BOB JONES UNIVERSITY V. UNITED STATES Our approach to the discussion of the functions, sources, and kinds of law may lead one to believe that law can be neatly categorized. In reality, it is a bit more complicated. The following Supreme Court decision, Bob Jones University v. United States, illustrates how a single case may involve several kinds of law and incorporates a number of the points made in this chapter. Background of the Case24 Section 501(C)(3) of the Internal Revenue Code contains a description of organizations that are granted tax-exempt status by the national government. Section 170 of the Code specifies that individual contributions to these organi- zations may qualify as charitable deductions on individual tax returns. Until 1970, Bob Jones University was granted tax-exempt status under $ 501(C) (3) by the Internal Revenue Service (IRS). Due to its interpretation of a lower federal court ruling, 25 however, the IRS notified the University in November 1970 that it could no longer grant tax-exempt status to "private schools which practice racial discrimination," nor could contributions made to them be chari- table deductions under $ 170. The IRS formalized this policy by promulgateng Revenue Ruling 71-447. Bob Jones University is an institution dedicated to teaching fundamental- ist Christian beliefs. Up until 1971 it had completely excluded African Ameri- cans. From 1971 to 1975 it accepted applications from African Americans who were married within their own race. The university permitted the enrollment of unmarried blacks in 1975 but also enforced a strict policy banning interracial dating and marriage, and expelling any student who espoused the idea. Accord- ing to the IRS interpretation, an organization qualifies for tax-exempt status only if it is a "charitable" institution within the common law meaning of that term. Under the common law, an institution that pursues activities contrary to public policy is not charitable. The IRS ruled that by practicing racial discrimi nation, Bob Jones University was acting contrary to a clear "national policy to discourage racial discrimination in education."26Ruling in the Case Bob Jones University challenged the revocation of its tax-exempt status on three grounds. First, it asserted that the IRS had no authority to promulgate Revenue Ruling 71-447. Second, the university challenged the IRS's interpre- tation of S 501(C)(3). According to the university's interpretation, the section grants tax-exempt status to organizations that operate exclusively for "reli- gious, charitable, scientific ... or educational purposes."27 Because the word "or" separates "charitable" from "educational" purposes, the IRS's application of the common law definition of "charitable" was inappropriate. Because the university is clearly organized for educational purposes, it should have qualified for the exemption. Finally, the university argued that the IRS's construction of $ 501(C)(3) and S 170 violated the Free Exercise Clause of the First Amend- ment because the university's racial policy was based on sincerely held religious beliefs. In an 8 to 1 decision, the Supreme Court rejected all three of the university's challenges in an opinion written by Chief Justice Warren E. Burger. The Court rejected the university's contention that the IRS had no authority to promulgate Revenue Ruling 71-447 without specific congressional authorization. Chief Justice Burger noted that since the inception of the tax code, Congress had granted broad authority to the IRS to interpret the tax laws. He wrote, "In an area as complex as the tax system, the agency Congress vests with adminis- trative responsibility must be able to exercise its authority to meet changing conditions and new problems."28 The Chief Justice then proceeded to note that any time after the promulgateon of Revenue Ruling 71-447, Congress could have modified it; Congress had chosen not to do so however, indicating tacit approval of the policy. Thus, if Congress felt that the IRS's ruling was arbitrary or constituted an abuse of its authority, Congress could have done something about it during the ensuing ten years and did not. The Court also rejected the university's contention that the IRS misapplied the term "charitable" and that it should qualify for tax-exempt status solely because of its educational purposes. The Chief Justice stated that it was clearly the intent of Congress to exempt "charitable" organizations-that is, organi- zations that serve a public purpose, and not purposes contrary to established public policy. In a footnote to the opinion,29 Chief Justice Burger pointed out that if the university's interpretation was accepted, then a school for training terrorists (clearly "educational" in purpose) would qualify for an exemption. He concluded that Congress surely did not intend for that to happen. Finally, the Court rejected the university's First Amendment claim that the revocation of the tax exemption constituted a violation of the Free Exercise Clause. In previous cases interpreting that clause, the Court has ruled that the government may justify a limitation on religious liberty by demonstrat- ing "an overriding governmental interest." Chief Justice Burger concluded that the government's interest in eradicating racial discrimination in education was "compelling" and that it justified the burden on religious liberty. He noted that although the denial of tax benefits would have an impact on the university, it would not prevent the university from observing the tenets of its religion."Analysis of the Case The Bob Jones University case illustrates several of the points previously made in this chapter. First, it involves several kinds of law: constitutional, statu- tory, regulatory, administrative, case, and common law. The constitutional question raised was the free exercise claim made by the university. Statutory law was involved when the Court was called upon to interpret $ 501(C)(3) and S 170. The common law definition of "charitable" adopted by the IRS was a major issue in the case. The question of whether or not the IRS had the authority to promulgate Revenue Ruling 71-447 was one of the admin- istrative law while the IRS's use of "charitable" in promulgateng the Ruling was one of regulatory law. Finally, the Court cited numerous precedents, not included in our analysis, to substantiate its decision, thus illustrating the use of case law. Second, Bob Jones University demonstrates the conflict between minor- ity rights and majority rule. There is no reason to doubt that the officials of the university were sincere in their racial viewpoint or that their views were grounded in their religious beliefs. In following the course that they chose, these officials undoubtedly believed that they were obeying a higher law, superior to the laws of the IRS or even the U.S. government. But the Supreme Court's opin- ion made it clear that the racial views of Bob Jones University were incompatible with a public policy endorsed by all three branches of the national government. The conflict was between the university's right to act upon its sincerely held religious beliefs and the majority's right to eradicate racial discrimination in the field of education. Third, the case demonstrates the role of courts in supervising the govern- ment bureaucracy. The Supreme Court had to decide whether the IRS's appli- cation of the term "charitable" to the university was reasonable and within the IRS's power. A ruling either that the IRS's application was unwarranted or that it had exceeded its authority would have resulted in a victory for the university. BOB JONES AS PRECEDENT? At first blush one may not readily see the connection between the Bob Jones Case and the Supreme Court's same-sex marriage ruling in Obergefell v. Hodges. But Chief Justice John Roberts' dissent in Obergefell raises the specter of Bob Jones. The Chief Justice wonders whether a religiously affiliated university that offers married student housing to heterosexual couples must now extend that benefit to same-sex couples. More to the point, could the IRS deny tax-exempt status to a university that refused to do so? Roberts fears that these questions and others like them will someday have to be resolved by the Supreme Court. Source: Obergefell v. Hodges, 576 U.S._ (2015), Roberts, dissenting at 28 (Slip Opinion)20 CHAPTER 1 Introduction Finally, the case illustrates how judges make decisions. Attorneys for the university offered some sound arguments that Congress intended to exempt organizations that are "charitable or educational" rather than "charitable and educational." Courts must often ascertain the intent of Congress when inter- preting an ambiguous statute. Even when one or more interpretations are reasonable, courts must choose one over the other. In cases of far-reaching importance, such as Bob Jones University, the interpretation chosen will have a broad impact as a precedent in future cases. In this manner, we see that law is an evolving concept that appears to be static but is actually constantly changing. CONCLUSION We began this chapter by asserting that there is a paradox of law in the United States. Americans possess ambivalent feelings about law. These feelings result from the fact that people disagree over what law is, where it comes from, and what it should do. We said that our ambivalence about law is related to the ambivalence we have about our society in general. We may all believe in "equal- ity of opportunity" in principle but disagree over the propriety of affirmative action programs. Likewise, we may agree with the ideal of the rule of law with- out agreeing on just what that means. There is no right or wrong or even single answer to the question: What is law? Our view of the law depends on what we consider to be the functions of law and the source of law. In the final analysis, we must decide for ourselves what law really is. Understanding the major ideas in this chapter is important to understand- ing what will follow. Without a firm grasp of these basic concepts, it will be more difficult to fully appreciate much of the discussion of the material covered in the remaining chapters