GOLDSBORO CHRISTIAN SCHOOLS, INC., PETITIONER V. UNITED STATES OF
AMERICA

   BOB JONES UNIVERSITY, PETITIONER V. UNITED STATES OF AMERICA

   No. 81-1

   No. 81-3

   In the Supreme Court of the United States

   October Term, 1981

   On Writs of Certiorari to the United States Court of Appeals for
the Fourth Circuit

   Brief for the United States

            TABLE OF CONTENTS
   Opinions below
   Jurisdiction
   Statutes and regulations involved
   Statement:
      A. Bob Jones University -- No. 81-3
      B.Goldsboro Christian Schools -- No. 81-1
   Summary of argument
   Argument:
      I. The language and legislative history of Section
      501(c)(3) show that the Commissioner does not have the
      discretion to deny tax-exempt status to otherwise exempt
      organizations for failure to conform to national policy
      with respect to racial discrimination
      II. Should the Court disagree with our view that the
      Commissioner lacked authority to deny exemptions to
      petitioners on national policy grounds, the exercise
      of such authority here did not violate petitioners'
      right to free religious belief and exercise under the
      First Amendment
   Conclusion

                            OPINIONS BELOW

   No. 81-1.  The order of the district court (Pet. App. 5a-18a) is
reported at 436 F.Supp. 1314.  The opinion of the court of appeals
(Pet. App. 1a-3a) is not reported.

   No. 81-3.  The opinion and order of the district court dated
December 26 1978 (Pet. App. A38-A71) are reported at 468 F.Supp. 890.
The opinion and order of the district court dated May 14, 1979 (Pet.
App. A72-A86) are not reported.  The opinion of the court of appeals
(Pet. App. A1-A37) is reported at 639 F.2d 147.

                             JURISDICTION

   No. 81-1.  The judgment of the court of appeals (Pet. App. 53a) was
entered on February 24, 1981, and the court of appeals denied a timely
petition for rehearing and suggestion for rehearing en banc on April
7, 1981 (Pet. App. 55a).  The petition for a writ of certiorari was
filed on July 2, 1981, and was granted on October 13, 1981, to be
consolidated with No. 81-3.  The jurisdiction of this Court rests on
28 U.S.C. 1254(1).

   No. 81-3.  The judgment of the court of appeals was entered on
December 30, 1980 (Pet. App. A1).  The order denying a petition for
rehearing was entered on April 8, 1981 (Pet. App. A100-A101).  The
petition for a writ of certiorari was filed on July 1, 1981, and was
granted on October 13, 1981, to be consolidated with No. 81-1.  The
jurisdiction of this Court rests on 28 U.S.C. 1254(1).

                   STATUTES AND REGULATIONS INVOLVED

   The relevant statutory and regulatory provisions are Sections
170(a), 170(c), 501(a), 501(c)(3), 3121(b)(8)(B) and 3306(c)(8) of the
Internal Revenue Code of 1954 (26 U.S.C.), and Section
1.501(c)(3)-1(d) of the Treasury Regulations on Income Tax (26
C.F.R.).

                          QUESTIONS PRESENTED

   1. Whether the Internal Revenue Service had authority under Section
501(c)(3) of the Internal Revenue Code of 1954 to revoke the
petitioners' tax-exempt status on grounds that private schools
operated by petitioners had racially discriminatory policies and
practices that contradicted national policy.

   2. If the Service was authorized to enforce national policy in this
manner, does the fact that the petitioners' practices were based on
religious doctrine prevent the revocation action under the First
Amendment.  /*/

                               STATEMENT

                 A.  Bob Jones University -- No. 81-3

   1. Petitioner Bob Jones University is a nonprofit organization
incorporated in 1952 under the laws of South Carolina "for the general
education of youth in the essentials of culture and in the arts and
sciences, giving special emphasis to the Christian religion and the
ethics revealed in the Holy Scriptures * * * " (Pet. App. A2-A3,
A40-A41).  /1/ Petitioner provides instruction for students from
kindergarten through college and graduate school, enrolling more than
5,000 students and offering more than 50 accredited degrees in secular
subjects (Pet. App. A3, A41;  J.A. A63, A127-A128, A153, A211-A223).
At the college level, it operates a school of education, a school of
fine arts, a school of religion, a college of arts and sciences, and a
school of business administration (J.A. A63, A127-A128).  In its
graduate schools, it offers courses in art, music, speech, radio and
television, cinema, religion, and education (J.A. A227).

   Petitioner also offers a separate nondegree, noncredit program
entitled Institute of Christian Service, for persons who do not wish
to undergo the rigors of academic pursuit (J.A. A75).  The purpose of
that program is to teach the principles of the Bible and to train
Christian character (Pet. App. A3, A41).  All courses are taught in
accordance with the dictates of Biblical Scripture.  Teachers are
required to be "born again" Christians.  Students are screened as to
their religious beliefs and their conduct is strictly regulated (Pet.
App. A3-A4).  However, more than 100 denominations are represented in
the student body (J.A. 84).

   Petitioner maintains a racially restrictive policy forbidding its
students to engage in interracial dating and interracial marriage.
This policy is based upon the belief that God intended the various
races to live apart, and that intermarriage of different races is
contrary to God's will and to the Scriptures (Pet. App. A43).  Prior
to 1971, petitioner excluded blacks entirely from enrollment.  From
1971 until 1975, married blacks and members of other minority races or
ethnic groups were not excluded from enrollment, but petitioner
continued to deny admission to unmarried blacks unless the applicant
had been a staff member of the university for at least four years (id.
at A4 A43).  See Bob Jones University v. Johnson, 396 F.Supp. 597, 600
& n.9 (D.S.C. 1974), aff'd without published opinion, 529 F.2d 514
(4th Cir. 1975).  At that time, it was petitioner's judgment that,
while a policy of excluding blacks altogether was not doctrinally
required, denying admission to unmarried black was the best means of
implementing its prohibition against interracial dating and marriage
(Pet. App. A43;  J.A. A71-A72, A81-A82, A250;  A. 209-210, 212).  /2/.

   In response to decisions of the court of appeals in Bob Jones
University v. Johnson, 529 F.2d 514 (4th Cir. 1975), and of the
Supreme Court in McCrary v. Runyon, 515 F.2d 1082 (4th Cir. 1975),
aff'd, 427 U.S. 160 (1976), petitioner revised its admissions policy
to permit unmarried blacks as well as married blacks to matriculate
(Pet. App. A4, A43-A44;  J.A. A250-A253).  It continued to deny
admission, however, to any applicant known to be a partner in an
interracial marriage, and it established disciplinary rules requiring
the expulsion of any student who:  (1) was a partner in an interracial
marriage;  (2) was affiliated with a group or organization advocating
interracial marriage;  (3) engaged in interracial dating;  or (4)
encouraged others to violate petitioner's rules and prohibitions
against interracial dating (Pet. App. A4, A43-A44;  J.A. A53-A54,
A77-A80, A197-A198, A208-A209, A277).  The university required each
student to attend a "rules meeting" at which the several disciplinary
rules were reviewed, and further required each student to sign a
statement promising to abide by these racial restrictions (Pet. A
A42-A43;  J.A. A132-A133).

   2. Prior to 1970, the Internal Revenue Service ("Service")
recognized petitioner as a tax-exempt organization under Section
501(c)(3) of the Internal Revenue Code of 1954 ("1954 Code") (26
U.S.C.).  See Bob Jones University v. Simon, 416 U.S. 725, 735 (1974).
 On July 10, 1970, the Service announced that it would no longer
accord tax-exempt status under Section 501 to private schools
maintaining racially discriminatory policies, and that it would not
continue to treat gifts to such schools as deductible contributions
under Section 170.  /3/ See Rev. Rul. 71-447, 1971-2 Cum.Bull. 230.

   In November 1970, the Service sent letters to approximately 5,000
organizations operating private schools, including petitioner,
announcing its new policy and requesting proof of nondiscriminatory
admissions practices (J.A. A232-A234).  Petitioner responded that it
did not admit black students and, in September 1971, further stated
that it had no intention of altering that policy.  The Service
therefore commenced administrative proceedings leading to the
revocation of petitioner's tax exemption and of its advance assurance
of deductibility.

   In January 1976, after petitioner's attempt to enjoin the
administrative proceedings had failed in the Supreme Court (see Bob
Jones University v. Simon, supra, 416 U.S.at 735), /4/ the Service
issued a final notice of revocation, effective as of December 1, 1970
(Pet. App. A40, A87-A88, A89).

   3. Seeking reinstatement of its tax exemption, petitioner initiated
suit in the United States District Court for the District of South
Carolina for refund of $21 in federal unemployment taxes for the year
1975 (Pet. App. A3, A40).  /5/ The government counterclaimed for
approximately $490,000 in federal unemployment taxes for the years
1971 through 1975 (ibid.).  Following a trial, the district court held
that Bob Jones qualified for tax exemption under Section 501(c)(3) of
the 1954 Code as an institution organized and operated exclusively for
religious and educational purposes, and that petitioner was not
required to demonstrate a nondiscriminatory racial policy in order to
so qualify (Pet. App. A45-A71).  /6/

   The district court explained that Section 501(c)(3) does not endow
the Service with authority to discipline wrongdoers or to promote
social change by denying exemptions to organizations that offend
federal public policy.  Voicing apprehension over the breadth of such
power, the district court observed (Pet. App. A67):  "Federal public
policy is constantly changing.  When can something be said to become
federal public policy?  Who decides?  With a change of federal public
policy, the law would change without congressional action -- a dilemma
of constitutional proportions.  Citizens could no longer rely on the
law of Section 501(c)(3) as it is written, but would then rely on the
IRS to tell them what it had decided the law to be for that particular
day.  Our laws would change at the whim of some nonelected IRS
personnel, producing bureaucratic tyranny."

   A majority of the Fourth Circuit Court of Appeals reversed.
Relying on the three-judge district court's decision in Green v.
Connally, supra, the majority agreed with the Service that Section
501(c)(3) must be interpreted as incorporating the common law of
charitable trusts as a gloss on each of the separately enumerated
exemptive purposes in the statute.  The panel majority further agreed
with the Green conclusion (330 F.Supp.at 1156-1160) that to be
eligible for tax-exempt status under Section 501(c)(3), "an
institution must be 'charitable' in the broad common law sense, and
therefore must not violate public policy" (Pet. App. A7-A8) (footnote
omitted).  It observed that "(t)his view finds additional support in
the statutory framework itself:  Section 170 of the Code, the
companion provision to Section 501(c)(3), places the separately
enumerated purposes in that section under the broad heading of
'charitable'" (Pet. App. A7-A8, n.6).

   To buttress the conclusion that Section 501(c)(3) establishes a
public policy test, the majority also relied on (Pet. App. A8) the
following excerpt from a 1939 House Report explaining the theory
animating Congress to exempt from taxation organizations devoted to
charitable and other purposes:

      The exemption from taxation of money or property devoted to
      charitable and other purposes is based upon the theory that the
      Government is compensated for the loss of revenue by its relief
      from financial burden which would otherwise have to be met by
      appropriations from other public funds, and by the benefits
      resulting from the promotion of the general welfare.

   H.R. Rep. No. 1860, 75th Cong., 3d Sess. 19 (1938).  /7/ Because
petitioner's discriminatory practices violate clearly defined public
policy rooted in the Constitution, federal prohibitions against
federal assistance to racially discriminatory schools, and a federal
statute (42 U.S.C. 1981) proscribing private acts of racial
discrimination, the court of appeals concluded that "the Service acted
within its statutory authority in revoking (petitioner's) tax exempt
status * * * " (Pet. App. A10).

   In so holding, the majority rejected petitioner's argument that
application of the Service's nondiscrimination policy to it violates
the Free Exercise Clause of the First Amendment, noting that the
Service's policy would neither prohibit petitioner from adhering to
its teachings nor force any individual student to violate his beliefs
(Pet. App. A13-A14).  With respect to petitioner's Establishment
Clause claim, the majority concluded that "the uniform application of
the (Service's) rule to all religiously operated schools avoids the
necessity for a potentially entangling inquiry into whether a racially
restrictive practice is the result of sincere religious belief" (Pet.
App. A16) (emphasis in original).

   Judge Widener dissented (Pet. App. A18-A37), concluding that "Bob
Jones University is a religious organization" (Pet. App. A19) within
the meaning Section 501(c)(3), and that the panel majority, the
Service, and the district court in Green v. Connally, supra, had
misconstrued Section 501(c)(3) by insisting that each of the eight
types of organizations identified in the statute as tax-exempt must
also be "charitable" organizations under the common law of charitable
trusts (Pet. App. A19-A20).  Section 501(c)(3), Judge Widener
observed, grants tax-exempt status to each class of organization
enumerated in the statute, and because petitioner falls within one of
those classes ("religious"), the Service lacked authority to deny the
exemption granted by Congress (Pet. App. A20).  Judge Widener further
asserted that the public policy favoring freedom of religion may not
be subordinated to the public policy against racial discrimination on
the context of private non-tax-funded religious institutions.

              B. Goldsboro Christian Schools -- No. 81-1

   1. Petitioner Goldsboro Christian Schools, Inc., is a North
Carolina nonprofit organization incorporated in 1963 "to conduct an
institution or institutions of learning for the general education of
Youth in the essentials of culture and its arts and sciences, giving
special emphasis to the Christian religion and the ethics revealed in
the Holy scriptures * * * " (Pet. App. 6a).  /8/ At least since 1969,
petitioner has maintained a regularly enrolled student body (750
students in 1973-1974) for kindergarten and grades one through twelve
(Pet. App. 7a;  J.A. 6-7), and has satisfied the requirements of North
Carolina for secular education in private schools (see N.C. Gen. Stat.
Section 115-255 (repl. 1978)).  Submissions to the State indicate that
petitioner requires its high school students to take one Bible-related
course during each semester.  In keeping with petitioner's overall
purpose and with the desire of its founders to provide a secular
private school education in a religious setting, petitioner's practice
is to begin each class with a prayer (Pet. App. 6a-7a).  /9/
Petitioner does not require that its students profess or subscribe to
any particular belief.  It does require, however, that its students
adhere to certain standards of conduct that are consistent with the
tenets held by petitioner (J.A. 68).  Various religious denominations
are represented in the student body (J.A. 69-70).

   Based upon its interpretation of the Bible, petitioner has
maintained a racially discriminatory admissions policy since the time
of its incorporation.  The policy reflects a belief that God intended
a "separation of the nations and races" and that it is necessary to
discourage "any kind of social intermingling by * * * students that
could eventually lead to intermarriage of the races and a
corresponding breakdown of distinctives established by almighty God"
(J.A. 10).  Notwithstanding this policy, petitioner has accepted
noncaucasians.  Its policy in practice requires the exclusion only of
members of the Negro race (Pet. App. 7a).  Petitioner's president and
principal believe that black students would be disinclined to abide by
its tenets and practices because of the racial climate prevailing in
the country and the pressures exerted by the positions of certain
"militant" organizations (J.A. 81-93).

   2. Pursuant to the Service's 1970 nondiscrimination ruling, the
Commissioner determined that petitioner did not quality for exemption
from federal social security taxes (FICA) under Section 3121(b)(8)(B)
of the 1954 Code, or for exemption from federal unemployment taxes
(FUTA) under Section 3306(c)(8) of the 1954 Code, and, in 1974, he
assessed FICA and FUTA taxes against Goldsboro.

   3. After making partial payment, petitioner instituted suit in the
United States District Court for the Eastern District of North
Carolina, seeking a refund of $3,459.93 of withheld federal social
security and unemployment taxes for 1969 through 1972.  The government
counterclaimed for $160,073.96 in taxes for that period (Pet. App. 5a,
7a-8a).  On the parties' cross motions for summary judgment, the
district court ruled that the Service had properly denied petitioner
tax-exempt status under Section 501(c)(3) and the tax benefits
associated with qualification as a Section 501(c)(3) organization,
because petitioner's racially discriminatory admissions policy
violated the declared public policy of the United States.

   A majority of the Fourth Circuit Court of Appeals affirmed (Pet.
App. 1a-3a).  Finding the case "identical" to the Bob Jones University
case, the court of appeals majority upheld the denial on the authority
of that precedent.  Judge Field dissented for the reasons stated by
Judge Widener in his dissenting opinion in Bob Jones University (Pet.
App. 3a).

                          SUMMARY OF ARGUMENT

   In 1970, the Internal Revenue Service reversed its longstanding
practice under Section 501(c)(3) of the Internal Revenue Code of
granting tax exemption to private educational institutions, without
regard to their admissions policies, and announced that such
institutions would no longer receive exemptions, and related tax
benefits, if they discriminated on the basis of race.  While
recognizing and fully subscribing to the strong national policy in
this country against racial discrimination in any and all forms, it is
the position of the United States that this change of position by the
Service finds no support in the language of Section 501(c)(3), or in
its legislative history.

   Under Article I of the Constitution and the Sixteenth Amendment,
Congress has the power "to lay and collect" taxes, not the Executive
Branch.  As an exercise of that power, Congress has directed the
Internal Revenue Service in Section 501(c)(3) of the Code to award taX
exemptions, and related tax benefits, to private corporations pursuing
any one of eight enumerated purposes, including, "educational"
purposes.  Nowhere has Congress qualified that grant of authority by
providing that an institution eligible for exemption as "educational"
can nonetheless be denied exempt status on public policy grounds, or
because the institution is not also "charitable" in the common-law
sense.

   This is not to suggest that Congress cannot legislate in such a
manner, but only that it thus far has not done so.  In this regard, we
do not find sufficient evidence of affirmative action by Congress
since 1970 to warrant the conclusion that the Service's practice now
under attack has received legislative ratification.  Thus, the denial
of tax exemptions to Bob Jones University and Goldsboro Christian
Schools is, we submit, unauthorized agency action that should not, in
the absence of congressional action, be countenanced.  Neither the
Fourteenth Amendment, Title VI of the Civil Rights Act of 1964, nor
prior case law compels a different result.

   In the event that the Court should disagree with the government's
foregoing statutory construction argument and conclude that Section
501(c)(3) of the Code authorizes the administrative denial of
tax-exempt status to private schools that engage in racially
discriminatory policies and practices, we agree with the court below
that such a denial violates no First Amendment rights of petitioners
under either the Free Exercise Clause or the Establishment Clause.
Assuming that petitioners' racial discrimination is motivated by
sincere religious beliefs, the court below noted that the Internal
Revenue Service's policy would not prohibit petitioners from adhering
to their teachings or force any individual student to violate his
beliefs (81-3 Pet. App. A13-A14).  The court of appeals further
concluded that "the uniform application of the (Service's) rule to all
religiously operated schools avoids the necessity for a potentially
entangling inquiry into whether a racially restrictive practice is the
result of sincere religious belief" (81-3 Pet. App. A16;  emphasis in
original).  The United States believes these conclusions to be correct
and therefore agrees that the court of appeals properly disposed of
petitioners' First Amendment claims.

                               ARGUMENT

 I. THE LANGUAGE AND LEGISLATIVE HISTORY OF SECTION 501(c)(3) SHOW
THAT THE COMMISSIONER DOES NOT HAVE THE DISCRETION TO DENY TAX-EXEMPT
STATUS TO OTHERWISE EXEMPT ORGANIZATIONS FOR FAILURE TO CONFORM TO
NATIONAL POLICY WITH RESPECT TO RACIAL DISCRIMINATION

   Congress, the courts, and all recent Administrations have
established a firm and uncontrovertible national policy against racial
discrimination.  This policy continues to guide all federal
activities.  The question addressed in the first portion of this brief
is the interaction of that policy with the administrative enforcement
of the nation's revenue code.  In the succeeding sections we argue --
contrary to the Government's position below -- that Section 501(c)(3)
does not permit the Commissioner of Internal Revenue to withhold
congressionally authorized tax exemptions from otherwise qualified
"religious" and "educational" organizations based solely on an
administrative determination of failure to conform to the national
policy.  Our contention is, not that the policy, which we fully accept
and implement, is wrong, but that the Internal Revenue Code -- from
which all the Commissioner's authority is derived -- neither
authorizes nor contemplates this kind of broad administrative
discretion.

   The threshold legal question presented is one of statutory
construction:  Did Congress intend to deny tax-exempt status under
Section 501(c)(3) to nonprofit private educational institutions that
maintain racially discriminatory admissions policies or other racially
discriminatory practices?  In answering this question affirmatively,
the court of appeals, principally in reliance on the district court in
Green v. Connally, supra, concluded (1) that Congress intended all
eight classes of organizations listed in Section 501(c)(3) to qualify
as "charitable," and (2) that Congress used the term "charitable" in
Section 501(c)(3) in its common-law sense -- that is, in the sense
that an organization cannot qualify as "charitable" if its purposes or
practices violate public policy.  This construction of Section
501(c)(3) is at odds with the statute's language, its legislative
history, and other objective evidence of legislative intent, and it
should not be accepted by this Court.

   1. The search for congressional intent must, of course, begin with
the words of the statute itself.  See, e.g., Northwest Airlines, Inc.
v. Transport Workers Union, 451 U.S. 77, 91 (1981);  United States v.
Oregon, 366 U.S. 643, 648 (1961).  Section 501(c)(3) exempts from
taxation "(c)orporations * * * organized and operated exclusively for
religious, charitable, scientific, testing for public safety,
literary, or educational purposes, * * * or for the prevention of
cruelty to children or animals * * * ." 26 U.S.C. (Supp. I 1971) 501
(c)(3) (emphasis supplied).

   By its very terms, the legislative enumeration of eight purposes or
functions entitling nonprofit corporations to tax-exempt treatment is
frame in the disjunctive, thus manifesting Congress' intent to accord
tax-exempt status to any organization organized and operated for any
one of the designated purposes or functions.  See, e.g., Reiter v.
Sonotone Corp., 442 U.S. 330, 339 (1979) ("Canons of construction
ordinarily suggest that terms connected by a disjunctive be given
separate meanings, unless the context dictates otherwise").  The
distinct references in Section 501(c)(3) to "educational" or
"charitable" organizations confirms "Congress' intent that not all
educational institutions must also be charitable institutions (as that
term was used in the common law) in order to receive tax-exempt
status." Prince Edward School Foundation v. United States, 450 U.S.
944, 947 (1981) (Rehnquist, J., joined by Stewart and Powell, J.J.,
dissenting from denial of certiorari).

   This reading of Section 501(c)(3) assigns to the words used by
Congress their ordinary meaning.  It is reinforced by the settled
canon of statutory construction requiring that related statutory
provisions be interpreted together.  Kokoska v. Belford, 417 U.S. 642,
650 (1974);  United States v. Cooper Corp., 312 U.S. 600, 606 (1941).
Sections 503, 504, and 513 of the 1954 Code, sister provisions of
Section 501(c)(3), reiterate the separate and disjunctive purposes or
functions described in Section 501(c)(3), thereby underscoring the
congressional intent to recognize each category enumerated under
Section 501(a)." See 26 U.S.C. (1964 ed.) 503(b)(3), 504(a)(1) and
(3), and 513(a).  In this regard, prior to 1969 Section 503 denied
tax-exempt status to an organization otherwise qualified under Section
501(c)(3) if it engaged in certain prohibited transactions.  /10/
Section 503(b) provided in pertinent part:

         This Section shall apply to any organization described in
      section 501(c)(3) * * * except --

         (1) a religious organization * * * ;

         (2) an educational organization * * * ;

         (3) an organization which normally receives a substantial
      part of its support (exclusive of income received in the
      exercise or performance by such organization of its charitable,
      educational, or other purpose or function constituting the basis
      for its exemption under section 501(a)) from the United States
      or any State or political subdivision thereof or from direct or
      indirect contributions from the general public;  * * * (emphasis
      supplied).

   The language underscored above, which also appeared in the pre-1969
versions of Sections 504(a)(1) and (3), /11/ and appears in the
current version of Section 513(a), /12/ plainly reflects Congress'
intent that "charitable" purposes be viewed as separate and distinct
from "educational" purposes and any other "purpose or function"
enumerated in Section 501, and (2) that each purpose or function
constitute a sufficient and independent basis for exemption under
Section 501(a).  /13/

   Nonetheless, the Fourth Circuit Court of Appeals read Section
501(c)(3) to provide tax-exempt status only to institutions that are
organized and operated for one of the designated purposes and are also
qualified as common-law charities.  In support of this interpretation,
the court cited Section 170 of the 1954 Code, which, it asserted,
"places the separately enumerated purposes in (Section 501(c)(3))
under the broad heading of 'charitable' and permits deductions of
contributions made to organizations serving those purposes." (81-3
Pet. App. A7 n.6).  The plain terms of Section 170, however,
contradict the court's construction of Section 501(c)(3).

   Subsection (c) of Section 170 defines "charitable contributions" in
relevant part as follows:

      (c) Charitable contribution defined.

         For purposes of this section, the term 'charitable
      contribution' means a contribution or gift to or for the use of
      --

                 *     *     *     *     *

         (2) A corporation, trust, or community chest, fund, or
      foundation --

                 *     *     *     *     *

      (B) organized and operated exclusively for religious,
      charitable, scientific, literary, or educational purposes, * * *
      or for the prevention of cruelty to children or animals;  * * *
      .

   26 U.S.C. 170 (emphasis supplied).  The definition of the term
"charitable contribution" relates solely to Section 170, and derives
its meaning in part on the basis of the purposes for which certain
organizations are organized and created;  namely, "religious,
charitable, scientific, literary, or educational (or specified other)
purposes." Each of these distinct purposes separately and
independently qualify an organization to receive "charitable
contributions."

   Nothing in Section 170 so much as hints at the proposition advanced
below that an organization eligible to receive what the drafters of
Section 170 have chosen to call "charitable contributions" must be
endowed with a "charitable" purpose within the meaning of Section
501(c)(3).  Nor has Congress signalled elsewhere that it intended
Section 170 to be so interpreted.  Reliance by the court of appeals on
this particular section of the Code is therefore misplaced.  /14/

   Based on the foregoing, the plain language of Section 501(c)(3) and
its sister provisions, the structure of the 1954 Code, and the
Service's interpretive regulations (see note 13, supra) require the
conclusion that Congress intended to afford tax-exempt status to any
organization organized and operated exclusively for any one of the
purposes or functions enumerated in Section 501(c)(3).

   In sum, "Congress has spoken in the plainest of words" (TVA v.
Hill, 437 U.S. 153, 194 (1978)) in Section 501(c)(3), exempting from
income taxation "educational" organizations that are not also
"charitable" as surely as it exempted "charitable" organizations that
are not also "educational." /15/ The contrary reading of the
legislation by the court of appeals is incorrect.

   2. Although the clarity of the language used by Congress in Section
501(c)(3) makes an examination of the statute's legislative history
unnecessary, see, e.g., Ernst & Ernst v. Hochfelder, 425 U.S. 199, 201
(1976);  United States v. Oregon, 366 U.S. 643, 648 (1961), a review
of that history provides no support for the construction of Section
501(c)(3) endorsed by the court of appeals.

   The exemptions from taxation now contained in Section 501(c)(3)
originated as a part of the Tariff Act of 1894, ch. 349, 28 Stat. 556,
/16/ which provided in pertinent part:  "(N)othing herein contained
shall apply to * * * corporations, companies, or associations
organized and conducted solely for charitable, religious, or
educational purposes." There is no indication in the legislative
history that Congress incorporated, or had reference to, the "common
law of charitable trusts" in enacting this taxing statute.

   After ratification of the Sixteenth Amendment, Congress passed the
Tariff Act of 1913, ch. 16, Section II, 38 Stat. 114, 166.  Section
II(G)(a) exempted from the income tax:

      (A)ny corporation or association organized and operated
      exclusively for religious, charitable, scientific, or
      educational purposes, no part of the net income of which inures
      to the benefit of any private stockholder or individual * * * .

   This legislation broadened the 1894 exemption to include
"scientific" corporations, and added the requirement that in order for
a corporation to be exempt from taxation, no part of its net earnings
could inure to the benefit of any private stockholder or individual.
Under the common law, however, income of a charity could not inure to
the benefit of a private person.  See r A. Scott, The Law of Trusts
Section 376 (2d ed. 1956).  There obviously would have been no need to
include such a requirement in the statute if Congress had intended to
condition tax exemption on satisfying the requirements of a common-law
charity.

   In subsequent revenue acts, Congress continued to broaden the list
of exempt purposes.  The Revenue Act of 1918, ch. 18, Section 231(6),
40 Stat. 1076, expanded the list of exempt corporations to include
those organized "for the prevention of cruelty to children or
animals." The Revenue Act of 1921, ch. 136, Section 231(6), 42 Stat.
253, further expanded the statute to exempt "any community chest,
fund, or foundation" and added "literary" organizations to the list of
exempt purposes.  These additions would have been unnecessary had
Congress intended to use the word "charitable" in its broad common-law
sense.  Moreover, as previously noted (supra, note 15) in 1923 the
Service interpreted the word "charitable" in Section 231(6) of the
Revenue Acts of 1918 and 1921 in its "popular and ordinary sense" as
meaning "relief of the poor," rather than in its broader common-law
sense.

   The exemption from taxation contained in the Revenue Act of 1921
remained unchanged in the Revenue Acts of 1924, 1926, 1928 and 1932,
/17/ and regulations issued by the Service under those acts continued
to define the term "charitable" to mean "relief of the poor." Treas.
Reg. 65, Art. 517 (1924 Revenue Act).  "Corporations organized and
operated exclusively for charitable purposes comprise, in general,
organizations for the relief of the poor".  /18/

   The Revenue Act of 1934, ch. 277, Section 101(6), 48 Stat. 700,
carried forward unchanged the exemption provision of prior revenue
acts, but added the requirement that no substantial part of the
activities of an exempt organization can involve the carrying on of
"propaganda" or "attempting to influence legislation." Once again, the
addition of the requirement would have been unnecessary if Congress
had intended for all organizations to qualify as common-law charities
in order to be exempt from taxation.  See 4 A. Scott, The Law of
Trusts Section 374.6 (2d ed. 1956).

   The Revenue Act of 1936, ch. 690, Section 101(6), 49 Stat. 1674,
and the Revenue Act of 1938, ch. 289, Section 101(6), 52 Stat. 481,
also carried forward the same exemption, and the regulations
promulgated under these Acts continued to define the term "charitable"
as "relief of the poor." See Treas. Reg. 86, Art. 101(6)-1 (1934
Revenue Act);  Treas. Reg. 94 Art. 101(6)-1 (1936 Revenue Act);
Treas. Reg. 101, Art. 101(6)-1 (1938 Revenue Act).

   In the Internal Revenue Code of 1939, ch. 2, 53 Stat. 1 ("1939
Code"), Congress exempted from taxation the identical categories of
organizations that had been exempt from taxation under the Revenue
Acts of 1934, 1936 and 1938.  During the 15 years in which the 1939
Code remained in effect, the Service issued three sets of regulations,
each of which defined the term "charitable" in its popular and
ordinary sense.  See Treas. Reg. 103, Section 19.101(6)-1 (1939 Code);
 Treas. Reg. 111, Section 29.101(6)-1 (1939 Code);  Treas. Reg. 118,
Section 39.101(6)-1(b) (1939 Code).  /19/

   Section 501(c)(3) of the 1954 Code, ch. 736, 68A Stat. 163,
continued to exempt the same categories of organizations that had been
exempt from taxation under the 1939 Code, and added to the list of
exempt entities those organizations which are organized and operated
for the purpose of "testing for public safety." In addition, Congress
tightened the restrictions on political activities of tax-exempt
organizations.  /20/

   The Report of the House Ways and Means Committee on the 1954 Code
stated that Section 501 "is derived from sections 101 and 421 of the
1939 Code.  No change in substance has been made except that
employees' pension trusts, etc., are brought in the scope of this
section." H.R. Rep. No. 1337, 83d Cong., 2d Sess. A165 (1954)
(emphasis supplied).

   It was not until 1959 that the Internal Revenue Service undertook
to expand its interpretation of "charitable." In Section 1.501(c)(3)-1
(d)(2) of its 1959 Regulations, the Service concluded:

      The term 'charitable' is used in section 501(c)(3) in its
      generally accepted legal sense and is, therefore, not to be
      construed as limited by the separate enumeration in section
      501(c)(3) of other tax-exempt purposes which may fall within the
      broad outlines of 'charity' as developed by judicial decisions.
      Such term includes:  Relief of the poor and distressed or of the
      underprivileged;  advancement of religion;  advancement of
      education or science;  erection or maintenance of public
      buildings, monuments, or works;  lessening of the burdens of
      Government;  and promotion of social welfare by organizations
      designed to accomplish any of the above purposes, or (i) to
      lessen neighborhood tensions;  (ii) to eliminate prejudice and
      discrimination;  (iii) to defend human and civil rights secured
      by law;  or (iv) to combat community deterioration and juvenile
      delinquency * * * .

   The purpose of this regulation is to clarify that the meaning of
"charitable" is not "limited by the separate enumeration in Section
501(c)(3) of other tax-exempt purposes";  for to so limit the term
would render it redundant in the statute.  Notably, the regulation
does not suggest that organizations devoted to other purposes
enumerated in Section 501(c)(3), such as "educational" and "religious"
purposes, must also serve "charitable" purposes.  /21/ Indeed, the
same regulation defines "educational" without reference to the notion
of charity:

      The term 'educational', as used in section 501(c)(3), relates to
      -- (a) The instruction or training of the individual for the
      purpose of improving or developing his capabilities;  or (b) The
      instruction of the public on subjects useful to the individual
      and beneficial to the community.

   26 C.F.R. 1.501(c)(3)-1(d)(3) (1959) (emphasis supplied).

   The record is thus overwhelming that, since 1894, Congress has
consistently and repeatedly manifested an intent to exempt from income
taxation corporations organized for purely "educational" or
"religious" purposes, as well as corporations organized for purely
"charitable" purposes.  The Commissioner of Internal Revenue so
construed Section 501(c)(3) and its predecessors until 1970 -- some 57
years after Congress' initial enactment of the relevant statutory
language in the Tariff Act of 1913.  An administrative reversal of
position so many years later provides no legal basis for ascribing to
a much earlier Congress an intent patently at odds with the very words
of the statute.  /22/

   3. The court of appeals, following the district court in Green,
held otherwise largely on the strength of Tank Truck Rentals, Inc. v.
Commissioner, 356 U.S. 30 (1958), which is said to stand for the
proposition that "tax benefits such as deductions and exclusions
generally are subject to limitation on public policy grounds" (Pet.
App. A8).  In Tank Truck, the taxpayer urged that fines paid for
violating state maximum weight laws were "ordinary and necessary"
expenses and thus allowable as deductions from gross income under the
predecessor to Section 162(a) of the 1954 Code.  /23/ The Supreme
Court affirmed the Commissioner's disallowance of the deduction,
holding that an expense is not "necessary" to the operation of a
business "if allowance of the deduction would frustrate sharply
defined national or state policies proscribing particular types of
conduct, evidenced by some governmental declaration thereof." 356
U.S.at 33.  Observing that "(d)eduction of fines and penalties
uniformly has been held to frustrate state policy in severe and direct
fashion by reducing the 'sting' of the penalty prescribed by the state
legislature, the Court concluded that Congress did not intend to allow
income tax deductions for fines incurred to punish violations of state
penal laws.  356 U.S.at 35-36.

   Unlike the explicit limitation placed by Congress on the
deductibility of business expenses (i.e., that they be "ordinary and
necessary"), tax-exempt status under Section 501(c)(3) is accorded to
"corporations * * * organized * * * for * * * educational purposes"
simpliciter.  No similar "ordinary and necessary" standard applies
under the exemption statute so as to warrant the court of appeals'
reference in this context to the wholly separate statutory
construction question involved in Tank Truck.  Indeed, even in the
context of "ordinary and necessary" business deductions under Section
162(a), this Court has admonished that the "public policy" exception
to the general rule of deductibility is "sharply limited and carefully
defined." Commissioner v. Tellier, 383 U.S. 687, 691, 693-694 (1966).
As the Tellier Court noted (ibid.):

      (T)he federal income tax is a tax on net income, not a sanction
      against wrongdoing.  That principle has been firmly imbedded in
      the tax statute from the beginning.  One familiar facet of the
      principle is the truism that the statute does not concern itself
      with the lawfulness of the income that it taxes.

   Moreover, Congress circumscribed the denial of tax deductions on
grounds of public policy in the aftermath of Tank Truck.  In 1969 and
1971, Congress enacted rules explicitly limiting the public policy
doctrine of nondeductibility to fines paid for violations of law and
to illegal bribes, kickbacks, and similar payments.  See 26 U.S.C.
162(c) and (f).  The Senate Finance Committee's report (No. 91-552)
accompanying the 1969 enactment stated:  "Public policy, in other
circumstances, generally is not sufficiently clearly defined to
justify the disallowance of deductions." 1969-3 Cum.Bull. 423, 597.
See Bittker and Kaufman, Taxes and Civil Rights:
"Constitutionalizing" the Internal Revenue Code, 82 Yale L.J. 51, 75
(1972).

   In light of these subsequent developments, the public policy
doctrine announced in Tank Truck -- even if transferable in its
severely narrowed form to the present situation (which it is not) --
provides no meaningful support for the result reached below.  Instead,
resolution of the statutory issue depends on the language of Section
501(c)(3) and its history.  We have already shown where the
legislative analysis leads, and that reading of the statute must
prevail until amended or altered by explicit congressional action.

   4. No such subsequent legislation has been passed, and, to the
extent that Congress has visited the tax exemption question since
1970, there is no basis to conclude that it has ratified or otherwise
acquiesced in the construction given Section 501(c)(3) by the Green
court and the court of appeals.

   a. As Judge Widener noted in dissent (81-3 Pet. App. A28-A31).
Congress has expressed misgivings regarding the Service's recent
activities in the area of tax exemptions to private schools.  In 1978
and 1979, the Service sought to supplement its procedures for
verifying whether the actual practices of private schools conformed to
the schools' announced policies of nondiscrimination.  43 Fed.Reg.
37296-37298 (1978);  44 Fed.Reg. 9451-9455 (1979).  The controversial
nature of those proposals prompted congressional hearings.  Tax Exempt
Status of Private Schools:  Hearings Before the Subcomm. on Oversight
of the House Comm. on Ways and Means, 96th Cong., 1st Sess. Sess.
(1979).  While some of the witnesses testifying at those hearings
assumed that Section 501(c)(3) authorized the Service to deny tax
exemptions to private schools with racially discriminatory policies
(see, e.g., id. at 1176), other witnesses indicated that the Service
had no such power (see e.g., id. at 586).

   In response to the controversy over the proposed revenue
procedures, Congress acted to prevent the Service from enforcing its
proposed regulations and from devising any additional procedures for
enforcing its policy of denying tax-exempt status to racially
discriminatory private schools.  The Dornan Amendment, Section 615 of
the Treasury, Postal Service, and General Government Appropriations
Act of 1980 ("1980 Appropriations Act"), Pub. L. No. 96-74, 93 Stat.
577, prohibited use of funds made available by the Act to carry out
the 1978 and 1979 proposed revenue procedures.  The Ashbrook
Amendment, Section 103 of the 1980 Appropriattions Act, 93 Stat. 562,
specified that the funds appropriated could not be used "to formulate
or carry out any * * * procedure, guideline * * * or measure which
would cause the loss of tax-exempt status to private, religious, or
church-operated schools under Section 501(c)(3) of the Internal
Revenue Code of 1954 unless in effect prior to August 22, 1978."

   The House Report on the 1980 Appropriations Act summarizes the
Committee's misgivings concerning the proposed 1978 and 1979 revenue
procedures:

      This Committee * * * is concerned about the Internal Revenue
      Service issuing revenue procedures in an area where legislation
      may be more appropriate.  The responsibility of the Internal
      Revenue Service is to enforce the tax laws.  The purpose of the
      Internal Revenue Service revenue procedures ought to be to
      clarify these laws, not to expand them.  The issue of tax exempt
      status of schools is a matter of farreaching social significance
      and the Service ought to issue revenue procedures in this area
      only when the legislative intent is fairly explicit.  The
      Appropriations Committee is unsure that the proposed revenue
      procedures issued by the Service are the proper expression of
      that legislative intent.  The Committee believes that the
      Service ought not issue these revenue procedures until the
      appropriate legislative committees have had a chance to evaluate
      them and make the determination that the proposed revenue
      procedures are a proper expression of the tax laws.

H.R. Rep. No. 96-248, 96th Cong., 1st Sess. 14-15 (1979) (emphasis
supplied).  Thus, the Report eschews any definitive conclusion with
regard to the Service's authority, stating that the Committee is
"unsure" whether the 1978 and 1979 procedures accord with legislative
intent.  The Report also counsels that action be taken by the Service
in the area of tax exemptions for private schools "only when the
legislative intent is fairly explicit." /24/ Moreover, the sponsors of
the amendments in both the House and Senate indicated their belief
that the Service lacks statutory authority to deny tax exemptions to
racially discriminatory schools /25/ and that the appropriations
limitations were necessary to allow Congress time to act in the area.
/26/

   In passing the Ashbrook and Dornan Amendments, Congress called a
halt to the Service's effort to establish stricter and more detailed
procedures for implementing its 1970 policy of denying tax-exempt
status to schools which discriminate on the basis of race.  /27/ The
debates on these amendments, however, provide little assistance in
divining Congress' view concerning the proper interpretation of
Section 501(c)(3).  Some legislators, including the Amendments'
sponsors, expressed the view that the Service lacks statutory
authority to deny tax exemptions to educational organizations, such as
petitioners, while others expressed the opposite view.  /28/

   Even if a clear congressional consensus regarding the proper
interpretation of Section 501(c)(3) emerged from a reading of the
debates on the Ashbrook and Dornan Amendments, little insight into the
legislative intent of Section 501(c)(3) would be gained.  It is well
settled that "the views of one Congress as to the construction of a
statute adopted many years before by another Congress have 'very
little, if any, Significance.'" Rainwater v. United States, 356 U.S.
590, 593 (1958);  United States v. Price, 361 U.S 304, 313 (1960);
Haynes v. United States, 390 U.S. 85, 87 n.4 (1968);  United States v.
Southwestern Cable Co., 392 U.S. 157, 170 (1968).  This point was
underscored in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).
There, the Court rejected a statutory construction based on
"subsequent legislative history," noting that the

      post-passage remarks of legislators, however explicit, cannot
      serve to change the legislative intent of Congress expressed
      before the Act's passage.  * * * Such statements 'represent only
      the personal views of these legislators, since the statements
      were (made) after passage of the Act.' (Regional Rail
      Reorganization Act Cases, 419 U.S. 102, 132 (1974), quoting
      National Woodwork Manufacturers Association v. NLRB, 386 U.S.
      612, 639 n.34 (1967).)

   Accord, Oscar Mayer & Co. v. Evans, 441 U.S. 750, 758 (1979),
quoting United Air Lines, Inc. v. McMann, 434 U.S. 192, 200 n.7
(1977);  see also Consumer Product Safety Commission v. GTE Sylvania,
447 U.S. 102, 118 n.13 (1980).

   b. Nor do the instant cases come within the familiar rule of
statutory construction that "(s)ubsequent legislation declaring the
intent of an earlier statute is entitled to great weight in statutory
construction." Red Lion Broadcasting Co. v. FTC, 395 U.S. 367, 380-381
(1969) .  In Red Lion, this Court rejected a radio broadcaster's
contention that the FCC's "fairness doctrine," which requires that
public issues be broadcast and that opposing viewpoints on those
issues be given fair coverage, was without statutory authorization in
the Communications Act.  Although the FCC had been applying the
fairness doctrine since 1929 under dubious statutory authority, the
Act was amended in 1959 to "make() it very plain that * * * the phrase
'public interest,' which had been in the Act since 1927, imposed a
duty on broadcasters to discuss both sides of controversial public
issues." Id. at 380.  Thus, through subsequent "positive legislation"
(id. at 382), Congress 'ratified" (id. at 381) the FCC's longstanding
administrative construction of the Act.

   Here, Congress has enacted no such subsequent legislation.  The
pertinent language of Section 501(c)(3) has not been altered, amended,
or in any respect modified since it was enacted in 1954.  In 1976,
Congress enacted Section 501(i) of the 1954 Code, which denies
tax-exempt status to Section 501(c)(7) organizations -- private social
clubs and similar organizations -- whose charter or other written
policy statements provide for "discrimination against any person on
the basis of race, color, or religion." 26 U.S.C. 501(i).  The 1976
statute is by its terms confined to Section 501(c)(7) organizations
and, therefore, provides no guidance as to the meaning of the terms
"charitable," "educational," and "religious" in Section 501(c)(3).
Indeed, the only mention of Section 501(c)(3) organizations in any
part of the 1976 statute or its legislative history is contained in a
single footnote to the accompany committee reports of both Houses.
/29/ This single footnote reference to Section 501(c)(3) in no way
indicates approval of or acquiescence in the Service's 1970 policy,
but merely acknowledges the district court's decision in Green v.
Connally, supra, and this Court's summary affirmance thereof.  /30/

   Similarly, neither the Ashbrook Amendment nor the Dornan Amendment
purports to alter, amend, or otherwise affect the definition of any
statutory term in Section 501(c)(3).  The amendments are negative in
effect, refusing to fund certain proposed revenue procedures.
Moreover, in acting on appropriations measures, legislators are
entitled to assume that the funds appropriated will be used lawfully
without foreclosing a later finding -- congressional or judicial --
that the agency funded has in fact been acting unlawfully.  As this
Court noted in TVA v. Hill, 437 U.S. 153, 190-191 (1978), "(w)ithout
such an assurance, every appropriations measure would be pregnant with
prospects of altering substantive legislation." Accordingly, the
Ashbrook and Dornan Amendments afford no basis for ascribing to
Congress an intent contrary to that reflected in the plain language
and legislative history of Section 501(c)(3).

   A similar question of statutory construction was involved in SEC v.
Sloan, 436 U.S. 103 (1978), which involved a reenactment in 1964 of
Section 12(k) of the Securities Exchange Act of 1934, 15 U.S.C.
78l(k).  /31/ In the Senate committee report accompanying the 1964
legislation, the Commission's interpretation of Section 12(k) was
endorsed.  /32/ The Court rejected the argument that this later
expression of congressional intent should prevail over the plain, and
contrary, meaning of the statute, declaring (436 U.S.at 121):

         Even if we were willing to presume such general awareness on
      the part of Congress, we are not at all sure that such awareness
      at the time of re-enactment would be tantamount to amendment of
      what we conceive to be the rather plain meaning of the language
      of Section 12(k).  On this point the present case differs
      significantly from United States v. Correll, (389 U.S. 299, 304
      (1967)) where the Court took pains to point. out in relying on a
      construction of a tax statute by the Commissioner of Internal
      Revenue that 'to the extent that the words chosen by Congress
      cut in either direction, they tend to support rather than defeat
      the Commissioner's position * * * .'

   Like the statute at issue in Sloan, the meaning of Section
501(c)(3) is clear from its language.  Indeed, the instant cases
present much less compelling reasons than those in Sloan to construe
subsequent legislative activity as indicative of a particular
statutory interpretation.  As previously discussed, the congressional
activity relating to the 1976 enactment of Section 501(i) and to
passage of the Ashbrook and Dornan Amendments generated no committee
report or other meaningful legislative expression endorsing or
otherwise approving of the interpretation given Section 501(c)(3) by
the district court in Green and adopted by the Service.  /33/

   c. There remains only the question whether, notwithstanding the
foregoing discussion, the Service's practice since 1970 of denying
tax-exempt status to petitioners and other racially discriminatory
private schools should be regarded as authorized by Section 501(c)(3)
on the ground that Congress has allowed it to continue for some eleven
years.  Such a proposition arguably follows from the principle of
statutory construction, noted in Red Lion Broadcasting Co. v. FCC,
supra, 395 U.S.AT 381, that "the construction of a statute by those
charged with its execution should be followed unless there are
compelling indications that it is wrong, especially when Congress has
refused to alter the administrative construction".

   This principle has in practice been invoked by the courts with
great care, since its logic would make an administrative construction
unassailable in a very few years so long as Congress remains silent.
In Red Lion itself, "the Congress ha(d) not just kept its silence by
refusing to overturn the administrative construction, but ha(d)
ratified it with positive legislation." 395 U.S.at 381-382.  And in
Zemel v. Rusk, 381 U.S. 1 (1965), which is relied on in Red Lion, the
administrative construction in question was uninterrupted for 26
years, and the Congress had not merely "refuse(d) to overturn the
administrative construction," but had reenacted the legislation
without change.  Id. at 12.

   Subsequent cases have also emphasized that a long-standing
administrative interpretation is particularly persuasive when Congress
has reenacted or otherwise "revisited" the pertinent legislation
without changing it.  See NLRB v. Bell Aerospace Co., 416 U.S. 267,
274-275 (1974);  United States v. Rutherford, 442 U.S. 554, 554 n.10
(1979);  Saxbe v. Bustos, 419 U.S. 65, 74 (1974);  Board of Governors
v. First Lincolnwood Corp., 439 U.S. 234, 248 (1978).

   Recently, however, the Court rejected the argument that the
Securities Exchange Commission's interpretation of the Securities
Exchange Act of 1934 should be adopted "where Congress was expressly
informed of the Commission's interpretation on two occasions when
significant amendments to the securities laws were enacted * * * and
on each occasion Congress left the administrative interpretation
undisturbed." Aaron v. SEC, 446 U.S. 680, 694 n.11 (1980).  As the
Court explained (ibid.):

      (S)ince the legislative consideration of those statutes was
      addressed principally to matters other than that at issue here,
      it is our view that the failure of Congress to overturn the
      Commission's interpretation falls far short of providing a basis
      to support a construction of Section 10(b) so clearly at odds
      with its plain meaning and legislative history.

   Similarly, although Section 501(c)(3) has been amended since 1970,
/34/ the Service's policy regarding the tax-exempt status of
discriminatory private schools was not directly addressed by Congress.
 And, while the Green court's decision was acknowledged in
congressional reports accompanying enactment of Section 501(i) in
1976, that legislation was concerned solely with the tax treatment of
private social clubs.  Nor was discussion of the Service's 1970
revenue ruling in connection with the Ashbrook and Dornan Amendments
equivalent to a failure to alter administrative construction.  As
noted above, when voting on appropriations measures, legislators are
entitled to operate under the assumption that the agencies funded are
operating within the law.  See TVA v. Hill, 437 U.S. 153, 190 (1978).

   Thus, as in Aaron, the failure of Congress to act on the Service's
1970 revenue ruling falls far short of supporting a construction of
Section 50B(c)(3) "so clearly at odds with its plain meaning and
legislative history." This point bears emphasis, for even where the
agency's statutory construction has been consistent an longstanding,
and even where Congress, having been informed of the agency's
construction, has reenacted the statute without overturning that
construction, the courts will reject an agency interpretation
unsupported by the language of the statute and its legislative
history.  SEC v. Sloan, supra, 436 U.S.at 119-120, 122-123.

   Indeed, Sloan involved an agency construction which had stood
consistently for 34 years, during which time the statute had been
reenacted with a legislative history indicating approval of the agency
construction.  436 U.S.at 117.  In contrast, the Service's
construction of Section 501(c)(3) regarding discriminatory schools has
stood for only 11 years and represents a litigation-inspired reversal
of the agency interpretation given the statute for more than a half
centure preceding 1970.  Moreover, here there has been neither
statutory reenactment nor a process of amendment which focused
congressional attention on the Service's construction without changing
it.  In these circumstances, congressional silence cannot override the
intent reflected in plain statutory language.  /35/

   5. There are two final points to be made.  In affirming the
Service's authority to deny tax-exempt status to petitioners, the
court of appeals hinted in Bob Jones University that its
interpretation of Section 501(c)(3) was guided, at least in part, by
equal protection considerations.  Citing Norwood v. Harrison, 413 U.S.
455 (1973), the court stated (81-3 Pet.App. A11 n.7):  "The
Constitution commands that government not provide any form of tangible
assistance to schools which discriminate on the basis of race.  * * *
(G)overnment must 'steer clear' of affording significant tax support
to educational institutions that practice racial discrimination."

   To the extent that the court of appeals was suggesting that the
granting of a tax exemption to these schools would be constitutionally
impermissible under the Fifth Amendment, we strongly disagree.  A
facially neutral statute affronts equal protection norms protecting
against racial discrimination only if its enactment or operation can
be said to have been animated by a discriminatory purpose.  E.g.,
Washington v. Davis, 426 U.S. 229, 239-244 (1976);  Personnel
Administrator of Massachusetts v. Feeney, 442 U.S. 256, 279 (1979).
/36/ Such is plainly not the case with regard to Section 501(c)(3).
Nothing in its language or legislative history suggests a
congressional purpose to afford tax-exempt status to educational
organizations in order to foster racial discrimination by private
schools.  /37/ Nor does the tax exemption conferred by Section
501(c)(3) make the government a partner or joint venturer in
petitioners' enterprises.  See Moose Lodge No. 107 v. Irvis, 407 U.S.
163, 176-177 (1972);  Burton v. Wilmington Parking Authority, 365 U.S.
715 (1961).

   Moreover, Norwood condemned material state resources provided to
segregated private schools.  The existence of a tax exemption for
certain organizations is simply not the same kind of material support.
 Rather, it is a decision by Congress to refrain from collecting taxes
from certain classes of organizations, including all bona fide
educational ones.  See Walz v. Tax Commission, 397 U.S. 664, 675
(1970).  The policies of an organization do not change its basic
character.  Indeed, in Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d), Congress considered the danger of the federal
government's involvement in the kind of activity at issue in Norwood
and forbade it from doing so.  But in taking such action, Congress
gave no indication that it was thereby limiting the entitlement of
educational institutions to tax exemptions.

   Although some have contended that Title VI itself should be
interpreted to achieve this result, the language of Title VI -- which
prohibits racial discrimination in any program or activity receiving
"Federal financial assistance" -- and its legislative history render
unpersuasive the contention that tax exemptions constitute federal
financial assistance under Title VI.  Congress defined "Federal
financial assistance" in the statute as "assistance to any program or
activity by way of grant, loan, or contract other than a contract of
insurance or guaranty." 42 U.S.C. 2000d-1.  The Department of
Justice's interpretative regulations are to the same effect.  28
C.F.R. 42.102(c).  Nowhere in the statute is there an indication that
Congress intended tax exemptions to be among the particular types of
assistance enumerated.  Nor is there any mention in its legislative
history of the possibility that tax exemptions could be the basis for
triggering federal coverage under Title VI.  /38/ Moreover, the
proposition that income tax exemptions constitute "Federal financial
assistance" is inconsistent with the overall structure of the Civil
Rights Act of 1964.  /39/

   In light of the far-reaching implications of including federal tax
exemptions within the meaning of "Federal financial assistance" under
Title VI (see note 39, supra), and in the absence of any indication in
the statute's language or legislative history that Congress considered
tax exemptions to constitute federal financial assistance, such a
construction of Title VI does not withstand scrutiny.  /40/

 II. SHOULD THE COURT DISAGREE WITH OUR VIEW THAT THE COMMISSIONER
LACKED AUTHORITY TO DENY EXEMPTIONS TO PETITIONERS ON NATIONAL POLICY
GROUNDS, THE EXERCISE OF SUCH AUTHORITY HERE DID NOT VIOLATE
PETITIONERS' RIGHT TO FREE RELIGIOUS BELIEF AND EXERCISE UNDER THE
FIRST AMENDMENT

   If the Court agrees with the preceding argument, it need not reach
petitioners' claims under the First Amendment.  Assuming arguendo that
the Court finds the Commissioner is in fact clothed with the requisite
authority to withdraw petitioners' exemptions, its action was not
prohibited by the First Amendment.

   Both Goldsboro Christian Schools (Br. 31-44) and Bob Jones
University (Br. 23-34) contend that because their racially
discriminatory practices are the outgrowth of sincere religious faith,
the Religion Clauses of the First Amendment prohibit the government
from denying them tax-exempt status.  But, as the court of appeals
correctly held (81-3 Pet.App. A13-A14;  footnote omitted), "the
government's rule would not prohibit (petitioner) from adhering to
(their) policy.  Abandonment of the policy would not prevent
(petitioners) from teaching the Scriptural doctrine of
nonmiscegenation.  Nor is any individual student * * * forced to
personally violate his beliefs;  no student is forced to date or marry
outside of his race." Moreover, the Service's policy, applied
evenhandedly to sectarian and nonsectarian schools, avoids government
entanglement in matters of church doctrine, and does not involve
preference of one sect or doctrine over another.  Hence, the court of
appeals concluded that "(t)he nondiscrimination policy also passes
muster under the Establishment Clause" (id. at A14).

   Since all that is at issue here is tax-exempt status, rather than a
governmental prohibition of any of petitioners' practices, analysis
begins with the principle that, while exemption from nondiscriminatory
application of generally applicable tax laws is a constitutionally
permissible accommodation of charitable organizations including
churches themselves (see Walz v. Tax Commission, supra), it presumably
is not constitutionally required.  Once such exemptions have been
granted, however, very serious First Amendment problems would be
presented by any attempt to differentiate among churches or other
religious organizations on the basis of their beliefs or religious
practices.  A grave constitutional problem would be presented, for
example, if an exemption were to be denied solely because of
admissions practices in a seminary or because the tenets of a faith
disqualify certain classes of persons from eligibility for its clergy.
 Thus, in a news release issued nine days after its ruling with
respect to private schools, the Service stated that "(s)electivity of
students, as by a religious seminary, having no relation to racial
discrimination, would not be inconsistent with the IRS statement of
position" (81-3 J.A. A239).

   On the other hand, some religious practices (even as part of a
worship service), such as human sacrifice, may constitutionally be
prohibited and, a fortiori, may constitutionally serve as a basis for
denial of tax-exempt status.  Here, we submit that there is no
constitutional impediment to basing denial of tax-exempt status on
petitioners' discriminatory practices (which involve commercial
dealings with the public).

   1. a.  It is, of course, well settled that the Free Exercise Clause
of the First Amendment affords substantial protection for the diverse
religious beliefs and practices in this country.  Thus, this Court has
held that the Free Exercise Clause prohibits governmental regulation
of religious beliefs as such (Cantwell v. Connecticut, 310 U.S. 296,
303 (1940)), governmental interference with the dissemination of
religious ideas (see Fowler v. Rhode Island, 345 U.S. 67 (1953);
Follett v. McCormick, 321 U.S. 573 (1944)), or use of secular
governmental programs "to impede the observance of one or all
religions or * * * to discriminate invidiously between religions, * *
* even though the burden may be characterized as being only indirect."
Braunfeld v. Brown, 366 U.S. 599, 607 (1961).  But as the Court has
also noted, "neutral prohibitory or regulatory laws having secular
aims" may impose certain "incidental burdens" on free exercise when
"the burden on First Amendment values is * * * justifiable in terms of
the Government's valid aims." Gillette v. United States, 401 U.S. 437,
462 (1971);  see, e.g., United States v. Lee, No. 80-767 (Feb. 23,
1982);  Wisconsin v. Yoder, 406 U.S. 205 (1972).

   Thus, a person is not protected from every burden on the exercise
of his religion resulting from the implementation of a neutral,
secular governmental interest.  Braunfeld v. Brown, supra, 366 U.S.at
603;  Johnson v. Robison, 415 U.S. 361, 383-386 (1974);  Gillette v.
United States, supra, 401 U.S.at 461-462;  see Prince v.
Massachusetts, 321 U.S. 158 (1944), Reynolds v. United States, 98 U.S.
145 (1878);  Jacobson v. Massachusetts, 197 U.S. 11 (1905).  In
determining whether a particular statute is supported by a
governmental interest that outweighs a free exercise claim, it is
appropriate (McDaniel v. Paty, 435 U.S. 618, 635 n.8 (1978) (Brennan,
J., concurring in the judgment))

      to balance the importance of the secular values advanced by the
      statute, the closeness of the fit between those ends and the
      means chosen, and the impact an exemption on religious grounds
      would have on the State's goals, on the one hand, against the
      sincerity and centrality of the objection to the State's goals
      to the sect's religious practice, and the extent to which the
      governmental regulation interfered with that practice, on the
      other hand.

   See Wisconsin v. Yoder, supra, 406 U.S.at 214 (the interest of the
government is subject to "a balancing process when it impinges on
fundamental rights * * * such as those specifically protected by the
Free Exercise Clause of the First Amendment");  Johnson v. Robison,
supra;  Gillette v. United States, supra.  However, "(t)o strike down
without the most critical scretiny, legislation which imposes only an
indirect burden on the exercise of religion, i.e., legislation which
does not make unlawful the operating latitude of the legislature."
Braunfeld v. Brown, supra, 366 U.S.at 606.  Accordingly, this Court
has repeatedly observed that a generally imposed income tax does not
have a prohibited coercive effect on religious practices or beliefs.
Follett v. McCormick, supra, 321 U.S.AT 577-578;  Murdock v.
Pennsylvania, 319 U.S. 105, 112 (1943);  see United States v. Lee,
supra, slip op. 6-7;  Braunfeld v. Brown, supra, 366 U.S.at 606.  /41/

   Here, despite petitioners' claims to the contrary (81-1 Br. 36;
81-3 Br. 9), the Service's rulings do not place more than an indirect
and limited burden upon any person's or any corporation's right to
free religious belief or exercise.  Petitioners do not seek on
religious grounds to limit their student body to members of a
particular sect or to those who espouse particular beliefs.  Rather,
the focus of the policies of petitioners' at issue here is on racially
discriminatory practices, not on beliefs.  In requiring that
petitioners maintain racially nondiscriminatory policies as a
prerequisite to tax-exempt status, the Service does not purport to
interfere with their right to espouse or teach a doctrine against
interracial marriage, or with any student's right to adhere to such a
doctrine.  See Brown v. Dade Christian Schools, Inc., 556 F.2d 310,
321-322 (5th Cir. 1977) (en banc) (Goldberg, J., concurring), cert.
denied, 434 U.S. 1063 (1978).  /42/ Indeed, as this Court has noted
(Runyon v. McCrary, supra, 427 U.S.at 176), even if the right of
parents to have their children educated in schools fostering a belief
in racial discrimination is assumed to be protected by the First
Amendment, the First Amendment does not protect a school's practice of
racial discrimination.  See also Bob Jones University v. Johnson, 396
F.Supp. 597, 606-608 (D.S.C. 1974), aff'd, 529 F.2d 514 (4th Cir.
1975).

   b. Sherbert v. Yoder, supra, upon which petitioners rely (81-1 Br.
33-34;  81-3 Br. 23 et seq.), are therefore distinguishable.  In both
of these cases, the infringement on the exercise of the individual's
religion was far more burdensome than here.  In Sherbert, a member of
the Seventy-Day Adventist Church was discharged by her employer
because she would not work on Saturday, the Sabbath Day of her faith.
She was unable to obtain other employment in the vicinity where she
lived because of her religious belief that she could not work on
Saturday.  South Carolina denied the appellant's claim for
unemployment benefits on the ground that she failed without reasonable
cause to accept available employment.  This Court held that
disqualification of a Seventy-Day Adventist from unemployment
compensation solely because of her refusal to accept employment in
which she would have to work on Saturday violated the Free Exercise
Clause.  The appellant in Sherbert was faced with a constitutionally
unacceptable choice.  She had to give up either her Sabbath Day or her
economic means of survival.  A similar choice was involved in Thomas
v. Review Board, Indiana Employment Security Division, 450 U.S. 707
(1981), in which the petitioner terminated his employment when he was
assigned to armament production.  Petitioners face no similar choice
here.

   Similarly, in Yoder, this Court upheld the claim of members of the
Old Order Amish sect that enforcement against them of a state
compulsory formal education requirement after the eighth grade would
violate the free exercise of their religion.  The interest of the
state in requiring an additional one or two years of formal high
school attendance was deemed insufficient against the claim that state
formal education during the crucial adolescent years would expose the
children to worldly influences, and thereby threaten the religious
survival of the Old Order Amish parents as well as their children.
The choice faced by the Amish parents in Yoder thus was either to risk
losing their children from their faith or to violate the law.  No such
choice need be made here.  Although petitioners claim that their
discriminatory practices are the product of religious belief, they are
free to continue to maintain their racial restrictions and relinquish
their claim to tax exemption and deductible charitable contributions.
Alternatively, petitioners can eliminate their racially restrictive
admissions policies and other rules but continue to teach their
religious belief in the separation of races.  Unlike Sherbert and
Yoder, the Service's policy therefore does not threaten the integrity
of petitioners' religious beliefs or observances.  See also McDaniel
v. Paty, supra;  Torcaso v. Watkins, 367 U.S. 488 (1961).

   2. Finally, the court of appeals correctly held (81-3 Pet.App.
A15-A16) that the Service's policy did not transgress Establishment
Clause values because it avoids excessive entanglement with religion
by applying its policy to all religiously operated schools (as well as
non-religious schools).  Thus, contrary to petitioner Bob Jones
University's contention (81-3 Br. 32), the Service's policy does not
have "the effect of creating a religious preference" and "official
hostility toward non-preferred religions."

   In enforcing its ruling, the only inquiry that the Service
uniformly undertakes is the relatively narrow inquiry whether the
school maintains racially nondiscriminatory policies.  Such an inquiry
does not involve the government in preferring one religion over
another, or even concerning itself with whether racial discrimination
is motivated by religious belief.  All private schools must
demonstrate compliance with the nondiscrimination principle.  Hence,
the Service's policy does not violate the Establishment Clause.  As
the court of appeals pointed out (81-3 Pet.App. A15-A16), "the
principle of neutrality embodied in the Establishment Clause does not
prevent government from enforcing its most fundamental constitutional
and societal values by means of a uniform policy, neutrally applied."
See Gillette v. United States, 401 U.S. 437, 454-458 (1971).  "And,
the uniform application of the rule to all religiously operated
schools avoids the necessity for a potentially entangling inquiry into
whether a racially restrictive practice is the result of sincere
religious belief" (81-3 Pet.App. A16;  emphasis in original).  Cf.
Brown v. Dade Christian Schools, Inc., supra, 556 F.2d at 323-324
(Goldbert, J., concurring);  Fiedler v. Marumsco Christian School, 631
F.2d 1144 (4th Cir. 1980);  Bob Jones University v. Johnson, supra,
396 F.Supp.at 606.

   Accordingly, the minimum intrusion occasioned by the Commissioner's
nondiscrimination policy does not violate the Establishment Clause.

                              CONCLUSION

   The judgments of the court of appeals should be reversed.

   Respectfully submitted,

   LAWRENCE G. WALLACE

      Acting Solicitor General /**/

   WM. BRADFORD REYNOLDS

      Assistant Attorney General

   CHARLES JUSTIN COOPER

      Special Assistant to the

         Assistant Attorney General

   February 1982

   /*/ This brief sets forth the position of the United States on both
questions presented.  The Acting Solicitor General fully subscribes to
the position set forth on question number two, only.  His views on
question one are set forth in the Brief for the United States filed in
this Court in September 1981 in response to the petitions for
certiorari in these cases.  Those views are more fully developed in a
draft brief on the merits which was ready to be printed for timely
filing in early January 1982.  Copies of that draft brief were
furnished by the Department of Justice in late January 1982, pursuant
to request, to the Senate Finance Committee and the House Ways and
Means Committee, along with other documents requested by those
committees.

   /1/ Unless otherwise indicated, "Pet. App." and "J.A." references
in this portion of the Statement are respectively to the appendix to
the petition and the joint appendix in Bob Jones University (No.
81-3).

   /2/ "A." refers to the separately bound record appendix filed in
the court of appeals, Nos. 79-1215 and 79-1216.

   /3/ The Service's interpretation of Section 501(c)(3) was spurred
by litigation.  In Green v. Connally, 330 F.Supp. 1150 (D.D.C.),
summarily aff'd per curiam sub nom. Coit v. Green, 404 U.S. 997
(1971), parents of black public school students sued to enjoin the
United States from according tax-exempt status under Section 501(c)(3)
to private schools in Mississippi that discriminated against blacks.
The Service initially took the position that racially segregative
private schools were entitled to tax exemption under Section
501(c)(3), but reversed its legal position "in the midst of (the)
litigation." 330 F.Supp.at 1156.  As subsequently observed by this
Court, the Court's summary affirmance of Green "lacks the precedential
weight of a case involving a truly adversary controversy," and leaves
open the question of whether a racially discriminatory private school
is eligible for tax exemption under Section 501(c)(3).  Bob Jones
University v. Simon, 416 U.S. 725, 740 n.11 (1974).

   /4/ While the administrative proceedings preliminary to the
revocation of its exemption were pending, petitioner sought injunctive
relief to prevent the Service from taking final action on the
revocation.  Bob Jones University v. Simon, supra.  This Court
unanimously held that the action was barred by the Anti-Injunction Act
(26 U.S.C. (& Supp. III) 7421(a)) and by the Declaratory Judgment Act
(28 U.S.C. (& Supp. III) 2201), but suggested (416 U.S.at 746) the
refund suit procedure ultimately employed by petitioners here.

   /5/ Petitioner's qualification for an exemption from federal
unemployment taxes (FUTA) under 26 U.S.C. 3306(c)(8) turns on its
entitlement to status as a tax-exempt organization under Section
501(c)(3).  See Bob Jones University v. Simon, supra, 416 U.S.at
727-728.

   /6/ In a separate suit against the Secretary of the Treasury and
the Commissioner of Internal Revenue instituted by petitioner, the
district court thereafter ordered those officials to restore
petitioner's tax-exempt status and to publish advance assurances of
deductibility of contributions to petitioner (Pet. App. A72-A86).

   /7/ The majority miscites the House Report as "H.R. Rep. No. 1820,
75th Cong., 3d Sess. 19 (1939)" (Pet. App. A8).

   /8/ Unless otherwise indicated, "Pet. App." and "J.A,' references
in this portion of the Statement are respectively to the appendix to
the petition and record appendix in Goldsboro Christian Schools (No.
81-1).

   /9/ Although the Second Baptist Church of Goldsboro was active in
petitioner's founding and operation, petitioner was incorporated as a
separate legal entity (Pet. App. 6a-7a;  J.A. 5-6).

   /10/ References to organizations described in Section 501(c)(3)
were deleted from Section 503 in 1969.

   /11/ Section 504(a)(1) and (3) provided for the denial of
tax-exempt status to any organization whose retained income during the
taxable year is

      unreasonable in amount of duration in order to carry out the
      charitable, educational, or other purpose or function
      constituting the basis for exemption under section 501(a) of an
      organization described in section 501(c)(3):  or * * *

             *     *     *     *     *

      (3) * * * invested in such a manner as to jeopardize the
      carrying out of the charitable, educational, or other purpose or
      function constituting the basis for exemption under section
      501(a) of an organization described in section 501(c)(3).

   Substantially identical language was contained in Section 3814 of
the 1939 Internal Revenue Code (26 U.S.C. 1952 ed.)).  This Section
504 was repealed by Congress in 1969.  Pub. L. No. 91-172, Section
101(j)(15), 83 Stat. 527.

   /12/ Section 513(a) provides, in pertinent part, that the term
"unrelated trade or business" in the context of Section 511 (which
imposes a tax on unrelated business income of otherwise tax-exempt
organizations) means "any trade or business the conduct of which is
not substantially related * * * to the exercise or performance by such
organization of its charitable, educational, or other purpose or
function constituting the basis for its exemption under Section 501
(or, * * * to the exercise or performance of an purpose or function
described in section 501(c)(3)), * * * ." Substantially identical
language appeared in Section 422(b) of the 1939 Internal Revenue Code.

   /13/ Regulations promulgated by the Internal Revenue Service also
reflect an interpretation of the statutory language as affording
tax-exempt status any organization qualifying under one of the
categories enumerated in Section 501(c)(3), without regard to whether
it also accords with the characteristics of a common-law charity.
Under Section 1.501(c)(3)-1(d)(1)(i) of the regulations, an
organization may be exempt "if it is organized and operated
exclusively for one or more of the following purposes:  (a) Religious,
(b) Charitable, (c) Scientific, (d) Testing for public safety, (e)
Literary, (f) Educational, or (g) Prevention of cruelty to children or
animals." 26 C.F.R. 1.501(c)(3)-1(d)(1)(i)(emphasis supplied).  The
regulations state further that

      (s)ince each of the purposes specified in subdivision (i) of
      this subparagraph is an exempt purpose in itself, an
      organization may be exempt if it is organized and operated
      exclusively for any one or more of such purposes.  * * * For
      example, if an organization claims exemption on the ground that
      it is 'educational', exemption will not be denied if, in fact,
      it is 'charitable'.

   26 C.F.R. 1.501(c)(3)-1(d)(1)(iii)(emphasis supplied).

   /14/ Moreover, if all organizations which receive "charitable
contributions" were required to conform to common-law notions of
charity, the requirement of Section 170(c)(2)(C) -- that no part of
the earnings of an organization which received "charitable
contributions" may "inure() to the benefit of any private shareholder
or individual" -- would be superfluous.  See page 20, infra.

   /15/ Even if one assumes that Congress did intend all tax-exempt
organizations to qualify as "charitable" under Section 501(c)(3), it
is doubtful that Congress used the term "charitable" in its common-law
sense.  As Lord McNaughten observed in Commissioners of Income Tax v.
Pemsel, (1891), A.C. 531, 583, the word "charitable" at common law
encompassed "trusts for the relief of poverty;  trusts for the
advancement of education;  trusts for the advancement of religion;
and trusts for other purposes beneficial to the community, not falling
under any of the preceding heads." Had Congress intended the word
"charitable" to have its common-law meaning, separate references in
Section 501(c)(3) to "educational" and "religious" organizations would
have been unnecessary, for the latter two terms would have been
included in the first.  Such an interpretation of the word
"charitable" in Section 501(c)(3) would thus betray a fundamental
axion of statutory construction:  statutes are to be construed to give
effect to each word, and no one part of a statute should be
interpreted so as to render another part of the statute redundant.
Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307-308 (1961);  United
States v. Menasche, 348 U.S. 528, 538-539 (1955).

   Notably, the Service followed this axiom during the initial period
of Section 501(c)(3)'s history and, accordingly, interpreted
"charitable" in its "popular and ordinary sense" rather than in its
common-law sense.  See, e.g., I.T. 1800, II-2 Cum.Bull. 152, 153
(1923) (discussing the intended meaning of the word "charitable" as
used in Section 231(6) of the Revenue Acts of 1918 and 1921 (Section
501(c)(3)' s predecessor)).  This contemporaneous administrative
interpretation of the statute clearly is not without significance.
Power Reactor Development Co. v. Electricians, 367 U.S. 396, 408
(1961).  See NLRB v. Boeing Co., 412 U.S. 67, 75 (1973) ("a consistent
and contemporaneous construction of a statute by the agency charged
with its enforcement is entitled to great deference * * * ").  See
also discussion in text at pages 19-22, infra.

   /16/ This income tax act was later declared unconstitutional by the
Supreme Court in Pollock v. Farmer's Loan & Trust Co., 158 U.S. 601
(1895).

   /17/ Revenue Act of 1924, ch. 234, Section 231(6), 43 Stat. 282;
Revenue Act of 1926, ch. 27, Section 231(6), 44 Stat. 40;  Revenue Act
of 1928, ch. 852, Section 103(6), 45 Stat. 813;  Revenue Act of 1932,
ch. 209, Section 103(6), 47 Stat. 193.

   /18/ Treas. Reg. 69, Art. 517 (1926 Revenue Act);  Treas. Reg. 74,
Art. 517 (1928 Revenue Act);  Treas. Reg. 77, Art. 527 (1932 Revenue
Act).

   /19/ The House Report on the 1939 Code explained that tax
exemptions are granted by Congress to certain types of organizations
in recognition of the performance of functions that promote the
general welfare and that might otherwise be provided by the
government.  See page 7, supra.  Contrary to the court of appeals'
suggestion in the Bob Jones University case (Pet. App. A8 the Report
does not indicate that Congress intended to endow the Internal Revenue
Service with authority to disqualify a designated organization from
tax-exempt status upon an agency determination that one or more of the
organization's practices affront an agency concept of federal public
policy as informed by the "general welfare." To the contrary, Congress
made a determination that organizations within the terms of Section
501(c)(3) advance the general welfare, and did not invest the Service
with authority to determine on a case-by-case basis whether particular
practices of a bona fide qualifying organization sufficiently
detracted from the general welfare to warrant denial of a tax
exemption.

   /20/ The 1954 Code does not permit tax-exempt organizations to
"participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of any
candidate for public office."

   /21/ Were the Service's regulations to be so interpreted they would
be inconsistent with the plain language of Section 501(c)(3) and would
have to fall.  The Supreme Court outlined the limits of the
Executive's interpretive powers in Manhattan General Equipment Co. v.
Commissioner, 297 U.S. 129, 134 (1936):

         The power of an administrative officer or board to administer
      a federal statute and to prescribe rules and regulations to that
      end is not the power to make law -- for no such power can de
      delegated by Congress -- but the power to adopt regulations to
      carry into effect the will of Congress as expressed by the
      statute.  A regulation which does not do this, but operates to
      create a rule out of harmony with the statute, is a mere
      nullity.

   /22/ Obviously, the Commissioner's 1970 revenue ruling does not
even arguably qualify as "a substantially contemporaneous construction
of the statute by those presumed to have been aware of congressional
intent." National Muffler Dealers Association v. United States, 440
U.S. 472, 477 (1979).

   /23/ The fines assessed against the taxpayer were for violations of
penal statutes enacted to protect state highways from damage and to
ensure the safety of highway users.

   /24/ That the Ashbrook and Dornan Amendments suspended only those
revenue procedures promulgated after August 1978 in no way indicates
congressional approval of the Service's pre-August 1978 policies.

   /25/ Congressman Ashbrook, in discussing his amendment on the House
floor, stated:

         So long as the Congress has not acted to set forth a national
      policy respecting denial of tax exemptions to private schools,
      it is improper for the IRS or any other branch of the Federal
      Government to seek denial of tax-exempt status.

                   *     *     *     *     *

         For an agency to permit itself to be guided by pressures of
      pending legal action, other Federal agencies, outside pressure
      groups, or changes in an administration is to confuse its own
      role as tax collector with that of legislator, jurist, or
      policymaker.  (125 Cong.Rec. H5879-H5880 (daily ed. July 13,
      1979).)

   Senator Helms, sponsor of the Ashbrook Amendment in the Senate, was
even more explicit, stating:

         Mr. President, the IRS has responded to the absence of
      specific statutory authority from Congress by constructing a
      theory which substantially distorts the legislative intent and
      clear meaning of section 501(c)(3) of the Internal Revenue Code.
       IRS asserts that for a private school to qualify for tax-exempt
      status under section 501(c)(3) it must be both a charitable and
      an educational organization.  However, section 501(c)(3) lists
      the exempt purpose as being independent and separate.  Nowhere
      in the statute can it be inferred that an organization seeking
      exemption must be both 'charitable' as well as meet their
      requirements of one of the other listed purposes.  (125
      Cong.Rec. S11835 (daily ed. Sept. 5, 1979).)

   See also 125 Cong.Rec. H5980 (daily ed. July 16, 1979) (remarks of
Congressman Dornan).

   /26/ In introducing the Ashbrook Amendment in the Senate, Senator
Helms stated:  'My amendment is necessary to allow Congress the time
to consider the numerous legislative proposals which have been
introduced to deal with this problem." 125 Cong.Rec. S11980 (daily ed.
Sept. 6, 1979);  see 125 Cong.Rec. H5980 (daily ed. July 16, 1979)
(remarks of Congressman Dornan).

   /27/ The Ashbrook and Dornan Amendments have been extended in
subsequent fiscal years.  In the Appropriations Act for fiscal 1982
the Ashbrook Amendment was extended with the addition of language
which prohibits use of appropriations to carry out any court order
which would cause the loss of tax-exempt status unless in effect prior
to August 22, 1978.  127 Cong.Rec. H5392, H5395 (daily ed. July 30,
1981).

   /28/ Compare 125 Cong.Rec. H5981 (daily ed. July 16, 1979)
(Congressman Philip M. Crane);  id. at H5982 (daily ed. July 16, 1979)
(Congressman Goldwater);  id. at H5884 (daily ed. July 13, 1979)
(Congressman Grassley);  id. H5885 (daily ed. July 13, 1979)
(Congressman Duncan);  id. at S11837 (daily ed. Sept. 5, 1979)
(Senator Thurmond);  id. at S11852 (daily ed. Sept. 5, 1979) (Senator
Stennis) with id. at H5982 (daily ed. July 16, 1979) (Congressman
Miller);  id. at S11984 (daily ed. Sept. 6, 1979) (Congressman
Schmitt);  id. at S11833 (daily ed. Sept. 5, 1979) (Senator Javits);
id. at S11835 (daily ed. Sept. 5, 1979) (Senator Metzenbaum);  id. at
S11851 (daily ed. Sept. 5, 1979) (Senator Levin).

   /29/ Worded identically in both Reports, the pertinent portion of
the footnote provides:

      Also, the Supreme Court has affirmed (Coit v. Green, 404 U.S.
      997 (1971))

a decision (Green v. Connally, 330 F.Supp. 1150 (D.C., D.C. 1971))
that discrimination on account of race is inconsistent with an
educational institution's tax-exempt status (sec. 501(c)(3)) and also
with its status as a charitable contribution donee (sec. 170(c)(2)).
(S. Rep. No. 94-1318, 94th Cong., 2d Sess. 7-8 & n.5 (1976);  H.R.
Rep. No. 94-1353, 94th Cong., 2d Sess. 8 & n.5 (1976).)

   In floor debate on Section 501(i), there was no indication of
congressional approval of the Service's policy regarding racially
discriminatory private schools.  Congressmen Ullman and Frenzel, who
spoke in support of the bill, explained the nondiscrimination
provision regarding private social clubs as "a new requirement" and a
"major change in the tax law * * * with regard to social
organizations." 122 Cong.Rec. 27452 (1976).

   /30/ Even if this singular footnote reference to Section 501(c)(3)
organizations had clearly expressed approval of Green, it could not be
read as an authoritative expression of congressional will.  In
Consumer Product Safety Commission v. GTE Sylvania, 447 U.S. 102, 118
n.13 (1980), this Court cautioned that "(a) mere statement in a
conference report * * * as to what the Committee believes an earlier
statute meant is obviously less weighty" than subsequent legislation
interpreting an earlier statute.  "Thus, * * * subsequent legislative
history will rarely override a reasonable interpretation of a statute
that can be gleaned from its language and legislative history prior to
its enactment." Ibid.

   The Court in GTE Sylvania, accordingly, gave no weight to
statements contained in a conference committee report because the
legislation which was the subject of the report did not deal with the
issue discussed in the statements in question, because the
interpretation espoused by the conferees was not mentioned by the
committee that drafted the amending act, and because the
interpretation espoused in the report was not debated on the floor of
Congress.  Similarly, here, the 1976 enactment of Section 501(i) did
not purport to interpret Section 501(c)(3) and, indeed, concerned
Section 501(c)(7) organizations only.  The Senate and House Reports
use virtually identical language, which suggests the absence of
independent consideration of the proper scope of Section 501(c)(3),
and the footnote reference to Green (again, assuming arguendo that it
expressed approval of Green) was not debated on the floor of Congress.
 Thus the conclusion of the Court in GTE Sylvania applies equally
here:  "the statement of the Conference Committee is far from
authoritative as an expression of congressional will * * * ." 447
U.S.at 120.

   /31/ Section 12(k) permits the SEC "summarily to suspend trading in
any security * * * for a period not exceeding ten days" under certain
specified circumstances.

   /32/ The Senate committee report stated:

      The Commission has consistently construed section 19(a)(4) as
      permitting it to issue more than one suspension if, upon
      reexamination at the end of the 10-day period, it determines
      that another suspension is necessary.  (S. Rep. No. 379, 88th
      Cong., 1st Sess. 66 (1963).)

   /33/ Shortly after the Service announced its new position with
regard to the tax-exempt status of racially discriminatory schools,
the Commissioner appeared to testify before the Senate Select
Committee on Equal Educational Opportunity.  The Commissioner
explained the Service's new policy and proposed modes of enforcement.
The Chairman of the Select Committee urged him to monitor attendance
records rather than to accept a private school's assurance of a
nondiscriminatory admissions policy.  Equal Educational Opportunity:
Hearings Before the Senate Select Comm. on Equal Educational
Opportunity, 91st Cong., 2d Sess. 1992-2028 (1970).  This colloquy
amounted to no more than a reiteration of the Service's recent policy
and an expression of approval by an individual Senator.  No
legislation pertaining to the tax laws was proposed or considered.

   /34/ In 1976 Congress amended Section 501(c)(3) to confer
tax-exempt status upon organizations devoted to fostering national or
international sports competition.  See Pub. L. No. 94-455, Section
1313(a), 90 Stat. 1730.

   /35/ This conclusion is in no way altered by the fact that several
bills have been introduced in Congress, seeking in a variety of ways
to legislate with regard to the tax-exempt status of private schools.
None of the bills reached the floor of either House of Congress.  More
importantly, the courts have accorded this type of evidence of
congressional inaction virtually no weight in the effort to illuminate
the intent of an earlier Congress.  See United States v. Wise, 370
U.S. 405, 411 (1962);  Waterman Steamship Corp. v. United States, 381
U.S. 252, 269 (1965).

   This Court's decision in Runyon v. McCrary, 427 U.S. 160 (1976),
does not suggest otherwise.  That case construed 42 U.S.C. 1981 to
apply to private acts of racial discrimination, and based that
interpretation on an earlier Court decision, Jones v. Alfred H. Mayer
Co., 392 U.S. 409 (1968).  Subsequent to the Jones decision, Congress
considered and rejected an amendment to the Equal Employment
Opportunity Act of 1970 which would have repealed the interpretation
accorded the statute in Jones insofar as it gave private sector
employees a right of action based on racial discrimination in
employment.  In light of this "indication of congressional agreement
with the view that Section 1981 does reach private acts of racial
discrimination" (427 U.S.at 175 (emphasis in original)), the Court
found "no basis for deviating from the well-settled principles of
stare decisis applicable to this Court's construction of federal
statutes." Ibid.  Here, however, the doctrine of stare decisis is
inapplicable, for "(t)he question of whether a segregative private
school qualifies under Section 501(c)(3) has not received plenary
review in this Court * * * ." Bob Jones University v. Simon, supra,
416 U.S.at 740 n.11.

   Moreover, the extent to which the Runyon Court relied upon this
congressional inaction in deciding the case is unclear.  Presumably
the Court did not give that factor much weight since "unsuccessful
attempts at legislation are not the best of guides to legislative
intent." Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 382 n.11
(1969);  see also United States v. Wise, supra, 370 U.S.at 411;
Waterman Steamship Corp. v. United States, supra, 381 U.S.at 269.  In
any event, Runyon is distinguishable from the situation with regard to
Section 501(c)(3) because no legislation which would have disapproved
of or overruled the interpretation given to Section 501(c)(3) by the
Green court and by the Service in 1970 has ever been considered on the
floor of either House of Congress.

   /36/ Norwood v. Harrison, supra, is not to the contrary, having
arisen in the context of state and municipal programs in Mississippi
that "benefitted private schools engaging in racially discriminatory
admissions practices following judicial decrees desegregating public
school systems,' Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 163
(1978).  See also Gilmore v. Montgomery, 417 U.S. 556, 568 570-571
n.10 (1974).  To the extent that the Court's decision in Norwood can
be read to reject the proposition that discriminatory purpose is a
necessary element of a constitutional violation, it should be noted
that Norwood was decided prior to the Court's ruling in Washington v.
Davis, supra, which held unequivocally to the contrary.

   /37/ Commentators have suggested that if tax exemptions were deemed
to impose constitutional obligations on the recipient, no one would be
immune, since, for example, individual taxpayers receive "subsidies"
in the form of interest deductions, charitable contribution
deductions, and medical expense deductions, while corporations receive
a surtax exemption.  Bittker and Kaufman, supra, 82 Yale L.J.at 68-74.
 "(T)he Internal Revenue Code is a pudding with plums for everyone."
Ibid.

   /38/ A list of covered federal programs prepared by the Deputy
Attorney General in connection with hearings on Title VI does not
include tax exemptions as triggering coverage, even though the list
referred to such minor instances of federal financial assistance as
payments to three counties in Minnesota from the national forest fund
and payments to the National Board for Promotion of Rifle Practice.
Hearings on H.R. 7152 as amended by Subcomm. No. 5 Before the House
Comm. on the Judiciary, 88th Cong.: 2d Sess., Pt. VI, 2773 (1964).
See generally, Bittker and Kaufman, supra, 82 Yale L.J.at 83-84.
"(I)f 'tax subsidies' were embraced by the statutory language (of
Title VI), the legislators were unaware of that fact." Id. at 83.

   /39/ For example, Title II of the Act, relating to public
accommodations, exempts from nondiscrimination requirements "an
establishment located within a building * * * which is actually
occupied by the proprietor of such establishment as his resident * * *
." 42 U.S.C. 2000a(b)(1).  However, if the proprietor claimed an
investment tax credit on purchasing a new stove, and if such a tax
subsidy were deemed "Federal financial assistance," the Title II
exemption would be nullified.  Similarly, under this conception of
"Federal financial assistance" the exclusion of contracts of insurance
and guaranty from coverage under Title VI would be cancelled if the
contract recipient were a corporation which took advantage of the
corporate surtax exemption.  Bittker and Kaufman, supra, 82 Yale
L.J.at 81.

   /40/ The reasoning of the three-judge federal district court in
McGlotten v. Connally, 338 F.Supp. 448 (D.D.C. 1972), which equated
tax exemptions with "Federal financial assistance," is unpersuasive.
While conceding that neither the language, nor agency interpretations,
nor legislative history of Title VI of the Civil Rights Act evidenced
a congressional intent to include Section 501(c) tax exemptions within
the ambit of federal financial assistance under Title VI, the district
court insisted that the "plain purpose" of the statute to promote
nondiscrimination should override its plain language in determining
whether federal tax exemptions constituted federal financial
assistance.  338 F.Supp.at 461.  The nondiscrimination purpose of
Title VI would be advanced, the district court concluded, if some tax
exemptions were equated with a distribution of federal funds,
property, or use of federal personnel, and were thus treated as
federal financial assistance.

   McGlotten contravenes the maxim that the plain language rather than
the general purpose of a statute should govern its interpretation,
absent contrary congressional direction.  See, e.g., Burns v. Alcala,
420 U.S. 575, 580-581 (1975).  In addition, the district court's
equation of tax exemptions with the distribution of federal funds
seems premised on the idea that the government is entitled to all
property and earnings of private parties, and thus a failure of
Congress to tax constitutes federal financial assistance.  The Supreme
Court rejected that concept in Walz v. Tax Commission, 397 U.S. 664
(1970), holding that a tax exemption reflects only government
restraint from demanding private financial support for the government,
not a flow of assistance or revenues from the government to the exempt
organization.

   /41/ We submit, for example, that the First Amendment would not
immunize a church from the tax on unrelated business income (see
Sections 511-513 of the 1954 Code) if the church believed that it was
its religious duty to conduct a business in competition with a
particular company.  See particularly Sections 512(b)(14) and 7605(c)
of the 1954 Code.

   /42/ Nor do the Service's actions implicate the interests of a
church in maintaining the intimacy of its activities, as petitioner
Bob Jones University urges (81-3 Br. 23-25).  Petitioners offer to the
public on a commercial basis educational services that compete with
programs of instruction in other schools and colleges (81-3 Pet.App.
A3;  J.A. A88-A89).  Hence, "'Their actual and potential constituency
* * * is more public than private.'" Runyon v. McCrary, 427 U.S. 160,
172 n.10 (1976) (quoting 515 F.2d 1082, 1089 (4th Cir. 1975)).

   /**/ The Solicitor General is disqualified in these cases.