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Supreme Court To Decide Tax-Exemption Dispute

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Washington--The U.S. Supreme Court last week broke its three-month silence on the issue of tax exemptions for private schools that discriminate on the basis of race, announcing that it will decide two related cases next fall.

At the same time, the Court appointed William T. Coleman Jr., a Washington lawyer and a former U.S. secretary of transportation, to argue the position abandoned in January by the Reagan Administration--that the Internal Revenue Service (irs) has the authority, under existing law, to deny the exemptions.

The Court thus could resolve a controversy that, White House advisers have acknowledged, has been a major political embarrassment to the Reagan Administration, which has changed its position on the issue three times since January. And it could spare Congress a battle over a Reagan-backed bill that has languished for two months.

Policy Revoked

The controversy began on Jan. 8, when the Justice and Treasury Departments announced the revocation of an 11-year-old irs policy of denying the exemptions to discriminatory schools.

The shift came in papers filed in two cases that had already been accepted by the Court, Bob Jones University v. U.S. and The Goldsboro Christian Schools v. U.S. Both suits challenge the authority of the irs to deny tax exemptions because of racially discriminatory policies that the institutions say are tied to religious beliefs.

In both cases, the U.S. Court of Appeals for the Fourth Circuit had upheld the government's right to withhold tax benefits to the schools.

The Jan. 8 reversal--although the Administration argued that it was largely a statutory technical-ity--prompted a storm of criticism from civil-rights, private-school, and other organizations. President Reagan promptly proposed legislation that would have the same effect as the old policy.

But the President's bill has been mired down in Congress because it is opposed by both liberals, who maintain it is unnecessary and undercuts existing civil-rights laws, and conservatives, who oppose any federal regulation of private-school policies.

In February, the U.S. Court of Appeals for the District of Columbia Circuit, in a separate case, enjoined the government from granting tax benefits to any schools with discriminatory policies. The Administration again reversed itself and asked the Supreme Court to decide the Bob Jones and Goldsboro cases after all.

The Justice Department's latest position in those cases is that the irs lacks the specific statutory au-thority to deny the exemptions, but that the schools have no constitutional right to discriminate under the guise of religious freedom.

Because the Administration now agrees in part and disagrees in part with the Fourth Circuit's decision, the Justice Department asked that the Supreme Court appoint someone else to argue the case. Several civil-rights organizations, including the National Association for the Advancement of Colored People, had asked to present arguments in favor of the Fourth Circuit's ruling.

Coleman Chosen

It is not known how the Justices chose Mr. Coleman, an eminent corporate lawyer who has long been active in civil-rights causes and is chairman of the naacp Legal Defense and Educational Fund Inc. He was one of several civil-rights lawyers who helped to prepare Supreme Court briefs in Brown v. Board of Education, the 1954 case in which the Court found segregated public schools unconstitutional.

Mr. Coleman, a Republican, served as secretary of transportation during the Ford Administration and was the second black appointed to a President's Cabinet. He is now head of the Washington office of O'Melveny and Myers, a large Los Angeles law firm.

"I'm delighted" with the Court's selection, said Norman Chachkin, deputy director of the Lawyers' Committee for Civil Rights Under Law, a private organization that has been active on the tax-exemption issue for more than a decade.

"I can't think of anybody better than Bill to present the right side of the case," Mr. Chachkin continued. "I think he's eminently qualified for the task. He's a very skilled advocate. He has an excellent, excellent reputation, and he's a very experienced Supreme Court advocate. He's more than a match for anyone I know of in the Justice Department who might argue the case."

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