June 16, 1981

A Federal appeals court today struck down a key section of New York State's tax on oil company receipts. But it implied the statute might withstand Federal challenge after September, when Federal price controls on petroleum expire. The decision, issued in Washington by the Temporary Emergency Court of Appeals, immediately threw into disarray the Legislature's negotiations on aid to mass transit. The oil tax, enacted last year, was intended to provide $235 million a year for public transportation, most of it for the Metropolitan Transportation Authority.

Matthew Volz, 6, and his sister, Charissa, 2, helping Chief Warrant Officer Wayne Devoe conduct the U.S. Marine Band during Flag Day ceremonies yesterday at the World Trade Center. The children, from Canton, Mich., are visiting New York with their parents.

''The Constitution does not mandate comfortable prisons.'' - Associate Justice Lewis F. Powell Jr. (B9:1.)

Czeslaw Milosz, exiled poet, is national hero on return to Poland A2 West critical of East Berliners' voting for Parliament A4 Around the World A5 Gromyko presses U.S. on starting arms control talks A6 Israeli aides in U.S. bemoan Reagan policy A7 Peres complains about violence in Israeli campaign A8 Survivors of Nazi terror mingle in joy and sorrow A9 Philippines expelling a U.S. priest A12 Kenya urges Africans to step up aid to Namibian guerrillas A15 Government/Politics Appeals court upsets ruling for Detroit on census A16 Koch vs. Kheel: where is the challenger headed? B1 Suit opposes moving Navy office into fort on Staten Island B2 State and Westchester agree to let the Air National Guard move B3 Republicans push attack on Democrats' budget cuts B10 House action near on disputed Federal legal-aid program B10 Reagan urges mayors to support block grant proposal B11 Reagan asks for study of Voting Rights Act impact B11 F.B.I. computerized index of states' crimes to be urged B13 Board approves $185 million for foster care agencies B19 General Around the Nation A16 Dover, Del. has an excess of parks A16 Polluted air plagues Phoenix, surprising many A16 Many tenured teachers losing their jobs in the New York area B2 Bus carrying group seeking jobs for minorities is attacked B3 High Court refuses to hear appeal on city police test B4 Pretrial hearing set on officer's tie to Soviet B12 Science Times From jungle outpost, Europeans ready a space challenge C1 Government scrutinizes gene industry link to universities C1 Studies suggest feminism may play mental health role C1 Education: City College cultivates minority engineers C1 Science Watch C2 The Doctor's World: Pope recovery reflects modern advances C2 Moth evolves jamming device to thwart bat C3 About Education: A warning on decline in teacher training C4 Science Q&A C2 Industry/Labor A.P. and unions continue to talk through strike deadline B6 Oil, Chemical and Atomic Workers in leadership battle B12 Arts/Entertainment Balanchine's new ''Pathetique'' danced by City Ballet C7 PG rating for ''Raiders of the Lost Ark'' is questioned C7 ''Sleeping Beauty'' opens Royal Ballet's 50th season C8 Baryshnikov's ''Don Quixote'' danced with three casts C8 Steve Lawrence and Eydie Gorme in Carnegie Hall concerts C8 Study of medieval need for monsters is reviewed C9 ''Cities in China,'' TV film, tours Suzhou and its gardens C19 Presidential task force on arts told to do more with less C20 Style Notes on Fashion B14 A fashion market in lustrous metal B14 Lee Wright wins design prize B14 Obituaries John G. Dinkeloo, innovative architect B19 Sports Baseball talks resume today, but outlook is pessimistic B15 Charlie Sanders adapts to life without football B15 Jersey interscholastic leagues can exclude private schools B15 Cabanas showing his full talent for the Cosmos B15 George Vecsey on object lessons of baseball strike B17 Backman of Mets carries strike to minors B17 Features/Notes Notes on People B18 News Analysis Richard Eder assesses Socialist victory in France A3 E. J. Dionne Jr. on New York State property tax impasse B20 Editorials/Letters/Op-Ed Editorials A18 What kind of defense? Police spread thin Cold-stove league Letters A18 Sydney H. Schanberg: the cupidity lobby A19 Tom Wicker: unwelcome personal testimony A19 A. Bartlett Giamatti: men of baseball, lend an ear A19 Catherine Lerza: new farmers need aid A19

Britain agreed today to cut the price of oil from the North Sea by $4.25 a barrel, more than double its earlier intention and a further sign of the intense downward pressure on world oil prices. The price of the most plentiful grade of North Sea oil would fall to $35 a barrel. That is as much as $6 a barrel below prices charged by Algeria, Nigeria and Libya, the three highest-priced producers, for oil of comparable quality. As a result, oil experts believe, those three producers, which are major exporters to the United States, will be forced to reduce their prices.