internal Revenue Service has uni­
formly taken the position that a private school will



3

Hot qualify as a tax-exempt organization under Sec­
tion 5 0 1 (c )(3 ) of the Internal Revenue Code of 
1954, or as an eligible donee of charitable contri­
butions deductible under Section 170(c) (2) of the 
Code, unless it establishes that its admissions and 
educational policies are operated on a racially 
non-discriminatory basis. Rev. Proc. 75-50, 1975-2 
Cum. Bull. 587 (Interv. Pet. App. E le-12e) 
sets forth the currently effective guidelines by which 
the Internal Revenue Service determines whether 
private schools seeking to acquire or maintain tax- 
exempt status have racially nondiscriminatory poli­
cies as to students.2 The Revenue Procedure accord­
ingly provides (§2 .02) that “ [a] school must show 
affirmatively both that it has adopted a racially non­
discriminatory policy as to students that is made 
known to the general public and that since the adop­
tion of that policy it has operated in a bona fide 
manner in accordance therewith.” The Revenue Pro­
cedure thereafter enumerates requirements that 
must be met by each school seeking to establish that 
it has adopted and is operating in accordance with 
a nondiscriminatory policy. Under the Revenue Pro­
cedure, a school seeking to acquire or retain tax- 
exempt status and eligibility for tax-deductible con­
tributions must state in its charter documents, and 
catalogues that it has adopted a non-discriminatory 
policy; publicize that policy at least once annually so 
as to bring it effectively to the attention of all racial 
segments of the community; and maintain records 
documenting, inter alia, the racial composition of its

2 In 1976 and 1977, the Internal Revenue Service also issued 
more detailed guidelines for the use of revenue agents per­
forming field audits o f private schools. See 4 Administration, 
Internal Revenue Manual (C'CH) HU 341.11-341.13, at 22,457-9 
— 22,460.



students, faculty, and administrative staff. Officials 
of a school claiming the benefits of tax exemption are 
required to certify to the Internal Revenue Service 
each year, under penalties of perjury, that the school 
has complied with the guidelines (Interv. Pet. App. 
E 7e-8e).3

On August 22, 1978, the Internal Revenue Serv­
ice published a proposed revenue procedure (see 
Interv. Pet. App. F lf-13 f) seeking to amplify its 
policy with respect to schools that had been held by a 
court or agency to be racially discriminatory, and 
schools that had an insignificant number of minority 
students and were formed or substantially expanded 
at or about the time of desegregation of the public 
schools in the community After lengthy administra­
tive hearings and the receipt of a substantial num­
ber of adverse written comments, the Internal Rev­

3 See Rev. Rul. 71-447, 1971-2 Cum. Bull. 230; Rev. Rul. 
75-231, 1975-1 Cum. Bull. 158. See also Prince Edward School 
Foundation V. Commissioner, 478 F. Supp. 107 (D.D.C. 1979), 
aff’d by unpublished order, No. 79-1622 (D.C. Cir. June 30, 
1980), cert, denied, No. 80-484 (Feb. 23, 1981) (non-religious 
private school denied tax-exempt status for failure to 
make requisite showing that it maintained a racially non- 
discriminatory admissions policy where no black child had 
been admitted for a period of almost 20 years; directors’ 
belief in the value of segregated education does not excuse 
failure to make requisite showing of nondiscriminatory 
policy).

The Internal Revenue Service’s position is before the Court 
in two cases presenting the question whether nonprofit cor­
porations operating private schools that, on the basis of reli­
gious doctrine, maintain racially discriminatory admissions 
policies and other racially discriminatory practices qualify as 
tax-exempt organizations under Section 5 01 (c )(3 ) of the 
Code. See Goldsboro Christian Schools, Inc. V. United States, 
No. 81-1, and Bob Jones University V. United States, cert, 
granted, No. 81-3 (Oct. 13,1981).

4



5

enue Service issued a revised proposal on February 9, 
1979 (Interv. Pet. App. G lg-14g).

The Internal Revenue Service’s proposals led to 
the enactment of two related provisions that Con­
gress included in the Treasury, Postal Service, and 
General Government Appropriations Act of 1980, 
Pub. L. No. 96-74, 93 Stat. 559. In Section 615 (93 
Stat. 577), known as the Dornan Amendment, Con­
gress stipulated that none of the funds made avail­
able by the Act be used to carry out the proposed 
revenue procedures of 1978 and 1979. In Section 103 
(93 Stat. 562), of the same Act, known as the 
Ashbrook Amendment, Congress provided that none 
of the funds made available by the Act be used 
“ to formulate or carry out any rule, policy, proce­
dure, guideline, regulation, standard, or measure 
which would cause the loss of tax-exempt status to 
private, religious or church-operated schools under 
Section 5 0 1 (c )(3 ) of the Internal Revenue Code of 
1954 unless in effect prior to August 22, 1978.” The 
district court observed that “ [t]he effect of [this 
congressional] action is to retain in effect, at least 
until September, 1980, the presently effective Rev. 
Proc. 75-50 * * *” (Interv. Pet. App. A 14a).

B. The Proceedings in this Case

1. Respondents are the parents of 25 black school 
children who attend public school in seven states, and 
claim to represent a nationwide class of “ several mil­
lion individuals” (Interv. Pet. App. A la ) . They 
brought this action in the United States District 
Court for the District of Columbia against the Sec­
retary of the Treasury and the Commissioner of In­
ternal Revenue, alleging that these federal officials 
“have fostered and encouraged the development, oper­



6

ation and expansion of * * * racially segregated pri­
vate schools by granting them, or the organizations 
that operate them, exemptions from federal taxation
* * 20) 4

Respondents alleged that the actions of the federal 
officials injured them and their class, and claimed 
injury in the following two respects, “ First, the 
exemptions constitute tangible financial aid and other 
assistance to racially segregated education. Second, 
the exemptions foster and encourage the development 
of institutions offering racially segregated educa­
tional opportunities for white children avoiding at­
tendance in desegregating public school districts, and 
thereby also interfere with the efforts of federal 
courts, HEW and local school authorities to desegre­
gate racially dual school systems”  (A. 11).

Although their complaint asserted that “ thousands 
of newly created and many existing private schools 
have provided racially segregated alternative educa­
tional opportunities for white children avoiding at­
tendance in desegregating school systems” (A. 9), it 
identified only 19 private schools that respondents 
claim to be “ racially segregated.” 4 5 Respondents

4 “A .” refers to the appendix filed in the court of appeals.
5 Respondents apparently use the term “ racially segre­

gated” to signify only that there are few or no black students 
in attendance at a particular school, and not to signify that 
the absence of blacks is attributable to racial exclusion prac­
tices. At a hearing in the district court, counsel for respond­
ents conceded that he did not know whether any of the black 
children who are parties to this action would be denied ad­
mission by any private school on the basis of race (Tr. of 
Motion of Defendants to Dismiss, Nov. 20, 1979, at 66-67).

The complaint identifies a number of private schools that 
respondents alleged to fit this description: Harding Academy, 
Briarcrest Baptist School System and the Southern Baptist



7

sought declaratory and injunctive relief requiring the 
federal officials to deny all applications for tax- 
exempt status for, and to revoke tax exemptions held 
by all private schools “which have insubstantial or 
nonexistent minority enrollments, which are located 
in or serve desegregating public school districts” 
(A. 11) and which either (A. 37) —

(1) were established or expanded at or about the 
time the public school districts in which they 
are located or which they serve were desegre­
gating;

(2) have been determined in adversary judicial or 
administrative proceedings to be racially seg­
regated ; or

(3) cannot demonstrate that they do not provide 
racially segregated educational opportunities 
for white children avoiding attendance in de­
segregating public school systems.

Respondents further requested the court to grant 
injunctive relief in the nature of mandamus requir­
ing the federal officials to revise Rev. Proc. 75-50 and 
to substitute the criteria that they urge as the gov­
erning standard for granting tax exempt status to 
private schools (A. 37).

Schools of Whitehaven, Inc., Memphis, Tennessee; Natchi­
toches Academy, Natchitoches Parish, Louisiana; Delta 
Christian Academy and Tallulah Academy, Madison Parish, 
Louisiana; River Oaks School, Monroe, Louisiana; Holly Hill 
Academy and Bowman Academy, Orangeburg, South Caro­
lina; Sea Pines Academy, Beaufort County, South Carolina; 
Prince Edward Academy, Prince Edward County, Virginia; 
Montgomery Academy and St. James Parish School, Mont­
gomery, Alabama; Camelot Parochial School, Cairo, Illinois; 
Hyde Park Academy, South Boston Heights Academy and 
Parkway Academy, Boston, Massachusetts. These schools 
are said to serve the desegregating public school districts 
where the minor respondents attend school (A. 20-34).



8

2. The district court dismissed respondents’ suit 
on three separate grounds. First, it concluded that 
respondents had no standing to bring the action be­
cause: (a) they had not asserted a distinct, palpable, 
and concrete injury; (b) they had not shown that 
their alleged injury was attributable to the federal 
officials’ actions; (c) there was no certainty that 
the relief requested would remove the injury; and 
(d) there was not a sufficient degree of concrete ad­
verseness between respondents and the federal offi­
cials (Interv. Pet. App. A 4a -lla ).

In so ruling, the court relied principally on this 
Court’s decision in Simon v. Eastern Ky. Welfare 
Rights Organization, 426 U.S. 26 (1976). The court 
noted that respondents had not alleged that any of 
the private schools cited in the complaint was actually 
discriminating in violation of the Constitution or of 
federal law, or that any of them or their children had 
suffered any discriminatory action or exclusion. It 
questioned whether enforcement of respondents’ pro­
posed guidelines would ultimately cause any of these 
schools to lose tax-exempt status that it would have 
otherwise retained. Furthermore, even though the 
implementation of respondents’ guidelines might ulti­
mately serve to deprive some schools of their exempt 
status, the court found that respondents had not 
shown that the loss of exemptions would produce a 
net change in the desegregation of any particular 
school district. The court accordingly concluded that 
respondents had failed to show any nexus between 
the Internal Revenue Service’s position and the in­
jury allegedly suffered. Rather, the court observed 
that it appeared probable that any schools forced to 
choose would elect to forgo their exempt status rather 
than terminate any discriminatory practices (Interv. 
Pet. App. A  9a-10a).



9

Second, the district court ruled that responent’s 
action was “barred by the doctrine of nonreviewabil­
ity” because it “would require this Court to under­
take detailed or continuing review of a generalized 
IRS enforcement program, or to review complex 
issues of tax enforcement policy and of agency re­
source allocation”  (Interv. Pet. App. A 11a). As 
the district court saw the matter, “ Such action would 
be tantamount to this Court becoming a ‘shadow 
Commissioner of Internal Revenue’ to run the ad­
ministration of tax assessments to private schools 
in the United States”  (id. at 12a).

Finally, the district court concluded that the enact­
ment in 1979 of the Ashbrook and Dornan Amend­
ments to the General Appropriations Act “ are the 
strongest possible expressions of the Congressional 
intent that Section 5 0 1 (c )(3 ) of the Internal Rev­
enue Code is not susceptible of the construction which 
[respondents] would place upon it in this case” (id. 
at 14a-15a). While the court acknowledged that the 
Ashbrook and Dornan Amendments apparently allow 
a federal court to fashion a remedy in this area, it 
concluded that it was “ not the business of a federal 
court to explicitly thwart the will of Congress or to 
otherwise fail to carry it out” (id. at 15a).

3. A divided panel of the court of appeals re­
versed (Interv. Pet. App. B lb-58b). It held that re­
spondents had standing to sue and remanded the 
case for further proceedings. In so ruling, the court 
acknowledged that this Court’s decision in Simon v. 
Eastern Ky. Welfare Rights Organization, supra, 
26, leaves “ the door barely ajar for third party chal­
lenges” (Interv. Pet. App. B 16b) of the tax treat­
ment of others. It also recognized that its own previ­
ous decisions had dismissed for lack of standing suits



brought by persons who sought to litigate the tax 
status of other parties.®

But the court concluded that other precedent of 
this Court points in the opposite direction and indi­
cates “ that black citizens have standing to complain 
against government action alleged to give aid or com­
fort to private schools practicing race discrimination 
in their communities” (Interv. Pet. App. B 15b-16b). 
See Coit v. Green, 404 U.S. 997, aff’g Green v. Con­
nolly, 330 F. Supp. 1150 (D.D.C. (1 9 7 1 )); Norwood 
v. Harrison, 413 U.S. 455 (1973); Gilmore v. City of 
Montgomery, 417 U.S. 556 (1974). In the court’s 
view, those cases “ recognized the right of black citi­
zens to insist that their government ‘steer clear’ of 
aiding schools in their communities that practice race 
discrimination”  (Interv. Pet. App. B 24b-25b). The 
court therefore ruled that because of “ the centrality 
of that right in our contemporary (post-Civil W ar) 
constitutional order, [it was] unable to conclude that 
Eastern Kentucky speaks to the issue before us” 
(ibid.).

In addition, the court found no impediment to the 
action in the other grounds of the district court’s 
decision dismissing the suit. It concluded that the 
doctrine of nonreviewability did not preclude ad­
judication of respondents’ claims because they de­
rived ultimately from constitutional concerns that 
courts, as opposed to administrators, were better 
equipped to address (Interv. Pet. App. 32b-35b). Nor 
did it view the Ashbrook and Dornan amendments as 
prohibitions upon fashioning a remedy. The amend­
ments, as it construed them, were merely interim 6

6 See American Society of Travel Agents V. Blumenthal, 
566 F.2d 145 (D.C. Cir. 1977), cert, denied, 435 U.S. 947 
(1978) ; Tax Analysts & Advocates V. Blumenthal, 566 F.2d 
130 (D.C. Cir. 1977), cert, denied, 434 U.S. 1086 (1978). , 
See also American Jewish Congress V. Vance, 575 F.2d 939 
(D.C. Cir. 1978).

10



11

stop orders on agency initiatives and did not purport 
to control judicial dispositions (id. at B 25b-30b).

In dissent, Judge Tamm deemed Eastern Ken­
tucky controlling. Finding that respondents had 
failed to allege a distinct and palpable injury to them­
selves, or a sufficient nexus between the Internal 
Revenue Service’s actions and whatever injury they 
claimed to have suffered, Judge Tamm would have 
denied them standing to maintain their suit. In his 
view, the majority’s opinion reflected an impermissi­
ble shift in focus from the right of respondents to 
make their claims to the rights they wished to assert. 
The majority, he concluded, had not only expanded 
significantly the law of standing, but had also over­
stepped the constitutional limits of its jurispruden­
tial power (Interv. Pet. App. B 38b-58b).

REASONS FOR GRANTING THE PETITION

In holding that respondents had standing to bring 
this suit in which they seek to compel the Depart­
ment of the Treasury to revise its rules governing 
the eligibility of private schools for tax-exempt status 
and to deny such status to schools having what they 
deem to be insufficient minority enrollment, the deci­
sion below refused to follow the squarely applicable 
precedent of Simon v. Eastern Ky. Welfare Rights 
Organization, 426 U.S. 26 (1976), in which this 
Court unanimously reversed the same court of ap­
peals that decided the instant case. The expansive 
view of standing adopted by the court of appeals seri­
ously erodes the previously settled “ case or contro­
versy” limitation of the Article III jurisdiction of the 
federal courts, and once again threatens the orderly 
administration of the revenue laws and the system



12

established by Congress for the adjudication of tax 
disputes. This Court should grant certiorari to dispel 
the uncertainty in the law of standing created by the 
decision below.

1. a. In Eastern Kentucky, as here, the plaintiffs 
sued to contest the Treasury’s administration of Sec­
tions 501(c) (3) and 170(c) (2) of the Internal Reve­
nue Code of 1954, not as it affected their own taxes 
but as it affected the tax treatment of private insti­
tutions not before the court, viz., hospitals that al­
legedly had denied free medical care to the indigent 
plaintiffs. The plaintiffs in that case likewise alleged 
that the Secretary of the Treasury and the Commis­
sioner of Internal Revenue had improperly conferred 
tax-exempt status to institutions that were not en­
titled to them under the Constitution and the tax 
laws, and thereby “ encouraged” hospitals to deny 
services to indigents.

This Court held that the plaintiffs in that vir­
tually identical posture lacked standing to have their 
claims adjudicated in a federal court. As the Court 
reaffirmed, “ the ‘case or controversy’ limitation of 
Art. I ll still requires that a federal court act only 
to redress injury that fairly can be traced to the 
challenged action of the defendant, and not injury 
that results from the independent action of some 
third party not before the court” (426 U.S. at 41- 
42). There, it was “purely speculative whether the 
denials of service specified in the complaint fairly 
can be traced to [the Treasury’s] ‘encouragement’ or 
instead result from the decisions made by the hos­
pitals without regard to the tax implications” (id. 
at 42-43.) Moreover, “ [i]t  i[was] equally speculative 
whether the desired exercise of the court’s remedial 
powers in [that] suit would result in the availabil­



13

ity to [the plaintiffs] of such services” (ibid.). In 
these circumstances, the Court held that the plain­
tiffs lacked standing because they had not shown that 
“ the asserted injury was the consequence of the de­
fendants’ actions; or that prospective relief will re­
move the harm.” Worth v. Seldin, 422 U.S. 490, 
505 (1975).

Eastern Kentucky governs this case. Indeed, un­
like the plaintiffs in Eastern Kentucky who alleged 
that they were denied medical treatment by par­
ticular hospitals, respondents’ generalized and at­
tenuated allegations concerning the practices of un­
identified private schools do not even demonstrate 
injury in fact. As the district court pointed out, 
“ there is no allegation in the record before the Court 
that the ‘target schools’ are actually discriminating 
in violation of the Constitution or federal law” 
(Interv. Pet. App. A  5a-6a). Nor do respondents 
allege that a judgment in their favor would redress 
any injury that fairly can be attributed to the chal­
lenged action of the Treasury defendants. In this 
respect, the court of appeals acknowledged that “ [re­
spondents] do not dispute that it is ‘speculative,’ 
within the Eastern Kentucky frame, whether any 
private school would welcome blacks in order to 
retain tax exemption or would relinquish exemption 
to retain current practices. They claim indifference 
as to the course private schools would take” (Interv. 
Pet. App. B 18b). While respondents are free to 
profess indifference to the response of the private 
schools whose policies they decry, “ [a] federal court, 
properly cognizant of the Art. I ll  limitation upon its 
jurisdiction, must require more than respondents have 
shown before proceeding to the merits.” Simon v. 
Eastern Ky. Welfare Rights Organization, swpra, 426 
U.S. at 46.



14

b. Although the court of appeals acknowledged 
that Eastern Kentucky “ suggests that litigation con­
cerning tax liability is a matter between taxpayer 
and IRS, with the door barely ajar for third party 
challenges” (Interv. Pet. App. B 16b), it concluded 
“ that Eastern Kentucky is not the line appropriately 
followed in the matter before us” {id. at 18b). In 
the court’s view, Eastern Kentucky was distinguish­
able because respondents do not assert “ a claim for 
relief against private actors” {ibid.) but rather 
against the government.

But the plaintiffs in Eastern Kentuclcy did not 
assert a claim against the private hospitals. Like 
respondents, they sued the Secretary of the Treasury 
to compel a change in the rules governing the tax 
exemption accorded to private hospitals that were 
claimed to have injured the plaintiffs. Thus, Eastern 
Kentucky is squarely in point because both suits 
sought a change in governmental conduct. If there is 
any difference between the two cases, it is, as we have 
pointed out {supra, pages 6, 8, 13), that respondents 
have not even asserted any injury at the hands of 
the Treasury or any private school— a fact that the 
court of appeals conceded in stating that respond­
ents “ do not allege that any particular school turns 
away students on the basis of race” (Interv. Pet. 
App. B 22b n.27). Thus, respondents’ suit is even 
further removed from meeting the prerequisites of 
standing than the plaintiffs’ claim dismissed by this 
Court in Eastern Kentucky.

There is, moreover, no basis for the court of 
appeals’ conclusion that “ the standing analysis 
should remain unaffected so long as plaintiffs have 
a right to demand that their government ‘steer clear’ 
of aiding discrimination in local educational facilities 
and contend, as plaintiffs do here, that current gov-



15

eminent (IRS) practice does not meet the “ steer 
clear’ standard” (Interv. Pet. App. B 22b n.27). 
Respondents’ asserted right to be free of government 
aid to racial discrimination is an undifferentiated 
right common to all members of the public that will 
not support standing to sue Treasury officials in an 
Article III court. See United States v. Richardson, 
418 U.S. 166, 176-180 (1974). The fact that re­
spondents may have an interest in a matter that they 
have sought to identify as a public issue, and that 
they may share certain attributes common to per­
sons who may have suffered discrimination at the 
hands of private schools, is an insufficient ground 
upon which to conclude that they have been injured 
in fact by such discrimination or that the Secre­
tary’s allegedly illegal conduct has actually caused 
such discrimination. Wafth v. Seldin, supra, 422 
U.S. at 502. In short, respondents are “ individuals 
who seek to do no more than vindicate their own 
value preference through the judicial process.” 
Sierra Club v. Morton, 405 U.S. 727, 740 (1972). 
See also O'Shea v. Littleton, 414 U.S. 488, 493-496 
(1974); Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 
166-168, 171, 178 (i972).

c. In refusing to follow Eastern Kentucky, the 
court of appeals declined to “ search for a grand 
solution that will unclutter this area of the law and 
lead to secure, evenhanded adjudication” (Interv. Pet. 
App. B 16b). Rather, it “ select[ed] from two diver­
gent lines of Supreme Court decision [s] the one [it] 
believe[dj best fit[] the case before [ it ]” and con­
cluded that there was precedent to support the prop­
osition that “black citizens have standing to com­
plain against government action alleged to give aid 
or comfort to private schools practicing race dserim- 
ination in their communities” (ibid.).



16

But the iaw of standing does not turn upon the 
racial characteristics of the plaintiff or the substan­
tive issues raised by the complaint. “ Unlike other 
associated doctrines, for example, that which re­
strains federal courts from deciding political ques­
tions, standing ‘focuses on the party seeking to get 
his complaint before a federal court and not on the 
issues he wishes to have adjudicated.’ ” Simon v. 
Eastern Ky. Welfare Rights Organization, supra, 426 
U.S, at 37-38, quoting from Flast v. Cohen, 392 U.S. 
83, 99 (1968). See also Wairth v. Seldin, supra, 422 
U.S. at 517-518; Schlesinger v. Reservists to Stop the 
War, 418 U.S. 208, 225-227 (1974). Hence, re­
spondents are subject to precisely the same require­
ment as any other plaintiff and therefore must allege 
“ ‘such a personal stake in the outcome of the contro­
versy as to warrant [their] invocation of federal- 
court jurisdiction and to justify exercise of the 
court’s remedial powers on [their] behalf’ ” . Worth 
v. Seldin, supra, 422 U.S. at 498-499, quoting from 
Baker v. Carr, 369 U.S. 186, 204 (1962).

There are, moreover, no “ divergent lines of Su­
preme Court decision” (Interv. Pet. App. B 16b), as 
the court of appeals mistakenly believed, that 
“ point] ] in opposite directions” {id. at 15b-16b), 
or that cast doubt upon the standing analysis of 
Eastern Kentucky. In proposing its novel hypothesis 
that black citizens can more easily invoke federal- 
court jurisdiction to remedy alleged governmental 
aid to private discrimination without demonstrating 
injury and a nexus between injury and the defend­
ant’s conduct, the decision below relied on Green v. 
Kennedy, 309 F. Supp. 1127 (1970), continued, 330 
F. Supp. 1150 (D.D.C.), aff’d, 404 U.S. 997 (1971);



17

Norwood v. Harrison, 418 U.S. 455 (1973); and 
Gilmore v. City of Montgomery, 417 U.S. 556 (1974).

But none of those cases warrant, much less dictate, 
the conclusion that respondents have standing to 
bring this suit. Neither the Court’s summary affirm­
ance in Green nor its opinion in Norwood v. Har­
rison addressed the standing of the plaintiffs in those 
cases. Indeed, unlike this case where the respond­
ents’ quarrel with the Internal Revenue Service is 
over the effectiveness of its enforcement proceedures 
rather than its substantive position,7 the Green litiga­
tion was initiated to obtain a ruling that racially 
discriminatory schools were not entitled to tax 
exemption under Section 5 0 1 (c )(3 ). There, the 
plaintiffs identified in their complaint specific private 
schools in their communities “ from which Negro stu­
dents [were] excluded on the basis of color” (Interv. 
Pet. App. B 4b). Moreover, because the Service 
adopted the complainants’ position in the midst of the 
litigation, “ the Court’s affirmance in Green lacks the 
precedential weight of a case involving a truly ad­
versary controversy.” Bob Jones University v. Simon, 
416 U.S. 725, 740 m il (1974).8

Norwood v. Harrison, supra, is similarly inap­
posite on the question of standing. There, the Court

7 We are advised that the Internal Revenue Service has 
revoked the tax exemption of more than 100 private schools 
that have failed to adopt and publicize racially nondiscrimina- 
tory policies.

8 The appeal in Green was taken by intervenors appealing 
from an order denying their motion to set aside the district 
court’s previous order. The intervenors sought to vindicate 
their asserted right to freedom of association. See Motion 
to Dismiss or Affirm, Coit V. Green (No. 820, 1970 Term).



18

struck down, a state program under which students 
borrowed textbooks without regard to- whether the 
students attended private schools with racially dis­
criminatory policies. As the Court subsequently ex­
plained in Gilmore v. City o f Montgomery, 417 U.S. 
556, 570-571 n.10 (1974), “ [t]he plaintiffs in Nor­
wood were parties to a school desegregation order and 
the relief they sought was directly related to the con­
crete injury they suffered.”

The same observation is equally applicable to Gil­
more, which was related to a prior class action to 
desegregate public parks and recreational facilities. 
Indeed, contrary to the decision below, the Court’s 
discussion of standing in Gilmore fully supports our 
submission that all plaintiffs must meet the tradi­
tional requisites of standing to invoke _ federal-court 
jurisdiction. As the Court stated, “ [w] itliout a prop­
erly developed record, it is not clear that every non­
exclusive use of city facilities by school groups, un­
like their exclusive use, would result in cognizable 
injury to these plaintiffs. The District Court does not 
have carte blanche authority to administer city facili­
ties simply because there is past or present discrim­
ination. The usual prudential tenets limiting the 
exercise of judicial power must be observed in this 
case as in any other (ibid.).” See also Warth v. Sel- 
din, supra.

2. a. The broad authority that Congress has given 
the Secretary of the Treasury and the Commissioner 
of Internal Revenue over the administration of the 
tax laws shows that it did not intend the courts to 
entertain suits of this kind. To adjudicate respond­
ents’ generalized claims, a broad-scale inquiry into 
the enforcement practices of the Internal Revenue 
Service, as well as into the racial policies of an in­
definite number of private schools, would be re­



19

quired.” The role respondents would assume and 
have the court assume, “ as virtually continuing moni­
tors of the wisdom and soundness of Executive ac­
tion,” Laird v. Tatum, 408 U.S. 1, 15 (1972), be­
longs to Congress in the exercise of its oversight 
function over the operation, administration, and 
effects of the internal revenue system (see Sections 
8021 through 8023 of the Internal Revenue Code of 
1954) and to the President, who, along with the 
Treasury officials, is required to “ take Care that the 
Laws be faithfully executed.” United States Consti­
tution, Article II, Section 3; 26 U.S.C. 7801(a), 
7805(a). Absent an assertion of concrete and reme­
diable injury directly attributable to unlawful gov­
ernment action, the judiciary should not assume the 
“ amorphous [task of] general supervision of the 
operations of government * * United States v. 
Richardson, supra,, 418 U.S. at 192 (Powell, J., con­
curring) ; Schlesinger v. Reservists to Stop the War, 
418 U.S. 208, 217-223 (1974).

Indeed, the structure for the adjudication of tax 
disputes shows that Congress established precisely 
defined channels for the conduct of the litigation that 
do not permit third parties such as respondents to 
challenge the tax treatment of others. The federal 
district courts and the Court of Claims have jurisdic­
tion over actions by the affected taxpayer for re­
funds of taxes paid. 26 U.S.C. 6532, 7422; 28 U.S.C. 
1346, 1491. And the Tax Court has been granted 
jurisdiction to review deficiency determinations with 
respect to income, estate, or gift tax, at the behest 9

9 We are advised by the Internal Revenue Service that there 
are approximately 20,000 private schools in the United States 
currently recognized as, or claiming to be, tax-exempt under 
Section 501(c) (3) of the Internal Revenue Code.



20

of the affected taxpayer. 26 U.S.C. 6212, 6213. In 
order to confine tax litigation to these prescribed 
avenues of review, Congress has generally prohibited 
“ any person, whether or not such person is the person 
against whom such tax was assessed,”  from main­
taining a “ suit for the purpose of restraining the 
assessment or collection of any tax” (26 U.S.C 7421 
(a ), the Anti-Injunction Act) and has prohibited 
declaratory relief in all actions “with respect to 
Federal taxes” (28 U.S.C. 2201). This Court has 
repeatedly required that those and other limitations 
on the channels of tax litigation be strictly enforced 
so as to accomplish their intended purpose. Louisi­
ana v. McAdoo, 234 U.S. 627 (1914); Bob Jones 
University v. Simon, 416 U.S. 725 (1974); Enochs 
v. Williams Packing Co., 370 U.S. 1 (1962); Flora 
v. United States, 362 U.S. 145 (1960); Angelus 
Milling Co. v. Commissioner, 325 U.S. 293 (1945); 
United States v. Felt & Tarrant Co., 283 U.S. 269 
(1931). Moreover, Congress has recently confirmed 
that the prohibitions against equity suits against the 
Treasury in tax matters remain fully operative in 
suits for review7 of agency action. S. Rep. No. 94- 
996, 94th Cong., 2d Sess. (1976); H.R. Rep. No. 94- 
1656, 94th Cong., 2d Sess. 12-13 (1976). In sum, the 
structure of our tax system confirms the correctness 
of Justice Stewart’s observation that he “cannot now 
imagine a case, at least outside the First Amendment 
area, where a person whose own tax liability was 
not affected ever could have standing to litigate the 
tax liability of someone else.”  Simon v. Eastern Ky. 
Welfare Rights Organization, supra, 426 U.S. at 46 
(Stewart, J., concurring).

b. Of course, we do not suggest that policies of 
the Internal Revenue Service should be immune from 
public inquiry and examination. The broad tax



21

policy questions raised by respondents’ suit are prop­
erly a matter for public debate. However, the ap­
propriate forum for such a debate concerning the 
correctness of Treasury policy is in the Congress 
pursuant to the exercise of its oversight of the De­
partment of the Treasury and not in the courts, 
“Any other conclusion would mean that the Found­
ing Fathers intended to set up something in the na­
ture 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,” 
United States v. Richardson, supra, 418 U.S, at 179.

Indeed, public debate has recently been taking 
place in Congress over the Treasury’s enforcement 
policies in the area o f tax exemptions of private 
schools, thereby confirming our submission that re­
spondents’ suit is not appropriate for judicial resolu­
tion. The Internal Revenue Service has already 
sought to supplement its existing procedures for 
testing the bona fides of the racial policies of private 
schools by proposing to treat as prima facie discrim­
inatory schools formed in the wake of desegregation 
decrees or adjudicated in the past to be discrimina­
tory (Interv. Pet. App. F lf-13 f; Pet App. G Ig- 
14g). Had they been adopted, those proposals appar­
ently would have gone far toward meeting respond­
ents’ objections to the current procedures. They pro­
voked, however, a large volume of adverse testimony 
before the Internal Revenue Service and Congress, 
See Tax Exempt Status of Private Schools: Hear­
ings Before the Subcomm. on Oversight of the House 
Comm, on Ways and Means, 96th Cong., 1st Sess. 
(1979). In the wake of the hearings, the House 
Committee on Appropriations recommended that 
adoption of the Internal Revenue Service’s proposals 
be deferred until after the regular taxwriting com­



22

mittees of Congress had determined that they rep­
resented a proper interpretation of the tax laws. 
H.R. Rep. No. 96-248, 96th Cong., 1st Sess. 14-15 
(1979). By means of the so-called Ashbrook and 
Doman Amendments to the 1980 Treasury Appro­
priations Act, Congress prohibited the Treasury, for 
fiscal year 1980, from expending funds to carry out 
any private school procedure, standard, or guide­
lines more preclusive than those in effect before 
August 22, 1978, the date of issuance of the first of 
the proposed procedures. Sections 103 and 615, 
Treasury, Postal Service, and General Government 
Appropriations Act, 1980, Pub. L. No. 96-74, 93 
Stat. 562, 576.10

Congress has continued to exercise its oversight 
authority in this area. After the court of appeals 
rendered its opinion in this case, in which it observed 
that the Ashbrook-Doman restrictions then in effect 
did not purport to control court orders (Interv. Pet. 
App. B 30b), the House of Representatives added to 
the 1982 Treasury Appropriations bill a spending 
restriction that would specifically encompass court 
orders entered after August 22, 1978.11 See 127

10 The Ashbrook-Dornan Amendment expired on October 1, 
1980, the end of the 1980 fiscal year, but was reinstated for 
the period December 16, 1980, through the close of the 1981 
fiscal year, by Sections 101(a )(1 ) and 1 01 (a )(4 ), H.R. J. 
Res., 644 of Dec. 16, 1980, Pub. L. No. 96-536, 94 Stat. 3166, 
as amended by Section 401, Supplemental Appropriations and 
Rescission Act, 1981, Pub. L. No. 97-12, 95 Stat. 95.

11 The House voted to modify the 1980 Ashbrook amend­
ment by inserting the phrase “court order” to an amendment 
to the Treasury, Postal Service, and General Government Ap­
propriations Bill, 1982 (H.R. 4121, 97th Cong., 1st Sess. 
(1981)). The bill, which has yet to pass both Houses, thus 
provides in Section 616:

None of the funds made available pursuant to the provi­
sions of this Act shall be used to formulate or carry out



23

Cong. Rec. H5392-H5398 (daily ed. July 30, 1981). 
The Senate Committee on Appropriations subse­
quently reported out a spending restriction in iden­
tical form. Under a joint resolution making continu­
ing appropriations for the current fiscal year, this 
provision became effective as of October 1, 1981, at 
least through November 20, 1981. Section 101(a) 
(3), H.R. J. Res. 325, Pub. L. No. 97-51, 95 Stat. 958, 
signed Oct. 1, 1981; see 127 Cong. Rec. H6698- 
H6699, H6702 (daily ed. Sept. 30, 1981).12 These 
actions by Congress suggest that it is the ap­
propriate forum for the resolution of respondents’ 
quarrel with the Treasury and reinforce the wisdom 
of “ the basic principle that to invoke judicial power 
the claimant must have ‘a personal stake in the out­
come,’ * * *, or a ‘particular, concrete injury’ or 
‘a direct injury,’ * * * in short, something more than 
‘generalized grievances’ * * *”  (citations omitted) 
United States v. Richardson, supra, 418 U.S. at 179- 
180.

any rule, policy, procedure, guideline, regulation, stand­
ard, court order, or measure which would cause the loss 
of tax-exempt status to private, religious, or church- 
operated schools under Section 501 (c) (3) of the Internal 
Revenue Code of 1954 unless in effect prior to August 22, 
1978.

12 Those congressional restrictions are prospective in opera­
tion and therefore do not impair the Commissioner’s right to 
use his existing guidelines and procedures established prior 
to August 22, 1978 ( e . g Rev. Proc. 75-50, 1975-2 Cum. Bull. 
587), to deny tax benefits to schools not operating under a 
bona fide nondiscriminatory policy. See Bob Jones University 
v. United States, 639 F.2d 147, 150, n.3 (4th Cir. 1981), cert, 
granted, No. 81-3 (Oct. 13, 1981). See also Interv. Pet. App. 
B 26b & n.35, 27b-28b, n.40).



24

CONCLUSION

The petition for a writ of certiorari should be 
granted.

Respectfully submitted.

November 1981

Rex E. Lee
Solicitor General

John F. Murray
Acting Assistant Attorney General

Stuart A. Smith 
Assistant to the Solicitor General

Michael L. Paup 
Ernest J. Brown 
Robert S. Pomerance 

Attorneys



la

APPENDIX

Constitution of the United States of America 
Article III.

* * * *

Section 2. The judicial Power shall extend to all 
Cases, in Law and Equity, arising under this Con­
stitution, the Laws of the United States, and 
Treaties made, or which shall be made, under their 
Authority;— to all Cases affecting Ambassadors, 
other public Ministers and Consuls ;— to all Cases of 
admiralty and maritime Jurisdiction;— to Contro­
versies to which the United States shall be a Party;—  
to Controversies between two or more States;— be­
tween a State and Citizens of another State;— be­
tween Citizens of different States,— between Citizens 
of the same State claiming Lands under Grants of 
different States, and between a State, or the Citizens 
thereof, and foreign States, Citizens or Subjects. 

* * * * *
Internal Revenue Code of 1954 (26 U .S .C .):

Section 170 C h a r it a b l e , e t c ., Co n tr ib u tio n s  
a n d  G if t s .

(a) Allowance of Deduction.—

(1) General rule.— There shall be al­
lowed as a deduction any charitable con­
tribution (as defined in subsection ( c ) ) pay­
ment of which is made within the taxable 
year. A charitable contribution shall be al­
lowable as a deduction only if  verified under 
regulations prescribed by the Secretary or 
his delegate.

* * * * *



2a

(c) [as amended by Section 201, Tax Re­
form Act of 1969, Pub. L. No. 91-172, 83 Stat. 
487] Charitable Contribution Defined,— For pur­
poses of this section, the term “ charitable con­
tribution” means a contribution or gift to or for 
the use of—

(2) A  corporation, trust, or commu­
nity chest, fund, or foundation—

(A ) created or organized in the 
United States or in any possession 
thereof, or under the law of the United 
States, any State, the District of Co­
lumbia, or any possession of the United 
States;

(B ) organized and operated ex­
clusively for religious, charitable, sci­
entific, literary, or educational pur­
poses, or to foster national or interna­
tional amateur sports competition (but 
only if  no part of its activities involve 
the provision of athletic facilities or 
equipment) or for the prevention of 
cruelty to children or animals;

(C) no part of the net earnings of 
which inures to the benefit of any pri­
vate shareholder or individual; and

(D ) which is not disqualified for 
tax exemption under section 501(c) (3) 
by reason of attempting to influence 
legislation, and which does not parti­
cipate in, or intervene in (including 
the publishing or distributing of state­
ments), any political campaign on be­
half of any candidate for public office.



3a

A contribution or gift by a corporation to 
a trust, chest, fund, or foundation shall be 
deductible by reason of this paragraph only 
if it is to be used within the United States 
or any of its possessions exclusively for 
purposes specified in subparagraph (B) .

^  a(i

☆ GOVERNMENT PRINTING OFFICE; 1 9 8 1 3 5 8 3 0 6  6 9 6