NEA Modifies Obscenity Guidelines : Arts: The policy change stems from an apparent dispute between the NEA and the Justice Department over whether to appeal a federal court ruling that struck down the so-called anti-obscenity oath.

In an alteration of controversial policies in its 1990 grants, the National Endowment for the Arts has issued new guidelines saying art projects will only be considered obscene if state courts classify them as such on appeal.

In the change, the NEA has technically grafted provisions of grant-making laws effective this year onto a controversial statute that applied for the 1990 fiscal year only. But it stops short of rescinding entirely an endowment requirement that artists pledge in advance not to show or create obscene work.

Endowment sources confirmed the change in policy Tuesday. It was disclosed in a memorandum signed by NEA Chairman John E. Frohnmayer and distributed at an NEA meeting Friday where endowment program directors were told they could discreetly notify grantees but were warned not to comment on it publicly.

The new policy applies retroactively to all 1990 NEA grants, whether recipients have already received their money or are still waiting to get it. Frohnmayer has said that many grantees appeared to have been waiting to see the outcome of the anti-obscenity oath controversy before drawing their money. Several dozen artists and arts groups rejected or threatened to reject NEA funds, but the arts endowment said Tuesday it could provide no estimate of the number of uncollected grants or the amount of money they represent.

Copies of the Frohnmayer memorandum were obtained by The Times on Tuesday. Senior NEA officials were not available to discuss the situation. But the Frohnmayer memo concluded, “It is my belief that it is time for all of us to move forward in the spirit of renewal.” The arts endowment, Frohnmayer wrote, should “continue to do what the NEA does best--fostering the best art that our diverse national community can manifest.”

But word of the new change in policy came as sources within the endowment and those familiar with pending litigation over the NEA’s controversial anti-obscenity-oath policy of last year said the shift had different and possibly broader implications.

What the new policy change signifies, these sources said, is an apparent dispute between the NEA and the Justice Department over whether to appeal a federal court ruling in two California cases that struck down entirely the so-called anti-obscenity-oath requirement. The litigation involved the famed Bella Lewitzky Dance Company in Los Angeles and the Newport Harbor Art Museum in Newport Beach.

The government has until early next month to decide whether to appeal. Sources close to the situation said the Justice Department had indicated it wants to appeal the Lewitzky-Newport Harbor ruling, issued by U.S. District Court Judge John G. Davies on Jan. 9. The NEA, on the other hand, opposes the appeal, these sources said.

The Justice Department and the NEA declined to comment. For more than a week, however, there has been broadening speculation in legal circles that the Justice Department may intend to try to get a court to uphold the NEA’s authority to require grantees to sign an anti-obscenity pledge in order to apply the principle of such oaths to some legal issue entirely unrelated to the arts.

Constitutional law experts acquainted with the dispute, speaking on the condition they would not be identified by name, suggested that the certification principle embodied in the arts endowment’s disputed practices might be applied to federal funding of family planning clinics that are forbidden to discuss abortion with their clients. A case challenging the constitutionality of such federal health legislation is pending before the U.S. Supreme Court.

James Fitzpatrick, a prominent Washington arts lawyer, said Tuesday that the NEA’s decision to issue the new modifications of its grant guidelines appeared to have been a deliberate attempt to destroy any prospects for successful appeal, if the Justice Department should decide to pursue the case.

Frohnmayer, said Fitzpatrick, “has taken that collateral opportunity away from” Justice Department lawyers. “It is my belief that this was being done against a backdrop of the abortion issue.”

The new policy unveiled by Frohnmayer on Friday represents the third modification of the controversial strictures implemented by the arts agency since late last year. The new change has the effect of declaring that the NEA will not make any attempt by itself to decide whether artwork is obscene.

Under a one-paragraph section of the controversial 1990 NEA grant law, the arts endowment was required to guarantee in advance that work it funded included no obscene, sadomasochistic or homoerotic content. The arts endowment elevated the wording of the statute into a major controversy by requiring artists and arts organizations to sign the written anti-obscenity pledge before their grant funds could be paid.

If the NEA and Justice Department lawyers can’t agree on whether to appeal, senior Administration officials might be required to decide the issue. NEA sources indicated that Frohnmayer hopes to use the appeal issue to try to rebuild confidence in the arts endowment in the nation’s arts community.

Last week, the Justice Department filed a letter in federal court in New York City, where a case similar to the Lewitzky and Newport Harbor matters is pending, alluding to confusion within the Bush Administration over how far to press the issue of the legality of the 1990 NEA anti-obscenity wording.

In the New York case, the New School for Social Research is challenging the NEA anti-obscenity-certification requirement under constitutional principles applied in the 1950s to McCarthy-era anti-Communist loyalty oaths.

“The government is currently considering whether or not to appeal Lewitzky,” said the letter, signed by Asst. U.S. Atty. Richard M. Schwartz. “The decision to appeal Lewitzky is related to the NEA’s decision whether the new legislation (passed last fall without inclusion of any anti-obscenity-certification requirements should impact in any way on the NEA’s implementation of the 1990 statute.”