did not consider filing something in the Supreme Court." I was told by the Office of the Solicitor General that "a determination was made that we should not file anything."

Now I would hope that Congress pursues the question of where the Justice Department thinks it gets the authority to determine that it should mislead the Supreme Court. Evidently it would have been too embarrassed to tell the plain truth-the plain truth that no longer could the case so easily be mooted.

Point 10: On January 25, in the Federal district court here in Washington, where proceedings in the reopened Green case have been stayed at the Justice Department's request since January 6, the Department of Justice filed papers to let the district court know what the President and the Treasury had said on January 18. But between January 25 and the release of the prepared statement that I submitted to this committee yesterday, 9 more days had passed without a word of retraction or correction in the Supreme Court of the United States. During all this time, the Court, among other things, was in a position to be deliberating officially about the Bob Jones and Goldsboro cases. The cases were on their conference agenda for Friday, January 22. It would be wonderful to have been a fly on the wall in the Solicitor General's Office on the preceding day when they must have been trying to figure out what they could do to avoid having the Court proceed the next day. Just simply telling the truth was evidently much too complicated.

Now if the Department of Justice should finally, today or soon thereafer, file something in the Supreme Court-and I have reason to believe that sometime this morning, having seen the statement that I submitted yesterday, they are filing something-should they do that, it will still be important to understand why the Department of Justice knowingly misled the Supreme Court on a crucial matter for nearly 3 weeks. That in itself was a serious breach of duty. The breach is aggravated by the only possible explanations. One possibility is that they hoped the Court would actually be misled into throwing the cases out as moot. That would relieve the Government of various political problems. The other possibility is that maybe they didn't really want that to happen, but they still found the risk of misleading the court more acceptable than the political costs of angering some of the administration's allies by straightening the Court out. Either explanation, I am afraid, is rather sordid.

That leads to point 11: If the Department of Justice does in the near future file a correction with the Court, it will be interesting to see, first, how it explains to the Court the 3-week delay, and, second, what it tells the Court about the revocation of those revenue rulings, the ones that the Department had told the Court on January 8 it had already placed in the shredder-the ones that the Department had said it had already commenced revoking forthwith.

The January 25 submission by Justice to the district court was strangely silent about the revenue rulings. Not a word was said about the issue. If those rulings are not being revoked after all, then the Supreme Court had better be so informed, for the deception continues. If the revenue rulings are being revoked, then the House and Senate must be so informed, because the promise made

e

e

to this body-that, until it acts the only recipient of tax breaks for racist schools will be Bob Jones and Goldboro-that promise cannot be kept.

My basic conclusion is that the problem that has been partially exposed and that I hope will be exposed more fully when the administration testifies, lies much more in the realm of ethics than in the world of tax policy.

What I am afraid we have seen is a sad display of cynical disregard for simple truth, calculated defiance of law-including existing judicial decrees that bind the very Department of Justice that claims there is no law on the subject-and callous disrespect for the equal dignity of every citizen.

The need, if I am right in these evaluations, is not for more laws or resolutions, but for a deeper look, by this or by some other appropriate committee, into how executive officials, so personable and so well meaning, could have taken their constitutional duties and our constitutional rights so casually.

Thank you very much.

[The statements of Mr. Tribe follow:]

STATEMENT OF LAURENCE H. TRIBE, PROFESSOR OF CONSTITUTIONAL LAW, HARVARD
LAW SCHOOL

CONSTITUTIONAL IMPLICATIONS OF THE ADMINISTRATION'S DISREGARD OF JUDICIAL DE-
CREES AND CONGRESSIONAL ACTIONS REGARDING THE TAX STATUS OF RACIALLY DIS-
CRIMINATORY PRIVATE SCHOOLS

I. Introduction

I am honored to appear at the Committee's invitation to testify about the implications of the Administration's recent repudiation of settled legal principles and binding judicial decrees regarding the tax status of racially discriminatory private schools.

As I trust both my prepared testimony and my discussion with the Committee will make clear, high officials of the Executive Branch, including the Secretary of the Treasury, the Attorney General, and the President himself, have abruptly undertaken to accord favored tax treatment to certain racially discriminatory private schools, in derogation of the basic duty of these officials faithfully to execute the Constitution and laws of the United States. These departures from the rule of law have, in turn, been both facilitated and aggravated by serious misrepresentations to the press, the public, and the Supreme Court.

Thus, if any action by Congress is called for, it is not legislative action to clarify or change the tax status of racist schools-a matter that was relatively clear until the Administration muddied it—but investigative and other corrective action to explore and remedy what appear to be grave abuses of office at the highest levels of the Executive Branch.

II. The Administration's Abrogation and Misrepresentation of Settled Law
Regarding Tax Benefits for Racially Discriminatory Private Schools

A. The administration's January 8 announcement of intent to give favorable tax
treatment to racially discriminatory schools

On January 8, 1982, the Treasury Department and the President announced publicly, and the Justice Department officially advised the Supreme Court, that the Government no longer read the Internal Revenue Code to deny tax-exempt status under section 501(c)(3) to racially discriminatory private schools or to deny tax deductions under section 170(c)(2) for contributions to such schools, and that the Treasury had accordingly "commenced the process necessary to revoke forthwith the pertinent [IRS] Rulings" implementing the prior understanding of the Revenue Code. At a press conference on January 8, spokesmen for the Treasury Department stated that this action would restore tax-exempt status to more than one hundred racially discriminatory schools. In Treasury's view, the IRS lacked "legislative authority to deny tax-exempt status to otherwise eligible organizations on the grounds that their

policies or practices do not conform to notions of national public policy." According to Deputy Secretary of the Treasury R. T. McNamar, the administration, in implementing this new position, was merely "attempting to protect the independence of all private tax-exempt organizations-many of which may follow practices and adhere to principles with which we disagree." On January 8, and at subsequent press conferences, the President, too, stated that the long-standing IRS denial of taxexempt status for discriminatory schools had "no basis in the law," and represented only a decision by the IRS "to govern by administrative fiat."

B. The applicable law: judicial and congressional actions with respect to tax benefits for schools discriminating against racial minorities

With all respect, these statements are simply preposterous. Although some of the underlying issues are not beyond debate, there is no doubt whatever that the denial of tax exemptions and deductions for racially discriminatory private schools reflects no mere policy preference by IRS officials; such denial is, instead, the direct result of definitive federal court orders requiring the Executive Branch to stop granting tax exemptions to private schools that discriminate on the basis of race and tax deductions to those individuals whose contributions help keep such schools afloat.1 Every federal appellate court to consider the issue since 1971 has reached the same conclusion-namely, that the "policy" now denounced by the Administration as lacking legal foundation is, in truth, a rule of law mandated by the Internal Revenue Code, properly construed. Equally important, there has been general agreement that any contrary reading of the Code would, at the very least, "raise serious constitutional questions." Green, supra, 330 F. Supp. at 1164, for "the tax-exempt status at issue," as a "government benefit not available to the public generally," Wright v. Regan, 656 F. 2d 820, 831 (D.C. Cir. 1981), petition for certiorari pending, is a form of special government support that obstructs public school desegregation and that black schoolchildren and their parents reasonably contend "stigmatizes [them] by signalling official approbation of educational institutions that perpetuate tions, once prevalent in our nation, of the inferior quality of the black race," 656 F. 2d at 836-37. See Norwood v. Harrison, 413 U.S. 455, 467 (1973)(government's "constitutional obligation [is] to steer clear... of giving significant aid to institutions that practice racial . . . discrimination.") 2

no

Congress itself, as the Court of Appeals for the District of Columbia Circuit recently noted, "appears to agree. . . that section 501(c)(3) does not accommodate taxexempt status for racially discriminatory private schools." Wright, supra, 656 F.2d at 834 n.40. For "Congress overturned a court holding, McGlotten v. Connally, 338 F. Supp. 448, 457–59 (D.D.C. 1972) (three-judge court), that nonprofit social clubs, although racially discriminatory, were eligible for tax-exempt status under section 501(c)(7). Congress added section 501(i), which explicitly denies exempt status to social clubs that discriminate against any person on the basis of race, color, or religion.' The Senate Report on the private club provision cites Green [the 1971 three-judge court ruling discussed in note 1 supra] as the leading case on tax-exempt status under section 501(c)(3) for educational institutions, and reflects an understanding that race discrimination disqualifies private schools from obtaining or retaining tax exemption. S. Rep. No. 1318, 94th Cong., 2d Sess. 8 n.5 (1976), . . ." 656 F.2d at 834 n.40. Indeed, when Congress in 1979 twice passed appropriations riders to restrict the use of federal funds to carry out certain proposed IRS guidelines for enforcing the denial of exempt status to discriminatory schools, it was common

1 In 1971, a three-judge district court permanently enjoined the Treasury Department from granting tax-exempt status to private schools engaging in racial discrimination. Green v. Connally, 330 F.Supp. 1150 (D.D.C. 1971) three-judge court), aff'd mem. sub nom. Coit v. Green, 404 U.S. 997 (1971). Although the injunction by its terms reached only Mississippi schools-the only schools directly involved in the litigation at that time-the court made clear that it was "laying down [no] special rule for schools located in Mississippi" and that the "underlying principle. is applicable to schools outside Mississippi with the same or similar badge of doubt." 330 F.Supp. at 1174.

not

2 As the Fourth Circuit observed, Internal Revenue Code Sections 501(c)(3) and 170(c)2) are "rooted in public policy considerations wholly apart from the "broad basis policy of taxing "net, gross, income. Bob Jones University v. United States, 639 F.2d 147, 152 (4th Cir. 1981), cert. granted 50 U.S.L.W. 3278 (U.S. October 13, 1981). See H.R. Rep. No. 1820, 75th Cong. 3d Sess. 19 (1939) exemption under 501(c)(3) is based on theory that resulting loss of federal revenue is offset by benefits for which public would otherwise have to pay directly). This not a situation, therefore, in which the Government is merely refraining from taxing certain properties or transactions on a wholly neutral theory derived from the nature or definition of the tax involved.

3 See Treasury, Postal Service, and General Government Appropriations Act, 1980, Public Law No. 96-74, 93 Stat. 559 (1979), secs. 103 (Ashbrook amendment) and 615 (Dornan amendment).

ground that the basic requirements of denying tax benefits to such schools through some procedure remained intact: "We are just saying do not go forwared with these broad [IRS] regulations or procedures . . . 125 Cong. Rec. H5882 (daily ed. July 13, 1979) (remarks of Rep. Ashbrook). As Senator Helms put it when supporting such a rider, "existing law [already] provides substantial procedures for the IRS to deny the tax exempt status of schools which discriminate . . . [The riders] preserve the ability of IRS to act against offending schools on a case-by-case basis." 125 Cong. Rec. S11979-80 (daily ed. Sept. 6, 1979).

One would hardly expect less from a body that had enacted Title VI of the Civil Rights Act of 1964, requiring all federal agencies to deny financial assistance in any form to institutions which engage in race discrimination. In approving that provision, Congress was expressing its agreement with the observation of President Kennedy that "[s]imple justice requires that public funds, to which all taxpayers contribute, not be spent in any fashion which encourages, entrenches, subsidizes or results in racial discrimination." H.R. Misc. Doc. No. 124, 88th Cong., 1st Sess., 3, 12 (1963). Although Title VI does not expressly require denying tax benefits to racist schools, its underlying philosophy, like that of the Constitution's equal protection mandate, points unerringly to the denial of special exempt status to such schools, and to the denial of special deductions for those who support these schools with private bequests and gifts.

When I testified before this Committee's Subcommittee on Oversight on February 21, 1979, I expressed confidence that the then-recent district court decision to the contrary, Bob Jones University v. United States, 468 Fed. Supp. 890 (D.S.C. 1978), was an aberration that could not "be expected to survive appellate review." Hearings on Proposed IRS Revenue Procedure Affecting Tax-Exemption of Private Schools, Part 1, at 372 (Feb. 20-21, 1979). That prediction proved correct two years later when the Fourth Circuit in 1981 reversed the district court's ruling, 639 F.2d 147, and upheld the IRS's non-discrimination requirement as applied to private educational institutions whose religions mandate racially discriminatory policies and practices. Nothing in the First Amendment's Religion Clauses, I testified in 1979 and the Fourth Circuit held in 1981, requires that anti-discrimination rules in the tax area be bent "at the sacrifice of an interest as weighty as that of removing the vestiges of racial discrimination from the educational institutions of this country." Hearings, supra, at 372. See 639 F.2d at 153-55. I recall my 1979 testimony at this point not to suggest any unusual prescience on my part; far from it. That I could so confidently predict the outcome of Bob Jones in the Fourth Circuit shows only that the applicable legal principles were, even then, unusually clear.

To be sure, the Fourth Circuit's endorsement of these principles is currently pending on certiorari in the Supreme Court, which decided on October 13, 1981, with the Government's assent, to review both Bob Jones and Goldsboro Christian Schools v. United States, No. 80-1473 (4th Cir., unpublished), cert. granted 50 U.S.L.W. 3278. But it is the Reagan Administration, which now says that it disagrees with the Fourth Circuit's rulings in this pair of cases, that has attempted, as I explain below (see Sections II-D and III, infra), to prevent the Supreme Court from speaking authoritatively on the issues involved. If the Administration's effort were to succeed, those who defend as correct the Fourth Circuit's decision (and that of every other appellate court that has taken up these questions) could hardly be blamed for the absence of a "last word" from the Supreme Court on this subject.4

C. The administration's unequal treatment of racial minorities in the formation of tax policy

To turn the tables in such a way would single out black schoolchildren and their parents for a uniquely burdensome approach to tax policy. They, and they alone, would labor under the bizarre presumption that a decade-old IRS rule protective of their rights-a rule repeatedly upheld by the courts as required by existing law and repeatedly approved by Congress itself as correctly reflecting congressional intentmay suddenly be suspended by unilateral executive action, "without notice or public consultation,' "5 and may thereby be rendered a nullity unless and until these black

*Insofar as there has been such a "last word," it was, of course, consistent with the Fourth Circuit's position. See Coit v. Green, supra, note 1. A unanimous Supreme Court later relied on the Court's summary affirmance in Green to support the conclusion that free textbooks could not be supplied at public expense to pupils attending racially discriminatory private schools. Norwood, supra, 413 U.S. at 463-64. Whatever the limits as precedent of the Court's summary affirmance in Green, see Bob Jones University v. Simon, 416 U.S. 725, 740 n. 11 (1974), it remains the Supreme Court's only direct pronouncement on the point.

B. Wolfman, "Law, Cut On a Bias," N.Y. Times, Jan. 19, 1982, at A27.

91-531 0-82-2

children and their families somehow persuade Congress to "pick up the pieces" by legislatively restoring the status quo ante.

The Supreme Court has held, in analogous circumstances, that the constitutional norm of equal protection of the laws precludes placing unusually heavy burdens in the path of those who seek governmental protection against private racial discrimination. Hunter v. Erickson, 393 U.S. 385 (1969). Whether the special hurdle of a required re-run through Congress' gauntlet is imposed "only" upon the specific black families injured by the schools directly involved in the Bob Jones and Goldsboro cases now pending in the Supreme Court, or upon all black children and parents similarly situated (see Section III infra), it seems plain that no hurdle of remotely comparable height is imposed for other groups adversely affected by proposed or contested IRS rulings or practices. Such groups, unlike those injured here, have always been free to persuade the IRS or the Treasury Department, especially when intermediate appellate courts have agreed, that the injury they seek to avoid is already barred by the Internal Revenue Code.

For these reasons, even if the Constitution did not independently compel the denial of tax benefits to racist schools, I would conclude that the Administration's imposition here of a requirement of explicit congressional approval that is imposed nowhere else would violate the Government's constitutional duty to respect black citizens no less than white.

D. The administration's attempted manipulation of pending judicial proceedings

In any event, Congress has spoken in this area with sufficient clarity and frequency, and with sufficient judicial support, to make any sudden call for new legislation extraordinarily puzzling at the very least. And such a call becomes worse than puzzling when it comes from the very government officials and departments that are currently subject to judicial decrees expressly designed to provide relief from taxsupported segregation "on an enduring, permanent basis, not on a basis that could be withdrawn with a shift in the tides of administration, or changing perceptions of sound discretion." Green, supra 330 F. Supp. at 1170-71.

8

On May 5 and June 2, 1980, the United States District Court for the District of Columbia issued orders supplementing the permanent injunctive decree previously issued in Green, supra, and laying down general standards to be applied by the Treasury to determine whether a private school is truly nondiscriminatory. The Government did not appeal those orders, which led to the withdrawal of exempt status from five additional private schools. Shortly, thereafter, the Clarksdale Baptist School was granted leave to intervene in the reopened Green case in order to litigate its claim that the district court's orders violated that school's First Amendment rights-a claim similar to the one already rejected by the Fourth Circuit_in the pair of cases that the Supreme Court on October 13, 1981, agreed to review. Despite the Government's agreement throughout the litigation with the position the IRS had long taken, the Government expressly supported the Court's granting of certiorari to review the Fourth Circuit's rulings in favor of the IRS in that pair of cases in order to "dispel the uncertainty surrounding the propriety of the Service's ruling position and [to] foster greater compliance on the part of the affected institutions." Brief at 17. Since the Supreme Court's anticipated ruling could offer clarifying guidance, the Clarksdale Baptist School asked the district court, on December 11, 1981, to stay further proceedings pending the outcome of Bob Jones and Goldsboro in the Supreme Court. Four days later, on December 15, 1981, the Government "strongly" endorsed the school's request for a stay, which the district court accordingly granted on January 6, 1982.

Just two days later on January 8, 1982-the Government, having thus supported a stay of proceedings in the district court pending final resolution of the underlying questions by the Supreme Court, urged the Supreme Court not to resolve those questions, but to vacate the Fourth Circuit's Bob Jones and Goldsboro judgments in light of the Administration's sudden decision to abandon those judgments and to grant tax exemptions to the two schools involved and to all others similarly situated. It was the Government's posture, as of January 8, that the two cases pending in the Supreme Court had become moot by virtue of this administrative decision. At no point has the Justice Department even suggested, however, that the Fourth Circuit made any error of law.

6 Id.

Hunter struck down a two-track system of lawmaking under which laws to combat private racial discrimination in housing were harder to enact than laws addressing other housing matters.

8 See 1981-37 I.R.B. 102 (Sept. 14, 1981.)