I don’t have anything helpful to say on the ethical, public relations, or interfaith amity questions raised by the ground zero mosque. Cathy Young takes one view, [UPDATE: Christopher Hitchens in Slate takes a somewhat different one, and this Ottawa Citizen op-ed takes yet another] and I know there are others, but I leave that question to people who specialize more in such matters.
But the legal issue is open and shut. The Free Exercise Clause means that the government may not discriminate against an entity because of its religious denomination. The Free Speech Clause means that the government generally may not discriminate an entity because of what it says or teaches (and that applies to discrimination against religious speakers as much as to discrimination against secular speakers). There are some exceptions to the latter principle, but none apply here.
This means that the government may not refuse a zoning permit to a group because it’s Muslim, or Tea Party, or Socialist, or anti-gay-rights. It may not try to use landmarking law to bar the group from reconstructing a building, if the law is being used because of the group’s message. (A religious organization may in some situations and in some jurisdictions get an exemption even when a neutral, generally applicable law is being applied to it for religion- and speech-independent reasons; but here the landmarking law was clearly being applied precisely because the mosque was a mosque, so the Free Exercise Clause’s prohibition on religious discrimination comes into play.)
Nor can the New York Public Service Commission force Consolidated Edison to refuse to sell its property to a religious or ideological because of the entity’s religious or ideological affiliation. A private property owner might have the right to discriminate based on religion or ideology in its choice of buyers. (I don’t know New York law on the subject, and I don’t know whether federal housing law would apply to discrimination based on religion in sale of non-residential property.) But the government may not force or coercively pressure private property owners to so discriminate.
Naturally, the fact that many people might be offended by the presence of a mosque not far from Ground Zero doesn’t change the constitutional analysis. Nor does the fact that people remain free to build mosques elsewhere; content-based and viewpoint-based restrictions on speech can’t generally be justified on the grounds that they are limited in location, and neither can religious discrimination.
These are basic principles of American free speech law, and of American religious freedom law. They help protect all of us, liberal or conservative, Christian, Jewish, Muslim, or atheist. Carving out exceptions from them will jeopardize all of us. We shouldn’t sacrifice these basic American principles — principles that help make America free and great, and distinguish it from most other countries — for the sake of symbolism.