Petition — MISSISSIPPI POWER AND LIGHT CO. v. UNITED STATES (Nos. 80-2057, 80-2046)

Office -Supreme Court, Us.

0 2 FILED

0 5 7 JUN 3 1981

No. ALEXANDER L. STEVAS,

— ss.

— +

In the Supreme Court of the United States

October Term, 1980

MISSISSIPPI POWER & LIGHT COMPANY.

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

COURT OF APPEALS FOR THE FIFTH CIRCUIT

SHERWOOD W. WISE

WIsE, CARTER, CHILD & CARAWAY

925 Electric Building

Jackson, Mississippi 39201

E. Grapy JOLLY

Counsel of Record

MICHAEL F'ARRELL

JOLLY, MILLER & MILAM

101 North State Street

P. O. Box 2366

Jackson, Mississippi 39205

Counsel for Petitioner

E. L. Menpenuatt, Ixc., 926 Cherry Street, Kansas City, Mo. 64106, (816) 421-3030

QUESTIONS PRESENTED

The narrow issue is the validity of a regulation (41

C.F.R. §60-1.4(e)) which unilaterally incorporates Execu-

tive Order 11246 into government contracts regardless of

consent. That rey ‘lation is challenged here on grounds

that (1) there is not a sufficient nexus between the reg-

ulation and any authorizing statute and (2) the regula-

tion violates the Fifth Amendment’s prohibition against

impairing the obligation of a contract.

Assuming that the regulation is valid, the broader

question is the validity of Executive Order 11246 in generai

and its enforcement provisions in particular. The Executive

Order is challenged on grounds that there is no nexus be-

tween it and any enabling legislation. The enforcement

provisions, i.e., searches of books and records, suits to

enjoin violations, and the imposition of sanctions and

penalties, are challenged on grounds that (1) they are not

authorized by Congress and (2) the separation of powers

doctrine as well as the Administrative Procedure Act pro-

hibit the Executive branch from creating enforcement

powers.

INDEX

r

Jurisdiction ...... = 88

Constitutional Provisions, Executive Orders, Regula-

tions and Statutes Involved

Statement of Case — ——

/// — —B

Original Proceedings in the District Court

Original Proceedings in the Court of Appeals

Original Actions by Supreme Court

Proceedings in District Court on Remand

Second Appeal to the Court of Appeals ................

Why the Petition Should Be Granted

I. The Validity of Executive Order 11246 ............

A. Statutory Authority in General

B. The Validity of Enforcement Provisions ....

1. Search of Records and Inspection of

Property ...

2. Suits to Enforce Compliance

3. Sanctions and Penalties

II. The Validity of 41 C.F.R. §60-1.4(e) Which

Unilaterally Imposes the Executive Order on

Non-Consenting Contractors

A. The Nexus Analysis

B. Impairment of Government Contracts

C. Abrogation of Common Law

Conclusion

89 Pr

Appendix

Appendix A (Opinion of Court of Appeals) Al

Appendix B (Opinion of the District Court) Bl

Appendix C (Judgment of the Court of Appeals) . Cl

Appendix D (Executive Order 11246) =e D1

Appendix E (Regulations of Secretary of Labor) .... El

Appendix F (Federal Property and Administrative

Services Act) . Fl

Table of Authorities

CASES

Baird v. Benton County Board of Education, 421 F.2d

700 (5th Cir. 1970) .......... Pe ae

Beacon Theatres v. Westover, 359 U.S. 500 (1959) ........ 19

Bell v. State of Maryland, 378 U.S. 226 (1964) 7

Camara v. Municipal Court, 387 U.S. 523 (1967) ............ 15

Chrysler Corp. v. Brown, 441 U.S. 281 (1979) 6-7, 8, 10,

11, 12, 23, 24

Colonnade Catering Corp. v. United States, 397 U.S.

72 (1970) ins - 16

Dixon v. United States, 381 U.S. 68 (1965) .................... 28

Farmer v. Philadelphia Electric Co., 329 F.2d 3 (3rd

Cir. 1964) 10

Farkus v. Texas Instruments, 375 F.2d 629 (5th Cir.

1967), cert, denied, 389 U.S. 977 (1967) 10

Hale v. Henkel, 201 U.S. 43 (1906) 14

Horowitz v. United States, 267 U.S. 459 (1925) 26

In Re Debs, 158 U.S. 564 (1895) 19

Interstate Commerce Comm. v. Brimson, 154 U.S. 447

(1894) 14

Vv

Liberty Mutual v. Friedman, F. Supp ......... „ 21

F. E. P. 1016 (D. Md. 1979), rev'd, —— „24

e 24

Lynch v. United States, 292 U.S. 571 (1934 25

Marshall v. Barlow’s, Inc., 436 U.S. 307 (1978) ....6, 15, 16, 17

Marshall v. Gibson’s Products, 584 F. 2d 668 (5th Cir.

— ——— 18

Morrison v. Work, 226 U.S. 482 (1925) eceeeseeseeees 19

Northern Pacific R. R. Co. v. Minnesota, 208 U.S. 583

(1908) 25

Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186

(1946) 14

Perkins v. Lukens Steel Co., 310 U. 8. 113 (1940) 27

Priebe & Sons v. United States, 332 U.S. 407 (1947) ....27, 28

Reading Steel Casting Co. v. United States, 268 U.S. 186

(1925) 27, 28

Rex Trailer Company v. United States, 350 U.S. 148

1111 —J— — 19

See v. City of Seattle, 387 U.S. 541 (1967) 14

Steuart and Brothers, Inc. v. Bowles, 322 U.S. 398

(1944) 21

United States v. Cooper Corp., 312 U.S. 600 (1941) ........ 19

United States v. Biswell, 406 U.S. 311 (1972) ............ 15, 16

United States v. Grimaud, 220 U.S. 506 (1911) ................ 21

United States v. Hark, 320 U.S. 531 (1944) 21

United States v. Local 189, Papermakers and Paper-

workers, 282 F. Supp. 39 (E.D. La. 1968), aff'd, 416

F.2d 980 (5th Cir. 1969), cert. denied, 397 U.S. 919

(1970) 19

United States v. Morton Salt Co., 383 U.S. 632 (1950) 14

United States v. Mississippi Power & Light Co., 10

F. E. P. 1084 (S.D. Miss. 1975), aff d, 553 F.2d 480 (5th

VI

Cir. 1977), cert. granted, 436 U.S. 942 (1978), decision

on remand, ........ . acne , 20 F.E.P. 47 (S.D.

Miss.), aff d, 638 F.2d 899 (5th Cir. 1981) .................... 5, 6

United States v. New Orleans Public Service, Inc.

(NOPSI), 553 F.2d 459 (5th Cir. 1977), cert.

granted, 436 U.S. 942 (1978), decision on remand,

e F. S upp. (E. D. La. 1980), aff'd, 638 F. 2d

899 (5th Cir. 1981) 1, 5, 6, 10

United States v. Standard Oil Co., 332 U.S. 302 (1947) 18

United States v. San Jacinto Tin Co., 175 U.S. 275

609 . 19

United States Trust Co. v. Neu Jersey, 431 U.S. 1

(1977) = . £6

Youngston Sheet & Tube Co. v. Sawyer, 343 U.S. 579

(1952) 21, 22

STATUTES

5 U.S.C. §555(c) 9 15

5 U.S.C. 8558 (b) 21

28 U.S.C. 81254 (1) 2

28 U.S.C. 81345 5,18

40 U.S.C.A. §§276a-1 and 2 20

40 U.S.C. §471 11

40 U.S.C. 8486 (a) 13

41 U.S.C.A. 336 20

41 U.S. C. A. 8354 20

Federal Property and Administrative Services Act, 63

Stat. 378 (June 30, 1949) 4,9

EXECUTIVE ORDERS

Executive Order 10925 9

Executive Order 11246 3, 4, 5, 7, 8, 9, 10, 11,

12, 13, 17, 19, 20, 22, 23

VII

Cop or FEDERAL REGULATIONS

41 C. F. R. 560-14 0e) 3, 7, 12, 22

41 C.F.R. 860-1. 26 (a) (2) 21

41 C. F.R. 860-1. 26 (d) * 21

41 C. F. R. 560-1. 26 (e) 17

41 C. F. R. §60-1.43 14

“1 CF. R. §60-1.47 22

OTHER AUTHORITIES

U.S. Constitution, Amendment IV 2, 6, 7, 8, 9, 14, 15, 16

U.S. Constitution, Amendment v q q 2, 23, 25, 26

42 Fed. Reg. 3454 (Feb. 17, 1977) 20

44 Fed. Reg. 77000 (Dec. 28, 1979) 12

45 Fed. Reg. 86216 (Dec. 30, 1980) .. - 22

46 Fed. Reg. 9950 (Jan. 30, 1981) 22

Sec. Labor’s Order No. 26-65, 31 Fed. Reg. 6921 (1966) 12

Attorney General’s Committee on Administration Pro-

cedure in Government Agencies, S. Doc. No. 10, 77th

as NE INNING PEEP potcnsectevenenisipndonssnubssunscasetasonsnaicsssoese 12

No.

In the Supreme Court of the United States

October Term, 1980

MISSISSIPPI POWER & LIGHT COMPANY,

Petitioner,

Vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

COURT OF APPEALS FOR THE FIFTH CIRCUIT

OPINIONS BELOW

The chronological order of the opinions below is as

follows. The district court’s original opinion is unofficially

reported at 10 F.E.P. 1084 (S.D. Miss. 1975). The court of

appeals’ first opinion is reported at 553 F.2d 480 (5th Cir.

1977). The court of appeals’ first decision in the companion

case, United States v. New Orleans Public Service, Inc.

(NOPSI), is reported at 553 F.2d 459 (5th Cir. 1977). This

Court’s granting of the Petitions for Writs of Certiorari in

both cases is reported at 436 U.S. 942 (1978). The court

of appeals’ order remanding both cases to the respective

2

district courts is reported at 577 F.2d 1030 (5th Cir. 1978).

The district court’s decision on remand in this case is

unofficially reported at 20 F.E.P. 47 (S.D. Miss. 1979)

(Appendix A). The subsequent decision of the court of

appeals is reported at 638 F.2d 899 (5th Cir. 1981) (Appen-

dix B).

JURISDICTION

The judgment of the court of appeals was entered on

March 6, 1981 (Appendix C). This Court’s jurisdiction is

invoked under 28 U.S.C. §1254(1).

CONSTITUTIONAL PROVISIONS, STATUTES,

EXECUTIVE ORDERS AND REGULATIONS

INVOLVED

U.S. Constitution, Amendment IV:

The right of the people to be secure in their persons,

houses, papers, and effects, against unreasonable

searches and seizures, shall not be violated, and no

Warrants shall issue, but upon probable cause, sup-

ported by Oath or affirmation, and particularly de-

scribing the place to be searched, and the persons or

things to be seized.

US. Constitution, Amendment V:

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictment of a Grand Jury, except in cases arising in

the land or naval forces, or in the Militia, when in

actual service in time of War or public danger; nor

shall any person be subject for the same offense to be

twice put in jeopardy of life or liimb; nor shall be

compelled in any criminal case to be a witness against

3

himself, nor be deprived of life, liberty, or property,

without due process of law; nor shall private property

be taken for public use without just compensation.

Executive Order 11246 (See Appendix D):

30 Fed. Reg. 12319 (1965), 3 C. F. R. 339 (1964-65 Com-

pilation), as amended by Exec. Order No. 11375, 32

Fed. Reg. 14303 (1967), 3 C. F. R. 406 (1969), 42 U.S. C. A.

§2000e note (1974), superseded in part (irrelevant

for purposes herein) by Exec. Order No. 11478, 34

Fed. Reg. 12985 (1969), 3 C.F.R. 133 (1969 Compila-

tion), 42 U.S.C.A. §2000e note (1974)

Pertinent regulations of the Secretary of Labor implement-

ing Executive Order 11246, reprinted in full in Ap-

pendix E, to-wit:

41 C.F.R. §60-1.4(e), Incorporation by operation of

the Order. By operation of the Order, the equal op-

portunity clause shall be considered to be a part of

every contract and subcontract required by the Order

and the regulations in this part to include such a

clause whether or not it is physically incorporated

in such contracts and whether or not the contract

between the agency and the contractor is written.

41 C.F.R. §60-1.43, Access to records of employment.

Each prime contractor and subcontractor shall permit

access during normal business hours to its premises

for the purpose of conducting on-site compliance re-

views and inspecting and copying such books, records,

accounts, and other material as may be relevant to

the matter under investigation and pertinent to compli-

ance with the orde: and the rules and regulations

pursuant thereto by the agency, or the Director. In-

formation obtained in this matter shall be used only

. 4

in connection with the administration of the Order,

the administration of the Civil Rights Act of 1964

(as amended) and in furtherance of the purposes of

the Order and that Act.

The pertinent provisions of the Federal Property and Ad-

ministrative Services Act of 1949, 63 Stat. 378, 40

U.S.C. §471 et seq., reprinted in Appendix F.

STATEMENT OF THE CASE

1. Background Facts

For many years, the petitioner, Mississippi Power &

Light Company (MP&L), a public utility, has furnished

electrical services to various facilities operated by the

General Services Administration (GSA) under written

and unwritten agreements. On March 28, 1972, the GSA

attempted to schedule an on-site compliance review of

MP&L’s compliance with Executive Order 11246. This

Executive Order requires all government agencies to in-

clude in every government procurement contract a pre-

scribed 600 word contractual stipulation commonly called

the equal opportunity clause. This clause obligates the

contractor as a part of its contract inter alia not to dis-

criminate on the basis of race, color, religion, national

origin or sex and to obey all implementing regulations of

the Secretary of Labor. MP&L advised the GSA that it

was not bound by the Executive Order because none of its

GSA contracts contained the equal opportunity clause. The

GSA then referred this matter to the Justice Department.

2. Original Proceedings in the District Court

On August 8, 1974, the Justice Department filed this

suit to “enforce the contractual obligations imposed by

Executive Order 11246.” Complaint 1. The government’s

5

alleged basis of jurisdiction is 28 U.S.C. §1345 which gives

“the District Courts . . original jurisdiction of all civil

actions .. commenced by the United States.” The com-

plaint alleges that MP&L is a government contractor and

is therefore bound by Executive Order 11246. In its an-

swer, MP&L challenged the validity of the Executive Order

in general and as applied to a non-consenting contractor.

On April 22, 1975, the district court granted the govern-

ment’s motion for partial summary judgment and en-

joined MP&L from refusing to comply with the Executive

Order and all applicable rules and regulations. In view of

the constitutional issues involved, the district court granted

MP&L’s motion for a stay of the injunction pending appeal.

3. Original Proceedings in the Court of Appeals

MP&L’s appeal was consolidated for oral argument

with United States v. New Orleans Public Service, Inc.

(NOPSI) which has similar facts and legal issues. While

companion opinions were written, the NOPSI opinion ef-

fectively disposed of both cases. The court of appeals

affirmed the district courts’ decisions that the utilities were

bound by Executive Order but vacated the injunctions

and remanded the case to the GSA for administrative en-

forcement proceedings. The court explained that it pre-

ferred “that the government. . now obtain the company’s

voluntary compliance before calling for the support of our

injunctive powers.” United States v. NOPSI, 553 F.2d

459, 474 (5th Cir. 1977) (Judge Clark dissenting). See also

United States v. Mississippi Power & Light Co., 553 F.2d

480 (5th Cir. 1977) (Judge Clark, dissenting).

4, Original Actions by Supreme Court

The utilities filed Petitions for Writs of Certiorari,

which this Court granted with the following order:

Petition for Writ of Certiorari granted, judgment

vacated and case remanded to the court of appeals for

further consideration in light of Marshall v. Barlow’s,

436 U.S. 307 (1978).

436 U.S. 942 (1978). The court of appeals subsequently

“vacated [the judgment of the district court] and... re-

manded [to the respective district courts] for considera-

tion in light of the Supreme Court’s order.” 577 F.2d 1030

(5th Cir. 1978).

5. Proceedings in the District Court on Remand

On May 30, 1979, the district court heard oral argu-

ments on respective motions for summary judgment.

MP&L argued that the entire judgment of the court of

appeals had been vacated and therefore all issues could be

reargued. The government contended, and the district

court agreed, that reconsideration was limited to the

Fourth Amendment because Marshall v. Barlow’s was a

Fourth Amendment case. The district court then held

that the Fourth Amendment was not applicable because

MP&L had consented to the searches by doing business

with the federal government. 20 F.E.P. 47 (S.D. Miss.

1979). See Appendix B. MP&L appealed.

6. Second Appeal to the Court of Appeals

On appeal, the MP&L and NOPSI cases were again con-

solidated for oral argument on October 6, 1980. In view of

this Court’s intervening decision in Chrysler Corp. v.

7

Brown, 441 U.S. 281 (1979), the panel asked both sides to

submit additional briefs on the following question: If

there is no enabling legislation for the Executive Order,

can the Executive Order be upheld based on the Presi-

dent’s inherent constitutional authority.

On March 6, 1981, the court of appeals issued a con-

solidated opinion holding that it need not make the nexus

inquiry articulated by this Court in Chrysler nor decide

whether the Executive Order was within the President’s

inherent authority. The court of appeals rationalized that

since this Court in Chrysler did not reach the question of

whether the Executive Order was authorized by statute,

it thereby indicated “a willingness to accept the validity of

the executive order. [The court of appeals therefore held}

fast to [its] previous determination that E.O. 11246 was

a proper exercise of congressionally delegated authority.”

638 F.2d at 905.

The court of appeals alsu upheld a challenged Depart-

ment of Labor regulation which incorporated the equal

opportunity clause into MP&L’s contracts “by operation of

the order” See 41 C.F.R. §60-1.4(e). The court held that

the regulation “is an evocation of the strict policy that

the affirmative action obligation is an understood and un-

alterable part of doing business with the federal govern-

ment.“ Id.

The court of appeals disagreed with the district court's

holding that MP&L waived its Fourth Amendment rights

1. This court’s original remand of this case did not specifi-

cally direct any reconsideration of the validity of the Executive

r. However, whatever the .— scope of review on

remand was, it was changed by this g subsequent decision

in Chrysler. “Lower courts are bound to consider any change

either in fact or in law which has supervened since the original

judgment was entered.” Baird v. Benton County Board of Edu-

cation, 421 F.2d 700, 701 (Sth Cir. 1970); Bell v. State of Mary-

land, 378 U.S. 226 (1964).

by doing business with the federal government. Neverthe-

less, the court of appeals held (1) that the Fourth Amend-

ment does not necessarily require a warrant if the enforce-

ment procedures contained in the relevant regulations pro-

vide equivalent safeguards, and (2) that the constitution

does require that the search be authorized by statute, be

limited in scope and initiated by neutral criteria. The court

of appeals asserted that the first and second issues were

questions of law which it could decide. The court proceeded

to hold that the search was limited in scope and that “the

inspections sought here are clearly within ... statutory au-

thority.” Id. at 908. The court then remanded the case to

the district court to conduct an evidentiary hearing on the

third criteria of whether the search was initiated pur-

suant to an administrative plan containing neutral criteria.

WHY THE PETITION SHOULD BE GRANTED

I, THE VALIDITY OF THE EXECUTIVE ORDER

A. Statutory Authority in General

This case raises the question that this Court left open

in Chrysler Corp. v. Brown.

[Whether Executive Order 11246 . . . is authorized

by the Federal Property and Administrative Services

Act of 1949, . the Civil Rights Act of 1964, the Equal

Employment Opportunity Act of 1972, or some more

general notion that the Executive can impose reason-

able contractual requirements in the exercise of its

procurement authority.

441 U.S. at 305. This Court articulated the test of validity.

Un order for [the Executive Order] to have the

“force and effect of law,” it is necessary to establish

a nexus between the [Executive Order] and some

delegation of the requisite legislative authority by

Congress. The pertinent inquiry is whether

under any of the arguable statutory grants of authority

the [Executive Order] is within the contemplation of

that grant of authority.

441 U.S. at 304, 306.

While this ourt did not reach that question, it did

make a cursory inquiry. “The origins of the congressional

authority for Executive Order 11246 are somewhat obscure

and... [are not] clearly identifiable.” Id. at 304, 307.

This Court went on to reject a 15 year line of cases which

had upheld the validity of the predecessor of Executive

Order 11246. Those cases held that the Executive Order

was authorized by §486(a) of the Federal Property and

Administrative Services Act (See Appendix F, §205(a)).

This Court relegated those decisions to “suggestions” and

“dicta” because the lower courts had failed to make any

“analysis of the nexus between the... Act and the Execu-

tive Orders.“ Id. at 405 n.34.

In its first opinion, the court of appeals made the same

error of failing to make any nexus analysis.

The starting point of our analysis is the well estab-

lished proposition that the Order has the force and

effect of law.

This circuit has held that Executive Order 10925, the

predecessor of No. 11246, was issued pursuant to

statutory authority because of the relationship between

the antidiscrimination provision in the Order and the

purposes of .. . §486(a) [of the FPASA], the statute

governing, inter alia, government procurement.

10

United States v. NOPSI, 553 F.2d at 465. The court of ap-

peals relied on Farkus v. Texas Instruments, 375 F.2d 629

(5th Cir. 1967), cert. denied, 389 U.S. 977 (1967) and

Farmer v. Philadelphia Electric Company, 329 F.2d 3 (3rd

Cir. 1964), the same cases this Court relegated to dicta for

failing to make any nexus analysis. 441 U.S. at 405 n.34.

Chrysler clearly rendered the court of appeals first

opinion to dicta. However, in its second decision, the court

of appeals did not correct its original error. In again fail-

ing to make any nexus analysis, the court stated:

Chrysler does not undermine our holding that E.O.

11246 is firmly rooted in congressionally delegated

authority.

We thus hold fast to our previous determination that

E.O. 11246 was a proper exercise of congressionally

delegated authority.

638 F. 2d at 905.

The court of appeals misread Chrysler. The court

rationalized that it could “hold fast” to its previous deter-

mination because “the Supreme Court’s refusal to [find

the Executive Order was not valid] implies . . . a willing-

ness to accept the validity of the executive order.” Id.

There is nothing in Chrysler to support the court of appeals’

conclusion that this Court “accepted” the validity of the

Executive Order.? Rather, this Court said that [for pur-

2. The court of appeals rationalized that:

To have found that E.O. 11246 was authorized by statute

would have been pointless. Such a holding would not have

aided the [Supreme] Court in deciding the pertinent ques-

tion - whether there was enough of a nexus between the

regulations at issue and the cited sources of authority to give

those regulations the force and effect of law.

(Continued on following page)

11

poses of this case, it is not necessary to decide [that issue

here].“ 441 U.S. at 304. This Court’s view that congres-

sional authorization for the Executive Order is obscure

and not clearly identifiable cannot be reconciled with the

court of appeals’ holding that congressional authorization

is deeply rooted.

This Court should grant this petition to decide whether

there is congressional authorization for Executive Order

11246. MP&L submits that there is simply no nexus be-

tween the Executive Order and the FPASA. Congress

declared that the purpose of the FPASA, which created the

GSA in 1949, was to consolidate the government’s procure-

ment function into a single agency with uniform pro-

cedures:

It is the intent of the Congress in enacting this legisla-

tion to provide for the government an economical and

efficient system for (a) the procurement and supply of

personal property and nonpersonal services.. (b)

the utilization of available property; (c) the disposal

of surplus property; and (d) records management.

40 U.S.C. §471.

The Act explicitly authorizes Executive Orders “neces-

sary to effectuate its provisions.” §486(a). However,

nowhere in the Act is there is specific reference to em-

ployment discrimination.

Chrysler at 304 n.34.

Footnote continued

638 F.2d at 905. The court of appeals’ statement that a nexus

finding would not have been pointless is erroneous. Such a find-

ing may have saved the regulations. “Were a grant of legislative

authority as the basis for Executive Order 11246 more clearly

identifiable, we might agree with the respondents that this com-

patibility gives the disclosure regulations the necessary legis-

lative force.” Chrysler, 441 U.S. at 307.

12

The validity of Executive Order 11246 is an important

question because of its pervasive impact. Twenty-one

thousand (21,000) entities including private companies,

state and local governments and educational institutions

are covered by the Executive Order and are thereby re-

quired as a condition of doing business with the govern-

ment to agree as part of their contract not to discriminate

and to take affirmative action to hire and promote females

and minorities. The boiler plate language of the Execu-

tive Order contains over 600 words and is bolstered by

almost 50,000 words of implementing regulations. See 41

C.F.R. §60 et seq.

In addition, the Executive Order is administered and

enforced by the Office of Federal Contract Compliance.

That office was not created by Congress but by the Sec-

retary of Labor. Sec. of Labor’s Order No. 26-65, 31 Fed.

Reg. 6921 (1966). The OFCCP has the power to terminate

government contracts and to debar companies from doing

business with the government in the future. “As long ago

as 1939, the government recognized that the penalty of

blacklisting is so severe that its imposition may destroy a

going business.” Report of Attorney General’s Committee

on Administration Procedure in Government Agencies. S.

Doc. No. 10, 77th Cong., Ist Sess., pt. 1 at 2-3 (1941). The

threat of canceling a federal contract is so powerful that

the OFCCP has used it to impose backpay penalties.

“TB]etween 1969 and 1979, OFCCP entered into hundreds

of backpay agreements involving well over $61,000,000.”

44 Fed. Reg. 77000 (Dec. 28, 1979).

This court should decide whether the exercise of such

pervasive regulatory control and awesome power over

government contractors “is within the contemplation of

[any] grant of [statutory] authority.” Chrysler, 441 U.S.

at 306.

13

B. Validity of Enforcement Provisions

Assuming arguendo that there is a nexus between the

Executive Order and the FPASA, the Executive Order

would generally have the force and effect of statutory law

because §486(a) of the FPASA authorizes the President

to write policies and directives to implement the Act.

Even so, that general nexus would not extend to the en-

forcement provisions of the Executive Order and its im-

plementing regulations. A general delegation of authority

to write rules and regulations to implement a statute can-

not constitutionally include the power to create enforce-

ment provisions. While enforcement provisions can be

administered by the Executive Branch, they must be

created by the legislative branch.

Executive Order 11246 and its implementing regula-

tions create at least three enforcement provisions: (1)

search of private records and inspection of private property;

(2) suits to enforce the Executive Order; and (3) sanc-

tions and penalties.

1. Search of Records and Inspection of Prop-

erty

The FPASA does not authorize a subpoena of records

or an inspection of premises to investigate violations of the

Act or implementing executive orders. However, the

President and the Secretary of Labor have authorized

their own searches. Section 202(5) of Executive Order

11246 provides that:

The contractor . . will permit access to his books,

records, and accoun’ by the contracting agency and

the Secretary of Labor for purposes of investigation

to ascertain compliance with such rules, regulations

and orders.

14

The Secretary of Labor has also provided that:

Each prime contractor and subcontractor shall permit

access during normal business hours to its premises

for the purpose of conducting on-site compliance re-

views and inspecting and copying such books, records,

accounts and other material as may be relevant to the

matter under investigation.

41 C.F.R. §60-1.43. This court has never been asked to

sanction an administrative search not authorized by law.

Soon after Congress created the first regulatory agency,

this Court considered the reasonableness of a subpoena

issued by that agency. Interstate Commerce Comm. v.

Brimson, 154 U.S. 447 (1894). In that case and in every

succeeding case, the subpoena - the search - was authorized

by Congress. See United States v. Morton Salt Company,

383 U.S. 632 (1950); Oklahoma Press Publishing Company

v. Walling, 327 U.S. 186 (1946); Hale v. Henkel, 201 U.S.

43 (1906). Statutory authorization is a cornerstone of rea-

sonableness under the Fourth Amendment.

When an administrative agency subpoenas corporate

books or records, the Fourth Amendment requires

that the subpoena be sufficiently limited in scope,

relevant in purpose and specific in directive. ... The

agency has the right to conduct all reasonable in-

spections of such documents which are contemplated

by statute.

See v. City of Seattle, 387 U.S. 541, 554 (1967) (em-

phasis added). While administrative inspection of private

property is a newer investigative technique, statutory

authorization is also constitutionally required.

One governing principle justified by history and by

current experience has consistently been followed:

except in certain carefully defined classes of cases,

15

a search of private property without proper consent

is unreasonable unless it has been authorized by a

valid search warrant.

Camara v. Municipal Court, 387 U.S. 523, 528-29 (1967).

Of course, “a warrant ... would provide assurances...

that the inspection ... is authorized by statute.” Marshall

v. Barlow’s, 436 U.S. at 323. “The legality of the search

depends. . . on the authority of a valid statute.” United

States v. Biswell, 406 U.S. 311, 315 (1972).

The government claims the right to conduct both kinds

of searches - a subpoena of MP&L’s records and an inspec-

tion of MP&L’s property without the benefit of a statute.

Both violate constitutional and statutory law. The Ad-

ministrative Procedure Act provides that process,

inspection or other investigative act or demand may not

be issued, made or enforced except as authorized by law.”

5 U.S.C. §555(c).

Even the court of appeals recognized the necessity for

congressional authorization. “One element of the [Fourth

Amendment] question is whether the proposed search is

authorized by statute.” 638 F.2d at 907. Having cor-

rectly recognized the constitutional standard, the court of

appeals erroneously implied the existence of a statute:

[The existence of a statute is a] question of law that

we may decide on appeal. Our first opinions in these

cases have already concluded that Executive Order

11246 and the regulations thereunder are statutorily

authorized. The inspections sought here are

clearly within that statutory authority.

Id. at 908. The court of appeals failed to cite any statute

for an ample reason - there is none. No provision of the

FPASA or any other statute authorizes this search.

16

The court of appeals’ reliance on its first opinion is

ironic because that opinion candidly acknowledged the

absence of statutory authorization. It nevertheless held

that:

The argument about lack of statutory authorization is

without merit in light of the pattern of congressional

approval for the executive order program.

«x9 * *&

The executive order and its implementing regulations

.. . play the same validating role as a statute.

553 F.2d at 472 n.12, 471. While this Court has under very

limited circumstances disposed of the necessity for a war-

rant,® it has never disposed of the constitutional require-

ment for congressional authorization for the search itself.

The court of appeals eviscerated this constitutional guaran-

tee by substituting tenuous and questionable implied con-

gressional approval of a general program in lieu of specific

authorization for the search itself. Such a holding allows

the Executive branch and its agencies to authorize their

own searches by simply writing a regulation. If that

result is not reversed, the cornerstone of the reasonableness

of an administrative search, i.e., congressional authorization,

and the protection it affords, will become a constitutional

relic.*

3. Colonnade Catering Corp. v. United States, 397 U.S. 72

(1970); United States v. Biswell, 406 U.S. 311 (1972).

4. This Court’s original remand to reconsider in light of

Marshall v. Barlow’s, supra, was not altogether clear. Barlow’s

did not involve the Fourth Amendment issue raised here. Bar-

low’s involved the question of whether an OSHA administrative

search fell within the Colonnade/Biswell exception to the general

rule that a warrantless search is unconstitutional. When MP&L

filed its original Petition for a Writ of Certiorari, it advised

this Court that Barlow‘s was then pending and pointed out its

(Continued on following page)

17

2. Suits to Enforce Compliance

While the FPASA does authorize the government to

sue for fraud, it does not authorize suits to enjoin viola-

tions of the Act or its implementing executive orders and/or

regulations. However, the President has authorized such

suits himself. Section 209(a)(2) of Executive Order

11246 provides that the Department of Justice shall bring

“appropriate proceedings . . . to enforce [the executive

order and implementing regulations] including the en-

joining . . of [persons who] seek to prevent . . com-

pliance with the... order.” Expanding upon this remedy,

the Secretary of Labor has authorized suits for injunctive

relief and any other equitable relief including back pay.“

This case raises an issue of first impression for this Court,

i.e, can the Executive branch create jurisdiction in the

federal courts by executive order or administrative regu-

Footnote continued—

inapplicability. Barlow’s “would not control here regardless of

whether a warrant is eventually uired because those inspec-

tions are specifically authorized by Congress.“ Petition for Writ

of Certiorari, No. 77-605 at 26 n. 19.

MP&L has never complained about the lack of a warrant -

the lack of statutory authorization. Since the OSHA search

in Barlow’s was authorized by Congress, that decision does not

di of the issue raised here. The only art of Barlow's that

MP&L considers dispositive of its issue is this Court's statement

that one advantage of a warrant is that it “would provide as-

surances .. that the inspection. . . is authorized by statute.”

436 U.S. at 321.

5. §209 of the Act authorizes the government to file suits

against persons who use fraud to obtain some benefit from a fed-

eral agency in connection with the procurement, transfer or dis-

position of property.

6. Implementing regulation 41 C. F. R. §60-1.26(e) provides:

{T]he Attorney General may bring a civil action in the

appropriate district court of the United States — a

temporary restraining order, preliminary or permanent in-

unction, and an order for such additional equitable relief

neluding back pay, deemed necessary or appropriate to

ensure the full enjoyment of the rights secured by the

Order, or any of the above.

18

lations. MP&L submits that the complaint fails to state a

claim upon which relief can be granted because this suit

is neither authorized by any statute nor based on a com-

mon law theory.’

Counsel make the . . argument that regulations

promulgated by the Secretary authorized him to bring

this suit. ... It is therefore claimed that jurisdic-

tion exists in the district court. ... We think this

argument patently paralogistic. A grant of rule mak-

ing power is not authority to create federal jurisdic-

tion. That authority lies solely with Congress.

Marshall v. Gibson’s Products, 584 F.2d 668, 677 (5th Cir.

1978) (emphasis added) .

The government alleges jurisdiction under 28 U.S.C.

§1345 which provides that “the district court shall have

original jurisdiction of all civil actions, suits, or proceedings

commenced by the United States, or by any agency or

officer thereof expressly authorized to sue by Act of Con-

gress.” While that statute may give the Federal Courts

technical jurisdiction over the parties, it does not give

the government a claim upon which relief can be granted.

In United States v. Standard Oil Co., 332 U.S. 302 (1947),

the government filed a tort action on a “loss of services”

theory after a serviceman was injured by the defendant.

The suit was not authorized by statute and was not based

on any common law theory.

Not often .. is this court asked to create a new sub-

stantive legal liability without legislative aid and as

7. Even though the issue of whether the government has

stated the cause of action at least indirectly effects the Court's

urisdiction, neither the district court nor the court of appeals

Mios —— addressed the issue during the seven years of this

19

at the common law. This case of first impression here

seeks such a result.

* * *

Here the United States is party plaintiff to the suit.

And the United States has power at any time to create

liability. The only question is which organ of the

government is to make the determination that liability

exists. That decision, for the reasons that we have

stated, is in this instance, for the Congress, not for the

courts. Until it acts to establish the liability, this

Court and others should withhold the creative touch.

332 U.S. 301, 302, 316-17 (1947).

In order to bring itself within this Court’s decisions

that the government does not need statutory authorization

to sue on a common law cause of action, e.g., breach of con-

tract, fraud, trepass,“ Rex Trailer Co. v. United States, 350

U.S. 148 (1956); United States v. Cooper Corp., 312 U.S.

600 (1941) (Justice Black dissenting); United States v.

San Jacinto Tin Co., 125 U.S. 275 (1888), the government

argued below that it is suing on a contractual theory.

The government's characterization of this suit as one “to

enforce the contractual obligations imposed by Executive

Order 11246” (Complaint 1) is linguistic sophistry to cir-

cumvent the lack of jurisdiction.’ This suit is not based

8. This court has also allowed the government to sue with-

out statutory authorization on an equitable theory. In Re Debs,

158 U.S. 564 (1895); Morrison v. Work, 226 U.S. 482 (1925).

However, the government's complaint in those cases were based

on a common law theory. “The basis of injunctive relief in the

federal courts has already been irreparable harm and 282

7 3805. remedy.” Beacon Theaters v. Westover, 359 U.S. 500, 50

9. While the government has sued some contractors for vi-

olating the Executive Order, those contractors had agreed to the

Executive Order as a part of their contract. See e.g., United

States v. Local 189, As wher} and Pa orkers, 282 b. Supp.

39 (E. D. La. 1968), aff'd, 416 F.2d 980 (5th Cir, 1969), cert. denied,

397 U.S. 919 (1970). The cause of action was one for common

law breach of contract.

20

on any common law theory because the government does

not allege that MP&L breached any agreement. The

complaint alleges that MP&L refuses to comply with Ex-

ecutive Order 11246. None of MP&L’s contracts with the

government include Executive Order 11246. Parties impose

contractual obligations upon themselves. Obligations im-

posed by an executive order upon an unconsenting party

does not arise via contract.

The government's position is also inherently contra-

dictory. To state a cause of action, the government alleges

that it is suing to enforce a common law contract. How-

ever, for purposes of liability, the government argues,

infra, that contract law is inapplicable and that MP&L is

bound by the Executive Order by operation of law regard-

less of the lack of its consent.

3. Sanctions and Penalties

While §209 of the FPASA does authorize certain sanc-

tions and penalties for fraud, the Act does not otherwise

authorize sanctions and penalties against those who violate

the Act or its implementing executive orders and/or regu-

lations. However, Executive Order 11246 creates its own

sanctions and penalties. Section 209(a) provides inter alia

that government contractors can have their contracts termi-

nated or can be debarred from future contracts for violating

the Executive Order and/or implementing regulations.“

In addition, the Secretary of Labor has conferred upon him-

self cease and desist authority."

10. While these remedies are provided for violations of

—— statutes 9 government contracts, they were ex-

created by Congress. See, 40 U.S. C. A. 692701 and 2;

11 100. C. A. §§36 and 354.

11. The Secretary amended the regulations (42 Fed. Reg.

3454, Feb. 17, 1977) to provide that:

The compliance agency (with the prior approval of the

Kor), or OFCCP may institute an administrative en-

(Continued on following page)

21

[I]t is for Congress to presci.ce the penalties for the

laws which it writes. It would transcend both the

judicial and the administrative function to make addi-

tions to those which Congress has placed behind the

statute.

Steuart and Brothers, Inc. v. Bowles, 322 U.S. 398, 404

(1944); see also United States v. Hark, 320 U.S. 531 (1944);

United States v. Grimaud, 220 U.S. 506 (1911). “Laws

entail sanctions - penalties for their violation. ** A

determination that sanctions should be applied... is an

exercise of legislative power.” Youngstown Sheet & Tube

Co. v. Sawyer, 343 U.S. 579, 630 (1952) (Justice Douglas,

concurring).

The creation of enforcement powers by Executive Or-

der also violates statutory law. The Administrative Pro-

cedure Act provides that “a sanction may not be imposed

... except within the jurisdiction delegated to the agency

and as authorized by law.” 5 U.S.C. §558(b).

The creation of these plenary powers by the Execu-

tive branch is unprecedented, fundamentally unconstitu-

tional and totally alien to our system of administrative

Footnote continued—

forcement proceeding to enjoin the violations, to seek ap-

propriate relief (which may include affected class and back

pay relief), and to impose administrative sanctions, or any

of the above.

41 C. F. R. §60-1.26(a) (2) (emphasis added).

If it is determined after a hearing . that the contractor

is violating the Order or regulations issued thereunder, the

compliance agency ... or the Secre . . » Shall issue an

Administrative Order enjoining the violations and requiring

the contractor to provide whatever remedies are appropriate,

— — whatever sanctions are appropriate, or any of

e above.

41 C. F. R. 5660-1. 26 (d) (emphasis added).

22

law.!“ The separation of powers doctrine prohibits the

Executive branch from creating penalties and sanctions

for violations of law.

II. TFE VALIDITY OF 41 C. F. R. §60-1.4(e) WHICH

UNILATERALLY IMPOSES THE EXECUTIVE

ORDER ON NONCONSENTING CONTRACTORS

Even if the Executive Order is valid in general, the

regulation which unilaterally imposes the Executive Order

on an unconsenting contractor like MP&L is unconstitu-

tional. MP&L’s contracts with the government make no

reference to the Executive Order. However, the chal-

lenged regulation!“ provides that the Executive Order’s

600 word contractual stipulation and the 48,000 words of

implementing regulations “shall be considered to be a part

of every contract . . . whether or not, it is physically in-

cluded in such contract.” 41 C.F.R. §60-1.4(e).™

The court of appeals upheld this regulation.

The regulation is an evocation of the strict policy that

the affirmative action obligation is an understood and

12. While the government has not attempted to terminate

its contract with MP&L, this sanction is disc here to illustrate

the arsenal of enforcement provisions not authorized by Congress.

13. Courts are rarely called upon to define the parameters

of executive power. While the validity of Executive Order 11246

is an important question, “clashes between different branches of

the government should be avoided if a legal ground of less ex-

plosive potentialities is properly available.” Youngstown Sheet

& Tube Co. v. Sawyer, 343 U.S. 579 (1952). A lesser ground is

present here. Should this court grant this petition and hold that

the regulation which incorporates the equal opportunity clause

into MP&L’s contracts is invalid, there would be no need to reach

the broader questions.

14. This regulation has been slightly reworded and renum-

bered to 41 C. F. R. §60-1.47 as a part of other revisions to OFCCP

rules. See 45 Fed. Reg. 86216 (Dec. 30, 1980). However, the

effective date of the revised rules has been stayed pending fur-

ther review by the current administration. 46 Fed. Reg. 9950

(Jan. 30, 1981).

23

unalterable part of doing business with the govern-

ment. If the government has the power to impose

the affirmative action obligation at all, it must cer-

tainly have the power to impose it without exception.

638 F. 2d at 905-06. With this sweeping language, the court

of appeals again failed to make the required nexus analysis

and avoided MP&L’s arguments that (1) the incorpora-

tion regulation violates the Fifth Amendment by impair-

ing the obligation of a government contract and (2) the

Secretary of Labor exceeded his authority in writing a

regulation which alters the terms of a government contract.

A. The Nexus Analysis

Chrysler held that:

UIln order for [disclosure] regulations [promulgated

under Executive Order 11246] to have the “force and

effect of law,” it is necessary to establish a nexus

between the regulations and some delegation of the

requisite legislative authority by Congress.

441 U.S. at 304-05. The court of appeals did not make the

required nexus analysis.

Chrysler establishes two prerequisites for a regulation

to have the force and effect of law. The promulgation

of the regulation . . must be within the contempla-

tion of some congressionally delegated authority.

Our analysis turns then to whether the regulation is

contemplated by the sources of congressional authority -

we cite for it. That analysis begins with the con-

clusion we have already reached: Chrysler does not

undermine our holding that E. O. 11246 is itself firmly

rooted in congressional.y delegated authority. From

there it is but a short step to the conclusion that the

regulation is also within the contemplation of that

grant of authority.

24

638 F.2d at 905. As argued, supra, there is no nexus be-

tween the Executive Order and the FPASA. Therefore,

if the Executive Branch has no statutory authority to

promulgate orders dealing with employment discrimination,

a fortiori, it cannot unilaterally amend contracts to im-

pose nondiscrimination covenants on unconsenting con-

tractors. The “incorporation” regulation is just as remote

to the FPASA as were the disclosure regulations in Chrys-

ler.

We think that it is clear that when it enacted these

statutes, Congress was not concerned with public dis-

closure of trade secrets or confidential business in-

formation, and, . . . it is simply not possible to find in

these statutes a delegation of the disclosure authority

asserted by the respondents here.

Chrysler, 441 U.S. 306.

The court of appeals’ decision also conflicts with the

decision of the Fourth Circuit in Liberty Mutual Insurance

Co. v. Friedman, 1 , 24 F. E. P. 1168 (4th Cir.

1981). Liberty Mutual wrote Workmen’s Compensation

insurance for various government contractors. The insur-

ance contracts made no reference to the Executive Order.

Nevertheless, the district court held that those contracts

made Liberty Mutual a subcontractor and subject to the

Executive Order by virtue of the “incorporation” regula-

tion. Liberty Mutual v. Friedman. F. Supp. ........ „21

F. E. P. 1016, 1021 (D. Md. 1979).

The Fourth Circuit reversed by using the Chrysler

nexus analysis to reject the unilateral imposition of the

Executive Order to an unconsenting party. “The connec-

tion between the cost of workers’ compensation policies

... and [the purpose of the FPASA] is simply too attentu-

ated to allow a reviewing court to find the requisite con-

25

nection between procurement costs and social objectives.”

To highlight the conflict in the circuits, the Fourth Cir-

cuit characterized the Fifth Circuit’s original opinion in

this case “as the most extreme view . . . [with which the

Fourth Circuit] simply disagreed.” Id.

B. Impairment of Government Contracts

Not only does the “incorporation” lack any attributes

of a substantive rule that has the force and effect of stat-

utory law, it is also outright invalid for other reasons. The

regulation is unconstitutional because it unilaterally alters

the substantive terms of MP&L’s contract with the gov-

ernment thereby violating MP&L’s Fifth Amendment rights.

MP&L’s obligations under the “four corners” of its con-

tracts with the government are fixed as a matter of con-

tract law and constitutional law. “Rights against the

United States arising out of contract with it are protected

by the Fifth Amendment.” Lynch v. United States, 292

U.S. 571, 579 (1934). Legislation [or regulations] which

.. . add new duties or obligations [to a contract] neces-

sarily impairs the obligations of the contract.” Northern

Pacific R. R. Co. v. Minnesota, 208 U.S. 583, 591 (1908).

Since the challenged regulation imposes additional con-

tractual obligations on MP&L, it impairs the obligation

of the contract. It is hard to imagine a more egregious

impairment than a regulation that unilaterally imposes on

a party a term to which it has not agreed.

The court of appeals’ statement that “the government

has the power to impose the affirmative action obligation

. . . without exception” shows a fundamental misconcep-

tion of the capacity in which the government appears in

this suit. The Fifth Amendment prohibits the Federal

Government from exercising sovereign powers when it

contracts.

26

The two characters which the government possesses

as a contractor and as a sovereign cannot be thus

fused ... Whatever acts the government may do, be

they legislative or executive . . . cannot be deemed

specifically to alter, modify, obstruct or violate the

particular contracts to which it enters with private

persons.

Horowitz v. United States, 267 U.S. 459, 461 (1925).

The truth is, states and cities, when they borrow

money and contract to repay it with interest, are not

acting as sovereignties. They come down to the level

of ordinary individuals. Their contracts have the same

meaning as that of similar contracts between private

persons.

United States Trust Co. v. New Jersey, 431 U.S. 1, 25 n.23

(1977).

The distinction between the government’s contracting

and sovereign capacities is not simply theory. The dis-

tinction was created by the Fifth Amendment.

There is a clear distinction between the power of

Congress to control or interdict the contracts of private

parties when they interfere with the exercise of its

constitutional authority, and the power of the Congress

to alter or repudiate the substance of its own engage-

ments.

United States Trust Co. v. New ] sey, 431 U.S. 1, 26 n.25

(1977). Therefore, acting in its contracting capacity, the

government has no power to “impose” anything, but only

the power to enforce compliance with an agreement.

The court of appeals view that the regulation is law-

ful because the Executive Order “is an understood and

unalterable part of doing business with the government,”

27

638 F.2d at 905, has absolutely no foundation in contract

law or constitutional law. This Court has held many times

that when the government contracts for goods and services,

it is bound by the same rules as its citizens. Reading Steel

Casting Co. v. United States, 268 U.S. 186 (1925); Priebe &

Sons v. United States, 332 U.S. 407 (1947). Even that rule

works in the government’s favor in most cases. As a

contractor, the government, like any businessperson, can

use its economic leverage to get desired provisions as a

condition of getting government business.

Like private individuals and businesses, the Govern-

ment enjoys the unrestricted power . . . to determine

those with whom it will deal, and to fix the terms

and conditions upon which it will make needed pur-

chases.

Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940).

With its tremendous economic leverage, the govern-

ment has successfully been able to get most contractors

to agree to the Executive Order. The Government did not

get such an agreement from MP&L. Having made an

agreement, the government cannot now invoke its sovereign

power to impose contractual terms it was unable to get at

the bargaining table.

C. Abrogation of Common Law

Even if the regulation passes constitutional muster

under the Fifth Amendment, it is still invalid because a

regulation can only implement a statute - it cannot make

law. This regulation “makes law” because it changes the

substantive terms of MP&L’s contract. When the govern-

ment contracts in the marketplace for goods and services,

its “contract is to be construed and the rights of the parties

are to be determined by the application of the same princi-

28

ples as if the contract were between individuals.” Reading

Steel Casting Company v. United States, 268 U.S. at 188.

“It is customary where Congress has not adopted a differ-

ent standard to apply to the construction of government

contracts the principles of general contract law.” Priebe &

Sons v. United States, 332 U.S. at 411.

This regulation abrogates the common law principles

otherwise applicable to MP&L’s contract with the govern-

ment. The power of an administrative officer. to

prescribe rules and regulations ... is not the power to make

law. . . but the power to adopt regulations to carry into

effect the will of Congress as expressed by the statute.

A regulation [which makes law] is a mere nullity.” Dixon

v. United States, 381 U.S. 68, 74 (1965).

CONCLUSION

Wherefore, premises considered, MP&L prays that this

Court will grant this Petition.

Respectfully submitted,

SHERWOOD WISE

E. Gravy JOLLY

MICHAEL FARRELL

Counsel for Petitioner

Al

APPENDIX

APPENDIX A

UNITED STATES of America,

Plaintiff-Appellee,

V.

MISSISSIPPI POWER & LIGHT COMPANY,

Defendant-Appellant.

UNITED STATES of America,

Plaintiff-Appellee,

V.

NEW ORLEANS PUBLIC SERVICE, INC.,

Defendant-Appellant.

Nos. 79-2636, 80-3043.

United States Court of Appeals,

Fifth Circuit.

Unit A

March 6, 1981.

Actions were brought to compel utilities’ compliance

with equal opportunity obligations of Executive Order

11246, which prohibits employment discrimination by gov-

ernment contractors. The United States District Courts for

the Southern District of Mississippi and the Eastern District

of Mississippi and the Eastern District of Louisiana granted

injunctions. On appeal, the Court of Appeals, 553 F.2d 459

and 553 F.2d 480, modified and affirmed, and utilities peti-

tioned for certiorari. The Supreme Court, 436 U.S. 942,

98 S.Ct. 2841, 56 L.Ed.2d 783, vacated and remanded. The

Court of Appeals, 577 F.2d 1030, vacated judgments of the

district courts and remanded causes with directions. On

A2

remand, the United States District Courts for the Eastern

District of Louisiana, Fred J. Cassibry, 480 F.Supp. 705, and

for the Southern District of Mississippi, Dan M. Russell, Jr.,

J., entered orders similar to Court of Appeals’ previous

declaratory order, and utilities appealed. The Court of

Appeals, Wisdom, Circuit Judge, held that: (1) orders is-

sued by district courts were final appealable decisions; (2)

Executive Order 11246 was a proper exercise of congres-

sionally delegated authority; (3) a formal judicial warrant

is not required for all administrative searches if enforce-

ment procedures contained in relevant statutes and regula-

tions provide safeguards roughly equal to those contained

in traditional warrants, and (4) although Executive Order

11246 and regulations thereunder were statutorily au-

thorized, and although searches were properly limited in

scope, remand was necessary for factual determination

as to how agency chose to initiate warrantless searches of

utilities’ records.

Vacated and remanded.

WISDOM, Circuit Judge:

These companion cases are before the Court for the

second time. The Attorney General, on behalf of the

United States, brought these actions in 1973 and 1974

against New Orleans Public Service, Inc. (NOPSI) and

Mississippi Power & Light (MP&L), contending that, as

government contractors, those companies were bound by

Executive Order (E.O.) 11246, as amended, and the regula-

tions of the Secretary of Labor promulgated under it, 41

C.F.R. § 60.1 et seq. That order imposes on government

contractors the obligation to take affirmative action to

achieve the equal opportunity goals of the E.0.’s mandate

(in effect, to increase the hiring of members of racial and

A3

ethnic minorities.)' More specifically, the United States

sought injunctions to obtain access to the companies’ rec-

ords to determine whether they had complied with the

mandates of the executive order. The companies resisted

the inspection on a number of grounds which are detailed

extensively in this Court's first opinions in these cases,

United States v. New Orleans Public Service, Inc., 5 Cir.

1977, 553 F.2d 459; United States v, Mississippi Power &

Light Co., 5 Cir, 1977, 553 F.2d 480. The primary chal-

~ lenges in those cases centered on the constitutional validity

of the executive order and relevant regulations, on whether

the mandates of the order could be imposed on the com-

panies without their contractual consent, and on whether,

and to what extent, the fourth amendment protected the

companies’ records from government view,

The district courts granted the injunctions, On appeal

we held that the executive order and the regulations were

congressionally authorized and therefore could validly be

applied to the defendant companies, We also rejected the

companies’ fourth amendment arguments, but withheld the

injunctive relief granted by the district courts, Instead,

relying on the declaratory force of our decisions and the

good faith of the parties, we allowed the companies to com-

1, Section 202 of E. O. 11246, „ C. F. R. 340 (1964-1965 Comp.),

sets out a seven-point clause that must be included in most gov-

ernment contracts, Among other things, the clause provides:

“The contractor will not discriminate against any employee or

a pg for employment because of race, creed, color, or national

origin. The contractor will take affirmative action to efisure

that applicants are employed, that employees are treated during

employment, without regard to their race, creed, color, or na-

tional 123 The history of E. O. 11246 is described in detail in

United States v. New Orleans Public Service, Inc., 5 Cir, 1977,

653 F.2d 459, E.O, 11375, 3 C. F. R. 684 (1966-1970 Comp.), ex-

tended the requirements of E. O. 11246 to prohibit discrimination

on the basis of sex. E.O, 12086, effective October 8, 1978, 3

C.S.R. 230 (1979), consolidated the entire contract compliance

program in the Department of Labor.

A4

ply voluntarily and authorized the government to seek

through administrative proceedings to resolve any remain-

ing issues concerning access to the companies’ records.

The Supreme Court granted certiorari and vacated our

decision for reconsideration in light of Marshall v. Barlow’s,

Inc., 1978, 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305, a de-

cision subsequent to this Court's decision, which cast some

shadows on the rationale underlying our resolution of the

fourth amendment issues. 436 U.S, 942, 98 S.Ct. 2841, 56

L.Ed.2d 763. We in turn rermanded the case to the respec-

tive district courts with the same directions, 577 F.2d

1030. Both courts concluded that Barlow’s did not dictate

a reversal of their earlier rulings and entered orders that

were similar to the order issued by this Court before the

Supreme Court's review, Because we disagree in part

with the district courts, we must vacate their orders and

remand for further findings.

I.

The United States raises an initial question, ignored

by the appellants, whether the two orders issued by the

district courts are final decisions within the meaning of 28

U.S.C. § 1291. If the decisions are not final, we do not

have jurisdiction over these appeals.’ Although the opin-

ions and orders in these two cases differ somewhat, the

effects of the two dispositions are the same. Both courts

2. Aside from some specialized routes of appeal that are

lainly not available here, see 15 C. Wright, A. Miller & E.

per, Federal Practice and Procedure § 3901, at 397-98 (1976),

the primary sources of appellate jurisdiction lie in 28 U.S.C,

§§ 1291 and 1292. The only provision of § 1292 that might be

applicable here is one proves ng for review of . M orders

E or refusing injunctions. See 28 U.S.C, § 1292 (a) (1).

n Liberty Mutual Ins, Co. v. Wetzel, 1976, 424 U.S, 737, 96 S.Ct.

1202, 47 L.Ed.2d 435, however, the Supreme Court held that an

order denying an 1 is not — under § 1292(a) (1)

by the party who, like the companies here, opposed the injunction,

AS

authorized the United States to proceed through adiainis-

trative action to force the companies to comply with the

executive order and the regulations. Both courts also con-

cluded that the companies had no further fourth amend-

ment defenses to the proposed inspections and that their

refusal to allow the inspections violated the executive or-

der, Neither court issued the injunctions sought by the

government, Like this Court in its first decision, they

were willing to rely instead on the declaratory force of

their decisions and on the good faith of the parties. Both

courts retained jurisdiction, however, in the event that

enforcement of their decisions became necessary."

[1] Gillespie v. United States Steel Corp., 1964, 379

U.S. 148, 85 S.Ct, 308, 13 L.Ed.2d 199, furnishes the analy-

tical framework for determining whether these orders are

final within the meaning of § 1291. As that case points

out, “a decision final within the meaning of § 1291 does

not necessarily mean the last order possible to be made

in a case.” Id, at 152, 85 S.Ct. at 310. Thus, although the

withholding of injunctive relief and retention of jurisdiction

by the district courts in these cases makes it possible that

they will be called on to issue another order to enforce

their decisions, that fact alone is not dispositive on the

issue of finality. Thoms v. Heffernan, 2 Cir, 1973, 479 F.2d

478, vacated on other grounds, 1974, 418 U.S. 908, 94 S.Ct.

3199, 41 L.Ed.2d 1154,

[2] Rather, Gillespie dictates that we give the finality

requirement a “practical rather than a technical construc-

3. The orders issued the district courts differed in one

respect. The Court in No, 79-2636 also ordered that, within 90

days from the entry of the order, the government and MP & L

were to seek through conciliation to resolve any remaining issues

concerning the company's compliance with the executive order.

Presumably, this additional provision was designed to fix a time

limit after which the district court would enforce its decision

by injunctive relief.

A6

tion” and that the chief countervailing considerations are

“the inconvenience and costs of piecemeal review on the

one hand and the danger of denying justice by delay on

the other“. 379 U.S, at 152-53 (quoting Cohen v. Beneficial

Industrial Loan Corp., 1949, 337 U.S. 541, 546, 69 S.Ct. 1221,

1225, 93 L.Ed, 1528 and Dickinson v. Petroleum Conversion

Corp., 1949, 38 U.S. 507, 511, 70 S.Ct, 322, 94 L.Ed, 299).

With these considerations in mind, we conclude that the

orders are sufficiently final to vest us with jurisdiction.

Our review of these orders does not raise the usual

problems attending piecemeal review because it can be

labelled “piecemeal” only in a distorted sense of the word,

The orders would be undeniably final if the court had

either granted or denied the injunctive relief asked for

by the government instead of retaining jurisdiction to issue

injunctions later if needed, The district courts otherwise

fully decided every issue presented, including the two

central issues before us now, These two substantive issues

have formed the core of these cases from their inception,

are the same issues we faced when the cases were first

appealed to us, and are the same issues on which the Su-

preme Court granted certiorari before vacating our first

judgment. These appeals are in effect a continuation of

the first appeals. To resolve these issues now would im-

pose no further inconvenience on the progress of this litiga-

tion. Indeed, refusal to decide these cases now would

create cost and inconvenience without any benefit either

to the parties or to the orderly administration of the ap-

pellate system. Should we refuse, the government will

again seek to obtain the companies’ records through ad-

ministrative proceedings; the companies will again raise

the two issues presented here; the government will apply

to the district courts for an injunction; and, relying on

their prior decisions, the courts will grant injunctions that

will be clearly appealable under 28 U.S.C, § 1292(a) (1).

A7

The issues would in no way be better suited for appellate

review than they are now, but the parties will have suf-

fered the cost and delay that would attend this unneces-

sary use of administrative and judicial resources. And,

given the unusual procedural history of these appeals, we

need not fear that our decision to hear these appeals will

open the door to a host of other appeals that are truly

“piecemeal”’.*

Liberty Mutual Insurance Co. v. Wetzel, 1976, 424 U.S.

737, 96 S.Ct. 1202, 47 L.Ed.2d 435, relied on heavily by

the government, is inapposite. Appeal was denied there

because the district court had issued a partial summary

judgment, deciding for the plaintiffs only on the issue of

liability but leaving open all issues concerning the relief

sought. That is not the situation in these cases. The dis-

trict courts decided every issue, including the appropriate

relief.

II.

After the decisions in these cases were vacated and

remanded to this Court, the Supreme Court issued its opin-

ion in Chrysler Corp. v. Brown, 1979, 441 U.S. 281, 99 S.Ct.

4. The unusual procedural history of these cases also dis-

tinguishes them from Garza v. Smith, 5 Cir. 1971, 450 F.2d 790.

In that case, this court dismissed, for lack of finality, an appeal

from a three-judge district court that granted declaratory relief

but withheld injunctive relief, choosing instead to retain juris-

diction in the event that injunctive relief would later be neces-

sary. The present cases come to us in a different posture, how-

ever, because they represent, in essence, rehearings of cases that

were undisputedly appealable when we first considered them. Be-

fore those first appeals, the district courts had decided all the

issues presented and had granted injunctive relief, making their

decisions appealable under § 1291. (It is our own first decision

in these cases, which withheld injunctive relief, that prompted the

district courts to fashion their present orders in the manner that

they did.) This protracted convoluted procedural history is

what pushes the two orders here across the not always bright line

distinguishing final orders from interlocutory ones.

Ag

1705, 60 L.Ed 2d 208. The defendant companies argue that

the case casts doubt on the statutory authorization we

found for E. O. 11246 and that Chrysler therefore under-

mines our first decision.“

Chrysler Corporation brought suit against the Office of

Federal Contract Compliance Programs (OFCCP), the

agency charged with monitoring compliance with E. O.

11246. Chrysler sought an injunction to block that agency’s

public disclosure of information that the executive order

had required Chrysler to furnish to the government. Chry-

sler argued, among other things, that public disclosure

was barred by the Trade Secrets Act, 18 U.S.C. § 1905,

which prohibits federal officials from releasing any in-

formation they receive in the course of their employment

“in any manner not authorized by law“. The OFCCP

countered that certain of its regulations, promulgated under

authority granted by E.O. 11246, had the force and effect of

law and thus provided the necessary authorization to take

the proposed disclosure outside the reach of the Trade

Secrets Act. This argument in turn was premised on the

validity of the executive order itself. The OFCCP found

congressional authorization for E.O. 11246 in the Federal

Procurement and Administrative Services Act,“ the Civil

Rights Act of 1964,“ and the Equal Employment Opportunity

5. The district courts did not address this issue. They were

of the opinion that since the Supreme Court vacated for recon-

sideration in light of Marshall v. Barlow’s, Inc., and that since

we remanded to them with those same directions, their review

was limited to the effect Barlow’s had on the prior decisions.

Although we do go beyond the district courts’ holdings and address

questions other than those raised by the Barlow’s decision, we

go only so far as to explore the impact of Chrysler v. Brown. To

the extent that the defendants have attempted to reopen issues

unaffected by those two cases, we rest on our earlier decisions.

6. 40 U.S.C. §§ 471, et seq.

7. Pub.L. No. 88-352, 78 Stat. 241 (codified in scattered sec-

tions of 42 U.S.C.).

A9

Act of 1972.“ These were the same sources this Court re-

lied on in reaching its first decision in these cases.

The Supreme Court held that the regulations did not

have the force and effect of law. In so holding, however,

the Supreme Court did not reach the issue whether E.O.

11246 was within the scope of the statutory grants of au-

thority relied on by the OFCCP. Rather, the pertinent

inquiry was whether the regulations themselves were

within the contemplation of the statutory grants of au-

thority. The Court concluded that they were not.

[3] We are unable to agree with the suggestion that

the Supreme Court’s failure to reach the question whether

the executive order was within any grant of congressionally

delegated authority impugns our earlier decision in these

cases. To have found that E.O. 11246 was authorized by

statute would have been pointless. Such a holding would

not have aided the Court in deciding the pertinent ques-

tion—whether there was enough of a nexus between the

regulations at issue and the cited sources of authority to

give those regulations the “force and effect of law”. Thus,

we can hardly draw any negative inference from the

Court’s failure to reach the issue of the validity of the

executive order. Indeed, if any inference can be drawn,

it could just as well be the opposite one. Had the Su-

preme Court held that the executive order was not valid,

that would have sounded the death knell for the regula-

tions promulgated under it. The Supreme Court’s re-

fusal to take this approach implies, equally well, a will-

ingness to accept the validity of the executive order. We

thus hold fast to our previous determination that E.O.

11246 was a proper exercise of congressionally delegated

authority.

8. Pub.L. No. 92-261, 86 Stat. 103 (amending the Civil

Rights Act of 1964).

Ald

[4] By establishing a course of analysis different

from the one we used for determining whether regula-

tions promulgated under E.O. 11246 have the force and

effect of law, the Chrysler case does require us to re-

examine the regulation in dispute in these cases, 41 C.F.R.

§ 60-1.4(e) (1979). Our conclusion as to its validity,

however, remains the same. Chrysler establishes two pre-

requisites for a regulation to have the force and effect of

law. The promulgation of the regulation must satisfy the

procedural requirements imposed by Congress, and, as

stated above, it must be within the contemplation of some

congressionally delegated authority. Unlike the regulations

at issue in Chrysler, the promulgation of 41 C.F.R. § 60-

1.4(e) (1979) did comport with the provisions of § 4 of

the Administrative Procedure Act, 5 U.S.C. § 553.“ Our

analysis turns then to whether the regulation is contem-

plated by the sources of congressional authority we cite

for it.

51 That analysis begins with the conclusion we have

already reached: Chrysler does not undermine our hold-

ing that E. O. 11246 is itself firmly rooted in congressionally

9. 41C.F.R. § 60-1.4(e) provides:

1 by operation of the Order. By operation

of the Order, the equal opportunity clause shall be considered

to be a part of every contract and subcontract required b

the Order and the regulations in this part to include suc

a clause whether or not it is physically incorporated in such

contracts and whether or not the contract between the agency

and the contractor is written.

10. Section 4 requires that notice of proposed rules be pub-

lished in the Federal Register no less than 30 days before their

effective date, and that interested parties be given an oppor-

tunity to be heard before prorulgation of the rule. The required

notice for the rules here in dispute was published on February

15, 1968, well over 30 days before their promulgation on May

28, 1968. See 33 Fed.Reg. 3000, 7804 (1968). Although § 60-1.4

(e) was not among the rules specifically set out in the notice of

roposed rulemaking, the notice sufficiently identified the sub-

ect and issues involved so as to satisfy 5 U.S.C.’ § 553 (b) (3).

See generally K. Davis, Administrative Law Treatise § 6.25 (1978).

All

delegated authority. From there it is but a short step to

the conclusion that the regulation is also within the con-

templation of that grant of authority. Ihe order states

that, with a few exceptions, all government contracts shall

include a clause requiring the party contracting with the

government to take affirmative action to increase the

hiring of members of racial minorities and other tradition-

ally disadvantaged groups. The regulation merely states

that such a clause is deemed a part of all government con-

tracts whether or not the contract is written and whether

or not the clause is physically incorporated in the con-

tract. The regulation is an evocation of the strict policy

that the affirmative action obligation is an understood and

unalterable part of doing business with the government.

If the federal government has the power to impose the

affirmative action obligation at all, it must certainly have

the power to impose it without exception. As we stated

in United States v. New Orleans Public Service, Inc., 553

F. 2d at 465, the regulation does “nothing more than give

teeth to the mandate of the Order”.

[6] Our holding that the executive order can validly

be applied to NOPSI and MP&L does not, however, rest

solely on the validity of 41 C.F.R. § 60-1.4(e). As stated

above, that regulation embodies a long-standing, congres-

sionally approved policy in government procurement: any-

one who wishes to do business with the government must

assume the affirmative action obligations required by the

executive order. This policy is so well known and well

entrenched that anyone who does business with the gov-

ernment is held to that obligation.“ NOPSI and MP&L

11. As the decision in Barlow’s makes clear, implied con-

sent to administrative searches is not easily found. This does not,

however, affect our holding that the companies assumed the

affirmative action obligation by dealing with the government.

(Continued on following page)

Al2

of course have not disputed the pervasiveness of the re-

quirement. We conclude that, even absent the disputed

regulation, they have accepted the affirmative action ob-

ligations contained in E.O. 11246 by dealing with the gov-

ernment.““

Footnote continued

It is one thing to say that the companies’ action in furnishing

services to the government implies an acceptance of a policy of

non-discrimination and affirmative action; it is entirely another

to say that it also implies a willingness to give up fourth amend-

ment rights.

12. At oral argument we requested supplemental briefs

on the inherent powers of the President as a source for E.O.

11246, an issue roundly debated by the commentators. See, e. g.,

Brody, Congress, The President, and Federal Equal Employment

Policymaking: A Problem in Separation of Powers, 60 B.U.L.

Rev. 239 f 1980); Fleishman & Aufses, Law and Orders: The

Problem of Presidential Legislation, 40 Law & Contemp. Prob. 1

1 1976); Note, Doing Good the Wrong Way: The Case

or Delimiting Presidential Power Under Executive Order No.

11,246, 33 Vand.L. Rev. 921 (1980); Comment, The Philadelphia

Plan: A Study in the Dynamics of Executive Power, 39 U.Chi.L.

Rev. 723 (1972). Although our holding obviates the need to

explore in detail the arguments advanced by counsel on this

issue, we sketch them briefly here.

The issue centers on the extent of the power granted by two

clauses of Article II of the Constitution: section 1, clause 1,

which states that “executive power shall be vested in a President

of the United States of America”, and section 3, which states that

the President shall take care that the laws be faithfully exe-

cuted”. Most discussion on this point springs from the Supreme

Court's decision in Youngstown Sheet and Tube Co. v. Sawyer,

1952, 343 U.S. 579, 585, 72 S.Ct. 863, 96 L.Ed. 1153, a case whose

instructions cannot easily be gleaned since all six justices in the

majority issued separate opinions. One line of argument follows

Justice Black’s view that policymaking is entirely Congress’s

province. Thus, to the extent that the executive order creates

rather than merely executes, fair employment policy, it is beyond

the power of the executive. The construct more often referred

to, however, is the one elaborated by Justice Jackson in his famous

concurrence. 343 U.S. at 634-38, 72 S.Ct. at 888, 871. In his

view, presidential authority can be arrayed in three categories,

being strongest when he acts with the express or implied approval

of Congress, weakest when he acts contrary to some express or

implied will of Congress, and in a “zone of twilight” when Con-

gress has expressed no will at all. We continue to hold the view,

expressed in our first opinion, that E.O. 11246 is executive action

that falls within the strongest category of 1 authority.

See 553 F.2d at 467 n.8. But see Liberty Mutual Life Insurance

Co. v. Friedman, ........ 28 , 4 Cir. 1981, No, 80-1078.

Al3.

III.

Finally, we turn to the issue that prompted the Su-

preme Court to vacate and remand these cases for recon-

sideration in light of Marshall v. Barlow’s, Inc., 1978, 436

U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305. In our first de-

cision, we rejected the companies’ contention that the ex-

ecutive order and its regulations violated the fourth amend-

ment because they authorized warrantless searches of the

companies’ records. The holding relied heavily on two

cases that have created what is now known as the Colon-

nade-Biswell exception to the warrant requirement. See

Colonnade Catering Corp. v. United States, 1970, 397 U.S.

72, 90 S.Ct. 774, 25 L.Ed.2d 60 and United States v. Biswell,

1972, 406 U.S. 311, 92 S.Ct. 1593, 32 L.Ed.2d 87. Those two

cases upheld statutorily authorized, warrantless searches

of businesses in two heavily regulated industries, liquor

and firearms. The Colonnade and Biswell decisions have

been interpreted to mean that one who enters those busi-

nesses impliedly consents to warrantless inspections be-

cause such inspections are essential to the enforcement of

the regulatory scheme. Almeida-Sanchez v. United States,

1973, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596. Extend-

ing that implied consent concept to our cases, we con-

cluded that “where, as here, the Government validly

regulates any business, the Government has a right to

include in its regulations the requirement that certain

records be kept open to official inspection so that the ad-

ministrative agency can determine whether the company

is complying”. United States v. New Orleans Public Ser-

vice, Inc., 553 F.2d at 472.

Marshall v. Barlow’s Inc. limited the reach of the

Colonnade-Biswell exception. In so doing, it may have

cast doubt on our use of the implied consent concept we

derived from those cases. See generally, Note, Rationaliz-

Al4

ing Administrative Searches, 77 Mich.L.Rev. 1291, 1315-19

(1979). But that is a question we need not now reach, for

Barlow’s presents us with a firmer basis on which to up-

hold the inspection scheme erected by the regulations here.

[7] At issue in Barlow’s was the constitutionality of

§ 8(a) of the Occupational Safety and Health Act of 1970

(OSHA), 29 U.S.C. § 657(a), which authorized warrantless

searches of the business premises of employers covered

under the Act. The Secretary of Labor, who is charged

with enforcing OSHA, argued under Colonnade and Biswell

that the employer had impliedly consented to search, and

that in any case, warrantless searches were reasonable

under the fourth amendment because they were suf-

ficiently restricted by agency regulations and were essential

to effective enforcement of the Act. In rejecting both argu-

ments, the Supreme Court stated that OSHA was uncon-

stitutional “insofar as it purports to authorize inspections

without a warrant or its equivalent”. 436 U.S. at 325, 98

S.Ct. at 1827, 56 L.Ed.2d at 319 (emphasis added). We take

the italicized words to mean that a formal judicial war-

rant is not required in all administrative searches if the en-

forcement procedures contained in the relevant statutes and

regulations provide, in both design and practice, safeguards

roughly equivalent to those contained in traditional war-

rants. For instance, the Supreme Court in Barlow’s pointed

to several statutes that allow for resort to federal courts to

enforce administrative searches against unwilling parties,

by whatever order or remedy is appropriate. 436 U.S. at

321 nn. 18 & 19, 98 S.Ct. at 1825 nn. 18 & 19, 56 L.Ed.2d

at 317 nn. 18 & 19. If the statutory or regulatory scheme

provides for resort to the federal courts before an inspec-

tion is forced upon a party, then the inspection provisions

will not themselves run afoul of the fourth amendment.

The procedures at issue here, like the statutes cited in

Barlow’s fulfill that requirement. 41 C. F. R. § 60-1.26.

Al5

18] After that initial determination, it is then the

task of the district court to measure the specific search that

is sought against the broad fourth amendment test of rea-

sonableness”. Camara v. Municipal Court, 1967, 387 U.S.

523, 538-39, 87 S.Ct. 1717, 1735-36, 18 L.Ed.2d 930, 940-41.

The proper elements of such an inquiry necessarily must

vary with the nature and circumstances of the search that

is desired, although Barlow’s gives some general guidance

to the district court. One element of the question is

whether the proposed search is authorized by statute, and a

second is whether it is properly limited in scope. 436 U.S.

at 323, 98 S.Ct. at 1826, 56 L.Ed.2d at 318. A third element

should be an examination of how the agency chose to

initiate this particular search. The search will be reason-

able if based either on (1) specific evidence of an existing

violation, (2) “a showing that ‘reasonable legislative or

administrative standards for conducting an . . . inspection

are satisfied with respect to a particular [establishment]’”,

436 U.S. at 320-21, 98 S.Ct. at 1824, 56 L.Ed.2d at 316,

(quoting Camara, 387 U.S. at 538, 87 S.Ct. at 1736, 18

L.Ed.2d at 940), or (3) a showing that the search is “pur-

suant to an administrative plan containing specific neutral

criteria”. 436 U.S, at 323, 98 S.Ct. at 1826, 56 L.Ed.2d at 318.

It is important that “the decision to enter and inspect...

not be the product of the unreviewed discretion of the

enforcement officer in the field”. See v. Seattle, 1967, 387

USS. 541, 545, 87 S.Ct. 1737, 1740, 18 L.Ed.2d 943, 947.

[9] A district court may find other questions relevant

to the reasonableness of the proposed search under the

fourth amendment, but these three elements, at least, are

essential. We find no indication in the record, however,

that the district courts considered any of the three. Of

course, the first two are questions of law that we may

decide on appeal. Our first opinions in these cases have

already concluded that E.O. 11246 and the regulations

Als

thereunder are statutorily authorized. Neu Orleans Public

Service, 5 Cir. 1977, 553 F. 2d 459; Mississippi Power & Light,

5 Cir. 1977, 553 F.2d 480. The inspections sought here are

clearly within that statutory authority. Similarly, because

the searches are restricted to an inspection solely of busi-

ness records to test compliance with the affirmative action

program, they are properly limited in scope. But the third

inquiry is a factuai question, and the record does not pro-

vide us with enough information to reach a decision our-

selves. We must therefore remand to the district court for

that determination.”

If the district court finds that the requested searches

satisfy the fourth amendment standards of reasonableness

outlined above, there will be no further objections that

NOPSI and MP&L can raise, and the district court should

immediately issue the injunctions requested by the United

States. The government’s efforts to conduct a compliance

review of NOPSI date from 1969, and this action began in

1973. NOPSI’s fides may be as bona as when we first

relied on it in our June 1977 opinion, 553 F.2d at 474-75,

but the time has come to bring this litigation to a conclu-

sion, without further opportunity for delay.

The Court has considered all of the contentions the

appellants have argued orally or by brief, including the

contentions not discussed in this opinion.

We VACATE the orders entered by the district courts

and REMAND these cases for further proceedings con-

sistent with this opinion.

13. For a survey of the types of criteria courts have evaluated

to satisfy this inquiry, see generally Note, Camara, See, and Their

Progeny: Another Look at Administrative I ctions Under The

17 Amendment, 15 Colum. J. of L. & Prob. 61, 78-96

(1979).

Bl

APPENDIX B

U.S. v. MISSISSIPPI & L CO.

US. District Court,

Southern District of Mississippi

UNITED STATES OF AMERICA v. MISSISSIPPI

POWER & LIGHT COMPANY, No. J74-160(R), May 30,

1979; Judgment June 1, 1979

Full Text of Oral Opinion

RUSSELL, Chief Judge: — All right, since there has

been no evidentiary hearing and no testimony in this case,

and merely the briefs have been submitted on the law,

and what’s been before this court before, I thought it

best that we probably have the court reporter here to take

down the opinion of the court in case there is additional

review of the matter. So, briefly stating it, this case, of

course, the background — it’s been to the Supreme Court,

certiorari was granted, and the Fifth Circuit’s affirmance

of this opinion was stated in the Supreme Court’s opinion

vacated, and the case remanded for further consideration

in light of Marshall v. Barlow, Inc., which is referred in

436, U.S. 307, 436, U.S. 1942, which is a 1978 case. Now,

in the instant case, which is 553, Fed. 2d, 480 [14 FEP Cases

1730], the Fifth Circuit of 1977, was considered along with

an analogous case, which is the New Orleans Public Ser-

vice, Inc., which we refer to as NOPSI, in 553 Fed. 2d, 480

[14 FEP Cases 1734], and in both cases are now on re-

mand. This one to this court, and NOPSI to the District

Court in Louisiana.

B2

The Defendant’s motion raises many points and alleged

infirmities regarding the executive order, which is 11246.

In essence, the defendant seeks to re-open the entire case, or

states that the entire matter — the executive order 11246,

is invalid, but the defendants argue that since the entire

case was vacated, that the entire matter is therefore open

to re-litigation, but this is simply not the case. The Su-

preme Court vacated for consideration in light of Barlow.

Therefore, that is the only issue to be addressed in this

matter and that was the Fourth Amendment search prob-

lems that we had. The lower court is bound to comply

with the mandate of the appellate court, so and if the

cause is remanded for a specific purpose, any proceedings

inconsistent therewith is in error, as pointed out by Mef-

ford v. Gardner, 383 Fed.2d, 748, a Sixth Circuit opinion.

Thus, the case may properly be limited to a consideration

in light of Barlow, and defendant denied an opportunity

to re-open the entire case. There is no need to reconsider

what this court previously held and which the Fifth Circuit

Court affirmed. That is: One, the executive order, 11246,

is valid; and two, the rules and regulations issued pursuant

thereto are vacated or valid and have the force and effect

of law; and three, that Mississippi Power and Light Cor-

poration is a government contractor subject to executive

order; and four, Mississippi Power and Light Company has

violated the executive order by refusing to comply with

it. The only ground the Fifth Circuit Court differed on

was to dissolve this court’s general injunction and direct

the parties to utilize the government’s administrative con-

ciliation process, and I understand that was done during

the course of the argument before the Fifth Circuit Court

of Appeals, and this is now prayed for in Paragraph 3 of

this motion. Thus, the only issue the court need consider

is whether under Barlow, the defendant has a valid Fourth

Amendment objection to the executive order and the rules

B3

and regulations. Section 202 of the order provides that

the non-discrimination clause will be incorporated into

every government contract. In Section 202(5), provides

that government contractors, Mississippi Power and Light,

shall provide access to their books, records and so forth, to

determine compliance with the executive order. Having

agreed by contract as previously held and affirmed, as to

Section 202(5), Mississippi Power and Light Company has,

in effect, and fact, consented to the search, and given con-

sent, the administrative searches are not unreasonable un-

der the Fourth Amendment. This seems a proper case for

application of acceptance found in Collonade and Biswell,

which was a Fifth Circuit case, and stating in that, 2(a)

that a defendant of public utilities is subject to close regu-

lation and (b) the executive order has been in existence

for about forty years. This shows a long pattern of regula-

tion of government contractors. These factors lead to the

conclusion that defendant has no reasonable expectation

of privacy, and as stated in Marshall v. Barlow, which has

been stated here previously, the element that distinguishes

these enterprises from ordinary business in their long

tradition of close government supervision, of which any

person, who chooses to enter such a business must always

be aware. A central difference between those cases, Col-

lonade and Biswell, which we referred to, and this one

which is the Barlow case, is that businessmen, engaged in

such federally licensed and regulated enterprises, accept

the burdens as well as the benefits of that trade, whereas,

the petitioner here, that was in Barlow, was not engaged

in any regulated or licensed business, but businessmen in

a regulated industry, in effect, consent to the restrictions

placed upon them. That’s the holding in Marshall v. Bar-

low. Unlike Section 8(a) of the OSHA considered in

Barlow, the order and regulations here are not self-ex-

B4

ecuted. That is, if entry is refused, the secretary may

refer the matter to the Justice Department to seek com-

pliance as stated in the plaintiff’s brief at Page 12, “The

compliance mechanism is identical to those in other acts,

like the Mining Safety Act, which the Supreme Court re-

ferred to approvingly in Barlow. Under this enforcement

mechanism, Mississippi Power and Light Company’s rights

have been more than amply protected. As noted, Mis-

sissippi Power and Light Company having chosen to con-

tract with the government and submit itself to a full

arsenal of governmental regulations, must accept the bur-

dens as well as the benefits of its trade,” and that’s a

quotation. So thus I feel that the government’s position

is well taken, and that will be the ruling of the court.

All right, then. I believe that under the motion that

the government has made, that Mississippi Power and

Light Company will be authorized to proceed at once by

administrative action and that to also direct Mississippi

Power and Light Company, the Department of Labor shall

in good faith seek to resolve through conciliation the issue

of the company’s substantive compliance with the execu-

tive order and the rules and regulations issued pursuant

thereto, within ninety days from the entry of this judg-

ment. Naturally, this court will retain jurisdiction of this

action, for entry of all orders, judgments, or decrees which

may be necessary to effectuate Mississippi Power and Light

Company’s full and complete compliance with the execu-

tive order and rules and regulations. So, that will be the

ruling of the court. You may furnish me with an order

to that effect.

Cl

APPENDIX C

(Filed April 27, 1981)

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

October Term, 19

No. 79-2636

D. C. Docket No. CA 74 160 R

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

MISSISSIPPI POWER & LIGHT COMPANY,

Defendant-Appellant.

Appeal from the United States District Court for the

Southern District of Mississippi

Before WISDOM, GARZA and REAVLEY, Circuit Judges.

JUDGMENT

This cause came on to be heard on the transcript of the

record from the United States District Court for the

Southern District of Mississippi, and was argued by

counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the order of the

District Court appealed from, in this cause be, and the

same is hereby, vacated; and that this cause be, and the

same is hereby remanded for further proceedings to the

said District Court in accordance with the opinion of this

Court;

C2

IT IS FURTHER ORDERED that defendant-appellant

be condemned to pay two-thirds of the costs on appeal to

be taxed by the Clerk of this Court; and that the plaintiff-

appellee be condemned to pay one-third of said costs.

MARCH 6, 1981

ISSUED AS MANDATE: APR 23 1981

Di

APPENDIX D

E.O. 11246 ON NONDISCRIMINATION UNDER

FEDERAL CONTRACTS

Text of Executive Order 11246, signed by President

Johnson September 24, 1965, as amended by Executive

Order 11375, signed October 13, 1967. Amended Part I,

effective November 12, 1967, was superseded by Executive

Order 11478 (See 401:1101), amended to add sex as pro-

hibited basis of discrimination, effective October 13, 1968.

Under and by virtue of the authority vested in me

as President of the United States by the Constitution and

statutes of the United States, it is ordered as follows:

PART I—Nondiscrimination in

Government Employment

Ed. ſote: Secs. 101-105, barring discrimination in fed-

eral employment on account of race, color, religion, sex,

or national origin, were superseded by Executive Order

11478. These provisions called for affirmative-action pro-

grams for equal opportunity at the agency level under

general supervision of the Civil Service Commission; estab-

lishment of complaint procedures at each agency with ap-

peal to the Commission; and promulgation of regulations

by CSC. (401: 1101.)

PART II—NONDISCRIMINATION IN EMPLOY-

MENT BY GOVERNMENT CONTRACTORS

AND SUBCONTRACTORS

Subpart A—Duties of the Secretary of Labor

Sec. 201. The Secretary of Labor shall be responsible

for the administration of Parts II and III of this Order

D2

and shall adopt such rules and regulations and issue such

orders as he deems necessary and appropriate to achieve

the purposes thereof.

Subpart B—Contractors’ Agreernents

Sec. 202. Except in contracts exempted in accordance

with Section 204 of this Order, all Government contracting

agencies shall include in every Government contract here-

after entered into the following provisions:

“During the performance of this contract, the contrac-

tor agrees as follows:

“(1) The contractor will not discriminate against any

employee or applicant for employment because of race,

color, religion, sex, or national origin. The contractor will

take affirmative action to ensure that applicants are em-

ployed, and that employees are treated during employment,

without regard to their race, color, religion, sex, or national

origin. Such action shall include, but not be limited to

the following: employment, upgrading, demotion, or trans-

fer; recruitment or recruitment advertising; layoff or ter-

mination; rates of pay or other forms of compensation;

and selection for training, including apprenticeship. The

contractor agrees to post in conspicuous places, available

to employees and applicants for employment, notices to

be provided by the contracting officer setting forth the

provisions of this nondiscrimination clause.

“(2) The contractor will, in all solicitations or adver-

tisements for employees placed by or on behalf of the

contractor, state that all qualified applicants will receive

consideration for employment without regard to race, color,

religion, sex, or national origin.

“(3) The contractor will send to each labor union

or representative of workers with which he has a collec-

D3

tive bargaining agreement or other contract or understand-

ing, a notice, to be provided by the agency contracting

officer, advising the labor union or workers’ representative

of the contractor’s commitments under Section 202 of Exe-

cutive Order No. 11246 of September 24, 1965, and shall

post copies of the notice in conspicuous places available

to employees and applicants for employment.

“(4) The contractor will comply with all provisions

of Executive Order No. 11246 of September 24, 1965, and

of the rules, regulations, and relevant orders of the Secre-

tary of Labor.

“(5) The contractor will furnish all information and

reports required by Executive Order No. 11246 of Septem-

ber 24, 1965, and by the rules, regulations, and orders

of the Secretary of Labor, or pursuant thereto, and will

permit access to his books, records, and accounts by the

contacting agency and the Secretary of Labor for purposes

of investigation to ascertain compliance with such rules,

regulations, and orders.

“(6) In the event of the contractor’s noncompliance

with the nondiscrimination clauses of this contract or with

any of such rules, regulations, or orders, this contract

may be cancelled, terminated, or suspended in whole or

in part and the contractor may be declared ineligible for

further Government contracts in accordance with proce-

dures authorized in Executive Order No. 11246 of Septem-

ber 24, 1965, and such other sanctions may be imposed

and remedies invoked as provided in Executive Order No.

11246 of September 24, 1965, or by rule, regulation, or

order of the Secretary of Labor, or as otherwise provided

by law.

“(7) The contractor will include the provisions of

Paragraphs (1) through (7) in every subcontract or pur-

D4

chase order unless exempted by rules, regulations, or or-

ders of the Secretary of Labor issued pursuant to Section

204 of Executive Order No. 11246 of September 24, 1965,

so that such provisions will be binding upon each subcon-

tractor or vendor. The contractor will take such action

with respect to any subcontract or purchase order as the

contracting agency may direct as a means of enforcing

such provisions including sanctions for noncompliance:

Provided, however, That in the event the contractor be-

comes involved in, or is threatened with, litigation with

a subcontractor or vendor as a result of such direction

by the contracting agency, the contractor may request

the United States to enter into such litigation to protect

the interests of the United States.”

Sec. 203. (a) Each contractor having a contract con-

taining the provisions prescribed in Section 202 shall file,

and shall cause each of his subcontractors to file, Compli-

ance Reports with the contracting agency or the Secretary

of Labor as may be directed. Compliance Reports shall

be filed within such times and shall contain such informa-

tion as to the practices, policies, programs, and employment

policies, programs, and employment statistics of the con-

tractor and each subcontractor, and shall be in such form,

as the Secretary of Labor may prescribe.

(b) Bidders or prospective contractors or subcontrac-

tors may be required to state whether they have partici-

pated in any previous contract subject to the provisions

of this Order, or any preceding similar Executive order,

and in that event to submit, on behalf of themselves and

their proposed subcontractors, Compliance Reports prior

to or as an initial part of their bid or negotiation of

a contract.

(c) Whenever the contractor or subcontractor has

a collective bargaining agreement or other contract or

DS

understanding with a labor union or an agency referring

workers or providing or supervising apprenticeship or

training for such workers, the Compliance Report shall

include such information as to such labor union’s or

agency’s practices and policies affecting compliance as the

Secretary of Labor may prescribe: Provided, That to the

extent such information is within the exclusive possession

of a labor union or an agency referring workers of pro-

viding or supervising apprenticeship or training and such

labor union or agency shall refuse to furnish such informa-

tion to the contractor, the contractor shall so certify to

the contracting agency as part of its Compliance Report

and shall set forth what efforts he has made to obtain

such information.

(d) The contracting agency or the Secretary of Labor

may direct that any bidder or prospective contractor or

subcontractor shall submit, as part of his Compliance Re-

port, a statement in writing, signed by an authorized officer

or agent on behalf of any labor union or any agency

referring workers or providing or supervising apprentice-

ship or other training, with which the bidder or prospec-

tive contractor deals, with supporting information, to the

effect that the signer’s practices and policies do not discrim-

inate on the grounds of race, color, religion, sex, or national

origin, and that the signer either will affirmatively coop-

erate in the implementation of the policy and provisions

of this Order or that it consents and agrees that recruit-

ment, employment, and the terms and conditions of em-

ployment under the proposed contract shall be in accor-

dance with the purposes and provisions of the Order. In

the event that the union, or the agency shall refuse to

execute such a statement, the Compliance Report shall

so certify and set forth what efforts have been made

to secure such a statement and such additional factual

Dad

material as the contracting agency or the Secretary of

Labor may require.

Sec. 204. The Secretary of Labor may, when he deems

that special circumstances in the national interest so re-

quire, exempt a contracting agency from the requirement

of including any or all of the provisions of Section 202

of this Order in any specific contract, subcontract, or pur-

chase order. The Secretary of Labor may, by rule or

regulation, also exempt certain classes of contracts, subcon-

tracts, or purchase orders (1) whenever work is to be

or has been performed outside the United States and no

recruitment of workers within the limits of the United

States is involved; (2) for standard commercial supplies

or raw materials; (3) involving less than specified amounts

of money or specified numbers of workers; or (4) to the

extent that they involve subcontracts below a specified

tier. The Secretary of Labor may also provide, by rule,

regulation, or order, for the exemption of facilities of a

contractor which are in all respects separate and distinct

from activities of the contractor related to the performance

of the contract: Provided, That such an exemption will

not interfere with or impede the effectuation of the pur-

poses of this Order: And provided further, That in the

absence of such an exemption all facilities shall be covered

by the provisions of this Order.

Subpart C—Powers and Duties of the Secretary of

Labor and the Contracting Agencies

Sec. 205. Each contracting agency shall be primarily

responsible for obtaining compliance with the rules, regula-

tions, and orders of the Secretary of Labor with respect

to contracts entered into by such agency or its contractors.

All contracting agencies shall comply with the rules of

the Secretary of Labor in discharging their primary respon-

D7.

sibility for securing compliance with the provisions of con-

tracts and otherwise with the terms of this Order and

of the rules, regulations, and orders of the Secretary of

Labor issued pursuant to this Order. They are directed

to cooperate with the Secretary of Labor and to furnish

the Secretary of Labor such information and assistance

as he may require in the performance of his functions

under this Order. They are further directed to appoint

or designate, from among the agency’s personnel, compli-

ance officers. It shall be the duty of such officers to

seek compliance with the objectives of this Order by con-

ference, conciliation, mediation, or persuasion.

Sec. 206. (a) The Secretary of Labor may investigate

the employment practices of any Government contractor

or subcontractor, or initiate such investigation by the ap-

propriate contracting agency, to determine whether or not

the contractual provisions specified in Section 202 of this

Order have been violated. Such investigation shall be

conducted in accordance with the procedures established

by the Secretary of Labor and the investigating agency

shall report to the Secretary of Labor any action taken

or recommended.

(b) The Secretary of Labor may receive and investi-

gate or cause to be investigated complaints by employees

or prospective employees of a Government contractor or

subcontractor which allege discrimination contrary to the

contractual provisions specified in Section 202 of this Order.

If this investigation is conducted for the Secretary of Labor

by a contracting agency, that agency shall report to the

Secretary what action has been taken or is recommended

with regard to such complaints.

Sec. 207. The Secretary of Labor shall use his best

efforts, directly and through contracting agencies, other

D8:

interested Federal, State, and local agencies, contractors,

and all other available instrumentalities to cause any labor

union engaged in work under Government contracts or

any agency referring workers or providing or supervising

apprenticeship or training for or in the course of such

work to cooperate in the implementation of the purposes

of this Order. The Secretary of Labor shall, in appropriate

cases, notify the Equal Employment Opportunity Commis-

sion, the Department of Justice, or other appropriate Fed-

eral agencies whenever it has reason to believe that the

practices of any such labor organization or agency violate

Title VI or Title VII of the Civil Rights Act of 1964

or other provision of Federal law.

Sec. 208. (a) The Secretary of Labor, or any agency,

officer, or employee in the executive branch of the Govern-

ment designated by rule, regulation, or order of the Secre-

tary, may hold such hearings, public or private, as the

Secretary may deem advisable for compliance, enforce-

ment, or educational purposes.

(b) The Secretary of Labor may hold, or cause to

be held, hearings in accordance with Subsection (a) of

this Section prior to imposing, ordering, or recommending

the imposition of penalties and sanctions under this Order.

No order for debarment of any contractor from further

Government contracts under Section 209(a) (6) shall be

made without affording the contractor an opportunity for

a hearing.

Subpart D—Sanctions and Penalties

Sec. 209. (a) In accordance with such rules, regula-

tions, or orders as the Secretary of Labor may issue or

adopt, the Secretary or the appropriate contracting agency

may:

D9

(1) Publish, or cause to be published, the names

of contractors or unions which it has concluded have com-

plied or have failed to comply with the provisions of this

Order or of the rules, regulations, and orders of the Secre-

tary of Labor.

(2) Recommend to the Department of Justice that,

in cases in which there is substantial or material violation

or the threat of substantial or material violation of the

contractual provisions set forth in Section 202 of this Order,

appropriate proceedings be brought to enforce those provi-

sions, including the enjoining, within the limitations of

applicable law, of organizations, individuals, or groups who

prevent directly or indirectly, or seek to prevent directly

or indirectly, compliance with the provisions of this Order.

(3) Recommend to the Equal Employment Opportu-

nity Commission or the Department of Justice that appro-

priate proceedings be instituted under Title VII of the

Civil Rights Act of 1964.

(4) Recommend to the Department of Justice that

criminal proceedings be brought for the furnishing of false

information to any contracting agency or to the Secretary

of Labor as the case may be.

(5) Cancel, terminate, suspend, or cause to be can-

celled, terminated, or suspended, any contract, or any por-

tion or portions thereof, for failure of the contractor or

subcontractor to comply with the nondiscrimination provi-

sions of the contract. Contracts may be cancelled, termi-

nated, or suspended absolutely or continuance of contracts

may be conditioned upon a program for future compliance

approved by the contracting agency.

(6) Provide that any contracting agency shall refrain

from entering into further contracts, or extensions or other

D10

modifications of existing contracts, with any noncomplying

contractor, until such contractor has satisfied the Secre-

tary of Labor that such contractor has established and

will carry out personnel and employment policies in com-

pliance with the provisions of this Order.

(b) Under rules and regulations prescribed by the

Secretary of Labor, each contracting agency shall make

reasonable efforts within a reasonable time limitation to

secure compliance with the contract provisions of this

Order by methods of conference, conciliation, mediation,

and persuasion before proceedings shall be instituted under

Subsection (a) (2) of this Section, or before a contract

shall be cancelled or terminated in whole or in part under

Subsection (a) (5) of this Section for failure of a con-

tractor or subcontractor to comply with the contract provi-

sions of this Order.

Sec. 210. Any contracting agency taking any action

authorized by this Subpart, whether on its own motion,

or as directed by the Secretary of Labor, or under the

rules and regulations of the Secretary, shall promptly no-

tify the Secretary of such action. Whenever the Secretary

of Labor makes a determination under this Section, he

shall promptly notify the appropriate contracting agency

of the action recommended. The agency shall take such

action and shall report the results thereof to the Secretary

of Labor within such time as the Secretary shall specify.

Sec. 211. If the Secretary shall so direct, contracting

agencies shall not enter into contracts with any bidder

or prospective contractor unless the bidder or prospective

contractor has satisfactorily complied with the provisions

of this Order or submits a program for compliance ac-

ceptable to the Secretary of Labor or, if the Secretary

so authorizes, to the contracting agency.

Dil

Sec. 212. Whenever a contracting agency cancels or

terminates a contract, or whenever a contractor has been

debarred from further Government contracts, under Sec-

tion 209 (a) (6) because of noncompliance with ihe con-

tract provisions with regard to nondiscrimination, the Sec-

retary of Labor or the contracting agency involved, shall

promptly notify the Comptroller General of the United

States. Any such debarment may be rescinded by the

Secretary of Labor or by the contracting agency which

imposed the sanction.

Subpart E—Certificates of Merit

Sec. 213. The Secretary of Labor may provide for

issuance of a United States Government Certificate of

Merit to employers or labor unions, or other agencies which

are or may hereafter be engaged in work under Govern-

ment contracts, if the Secretary is satisfied that the person-

nel and employment practices of the employer, or that

the personnel training, apprenticeship, membership, griev-

ance and representation, upgrading, and other practices

and policies of the labor union or other ager conform

to the purposes and provisions of this Order.

Sec. 214. Any Certificate of Merit may at any time

be suspended or revoked by the Secretary of Labor if

the holder thereof, in the judgment of the Secretary, has

failed to comply with the provisions of this Order.

Sec. 215. The Secretary of Labor may provide for

the exemption of any employer, labor union, or other

agency from any reporting requirements imposed under

or pursuant to this Order if such employer, labor union,

or other agency has been awarded a Certificate of Merit

which has not been suspended or revoked.

D2

PART III—NONDISCRIMINATION PROVISIONS

IN FEDERALLY ASSISTED CONSTRUCTION

CONTRACTS

Sec. 301. Each executive department and agency

which administers a program involving Federal financial

assistance shall require as a condition for the approval

of any grant, contract, loan, insurance, or guarantee there-

under, which may involve a construction contract, that

the applicant for Federal assistance undertake and agree

to incorporate, or cause to be incorporated, into all con-

struction contracts paid for in whole or in part with funds

obtained from the Federal Government or borrowed on

the credit of the Federal Government pursuant to such

grant, contract, loan, insurance, or guarantee, or under-

taken pursuant to any Federal program involving such

grant, contract, loan, insurance, or guarantee, the provi-

sions prescribed for Government contracts by Section 203

of this Order or such modification thereof, preserving in

substance the contractor’s obligations thereunder, as may

be approved by the Secretary of Labor, together with

such additional provisions as the Secretary deems appro-

priate to establish and protect the interest of the United

States in the enforcement of those obligations. Each such

applicant shall also undertake and agree (1) to assist and

cooperate actively with the administering department or

agency and the Secretary of Labor in obtaining the com-

pliance of contractors and subcontractors with those con-

tract provisions and with the rules, regulations, and rele-

vant orders of the Secretary, (2) to obtain and to furnish

to the administering depariment or agency and to the

Secretary of Labor such information as they may require

for the supervision of such compliance, (3) to carry out

sanctions and penalties for violation of such obligations

imposed upon contractors and subcontractors by the Secre-

tary of Labor or the administering department or agency

Di3.

pursuant to Part II, Subpart D, of this Order, and (4)

to refrain from entering into any contract subject to this

Order, or extension or other modification of such a contract

with a contractor debarred from Government contracts

under Part II, Subpart D, of this Order.

Sec. 302. (a) “Construction contract” as used in this

Order means any contract for the construction, rehabilita-

tion, alteration, conversion, extension, or repair of build-

ings, highways, or other improvements to real property.

(b) The provisions of Part II of this Order shall

apply to such construction contracts, and for purposes of

such application the administering department or agency

shall be considered the contracting agency referred to

therein.

(e) The term “applicant” as used in this Order means

an applicant for Federal assistance or, as determined by

agency regulation, other program participant, with respect

to whom an application for any grant, contract, loan, insur-

ance, or guarantee is not finally acted upon prior to the

effective date of this Part, and it includes such an applicant

after he becomes a recipient of such Federal assistance.

Sec. 303. (a) Each administering department and

agency shall be responsible for obtaining the compliance

of such applicants with their undertakings under this

Order. Each administering department and agency is di-

rected to cooperate with the Secretary of Labor, and to

furnish the Secretary such information and assistance as

he may require in the performance of his functions under

this Order.

(b) In the event an applicant fails and refuses to

comply with his undertakings, the administering depart-

ment or agency may take any or all of the following

actions: (1) cancel, terminate, or suspend in whole or

214

in part the agreement, contract, or other arrangement with

such applicant with respect to which the failure and refusal

occurred; (2) refrain from extending any further assistance

to the applicant under the program with respect to which

the failure or refusal occurred until satisfactory assurance

of future compliance has been received from such appli-

cant; and (3) refer the case to the Department of Justice

for appropriate legal proceedings.

(c) Any action with respect to an applicant pursuant

to Subsection (b) shall be taken in conformity with Sec-

tion 602 of the Civil Rights Act of 1964 (and the regula-

tions of the administering department or agency issued

thereunder), to the extent applicable. In no case shall

action be taken with respect to an applicant pursuant

to Clause (1) or (2) of Subsection (b) without notice and

opportunity for hearing before the administering depart-

ment or agency.

Sec. 304. Any executive department or agency which

imposes by rule, regulation, or order requirements of non-

discrimination in employment, other than requirements

imposed pursuant to this Order, may delegate to the Secre-

tary of Labor by agreement such responsibilities with re-

spect to compliance standards, reports, and procedures as

would tend to bring the administration of such require-

ments into conformity with the administration of require-

ments imposed under this Order: Provided, That actions

to effect compliance by recipients of Federal financial as-

sistance with requirements imposed pursuant to Title VI

of the Civil Rights Act of 1964 shall be taken in conformity

with the procedures and limitations prescribed in Section

602 thereof and the regulations of the administering de-

partment or agency issued thereunder.

D15

PART IV—MISCELLANEOUS

Sec. 401. The Secretary of Labor may delegate to

any officer, agency, or employee in the Executive branch

of the Government, any function or duty of the Secretary

under Parts II and III of this Order, except authority

to promulgate rules and regulations of a general nature.

Sec. 402. The Secretary of Labor shall provide ad-

ministrative support for the execution of the program

known as the “Plans for Progress.”

Sec. 403. (a) Executive Orders Nos. 10590 (January

18, 1955), 10722 (August 5, 1957), 10925 (March 6, 1961),

11114 (June 22, 1963), and 11162 (July 28, 1964), are

hereby superseded and the President’s Committee on Equal

Employment Opportunity established by Executive Order

No. 10925 is hereby abolished. All records and property

in the custody of the Committee shall be transferred to

the Civil Service Commission and the Secretary of Labor,

as appropriate.

(b) Nothing in this Order shall be deemed to relieve

any person of any obligation assumed or imposed under

or pursuant to any Executive Order superseded by this

Order. All rules, regulations, orders, instructions, designa-

tions, and other directives issued by the President’s Com-

mittee on Equal Employment Opportunity and those issued

by the heads of various departments or agencies under

or pursuant to any of the Executive orders superseded

by this Order, shall, to the extent that they are not in-

consistent with this Order, remain in full force and effect

unless and until revoked or superseded by appropriate

authority. References in such directives to provisions of

the superseded orders shall be deemed to be references

to the comparable provisions of this Order.

D16

Sec. 404. The General Services Administration shall

take appropriate action to revise the standard Government

contract forms to accord with the provisions of this Order

and of the rules and regulations of the Secretary of Labor.

Sec. 405. This Order shall become effective 30 days

after the date of this Order.

El

APPENDIX E

Office of Federal Contract Compliance Programs

Department of Labor

Rules and Regulations

Following is the text of FOCCP Rules and Regulations,

codified as 41 CFR 60-1, which reads as last amended at 45

FR 9271, effective February 12, 1980. Revisions to these

regulations promulgated on December 30, 1980 (45 Fed.

Reg. 86216) have been stayed pending further review.

46 Fed. Reg. 9950 (Jan. 30, 1981).

Chapter 60—Office of Federal Contract Compliance Pro-

grams, Equal Employment Opportunity, Department

of Labor

Part 60-1—Obligations of Contractors and Subcontractors

Subpart A—Preliminary Matters; Equal Opportunity

Clause; Compliance Reports

Sec.

60-1.1 Purposes and application.

60-1.2 Administrative responsibility.

60-1.3 Definitions.

60-1.4 Equal opportunity clause.

60-1.5 Exemptions.

60-1.6 [Reserved].

60-1.7 Reports and other required information.

60-1.8 Segregated facilities.

60-1.9 Compliance by labor unions and by recruiting and

training agencies.

60-1.10 Foreign government practices.

E2

Subpart B—General Enforcement Compliance Review and

Complaint Procedure

60-1.20

60-1.21

60-1.22

60-1.23

60-1.24

60-1.25

60-1.26

60-1.27

60-1.28

60-1.29

60-1.30

60-1.31

60-1.32

60-1.33

60-1.34

Compliance reviews.

Filing complaints.

Where to file.

Contents of complaint.

Processing of matters.

Assumption of jurisdiction by or referrals to the

Director.

Enforcement proceedings.

Sanctions and penalties.

Show cause notices.

Preaward notices.

Contract ineligibility list.

Reinstatement of ineligible prime contractors and

subcontractors.

Intimidation and interference.

Conciliation Agreements.

Violation of a conciliation agreement or letter of

commitment.

Subpart C—Ancillary Matters

60-1.40

60-1.41

60-1.42

60-1.43

60-1.44

60-1.45

60-1.46

60-1.47

Affirmative action compliance programs.

Solicitations or advertisements for employees.

Notices to be posted.

Access to records and site of employment.

Rulings and interpretations.

Existing contracts and subcontracts.

Delegation of authority by the Director.

Effective date.

E3

SUBPART A—PRELIMINARY MATTERS; EQUAL OP-

PORTUNITY CLAUSE; COMPLIANCE REPORTS

§ 60-1.1 Purpose and application.

The purpose of the regulations in this part is to achieve

the aims of Parts II, III, and IV of Executive Order 11246

for the promotion and insuring of equal opportunity for all

persons, without regard to race, color, religion, sex, or na-

tional origin, employed or seeking employment with Gov-

ernment contractors or with contractors performing under

federally assisted construction contracts. The regulations

in this part apply to all contracting agencies of the Govern-

ment and to contractors and subcontractors who perform

under Government contracts, to the extent set forth in

this part. The regulations in this part also apply to all

agencies of the Government administering programs in-

volving Federal financial assistance which may include a

construction contract, and to all contractors and subcontrac-

tors performing under construction contracts which are re-

lated to any such programs. The procedures set forth in the

regulations in this part govern all disputes relative to a

contractor’s compliance with his obligations under the

equal opportunity clause regardless of whether or not his

contract contains a “Disputes” clause. Failure of a con-

tractor or applicant to comply with any provision of the

regulations in this part shall be grounds for the imposition

of any or all of the sanctions authorized by the order. The

regulations in this part do not apply to any action taken to

effect compliance with respect to employment practices

subject to Title VI of the Civil Rights Act of 1964. The

rights and remedies of the Government hereunder are not

exclusive and do not affect rights and remedies provided

elsewhere by law, regulation, or contract; neither do the

regulations limit the exercise by the Secretary of Govern-

EA

ment agencies of powers not herein specifically set forth,

but granted to them by the order.

§ 60-1.2 Administrative responsibility.

The Director has been delegated authority and assigned

responsibility for carrying out the responsibilities assigned

to the Secretary under the Executive order. All corre-

spondence regarding the order should be directed to the

Director, Office of Federal Contract Compliance, U.S. De-

partment of Labor, 200 Constitution Avenue NW., Wash-

ington, D.C. 20210.

§ 60-1.3 Definitions.

“Administering agency” means any department, agency

and establishment in the executive branch of the Govern-

ment, including any wholly owned Government corpora-

tion, which administers a program involving federally as-

sisted construction contracts.

“Administrative law judge” means an administrative

law judge appointed as provided in 5 U.S.C. 3105 and Sub-

part B of Part 930 of Title 5 of the Code of Federal Regula-

tions (see 37 FR 16787) and qualified to preside at hear-

ings und 5 U.S. C. 557.

“Agency” means any contracting or any administer-

ing agency of the Government.

“Applicant” means an applicant for Federal assistance

involving a construction contract, or other participant in

a program involving a construction contract as determined

by regulation of an administering agency. The term also

includes such persons after they become recipients of such

Federal assistance.

“Construction work” means the construction, rehabili-

tation, alteration, conversion extension, demolition or re-

E5

pair of buildings, highways, or other changes or improve-

ments to real property, including facilities providing utility

services. The term also includes the supervision, inspec-

tion and other onsite functions incidental to the actual

construction.

“Contract” means any Government contract or any

federally assisted construction contract.

“Contracting agency” means any department, agency,

establishment, or instrumentality in the executive branch

of the Government, including any wholly owned Govern-

ment corporation, which enters into contracts.

“Contractor” means, unless otherwise indicated, a

prime contractor or subcontractor.

“Director” means the Director, Office of Federal Con-

tract Compliance Programs (OFCCP), U.S. Department of

Labor or any person to whom he delegates authority under

the regulations in this chapter.

“Equal opportunity clause” means the contract provi-

sions set forth in § 60-1.4 (a) or (b), as appropriate.

“Federally assisted construction contract” means any

agreement or modification thereof between any applicant

and a person for construction work which is paid for in

whole or in part with funds obtained from the Govern-

ment or borrowed on the credit of the Government pur-

suant to any Federal program involving a grant, contract,

loan, insurance, or guarantee, or undertaken pursuant to

any Federal program involving such grant, contract, loan,

insurance, or guarantee, or any application or modification

thereof approved by the Government for a grant, contract,

loan, insurance, or guarantee under which the applicant

itself participates in the construction work.

“Government” means the government of the United

States of America.

E6

“Government contract” means any agreement or modi-

fication thereof between any contracting agency and any

person for the furnishing of supplies or services or for

the use of real or personal property, including lease ar-

rangements. The term “services”, as used in this section

includes, but is not limited to the following services: Util-

ity construction, transportation, research, insurance, and

fund depository. The term “Government contract” does

not include (1) agreements in which the parties stand in

the relationship of employer and employee, and (2) fed-

erally assisted construction contracts.

“Minority group” as used herein shall include, where

appropriate, female employees and perspective female em-

ployees.

“Modification” means any alteration in the terms and

conditions of a contract, including supplemental agree-

ments, amendments, and extensions.

“Order,” “Executive Order,” or “Executive Order

11246” means parts II, III, and IV of the Executive Order

11246 dated September 24, 1965 (30 FR 12319), any Ex-

ecutive order amending such order, and any other Ex-

ecutive order superseding such order.

“Person” means any natural person, corporation, part-

nership, unincorporated association, State or local govern-

ment, and any agency, instrumentality, or subdivision of

such a government.

“Prime contractor” means any person holding a con-

tract and, for the purposes of Subpart B of this part, any

person who has held a contract, subject to the order.

“Recruiting and training agency” means any person

who refers workers to any contractor or subcontractor or

who provides for employment by any contractor or sub-

contractor.

E/

“Rules, regulations, and relevant orders of the Sec-

retary of Labor“ used in paragraph (4) of the equal op-

portunity clause means rules, regulations, and relevant or-

ders of the Secretary of Labor or his designee issued pur-

suant to the order.

Secretary“ means the Secretary of Labor, U.S. De-

partment of Labor.

Site of construction” means the general physical loca-

tion of any building, highway, or other change or improve-

ment to real property which is undergoing construction,

rehabilitation, alteration, conversion, extension, demoli-

tion, or repair and any temporary location or facility at

which a contractor, subcontractor, or other participating

party meets a demand or performs a function relating to

the contract or subcontract.

“Subcontract” means any agreement or arrangement

between a contractor and any person (in which the parties

do not stand in the relationship of an employer and an

employee) :

(1) For the furnishing of supplies or services or for

the use of real or personal property, including lease ar-

rangements, which, in whole or in part, is necessary to

the performance of any one or more contracts; or

(2) Under which any portion of the contractor’s ob-

ligation under any one or more contracts is performed,

undertaken, or assumed.

“Subcontractor” means any person holding a subcon-

tract and, for the purposes of Subpart B of this part, any

person who has held a subcontract subject to the order.

The term “First-tier subcontractor” refers to a subcon-

tractor holding a subcontract with a prime contractor.

“United States” as used herein shall include the sev-

eral States, the District of Columbia, the Commonwealth

E8

of Puerto Rico, the Panama Canal Zone, and the possessions

of the United States.

§ 60-1.4 Equal opportunity clause.

(a) Government contracts Except as otherwise pro-

vided, each contracting agency shall include the following

equal opportunity clause contained in section 202 of the

order in each of its Government contracts (and modifica-

tions thereof if not included in the original contract) :

During the performance of this contract, the contractor

agrees as follows:

(1) The contractor will not discriminate against any

employee or applicant for employment because of race,

color, religion, sex, or national origin. The contractor will

take affirmative action to ensure that applicants are em-

ployed, and that employees are treated during employment,

without regard to their race, color, religion, sex, or national

origin. Such action shall include, but not be limited to

the following: Employment, upgrading, demotion, or trans-

fer, recruitment or recruitment advertising; layoff or termi-

nation; rates of pay or other forms of compensation; and

selection for training, including apprenticeship. The con-

tractor agrees to post in conspicuous places, available to

employees and applicants for employment, notices to be

provided by the contracting officer setting forth the pro-

visions of this non-discrimination clause.

(2) The contractor will, in all solicitations or adver-

tisements for employees placed by or on behalf of the con-

tractor, state that all qualified applicants will receive con-

sideration for employment without regard to race, color,

religion, sex, or national origin.

(3) The contractor will send to each laber union or

representative of workers with which he has a collective

bargaining agreement or other contract or understanding, a

notice to be provided by the agency contracting officer,

advising the labor union or workers’ representative of the

contractor’s commitments under section 202 of Executive

Order 11246 of September 24, 1965, and shall post copies

of the notice in conspicuous places available to employees

and applicants for employment.

(4) The contractor will comply with all provisions of

Executive Order 11246 of September 24, 1965, and of the

rules, regulations, and relevant orders of the Secretary of

Labor.

(5) The contractor will furnish all information and

reports required by Executive Order 11246 of September

24, 1965, and by the rules, regulations, and orders of the

Secretary of Labor, or pursuant thereto, and will permit

access to his books, records, and accounts by the contract-

ing agency and the Secretary of Labor for purposes of in-

vestigation to ascertain compliance with such rules, regula-

tions, and orders.

(6) In the event of the contractor’s noncompliance

with the nondiscrimination clauses of this contract or with

any of such rules, regulations, or orders, this contract may

be canceled, terminated or suspended in whole or in part

and the contractor may be declared ineligible for further

Government contracts in accordance with procedures au-

thorized in Executive Order 11246 of September 24, 1965,

and such other sanctions may be imposed and remedies

invoked as provided in Executive Order 11246 of Sep-

tember 24, 1965, or by rule, regulation, or order of the

Secretary of Labor, or as otherwise provided by law.

(7) The contractor will include the provisions of

paragraphs (1) through (7) in every subcontract or pur-

chase order unless exempted by rules, regulations, or orders

E10

of the Secretary of Labor issued pursuant to section 204 of

Executive Order 11246 of September 24, 1965, so that such

provision will be binding upon each subcontractor or ven-

dor. The contractor will take such action with respect

to any subcontract or purchase order as may be directed

by the Secretary of Labor as a means of enforcing such

provisions including sanctions for noncompliance: Pro-

vided, however, that in the event the contractor becomes

involved in, or is threatened with, litigation with a sub-

contractor or vendor as a result of such direction, the

contractor may request the United States to enter into such

litigation to protect the interests of the United States.

(b) Federally assisted construction contracts. (1)

Except as otherwise provided, each administering agency

shall require the inclusion of the following language as a

condition of any grant, contract, loan, insurance, or guar-

antee involving federally assisted construction which is

not exempt from the requirements of the equal opportunity

clause:

The applicant hereby agrees that it will incorporate

or cause to be incorporated into any contract for construc-

tion work, or modification thereof, as defined in the regu-

lations of the Secretary of Labor at 41 CFR Chapter 60,

which is paid for in whole or in part with funds obtained

from the Federal Government or borrowed on the credit

of the Federal Government pursuant to a grant, contract,

loan insurance, or guarantee, or undertaken pursuant to

any Federal program involving such grant, contract, loan,

insurance, or guarantee, the following equal opportunity

clause:

During the performance of this contract the contractor

agrees as follows:

Ell

(1) The contractor will not discriminate against any

employee or applicant for employment because of race,

color, religion, sex, or national origin. The contractor will

take affirmative action to ensure that applicants are em-

ployed, and that employees are treated during employment

without regard to their race, color, religion, sex, or na-

tional origin, such action shall include, but not be limited

to the following: Employment, upgrading, demotion, or

transfer; recruitment or recruitment advertising; layoff or

termination; rates of pay or other forms of compensation;

and selection for training including apprenticeship. The

contractor agrees to post in conspicuous places, available

to employees and applicants for employment, notices to be

provided setting forth the provisions of this nondiscrimina-

tion clause.

(2) The contractor will, in all solicitations or adver-

tisements for employees placed by or on behalf of the con-

tractor, state that all qualified applicants will receive

considerations for employment without regard to race,

color, religion, sex, or national origin.

(3) The contractor will send to each labor union or

representative of workers with which he has a collective

bargaining agreement or other contract or understanding,

a notice to be provided advising the said labor union or

workers’ representatives of the contractor’s commitments

under this section, and shall post copies of the notice in

conspicious places available to employees and applicants for

employment.

(4) The contractor will comply with all provisions

of Executive Order 11246 of September 24, 1965, and of

the rules, regulations, and relevant orders of the Secretary

of Labor.

E12

(5) The contractor will furnish all information and

reports required by Executive Order 11246 of September

24, 1965, and by rules, regulations, and orders of the Sec-

retary of Labor, or pursuant thereto, and will permit access

to his books, records, and accounts by the administering

agency and the Secretary of Labor for purposes of inves-

tigation to ascertain compliance with such rulles, regula-

tions, and orders.

(6) In the event of the contractor’s noncompliance

with the nondiscrimination clauses of this contract or with

any of the said rules, regulations, or orders, this contract

may be canceled, terminated, or suspended in whole or in

part and the contractor may be declared ineligible for fur-

ther Government contracts or federally assisted construc-

tion contracts in accordance with procedures authorized in

Executive Order 11246 of September 24, 1965, and such

other sanctions may be imposed and remedies invoked as

provided in Executive Order 11246 of September 24, 1965,

or by rule, regulation, or order of the Secretary of Labor,

or as otherwise provided by law.

(7) The contractor will include the portion of the

sentence immediately preceding paragraph (1) and the

provisions of paragraphs (1) through (7) in every sub-

contract or purchase order unless exempted by rules, regu-

lations, or orders of the Secretary of Labor issued pursuant

to section 204 of Executive Order 11246 of September 24,

1965, so that such provisions will be binding upon each

subcontractor or vendor. The contractor will take such

action with respect to any subcontractor or purchase order

as the administering agency may direct as a means of en-

forcing such provisions, including sanctions for noncom-

pliance: Provided, however, That in the event a contractor

becomes involved in, or is threatened with, litigation with

a subcontractor or vendor as a result of such direction by

E13

the administering agency the contractor may request the

United States to enter into such litigation to protect the

interests of the United States.

The applicant further agrees that it will be bound by

the above equal opportunity clause with respect to its own

‘employment practices when it participates in federally

assisted construction work: Provided, That if the ap-

plicant so participating is a State or local government, the

above equal opportunity clause is not applicable to any

agency, instrumentality or subdivision of such government

which does not participate in work on or under the con-

tract.

The applicant agrees that it will assist and cooperate

actively with the administering agency and the Secretary

of Labor in obtaining the compliance of contractors and

subcontractors with the equal opportunity clause and the

rules, regulations, and relevant orders of the Secretary of

Labor, that it will furnish the administering agency and

the Secretary of Labor such information as they may re-

quire for the supervision of such compliance, and that it

will otherwise assist the administering agency in the dis-

charge of the agency’s primary responsibility for securing

compliance.

The applicant further agrees that it will refrain from

entering into any contract or contract modification subject

to Executive Order 11246 of September 24, 1965, with a

contractor debarred from, or who has not demonstrated

eligibility for, Government contracts and federally assisted

construction contracts pursuant to the Executive order

and will carry out such sanctions and penalties for violation

of the equal opportunity clause as may be imposed upon

contractors and subcontractors by the administering agency

or the Secretary of Labor pursuant to Part II, Subpart D

El4

of the Executive order. In addition, the applicant agrees

that if it fails or refuses to comply with these undertakings,

the administering agency may take any or all of the fol-

lowing actions: Cancel, terminate, or suspend in whole

or in part this grant (contract, loan, insurance, guarantee) ;

refrain from extending any further assistance to the ap-

plicant under the program with respect to which the failure

or refund occurred until satisfactory assurance of future

compliance has been received from such applicant; and

refer the case to the Department of Justice for appropriate

legal proceedings.

(c) Subcontracts.

Each nonexempt prime contractor or subcontractor

shall include the equal opportunity clause in each of its

nonexempt subcontracts.

(d) Incorporation by reference. The equal oppor-

tunity clause may be incorporated by reference in all Gov-

ernment contracts and subcontracts, including Government

bills of lading, transportation requests, contracts for deposit

of Government funds, and contracts for issuing and paying

U.S. savings bonds and notes, and such other contracts and

subcontracts as the Director may designate.

(e) Incorporation by operation of the Order. By oper-

ation of the Order, the equal opportunity clause shall be

considered to be a part of every contract and subcontract

required by the Order and the regulations in this part to

include such a clause whether or not it is physically in-

corporated in such contracts and whether or not the con-

tract between the agency and the contractor is written.

(f) Adaptation of language. Such necessary changes

in language may be made in the equal opportunity clause

as shall be appropriate to identify properly the parties and

their undertakings.

E15

§ 60-1.5 Exemptions.

(a) General—(1) Transactions of $10,000 or under.

Contracts and subcontracts not exceeding $10,000, other

than Government bills of lading, and other than contracts

and subcontracts with depositories of Federal funds in any

amount and with financial institutions which are issuing

and paying agents for U.S. savings bonds and savings notes,

are exempt from the requirements of the equal opportunity

clause. In determining the applicability of this exemption

to any federally assisted construction contract, or sub-

contract thereunder, the amount of such contract or sub-

contract rather than the amount of the Federal financial

assistance shall govern. No agency, contractor, or subcon-

tractor shall procure supplies or services in a manner so

as to avoid applicability of the equal opportunity clause:

Provided, that where a contractor has contracts or sub-

contracts with the Government in any 12-month period

which have an aggregate total value (or can reasonably

be expected to have an aggregate total value) exceeding

$10,000, the $10,000 or under exemption does not apply,

and the contracts are subject to the order and the regula-

tions issued pursuant thereto regardless of whether any

single contract exceeds $10,000.

(2) Contracts and subcontracts for indefinite quan-

tities. With respect to contracts and subcontracts for in-

definite quantities (including, but not limited to, open-end

contracts, requirement-type contracts, Federal Supply

Schedule contracts, “call-type” contracts, and purchase

notice agreements, the equal opportunity clause shall be

included unless the purchaser has reason to believe that

the amount to be ordered in any year under such contract

will not exceed $10,000. The applicability of the equal

opportunity clause shall be determined by the purchaser

at the time of award for the first year, and annually there-

E16

after for succeeding years, if any. Notwithstanding the

above, the equal opportunity clause shall be applied to

such contract whenever the amount of a single order ex-

ceeds $10,000. Once the equal opportunity clause is de-

termined to be applicable, the contract shall continue to

be subject to such clause for its duration, regardless of

the amounts ordered, or reasonably expected to be ordered

in any year.

(3) Work outside the United States. Contracts and

subcontracts are exempt from the requirements of the

equal opportunity clause with regard to work performed

outside the United States by employees who were not re-

cruited within the United States.

(4) Contracts with State or local governments. The

requirements of the equal opportunity clause in any contract

or subcontract with a State or local government (or any

agency, instrumentality or subdivision thereof) shall not

be applicable to any agency, instrumentality or subdivision

of such government which does not participate in work

on or under the contract or subcontract. In addition, any

agency, instrumentality or subdivision of such government,

except for educational institutions and medical facilities, are

exempt from the requirements of filing the annual com-

pliance report provided for by § 60-1.7 (a) (1) and main-

taining a written affirmative action compliance program

prescribed by § 60-1.40 and part 60-2 of this chapter.

(5) Contracts with certain educational institutions.

It shall not be a violation of the equal opportunity clause

for a school, college, university, or other educational in-

stitution or institution of learning to hire and employ em-

ployees of a particular religion if such school, college, uni-

versity, or other educational institution or institution of

learning is, in whole or in substantial part, owned, sup-

ported, controlled, or managed by a particular religion or

Ei7

by a particular religious corporation, association, or society,

or if the curriculum of such school, college, university, or

other educational institution or institution of learning is

directed toward the propagation of a particular religion.

The primary thrust of this provision is directed at relig-

iously oriented church-related colleges and universities and

should be so interpreted.

(6) Work on or near Indian reservations. It shall

not be a violation of the equal opportunity clause for a

construction or nonconstruction contractor to extend a

publicly announced preference in employment to Indians

living on or near an Indian reservation in connection with

employment opportunities on or near an Indian reserva-

tion. The use of the word near“ would include all that

area where a person seeking employment could reasonably

be expected to commute to and from in the course of a

work day. Contractors or subcontractors extending such

a preference shall not, however, discriminate among In-

dians on the basis of religion, sex, or tribal affiliation, and

the use of such a preference shall not excuse a contractor

from complying with the other requirements contained in

this chapter.

(b) Specific contracts and facilities—(1) Specific con-

tracts, The Director may exempt an agency or any person

from requiring the inclusion of any or all of the equal

opportunity clause in any specific contract or subcontract

when he deems that special circumstances in the national

interest so require. The Director may also exempt groups

or categories of contracts or subcontracts of the same type

where he finds it impracticable to act upon each request

individually or where group exemptions will contribute

to convenience in the administration of the order.

(2) Facilities not connected with contracts. The Di-

rector may exempt from the requirements of the equal op-

Ei8

portunity clause any of a prime contractor’s or subcon-

tractor’s facilities which he finds to be in all respects

separate and distinct from activities of the prime contractor

or subcontractor related to the performance of the contract,

provided that he also finds that such an exemption will not

interfere with or impede the effectuation of the order.

(c) National security. Any requirement set forth in

these regulations in this part shall not apply to any con-

tract or subcontract whenever the head of an agency deter-

mines that such contract or subcontract is essential to the

national security and that its award without complying

with such requirement is necessary to the national security.

Upon making such a determination, the head of the agency

will notify the Director in writing within 30 days.

(d) Withdrawal of exemption. When any contract

or subcontract is of a class exempted under this section,

the Director may withdraw the exemption for a specific

contract or subcontract or group of contracts or subcon-

tracts when in his judgment such action is necessary or

appropriate to achieve the purposes of the order. Such

withdrawal shall not apply to contracts or subcontracts

awarded prior to the withdrawal, except that in procure-

ments entered into by formal advertising, or the various

forms of restricted formal advertising, such withdrawal

shall not apply unless the withdrawal is made more than 10

calendar days before the date set for the opening of the

bids.

§ 60-16 [Reserved]

§ 60-1.7 Reports and other required information.

(a) Requirements for prime contracts and subcon-

tractors. (1) Each prime contractor and subcontractor

shall file annually, on or before the 3lst day of March,

E19

complete and accurate reports on Standard Form 100

(EEO-1) promulgated jointly by the Office of Federal Con-

tract Compliance Programs, the Equal Employment Op-

portunity Commission and Plans for Progress or such form

as may hereafter be promulgated in its place if such prime

contractor or subcontractor (i) is not exempt from the pro-

visions of these regulations in accordance with § 60-1.5; (ii)

has 50 or more employees; (iii) is a prime contractor or

first tier subcontractor; and (iv) has a contract, subcon-

tract or purchase order amounting to $50,000 or more or

serves as a depository of Government funds in any amount,

or is a financial institution which is an issuing and paying

agent for U.S. savings bonds and savings notes: Provided,

That any subcontractor below the first tier which performs

construction work at the site of construction shall be re-

quired to file such a report if it meets requirements of para-

graphs (a) (1) (i), (ii), and (iv) of this section.

(2) Each person required by § 60-1.7(a)(1) to sub-

mit reports shall file such a report with the contracting

or administering agency within 30 days after the award

to him of a contract or subcontract, unless such person has

submitted such a report within 12 months preceding the

date of the award. Subsequent reports shall be submitted

annually in accordance with § 60-1.7(a)(1), or at such

other intervals as the Director may require. The Director

may extend the time for filing any report.

(3) The Director or the applicant, on their own mo-

tions, may require a contractor to keep employment or

other records and to furnish, in the form requested, within

reasonable limits such information as the Director or the

applicant deems necessary for the administration of the

order.

(4) Failure to file timely, complete and accurate re-

ports as required constitutes noncompliance with the prime

E20

contractor’s or subcontractor’s obligations under the equal

opportunity clause and is ground for the imposition by the

Director, an applicant, prime contractor or subcontractor,

of any sanctions as authorized by the order and the regula-

tions in this part.

(b) Requirements for bidders or prospective contrac-

tors (1) Certification of compliance with Part 60-2: Af-

firmative Action Programs. Each agency shall require

each bidder or prospective prime contractor and proposed

subcontractor, where appropriate, to state in the bid or in

writing at the outset of negotiations for the contract: (i)

Whether it has developed and has on file at each establish-

ment affirmative action programs pursuant to Part 60-2 of

this chapter; (ii) whether it has participated in any pre-

vious contract or subcontractor subject to the equal op-

portunity clause; (iii) whether it has filed with the Joint

Reporting Committee, the Director or the Equal Employ-

ment Opportunity Commission all reports due under the

applicable filing requirements.

(2) Additional information. A bidder or prospective

prime contractor or proposed subcontractor shall be re-

quired to submit such information as the Director requests

prior to the award of the contract or subcontract. When

a determination has been made to award the contract or

subcontract to a specific contractor, such contractor shall be

required, prior to award, or after the award, or both, to

furnish such other information as the applicant or the Di-

rector requests.

(c) Use of reports. Reports filed pursuant to this

section shall be used only in connection with the adminis-

tration of the order, the Civil Rights Act of 1964, or in

furtherance of the purposes of the order and said Act.

E21

§ 60-18 Segregated facilities.

(a) General. In order to comply with his obligations

under the equal opportunity clause, a prime contractor or

subcontractor must insure that facilities provided for em-

ployees are provided in such a manner that segregation on

the basis of race, color, religion, or national origin cannot

result. He may neither require such segregated use by

written or oral policies nor tolerate such use by employee

custom. His obligation extends further to insuring that his

employees are not assigned to perform their services at any

location, under his control, where the facilities are segre-

gated. This obligation extends to all contracts containing

the equal opportunity clause regardless of the amount of the

contract, The term “facilities” as used in this section

means waiting rooms, work areas, restaurants and other

eating areas, time clocks, restrooms, wash rooms, locker

rooms, and other storage or dressing areas, parking lots,

drinking fountains, recreation or entertainment areas, trans-

portation, and housing facilities provided for employees.

(b) Certification by prime contractors and subcon-

tractors. Prior to the award of any nonexempt Government

contract of subcontract or federally assisted construction

contract or subcontract, each agency or applicant shall re-

quire the prospective prime contractor and each prime con-

tractor and subcontractor shall require each subcontractor

to submit a certification, in the form approved by the

Director, that the prospective prime contractor or subcon-

tractor does not and will not maintain any facilities he

provides for his employees in a segregated manner, or per-

mit his employees to perform their services at any location,

under his control, where segregated facilities are main-

tained; and that he will obtain a similar certification in

the form approved by the Director, prior to the award of

any nonexempt subcontract.

E22

§ 60-1.9 Compliance by labor unions and by recruiting

and training agencies.

(a) Whenever compliance with the equal opportunity

clause may necessitate a revision of a collective bargaining

agreement the labor union or unions which are parties to

such an agreement shall be given an adequate opportunity

to present their views to the director.

(b) The Director shall use his best efforts, directly

and through agencies, contractors, subcontractors, appli-

cants, State and local officials, public and private agencies,

and all other available instrumentalities, to cause any

labor union, recruiting and training agency or other rep-

resentative of workers who are or may be engaged in

work under contracts and subcontracts to cooperate with,

and to comply in the implementation of, the purposes of

the order.

(c) In order to effectuate the purposes of paragraph

(a) of this section, the Director may hold hearings, public

or private, with respect to the practices and policies of

any such labor union or recruiting and training agency.

(d) The Director may notify any Federal, State, or

local agency of his conclusions and recommendations with

respect to any such labor organization or recruiting and

training agency which in his judgment has failed to co-

operate with himself, agencies, prime contractors, sub-

contractors or applicants in carrying out the purposes of

the order. The Director also may notify the Equal Em-

ployment Opportunity Commission, the Departm

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