In October 1970 civil rights activists sued the Department of Health, Education, and Welfare (DHEW), charging it with "general and calculated default" in enforcement of a law forbidding racial discrimination in the use of federal education funds. Subsequent DHEW secretaries have been named as defendants. This case study of the regulatory process focuses on four groups of actors and actions: (1) the actions of Congress and the courts and the target populations; (2) the academic groups expected to change their behavior (in this case the higher education system of North Carolina); (3) the regulators (HEW, and within it, the Office of Civil Rights (OCR); and (4) the black citizens' groups, the NAACP Legal Defense Fund. Legal, academic, and agency background are given through three time periods: prior to the suit, 1964-1970; through January 1977, when the director of OCR left the agency; and through January 1978, the date of publication. The case is seen as an extreme but not unique example of conflicting sources of authority in the antidiscrimination regulatory process. It is concluded that new regulatory processes must be developed that respect the structure and norms of the academic community and still guarantee that it acts in a manner consistent with social policies. Both mediation between academia and the regulatory system and participation in regulatory processes are suggested as partial solutions. Appended are an outline of a plan to eliminate a dual system of higher education; a list of DHEW secretaries, general counsels, and assistant counsels since 1964, and OCR directors since 1964; figures of black participation in North Carolina higher education; and an outline of pertinent laws. (MSE)