In the 1981 case Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., et al., the U.S. Supreme Court ruled that taxpayers do not have standing to challenge a federal government property transfer on constitutional grounds unless they can demonstrate direct injury or harm from such action. The controversy arose when the Department of Health, Education, and Welfare transferred a decommissioned military hospital to Valley Forge Christian College under provisions in the Federal Property and Administrative Services Act of 1949 allowing surplus properties to be used for educational purposes. Americans United for Separation of Church and State argued this violated First Amendment principles separating church from state because it amounted to governmental support for religious education. However, without demonstrating personal harm beyond their status as taxpayers, they lacked legal standing according to majority opinion written by Justice William Rehnquist.

In the dissenting opinion for Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., Justice William J. Brennan Jr., joined by Justices Thurgood Marshall and John Paul Stevens, argued that the majority's decision to deny standing was a departure from precedent which had previously allowed taxpayers to challenge governmental expenditures alleged to violate the Establishment Clause. The dissenters contended that this case should not be treated differently simply because it involved a property transfer rather than direct funding. They also disagreed with the majority's assertion that there was no logical link between taxpayer status and challenging an unconstitutional conveyance of government property, arguing instead that all citizens have a stake in upholding constitutional principles such as church-state separation. Furthermore, they criticized the majority’s narrow interpretation of “injury” required for standing, asserting it undermined effective judicial review.