We noted Friday that there are various reasons to discount the statements about an Alaska-only interpretation of the statute by Udall. Also, the exchange of letters with the Justice Department was wholly private. Maybe we can say the same thing about Melcher.
This is unusual! The traditional view laid out by the notes says that the views of a subsequent Congress form a hazardous basis for finding out the views of an earlier Congress. The two Congresses may have different members. Why should we reject the traditional view here? Did the legislature rely on a certain interpretation in making further legislation? It’s unusual, which is why it’s in the casebook, but it’s also a case where members are paying serious attention to the way their conferees are acting.
It’s a highly uncontroversial case! Do private schools that enforce racial discrimination under religious doctrine qualify as tax-exempt institutions under § 501(c)(3) of the Internal Revenue Code? Well, gee whiz, I think…NO. Until 1970, the IRS had granted tax-exempt status without regard to racial discrimination. But then the IRS changes their policy. On the face of the language of § 503(c), which side of the debate is favored? Rehnquist seems to have a good argument in dissent. Where does the legislative history point here? The legislative history shows that Congress had been adding on more and more exemptions. There’s nothing to show that Congress is taking on common law “baggage” that says we won’t go against public policy.
What has Congress done since 1970? Burger is looking at this in the early 1980s. We have 10 years of Congress’s response to the IRS ruling. What if the IRS had said that they would give special tax advantages to racial minorities to make up for past discrimination? Would that reflect our “national understanding”? The IRS has some rule-making power, but it probably isn’t that broad. What is Congress’s reaction to the revenue ruling? If the IRS is a spokesperson for public policy, they were also the spokesperson for the wrong public policy for a long time. Is Congress’s inaction a useful guide? We have 13 different bills over a 12 year period where Congress had the opportunity, and debated the possibility, of amending § 501 to contradict the IRS. But they didn’t do it. However, they did amend § 501 to do other things. The Court says that we have intense awareness by Congress of what the IRS did plus inaction, which leads to the conclusion that they accepted the ruling.
Did the legislative branch endorse the IRS’s change in position in 1970? There is at least an argument that they did. There was inaction in the face of constant attempts to revise § 501. This is “positive inaction” of the form we saw in Flood v. Kuhn.
Tomorrow, we’ll think more about what § 501 (i) really means here. What is Rehnquist’s comeback? What if Congress tried to pass § 501 (i) but failed? Then we’ll deal with the harder question of what the public policy is that we’re trying to wrap ourselves around. Is there a policy against racial discrimination in private educational facilities?