The assertion of the right of higher education institutions to use racial preferences in their admissions policies has been based on the diversity rationale that U.S. Supreme Court Justice Lewis F. Powell articulated in his opinion in the "Bakke v. Regents of the University of California" case of 1978. This report explores the legal and constitutional issues surrounding the diversity rationale in U.S. higher education, and the position taken by higher education accreditation agencies on the question. It reviews survey research of faculty and student opinion on affirmative action in higher education and empirical research testing the hypothesis that campus racial diversity is coordinated with beneficial educational outcomes. The paper argues that Justice Powell's diversity rationale must be rejected based on evidence from each of these areas of investigation. Part 1 shows that a majority of the U.S. Supreme Court did not reach agreement about the constitutional justification for racial preferences, and that "Bakke" should not be cited as a court precedent supporting the diversity rationale. Part 2 shows that accreditation agencies have never embraced the "Bakke" arguments. Part 3 uses existing survey data to show that faculty and students reject preferential higher education admissions policies, and Part 4 shows that the claim that campus racial diversity is correlated with positive educational outcomes has already been tested and rejected. Part 5 reviews the body of research and indicates why future research is unlikely to support the diversity rationale. Part 5 also shows how the Powell rationale has become closely linked with versions of multicultural education and racial identity politics that are antithetical to the traditional, liberal concept of education and the traditional understanding of civil rights. (Contains 2 figures, 5 tables, 125 footnotes, and 78 references.) (SLD)