The U.S. Circuit Court of Appeals here has blocked the Reagan administration temporarily from granting tax exemptions to any segregated private schools, including Bob Jones University and Goldsboro (N.C.) Christian Schools, whose Supreme Court case triggered a major civil rights controversy.
The effect of Thursday's order is to shift the dispute from Congress, where the administration hoped to settle it, back to the courts.
And because the order blocks exemptions the administration promised to give Bob Jones and Goldsboro, it also seems to negate the government's request that the cases be dismissed as moot by the Supreme Court.
The order said the ban will continue until the judges decide whether to make it permanent.
The administration created a furor last month when it reversed a 12-year-old Internal Revenue Service policy of denying tax-exempt status to private schools practicing discrimination. The government told the Supreme Court Jan. 8 that Bob Jones University, in Greenville, S.C., and Goldsboro would get exemptions, and asked that their cases be dismissed as moot.
After a storm of criticism, President Reagan proposed legislation to prohibit tax exemptions for discriminatory schools, and said the administration would grant exemptions only to Bob Jones and Goldsboro. But Congress has been reluctant to consider the bills, and the appeals court decision seems to take any pressure off Congress.
A Justice Department lawyer involved in the case said the order might force the government to change its position before the Supreme Court in the two cases. One option would be for the government to change its mind entirely and say the cases should be heard after all, he said.
William G. McNairy, the attorney for Goldsboro, said yesterday that the order "seems to do away with the mootness claim. If the government can't produce the exemption because of the court order, we still have a case in controversy."
McNairy had complained that the IRS was dragging its feet in granting his client the promised exemption, and administration officials acknowledged they were stalling.
Philip Murren, an attorney for Bob Jones, said he was unhappy about the ruling because his client isn't represented in Wright vs. Regan, the case that triggered it.
The appeals court action was in response to a motion by Norman Chachkin, attorney for the Lawyers' Committee for Civil Rights, to block any IRS exemptions while the Supreme Court considers whether to hear Wright vs. Regan.
In the case, civil rights groups representing black parents in several states are attempting to extend nationwide a denial of tax exemptions that now applies only to private schools in Mississippi.
Chachkin said yesterday that he argued that the temporary injunction was necessary to preserve his clients' case while the Supreme Court decides whether the parents have standing to sue. The same federal appeals panel ruled 2-to-1 last year that the Wright plaintiffs have standing to sue. The government disagrees and is asking the Supreme Court to decide the issue.
In a related development, the U.S. Commission on Civil Rights released a scathing letter criticizing the administration's record in education. It cited the tax-exemption dispute and policy reversals in school desegregation cases in urging Reagan "to halt this abandonment of federal civil rights leadership."
The Feb. 12 letter to the president was signed by Chairman Arthur S. Flemming, whom Reagan plans to replace. Flemming said the commission "views with increasing alarm efforts to end federal leadership in promoting equal educational opportunity" and was "deeply disturbed by initiatives that would roll back" progress.
As examples of the retreat, the letter cited congressional efforts to ban busing for school desegregation, and the Department of Education's killing of bilingual education regulations, acceptance of higher education desegregation plans and passive role in civil rights enforcement.