AMERICAN SOC. OF TRAVEL AGENTS, v. BLUMENTHAL, 566 F.2d 145 (D.C. Cir. 1977)

AMERICAN SOCIETY OF TRAVEL AGENTS, INC., ET AL., APPELLANTS, v. MICHAEL BLUMENTHAL, SECRETARY OF TREASURY, ET AL.

No. 75-1782.United States Court of Appeals, District of Columbia Circuit.Argued October 20, 1976.
Decided September 15, 1977. Rehearing Denied November 1, 1977.

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Thomas J. Bacas, Washington, D.C., with whom Paul S. Quinn, Washington, D.C., was on the brief, for appellants.

Leonard J. Henzke, Jr., Atty., Tax Div., Dept. of Justice, Washington, D.C., with whom Scott P. Crampton, Asst. Atty. Gen., Earl J. Silbert, U.S. Atty., and Ann B. Durney, Atty., Tax Div., Dept. of Justice, Washington, D.C., were on the brief, for appellees.

Appeal from the United States District Court for the District of Columbia (D.C. Civil 74-1081).

Before BAZELON, Chief Judge, and McGOWAN and ROBB, Circuit Judges.

Opinion for the court filed by McGOWAN, Circuit Judge.

Dissenting opinion filed by BAZELON,[*] Chief Judge.

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McGOWAN, Circuit Judge:

[1] This is an appeal from the District Court’s dismissal of a complaint challenging the administration of the federal tax laws, not in relation to the tax liabilities of plaintiffs-appellants, but as to third parties not before the court. It thus presents a threshold issue of standing to sue reminiscent of Justice Stewart’s observation, concurring in Simon v. Eastern Kentucky Welfare Rights Organization, et al., 426 U.S. 26, 46, 96 S.Ct. 1917, 1928, 48 L.Ed.2d 450 (1975), that he could not “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 federal tax liability of someone else.” Becaus Eastern Kentucky — an obviously relevant case — was pending before the Supreme Court at the time this appeal was first scheduled for oral argument, we deferred our consideration to await the Supreme Court’s outcome. We now hold, by reference to the Supreme Court’s disposition of Eastern Kentucky, that there was a fatal want of standing here; and we affirm the District Court’s judgment for that reason.

I
[2] Appellants, the American Society of Travel Agents (ASTA) and several individual travel agencies, complain of the failure of the federal tax authorities to assess taxes upon certain income received by the American Jewish Congress (AJC) and other organizations enjoying tax exemptions under § 501(c)(3) of the Internal Revenue Code.[1] In particular, they object to the tax-exempt treatment accorded to income derived from the operation of travel programs by § 501(c)(3) organizations. Appellants assert that such income should be taxed as so-called unrelated business income, i.e., income obtained from a business the conduct of which is “not substantially related . . . to the exercise of performance . . . [of the] purpose or function constituting the basis” for an organization’s § 501 exemption See I.R.C. § 513(a). Alternatively, appellants contend that the AJC and other exempt organizations have become so heavily involved in the travel business that their § 501(c)(3) exemptions should be eliminated altogether.

[3] By memorandum order, the District Court decided that neither count of appellants’ complaint stated a claim upon which relief could be granted. 36 A.F.T.R.2d 75-5142 (D.D.C. May 23, 1975). It observed that allegations like those raised by plaintiffs would necessitate “careful consideration of the particular facts and circumstances of each case.” Unwilling to embark upon such an enterprise, the court declared that its jurisdiction could “not be invoked to undertake continuing supervision of IRS’s administration of the Internal Revenue Code.”

[4] The District Court’s reluctance to become embroiled, at the instance of taxpayers not directly involved, in the intricacies of tax law enforcement is both understandable and far from irrational in terms of jurisdictional principles. However, we believe that, looking to the Supreme Court’s opinion in Eastern Kentucky, dismissal of appellant’s action should be accomplished by resolution of the preliminary question of standing. We conclude that appellants

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have failed to demonstrate any actual injury resulting from appellees’ administration, with respect to third parties, of the statutory provisions governing tax-exempt organizations. We find that appellants here, like the complaints in Eastern Kentucky,
“have failed to carry [the] burden” of establishing “that, in fact, the asserted injury was the consequence of the defendants’ actions, or that prospective relief will remove the harm.”426 U.S. at 45, 96 S.Ct. at 1927, quoting Warth v. Seldin, 422 U.S. 490, 505, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

II
[5] Appellants’ basic grievance may be simply stated. Private travel agents earn their livelihood, primarily on a commission basis, through the sale of transportation and travel-related services in both domestic and foreign markets. One especially common function performed by travel agents is the arrangement of so-called tour packages, consisting of transportation, accommodations, meals, and a variety of other features. Such packages are sold together at one price, a portion of which the agent retains as a commission.

[6] Appellants allege that, in recent years, a number of tax-exempt organizations, including the AJC, have become increasingly involved in preparing tour packages and offering such packages to their members. Appellants further allege that the tax-exempt status of these organizations has enabled them to sell tour packages at prices lower than those which private travel agents must charge in order to earn a reasonable profit. Thus, so it is said, the AJC and other unspecified organizations have improperly used their tax exemptions to obtain an unfair competitive advantage in the sale of tour packages.

[7] Operation of an extensive travel program is, in appellants’ view, substantially unrelated to the religious, charitable, scientific, or educational purposes which justify many § 501(c)(3) exemptions, including that enjoyed by the AJC. Consequently, appellants urge that income from such a travel program should be subjected to the same tax treatment accorded to income earned by ordinary ASTA members. Somewhat less vigorously, appellants maintain that if the § 501(c)(3) organizations at issue conduct travel businesses of significant size, then those organizations are no longer operated “exclusively” for religious, charitable, scientific, or educational purposes, and thereby forfeit their § 501(c)(3) exemptions.

[8] We do not reach the merits, because we believe appellants have not alleged any judicially cognizable “injury in fact,” and thus have failed to establish their standing to bring this suit. “Injury in fact” has long been regarded as the foremost standing prerequisite, and the only one of constitutional dimension. See, e.g., United States v. SCRAP, 412 U.S. 669, 686-89 n. 14, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973); Sierra Club v. Morton, 405 U.S. 727, 733, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972), and Flast v. Cohen, 392 U.S. 83, 99-101, 88 S.Ct. 1942, 20 L.Ed.2d 947
(1968). Under Article III of the Constitution, federal courts are limited to the adjudication of cases and controversies. In order to guarantee the adversarial litigation posture demanded by this constitutional language, plaintiffs seeking to invoke federal court jurisdiction have been required to demonstrate that they have suffered some actual injury attributable to defendants.

[9] Here, appellants claim to have been injured by appellees’ improper administration of the Internal Revenue Code, and seek injunctive relief. However, appellants have not indicated with sufficient specificity either the manner in which their alleged injury occurred or the nature of that injury. Appellants point to no prospective customers who spurned the services of ASTA members because of appellees’ allegedly inequitable tax treatment of § 501(c)(3) organizations. Nor do appellants identify tour package purchasers who in fact patronized the AJC or some other tax-exempt organization, but who might legitimately be expected to do business with a private travel agent in the event appellees enforced the relevant tax code provisions according to appellants’ recommendations. Instead, appellants

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complain in more abstract terms, alleging injury arising from appellees’ creation of an unfair competitive atmosphere, and seeking relief in the form of the more congenial competitive environment which would supposedly result from proper tax enforcement policy. We regard this sort of injury claim as too speculative to support standing under the circumstances presented here.

[10] We conceive that this disposition is not only sustained, but also largely mandated, by Eastern Kentucky. In that case, several indigents and organizations composed of indigents attacked a 1969 Revenue Ruling which revised the criteria under which nonprofit hospitals might qualify for tax-exempt status as charitable institutions. In particular, the challenged ruling eliminated the requirement contained in a 1956 ruling to the effect that a non-profit hospital desirous of charitable classification “must be operated to the extent of its financial ability for those not able to pay for the services rendered.” Deletion of this language, argued the Eastern Kentucky
plaintiffs, was directly responsible for several refusals by tax-exempt hospitals to provide needed services to individuals unable to pay a deposit or advance fee. Plaintiffs further alleged that similar refusals could be expected in the future if the offending Revenue Ruling was not changed.

[11] As indicated above, the Supreme Court held that “[s]peculative inferences are necessary to connect [plaintiffs’] injury to the challenged actions . . .,” and “[m]oreover, the complaint suggests no substantial likelihood that victory in this suit would result” in receipt of the hospital treatment desired. 426 U.S. at 45-46, 96 S.Ct. at 1927-1928. The Court explained its conclusion by commenting upon what it perceived as the tenuous connection between the injury suffered and the relief sought by plaintiffs:

[I]t does not follow . . . that the denial of access to hospital services in fact results from petitioners’ new Ruling, or that a court-ordered return by petitioners to their previous policy would result in these respondents’ receiving the hospital services they desire. It is purely speculative whether the denials of service specified in the complaint fairly can be traced to petitioners’ “encouragement” or instead result from decisions made by the hospitals without regard to the tax implications.
It is equally speculative whether the desired exercise of the court’s remedial powers in this suit would result in the availability to respondents of such services. So far as the complaint sheds light, it is just as plausible that the hospitals to which respondents may apply for service would elect to forego favorable tax treatment to avoid the undetermined financial drain of an increase in the level of uncompensated services.[2]

[12] Id. at 42-43, 96 S.Ct. at 1926.

[13] ASTA’s complaint in the appeal before us reveals inadequacies closely comparable

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to those which afflicted the pleadings filed by the indigents and indigent organizations in Eastern Kentucky. Appellants here must rely solely on speculation in their attempt to assert that their business or profits would improve in the event that appellees began to tax the travel-related income of § 501(c)(3) organizations. Appellants have not demonstrated that they would reap any tangible benefit if the court were to order the relief sought.

[14] As appellees argue in their supplemental memorandum, the lower cost of the tour packages offered by the AJC and other tax-exempt organizations may well be attributable at least in significant part to the use of volunteer labor or the willingness to accept lower profits than would commercial travel agents. Moreover, even if appellants were to prevail in this suit, members of § 501(c)(3) organizations might for a variety of reasons continue to prefer the travel programs operated by their own organizations. Alternately, such organizations might shift to tour packages whose religious or educational orientation would be more readily apparent. A third possibility is that travel by members of § 501(c)(3) organizations would simply decline.

[15] If any of these consequences, or some combination of them, ensued from a decision favorable to appellants, private travel agents would enjoy no gain whatever from their successful litigation. This is precisely the sort of situation in which the Supreme Court failed to find standing in Eastern Kentucky.[3]

[16] By emphasizing their asserted competitor status, appellants seek to distinguish Eastern Kentucky. Appellants contend that, as competitors of the AJC and certain other § 501(c)(3) organizations, they are entitled to protest tax treatment of such organizations in federal court.[4] For support of their position, appellants rely heavily on Association of Data Processing Organizations, Inc. v. Camp, 397 U.S. 150,

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90 S.Ct. 827, 25 L.Ed.2d 184 (1970). In that case, the Court held that private competitors had standing to challenge a ruling by the Comptroller of the Currency which allowed national banks to provide data processing services to other banks and bank customers. Appellants emphasize that the Supreme Court has, in its Eastern Kentucky opinion, recently reaffirmed the vitality of the Data Processing decision. See 426 U.S. at 45 n. 25, 96 S.Ct. 1917.

[17] Our response is threefold. First, the rather cryptic phrasing of Data Processing does not clearly define the contours of competitor standing as conceived by the Supreme Court. The opinion by Justice Douglas for the Court provides little guidance as to the precise nature of the requirements which must be satisfied before competitor standing can be sustained.[5]

[18] Secondly, and more significantly, Data Processing was not a tax case. Whatever may be the impact of competitor standing when ordinary administrative action is at issue, we do not believe that Data Processing should be read to endorse standing for any private business, individual or corporate, which wishes to contest the tax treatment of a competitor.

[19] Finally, § 501(c)(3) organizations occupy a different posture with respect to the sale of tour packages than did the national banks with respect to the provision of data processing services. Here, the AJC and other such groups will clearly remain free to pursue their travel businesses, however the tax status is finally resolved. By contrast, in Data Processing, if the Comptroller of the Currency’s ruling had been overturned on judicial review, the offering of data processing services by national banks would have been illegal, and petitioners undoubtedly would have faced no further competition from that source, absent statutory revision.

[20] For all these reasons, we do not believe that the Data Processing decision controls the standing issue in the present litigation.[6] Since we are convinced that the Eastern Kentucky analysis of standing is the one we are bound to apply in this case, and that under it appellants lacked standing to maintain this suit, the judgment of dismissal is affirmed.[7]

[21] It is so ordered.

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[22] BAZELON, Chief Judge, dissenting in No. 75-1304, Tax Analysts and Advocates v. Blumenthal, 184 U.S.App.D.C. ___, 566 F.2d 130, and in No. 75-1782, American Society of Travel Agents, Inc. v. Blumenthal.

[23] Two panels of the Court hold, for partially inconsistent reasons, that a taxpayer suffering competitive injury lacks standing to challenge tax rulings applicable to a third party. Because I disagree with the reasoning of both panels, I must respectfully dissent.

[24] I have decided to write a common dissent on both decisions because I believe that, although each panel develops a different aspect of standing doctrine, both are in fact responding to a common but implicit apprehension of taxpayer standing.[1] I share that apprehension. The spectre of the Internal Revenue Service (IRS) defending a multiplicity of suits challenging the tax liabilities of third parties is not a happy one.[2] Taxes and courts are a volatile political combination; our jurisdiction in this area has for that reason been circumscribed by statute.[3]

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But whether a federal forum should be closed to such suits is a profound and complicated issue, and at base one that should be decided by Congress. At present Congress has decided that we do have jurisdiction to hear cases such as those presently before us,[4] and we are obligated to exercise this statutory jurisdiction.

[25] Appellants have alleged circumstances that would have justified standing had they been seeking review of an ordinary administrative ruling. What concerns me most deeply about these decisions is that both deny appellants standing not on principles specifically applicable to taxpayers suits, but on the basis of general doctrines of the law of standing. The consequence is that general standing law is distorted to accommodate the purpose of shielding the IRS.

[26] In No. 75-1782, American Society of Travel Agents, Inc. v. Blumenthal, appellants, numerous commercial travel agencies and the American Society of Travel Agents (ASTA), a non-profit corporation organized to represent the professional interests of travel agents, allege that certain organizations tax exempt under 26 U.S.C. § 501(c)(3),[5] and the American Jewish Congress (AJC) in particular, actually package and offer to the public large scale commercial travel programs. Appellants argue that such commercial activities are illegal in corporations exempt under § 501(c)(3),[6] and that appellants are injured by this illegality since tax-exempt organizations can offer travel programs more cheaply than taxpaying organizations.[7] They ask that the AJC and similar organizations be deprived of their tax-exempt status, or, in the alternative, that income from these commercial programs be taxed under 26 U.S.C. § 511(a).[8] The majority holds that appellants fail to meet the Article III requirement of

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injury in fact. Because I believe that appellants have alleged ordinary competitive injury sufficient to meet the standards set out in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184
(1970), I dissent from this holding.

[27] In No. 75-1304, Tax Analysts and Advocates v. Blumenthal,
___ U.S.App.D.C ___, 566 F.2d 130, the majority denies standing to appellant Tax Analysts and Advocates (TAA), a non-profit corporation organized for the purpose of promoting tax reform, and to appellant Thomas Field, a United States taxpayer and owner of the entire working interest in a currently producing oil well in Pennsylvania. Appellants seek to challenge published[9] and private[10] rulings by the IRS that taxes imposed by Saudi Arabia, Libya, Iran, Kuwait and Venezuela are “income” taxes, and thus can be credited against U.S. tax liability under 26 U.S.C. § 901(b).[11] Appellants allege that these taxes are in fact either royalties or “excise, severance, or similar taxes not creditable under Section 901(b).”[12]

[28] Appellant Field and appellant TAA as a representative of its taxpaying members, claim injury as taxpayers. They allege that the illegal IRS rulings cost the U.S. Treasury approximately $3,000,000,000 in 1974, and argue that this loss causes them to pay higher federal income taxes.[13] Appellant Field, in addition, claims that he is injured as a competitor of those oil companies who benefit from the illegal IRS rulings. Field alleges that since the prices charged by these companies for imported oil largely determine the market price for the uncontrolled crude oil of domestic independent producers, he receives a lower price for his oil than would be the case if such companies could only deduct these foreign taxes from their gross income rather than illegally credit them.[14] Moreover, since domestic producers can only deduct the royalties they pay to the land owners of their oil wells,[15] Field claims that investment in foreign oil production is relatively more profitable and attractive. Field alleges that the IRS ruling thus “depress the value of his operating interest in a domestic oil well.”[16]

[29] The majority denies standing to both Field and the TAA in their capacities as mere taxpayers.[17] Because as taxpayers appellants have not met the “nexus” text of Flast v. Cohen, 392 U.S. 83, 102-03, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968),[18] and have alleged only a “generalized grievance” the impact of which “is plainly undifferentiated and `common to all members of the public . . .’ Ex parte Levitt, 302 U.S. 633,

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634, [58 S.Ct. 1, 82 L.Ed. 493] (1937)”,[19] I concur in that holding.[20]

[30] The majority also denies appellant Field standing. It concedes that Field has suffered injury in fact sufficient to meet Article III standards,[21] yet it finds that Field has failed the second of the standing tests enunciated in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). It concludes that the interests Field seeks to protect are not “arguably within the zone of interests to be protected or regulated” by § 901(b). In reaching this conclusion the majority is forced to construe the “zone of interests” test in an unsupportable manner, capable of causing unforeseeable mischief in other areas of standing law. I dissent both from the majority’s conclusion and from its construction.

[31] I. INJURY IN FACT
[32] Article III of the Constitution limits federal court jurisdiction to actual cases or controversies. The question of standing “focuses on the party seeking to get his complaint before a federal court”, Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968), in order to determine if he “has made out a `case or controversy’ between himself and the defendant within the meaning of Art. III.” Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). Two aspects of the case and controversy standard are important for the law of standing. The first is that cases and controversies must be adversary; that is, they must be disputes over actual or threatened injuries. Thus standing exists “only when the plaintiff himself has suffered `some threatened or actual injury resulting from the putatively illegal action . . ..’ Linda R. S. v. Richard D., 410 U.S. 614, 617, [93 S.Ct. 1146, 1148, 35 L.Ed.2d 536] (1973).” Id. at 499, 95 S.Ct. at 2205. Second, cases and controversies must “be presented in an adversary context and in a form historically viewed as capable of judicial resolution.” Flast v. Cohen, 392 U.S. 83, 101, 88 S.Ct. 1942, 1953, 20 L.Ed.2d 947 (1968). Thus federal courts cannot, consistent with Article III, issue advisory opinions. Id. at 96-97, 88 S.Ct. 1942. Standing requires that a plaintiff demonstrate “an injury to himself that he is likely to be redressed by a favorable decision. Absent such a showing, exercise of its power by a federal court would be gratuitous and thus inconsistent with the Art. III limitation.” Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976).[22] Eastern Kentucky makes clear that an injury capable of being redressed is one that can fairly “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.” Id. at 41-42,[23] 96 S.Ct. at 1926.

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[33] It is, of course, settled law that in appropriate circumstances competitive injury constitutes sufficient injury in fact to fulfill Article III requirements.[24] This is acknowledged by the opinion in Tax Analysts.[25] In that case appellant Field owns the entire working interest in a Pennsylvania oil well. The well produces three barrels of crude oil per month at a price of $10.28 per barrel. Field’s anticipated profits before taxes are approximately $203.76 per year.[26] He complains of economic injury because allegedly illegal IRS rulings have decreased the value of his well and the price he receives for his crude oil.

[34] At first blush it is tempting to hold such economic injury, if it exists, to be de minimis. However, it is apparent that there can be no principled justification for such a holding, and the Supreme Court has held that any identifiable trifle of harm is enough to establish standing. United States v. SCRAP, 412 U.S. 669, 689 n. 14, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973). It is also tempting to hold that Field’s injury is too speculative. While it is true that we cannot know with absolute certainty whether the elimination of the allegedly illegal IRS ruling would redress Field’s competitive injury, he has set forth a cogent economic analysis that this would be the case. To require Field to allege facts that would prove the laws of economics would be ungainly, wasteful, and inconsistent with the philosophy of pleading of the Federal Rules of Civil Procedure. The modern conception of “notice pleading”[27] does “not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is `a short and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.”Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957). Requiring Field to allege all of the facts supportive of the chain of causation upon which his allegation of injury rests would return us to the unpredictable and fact-laden system of code pleading.[28]

[35] Recognizing all this, the majority in Tax Analysts holds that Field “has suffered injury in fact in his capacity as a competitor.”[29] I concur in this holding. And, so far as I can see, the competitive injury that ASTA and the other appellants i Travel Agents claim to have suffered is virtually indistinguishable. Yet the majority in that case holds that appellants have no standing because they have failed to demonstrate “any judicially cognizable `injury in fact.'”[30]

[36] The majority in Travel Agents holds, first, that the very existence of appellants’ competitive injury is “too speculative to support standing” since they do not allege specific customers who would be gained if the AJC and similar organizations were to lose their tax-exempt status.[31] Second, the majority concludes that “[a]ppellants have not demonstrated that they would reap any

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tangible benefit if the court were to order the relief sought.”[32] If the tax-exempt status of the AJC or other tax-exempt organizations were eliminated, these organizations might still maintain lower prices because of “volunteer labor or the willingness to accept lower profits”; or members of these tax-exempt organizations might still prefer the travel programs of their own organizations even if more expensive; or such members might simply decide not to travel at all.[33]

[37] With all due respect, such reasoning reveals that it is the majority, not the appellants, who is engaging in speculation. The economic basis of appellants’ injury is straight forward, far more compelling even than that alleged by appellant Field in Tax Analysts. Appellants allege that because of the AJC’s

tax-exempt status and the other privileges which flow from it, such as reduced-rate postage, the [AJC] and others are able to offer lower-cost travel programs than plaintiffs and other tax-paying travel agents. Plaintiffs allege and believe that numerous persons who would otherwise use plaintiffs’ services and the services of other tax-paying travel agents are instead induced by the extensive mail solicitations and lower costs and take business to tax-exempt organizations.[34]

[38] It is true, of course, that all claims of competitive injury are to some extent speculative, since they are predicated on the independent decisions of third parties; i.e., customers. However, economics is the science of predicting these economic decisions, and it is the stuff of the most elementary economic texts that if two firms are offering a similar product for different prices, the firm offering the lower price will draw away customers from its competitor. For us to fly in the face of this learning and require a plaintiff to allege in his complaint the names of specific customers who would be led to alter their consumption patterns, would be to exalt form over substance and to take a long, unfortunate step backwards into what Professor Moore has termed “the morass” of code pleading.[35] I know of no case, nor has one been cited by the majority, in which such allegations have been adjudged a necessary element in a complaint of competitive injury.[36]

[39] The majority’s reasoning, in fact, is flatly contradictory t Investment Co. Institute v. Camp, 401 U.S. 617, 91 S.Ct. 1091,

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28 L.Ed.2d 367 (1971). In that case plaintiffs complained of competitive injury because of an allegedly illegal regulation of the Comptroller of the Currency permitting national banks to establish and operate collective investment funds. The Supreme Court upheld the standing of the plaintiffs, id. at 620-21, 91 S.Ct. 1091, even though their allegations of injury were no more specific than those of the appellants in this case. Plaintiffs alleged merely that they would

suffer present and continuing serious and irreparable injury as a direct result of the illegal activity authorized by the Comptroller’s challenged regulations and particularly as a result of the Bank’s proposed illegal activity which was approved by the Comptroller under such regulations. This illegal activity will subject the Institute’s mutual fund members to illegal competition, will deprive them of legitimate business, and will dilute, divert, and withdraw a substantial portion of the potential market for securities in mutual funds to the substantial and irreparable injury of such plaintiffs and the shareholders in such funds. This illegal activity will also subject the Institute’s investment adviser and underwriter members, including the additional plaintiffs, to illegal competition and to loss of opportunities for profit in their trade and will dilute, divert and withdraw a substantial portion of the potential market for their services to the irreparable injury of such plaintiffs.[37]

[40] The Supreme Court did not, as does the majority in this case, require plaintiffs to allege in their complaint facts sufficient to refute every possible anomaly of the marketplace such as the existence of voluntary labor or ideologically committed consumers. The Court assumed that the marketplace would function in a normal, predictable fashion,[38] for to assume otherwise would be to foreclose the very possibility of ever satisfactorily alleging a competitive injury. As the majority’s opinion demonstrates, one might conjecture an indefinite number of such anomalies, some more plausible than others. For every anomaly invented, the plaintiffs’ claim can be made to appear more “speculative.” Standing under such access rules would virtually depend upon the imagination of the reviewing judge.

[41] The majority argues that its conclusion is required by Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976). I disagree. In Eastern Kentucky,
plaintiffs alleged that a 1969 Revenue Ruling has “encouraged” hospitals to deny services to indigents.[39] Under the tax code, benefactors of institutions

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qualifying as “charitable” under § 501(c)(3) can deduct the amount of their donations. Plaintiffs alleged that the new Revenue Ruling, by permitting hospitals that offered only emergency room services to indigents to qualify for § 501(c)(3) status, “caused” the refusal of various hospitals to admit indigent plaintiffs. The premise of the plaintiffs’ argument was that hospitals were so dependent upon deductible donations that they would perform whatever services were necessary to qualify for § 501(c)(3) status. That premise, as a logical or economic prediction, was clearly false: there was no way of knowing in advance whether the increased income from charitable contributions would exceed the increased costs of providing additional services. The result, as the Supreme Court observed, would “vary from hospital to hospital.” Id. at 43, 96 S.Ct. 1917. Plaintiffs had thus failed to alleged facts sufficient to predict whether the change in the Revenue Ruling would affect the behavior of those particular hospitals that had refused to admit the plaintiffs.

[42] Eastern Kentucky applies to fundamentally different circumstances than those presented in Travel Agents. The injury alleged by ASTA and the other appellant travel agencies does not depend upon the discreet decisions of particular institutions or specific customers. Appellants allege a competitive injury, stemming from a systematic distortion of the marketplace. They claim that, because of illegal IRS rulings, their competitors pay no taxes and therefore have lower costs and charge lower prices. There is nothing hypothetical about this allegation: if we grant the relief appellants seek, the costs of their competitors would necessarily increase. The ultimate injury alleged is a loss of customers, and there is, of course, an implicit prediction in appellants’ case that customers will, on the whole, tend to buy similar items at the lowest possible price. The majority can refer to this injury as “abstract” and to this prediction as “speculative,” but these are abstractions and speculations that every businessman must confront every day.[40] The majority’s corrosive skepticism would altogether eliminate competitive injury as a grounds for standing.[41] That would in fact be contrary to the teaching of Eastern Kentucky, since the decision explicitly reaffirmed

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Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). Standing was appropriate in Data Processing, the Court said, because in that case the complaint had “alleged injury that was directly traceable to the action of the defendant federal official, for it complained of injurious competition that would have been illegal without that action.” 426 U.S. at 45 n. 25, 96 S.Ct. at 1927.

[43] In Travel Agents appellants also allege “injurious competition” that is “directly traceable to the action of the defendant federal official.” The majority attempts to distinguis Data Processing by arguing that the relief requested in that case was the total elimination of the allegedly illegal competition, whereas in Travel Agents “the AJC and other such groups will clearly remain free to pursue their travel businesses, however the tax status is finally resolved.”[42]
This distinction, however, goes only to the extent of the injury suffered, not to its speculative or hypothetical nature. And so long as appellants have alleged any “identifiable trifle” of an injury, they should be granted standing. United States v. SCRAP, 412 U.S. 669, 689 n. 14, 93 S.Ct. 2405, 37 L.Ed.2d 254
(1973); Tax Analysts and Advocates v. Blumenthal, No. 75-1304, 184 U.S.App.D.C. ___ at ___, 566 F.2d 130 at 138 (1977). Because I believe that Data Processing controls this case, I would hold that appellants have alleged injury in fact sufficient to meet the prerequisites of Article III.

[44] II. ZONE OF INTERESTS
[45] Data Processing announced two tests for standing: A petitioner must allege injury in fact, and he must allege that the “interest sought to be protected . . . is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.” 397 U.S. at 153, 90 S.Ct. at 830. The majority in Tax Analysts, following a different approach from that in Travel Agents, finds that appellant Field has suffered injury in fact, but concludes that he must fail the zone test because he is not arguably within the zone of interests protected or regulated by the provisions of IRS § 901(b),[43]
the foreign tax credit.

[46] As the majority in Tax Analysts candidly admits,[44] the ambiguities and analytic deficiencies of the zone test have in recent years suffered scathing criticism.[45] In order to reach its conclusion, the majority is forced to undertake an extensive reevaluation of the purposes and operation of the zone test. In my opinion not only does the majority reach an incorrect conclusion in the instant case, but its analysis only further confuses an already unfortunately unsettled area of the law.

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[47] A. Defining the Zone of Interests
[48] The majority begins with the premise that the zone test must be “based on discerned Congressional purpose.”[46] It concludes that the function of the zone test is to allow “courts to define those instances when it believes the exercise of its power at the instigation of a particular party is not congruent with the mandate of the legislative branch in a particular subject area.”[47]

[49] I agree with the majority’s premise. The real question, however, is how “the mandate of the legislative branch” is to be determined. In some cases congressional intent will be manifest. In Travel Agents, for example, the legislative history of sections 511-513 of the Code[48] clearly indicates that Congress intended to eliminate the unfair competition that results when tax-exempt organizations compete with tax-paying enterprises. Both House and Senate Committee reports state that “[t]he problem at which the tax on unrelated business income is directed is primarily unfair competition.” H.R. Rep. No. 2319, 81st Cong., 2d Sess. 36 (1950); S.Rep. No. 2375, 81st Cong., 2d Sess. 28 (1950), U.S. Code Cong.Serv. 1950, pp. 3053, 3081.[49] There is no doubt, therefore, that appellants would have satisfied the zone test.

[50] In other cases, however, the legislative mandate will be silent or ambiguous with respect to the interests of a “particular party.” In such cases it is necessary to develop rules for the constructive interpretation of congressional purpose. Decisions of the Supreme Court that have enunciated and applied the zone test are the most authoritative source of such rules. These decisions indicate that congressional intent must be construed to include within the zone of interests to be protected or regulated by a statute those interests upon which the statute will have a readily foreseeable impact.

[51] In Arnold Tours, Inc. v. Camp, 400 U.S. 45, 91 S.Ct. 158, 27 L.Ed.2d 179 (1970), for example, plaintiff travel agents challenged as contrary to the Bank Service Corporation Act a ruling of the Comptroller of the Currency authorizing national banks to provide travel services for their customers. Plaintiffs themselves were clearly not the intended beneficiaries of the Act. There were unchallenged findings in the court below that the limitations on banking activity imposed by the Act “were for the purpose of insuring the stability, liquidity, and safety of the banks” and that Congress was unconcerned “with competitors in the businesses impliedly prohibited, much less in any particularity with travel agents”. 408 F.2d 1147, 1151 (1st Cir. 1969). Nevertheless the Supreme Court concluded that the interests asserted by plaintiffs were arguably within the zone of interests protected by the Act. The only connection between plaintiffs’ interests and the Act was that “[w]hen national banks begin to provide travel services for their customers, they compete with travel agents . . ..” 400 U.S. at 46, 91 S.Ct. at 159.

[52] Investment Co. Institute v. Camp, 401 U.S. 617, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971), teaches a similar lesson. In that case plaintiff investment companies challenged a regulation of the Comptroller authorizing national banks to establish and operate collective investment funds. Plaintiffs alleged that the regulation violated provisions of the Glass-Steagall Banking Act. Despite unchallenged evidence that “neither the language of the pertinent provisions of the Glass-Steagall Act nor the legislative history evinces any congressional concern for the interests of petitioners and

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others like them in freedom from competition,” 401 U.S. at 640, 91 S.Ct. at 1103 (Harlan, J., dissenting),[50] the court held that plaintiffs satisfied the requirements of the zone test. Again, the readily foreseeable impact of the statute on plaintiffs’ interests was their only connection to the legislation.

[53] These decisions, then, stand for the proposition that, in the absence of manifest congressional intent to the contrary, the zone of interests arguably protected or regulated by a statute should at a minimum include those interests upon which the statute has a readily foreseeable impact.[51] Plaintiffs asserting such interests should have standing under the zone test.

[54] The majority, however, rejects this conclusion, arguing that “the concepts of consequence and impact are not the proper guideposts to define the relevant zone of interests.”[52] The majority reasons that defining “the zone of interests as being the equivalent in every case of the `zone of impact’ or the `zone of consequences.’ . . would establish a standing doctrine based solely on the existence of harm to a party . . ..”[53] But this reasoning is clearly faulty: a statute’s zone of foreseeable
impact or consequences would not encompass every incidence o actual impact. And, more importantly, the majority’s conclusion is flatly contradictory to the guidance of the Supreme Court.

[55] I sense yet another, implicit reason underlying the majority’s rejection of the liberal standards of Arnold Tours an Investment Co. Institute. Although the majority acknowledges that the zone test is meant to be “a quite generous standard,”[54] it nevertheless argues that the test implements that aspect of standing doctrine designed to define “the proper — and properly limited — role of the courts in a democratic society.”[55] This function of standing law, however, has been used to justify the restriction of access to federal courts.

[56] Even if the majority has correctly identified the appropriate function of the zone test, it does not follow that the test must be interpreted in a restrictive fashion. The Supreme Court decisions that have used standing doctrine to define the role of the courts in a democracy have been in the context of constitutional challenges to government action.[56] Such challenges raise difficult issues about the proper judicial role because they require a non-elected judiciary on its own authority to pass on the actions of the democratic branches of government. These issues are not raised in so dramatic a fashion by the zone test, however, at least in its statutory application.[57] In that context courts are asked only to measure the authority of executive

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action under applicable statutes.[58] Such suits represent routine, accepted and legitimate exercises of judicial power,[59] so much so that the Supreme Court has repeatedly held that “judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.” Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967).[60] Standing doctrine and reviewability doctrine raise identical issues about the nature of the judicial role in the context of statutory review of executive action. The unproblematic nature of that role is reflected in the generosity of the Abbott Laboratories’ standard of reviewability, and it should be reflected in an equally generous standard for standing, assuming, of course, that the injury in fact requirement of Article III has been met. And this, I take it, is the underlying significance of the very liberal standards of Arnold Tours and Investment Co. Institute.[61]

[57] B. Technique in the Application of the Zone Test
[58] The majority devotes much of its opinion to a discussion of “the proper technique to employ in order to discern the Congressional intention in a manner which does not defeat other basic tenets of the law of standing.”[62] The majority first concludes that congressional intent must be determined from the specific applicable statutory provision and not from the statute as a whole. It offers two reasons for this prescription: such a specific focus will ensure “complete adversariness,” and it will reduce the possibilities of endless litigation that would “distort the role of the courts in relation to the legislative branch”.[63]

[59] I have difficulty following the majority’s reasoning. If the basis of the zone test is the discernment of congressional purpose, a court should use whatever material is relevant to that inquiry. As Chief Justice Marshall advised a very long time ago, “[w]here the mind labors to discover the design of the legislature, it seizes everything from which aid can be derived . . ..” United States v. Fisher, 6 U.S. (2 Cranch) 358, 386, 2 L.Ed. 304 (1805). A traditional canon of statutory interpretation is that laws are to be read as a harmonious whole.[64] “It is undoubtedly a well-established principle in the exposition of statutes, that every part is to be considered, and the intention of the legislature to be extracted from the whole.”

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Id. Contradictory interpretations of differing statutory sections are avoided on the assumption that statutes constitute the expression of a coherent purpose, not a patchwork of conflicting intentions.[65] Thus consideration of an entire statute is often considered necessary to an informed interpretation of any of its particular sections. And this procedure, not surprisingly, has been a standard technique among courts applying the zone test.[66]

[60] The majority’s reasons for abandoning this traditional approach are simply not convincing. The “complete adversariness” that it seeks, aside from being logically unconnected to the question of how many statutory provisions are at issue, is adequately served for the purposes of standing by the injury in fact suffered by the plaintiff. This injury ensures that plaintiffs have “such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends . . ..” Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663
(1962). And I am even more baffled by the majority’s second reason, that focusing on a particular statutory section will create the possibility of endless litigation that “would distort the role of the courts in relation to the legislative branch”. Examination of a particular provision in the context of an entire statute will increase the accuracy of judicial discernment of congressional purpose. And I cannot comprehend how accurately ascertaining congressional purpose can possibly distort the role of the courts with respect to Congress. Surely, the majority does not mean to argue that the possibility of increased litigation, by itself would constitute such a distortion.

[61] Perhaps as an illustration of its analysis, the majority blends into its theoretical reasoning a specific discussion of the Internal Revenue Code. The code, it notes, “does not have a single, unified purpose”, and, therefore, litigants should not be permitted to borrow “the arguable regulatory or protective intent embodied in one provision of the Code, and apply it to a provision where that intent is not evident . . ..”[67]

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[62] As a conclusion this observation is unimpeachable, but it begs the real question. Even assuming, arguendo, that the relevant zone of interests emanates only from a particular provision of the Code rather than from the Code as a whole, the question of whether one provision of the Code is relevant to the interpretation of another can only be answered after both provisions have been examined. It is not a question that can be addressed in the abstract. Yet this is just what the majority opinion, drawing on its theoretical analysis, purports to do. A fortiori the majority completely misses the thrust of appellant Field’s argument that, although various sections of the Code have different goals, the entire Code is infused with certain general purposes.[68] These general purposes, he claims, arguably give rise to a zone of protected interests that emanates from the Code as a whole. The majority rejects this argument on the grounds of nothing more convincing than bald assertion.

[63] The majority reaches a second major conclusion concerning proper technique in the application of the zone test: the examination of legislative history is to be avoided and the appropriate zone determined from “the face of the statute.”[69]
The majority is aware that courts regularly resort to legislative history in order to discern the intent of Congress. It shows less awareness that courts also regularly use legislative history for the same purpose in the application of the zone test.[70] The majority argues, however, that there are three special reasons why this latter practice should cease. First, the examination of legislative history will lead to a prejudgment of the merits of the case. Second, it is likely to be unilluminating; and third, it will undermine the generous nature of the zone test.

[64] Taking these reasons in order, there is, first, no logical connection between the use of legislative history and a prejudgment of the merits of the case.[71] The majority thus seems to be making a psychological point: “A canvassing of the entire legislative background may lead to a decision on the question of standing based on an assessment of the strength or weakness of the claims being presented.”[72] The majority’s assumption appears to be that federal judges will not be able to keep distinct issues of standing and of the merits when confronted with information relevant to both. I reject this assumption as completely unfounded. We trust federal judges to successfully perform such tasks all the time, as for example when ruling on the admissibility of evidence in non-jury trials. Standing and the merits require distinct inquiries,

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and federal judges are perfectly capable of using legislative history to answer the demands of each.

[65] Second, legislative history may indeed be “unilluminating,” but it also may be helpful, and there is no way of knowing until one looks. Legislative history can be and often is an important instrument in the determination of congressional intent.[73]
The majority’s proscription of legislative history in all cases simply because of its failure in some, reminds me of the gourmet who, having once tasted sour grapes, refused to eat anything.

[66] Finally, there is simply no way to predict whether the resort to legislative history will expand or contract the generosity of the zone test.[74] The results will vary from case to case. What is clear, however, is that if the determination of congressional intent is relevant, the use of legislative history may lead to more accurate applications of the test. The generosity of the test will be sufficiently protected by the legal standard that resolves in plaintiff’s favor all “potential ambiguities in the legislative history” and in the face of the statute.[75]

[67] C. The Application of the Zone Test to Appellant Field
[68] The majority is aware of “the confusion surrounding the meaning of which interests are relevant to the zone test,” and it concludes that what must “fall within the relevant zone” is “the particular interest the parties are asserting in the litigation.”[76] Yet the majority denies Field standing because “the protective intent of the statutory section extends to all those U.S. companies doing business abroad and paying foreign income taxes” and “appellant Field cannot be said to fall within the regulatory field of concern”.[77] Therefore, the majority argues, Field’s interests cannot arguably have been intended to have been protected by § 901(b). In other words, contrary to its own advice, the majority acts as if the zone test requires th plaintiff himself to be within the statutory zone.

[69] The majority’s conclusion that a plaintiff’s interests must fall within the relevant zone, however, is correct. Arnold Tours and Investment Co. Institute make clear that a plaintiff will satisfy the zone test if he asserts interests upon which the applicable statute will have a readily foreseeable impact.

[70] Using this framework of analysis, the interests Field asserts are arguably within the zone of interests to be protected by § 901(b). A primary purpose of that section, as the majority clearly establishes, is to prevent the double taxation of United States corporations operating abroad. But this purpose is itself founded on the deeper principle that, as one noted scholar of the foreign tax credit has put it, “taxpayers with an equal taxable capacity should bear an equal United States tax burden. . . [T]he result of the operation of the credit is that United States corporations . . . with the same amount of income bear an equal total tax burden on income whether or not they are subject to foreign income taxation.”[78] The section thus establishes an equation of rough equality between United States corporations that must pay certain foreign taxes and those that have tax liability only to the United States

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government. If the IRS were mistakenly to deny a valid application for a foreign tax credit, one side of this equation would be violated. Similarly, if the IRS were mistakenly to grant a foreign tax credit, the equation would be violated on the other side. This is essentially Field’s position. He claims that his interests in tax parity with his competitors who import foreign oil are implicit in the structure of § 901(b) and that his interests are therefore arguably within the zone of interests to be protected by the section.

[71] The legislative history of § 901(b) is silent about congressional concern for those in Field’s circumstances. The readily foreseeable consequences of the foreign tax credit on Field’s competitive situation, however, is powerful support for his claim. His position is indistinguishable from that of the plaintiff travel agents in Arnold Tours or that of the plaintiff investment companies in Investment Co. Institute. I would therefore grant standing to appellant Field.