proceedings and refund suits are adequate to support application of the Anti-Injunction Act. See Bob Jones University, 416 U.S. at 746-47, 94 S. Ct. at 2050-51. Thus, the plaintiffs in this case cannot establish the Court's equitable jurisdiction.
2. The Government is Likely to Prevail on the Merits.
Even if the plaintiffs could establish the Court's equitable jurisdiction, they have not met the second prong of the exception to the Anti-Injunction Act. In Enochs the Court formulated this second test by saying that an injunction could be granted only if "under the most liberal view of the law and the facts, the United States cannot establish its claim." 370 U.S. at 7, 82 S. Ct. at 1129. In this case the plaintiffs claim that the WPT cannot be assessed against them because they are not classed as "producers" under state law. Although the WPT is to be paid by the producers of the oil, Congress, by defining "producers" as the holders of the economic interest in the oil, has, in effect, made "economic interest" the touchstone of the WPT. See I.R.C. § 4996(a)(1)(A).
The concept of economic interest has a specialized meaning in and is a fundamental part of the federal taxation of natural resources. The tax regulations define economic interest as existing in "every case in which the taxpayer has acquired by investment any interest in mineral in place ... and secures, by any form of legal relationship, income derived from the extraction of the mineral ... to which he must look for a return of his capital." Treas.Reg. § 1.611-1(b)(1) (1980). Only the owner of an economic interest is taxed on the income from a mineral property and takes depletion on the mineral as it is extracted. Moreover, the concept also determines whether a transaction involving a mineral property is a sale or a lease, that is, whether the income from that transaction is ordinary or capital gain. See Burke & Bowhay, supra, at 208. Thus, when Congress made holders of economic interests in domestic crude oil subject to the WPT, it merely followed its usual practice in taxing natural resources.
The plaintiffs admit that as the owners of a royalty interest in an oil well they are holders of an economic interest. They contend, however, that Congress could not constitutionally impose the WPT on them because under Louisiana law they are not "producers" of crude oil. This argument is not convincing. The Supreme Court in early cases on natural resources law dealt with the question whether local law applies to the concept of economic interest. The Court looked to the relevant federal statute for an indication of whether the state law was to apply. If the statute did not indicate a reliance on state law, state law was irrelevant. See Palmer v. Bender, 287 U.S. 551, 555-56, 53 S. Ct. 225, 226, 77 L. Ed. 489 (1933); Burnet v. Harmel, 287 U.S. 103, 110, 53 S. Ct. 74, 77, 77 L. Ed. 199 (1932); Costantino v. Commissioner of Internal Revenue, 445 F.2d 405, 408 (3d Cir. 1971); cf. Swank v. United States, 221 Ct. Cl. 246, 602 F.2d 348, 353 (Ct.Cl.1979) (economic interest exists independent of legal title), cert. granted, 446 U.S. 934, 100 S. Ct. 2150, 64 L. Ed. 2d 786 (1980). These cases indicate that "(s)tate law may control only when the federal taxing act, by express language or necessary implication, makes its own operation dependent upon state law." Burnet v. Harmel, 287 U.S. at 110, 53 S. Ct. at 77.
Consequently, the plaintiffs' reliance on state law is unfounded, and the government has more than a fair chance of demonstrating that Congress had the power to impose a tax on "producers" as the holders of economic interests in the property.
The plaintiffs' second argument seems to be that they have not received a "windfall" and that to tax their royalties as if they had received a windfall deprives them of property without due process of law in violation of the fifth amendment. In Magnano v. Hamilton, 292 U.S. 40, 54 S. Ct. 599, 78 L. Ed. 1109 (1934), the Supreme Court held that only in certain rare circumstances is the due process clause of the fifth amendment a limitation on the taxing power of Congress. Id. at 44, 54 S. Ct. at 601; accord, Pittsburgh v. Alco Parking Corp., 417 U.S. 369, 373-74, 94 S. Ct. 2291, 2294, 41 L. Ed. 2d 132 (1974); Merrion v. Jicarilla Apache Tribe, 617 F.2d 537, 542 (10th Cir.), cert. granted, 449 U.S. 820, 101 S. Ct. 71, 66 L. Ed. 2d 121 (1980). A taxing statute will be struck down only if it is so arbitrary as to constitute, in effect, the direct exertion of a different and forbidden power, such as the confiscation of property. Magnano, 292 U.S. at 44, 54 S. Ct. at 601; Merrion, 617 F.2d at 542. A tax is not considered confiscatory even if its consequences are so harsh that it restricts or destroys particular occupations or businesses. Magnano, 292 U.S. at 44, 54 S. Ct. at 601; Alco Parking Corp., 417 U.S. at 374, 94 S. Ct. at 2294.
Because the power of Congress to tax is so broad, any plaintiffs are unlikely to prevail on a fifth amendment argument.
In this case the tax does not seem to disguise a forbidden purpose. The WPT taxes the increased income that will accrue to the owners of domestic oil properties after the lifting of price controls. Under the terms of the lease of the plaintiffs' well, they are entitled to a share of one-eighth of the net income from the well. Complaint, Exhibit B, P 3. Thus, if income from the well increases because of the decontrol of oil prices, the plaintiffs will share in the increase, even if only in a small way. Therefore, the application of the WPT to the plaintiffs seems justified, especially in view of Congress' broad power to tax.
This case does not satisfy either prong of the test set out in Enochs and Bob Jones University. As a result, the Anti-Injunction Act bars the plaintiffs' suit.
B. Plaintiffs' Alternative Grounds for Jurisdiction.
In their amended complaint the plaintiffs allege jurisdiction under 28 U.S.C. §§ 1361, 1651, 2201 and 2202. These provisions do not allow the plaintiffs to circumvent the ban of the Anti-Injunction Act.
1. Sections 2201 and 2202.
Section 2201 provides: "In the case of actual controversy within its jurisdiction, except with respect to taxes, any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration ...." 28 U.S.C. § 2201 (1976) (emphasis added). Section 2202 states that "further necessary or proper relief based upon a declaratory judgment" may be granted by a court. Id. § 2202. Relief under section 2202 thus depends on the court having jurisdiction under 2201. Yet section 2201 on its face does not apply to tax suits. The courts have repeatedly emphasized that the prohibition against declaratory judgments on tax matters is at least as broad in its prohibitive scope as the Anti-Injunction Act. See, e.g., Bob Jones University, supra, 416 U.S. 732-33 n.7, 94 S. Ct. 2044 n.7; McCabe v. Alexander, 526 F.2d 963, 965 (5th Cir. 1976); Application of J. W. Schonfeld, Ltd., 460 F. Supp. 332, 338 (E.D.Va.1978). Thus, sections 2201 and 2202, rather than providing jurisdiction, actually bar jurisdiction. See Investment Annuity, Inc. v. Blumenthal, supra, 609 F.2d at 6; Mitchell v. Riddell, 402 F.2d 842, 846 (9th Cir. 1968), cert. denied, 394 U.S. 456, 89 S. Ct. 1223, 22 L. Ed. 2d 415 (1969).
2. Section 1651.
Section 1651 provides that "all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions ...." 28 U.S.C. § 1651 (1976). This section does not provide an independent jurisdictional base for a cause of action. See, e.g., Brittingham v. Commissioner of Internal Revenue, 451 F.2d 315, 317 (4th Cir. 1971); Benson v. Board of Parole & Probation, 384 F.2d 238, 239 (9th Cir. 1967), cert. denied, 391 U.S. 954, 88 S. Ct. 1860, 20 L. Ed. 2d 869 (1968); Dexter v. United States, 78 Cust. Ct. 179, 424 F. Supp. 1069, 1071 (Cust.Ct.1977). Therefore, unless some other basis of jurisdiction may be found, section 1651 is of no help to the plaintiffs' case.
3. Section 1361.
Under 28 U.S.C. § 1361, "(t)he district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or an agency thereof to perform a duty owed the plaintiff." However, the drastic remedy of mandamus is to be invoked only in extraordinary situations. Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 101 S. Ct. 188, 190, 66 L. Ed. 2d 193 (1980); Kerr v. United States District Court, 426 U.S. 394, 402, 96 S. Ct. 2119, 2123, 48 L. Ed. 2d 725 (1976). As a result, courts usually condition the grant of mandamus on several circumstances, including whether the plaintiff has any alternative means of getting relief. Allied Chemical Corp., 101 S. Ct. at 191; Kerr, 426 U.S. at 403, 96 S. Ct. at 2124; Cartier v. Secretary of State, 165 U.S. App. D.C. 130, 506 F.2d 191, 199 (D.C. Cir. 1974), cert. denied, 421 U.S. 947, 95 S. Ct. 1677, 44 L. Ed. 2d 101 (1975). In this case the plaintiffs have another route by which to seek relief. As discussed above, they can carry the administrative refund process to its conclusion and can then sue for a refund if they have been unsuccessful at the administrative level. Therefore, relief in the form of a writ of mandamus is inappropriate.
The circumstances of this case do not conform to the narrow exception to the Anti-Injunction Act, and the new grounds of jurisdiction alleged by the plaintiffs in their amended complaint either do not permit tax suits (ss 2201 and 2202) or are inappropriate in the present case (ss 1361, 1651). Moreover, the plaintiffs do have an alternative forum in which to seek relief. Therefore, the defendants' motion to dismiss is granted.