UNITED STATES OF AMERICA, APPELLANT V. HARRY PTASYNSKI, ET AL.

   No. 82-1066

   In the Supreme Court of the United States

   October Term, 1982

   On Appeal from the United States District Court for the District of
Wyoming

   Brief for the United States

            TABLE OF CONTENTS
   Opinion below
   Jurisdiction
   Constitutional provisions and statutes involved
   Statement:
       A. The statute
   B. The Proceedings below
   Summary of argument
   Argument:
      I. The exclusion of certain geographically defined
           categories of Alaskan oil from the crude oil windfall
          profit tax does not violate the uniformity clause of the
          Constitution
          A. Congress determined that the difficulties of
             producing oil in the "North Slope" areas of Alaska
             justified special tax treatment
          B. The uniformity clause does not prohibit Congress
             from drawing tax classifications based on special
             circumstances existing within particular geographic
             areas:
             1. The uniformity clause does not require strict
                 geographic uniformity but was intended to
                 prohibit combinations of states from imposing
                 discriminatory taxes on some states and granting
                 undue preferences to others
             2. Congress' reason for exempting new oil produced
                 within the "North Slope" of Alaska does not
                 contravene the purpose of the Uniformity Clause
             3. The decisions of this Court under the
                 Uniformity Clause support the validity of the
                 exemption of North Slope Alaska Oil
             4. Analogous decisions of this Court construing the
                 Bankruptcy Clause and Port Preference Clause
                 support Congress' power to take geographic
                 considerations into account in enacting excise
                 taxes
          C. The Windfall profit tax act operated with
             absolute geographic uniformity as to all domestic
             oil produced prior to December 1981
      II. Even if the Alaskan oil exemption violates the
          Uniformity Clause, the remaining provisions of the
          Windfall profit tax are separable and should be upheld
   Conclusion

                             OPINION BELOW

   The memorandum opinion of the district court (J.S. App. 1a-11a) is
reported at 550 F. Supp. 549.

                             JURISDICTION

   Several of the appellees brought these suits in the United States
District Court for the District of Wyoming, seeking a refund of
windfall profit taxes, a declaratory judgment that the Crude Oil
Windfall Profit Tax Act of 1980, Pub. L. No. 96-223, 94 Stat. 229 et
seq., is unconstitutional, and injunctive relief restraining the
further assessment and collection of such taxes (J.A. 11-21).  On
November 4, 1982, the district court filed a judgment directing that
appellees recover windfall profit taxes plus interest for the taxable
periods in question in unspecified amounts to be later determined by
the parties (J.S. App. 12a-13a).  On November 12, 1982, the district
court filed an amended order awarding judgment in favor of appellees
in the amounts sought in the pleadings, with interest as provided by
law, and also specifically setting forth the court's holding that the
Crude Oil Windfall Profit Tax Act of 1980 is unconstitutional (J.S.
App. 14a-15a).  On November 15, 1982, the district court entered a
further amended judgment order limiting its ruling of
unconstitutionality to the provisions of Title I of the Crude Oil
Windfall Profit Tax Act (26 U.S.C. (Supp. V) 4986 to 4998 and related
administrative provisions) (J.S. App. 16a-17a).  /2/

   On November 18, 1982, the United States filed a notice of appeal
from all three judgment orders (J.S. App. 18a;  J.A. III), and on
February 22, 1983, this Court noted probable jurisdiction (J.A. 78).
The jurisdiction of this Court rests on 28 U.S.C. 1252, which
authorizes a direct appeal to this Court from an interlocutory or
final judgment of a court of the United States holding an Act of
Congress unconstitutional in a civil action to which the United States
is a party.  /3/

            CONSTITUTIONAL PROVISIONS AND STATUTES INVOLVED

   Article I, Section 8, Clause 1 of the United States Constitution is
set forth at J.S. App. 19a.  Title I of the Crude Oil Windfall Profit
Tax Act of 1980, Pub. L. No. 96-223, 94 Stat. 229 et seq., and Section
7852(a) of the Internal Revenue Code of 1954 (26 U.S.C.) are set forth
at J.S. App. 20a-63a.

                        QUESTIONS PRESENTED /1/

   1. Whether the exclusion of certain geographically defined
categories of Alaskan oil (26 U.S.C. (Supp. V) 4991(b)(3) and 4994(e))
from the coverage of the Crude Oil Windfall Profit Tax Act of 1980,
violates the Uniformity Clause (Article I, Section 8, Clause 1) of the
Constitution, which requires that "Duties, Imposts and Excises shall
be uniform throughout the United States."

   2. Assuming the answer to Question No. 1 is in the affirmative,
whether the constitutionality of the remaining provisions of Title I
of the Crude Oil Windfall Profit Tax Act should be upheld, pursuant to
the separability clause of Section 7852(a) of the Internal Revenue
Code of 1954.

                               STATEMENT

                            A. The Statute

   On April 2, 1980, the President signed into law the Crude Oil
Windfall Profit Tax Act of 1980.  Title I of that Act, 94 Stat. 230 et
seq., added Sections 4986 through 4998 to the Internal Revenue Code of
1954 (26 U.S.C. (Supp. V)) together with related administrative
provisions.  /4/ Under Title I of the Act, an excise tax is imposed
(subject to certain exemptions) on the "windfall profit" derived from
the production of domestic crude oil after February 29, 1980 (Sections
4986(a) and 4991(a)).  /5/ The "windfall profit" subject to the tax is
determined (on a per barrel basis) by reference to the difference
between the "removal price" (generally the price at which the oil is
sold at the wellhead) and an "adjusted base price" reflecting, with
certain adjustments, the price at which such oil would have been sold
in 1979, under varying assumptions applicable to different categories
of oil (Sections 4988(a), 4988(c) and 4989)).  /6/ An offset is
allowed, however, for state severance taxes attributable to the value
of the oil in excess of its "adjusted base price" (Sections 4988(a)(2)
and 4996(c)).  Finally, in no event can the taxable "windfall profit"
exceed 90% of the net income attributable to the oil (Section
4988(b)).

   The rate of the tax varies between 30% and 70% of the "windfall
profit" so determined.  The rate depends upon the particular category
of the oil (Section 4987(a)).  The lowest rate (as well as the most
favorable "base price" (see n.3, supra)) is applicable to "tier 3 oil"
(which includes "newly discovered oil," "heavy oil" and "incremental
tertiary oil" (Sections 4991(e) and 4993)).  /7/ The 30% rate also
applies to "independent producer oil" (Section 4992) that qualifies as
"tier 2 oil" (which is oil from "stripper well properties" and from
economic interests in National Petroleum Reserves held by the United
States (Section 4991(d)).  The highest rate (as well as the least
favorable "base price") applies to "tier 1 oil" (which includes all
nonexempt domestic oil other than "tier 2" or "tier 3" oil (Section
4991(c)) that does not qualify as "independent producer oil." "Tier 1
oil" that qualifies as "independent producer oil" and "tier 2 oil"
that does not qualify as "independent producer oil" are taxable at the
intermediate rates of 50 and 60%, respectively.

   Section 4991(b) exempts certain classes of oil from the tax.  The
exempt categories are:  (1) oil from "qualified governmental
interest(s)" (Section 4994(a));  (2) oil from "qualified charitable
interest(s)" (Section 4994(b));  (3) certain oil from interests held
by or for Indian tribes or their members or produced by corporations
organized under the Alaska Native Claims Settlement Act, 43 U.S.C. (&
Supp. IV) 1601 et seq. (Section 4994(d));  (4) "front-end tertiary
oil" (Section 4994(c));  and (5) "exempt Alaskan oil" (Section
4994(e)).  The last-mentioned category includes certain oil produced
"(1) from a reservoir from which oil has been produced in commercial
quantities through a well located north of the Arctic Circle, or (2)
from a well located on the northerly side of the divide of the
Alaska-Aleutian Range and at least 75 miles from the nearest point on
the Trans-Alaska Pipeline System" (Section 4994(e)).  However, exempt
Alaskan oil does not include "Sadlerochit oil," the only oil in the
statutorily defined areas which was then in production.  Sadlerochit
oil is defined as "crude oil produced from the Sadlerochit reservoir
in the Prudhoe Bay oilfield" (Section 4996(d)(3)).  /8/

   The liability for the windfall profit tax is ultimately placed on
the "producer" of the oil (Section 4986(b)), defined generally as "the
holder of the economic interest with respect to the crude oil"
(Section 4996(a)(1)(A)).  Section 4995, however, requires that the tax
be withheld from the purchase price by the first purchaser of the oil,
and further provides that the producer shall thereafter be treated as
having paid the amount so withheld.  /9/

                       B. The Proceedings Below

   Six of the appellees are independent domestic oil producers and/or
royalty holders who alleged that they were subject to the windfall
profit tax.  /10/ They brought this action in the United States
District Court for the District of Wyoming, seeking:  (1) a
declaratory judgment that the Alaskan oil exemption from the windfall
profit tax violates the Uniformity Clause of Article I, Section 8,
Clause 1, of the Constitution, and that the tax violates the Due
Process and Taking Clauses of the Fifth Amendment to the Constitution;
 (2) an adjudication that all such taxes were illegally assessed and
collected;  and (3) an order directing the government to refund all
such taxes (J.A. 6-21).  /11/

   On cross motions for summary judgement (J.A. 8-60), the district
court first ruled that the question of the constitutionality of the
windfall profit tax was ripe for decision even though there had been
no production of "exempt Alaskan oil" during the periods in suit (see
pp. 40-43, infra).  It then held that the "exempt Alaskan oil"
provision of the Windfall Profit Tax Act is unconstitutional under the
Uniformity Clause.  It reasoned that "(t)he Act, on its face, says
that one state, Alaska, is not subject to the same tax, at the same
rate as all the other states.  This is a clear violation of the
constitutional requirement of uniformity" (J.S. App. 7a).  In so
holding, the court rejected the government's argument that a rational
justification for the Alaskan oil exemption supported its validity.
As the court saw the matter, "(t)he Constitution has unequivocally set
forth a limitation on indirect taxation -- uniformity -- which has
been narrowly, but precisely defined by the judiciary.  Distinctions
based on geography are simply not allowed" (ibid.).  /12/

   The court also rejected the government's alternative contention
that, at all events, pursuant to the "separability clause" in Section
7852(a) of the 1954 Code, the remaining provisions of the Act should
be upheld, with respect to all domestic oil production not subject to
other valid exemptions.  The court stated that it would have given
more "deferential consideration" to a separability clause written into
the Windfall Profit Tax Act itself.  It held that Section 7852(a) of
the 1954 Code (to which the windfall profit tax provisions were added)
was of "minimal" aid in providing a basis for sustaining the remianing
tax provisions (J.S. App. 8a).  In the district court's view, "the
Alaska exemption was the result of negotiations and compromise, and *
* * the Act as it exists today would not have been passed without the
invalid Alaska provision" (J.S. App. 9a).  Hence, it concluded that
applying the "separability clause" of Section 7852(a) so as to extend
the tax to Alaskan oil would require the court to engage in
impermissible judicial legislation (J.S. App. 7a-10a).  /13/

                          SUMMARY OF ARGUMENT

                                   I

4 In enacting the Crude Oil Windfall Tax of 1980, Congress exempted
oil produced within certain geographically defined areas located on
the "North Slope" of Alaska, and offshore oil that might be located on
the Outer Continental Shelf adjacent to the North Slope.  During the
legislative debates, the point was repeatedly made, without
contradiction, that because of its remote location, fragile
environment, and extreme climatic conditions, the production of North
Slope oil involved risks and costs far greater than the risks and
costs of developing domestic oil properties elsewhere.  The conference
report similarly noted that the exemption "reflects the concern of the
conferees that taxation of this production would discourage
exploration and development of reservoirs in areas of extreme climatic
conditions." H.R. Conf. Rep. No. 96-817, 96th Cong., 2d Sess. 103
(1980).

   Prior to the decision below, no taxing statute had ever been held
invalid on the ground that it violated the Uniformity Clause (Art. I,
Section 8, Cl. 1) of the Constitution, which requires that "Duties,
Imposts and Excises shall be uniform throughout the United States." In
ruling that the windfall profit tax violated that clause, the district
court concluded that "(d)istinctions based on geography are simply not
allowed" (J.S. App. 7a).  Thus, it held that the "exempt Alaskan oil
provisions" of the statute rendered the tax unconstitutional per se
without regard to any rational justification that might exist for the
exempt classification.  The court's ruling rests upon a literal
application of this Court's statement in the Head Money Cases, 112
U.S. 580, 594 (1884), that a "tax is uniform when it operates with the
same force and effect in every place where the subject of it is
found." In so ruling, the district court failed to take account of the
underlying purpose of the Uniformity Clause (and the related Port
Preference Clause), which was to prevent combinations of states from
taking action that might, through the exercise of the taxing power,
strike at the vital interests of one state or region.  Quite the
opposite happened here, where substantial congressional majorities
(including members from oil producing states) recognized and chose to
accommodate the special circumstances confined to a limited geographic
area within one state.  Indeed, this is not even a case in which one
state has received a blanket exemption for all oil produced within its
boundaries, for the exemptions at issue apply to only particular areas
within Alaska and outside its boundaries on the Outer Continental
Shelf.  The role of judicial review in our constitutional system
ordinarily would be thought to be quite limited where the claim is, at
bottom, that the representative institutions of the federal government
should be restrained from discriminating against 49 states in favor of
one.

   Moreover, the district court's conclusion that an excise tax is not
uniform and therefore violates Article I, Section 8, Clause 1, where
any geographical considerations are employed in the definition of the
"subject" of or exemptions from the tax is at odds with the actual
holding of the Head Money Cases.  That case affirmatively supports the
power of Congress to take geographical considerations into account in
drawing legitimate tax classifications.  At issue there was the
constitutionality of a duty levied against transportation companies on
foreign passengers entering the United States by vessel.  The Court
squarely rejected the contention that the duty violated the Uniformity
Clause on the ground that it did not operate with strict geographical
uniformity since, by its terms, it could apply only in states having
sea ports (a matter necessarily determined by considerations of their
geography) and not in landlocked states where foreign passengers might
arrive by railroad or other inland mode of conveyance.  The Court
noted that "the evil to be remedied by this legislation" did not exist
on the inland borders, and that "substantial uniformity within the
meaning and purpose of the Constitution" was achieved by the uniform
application of the statute in those quarters in which that "evil" was
found to exist.  112 U.S. at 595.  Thus, the Court confirmed Congress'
broad power to pick and choose subjects that, as a matter of
geographical considerations alone, exist only in certain states, and
to leave untaxed similar "subjects" existing in other states.
Similarly, in construing the analogous uniformity proviso applicable
to the exercise of the bankruptcy power, this Court, relying on the
same analysis as in the Head Money Cases, concluded that the
uniformity requirement "does not deny Congress power to take into
account differences that exist between different parts of the country,
and to fashion legislation to resolve geographically isolated
problems." Regional Rail Reorganization Act Cases, 419 U.S. 102, 159
(1974).

   Here, too, the validity of the "Alaskan oil exemption" from the
windfall profit tax should turn not, as the district court erroneously
concluded, simply on the fact that Congress took geographical
considerations into account, but rather on whether inclusion of those
geographical considerations in the classification of the "subject" is
justified in terms of the relationship of those considerations to the
"subject" of the regulation or tax.  Congress should be free to base
an exemption on the distance of newly-discovered domestic oil from
existing transportation systems and markets, and on unusual
development costs resulting from extreme climatic and environmental
conditions, even though those conditions might be found to exist only
in limited areas and, perhaps, only within a single state.  For
example, if Congress had cast the exemption for North Slope oil in
terms of the characteristics of remoteness of a location in which the
average temperature did not exceed a particular level, there could be
no quarrel with such a provision under the uniformity clause.  An
exemption provision that is designed to achieve precisely the same
result, and that is justified by precisely the same considerations,
should not be rendered unconstitutional on the ground that Congress
chose to define the scope of the exemption not in terms of the
underlying conditions themselves, but rather in terms of the only
geographic location in which Congress had reason to believe that those
conditions existed.  Here, all oil producers who are similarly
situated with respect to the purposes of the Windfall Profit Tax are
treated alike regardless of their geographic location.  This is the
only unformity the Constitution requires.  The purpose of the
Uniformity Clause is to provide substantive protection to the states,
rather than to require mere niceties of congressional draftsmanship.
And, more fundamentally, it would ill serve the great unifying purpose
of the Constitution of which the Uniformity Clause is a part, for that
clause to be interpreted as disabling the Congress and President from
dealing with great national concerns, such as energy development and
federal revenues, in a discerning, non-discriminatory way, as they did
here.  /14/

                                  II

   At all events, even assuming the "exempt Alaskan oil" provisions of
Sections 4991(b)(3) and 4994(e) are unconstitutional, the district
court erred in holding that the windfall profit tax was thereby
rendered invalid in its entirety.  Section 7852(a) of the 1954 Code
expressly provides that, if any provision contained in that title (26
U.S.C.) is held invalid, "the remainder of the title, and the
application of such provision to other persons or circumstances, shall
not be affected thereby." The decisions of this Court indicate that
such "separability clauses" create, at a minimum, a strong presumption
that Congress intended the courts to sever the unconstitutional
portions of a statute and save the remainder.  Moreover, the
legislative history indicates that Congress fully understood not only
that the various provisions added to the Code by the Act would be
subject to the "separability clause" of Section 7852(a), but also that
it would apply in such a way as to strike down only the Alaska oil
exemption, in the event it were held to violate the Uniformity Clause.
 Therefore, even if it is assumed that the Alaska oil exemption is
barred by the Uniformity Clause, the "separability clause" of Section
7852(a) saves the remaining provisions of the Act.  /15/

                               ARGUMENT

                                   I

 THE EXCLUSION OF CERTAIN GEOGRAPHICALLY DEFINED CATEGORIES OF ALASKAN
OIL FROM THE CRUDE OIL WINDFALL PROFIT TAX DOES NOT VIOLATE THE
UNIFORMITY CLAUSE OF THE CONSTITUTION

   This case presents questions of great public importance to both the
revenue and our national oil policy.  In holding unconstitutional the
windfall profit tax provisions added to the Internal Revenue Code of
1954 by the Crude Oil Windfall Profit Tax Act of 1980, the district
court has invalidated an important federal tax statute that Congress
enacted as an integral part of the decontrol of domestic oil pricing.
/16/

   The constitutional provision at issue here is the Uniformity Clause
of Article I, Section 8, Clause 1, which requires that "Duties,
Imposts and Excises shall be uniform throughout the United States."
Prior to the decision below, no taxing statute had ever been held
invalid on the ground that it violated the Uniformity Clause.  In
ruling that the windfall profit tax violated that clause, the district
court flatly concluded that "(d)istinctions based on geography are
simply not allowed" (J.S. App 7a).  Thus, it ruled that the exclusion
of certain geographically defined categories of Alaskan oil from the
windfall profit tax rendered the entire tax unconstitutional per se
without regard to any rational justification that might exist for the
exempt classification.

   But, as we shall show, there is no per se rule in the Uniformity
Clause jurisprudence of this Court that prohibits Congress from taking
any geographical considerations into account in formulating excise tax
statutes.  Before addressing the Uniformity Clause decisions of this
Court, however, it is important to consider the background of the
Alaska oil exemption and the reasons why Congress distinguished
between new oil produced within specific areas in Alaska and
elsewhere.

      A.  Congress determined that the difficulties of producing

               oil in the "North Slope" areas of Alaska justified

               special tax treatment

   1. Congress enacted the windfall profit tax in response to
President Carter's decision in April 1979, to begin phasing out the
price controls that had been imposed on domestic oil since 1971.  Oil
price controls had been extended and made mandatory through May 31,
1979, by the Energy Policy and Conservation Act of 1975, Pub. L. No.
94-163, 89 Stat. 871.  That Act gave the President discretionary
authority to extend such controls from May 31, 1979, through September
30, 1981.  At the time domestic crude oil prices were first frozen in
1971, the price of crude oil had risen from a prevailing price of
about $2.90 per barrel during the prior decade, to $3.39 per barrel.
By June 1979, the uncontrolled world price for oil (including
transportation costs to the United States) had risen to nearly $20 per
barrel, with "spot market" prices occasionally exceeding $30 per
barrel.  At the same time, the average controlled price of domestic
"old oil" was $5.86 per barrel, and the average controlled price of
domestic "new oil" was $13.06 per barrel.  President Carter's
announcement indicated that existing controls would be phased out over
a period beginning in January 1980, and ending on October 1, 1981, the
effective date of the expiration of the President's authority under
the Energy Policy and Conservation Act of 1975.  See H.R. Rep. No.
96-304, 96th Cong., 1st Sess. 4-7 (1979).  /17/

   The President proposed the windfall profit tax as an integral part
of his plan to phase out existing price controls "(i)n order to
prevent oil producers from reaping excessive profits from decontrol *
* * ." H.R. Doc. No. 96-107, 96th Cong., 1st Sess. 1 (1979).  The
President noted that the gradual removal of price controls on domestic
oil would encourage exploration and production, eliminate inequities
and inefficiencies under the existing system of controls, reduce
United States dependency on foreign oil, and reduce the adverse
balance of payments attributable to the importation of oil.  He
further concluded, however, that "deregulation of domestic oil prices
will also provide enormous windfall gains for domestic producers of
oil" as domestic oil prices rise to the prevailing world price, which
had been drastically affected and could continue to be affected by
actions taken by the nations participating in the "OPEC cartel" (id.
at 1-2).

   In favorably reporting on the proposed legislation, the House Ways
and Means Committee similarly noted that decontrol of domestic oil
prices would lead not only to "limited increases in production," but
also to increases in profits to oil producers "far in excess of what
most of them originally anticipated when they drilled their wells and
in excess of what they might now be expected to invest in energy
production." H.R. Rep. No. 96-304, supra, at 7.  Thus, it agreed that
"the additional revenues received by oil producers and royalty owners,
both as a result of decontrol of oil prices and as a result of
increases in world oil prices substantially above those prevailing in
1978, are an appropriate object of taxation" (ibid.).  See also S.
Rep. No. 96-394, 96th Cong., 1st Sess. 6, 27 (1979), setting forth the
similar views of the Senate Finance Committee as to the imposition of
such a tax on windfall profits from old oil.

   As we have noted (pp. 2-5, supra), the tax that Congress ultimately
enacted is imposed at varying rates, and the "windfall profit" subject
to the tax is computed under varying bases, depending on the type of
oil produced, /18/ the nature of the producer, /19/ the circumstances
and manner under which the oil is produced, /20/ and the time such oil
was discovered and went into production.  /21/ While the pattern of
classifications and exemptions was modified in certain respects as the
proposed legislation was considered by the House and the Senate, the
primary objective remained "to impose relatively high tax rates where
production cannot be expected to respond very much to further
increases in price and relatively low tax rates on oil whose
production is likely to be responsive to price." H.R. Rep. No. 96-304,
supra, at 7.  See also S. Rep. No. 96-394, supra, at 7, 9.

   Because of the unique climatological and environmental difficulties
in oil extraction in the "North Slope" areas of Alaska, Congress
recognized from the outset that oil produced in that region presented
a special case with respect to both the existence of "windfall
profits" and the determination of an appropriate tax to be imposed.
Under the original Administration proposal, all oil produced from
wells north of the Arctic Circle would have been exempt from the tax.
H.R. 3919, 96th Cong., 1st Sess. Section 2 (1979).  At that time,
because of the extraordinary transportation costs involved, Alaskan
oil was selling for a wellhead price that was far below what
eventually became the lowest "base price" for computing the taxable
"windfall profit." Moreover, it was expected that the wellhead price
for such oil would remian $8 to $9 less than the prevailing
uncontrolled wellhead price of domestic oil produced elsewhere.  H.R.
Rep. No. 96-304, supra, at 30.  See also Staff of Joint Comm. on
Taxation, 96th Cong., 1st Sess., The Design of a Windfall Profit Tax
21 (Comm. Print 1979).  Accordingly, the Secretary of the Treasury
expressed the view that "there are no windfalls that will be gained by
the producers of Alaskan crude." Proposed Windfall Profits Tax and
Creation of Energy Trust Fund:  Hearings Before the House Comm. on
Ways and Means, 96th Cong., 1st Sess. 27 (1979) ("House Hearings")).
As the Secretary explained, "(i) tis easier to exempt Alaskan
production from the tax than to require Alaskan producers to file tax
returns solely for the purpose of showing that no liability has been
incurred." House Hearings, supra, at 19.  /22/

   By the time the proposal reached the House itself, further price
increases indicated that the uncontrolled world price would soon reach
a level at which the uncontrolled wellhead price for North Slope oil
would exceed its 1979 ceiling.  H.R. Rep. No. 96-304, supra, at 6-7.
The House Committee on Ways and Means, and the House itself,
nevertheless agreed with the concept of exempting "new oil" produced
from wells north of the Arctic Circle, but proposed not to extend the
exemption to "Sadlerochit oil," which had already gone into
production.  H.R. Rep. No. 96-304, supra, at 30.  The bill as reported
by the Senate Finance Committee, however, would have eliminated the
necessity of providing such a specific exemption for new North Slope
oil by proposing to exempt all "newly discovered oil" from the scope
of the tax.  S. Rep. No. 96-394, supra, at 42-43.  /23/ A floor
amendment proposed by Senate Majority Leader Byrd, and approved by the
Senate, however, provided for the imposition of a 10% tax on the
"windfall profit" from "newly discovered oil (other than newly
discovered oil produced north of the Arctic Circle)." 125 Cong. Rec.
3087, 36510 (1979).  /24/

   Thus, while the bills passed by the House and the Senate differed
on a number of points, both ultimately provided for taxing "newly
discovered oil," but on a favorable basis and subject to an exemption
for new oil (i.e., oil other than Sadlerochit oil) produced north of
the Arctic Circle.  The legislation thereafter took its final form in
the version approved by the conferees assembled to reconcile the
differences between the Senate and House bills.  The conference
version expanded the scope of the Alaskan exemption to include oil
that might be produced in areas south of the Arctic Circle, but north
of the divide of the Alaska-Aleutian mountain range, if produced from
a well at least 75 miles from the nearest point on the Trans-Alaskan
Pipeline System.  The conference report noted that this exemption
"reflects the concern of the conferees that taxation of this
production would discourage exploration and development of reservoirs
in areas of extreme climatic conditions." H.R. Conf. Rep. No. 96-817,
96th Cong., 2d Sess. 103 (1980).  The conference version was approved
without further change, by the House by a vote of 302 to 107 (126
Cong. Rec. H1861 (daily ed. Mar. 13, 1980)) and by the Senate by a
vote of 66 to 31 (126 Cong. Rec. S3151 (daily ed. Mar. 27, 1980)).

   2. As the very title of the Act (J.S. App. 20a) and the operative
language of Section 4986(a) demonstrate, the subject of the windfall
profit tax is the "windfall profit" derived from oil production.
Thus, the statutory distinctions between different categories of oil
do not turn upon differences in the physical character and quality of
the product itself.  /25/ Instead, the statute focuses upon
differences in the "windfall profit" that the holder of the economic
interest in the property would realize from production after
decontrol.

   The structure of the tax reflects the fact that Congress was
concerned with at least two distinct types of "windfall profit" that
might be enjoyed by oil producers as a result of the decontrol of oil
prices.  The first and most readily identifiable element of such
"windfall profit" was the additional revenues that would immediately
be generated on the removal of price controls with respect to the
continuing production of previously controlled oil.  There was broad
agreement among the Administration, the House and the Senate, as well
as the tax committees of both houses, that the imposition of some form
of tax was appropriate with respect to this element of "windfall
profit," because (1) continued production of such oil would lead to a
supererogatory element of profit above that expected when the oil was
developed to production;  and (2) the imposition of such a tax was not
expected to constitute a significant disincentive to continued
production.  See H.R. Rep. No. 96-304, supra, at 7;  S. Rep. No.
96-394, supra, at 6;  House Hearings, supra, at 174 (statement of
Charles L. Schultze, Chairman of the Council of Economic Advisers).

   There was considerably more controversy, however, as to whether any
"windfall profit" would exist with respect to new production, or
production of "old" oil by unconventional production techniques.  As
we have pointed out (p. 15, supra), one of the fundamental purposes of
the removal of price controls was to encourage the discovery and
development of new oil, as well as the exploitation of known
reservoirs that could not profitably be developed through conventional
production techniques.  See H.R. Doc. 96-107, supra, at 2;  House
Hearings, supra, at 7-10, 16-17.  While a second element of "windfall
profit" -- reflecting the increased revenues that might be generated
from further increases in uncontrolled world oil prices -- might
nevertheless be attributed to both "old" oil and "new" oil, there was
considerable debate whether that second element should be identified
as a taxable "windfall profit" in the case of new oil.  See S. Rep.
No. 96-394, supra, at 7, and also at 167 (additional views of Senator
Dole).

   Moreover, Congress recognized that it was even more difficult to
identify an element of "windfall profit" appropriate for taxation in
the case of "North Slope" oil.  Such oil was subject to extraordinary
transportation costs, which served to reduce the wellhead price (and
hence gross revenues) by $6-8 per barrel, and extraordinarily high
exploration and development costs, which were estimated at several
times the cost of domestic exploration and development elsewhere.  See
Crude Oil Tax:  Hearings on H.R. 3919 Before the Senate Comm. on
Finance, 96th Cong., 1st Sess. 218-224, 238-243 (1979);  House
Hearings, supra, at 453-455.  /26/ Congress ultimately agreed on a tax
under which conventionally produced "old oil" would generally be
deemed to generate a "windfall profit" equal to the difference between
the removal price and the May 1979 controlled price for "upper tier"
oil, and such "windfall profit" would generally be taxable at the
highest rate provided for by the statute.  Production of "newly
discovered oil" was also deemed to generate a "windfall profit," but
only in the amount of the difference between the removal price and the
December 1979 uncontrolled price for such oil, and that "windfall
profit" was taxable only at the lowest rate provided for by the
statute.

   At the same time that Congress determined to treat Sadlerochit oil
(the only oil then in production on the "North Slope" or elsewhere
within the area defined by Section 4994(e)) on the same basis as other
"old" oil, it entirely exempted new production in areas north of the
Arctic Circle or north of the divide of the Alaska-Aleutian Range and
more than 75 miles distant from the Trans-Alaska Pipeline System
because of the differences in development and transportation costs for
such oil.  Thus, while the statute refers to "exempt Alaskan oil"
(Section 4991(b)(3) and 4994(e)), that designation is simply a
shorthand reference to the geographically defined areas subject to the
exemption, and does not, as the district court mistakenly observed,
apply to oil "found only in Alaska" (J.S. App. 4a).  In fact, the
exemption applies to any new production in areas north of the
specified features (the Arctic Circle or the divide of the
Alaska-Aleutian Range), including oil that might be produced in
offshore United States territorial waters.  /27/

   Hence, the so-called Alaska exemption does not apply to all areas
within the boundaries of the State of Alaska, or even to all oil
produced in the areas to which it does apply.  Indeed, as we shall
discuss in further detail (pp. 40-43, infra), none of the oil produced
in the State of Alaska during 1980 was eligible for the exemption,
and, for 1981, only a minuscule portion of Alaskan production was
exempt on this basis.  Of 592 million barrels of crude oil produced in
Alaska in 1981 (about 20% of the total United States production), only
about 800,000 barrels (or about 0.13% of Alaskan production) qualified
as "exempt Alaskan oil." Dep't of Energy, U.S. Crude Oil, Natural Gas
& Natural Liquids Reserves, 1981 Annual Report ("1981 Annual Report)
22, Table 6 (1982);  Internal Revenue Service, Statistics of Income
Bulletin ("S.I.B.") 45, Table 6 (Fall 1982).  Moreover, most of the
Alaskan production was reported as taxable Sadlerochit oil (about 461
million barrels), all of which was taxable at the highest rate (70%)
provided for by the statute.  S.I.B., supra, at 53, Table 3.  Finally,
all other significant Alaskan production was in wholly non-exempt
areas, primarily in the Cook Inlet.  /28/ Alaska Oil and Gas
Conservation Commission, 1981 Statistical Report, supra, at 10-12.  In
sum, while production of "exempt Alaskan oil" from the Kuparuk field
(which commenced in December 1981) was expected to reach the level of
250,000 barrels per day by the end of 1982, even at that rate, exempt
production would remain far less than current production of taxable
Sadlerochit oil.  /29/

   Indeed, the production of taxable Sadlerochit oil in 1981 far
exceeded the total oil production of any other state except Texas.
1981 Annual Report, supra, at 22, Table 6.  Thus, while the taxpayer
and association appellees assert (Mot. to Aff. 15 n.21), without
citation and supporting authority, that the bulk of the windfall
profit tax is "borne" by just five states (Texas, Louisiana,
California, Oklahoma and Wyoming) and that the remainder is "borne" by
28 states none of which "bears" more than 3% of the tax burden, /30/
the undisputed fact is that a tax liability of $2.4 billion -- nearly
10% of the total reported liability for all domestic oil for 1981 --
was reported with respect to Sadlerochit oil alone.  S.I.B., supra, at
43, Table 3.  Obviously, then, a substantial portion of the overall
tax liability imposed by the Act -- and an amount at least comparable
to that imposed in the five states singled out by the appellees in
this regard -- is imposed on Alaskan production, even though the
removal price (and hence, the per barrel "windfall profit") of most of
that oil is far less than that of other domestic "tier 1 oil" because
of the extraordinary transportation costs involved.  S.I.B., supra, at
43, Table 2.

 B. The Uniformity Clause does not prohibit Congress from drawing tax
classifications based on special circumstances existing within
particular geographic areas

 1. The Uniformity Clause Does Not Require Strict Geographic
Uniformity But Was Intended to Prohibit Combinations of States From
Imposing Discriminatory Taxes on Some States and Granting Undue
Preferences to Others

   Article I, Section 8, Clause 1, of the Constitution provides that
"The Congress shall have Power to lay and collect Taxes, Duties,
Imposts and Excises to pay the Debts and provide for the common
Defence and general Welfare of the United States;  but all Duties,
Imposts and Excises shall be uniform throughout the United States"
(emphasis added).  As the Court noted in Knowlton v. Moore, 178 U.S.
41, 102-106 (1900), the Uniformity Clause is closely tied to the Port
Preference Clause of Article I, Section 9, which provides that "No
preference shall be given by any Regulation of Commerce or Revenue to
the Ports of one State over those of another * * * ." See also C.
Warren, The Making of the Constitution, 570-588 (2d ed. 1937).

   The origin of the Uniformity Clause can be traced to a draft
submitted to the Constitutional Convention on August 6, 1787, by its
Committee on Detail.  Closely following language earlier proposed by
General Pinckney on this subject, the draft provided that the
legislature be given the powers "to lay and collect taxes, duties,
imposts and excises" and "(t)o regulate commerce with all nations, and
among the several states." Knowlton v. Moore, supra, 178 U.S. at
101-103.  With respect to the taxing power, however, the draft limited
direct and "capitation" taxes to those apportioned on the basis of the
population and prohibited the laying of any tax or duty on articles
exported from any state, or on the migration or importation of "such
persons as the several states shall think proper to admit." The
commerce power was similarly limited by a provision barring Congress
from prohibiting "such migration or importation," and was also limited
by a provision requiring a two thirds majority for approval of any
"navigation act." A. Prescott, Drafting of the Federal Constitution
104-105 (1941).

   These proposals addressed, but did not resolve, a number of
sectional fears and jealousies reflecting not only the division
concerning the institution of slavery, but also the economic divisions
among the agricultural, manufacturing, and shipping interests of the
various states.  See Warren, supra, at 570-574.  Many of these
differences were settled by the compromise approved by the Convention
on August 29, 1787, which eliminated the restriction regarding
"navigation acts," and which limited the power to tax, but allowed for
the prohibition after 1808 of "the migration or importion of * * *
persons." Warren, supra, at 578-582.

   Nevertheless, this "crucial compromise" (Warren, supra, at 578) did
not allay all of the fears of the delegates relating to the broad
powers to regulate commerce and to impose taxes.  On August 25, 1787,
Messrs. Carroll and Martin of Maryland had moved the following
proposition (C. Tansill, Documents Illustrative of the Formation of
the United States 619 (1927)):

         The Legislature of the U.S. shall not oblige vessels
      belonging to citizens thereof, or to foreigners, to enter or pay
      duties or imposts in any other state than in that to which they
      may be bound, or to clear out in any other than the State in
      which their cargoes may be laden on board;  nor shall any
      privilege or immunity be granted to any vessels on entering or
      clearing out, or paying duties or imposts in one State in
      preference to another.

   This proposal was designed to prevent the national legislature from
favoring the ports of certain states by requiring all vessels to enter
and clear at those ports.  Knowlton v. Moore, supra, 178 U.S. at 103;
Warren, supra at 586.  Because some delegates believed that this
proposal would facilitate smuggling, Mr. McHenry of Maryland and
General Pinckney of South Carolina proposed the following provision
(Tansill, supra, at 619):

         "Should it be judged expedient by the Legislature of the U.S.
      that one or more ports for collecting duties or imposts other
      than those ports of entrance & clearance already established by
      the respective States, should be established, the Legislature of
      the U.S. shall signify the same to the Executives of the
      respective States, ascertaining the number of such ports judged
      necessary;  to be laid by the said Executives before the
      Legislatures of the States at their next Session;  and the
      Legislature of the U.S. shall not have the power of fixing or
      establishing the particular ports for collecting duties or
      imposts in any State, except the Legislature of such State shall
      neglect to fix and establish the same during their first session
      to be held after such notification by the Legislature of the
      U.S. to the Executive of such State."

         "All duties, imposts & excises, prohibitions or restraints
      laid or made by the Legislature of the U.S. shall be uniform &
      equal throughout the U.S."

   A Special Committee, to whom these proposals were referred,
thereafter recommended the following clause incorporating these
suggestions (id. at 626):

         "Nor shall any regulation of commerce or revenue give
      preference to the ports of one State over those of another, or
      oblige vessels bound to or from any State to enter, clear or pay
      duties in another and all tonnage, duties, imposts & excises
      laid by the Legislature shall be uniform throughout the U.S."

   Although the Convention ultimately adopted this proposal, it was
not set forth in a single clause.  Rather, the first half containing
the Port Preference Clause was placed in Section 9 of Article I;  the
second half containing the Uniformity Clause was added to Section 8 of
Article I.  "Thus, it came to pass that although the provisions as to
preference between ports and that regarding uniformity of duties,
imposts and excises were one in purpose, and in their adoption, they
became separated only in arranging the Constitution for purpose of
style." Knowlton v. Moore, supra, 178 U.S. at 105.

   The successive versions of the Uniformity Clause demonstrate not
only the close relationship between it and the Port Preference Clause,
but also that the Framers did not intend to require "intrinsic"
uniformity, i.e., that duties, imposts or excises fall equally on the
various states or their populations.  As the Court observed in
Knowlton v. Moore, supra, 178 U.S. at 104 --

         The sense in which the word 'uniform' was used is shown by
      the fact that the committee, whilst adopting in a large measure
      the proposition of Mr. McHenry and General Pinckney, 'that all
      duties, imposts, excises, prohibitions or restraints * * * shall
      be uniform and equal throughout the United States,' struck out
      the words "and equal.' Undoubtedly, this was done to prevent the
      implication that taxes should have an equal effect in each
      State.  As we have seen, the pith of the controversy during the
      confederation was that even, although the same duty or the same
      impost or the same excise was laid all over the United States,
      it might operate unequally by reason of the unequal distribution
      or existence of the article taxed among the respective States.

   The agricultural states considered the adoption of the Uniformity
and Port Preference Clauses to be a victory over the large states with
ports and substantial shipping interests, and a prophylactic measure
against further oppressive combinations among these states.  See
Report of North Carolina delegates to Governor Caswell, in Warren,
supra, at 726-727.  As Joseph Story explained in his classic
constitutional test:

      The answer to the * * * (uniformity requirement) may be given in
      a few words.  It was to cut off all undue preferences of one
      state over another, in the regulation of subjects affecting
      their common interests.  Unless duties, imposts and excises were
      uniform, the grossest and most oppressive inequalities vitally
      affecting the pursuits and employments of the people of
      different states might exist.

   J. Story, Commentaries on the Constitution of the United States,
Section 957, at 673 (2d ed. 1851).  In short, the Uniformity Clause
was designed to prevent "combinations" that might, through the
exercise of the taxing power, strike at the "vital interests" of one
region.  Ibid.  See also Warren, supra at 587-588, 726-727.

 2. Congress' reason for exempting new oil produced within the "North
Slope" of Alaska does not contravene the purpose of the Uniformity
Clause

   In light of the legislative background of the windfall profits tax
(see pp. 13-23, supra), it is plain that Congress had a rational basis
for excluding certain geographically defined categories of Alaskan oil
from the coverage of the windfall profit tax.  Moreover, the basis of
Congress' decision does not violate the underlying purpose of the
Uniformity Clause, which was to prevent combinations of states from
imposing taxes that grant an undue preference to their own states or
to impose an oppressive discrimination against a minority.  Hence, the
validity of the "Alaskan oil exemption" should not turn, as the
district court erroneously concluded, simply on the fact that Congress
took geographical considerations into account.  Rather, the question
is whether the classification based on those geographic considerations
to the "subject" of the regulation or tax.  Put another way, the
question is whether, in fashioning the tax, Congress could, while
favoring generally "newly discovered oil" over "old oil," accord the
most favorable treatment to "newly discovered oil" located in certain
areas (Section 4994(e)).  /31/

   There can, of course, be no dispute that the exemption here at
issue is geographically defined so as to exclude oil located in all of
the 50 states except portions of Alaska.  It is equally beyond
dispute, however, that Congress had a rational basis for drawing such
a classification.  Obviously, this is not an instance in which
"combinations" of states have drawn taxing legislation in such a way
as to grant an "undue preference" in favor of their own states or to
impose an "oppressive" discrimination against a minority.  Rather, it
is an instance of a broad-based congressional majority (including many
members from other oil-producing states) granting an exemption
applicable to only a portion of the oil production that might be
derived in the future from certain areas that include a part of a
single state.

   Nor could these provisions be characterized as an "undue
preference" in favor of Alaskan producers.  Indeed, the benefit of the
exemption falls on the owners of economic interests in that oil
wherever they might reside or be incorporated.  Moreover, the
"subject" of the tax in question is not the production of crude oil,
per se, but the enjoyment of a "windfall profit" by the holders of
such economic interests as a result of the removal of price controls
on domestic oil and the concomitant increase in the selling price of
such oil to the prevailing world price.  The various classifications
adopted with regard to this tax demonstrate Congress' belief that the
existence and extent of such "windfall profits," as well as the
appropriate tax to be levied, would vary on the basis of a number of
factors including the nature and type of the oil in question, the
nature of the producer and the quality of his interest in the oil, and
the circumstances under which the oil is produced.  As the legislative
history of the Act makes clear, Congress sought to draw tax
classifications that would not deter producers from fully exploiting
existing properties or from exploring and developing new properties.
See H.R. Rep. No. 96-304, supra, at 7, 14;  S. Rep. No. 96-394, supra,
at 2, 6, 7.

   The critical question therefore is whether Congress could carve out
a portion of the "newly discovered oil" that might be produced in
areas north of the Arctic Circle or in areas located north of the
Alaska-Aleutian Range and more than 75 miles from the Trans-Alaskan
Pipeline System and accord such oil even more favorable treatment.  We
submit that this exemption serves the legitimate purposes of the
legislation in question, and that it does not violate the Uniformity
Clause, despite the fact that it is defined in terms of the geographic
location of such oil.  Congress had substantial grounds for concluding
that North Slope oil -- particularly North Slope oil that had not yet
gone into production -- presented a special case, distinct from
domestic oil found elsewhere (including other oil found in Alaska).
First, North Slope oil that was in production at the time the tax was
under consideration brought a substantially lower price at the
wellhead than did equivalent oil produced in other locations of the
United States because of its distance from existing markets and the
necessity of transporting it over the newly constructed Trans-Alaska
Pipeline.  Indeed, the price of such North Slope oil was only about
half the applicable ceiling price for such oil.  H.R. Rep. No. 96-304,
supra, at 5, 30.  Moreover, Congress anticipated that the wellhead
price for such oil would continue, in the foreseeable future, to be $8
to $9 less than the prevailing wellhead prices in other producing
states.  /32/

   Second, during the debates, the point was repeatedly made, without
contradiciton, that because of its "severe weather conditions,
remoteness, sensitive environmental and geological characteristics,
and a lack of normal social and industrial infrastructure," the
production of North Slope oil involved risks and costs far greater
than the risks and costs of developing domestic oil properties
elsewhere.  See, e.g., 125 Cong. Rec. 31733, 33850, 34006-34009
(1979);  and S17478-S17480 (daily ed. Nov. 29, 1979) (comments of
Senators Bradley and Stevens).  Accordingly, Congress had substantial
reason to question whether North Slope oil (other than that produced
from the Sadlerochit reservoir) would, in fact, generate a "windfall
profit" comparable to that generated by the other categories of oil
subject to this tax, and to conclude that the imposition of even the
relatively small windfall profit tax burden applicable in the case of
other "newly discovered oil" might deter further exploration and
development of North Slope properties.  There was no showing either in
Congress or in the court below that domestic production elsewhere
would involve the combination of similar developmental costs and risks
and transportation-related disparities.

   In sum, it was entirely consistent with the purpose of the
Uniformity Clause for Congress to draw an exemption provision based,
in general terms, on the distance of newly-discovered domestic oil
from existing transportation systems and markets, and on unusual
development costs incurred as a result of extreme climatic and
environmental conditions, even though those conditions were found to
exist only in a limited geographic area, including a portion of only a
single state.  Indeed, if Congress had cast the exemption for North
Slope oil in terms of a location of a certain degree of remoteness,
climate, and environmental obstacles, there could be no quarrel with
such a provision under the Uniformity Clause.  An exemption provision
that is designed to achieve precisely the same result, and that is
justified by precisely the same considerations, should not be rendered
unconstitutional on the ground that Congress chose to define the scope
of the exemption not in terms of the underlying conditions themselves,
but rather in terms of the only geographic location in which Congress
had reason to believe that those conditions existed.  The purpose of
the Uniformity Clause is to provide substantive protection to the
states, rather than to require mere niceties of congressional
draftsmanship.  And, more fundamentally, it would ill serve the great
unifying purpose of the Constitution of which the Uniformity Clause is
a part, for that clause to be interpreted as disabling the Congress
and President from dealing with great national concerns, such as
energy development and federal revenues, in a discerning,
nondiscriminatory way, as they did here.

 3. The decisions of this Court under the Uniformity Clause support
the validity of the exemption of North Slope Alaska Oil

   a. The decisions of this Court confirm that the Uniformity Clause
does not require what might be termed "intrinsic" uniformity.  Thus,
Congress' broad power to choose the appropriate subjects of taxation
encompasses the power to choose subjects that do not exist uniformly
throughout the United States.  Knowlton v. Moore, supra, 178 U.S. at
108.  Assuming the subject chosen by Congress for taxation (or
exemption) itself represents a permissible classification, the
Uniformity Clause is not violated simply because that subject occurs
only in a few states, or indeed only in a single state.

   To be sure, where no other distinction can properly be drawn
between a "subject" as it exists in different states, the Uniformity
Clause may require the same treatment in each instance.  But while
classifications that operate only in certain areas might be subject to
special scrutiny in light of the purposes of the Uniformity Clause, we
submit that the inquiry cannot be separated from the question whether
the tax classifications drawn by Congress are supported by rational
considerations showing that they are not intended, and do not operate,
either as an "undue preference" in favor of, or an "oppressive"
discrimination against, the affected states.

   Thus, the holding of this Court in the Head Money Cases, 112 U.S.
580 (1884), affirmatively supports the power of Congress to take
geographical considerations into account in drawing legitimate tax
classifications.  At issue there was the constitutionality of a duty
levied against transportation companies on foreign passengers entering
the United States by vessel.  The Court squarely rejected the
contention that the duty violated the Uniformity Clause on the ground
that it did not operate with strict geographical uniformity since, by
its terms, it could apply only in states having sea ports (a matter
necessarily determined by their geography) and not in landlocked
states where foreign passengers might arrive by railroad or other
inland mode of conveyance.  In so ruling, the Court observed that
"(p)erfect uniformity and perfect equality of taxation, in all the
aspects in which the human mind can view it, is a baseless dream * * *
" (112 U.S. at 595).  The Court noted that "the evil to be remedied by
this legislation has no existence on our inland borders, and
immigration in that quarter needed no such regulation" (ibid.), and
that "substantial uniformity within the meaning and purpose of the
Constitution" was achieved by the uniform application of the statute
in those quarters (i.e., seaports) in which that "evil" was found to
exist (ibid.).  Thus, the Court confirmed that Congress' broad power
to pick and choose subjects of taxation includes the power to choose
subjects that, as a matter of geographical considerations alone, exist
only in certain states, and to leave untaxed similar "subjects"
existing in other states.  The ultimate question, in the Court's view,
was whether Congress had a reasonable basis for distinguishing between
the activity that was taxed in coastal states and the similar activity
that was untaxed in inland states.

   Similarly, in Knowlton v. Moore, supra, the Court considered a
challenge to the federal inheritance tax on the ground, inter alia,
that it was not uniform because the rate of taxation turned on the
degree of the relationship between a deceased and the beneficiaries,
which in turn depended on testamentary and intestacy laws that
differed from state to state.  In rejecting that argument, the Court
stated (178 U.S. at 108) --

      The proposition in substance assumes that the objects taxed by
      duties, imposts and excises must be found in uniform quantities
      and conditions in the respective States, otherwise the tax
      levied on them will not be uniform throughout the United States.
       But what the Constitution commands is the imposition of a tax
      by the rule of geographical uniformity, not that in order to
      levy such a tax objects must be selected which exist uniformly
      in the several States.

   See also, e.g., Flint v. Stone Tracy Co., 220 U.S. 107, 158 (1911);
 Billings v. United States, 232 U.S. 261, 282-284 (1914);  Fernandez
v. Wiener, 326 U.S. 340, 359-361 (1945).  /33/

   b. Appellees agree that the Uniformity Clause does not mandate
intrinsic uniformity (see Taxpayers and Association Mot. to Aff. 10).
Hence, Congress could presumably impose an excise tax on the
harvesting of citrus fruits even though such a commodity might be (or
even could be) grown in only a few of the several states.  Appellees
contend, however, that the Uniformity Clause strictly prohibits
Congress from casting an excise tax (or an exemption) in geographic
terms, even if it has a rational basis for distinguishing between the
various geographic circumstances where the subject of the tax might be
found.  In so urging, appellees invoke this Court's statement in the
Head Money Cases, supra, 112 U.S. at 594, quoted in Knowlton v. Moore,
supra, 178 U.S. at 86, upon which the district court likewise relied
(J.S. App 6a), that "The tax is uniform when it operates with the same
force and effect in every place where the subject of it is found."

   But this statement cannot be read as an abstract rule of
constitutional law without regard to the context in which it was
rendered.  Indeed, the decisions of this Court have never construed
the Uniformity Clause to require the strict geographic uniformity
which the district court prescribed.  As we have pointed out (supra,
pp. 31-32), the subject of the tax at issue in the Head Money Cases
was "the business of bringing passengers from foreign countries into
this, by ocean navigation * * * " (112 U.S. at 594).  Because the
"subject" of the tax was foreign passengers arriving by ocean
navigation, not foreign passengers generally, the Court concluded that
the tax "(was) uniform (because it) operat(ed) precisely alike in
every port of the United States where such passengers (could) be
landed" (ibid.).  By means of this analysis, the Court upheld
Congress' power to define the subject of a tax, even in geographic
terms, in order to remedy a specific national problem.  The Court made
that clear when it stated that "the evil to be remedied by this
legislation has no existence on our inland borders, and immigration in
that quarter needed no such regulation" (id. at 595).  In these
circumstances, the tax operated with "the same force and effect where
the subject of it is found" because "the law applie(d) to all ports
alike, and evidently g(ave) no preference to one over another * * * "
(ibid.; emphasis in original).  Accordingly, the Court concluded that
"Here there is substantial uniformity within the meaning and purpose
of the Constitution" (ibid.).

   The foregoing analysis fully applies to this case and demonstrates
that there is no constitutional prohibition against properly casting
an excise tax in geographic terms.  Here, Congress has identified
"windfall profit" from the sale of oil by the producer as the subject
of the tax, and has further determined that oil produced within a
particular geographic area is not part of "the evil to be remedied,"
i.e., that such exempt oil will not generate windfall profits for its
producers because of the particular economic differences arising from
the characteristics of the area.  Just as in the Head Money Cases
Congress could identify foreign passengers arriving in ports (as
opposed to inland cities) as the subject of the tax, here, too,
Congress could identify the production and sale of various categories
of oil (as opposed to North Slope newly discovered oil) as the subject
of a windfall profits tax.  Contrary to appellees' argument (Taxpayers
and Association Mot. to Aff. 10), the fact that the tax in the Head
Money Cases was cast in terms of "ports," rather than in particular
geographic terms, does not distinguish that precedent for purposes of
this case.  Both the word "ports" and the statutorily defined
categories of exempt Alaskan oil are terms necessarily requiring
geographic inclusion and exclusion from the operation of the tax.
Hence, in both instances, Congress can, consistently with the
Uniformity Clause, properly define the subject of a tax even though
that subject is not to be found within a particular geographic area.
"The question always is, when a classification is made, whether there
is any reasonable ground for it, or whether it is only and simply
arbitrary, based upon no real distinction and entirely unnatural * * *
.  If the classification be proper and legal, then there is the
requisite uniformity in that respect." Nicol v. Ames, 173 U.S. 509,
521 (1899).  Here, all oil producers who are similarly situated with
respect to the purposes of the Windfall Profit Tax Act are treated
alike regardless of their geographic location.  This is the only
uniformity the Constitution requires.

         4.  Analogous decisions of this Court construing the

               Bankruptcy Clause and Port Preference Clause support

               Congress' power to take geographic considerations into

               account in enacting excise taxes

   Our submission that the Uniformity Clause does not bar Congress
from taking pertinent geographic considerations into account in
enacting excises taxes finds further support in the decisions of this
Court construing the Bankruptcy Clause and Port Preference Clause of
the Constitution.

   a. The Bankruptcy Clause.  Article I, Section 8, Clause 4 of the
Constitution gives Congress power "To establish * * * uniform Laws on
the subject of Bankruptcies throughout the United States." The
language of the Bankruptcy Clause is comparable to the Uniformity
Clause insofar as both provisions mandate laws that are "uniform" in
their application throughout the Nation.  In the Regional Rail
Reorganization Act Cases, 419 U.S. 102 (1974), the Court considered a
challenge to the Regional Rail Reorganization Act of 1973, on the
ground that it violated the bankruptcy uniformity requirement becasue
it operated only in a single statutorily defined region.  Although the
Court acknowledged that "the argument has a certain surface appeal,"
it concluded that it "is without merit because it overlooks the
flexibility inherent in the constitutional provision" (id. at 158).
As the Court observed, "(t)he uniformity provision does not deny
Congress power to take into account differences that exist between
different parts of the country, and to fashion legislation to resolve
geographically isolated problems" (id. at 159).  /34/

   Significantly, for purposes of this case, the Court relied upon its
analysis of the Uniformity Clause in the Head Money Cases, supra.  In
terms that convincingly refute the district court's conclusion (J.S.
App. 7a) that "(d)istinctions based on geography are simply not
allowed," the Court stated (419 U.S. at 160-161):

         Our Construction of the Bankruptcy Clause's uniformity
      provision comports with this Court's construction of other
      "uniform" provisions of the Constitution.  The Head Money Cases,
      112 U.S. 580 (1884), involved the levy on ships' agents or
      owners of a 50-cent tax for any passenger not a United States
      citizen who entered an American port from a foreign port "by
      steam or sail vessel." Individuals engaged in transporting
      passengers from Holland to the United States challenged the levy
      as contrary to Art. I, Section 8, cl., 1, under which Congress
      is empowered to lay and collect "all Duties, Imposts and Excises
      (which) shall be uniform throughout the United States." The
      argument was that the head tax violated the uniformity clause
      because it was not also levied on noncitizen passengers entering
      this country by rail or other inland mode of conveyance.  The
      Court upheld the tax, stating:

         "The tax is uniform when it operates with the same force and
      effect in every place where the subject of it is found.  The tax
      in this case * * * is uniform and operates precisely alike in
      every port of the United States where such passengers can be
      landed." 112 U.S. at 594.

         That the tax was not imposed on noncitizens entering the
      Nation across inland borders did not render the tax nonuniform
      since "the evil to be remedied by this legislation has no
      existence on our inland borders, and immigration in that quarter
      needed no such regulation." 112 U.S. at 595.  Similarly, the
      Rail Act is designed to solve "the evil to be remedied," and
      thus satisfies the uniformity requirement of the Bankruptcy
      Clause.  The argument that the Rail Act differs from the head
      tax statute because by its own terms the Rail Act applies only
      to one designated region is without merit.  The definition of
      the region does not obscure the reality that the legislation
      applies to all railroads under reorganization pursuant to
      Section 77 during the time the Act applies.

   b. The Port Preference Clause.  As we have pointed out (supra, p.
23), Article I, Section 9, Clause 6 of the Constitution provides that
"No preference shall be given by any Regulation of Commerce or Revenue
to the Ports of one State over those of another * * * ." This
provision and the Uniformity Clause "were, in effect, in framing the
Constitution, treated, as respected their operation, as one and the
same thing, and embodied the same conception." Knowlton v. Moore,
supra, 178 U.S. at 106.

   To the extent that the Court has addressed the Port Preference
Clause, it has likewise accorded Congress considerable latitude in
drawing distinctions between particular ports of different states.
For example, in Commission v. Texas N.O.R.R., 284 U.S. 125 (1931), the
Louisiana Public Service Commission challenged certain intrastate
railroad tariffs set by the Interstate Commerce Commission on the
ground that the rates, in effect, favored the ports of Texas over
those of Louisiana (id. at 130).  The ICC rate schedule was intended
to rectify the discrimination caused by Louisiana's intrastate rates
against shippers in Texas who were equidistant or closer to
destinations in Louisiana than shippers in Louisiana (id. at 135).
The Court rejected Louisiana's challenge in the following terms (id.
at 131) (emphasis added):

      The specified limitations on the power of Congress were set to
      prevent preference as between States in respect of their ports
      or the entry and clearance of vessels.  It does not forbid such
      discriminations as between ports.  Congress, acting under the
      commerce clause, causes many things to be done that greatly
      benefit particular ports and which incidentally result to the
      disadvantage of other ports in the same or neighboring States.
      The establishing of ports of entry, erection and operation of
      lighthouses, improvement of rivers and harbors and the providing
      of structures for the convenient and economical handling of
      traffic are examples (citations omitted).  The construction for
      which appellants contend would strip Congress of much of the
      power that it long has been accustomed to exert and which always
      has been held to have been granted to it by the commerce clause.

   Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.)
421 (1855), is to the same effect.  There, Congress had authorized the
building of a bridge across the Ohio River that was too low to allow
clearance of all vessels plying the river.  The State of Pennsylvania
attacked this impediment to waterborne commerce on the ground that it
favored the port of Wheeling, Virginia, at the expense of the port of
Pittsburgh, Pennsylvania, and therefore violated the Port Preference
Clause.  But the Court refused to ascribe such a broad prohibition to
the Clause.  In the Court's view (id. at 435):

         (W)hat is forbidden is, not discrimination between individual
      ports within the same or different States, but discrimination
      between States:  and if so, in order to bring this case within
      the prohibition, it is necessary to show not merely
      discrimination between Pittsburgh and Wheeling, but
      discrimination between the ports of Virginia and those of
      Pennsylvania.

   Thus, the Court held that the discrimination that was the object of
the Port Preference Clause was not simply any distinction between
various ports, but rather systematic discrimination in favor of, or
against, the commerce of one state.  It was not intended to proscribe
laws merely because they incidentally favored or prejudiced some line
of commerce in one state or another.  Pennsylvania v. Wheeling &
Belmont Bridge Co., supra, 59 U.S. (18 How.) at 433-434;  South
Carolina v. Georgia, 93 U.S. 4, 13 (1876).

   Given the close relationship between the Port Preference Clause and
the Uniformity Clause, the Court's decisions support our submission
that the Uniformity Clause likewise prohibits only systematic
preference for or discrimination against a particular state or states.
 Here, with respect to the windfall profit tax, there is no systematic
preference in favor of production of oil in Alaska.  While some "newly
discovered oil" that has been produced in Alaska since December 1981
is treated more favorably than "newly discovered oil" produced
elsewhere, it is equally true that the bulk of Alaskan oil production
has been, and is likely to continue to be, taxable at the highest rate
applicable under the statute, and therefore taxed less favorably than
a great deal of oil produced elsewhere in the United States.  As
Senator Stevens noted, the favorable treatment accorded to oil
produced from "stripper well" properties and to "independent producer
oil" are of little benefit to Alaskan producers because there are no
"stripper wells" and few, if any, "independent producers" operating in
that state.  125 Cong. Rec. 34006-34007 (1979).  Indeed, Senator Long
indicated that one of the reasons for adopting the "exempt Alaskan
oil" provisions was to reduce what otherwise might have been
considered to be a disproportionate share of the overall tax burden
being imposed on Alaskan producers.  126 Cong. Rec. S3056 (daily ed.
Mar. 26, 1980).  While it is well settled that the Uniformity Clause
does not require "intrinsic" uniformity or equivalence in the tax
burden imposed on the populations of the various states, the Framers
of the Constitution could hardly have intended that the Uniformity
Clause would impede Congress from distributing the burden of a tax
more equitably among the states.  Indeed, the role of judicial review
in our constitutional system ordinarily would be thought to be quite
limited where the claim is, at bottom, that the representative
institutions of the federal government should be restrained from
discriminating against 49 states in favor of one.

 C. The Windfall Profit Tax Act Operated With Absolute Geographic
Uniformity As To All Domestic Oil Produced Prior To December 1981

   Even on the assumption that the district court correctly ruled that
the Uniformity Clause requires that all crude oil be taxed on the same
basis without regard to the geographic area in which it is found, it
erred in holding that the windfall profit tax violated that
requirement during the periods in question in this suit.  It is
undisputed that there was no production of any oil that was actually
exempt from tax under the "exempt Alaskan oil" provision until
December 1981, almost one full year after the end of the last period
covered by any of the refund claims in this case (J.A. 22, 26, 29, 31,
68, 71).  Viewing this obstacle to decision simply as a matter of
"ripeness" (J.S. App. 4a), the district court concluded that the issue
was ripe for decision because exempt production from the Kuparuk River
field had commenced by the time of its decision.  It simply assumed
that its ruling would govern the refund claims for the prior periods.
But the court's ruling was erroneous in light of the narrow scope of
its jurisdiction in this tax refund suit.  Thus, even if the
constitutional issue became ripe for decision with respect to later
periods, the district court should not have invalidated the tax for
those periods in which it operated with absolute geographic
uniformity.

   1. One of the most firmly established principles of our
jurisprudence is the exercise of judicial restraint in reaching and
deciding constitutional issues.  This Court has often emphasized the
need for caution in entertaining constitutional challenges to
legislation and declaring such legislation unconstitutional.  See
Ashwander v. TVA, 297 U.S. 288, 345-346, 354-355 (Brandeis, J.,
concurring) (1936);  Rescue Army v. Municipal Court, 331 U.S. 549,
568-573 (1947).  The question of the constitutionality of revenue
acts, in particular, has been treated with special caution.  Nicol v.
Ames, supra, 173 U.S. at 515.

   Among the interrelated body of principles upon which the Court has
relied in refusing to reach constitutional issues prematurely or
unnecessarily is the doctrine of "ripeness" -- i.e., that the issue
ordinarily will not be reached unless the alleged constitutional
injury actually has occurred, or in injunctive suits, unless such
constitutional injury is imminent.  /35/ See, e.g., Boyle v. Landry,
401 U.S. 77, 80-81 (1971);  Toilet Goods Ass'n v. Gardner, 387 U.S.
158, 163-166 (1967).  Despite the fact that the tax had operated with
absolute geographic uniformity during the periods for which refund
claims were filed, the district court found that the uniformity issue
was ripe for decision because production of "exempt Alaskan oil"
ultimately did commence after this litigation was initiated.  In
support of its decision, the district court relied on Carter v. Carter
Coal Co., 298 U.S. 238 (1936), Pennsylvania v. West Virginia, 262 U.S.
553 (1923), and Pierce v. Society of Sisters, 268 U.S. 510 (1925), in
which this Court had held that constitutional issues raised in suits
for injunctive relief were ripe for decision upon a showing that the
alleged constitutional injury was, in fact, about to be incurred by
the litigants.

   But those precedents have no application to this case, where the
only statutory basis for the district court's jurisdiction is 28
U.S.C. 1346(a)(1), which permits actions to be maintained against the
United States for the recovery of taxes alleged to have been
erroneously or illegally assessed and collected.  Pursuant to the
terms of Section 7422(a) of the 1954 Code, the district court's
jurisdiction in a refund suit is limited to those instances in which
the taxpayer has filed an administrative refund claim.  See United
States v. Felt & Tarrant Co., 283 U.S. 269, 272-273 (1931);  Biggs v.
United States, 326 F. Supp. 749, 751 (E.D. Ky. 1971);  cf. Rosengarten
v. United States, 181 F. Supp. 275, 279 (Ct. Cl.), cert denied, 364
U.S. 822 (1960).  Accordingly, the district court's jurisdiction was
limited to the periods for which claims for refund had been filed,
i.e., March 1, through December 31, 1980.  /36/

   2. Moreover, the question is not simply one of ripeness, as such,
but whether, assuming the district court's reading of the Uniformity
Clause is correct, the Act could be deemed to violate the Clause when,
in fact, during the only periods for which the legality of the tax can
be questioned in this refund suit, the taxing provisions operated with
precisely the same force and effect in every place where the subject
was found.  Since the assertedly defective provisions remained wholly
inoperative during the period for which the taxes in question were
collected, there was not simply "substantial uniformity," but absolute
geographical uniformity with respect to the imposition of those taxes
during those periods.  Hence, appellees suffered no injury from the
alleged unconstitutionality of the exemption.

   Had Congress exempted oil produced in the State of Hawaii, an area
in which oil never has been found, its action might be characterized
as somewhat bizarre and irrational, but it could hardly be contended
that such an exemption would cause the tax to run afoul of the
Uniformity Clause.  By the same token, until such time as "exempt
Alaskan oil" was actually produced (and, thus, until such time as its
producers were actually given the benefit of the exemption), the
provisions here in question stand on the same footing.  Hence,
appellees are not entitled to refunds for the periods in suit.  /37/

                                  II

 EVEN IF THE ALASKAN OIL EXEMPTION VIOLATES THE UNIFORMITY CLAUSE, THE
REMAINING PROVISIONS OF THE WINDFALL PROFIT TAX ARE SEPARABLE AND
SHOULD BE UPHELD

   1. Assuming that the exemption provisions of Sections 4991(b)(3)
and 4994(e) violate the Uniformity Clause (even for periods prior to
December 1981), the district court nevertheless erred in holding the
entire tax invalid.  The general rule is that (Lynch v. United States,
292 U.S. 571, 586 (1934)):

      * * * a statute bad in part is not necessarily void in its
      entirety.  A provision within the legislative power may be
      allowed to stand if it is separable from the bad.  But no
      provision however unobjectionable in itself, can stand unless it
      appears both that, standing alone, the provision can be given
      legal effect and that the legislature intended the
      unobjectionable provision to stand in case other provisions held
      bad should fall.  Dorchy v. Kansas, 264 U.S. 286, 288, 290.

   See Stern, Separability and the Separability Clauses in the Supreme
Court, 51 Harv. L. Rev. 76, 77 (1937).

   It is firmly established that, in the absence of compelling
evidence to the contrary, the Court will presume that Congress intends
the unconstitutional portion of a statute to be severed from the
remainder.  "'The cardinal principle of statutory construction is to
save and not to destroy'." Tilton v. Richardson, 403 U.S. 672, 684
(1971) (plurality opinion), quoting NLRB v. Jones & Laughlin Steel
Corp., 301 U.S. 1, 30 (1937).  The invalid portions of a statute are
to be severed "'(u)nless it is evident that the Legislature would not
have enacted those provisions which are within its power,
independently of that which is not'." Buckley v. Valeo, 424 U.S. 1,
108-109 (1976), quoting Champlin Refining Co. v. Corporation
Commission, 286 U.S. 210, 234 (1932).

   There can be little doubt that the portions of the statute
remaining after the excision of Sections 4991(b)(3) and 4994(e) can be
given legal effect standing on their own.  If the Alaskan exemption
provisions were removed, then all oil production would be taxed under
the remaining statutory provisions.  Profit from production that would
otherwise qualify as "exempt Alaskan oil" would then be taxed as "tier
3 oil" (unless, of course, it fell within one of the other exemptions
in the statute).  /38/ Moreover, despite the district court's
assertion that "the legislative history and spirit remains somewhat of
an enigma in this case" (J.S. App. 9a), that history makes it
abundantly clear that this is not (United States v. Raines, 362 U.S.
17, 23 (1960)):

      that rarest of cases where this Court can justifiably think
      itself able confidently to discern that Congress would not have
      desired its legislation to stand at all unless it could validly
      stand in its every application.

   Section 7852(a) of the 1954 Code provides that "(i)f any provision
of this title (26 U.S.C.), or the application thereof to any person or
circumstances, is held invalid, the remainder of the title, and the
application of such provision to other persons or circumstances, shall
not be affected thereby." This separability provision has been
included in the tax laws in virtually identical terms since the
Revenue Act of 1921, ch. 136, Section 1403, 42 Stat. 321.  The
presence of this clause creates a strong presumption that Congress
intended the valid portions of the Internal Revenue Code to be
separated from invalid portions.  /39/ See McElroy v. United States ex
rel. Guagliardo, 361 U.S. 281, 283 (1960);  Electric Bond & Share Co.
v. SEC, 303 U.S. 419, 434 (1938);  Carter v. Carter Coal Co., 298 U.S.
238, 312-313 (1936).

   Moreover, the pertinent legislative history of the Windfall Profit
Tax confirms that Congress understood that in the event the Alaskan
exemption provisions were declared invalid, the saving provision of
Section 7852(a) would become fully applicable.  During the debate on
the tax, several Senators voiced reservations as to the
constitutionality of the Alaskan oil exemption.  126 Cong.Rec. S2771,
S2773-2774 (daily ed. Mar. 20, 1980);  S2825-2828 (daily ed. Mar. 21,
1980);  S2854-2855 (daily ed. Mar. 24, 1980) (comments and submissions
of Senators Bellmon, Boren, Schmitt, and Stevens).  In response,
Senator Long, the Chairman of the Finance Committee and the floor
manager of the bill in the Senate, expressed the view that the bill
satisfied the requirements of the Uniformity Clause.  126 Cong. Rec.
S3055-3056 (daily ed. Mar. 26, 1980).  But, recognizing the
possibility that the "exempt Alaskan oil" provisions might be held to
violate that requirement, he noted (id. at 3056):

      It is our thought that there is a seaprability clause in the
      Internal Revenue Code which applies to everything in the code
      and to all amendments to it, and we would expect and we would
      intend, if the courts should find a constitutional objection
      valid with respect to the Alaskan oil exemption, that the
      Alaskan oil exemption should not stand and that Alaskans or
      those producing oil in Alaska would have to pay the same 30
      percent tax on new oil that everybody else would have to pay.

   No contrary views were expressed as to the applicability or
operation of Section 7852(a) by any proponent or opponent of this
legislation in either the House or the Senate.  There is nothing
"enigmatic" in this statement by the chairman of one of the two
committees responsible for drafting this legislation.  /40/ Senator
Long's statement demonstrates that Congress was fully aware that the
provisions added to the Internal Revenue Code by the Crude Oil
Windfall Profit Tax Act would be subject to the "separability clause"
of Section 7852(a), and that if the Alaska oil exemption were held
invalid the exemption would be severed and the windfall profit tax
itself preserved.  /41/

   Finally, even apart from this explicit statement as to the
applicability of the separability clause of Section 7852(a), it can
hardly be thought that Congress would not have enacted a windfall
profit tax if it could not have provided the Alaskan exemption in its
present form.  /42/ The legislative history of the Act makes clear
that the adoption of the tax was the price exacted for the concomitant
decontrol of domestic oil prices, and that the main purpose of the tax
was to raise revenue.  See H.R. Rep. No. 96-304, supra, at 4, 7;  S.
Rep. No. 96-394, supra, at 6-7.  There is no doubt, of course, that
Congress was concerned that the general imposition of a windfall
profit tax with respect to "newly discovered oil" could have a
deterrent effect on future discovery and development, particularly in
the case of new Alaskan oil.  But there is no indication in the
legislative history that this was such a critical consideration that
Congress would have entirely foregone the adoption of this tax, and
the $227.3 billion in revenue it was estimated to produce over a 12-15
year period, if it could not have provided an exemption for North
Slope Alaska oil.  /43/

   In light of the continuing presence of a separability clause in the
Internal Revenue Code, as well as the legislative history, the
district court erred in ascribing significance (J.S. App. 8a) to the
fact that a separate separability clause was not contained in the Act
itself.  There was simply no reason for Congress to add a separability
clause to the Act in order to preserve those provisions of it that
amended or were added to the Internal Revenue Code.  Section 7852(a)
has been held applicable to amendments to the 1954 Code as well as to
provisions that were included in the original 1954 recodification of
the internal revenue laws.  See Sipes v. United States, 321 F.2d 174,
178 (8th Cir.), cert. denied, 375 U.S. 913 (1963) (amended provision
of 1954 code);  United States v. Castro, 413 F.2d 891, 894 (1st Cir.
1969) (original provision of 1954 Code).  Thus, when the windfall
profit tax provisions of Section 4986 through 4998 were added to the
Internal Revenue Code, each of those provisions became subject to the
separability clause of Section 7852(a) to the same extent as any other
provision of the Code.  As we have noted (supra, pp. 45-46), that was
the precise understanding expressed by Senator Long during the debate
on the uniformity question.  /44/

   2. In refusing to apply the separability clause of Section 7852(a),
the district court reasoned (J.S. App. 9a-10a) that it would be
engaging in impermissible judicial legislation if it extended the tax
to crude oil producers that Congress intended to exempt.  But the
district court engaged all the more so in judicial legislation when it
declined to enforce any portion of this statute after finding one
portion invalid.  That holding flouts the legislative history that
strongly establishes a congressional preference that the invalid
portion be severed and the remaining provisions of the Act enforced.
While the district court's ruling follows precedents of an earlier era
(see, e.g., United States v. Reese, 92 U.S. 214 (1875);  Employers'
Liability Cases, 207 U.S. 463 (1908);  Trade-Mark Cases, 100 U.S. 82
(1879)) when the courts adhered to a rigid separability rule that
"required invalidation of an entire statute if any part of it was
unconstitutionally broad, unless its different parts could be read as
wholly independent provisions" (Griffin v. Breckenridge, 403 U.S. 88,
104 (1971)), "(t)his Court has long since firmly rejected that rule *
* * " (ibid.).

   Finally, the district court's suggestion (J.S. App. 9a-10a) that
the courts are powerless to apply a separability clause or general
severability principles in such a way as to strike down a
constitutionally invalid tax exemption without striking down the tax
itself is contrary to Utah Power & Light Co. v. Pfost, 286 U.S. 165
(1932).  There, a state tax statute containing a separability clause
was similarly challenged on the ground that an exemption provision in
the statute was unconstitutional.  While the Court ultimately found it
unnecessary to decide whether the exemption was actually invalid, it
squarely rejected the contention that a defect in the exemption
provisions would render the entire taxing statute unconstitutional.
In this respect, this Court held (286 U.S. at 185):

         The primary object of the statute, under review, plainly, is
      to raise revenue.  The exemption * * * and the provisions for
      carrying that exemption into effect are secondary.  We find no
      warrant for concluding that the legislature would have been
      content to sacrifice an important revenue statute in the event
      that relief from its burdens in respect to particular
      individuals should become effective.  On the contrary, it seems
      entirely reasonable to suppose that if the legislature had
      expressed itself specifically in respect of the matter, it would
      have declared that the tax, being the vital aim of the act, was
      to be preserved even though the specified exemptions should fall
      for lack of validity.

   Here, the same conclusion as to the "vital aim" of the windfall
profit tax, if anything, finds even stronger support in the
legislative history showing Congress' principal intent to collect
$227.3 billion from those persons who enjoy the "windfall profit"
resulting from the decontrol of crude oil prices.  /45/ Therefore,
even if it is assumed that the Alaskan oil exemption is barred by the
Uniformity Clause, the "separability clause" of Section 7852(a) saves
the remaining provisions of the Act.  Hence, the tax remains fully
applicable to the appellees regardless of the merits of their
Unifomity Clause contention.  /46/

                              CONCLUSION

   The judgment of the district court should be reversed.

   Respectfully submitted.

   LAWRENCE G. WALLACE

      Acting Solicitor General /*/

   JOHN F. MURRAY

      Acting Assistant Attorney General

   STUART A. SMITH

      Assistant to the Solicitor General

   GARY R. ALLEN

   WILLIAM S. ESTABROOK

   KRISTINA HARRIGAN

      Attorneys

   /*/ The Solicitor General is disqualified in this case.

   FEBRUARY 1983

   /1/ Appellees are the taxpayers Harry Ptasynski, John Patridge,
Berton W. Avery, Goldie Avery, Frederick S. Johnson, and the Calvin
Petroleum Corporation.

   Appellee-intervenors are the Independent Petroleum Association of
America, American Association of Petroleum Landmen, Association of
Oilwell Servicing Contractors, Eastern Kansas Oil and Gas Association,
Liaison Committee of Cooperating Oil and Gas Associations, Arkoma
Basin Independent Gas Producers Association, California Independent
Producers Association, Illinois Oil and Gas Association, Indiana Oil
and Gas Association, Independent Oil and Gas Association of West
Virginia, Independent Petroleum Association of Mountain States, Kansas
Independent Oil and Gas Association, Louisiana Landowners Association,
Inc., Michigan Oil and Gas Association, New York State Oil Producers
Association, Independent Oil Producers Tri-State, Inc., Independent
Petroleum Association of New Mexico, Kentucky Oil and Gas Association,
Louisiana Association of Independent Producers and Royalty Owners,
National Stripper Well Association, North Texas Oil and Gas
Association, Ohio Oil and Gas Association, Panhandle Producers and
Royalty Owners Association, Pennsylvania Oil and Gas Association,
Tennessee Oil and Gas Association, Virginia Oil and Gas Association,
Oklahoma Independent Petroleum Association, Pennsylvania Grade Crude
Oil Association, Permiam Basin Petroleum Association, Texas
Independent Producers and Royalty Owners Association, West Central
Texas Oil and Gas Association, and the States of Texas and Louisiana
(see J.A. 7-8, 13).

   /2/ The order dated November 12, 1982, appears to have been
withdrawn and replaced with the November 15 order before it was
entered on the court's docket sheets (J.A. III).

   /3/ Although the judgment order of November 4, 1982, appears to
have been interlocutory, the orders of November 12 and November 15,
1982, were final judgments because they determined the specific
amounts to be refunded as sought in the pleadings and they contain the
requisite determination that there is no just reason for delay in the
entry of final judgment on the claims addressed.  See Fed. R. Civ. P.
54(b).  At all events, all three orders are appealable to this Court
under 28 U.S.C. 1252.  See United States v. Clark, 445 U.S. 23, 25-26
n.2 (1980).

   /4/ Title II of the Act, 94 Stat. 256 et seq., provides for various
energy expenditure and investment credits, unconventional fuel
production credits, energy related uses of tax-exempt bonds, and
special income tax deductions for "tertiary injectant expenses." Title
III of the Act, 94 Stat. 288 et seq., provides for energy assistance
for certain low income households, and Title IV, 94 Stat. 299 et seq.,
provides for a number of miscellaneous amendments to unrelated
provisions of the Internal Revenue Code of 1954 and other statutes.

   /5/ Under Section 4990, the tax is to be phased out over a 33-month
period, beginning with the later of January 1988, or the first month
(not later than January 1991) after the Secretary of the Treasury
estimates that aggregate net revenues from the tax will exceed $227.3
billion as of the end of that month.  Under Section 102 of the Act, 94
Stat. 255, revenues collected in the interim are required to be
allocated to a separate account in the Treasury for the following
uses:  (1) income tax reductions (60%), (2) low-income assistance
(25%), and (3) energy and transportation programs (15%).

   /6/ In the case of "tier 1 oil" -- i.e., oil that does not qualify
for the more favorable treatment accorded "tier 2" or "tier 3" oil --
the base price reflects the applicable ceiling price (less 21 cents)
for such oil if it had been sold as "upper tier" oil in May 1979,
prior to the beginning of the phase out of the oil price controls
provided for under the Energy Policy and Conservation Act of 1975,
Pub. L. No. 94-163, 89 Stat. 871.  Such "upper tier" prices under the
then applicable regulations averaged $13.02 per barrel.  H.R. Conf.
Rep. No. 96-817, 96th Cong., 2d Sess. 92 (1980).  The "base price" of
"tier 2" and "tier 3 oil" is equal to the price at which such oil
would have been sold in December 1979 on the assumptions (1) that the
price of all domestic crude oil was then uncontrolled;  and (2) that
the average prices for domestic crude oil were then $15.20 per barrel
for "tier 2 oil" and $16.55 for "tier 3 oil." Section 4989(c) and (d).

   /7/ Section 602 of the Economic Recovery Tax Act of 1981, Pub. L.
No. 97-34, 95 Stat. 337, amended Section 4987(b) to reduce the
applicable tax rate in the case of "newly discovered oil" from 30% to
15%, in gradual steps during the period 1982-1986.

   /8/ Further exemptions were provided for certain oil produced by
independent producers from "stripper well propert(ies)" and specified
portions of a "qualified royalty owner's qualified royalty
production," under amendments made to Sections 4991(b) and 4994 by
Section 601 of the Economic Recovery Tax Act of 1981, Pub. L. No.
97-34, 95 Stat. 336-337.

   /9/ The tax is deductible, for income tax purposes, by the producer
under Section 164(a)(5) of the 1954 Code, as added by Section 101(b)
of the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. No. 96-223,
94 Stat. 250.  Certain holders of royalty interests, however, are
entitled to treat up to $1,000 of windfall profit taxes paid with
respect to their "qualified royalty production" for 1980 as a
creditable or refundable "overpayment." Section 6429 of the Internal
Revenue Code of 1954, as added by Section 1131 of the Omnibus
Reconciliation Act of 1980, Pub. L. No. 96-499, 94 Stat. 2691.  These
provisions were extended to encompass "qualified royalty production"
for the year 1981, and the amount allowable as a credit for that year
was increased to $2,500, by Section 601 of the Economic Recovery Tax
Act of 1981.

   /10/ The remaining appellees are 30 trade associations whose
members are alleged to be oil producers or royalty holders subject to
the tax, and the States of Texas and Louisiana, which were permitted
to intervene in the case.  See n.11, infra.  Two other individual
producers withdrew from the suit.

   /11/ The original complaint did not allege that any of appellees
filed administrative refund claims with respect to the taxes.
However, appellees filed two amended complaints alleging that the
producers and royalty holders had filed refund claims covering taxes
paid for one or more taxable periods in calendar year 1980.  The
amended complaints also sought an order restraining the further
assessment or collection of windfall profit taxes.  Because the second
amended complaint supplanted the earlier pleadings, the parties have
not reproduced the previously filed complaints in the joint appendix.

   In response to the government's motion to dismiss, urging, inter
alia, that several trade associations lacked standing to join the
action as plaintiffs, the district court dismissed the associations as
plaintiffs but permitted them to remain as permissive intervenors.
Moreover, over the government's objection, the district court
permitted the States of Texas and Louisiana to intervene in the
litigation urging that the windfall profit tax violates the Tenth
Amendment as well as the Uniformity Clause (J.S. App. 61-2a;
Louisiana Mot. to Aff. 3).

   Finally, a subsequent suit that was filed by appellee John
Partridge (J.A. 61-67), after filing a new refund claim covering all
taxable periods in calendar year 1980, and which sought identical
relief, was consolidated with the original action (J.S. App. 2a;  J.A.
77).

   /12/ Although its ruling that the Windfall Profit Tax Act violated
the Uniformity Clause obviated the necessity for consideration of
appellees' claim that the Act was barred by the Due Process Clause of
the Fifth Amendment, the court concluded that "(t)he Fifth Amendment
challenge to the windfall profits tax is unfounded, and without merit
* * * " (J.S. App. 10a).

   /13/ In its final amended judgment, the district court noted that
its ruling was restricted to the provisions added by Title I of the
Crude Oil Windfall Profit Tax Act of 1980 (26 U.S.C. (Supp. V)
4986-4998), and that it did not intend to hold the remaining
provisions invalid as a result of its conclusion that the "exempt
Alaskan oil" provisions could not be severed from the remaining
provisions of the Act (J.S. App. 16a).

   The district court stayed the effect of its order (J.S. App. 17a).
Hence, no refunds have been issued to appellees and the windfall
profit tax continues to be collected pendente lite.  Accordingly,
although the government argued below that appellees' suit for
injunctive and declaratory relief is barred by the Anti-Injunction Act
(26 U.S.C. (Supp. V) 7421(a)) and the tax exception to the Declaratory
Judgment Act (28 U.S.C. (Supp. V) 2201), this Court need not decide
those questions.

   /14/ Even on the assumption that the Uniformity Clause prohibits
Congress from drawing a distinction between North Slope "newly
discovered oil" and other domestic "newly discovered oil," there was
still no violation of the Uniformity Clause during the periods
properly in question here.  It was uncontested that there was, in
fact, no production of "exempt Alaska oil" during the periods covered
by any of the refund claims in issue.  Hence, during the only periods
for which the legality of the tax can be questioned in this refund
suit, the taxing provisions operated with precisely the "same force
and effect in every place where the subject * * * (was) found." Put
another way, all oil falling into each taxable category established by
the Act (including "newly discovered oil") was subject to tax during
these periods on the same basis whereever it was found.  Since the
assertedly defective provisions remained wholly inoperative during the
period for which the taxes in question were collected, there was not
simply "substantial uniformity," but strict geographical uniformity
with respect to the imposition of those taxes during those periods.

   /15/ At an absolute minimum, the separability clause of Section
7852(a) should be applied to sustain those portions of the taxing
statute that apply to all categories of oil other than "newly
discovered oil," which is the only type of oil that could ever qualify
for the Alaskan exemption (see p. 50-51, n. 46, infra.).

   /16/ The amounts at stake are of enormous magnitude, and almost
certainly exceed the revenues at issue in any other federal tax case
ever presented to this Court.  As we pointed out in our jurisdictional
statement (at 8), it is estimated that the net windfall profit tax
revenues from the inception of the tax through the end of the 1982
fiscal year are in excess of $26 billion, and that the net revenues
during the next five years will be approximately $50 billion.

   The gross revenues from the windfall profit tax through the end of
fiscal year 1982 are estimated to be $50 billion.  The windfall profit
tax, however, is deductible for federal income tax purposes, under
Section 164(a)(5) of the 1954 Code, and the windfall profit taxes
attributable to economic interests owned by the United States reduce
proprietary receipts.  Accordingly, the net budgetary impact of the
statutory provisions in question is smaller than the gross liability,
but nevertheless very substantial.

   /17/ The phase-out of price controls on domestic crude oil was
actually completed by Exec. Order No. 12287, 3 C.F.R. 124, issued by
President Reagan on January 28, 1981.

   /18/ See, e.g., Section 4991(e)(1)(B) and (e)(3) placing "heavy
oil" in the favorable category of "tier 3 oil."

   /19/ See, e.g., Section 4987(b)(2), providing for reduced tax rates
in the case of "independent producer oil" as defined by Section 4992.

   /20/ See, e.g., Section 4991(d)(1)(A) and (e)(1) providing that oil
from "stripper well" properties and "incremental tertiary oil," as
defined in Section 4993, are to be favorably treated as "tier 2 oil"
and "tier 3 oil," respectively.

   /21/ See Section 4991(e)(1)(A), providing that "newly discovered
oil" is to be favorably treated as "tier 3 oil."

   /22/ As the Joint Committee staff study indicated (House Hearings,
supra, at 21), the world price of oil would have to rise (as it
ultimately did) to at leaet $22 per barrel (or the tariff rate for the
Trans-Alaska Pipeline would have to be correspondingly reduced) in
order for the price of Alaskan oil to rise to its then applicable
ceiling price.  The staff study also indicated (at 22) that the
exemption was intended "to eliminate the possibility of creating a
disincentive for the production of Alaskan oil." Although it concluded
that there was relatively little risk that a tax on Sadlerochit oil
would discourage production, it noted that production costs for the
other two known Prudhoe Bay reservoirs would be higher.

   /23/ The Finance Committee proposal, like the provisions ultimately
enacted (Section 4991(a)(2)), provided that the term "newly discovered
oil" has the same meaning it had in the June 1979 energy regulations.
Under that definition, the term would encompass all oil from
properties from which no crude oil was produced in calendar year 1978.
 See 10 C.F.R. 212.79(b) (1981), 44 Fed. Reg. 25828, 25832 (1979).  As
the committee noted, this definition of "newly discovered oil" would
exclude Sadlerochit oil.  S. Rep. No. 96-394, supra, at 42-43.

   /24/ Amendments previously offered by Senators Ribicoff and Bradley
would have taxed the "windfall profit" from "newly discovered oil" at
a rate of 20%, but also would have exempted "newly discovered oil"
produced north of the Arctic Circle.  125 Cong. Rec. 35258 (1979).
Concerns with respect to the high costs and risks involved in
producing North Slope oil and the disincentive to further exploration
and development that would be imposed by subjecting that oil to tax
had been expressed by both Senator Gravel (125 Cong. Rec. 31733
(1979)) and Senator Stevens (125 Cong. Rec. 33850, 34006-34009 (1979).

   /25/ One apparent exception is the classification of "heavy oil,"
which is defined in terms of its physical characteristics (Section
4991(e)(3)).  This category is included within the favorably treated
"tier 3" group.  This classification, however, is not based on the
fact that such oil has any favorable characteristics, but on the fact
that it is more "tar-like" and, hence, more difficult to produce.  S.
Rep. No. 96-394, supra, at 51.  Accordingly, the favorable treatment
for "heavy oil," like that for "newly discovered oil" and "incremental
tertiary oil," is based on considerations relating to the profit
incentive necessary to employ the production techniques to produce
such oil rather than the physical characteristics of the oil itself.

   /26/ The basis for Congress' concern as to the effect of the
imposition of even the smallest tax on new production on the North
Slope is shown by the fact that a relatively small reduction in the
price of oil during 1982 led to a slowdown of development in the
Kuparuk River field.  See 80 Oil and Gas J. 83 (July 12, 1982).  The
continued drop in oil prices is expected to delay exploitation of new
finds in the area.  See 286 The Economist 57, 59 (Jan. 29, 1983).

   /27/ Offshore oil found further than three miles from Alaska's
coastline and located on the Outer Continental Shelf is subject to the
exclusive jurisdiction and control of the United States.  Jurisdiction
over offshore areas closer than three miles has been conferred on the
states by federal statute.  Submerged Lands Act, 43 U.S.C. (Supp. IV)
1301-1315;  see Maryland v. Louisiana, 451 U.S. 725, 730 (1981).  The
exercise of the taxing power with respect to activities outside the
states themselves is not subject to the Uniformity Clause.  See p.
32-33 n.33, infra.

   /28/ As of the end of 1981, estimated proven reserves for the
Kuparuk River field (the first "exempt Alaskan oil" to go into
production) were 447 million barrels as compared with reserves for the
Prudhoe Bay field of 7.2 billion barrels, most of which is in the
Sadlerochit formation.  Alaska Oil and Gas Conservation Commission,
1981 Statistical Report 23;  The Design of the Windfall Profit Tax,
supra, at 21.  All other proven Alaskan reserves (ibid.) are in other
areas not encompassed by Section 4994(e).  In their Mot. to Aff., the
taxpayer and association appellees assert (p. 3 n.4) that there are
estimated "undiscovered reserves" in the exempt area of 17.2 billion
barrels.  However, most "undiscovered recoverable resources" are
attributed to offshore areas (see Geological Survey Circular 860, at 2
(Table 1), 74, 76, 78-79 (1981)).  See also Operator Interest in U.S.
Beaufort Sea, 80 Oil and Gas Journal 72, 77 (July 12, 1982);  65 AAPG
Bulletin 1757, 1758 (Oct. 1981), indicating that much of the oil to be
extracted from exempt regions will likely come from wells drilled on
the outer continental shelf in areas leased from the United States.
For example, while state leases in the exempt area totalled $59.7
million in 1982, federal leases in the Outer Continental Shelf for
that year totalled more than $2 billion.  More significantly, the
highest per/acre bid in the federal sales was $39,901, compared to the
highest per acre bid in the state sales of $6.397.  80 Oil and Gas and
Gas J. 58 (May 31, 1982);  id. at 48-50 (Oct. 18, 1982).

   /29/ Although the taxpayer and association appellees suggest (Mot.
to Aff. 2 n.1) that it is inaccurate to refer to the exemption as a
"north Slope" or "Arctic oil" exemption because the exempt area
defined by Section 4994(e) includes a large area below the Arctic
Circle, those descriptive terms reflect the practical realities of the
exemption.  There has been no production from, and little exploration
of, this additional area.  Thus, in 1980 and 1981, only three
exploration wells (all on native lands) were drilled in any area of
Alaska outside of the Cook Inlet and North Slope areas.  Geological
Survey Circular 884, at 13.  Estimated undiscovered crude oil
resources in Alaskan areas south of the Arctic Circle and north of the
divide of the Alaska-Aleutian Range are minimal, and possibly
nonexistent.  See Geological Survey Circular 860, supra, at 74-78.  It
is therefore far more accurate to refer to the exemption as a "North
Slope" or "Arctic" exemption than to refer to it, as do the district
court and the appellees, as an "Alaskan exemption."

   /30/ Obviously, none of these states "bear" this tax liability, nor
is there any necessary correlation between the total tax burden that
might be imposed on a particular state's production and the total tax
burden that is borne by the residents of that state.

   /31/ The scope of Section 4994(e) is not, as the Taxpayer and
Association appellees suggest (Mot. to Aff. 10), defined in terms of
the geographic boundaries of the State of Alaska, but in terms of the
relative position of the well vis-a-vis the Arctic Circle or the
divide of the Alaska-Aleutian Range and the Trans-Alaskan Pipeline.

   /32/ In fact, the tax returns for 1981 indicate that there was a
difference of more than $10 per barrel between the removal price of
Sadlerochit oil and "tier 1" oil generally.  See S.I.B., supra, at 44,
Table 4.

   /33/ It is well established, however, that the Uniformity Clause
does not apply at all to territories, federal enclaves, or other
possessions of the United States, but is limited to the States.
Downes v. Bidwell, 182 U.S. 244, 278, 287 (1901);  Mercury Press v.
District of Columbia, 173 F.2d 636, 637 (D.C. Cir., 1948);  Bosley,
The Constitutional Requirement of Uniformity in Duties, Imposts and
Excises, 9 Yale L.J. 164 (1900).  Hence, the Clause places no
restriction on Congress with respect to taxation or exemption of
offshore oil located in the outer continental shelf and, arguably, has
no application in the case of any offshore oil.  See pp. 20-21 n.27,
supra.

   /34/ Railway Labor Executives' Ass'n v. Gibbons, 455 U.S. 457
(1982), upon which the Taxpayer and Association appellees rely (Mot.
to Aff. 6, 9, 12. 17), is not to the contrary.  There, the Court
invalidated an Act of Congress that was "not a response either to the
particular problems of major railroad bankruptcies or to any
geographically isolated problem:  it (was) a response to the problems
caused by the bankruptcy of one railroad" (455 U.S. at 470;  emphasis
in original).  While the Court reaffirmed its prior decision in the
Regional Rail Reorganization Act Cases, supra, as upholding
"bankruptcy laws that apply to a particular industry in a particular
region," it concluded that "(t)he uniformity requirement, however,
prohibits Congress from enacting a bankruptcy law that, by definition,
applies only to one regional debtor" (455 U.S. at 473), i.e., a
private bankruptcy law.

   /35/ The doctrine of ripeness is closely related to, though broader
than, the general requirement of "standing" -- i.e., that a person
challenging the statute be adversely affected by its alleged
unconstitutional operation.  See, e.g., Blum v. Yaretsky, No. 80-1952
(June 25, 1982), slip op. 9 n.13;  Simon v. Eastern Ky. Welfare Rights
Org., 426 U.S. 26, 37-39 (1976).  Here, the producer/royalty holder
appellees concededly had standing to challenge the imposition of the
taxes for the periods for which refund claims had been submitted.  But
the standing of appellees is of little significance in light of the
fact that the district court lacked jurisdiction to adjudicate the
validity of the tax for those periods (see pp. 41-42, infra).

   /36/ Insofar as appellees' claims for declaratory and injunctive
relief with respect to the operation of the tax in later periods are
concerned, the requisite statutory consent to the maintenance of such
suits against the United States is lacking (see United States v.
Sherwood, 312 U.S. 584, 586-587 (1941);  Dugan v. Rank, 372 U.S. 609,
617-618 (1963)) and such relief is expressly barred by the
Anti-Injunction Act (Section 7421(a) of the Internal Revenue Code of
1954) and the tax exception to the Declaratory Judgment Act (28 U.S.C.
(Supp. V) 2201).  The bar of the Anti-Injunction Act is subject to a
narrow exception where (1) under no circumstances could the United
States prevail on the merits of its claim;  and (2) there is no other
adequate legal remedy.  Enochs v. Williams Packing Co., 370 U.S. 1, 7
(1962);  Bob Jones University v. Simon, 416 U.S. 725 (1974).  Even if
the exception were otherwise applicable, however, the doctrine of
sovereign immunity would bar this suit, where the only named defendant
was the United States.  See Buck v. United States, 466 F.2d 481 (10th
Cir. 1972);  Matya v. United States, 478 F.2d 330 (8th Cir. 1973).
Moreover, because any taxpayer actually subject to the tax is free to
file the requisite refund claim and then to bring a refund suit under
28 U.S.C. 1346(a)(1), the second aspect of the Enochs v. Williams
Packing Co. requirement would, at all events, not be satisfied.
Finally, it is highly questionable whether the association and state
appellees would have standing to seek such relief.  See Simon v.
Eastern Ky. Welfare Rights Org., supra;  Massachusetts v. Mellon, 262
U.S. 447, 484-486 (1923);  Florida v. Mellon, 273 U.S. 12, 18 (1927).

   /37/ See also Regional Rail Reorganization Act Cases, supra, 419
U.S. at 159-160.  There, apart from the other reasons stated for
rejecting the plaintiffs' contention that the Rail Act violated the
bankruptcy uniformity requirement, the Court noted that the statute
had operated with absolute geographic uniformity in any event because
no other railroad reorganization proceedings were pending during the
period the Act was in effect.

   /38/ Except for taxable Sadlerochit oil, all oil produced in the
geographical area falling within the Alaskan exemption constitutes
"newly discovered oil," as defined by Section 4991(e)(2).

   /39/ The presumption of separability is especially appropriate in
the case of revenue measures, even without an express separability
clause.  As the Court noted in Field v. Clark, 143 U.S. 649, 696-697
(1892):

      Unless it be impossible to avoid it, a general revenue statute
      should never be declared inoperative in all its parts because a
      particular part relating to a distinct subject may be invalid.
      A different rule might be disastrous in the financial operations
      of the government, and produce the utmost confusion in the
      business of the entire country.

   /40/ As a statement of one of the bill's sponsors, Senator Long's
explanation deserves to be accorded substantial weight in interpreting
the statute.  FEA v. Algonquin SNG, Inc., 426 U.S. 548, 564 (1976);
Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 394-395
(1951).

   /41/ Senator Long also expressed the view that, in the event the
exemption were held invalid and severed, Congress might then consider
whether to devise other relief for high-risk, high-transportation-cost
oil production.  126 Cong. Rec. S3056 (daily ed. Mar. 26, 1980).

   /42/ Senator Stevens of Alaska voted against passage of the Act
(126 Cong. Rec. S3151 (daily ed. Mar. 27, 1980)), as did Alaska's only
House member, Representative Young (126 Cong. Rec. H1861 (daily ed.
Mar. 13, 1980)). Senator Gravel of Alaska did not vote on the matter.
126 Cong. Rec. S3151 (daily ed. Mar. 27, 1980).  Since no member of
Alaska's congressional delegation voted in favor of the Act, taxpayer
and association appellees err (Mot. to Aff. 26-28) in suggesting that
the Alaska oil exemption was the price to obtain the support of the
Alaska representatives for passage of the Act.

   /43/ The district court took pains to make clear its view that its
holding would not affect any of the remaining provisions of the Act
not directly related to the imposition of the windfall profit tax (see
J.S. App. 16a-17a).  But it is far more questionable whether Congress
would have intended to confer the benefits of the energy conservation
and production measures provided by Title II of the Act, the
low-income energy assistance provided for by Title III or, indeed,
possibly any of the relief measures provided by Title IV of the Act,
if the revenues to be generated by Title I would not be forthcoming.

   /44/ In its Mot. to Aff. 15-16, appellee State of Louisiana urges
that the provisions of Section 7852(a) serve only to preserve the
pre-existing provisions of the Internal Revenue Code of 1954, and that
the provision to be nullified is "the Act" that added unconstitutional
provisions.  On this theory, of course, the provisions added to the
Code by the other titles of the Act would also presumably be
nullified, a course the district court declined to take (see n. 13,
supra).

   In marked contrast, the Taxpayer and Association appellees assert
(Mot. to Aff. 21) that the exemption itself would be perfectly valid
if it stood on its own, and that Section 7852(a) should therefore be
applied to strike down the entire windfall profit tax (thereby
preserving the "valid" exemption).  Surely, however, Section 7852(a)
was intended to preserve the revenue by avoiding such drastic
remedies, not to require them.  Moreover, Senator Long, without
contradiction, specified how Section 7852(a) was intended to apply if
the Uniformity Clause were deemed violated.

   /45/ Contrary to the argument of the Taxpayer and Association
appellees (Mot. to Aff. 21), the severability question is not governed
by Iowa-Des Moines National Bank v. Bennett, 284 U.S. 239 (1931),
rather than by the Court's subsequent decision in Utah Power & Light
Co. v. Pfost, supra.  Indeed, that prior decision did not involve
either an invalid statutory tax exemption, the application of a
separability clause, or general separability principles.  What was
challenged in Iowa-Des Moines National Bank was not an
unconstitutional statute, but an allegedly discriminatory
administration of a state statute that, by its terms, provided for the
imposition of the same rate of tax against the petitioner banks and
their competitors.  The administering officials, however, collected a
lower rate of tax from the competitors, in violation of the state
statute, the Equal Protection Clause of the Fourteenth Amendment, and
the federal statutory requirement (Rev. Stat. 5219 (1878 ed.)) that
state taxes on national banks be imposed on a nondiscriminatory basis.
 While the Court did conclude that the proper remedy there was to
grant the petitioners a refund of the difference between the two rates
rather than to compel the State to collect the higher (and correct)
amount of the tax from their competitors (284 U.S. at 247), it is
clear that it did not intend this holding as a strict rule against
applying separability clauses in such a way as to eliminate invalid
exemption provisions.  Indeed, only a few months later in the same
Term, in Utah Power & Light Co., the Court rejected virtually the same
argument as that advanced here without even mentioning the Iowa Des
Moines Bank decision.

   /46/ Even if the district court correctly held that the
"separability clause" of Section 7852(a) of the Code could not
properly be applied in such a way as to result in the imposition of a
tax on the members of the class that Congress had given the benefit of
an invalid exemption, i.e., the holders of economic interests in
"exempt Alaskan oil," it should nevertheless have applied it in such a
way as to preserve both the benefit of that exemption and so much of
the tax as would apply with absolute geographic uniformity throughout
the United States, with or without that exemption.  See Welsh v.
United States, 398 U.S. 333, 361 (1970) (Harlan, J., concurring):
"Where a statute is defective because of underinclusion there exist
two remedial alternatives:  a court may either decalre it a nullity
and order that its benefits not extend to the class that the
legislature intended to benefit, or it may extend the coverage of the
statute to include those who are aggrieved by the exclusion." There is
no reason, however, to extend such benefits to those persons who are
not actually aggrieved by the impermissibly narrow classification.
Cf. Califano v. Wescott, 443 U.S. 76, 89 (1979).  Here, the only
persons who are arguably "aggrieved" by the exemption provided by
Sections 4991(b)(3) and 4994(e) are those who are the holders of
economic interests in "newly discovered oil" located in geographic
areas other than those described in Section 4994(e), because that is
the only category of oil that is not taxed with absolute geographic
uniformity.  All of the other categories provided for by the statute
are taxed on precisely the same basis without regard to where such oil
is found.  Moreover, as the legislative history (supra, pp. 19-20)
indicates, whether a tax should be imposed with respect to "newly
discovered oil" was the most controversial aspect of this legislation.
 It can hardly be doubted that the tax would have been imposed with
respect to the less controversial categories -- as to which the
element of "windfall profit" was more apparent -- even if all "newly
discovered oil" had been exempted.  Accordingly, there was no reason
for holding the taxing statute invalid insofar as it applies to
categories other than "newly discovered oil."