US SUPREME COURT DECISIONS

In this action for injunctive and declaratory relief appellant challenges the South Carolina Educational Facilities Authority Act as violative of the Establishment Clause of the First Amendment insofar as it authorizes a proposed financing transaction involving the issuance of revenue bonds benefiting a Baptist controlled college. The Act establishes an Educational Facilities Authority to assist (through the issuance of revenue bonds) higher educational institutions in constructing and financing projects, such as buildings, facilities, and site preparation, but not including any facility for sectarian instruction or religious worship. Neither the State nor the Authority is obligated, directly or indirectly, to pay the principal of or interest on the bonds; nor is the State's taxing power pledged or implicated. All expenses of the Authority also must be paid solely from the revenues of the projects. The Authority gave preliminary approval to an application submitted by the college, only 60% of whose students are Baptists. As subsequently modified, the application requests the issuance of revenue bonds to be used for refinancing capital improvements and completing the dining hall. Under the statutory scheme, the project would be conveyed to the Authority, which would lease it back to the college, with reconveyance to the college on full payment of the bonds. The lease agreement would contain a clause obligating the institution to observe the Act's restrictions on sectarian use and enabling the Authority to conduct inspections. The provision for reconveyance would restrict the project to nonsectarian use. The trial court denied appellant relief, and the State Supreme Court affirmed. After this Court had vacated the judgment and remanded the case for reconsideration in the light of Lemon v. Kurtzman, 403 U. S. 602, and other intervening decisions, the State Supreme Court adhered to its earlier decision.

Held: The Act as construed by the South Carolina Supreme Court does not, under the guidelines of Lemon v. Kurtzman, supra, at 403 U. S. 612-613, violate the Establishment Clause. Pp. 413 U. S. 741-749.

(a) The purpose of the Act is secular, the benefits of the statute being available to all institutions of higher education in the chanrobles.com-red

Page 413 U. S. 735

State, whether or not they have a religious affiliation. Pp. 413 U. S. 741-742.

(b) The statute does not have the primary effect of advancing or inhibiting religion. The college involved has no significant sectarian orientation, and the project must be confined to a secular purpose, with the lease agreement, enforced by inspection provisions, forbidding religious use. Pp. 413 U. S. 742-745.

(c) The statute does not foster an excessive entanglement with religion. The record here does not show that religion so permeates the college that inspection by the Authority to insure that the project is not used for religious purposes would necessarily lead to such entanglement. The Authority's statutory power to participate in certain management decisions also does not have that effect, in view of the narrow construction by the State Supreme Court, limiting such power to insuring that the college's fees suffice to meet bond payments. Absent default, the lease agreement would leave full responsibility with the college regarding fees and general operations. Pp. 413 U. S. 745-749.

258 S.C. 97, 187 S.E.2d 645, affirmed.

POWELL, J., delivered the opinion of the Court, in which BURGER, C.J.,and STEWART, WHITE, BLACKMUN, and REHNQUIST, JJ., joined. BRENNAN, J., filed a dissenting opinion, in which DOUGLAS and MARSHALL, JJ., joined, post, p. 413 U. S. 749.