Racially Restricted Scholarship Is Rejected : Law: Ruling by federal appeals court sets the stage for a Supreme Court confrontation. Case challenges University of Maryland program.

WASHINGTON —  A federal appeals court ruled Thursday that college scholarships that are restricted to students based on their race are unconstitutional.

The broadly worded, unanimous opinion by the three-judge panel of the U.S. 4th Circuit Court of Appeals sets the stage for a Supreme Court confrontation on whether two-thirds of the nation’s colleges can continue to set aside at least some scholarships exclusively for minority students.

“Of all the criteria by which men and women can be judged, the most pernicious is that of race,” wrote Judge H. Emory Widener of Richmond, Va. “The casual invocation of benign remedial aims” is not enough to justify a state-funded scholarship that bars some students from applying solely because of their race, he said.

The decision invalidates the University of Maryland’s Banneker Program, which awards all-expenses-paid scholarships to promising black students. In a closely watched lawsuit, the state-funded program had been challenged by a Latino student who was deemed ineligible to apply, even though he had a 4.0 grade average in high school and a score of 1,340 out of 1,600 on the Scholastic Aptitude Test.

Daniel Podberesky, now 22 and a first-year medical student at the University of Maryland, is entitled to the $35,000 in scholarship aid he should have received as an undergraduate, the court said.

“This is a decisive victory, and it’s an important statement,” said Richard Samp, an attorney for the Washington Legal Foundation, a conservative group that supported the lawsuit.

“We’re disappointed. That’s all I can say now,” said Evelyn Cannon, the state’s chief of litigation. The U.S. Department of Justice and the NAACP Legal Defense Fund had supported Maryland in the case.

In 1990, an obscure lawyer in the George Bush Administration set off a national controversy over “race-targeted” scholarships when he advised officials of the Fiesta Bowl in Tempe, Ariz., that they could not earmark scholarship money exclusively for African American students.

To do so violated federal civil rights law, said Michael L. Williams, an Education Department official who is black. However, faced with a barrage of criticism, the Bush White House quickly rescinded Williams’ order and announced that it would study the matter.

In February of this year, the Clinton Administration reversed the stand entirely and gave its approval to “race-targeted financial assistance” at the nation’s colleges and universities.

“We want the doors to post-secondary education to remain open for minority students,” said Education Secretary Richard W. Riley.

The controversy does not concern scholarship programs that give an edge to minority students, but rather those that take applications only from students who are, for example, black, Latino, Native American or Asian. It was not clear if the ruling would affect other, specifically targeted scholarships, such as those directed to women.

Earlier this year, the General Accounting Office found that race-targeted scholarships make up only a small portion of all scholarships--5% in undergraduate schools, 3% in graduate schools and 10% in professional schools.

However, the study also found that at least two-thirds of the nation’s higher-education institutions had at least one of these scholarship programs. University officials said they are especially important for attracting minority students to highly competitive fields of study, such as a graduate chemistry program.

In a landmark case in 1978, the Supreme Court said universities may not use racial quotas in admission but that they may use race as a “plus factor” in favor of minority applicants.

But Clinton Administration officials said “race-targeted” scholarships are legal if they are intended to “remedy past discrimination,” or if they are needed to “achieve a diverse student body.”

The University of Maryland certainly has a history of racial discrimination. The late Justice Thurgood Marshall, though a native of Baltimore, could not apply for admission to the University of Maryland Law School. As a lawyer, he later won a ruling striking down that discriminatory admissions policy.

But the appeals court said Thursday that this discrimination is too far in the past to justify a current discriminatory policy that favors black students.

It ordered that the university no longer “require that the applicant (for a Banneker scholarship) be of the African American race.”