# Appendix — S. J. Groves & Sons Co. v. Fulton County

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1991
- **Citation:** 500 U.S. 959

## Text

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Supreme Court, U.S,
; ~~ FILED
91-1562 APR g 1991
No. | OMiCE OF THE CLERK

IN THE
Supreme Court of the United States

OcTOBER TERM, 1990

?

S.J. GROVES & SONS COMPANY AND
JASPER CONSTRUCTION COMPANY,
Petitioners,
V.
FULTON COUNTY, GEORGIA,
Respondent.

»
>

APPENDIX OF PETITIONERS

>

W. Henry PARKMAN
Counsel of Record

TERRENCE LEE CROF1

C. WiLsoN DuBose

GRIFFIN COCHRANE & MARSHALL
4700 IBM Tower - One Atlantic Center
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309

(404) 874-3000

Attorneys for Petitioners S.J.
Groves & Sons Company and Jasper
Construction Company

April 199]

‘?*

TABLE OF CONTENTS

A. S.J. Groves & Sons Co. v. Fulton County,

FID Pd FECA IGN GE TGF) 00.22 20sensessecoreseresenes la
B. S.J. Groves & Sons Co. v. Fulton County,
696 F. Supp. 1480 (N.D. Ga. 1987) ........:.cceeeeees 1b

C. Order of United States District Court for the
Northern District of Georgia dated
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D. Order of United States District Court for the
Northern District of Georgia dated
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E. Order of United States District Court for the
Northern District of Georgia dated
IE ile I itarannstinticntenstaanarictansionmnniccitiaaasseses le

F. Part 23 — Participation by Minority Business
Enterprise in Department of Transportation
Programs, 49 C.F.R. §§ 23.01-23.55 00... 1f

G. Policy Statement - Fulton County 1982 MBE
FIONIIY siscnicicccncninnnnatinnsadscandssniminanntbonbntonsantnianiaisens 1g

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Appendix A

S.J. GROVES & SONS COMPANY and
Jasper Construction Company,
Plaintiffs-Appellees,

V.

FULTON COUNTY,
Defendant-Appellant,

U.S. Department of
Transportation, Defendant.

S.J. GROVES & SONS COMPANY and
Jasper Construction Company,
Plaintiffs-Appellees,

V.

FULTON COUNTY,
Defendant-Cross-Claim
Plaintiff-Appellant.

S.J. GROVES COMPANY and Jasper
Construction Company,
Plaintiffs-Appellees,

Vv.

FULTON COUNTY,
Defendant-Cross-Claim
Plaintiff-Appellant,

United States Department of Transportation and
James H. Burnley, IV, Secretary, United States
Department of Transportation, Defendant-
Cross-Claim Defendants-Appellees.

la

S.J. GROVES & SONS COMPANY and
Jasper Construction Co., Inc.,
Plaintiffs-Appellees,

Vv.

FULTON COUNTY,
Defendant-Appellant,

United States Department of Transportation,
James H. Burnley, IV, Secretary, United States Depart-
ment of Transportation, Defendants-Appellees.

Nos. 86-8105, 88-8536, 88-8573 and 88-8700.

United States Court of Appeals,
Eleventh Circuit.

Jan. 7, 1991.

Appeals from the United States District Court for the
Northern District of Georgia.

Before KRAVITCH and COX, Circuit Judges, and
DYER, Senior Circuit Judge.

COX, Circuit Judge:
I. FACTS AND PROCEDURE
A. Facts

The Federal Aviation Administration (FAA) of the De-
partment of Transportation (DOT) has designated Fulton
County Airport (also known as Brown Field) a “reliever”
airport. This means that it is an alternative destination for
freight and cargo flights away from the primary passenger
airport in the area, Hartsfield International Airport. In 1981,
the FAA determined that the instrumented runway at Ful-
ton County Airport was in “rapidly deteriorating condi-

2a

tion.” District Court Order, Sept. 30, 1985, R.6-103-2. The
FAA threatened to close the runway, which would have re-
sulted in the airport losing its status as a reliever airport. Id.

In order to avoid this result, the Fulton County Board
of Commissioners decided that the runway should be re-
paired. The County applied for a grant from the FAA under
the Airport and Airway Development Act of 1970, as
amended (AADA). Under a program created by that statute,
the federal government would fund ninety percent of the
project, the state of Georgia would fund five percent, and
Fulton County would fund five percent. As a condition of
receiving the grant, Fulton County was required to develop
and submit for approval to the FAA an MBE (Minority
Business Enterprise)! program for the project. The program
had to meet the requirements set forth in regulations pro-
mulgated by the Department of Transportation (the DOT
regulations). These regulations are set out at 49 C.F.R. §
23.1-23.55.

Fulton County developed an MBE program (the
specifics of the program are discussed in Part III of this
opinion), and the FAA approved it and awarded the funds
to the County. Once the funds were received, the County
invited bids from contractors. S.J. Groves & Sons, Co.
(Groves)? submitted a timely bid of $818,432.40, the lowest

' Minority Business Enterprise (MBE) is defined in slightly cifferent
ways, depending on the statute or program at issue. For purposes of this
opinion, we will use the definition found at 49 C.F.R. § 27.5:

a small business concern ... which is owned and controlled

by one or more minorities or women.

? Jasper Construction Company is a wholly-owned subsidiary of Groves.
Both are Minnesota corporations with their principal place of business in
Minneapolis, Minnesota.

3a

bid the County received. The Groves bid included MBE
participation of 4.15%. The County Commission awarded
the contract to Groves, on condition that it make a good
faith effort to increase the level of its proposed MBE partiei-
pation. The extent of Groves’s good faith efforts to increase
MBE participation is disputed. The County Commission
decided Groves had not in good faith attempted to increase
MBE participation and awarded the contract to the second-
lowest bidder, Dickerson, Inc., whose bid contained an MBE
participation level of 10%. The award was again condi-
tioned on good faith efforts to increase MBE participation.
Dickerson was able to increase MBE participation to 16%
within two days. The Commission then permanently
awarded the contract to Dickerson.

B. Procedural History

The protracted procedural history of this case began in
August 1982 when Groves, after an unsuccessful attempt to
obtain equitable relief, filed a complaint against Fulton
County in the district court for the Northern District of
Georgia. Subject matter jurisdiction was grounded in diver-
sity.

Subsequently, the district court permitted Groves to
file five amended complaints. Groves alleges the following:
Count I — Fulton County breached its promise as contained
in the invitation to bid by not awarding the contract to the
lowest bidder; Count II — Fulton County had no authority
to promulgate the MBE program because it conflicts with
the Georgia low-bid statute, and the MBE program is there-
fore invalid; Count II] — the MBE program is unconstitu-

3 “MBE participation” is defined by reference to the total dollar value of a
bid in relation to the dollar value proposed to be sublet to MBEs.

4a

tional under the Georgia Constitution; Count IV — the MBE
program violates Title VI of the Civil Rights Act of 1964;
Count V — the MBE program violates the equal protection
component of the Fourteenth Amendment of the federal
Constitution; Count VI — Fulton County’s 1984 MBE reso-
lution,‘on its face, violates the equal protection component
of the Fourteenth Amendment; Count VII — the 1984 MBE
Resolution, on its face, violates the Georgia low-bid statute;
Count VIII -— the 1984 MBE Resolution, on its face, violates
Title VI.§ Counts IX and X — the DOT regulations violate,
inter alia, the equal protection component of the Fifth
Amendment of the federal Constitution.‘ Groves seeks
damages on Counts I through V and equitable relief on
Counts VI through X.

* Counts VI, VII and VIII were originally facial attacks on Fulton
County’s 1979 MBE Resolution. The 1979 Resolution “called for a goal of
twenty percent participation by [MBEs] in all county and procurement
contracts.” District Court Order, Sept. 30, 1985, R. 6-103-1. After the
County replaced the 1979 Resolution with the 1984 MBE Resolution, .
Groves amended its complaint to reflect the change. Fulton County de-
veloped the 1982 program challenged in this appeal “solely to comply
with the regulatory requirements|; the program is] not related in any way
to the 1979 Resolution.” Id. at 3.

* Jasper Construction Company is a plaintiff in Counts VI through VIII
because of its alleged involvement in Fulton County construction work
and the alleged injury to it caused by the 1984 MBE Resolution.

® Although the Fifth Amendment does not contain an equal protection
clause, its due process clause incorporates the equal protection element
prohibiting racial discrimination to the same extent as the equal protec-
tion clause contained in the Fourteenth Amendment prohibits such dis-
crimination. Washington v. Davis, 426 U.S. 229, 239, 96 S.Ct. 2040, 2047, 48
L.Ed.2d 597 (1976).

5a

The district court, over the course of several years,’ is-
sued three separate orders in this case. Each order resulted
from cross-motions for summary judgment. These orders
are now before us on interlocutory appeal. Following is a
brief summary of the district court’s resolution of each
count. More detailed discussion of the district court’s find-
ings and orders will accompany our discussion of the is-
sues.

First, the district court denied summary judgment on
Count I because Groves’s good faith efforts to meet the MBE
requirements on the airport project contract are disputed.
Second, the court granted summary judgment in favor of
Groves on Counts VI through VIII because the court found
that “the actions of Fulton County in enacting the airport
program and the 1984 [MBE] Resolution violate Georgia’s
low-bid statute.” District Court Order, Sept. 30, 1985, R. 6-
103-24. The County was enjoined from enforcing the 1984
Resolution. Next, the court held the DOT regulations violate
the equal protection component of the Fifth Amendment
and are therefore unconstitutional. Therefore, summary
judgment was entered in favor of Groves on Counts IX and
X.* Finally, the district court granted summary judgment for

” The delays in this case seem to have been caused primarily by extensive
discovery and by the district court’s prudent request for additional brief-
ing on the effect of the Eleventh Circuit's opinion in H.K. Porter Co. v.
Metropolitan Dade County, 825 F.2d 324 (11th Cir.1987), vacated, 489 U.S.
1062, 109 S.Ct. 1333, 103 L.Ed.2d 804 (1989), on this case. The district court
decided Porter did not affect its disposition of the issues in this case. See
District Court Order, Apr. 22, 1988, R. 3-188-6. The Supreme Court subse-
quently vacated our opinion in Porter. H.K. Porter Co. v. Metropolitan Dade
County, 489 U.S. 1062, 109 S.Ct. 1333, 103 L.Ed.2d 804 (1989).

§ The DOT dismissed its appeal of this order after the Supreme Court
rendered its decision in City of Richmond v. ].A. Croson Co., 488 U.S. 469,

6a

Groves on Counts II, IV and V. Because the DOT regulations
are unconstitutionai, the court ruled, they cannot preempt
the Georgia low-bid statute. Further, Fulton County had no
other defense to its violation of the state statute, and the
court consequently held the County liable to Groves.’*

lI. PARTIES’ CONTENTIONS AND ISSUES
ON APPEAL

Essentially, Groves complains of two things Fulton
County has done. First, Groves claims the County’s 1984
MBE Resolution is not authorized by state or federal law
and puts Groves at a disadvantage in bidding on Fulton
County public works projects. Therefore, the injunction
preventing enforcement of the resolution should be
affirmed. Second, Groves claims it should have been
awarded the airport paving contract pursuant to the
Georgia low-bid statute. Fulton County awarded the
contract to another bidder, Groves asserts, based on an
unconstitutional MBE program that the County had no
authority to enact.

Fulton County argues that Groves lacks standing to
challenge the 1984 Resolution and that regardless, the reso-
lution is constitutional. The County further contends that it
is authorized by the low-bid statute to take compliance with
MBE requirements into account in awarding contracts. Fi-
nally, the County asserts that even if it did violate the low-
bid statute, it has a valid defense that prohibits a finding of
liability to Groves.

109 S.Ct. 706, 102 L.Ed.2d 854 (1989). Therefore, Fulton County is the only
appellant in this case.

* The court found it unnecessary to reach the Georgia constitutional
question and denied summary judgment on Count III.

7a

We are called upon in this appeal to resolve the follow-
ing issues. First, does Groves have standing to challenge the
County’s 1984 MBE Resolution, and if it does, is the resolu-
tion constitutional. Second, in awarding the 1982 airport
project contract to a bidder other than Groves, did the
County violate the Georgia low-bid statute. Finally, if the
County did transgress state law, does it have a valid defense
to the violation.

III. DISCUSSION

Summary judgment is appropriate “if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Fed.R.
Civ.P. 56(c).

A. The 1984 MBE Resolution

In 1979, Fulton County enacted a resolution that called
for a goal of twenty percent participation by MBEs in all
county contracts (the 1979 MBE Resolution). The County
Commission decided to update the resolution and directed
Clarence Reid, the County’s affirmative action officer, to
conduct a study of MBE participation in Fulton County con-
tracts. After conducting personal meetings, compiling data
and reviewing similar programs instituted by other local
governments, as well as by the Metro Atlanta Rapid Transit
Authority, the Reid study corcluded that MBE participation
in County contracts was disproportionately low. The cause
of the problem, according to the study, was systemic racial
discrimination.

In 1984, the County Commission ordered the County
Manager to develop an MBE program to replace the 1979

8a

MBE Resolution. The County enacted such a program on
June 6, 1984 (the 1984 MBE Resolution). The program re-
tained the twenty percent MBE participation goal. Groves
asserts the district court was correct in awarding declaratory
and injunctive relief in Groves’s favor. Groves asserts the
1984 Resolution injures it and is unconstitutional and
therefore the district court’s order awarding declaratory and
injunctive relief in Groves’s favor should be affirmed.

1. Standing

Fulton County contests Groves’s standing to attack the

1984 MBE Resolution. Standing is a jurisdictional prereq-

uisite to a suit in a federal court. Valley Forge Christian Col-

lege v. Americans United for Separation of Church & State, Inc.,

454 U.S. 464, 475-76, 102 S.Ct. 752, 760-61, 70 L.Ed.2d 700

(1982). The district court determined Groves has standing to
“challenge the resolution. See R. 6-103-27.

There is no dispute regarding the facts relevant to the
standing question. We therefore must review the law of
standing and determine if Groves has standing to challenge
the 1984 Resolution under the facts of this case. A litigant
has standing when the party has “alleged such a personal
stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for the

illumination of difficult constitutional questions... .” Baker
v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663
(1962).

The Supreme Court has developed an analytical
framework that is useful in solving standing questions. Un-
der this framework, the standing doctrine has two compo-
nents: “irreducible” constitutional requirements and pru-

9a

dential considerations. Valley Forge Christian College, 454 U.S.
at 472, 102 S.Ct. at 758; FDIC v. Morley, 867 F.2d 1381, 1386
(11th Cir.1989), cert. denied, — U.S. —, 110 S.Ct. 75, 107
L.Ed.2d 41 (1990). To satisfy the standing doctrine’s consti-
tutional component, a litigant must demonstrate three ele-
ments. First, the party must have suffered an actual injury
or show the imminence of such injury. Valley Forge Christian
College, 454 U.S. at 472, 102 S.Ct. at 758; E.F. Hutton & Co. v.
Hadley, 901 F.2d 979, 984 (11th Cir.1990); Morley, 867 F.2d at
1386. Second, the injury must be “fairly traceable to the
challenged conduct.” Valley Forge Christian College, 454 U.S.
at 472, 102 S.Ct. at 758; E.F. Hutton, 901 F.2d at 984; Morley,
867 F.2d at 1386. Third, the party must demonstrate that a
favorable decision likely will redress the injury. Valley Forge
Christian College, 454 U.S. at 472, 102 S.Ct. at 758; E.F. Hutton,
901 F.2d at 984; Morley, 867 F.2d at 1386.

After satisfying the constitutional component of the
standing doctrine, a party must show that “prudential con-
siderations do not favor judicial restraint from hearing such
action.” Morley, 867 F.2d at 1386. The Supreme Court has
listed three considerations that discourage judicial action
despite a party’s satisfaction of all three constitutional re-
quirements: (1) assertion of a third party’s rights; (2) allega-
tion of a generalized grievance instead of an injury peculiar
to the litigant; and (3) assertion of an injury outside the
statute’s or constitutional provision’s zone of interests. Val-
ley Forge Christian College, 454 U.S. at 474-75, 102 S.Ct. at 759-
60; Morley, 867 F.2d at 1386.

a. Actual or Imminent Injury

Groves contends the existence of the 1984 Resolution
presents two threatened injuries sufficient to satisfy consti-

10a

tutional requirements. The district court found that Groves
is a large, national contractor that can often complete con-
tracts with little or no subcontracting. District Court Order,
Sept. 30, 1985, R. 6-103-26. Therefore, Groves argues, forcing
compliance with the 1984 Resolution’s criteria, including its
20% MBE participation goal, will require unnecessary sub-
contracting. Groves’s first claimed injury, then, is a threat-
ened loss of potential profits. If Groves were awarded a Ful-
ton County construction contract, Groves asserts its profit
margin on that contract would be smaller than Groves’s
profit margins on contracts with government entities that
do not have MBE programs. Groves’s second claimed injury
is a “lost opportunity, strictly on the basis of race, to com-
pete equally with other contractors for Fulton County pro-
jects.” Appellee’s Brief, No. 86-8105 at 9.

To have standing, a litigant must have suffered or be in
imminent danger of suffering a “distinct and palpable
injury” instead of an “abstract” or “conjectural” injury. Allen
v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324, 82 L.Ed.2d
556 reh’g denied, 468 U.S. 1250, 105 S.Ct. 51, 82 L.Ed.2d 942
(1984) (citations omitted); Morley, 867 F.2d at 1387. The in-
jury or threat of injury “must be both ‘real and immediate,’
not ‘conjectural’ or ‘hypothetical.’ ” Pollar: v. Cockrell, 578
F.2d 1002, 1006 (5th Cir.1978) (quoting O'Shea v. Littleton, 414
U.S. 488, 494, 94S.Ct. 669, 675, 38 L.Ed.2d 674 (1974)).'°

Groves’s second claimed injury, lost opportunity to
compete on an equal basis with other bidders, is not a cog-
nizable Article III injury. Nothing in the 1984 Resolution

‘0 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en
banc), this court adopted as binding precedent all decisions of the former
Fifth Circuit handed down prior to October 1, 1981.

lla

prevents Groves from bidding on any Fulton County con-
tract under the same terms as any other bidder. Therefore,
Groves is able to compete with other bidders on an equal
basis. Were we to agree with Groves’s reasoning regarding
this so-called injury, then bidders subject to any universally
applicable requirements (e.g. time of bid, manner of bid,
place of bid) would allege injury sufficient to satisfy the
standing requirement.

We reach the same conclusion, for different reasons,
regarding Groves’s first claimed injury, loss of potential
profits. We find the Supreme Court's opinion in Warth v.
Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975),
controlling on this point. In-_Warth, Rochester Home
Builders Association (Home Builders) sought to intervene in
a suit challenging the town of Penfield’s zoning ordinance.
Home Buildings alleged that the zoning ordinance “had de-
prived some of its members of ‘substantial business oppor-
tunities and profits.’ ” Id. at 515, 95 S.Ct. at 2213. The Court
decided that Home Builders did not have standing to seek
equitable relief. “The complaint refers to no specific project
of any of its members that is currently precluded either by
the ordinance or by [the town of Penfield’s] action in enforc-
ing it. There is no averment that any member has applied to
[Penfield] for a building permit or a variance with respect to
any current project.” Id. at 516, 95 S.Ct. at 2214.

Similarly, Groves has pointed to no contract it was de-
nied because of the 1984 Resolution. Nor has Groves alleged
it has ever bid for a single contract that was subject to the
resolution. Groves points to Fulton County’s denial of the
airport project contract because of the 1982 MBE Program.
Because the district court found that the 1982 Program was
in no way related to the 1984 Resolution (District Court Or-

12a

der, Sept. 30, 1985, R.6-103-3), this allegation is insufficient
to satisfy the injury requirement of the standing doctrine.

The case law cited by Groves is likewise anavailing.
Some of these cases involve situations where contracts were
set aside for minority bidders only. See Investment Co. Insti-
tute v. FDIC, 815 F.2d 1540, 1543 (D.C.Cir.), cert. denied, 484
U.S. 847, 108 S.Ct. 143, 98 L.Ed.2d 99 (1987) (FDIC rule dealt
petitioners competitive injury by allowing insured non-
member banks to enter the securities field indirectly
through subsidiaries and affiliates); Ray Baillie Trash Haul-
ing, Inc. v. Kleppe, 477 F.2d 696, 699-701 (5th Cir.), reh’g de-
nied, 478 F.2d 1403 (5th Cir.1973), cert. denied, 415 US. 914,
94 S.Ct. 1410, 39 L.Ed.2d 468 (1974) (SBA program at issue
authorized SBA to set aside contracts for placement with
small businesses owned by disadvantaged persons; plaintiff
not allowed to compete for contract in question; recipient of
contract received premium price not available to non-disad-
vantaged businesses). That is not the case here; the 1984
Resolution permits Groves to bid for all Fulton County
contracts. Other cases cited by Groves present much more
concrete injuries than the injury Groves asserts in this case.
See Uzzell v. Friday, 592 F.Supp. 1502, 1514 (M.D. N.C.1984)
(plaintiffs had standing because they were denied the op-
portunity to compete on an equal basis with other members
of the student body); Rhode Island Chapter, Associated Gen.
Contractors of America, Inc. v. Kreps, 450 F.Supp. 338, 346-47
n. 3 (D.R.I.1978) (some contractors lost contracts they would
have been awarded but for the MBE program); Wright Farms
Constr., Inc. v. Kreps, 444 F.Supp. 1023, 1027 (D.Vt.1977)
(plaintiff presented uncontroverted evidence that but for the
MBE program, it would have received public works con-
tracts).

13a

The only case Groves cites that directly supports its po-
sition is Contractors Association of Eastern Pennsylvania v. Sec-
retary of Labor, 442 F.2d 159 (3d Cir.), cert. denied, 404 U.S.
854, 92 S.Ct. 98, 30 L.Ed.2d 95 (1971). That case is of ques-
tionable authority, however, for two reasons. First, it pre-
dates Warth. Second, the opinion cites Abbott Laboratories v.
Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), to
support the proposition that contractors who have nct bid
on projects that are subject to MBE requirements and have
not identified specific projects they wish to bid on may still
establish standing. However, Abbott Laboratories, in the
standing context, stands for the proposition that a drug
manufacturer need not expose itself to FDA sanctions in or-
der to establish standing. Id. at 154, 87 S.Ct. at 1518. Groves
is not in a similar position of having to expose itself to po-
tential sanctions in order to establish standing."

Because Groves fails to satisfy the first constitutional
requirement of standing, injury, a discussion of the other
two constitutional requirements, causation and redressabil-
ity, is unnecessary. Likewise, an examination of the standing
doctrine’s prudential component would be superfluous. We
will vacate the district court’s order and judgment on
Counts VI through VIII and remand with instructions to
dismiss the claims presented by those counts for lack of

1! Groves also cites Associated General Contractors of California v. Secretary
of Commerce, 441 F.Supp. 955 (C.D.Cal.1977), vacated, Los Angeles County v.
Associated Gen. Contractors, 438 U.S. 909, 98 S.Ct. 3132, 57 L.Ed.2d 1153
(1978). There, the complaining contractors had not bid on any projects,
but had at least identified specific projects they wished to bid on. Id. at
963. To the extent the cited case stands for the proposition that under cir-
cumstances similar to this case contractors need not bid on any project in
order to show injury, we think the case was incorrectly decided.

l4a

standing. We now proceed to a discussion of Groves’s claim
that Fulton County violated the Georgia low-bid statute by
creating the 1982 MBE program and relying on it in not
awarding the airport project contract to Groves.

B. The 1982 MBE Program

Fulton County does not contest Groves’s standing to
challenge the 1982 MBE Program. Nor could it because
Groves clearly has standing to attack the program because it
was denied the contract for the airport project because of its
alleged failure to make a good faith attempt to meet the
program’s MBE goals. The district court found that Fulton
County developed the 1982 Program for one purpose only:
to comply with DOT regulations in order to obtain a grant
under the AADA. District Court Order, Sept. 30, 1985, R.6-
103-3. Fulton County’s claim that the 1982 Program is valid
is therefore bottomed on its assertion that the DOT regula-
tions are constitutional.

1. The DOT Regulations

A good summary of the DOT regulations is found in
the district court’s March 30, 1987, order, S.]. Groves & Sons
Co. v. Fulton County, 696 F.Supp. 1480, 1482-83
(N.D.Ga.1987):

DOT’s regulation entitled “Participation by Mi-
nority Business Enterprise in Department of
Transportation Programs” is found at 49 C.F.R. §
23.01 et seq.'* The regulation defines minority as
follows:

2 On May 17, 1979, DOT issued a Notice cf Proposed Rule Making
(NPRM) for the MBE regulation. 44 Fed.Reg. 28928. A final rule was is-
sued March 31, 1980. 45 Fed.Reg. 21172. On March 3, 1981, DOT issued an

15a

“Minority” means a person who is a citizen or
lawful permanent resident of the United States
and who is:

(a) Black (a person having origins in any
of the black racial groups of Africa);

(b) Hispanic (a person of Mexican,
Puerto Rican, Cuban, Central or South
American, or other Spanish culture or
origin, regardless of race);

(c) Portuguese (a person of Portuguese,
Brazilian, or other Portuguese culture or
origin, regardless of race);

(d) Asian American (a person having
origins in any of the original peoples of
the Far East, Southeast Asia, the Indian
subcontinent, or the Pacific Islands);

(e) American Indian and Alaskan Native
(a person having origins in any of the
original peoples of North America); or

(f) Members of other groups, or other

- individuals, found to be economically
and socially disadvantaged by the Small
Business Administration under section
8(a) of the Small Business Act, as
amended (15 U.S.C. § 637(a)).

NPRM to amend one provision of the MBE regulation. 46 Fed.Reg. 16282.
The regulation was promulgated in its present form as a final rule on
April 27, 1981. 46 Fed.Reg. 23457.

l6a

49 C.F.R. § 23.5. “Minority business enterprise” or
“MBE” is defined as “a small business concern ..
which is owned and controlled by one or more
minorities or women.” Id.

The MBE regulation requires recipients of DOT
funds (state and local governments) to implement
an MBE program incorporating certain specific
features. The regulation does not set a uniform
percentage goal but leaves it to the recipients to
do so. Among the required components of MBE
programs are the following:

(a) A policy statement expressing a
commitment to use MBEs in all aspects
of contracting to the maximum extent
feasible;

(b) The designation of an MBE liaison
officer;

(c) Affirmative action techniques to
facilitate MBE participation in
contracting, including the following:

(1) arranging solicitations, time
for the presentation of bids,
quantities, specifications, and
delivery schedules so as to
fecilitate the participation of
MBEs;

(2) providing assistance to MBEs
in Overcoming barriers such as
the inability to obtain bonding,

17a

financing, or technical assistance;
and

(3) carrying out information and
communications programs on
contracting procedures and
specific contracting opportunities
in a timely manner, with such
programs being bilingual where
appropriate.

(d) Encouraging the use of banks owned
or controlled by minorities or women;

(e) Making an MBE directory available
to bidders;

(f) Certification of the eligibility of MBEs
by the recipient, to ensure that the MBE
program benefits only firms owned and
controlled by minorities;

(g) Establishing percentage goals for the
dollar value of work to be awarded to
MBEs, including overall goals and goals
on each specific prime contract with
subcontracting possibilities; overall
goals are to be based on a projection of
the number and types of MBEs likely to
be available to compete for contracts;
goals for specific contracts are to be
based on the known availability of
qualified MBEs; and

(h) A requirement that bidders who do
not meet the MBE contract goals satisfy

18a

the recipient that the bidder has made
“good faith efforts” to meet the goals."*

See 49 C.F.R. § 23.45.

Finally, the regulation includes a provision
allowing exemptions from the above-listed
requirements if “the particular situation is
exceptional” and if “the modified program
complies substantially” with the regulations. Id. §
23.41(f).

2. The 1982 MBE Program Violates the Georgia Low-
Bid Statute

The district court decided that Georgia law does not
give Fulton County the authority “to enact race-conscious
contracting requirements.” District Court Order, Sept. 30,
1985, R.6-103-12. Our review of Georgia law leads us to the
same conclusion.

Fuiton County argues that its 1982 MBE Program
“merely adds another element of responsiveness and re-
sponsibility that must be satisfied by a bidder in the com-
petitive bidding process,” (Appellant's Brief in No. 86-8105
at 37)"* and that the County had authority to enact the pro-

gram.

The Georgia low-bid statute provides as follows:

13 The regulation does not define what constitutes “good faith efforts,”
but instead leaves the determination to the recipient. In Appendix A to
subpart C of the regulation DOT provides a list meant to suggest the
kinds of efforts recipients might consider.

4 The County actually makes this argument in connection with its 1984
Resolution. Logically, however, the County is obliged to make the same
argument with regard to the 1982 Program.

19a

Whenever it becomes necessary to build or repair
any courthouse, jail, bridge, causeway, or other
public works in any county, the county governing
authority shall cause the same to be built or re-
paired by letting out the contract therefor to the
lowest bidder, at public outcry, before the court-
house door, after having advertised the letting of
the contracts, ... provided that such county au-
thorities shall have authority to reject any and all
bids at the public letting. If, in their discretion, the
public interest and economy require it, the county
authorities may build or repair any public build-
ings, bridges, causeways, or other public property
in the county by contract or sealed proposals, ...

O.C.G.A. § 36-10-2 (Supp.1990)."

No Georgia case has dealt directly with the issue of a
county’s authority to enact an MBE program. However, one
Georgia case involves an analogous situation. Georgia
Branch, Associated General Contractors of America, Inc. v. City
of Atlanta, 253 Ga. 397, 321 S.E.2d 325 (1984), involved a
challenge to Atlanta’s MBE program. The Atlanta program,
except for differences in MBE participation goals, was very
simiiar to the Fulton County MBE program at issue here. A
group of contractors attacked the program as violative of
Georgia and federal law. A unanimous Supreme Court of
Georgia decided that the City lacked authority to enact such
a program, and therefore avoided reaching the plaintiffs’
constitutional claims. In so doing, the court interpreted a
provision in the Atlanta City Charter, Ga.Cede Ann. § 6-402,

1S Effective March 30, 1989, the word “responsible” was inserted after the
word “lowest” in the first sentence.

20a >

that required the awarding of public works contracts to the
“lowest and/or best bidder.” The court stated that “the leg-
islative purpose [of the requirement] was to further the
cause that contracts be awarded without favoritism to ob-
tain reasonable quality at the lowest cost.” Id. at 399, 321
S.E.2d at 328. Because the Atlanta MBE program conflicted
with this purpose (i.e., it sometimes required the awarding
of a contract, on the basis of race, to a bidder who was not
the lowest qualified bidder) the program was declared void.
Id.

The County argues that Georgia Branch is distinguish-
able because the opinion did not discuss the Georgia low-
bid statute and because the low-bid statute contains differ-
ent language than the Atlanta Charter provision at issue in
Georgia Branch. We have already indicated that no Georgia
case is directly on point, but for several reasons we believe
Georgia Branch gives us a good indication of how a Georgia
court would rule on this question. First, the Supreme Court
of Georgia did not discuss the Georgia low-bid statute in
Georgia Branch for the obvious reason that it is inapplicable
to cities—it applies to counties only. Second, the language
“lowest and/or best bidder” is quite similar to “lowest bid-
der.” Third, in reaching its conclusion, the court in Georgia
Branch discussed another Georgia case and several cases
from other jurisdictions which had dealt with somewhat
different language, in some instances language closer to the
language found in the Georgia low-bid statute. See Associ-
ated Gen. Contractors of California v. San Franctsco Unified
School Dist., 616 F.2d 1381 (9th Cir.1980) (“lowest responsi-
ble bidder”); Arrington v. Associated Gen. Contractors of Amer-
ica, Alabama Branch, 403 So.2d 893 (Ala.1981), cert. denied, 455
U.S. 913, 102 S.Ct. 1265, 71 L.Ed.2d 453 (1982) (same); City of

21a

Inglewood-L.A. County Civic Center Auth. v. Superior Court, 7
Cal.3d. 861, 103 Cal. Rptr. 689, 500 P.2d 601 (1972) (same);
Hilton Constr. Co. v. Rockdale County Bd. of Educ., 245 Ga. 533,
266 S.E.2d 157 (1980) (“the responsible bidder submitting
the lowest acceptable bid”).

The County also argues that the low-bid statute, by its
terms, allows the County to reject “any and all bids”; there-
fore, the County may reject a bid based on a failure to meet
MBE requirements. This argument is again refuted by
Georgia case law. Manly Building Co. v. Newton, 114 Ga. 245,
40 S.E. 274 (1901), is the seminal case discussing the low-bid
statute. The Manly court noted that the original statute had
no provision in it for rejecting any and all bids, nor did it
allow for sealed bids. Id. at 249, 40 S.E. at 276.-In 1881, the
statute was amended to add these provisions. Id. at 249-50,
40 S.E. at 276. A unanimous Georgia Supreme Court in dis-
cussing the meaning of the statute noted:

The plain meaning of the first section of the act as
amended is, that county authorities may, after due
advertisement, cause a court-house to be built by
letting out the contract therefor to the lowest bid-
der at public outcry before the court-house door,
or they may advertise for sealed proposals for the
erection of the building, and let the contract
thereunder. They may do either in the first in-
stance; or they may, if they have undertaken to let the
contract to the lowest bidder before the court-house
door and have rejected all bids, then proceed to adver-
tise for sealed proposals.

Id. at 251, 40 S.E. at 277 (emphasis added). The court went
on to explain:

22a

ee ee

The provision allowing the county to reject any
and all bids was found to be necessary, we sup-
pose, because of the fact that, by a combination
between bidders at a public letting, the county
might be forced to pay a price largely beyond the
value of the work, ... hence for the protection of a
county, came the enactment of the provision giv-
ing the right to reject any and all bids at such let-
ting.

Id. at 250, 40 S.E. at 276. Therefore, the purpose of the “any
and all” provision was to protect a county against collusion
by contractors at a public letting. The provision was not in-
tended to allow a county to reject sealed low bids submitted
by qualified contractors.

Indeed, the purpose of the statute, we believe, is the
same as the Atlanta City Charter provision construed in
Georgia Branch: to “insure the interest of the public in having
contracts awarded without favoritism so that projects will
be done . . . without excessive cost, and constructed at the
lowest price consistent with the reasonable quality and ex-
pectation of completion.” Georgia Branch, 253 Ga. at 399, 321
S.E.2d at 327 (quoting City of Inglewood-L.A. County Civic
Center Auth. v. Superior Court, 7 Cal. 3d 861, 103 Cal. Rptr.
689, 692, 500 P.2d 601, 605 (1972). Other Georgia cases have
similarly emphasized that the purpose of the statute is to
obtain quality work at the lowest possible cost. See, e.g.,
Mark Smith Constr. Co. v. Fulton County, 248 Ga. 694, 285
S.E.2d 692 (1982); Hilton Constr. Co. v. Rockdale County Bd. of
Educ., 245 Ga. 533, 266 S.E.2d 157 (1980).

23a

The County makes a final argument that it had author-
ity to enact the program under its home rule charter, which
is found in the Georgia Constitution. It reads as follows:

The governing authority of each county shall have
legislative power to adopt ... resolutions ... for
which no provision has been made by general law
and which is not inconsistent with this constitu-
tion or any local law applicable thereto.

Ga. Const. art. IX, § 2, par. 1. Because provision has been
made by general law for the letting of public works con-
tracts, and the Fulton County MBE Program conflicts with
that general law, the home rule charter does not authorize
the County to enact the program.

Finally, we note that in 1986 the Georgia legislature en-
acted O.C.G.A. § 36-10-2.1, which permits Georgia counties
of a certain size to consider compliance with an MBE
program as an element of a bidder's responsibility."* Fulton
County argues the enactment of this statute affirms the
County’s authority to take MBE compliance into account in
letting contracts prior to 1986. Groves asserts the enactment
of the statute proves the County did not have such authority
before 1986. We agree with neither position. The enactment
of a statute by a Georgia legislature in 1986 sheds no light
on the intent of a nineteenth-century Georgia legislature.

3. Fulton County’s Defenses

Because Fulton County had no authority to enact the
1982 MBE Program, by awarding the airport project contract
to Dickerson, Inc., instead of Groves, the lowest responsible

© Fulton County is the only county that meets the size specifications of
the new statute.

24a

bidder, the County violated the state low-bid statute. The
County may escape liability if it has a defense to its viola-
tion of state law. Fulton County offers three defenses: pre-
emption, reliance on presumptively valid federal regula-
tions, and constitutional estoppel.

a. Preemption

The County’s first defense to its violation of the
Georgia low-bid statute is that the DOT regulations, upon
which tlie 1982 MBE Program was based, preempt the state
statute. Of course, when Congress acts pursuant to its dele-
gated powers, conflicting state law must yield. See generally
J. Nowak, R. Rotunda, J. Young, Constitutional Law (3d ed.
1986) § 9.1. Further, regulations promulgated pursuant to a
congressional delegation of authority can also preempt state
law. See Fidelity Fed. Sav. & Loan Ass’n v. De La Cuesta, 458
U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982).

However, only measures that are constitutional may
»~reempt state law. The Supremacy Clause, from which the
preemption doctrine derives;see id. at 152, 102 S.Ct. at 3022,
provides that: “This Constitution, and the Laws of the
United States which shall be made in pursuance thereof ... shall
be the supreme Law of the Land ...” U.S. Const. art. VI, cl. 2
(emphasis added). Chief Justice Marshall stated that “[t'he
appropriate application of that part of the clause which con-
fers the same supremacy on laws and treaties, is to such acts
of the State legislatures as do not transcend their powers,
but, though enacted in the execution of acknowledged State
powers, interfere with, or are contrary to the laws of
Congress, made in pursuance of the Constitution ...” Gibbons v.
Ogden, 22 US. (4 Wheat.) 1, 211, 6 L.Ed. 23 (1824) (emphasis
added). See also Pacific Gas and Elec. Co. v. State Energy Re-
sources Conservation & Dev. Comm'n, 461 U.S. 190, 203, 103

2a

ae ee

S.Ct. 1713, 1722, 75 L.Ed.2d 752 (1983) (“It is well established
that within constitutional limits Congress may preempt state
authority ...”) (emphasis added); Jones v. Rath Packing Co.,
430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 reh’g
denied, 431 U.S. 925, 97 S.Ct. 2201, 53 L.Ed.2d 240 (1977)
(same); Rollins Environmental Services (FS), Inc. v. Parish of St.
James, 775 F.2d 627, 634 (5th Cir.1985) (same). To hold that
Congress could preempt state laws by enacting unconstitu-
tional acts would be directly contrary to deeply rooted
principles of Federalism.’7 Consequently, we conclude that
Fulton County’s preemption defense is only available if the
DOT regulations are constitutional.

1. The Constitutionality of the DOT Regulations

As an initial matter, we must dispose of two questions
of authority: Congress’s authority to enact the program em-
bodied in the DOT regulations and the DOT’s authority to
create such a program. These initial inquiries are mandated
both by Supreme Court precedent, see Fullilove v. Klutznick;
448 U.S. 448, 476-77, 100 S.Ct. 2758, 2773-74, 65 L.Ed.2d 902
(1980), and by precedent in this circuit, see South Florida
Chapter of the Associated Gen. Contractors of America, Inc. v.
Metropolitan Dade County, 723 F.2d 846, 852 (11th Cir.), reh’g
denied, 729 F.2d 1468, cert. denied, 469 U.S. 871, 105 S.Ct. 220,
83 L.Ed.2d 150 (1984).

The first question is answered by Fullilove. There, the
Supreme Court decided that Congress had “employed an
amalgam of its specifically delegated powers” in enacting
an MBE program similar to the MBE program contained in

'7 We do not agree that, “like Tinker Bell, [federalism] must be close to
expiring because no one believes in it anymore.” The Third Death of Fed-
eralism, 3 Const’| Commentary 293, 294 (D. Bryden & Farber, eds.).

26a

the DOT regulations. Fullilove, 448 U.S. at 473, 100 S.Ct. at
2772. The answer to the second question is unfortunately
not as Clear.

Federal regulations have no less preemptive effect than
federal statutes. Fidelity Fed. Sav. & Loan Ass'n v. De La
Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664
(1982). However, regulations must not be “unreasonable,
unauthorized, or inconsistent with” the statute that autho-
rizes them. Free v. Bland, 369 U.S. 663, 668, 82 S.Ct. 1089,
1093, 8 L.Ed.2d 180 (1962). “What is important is that the
reviewing court reasonably be able to conclude that the
grant of authority contemplates the regulations issued.”
Chrysler Corp. v. Brown, 441 U.S. 281, 308, 99 S.Ct. 1705, 1721,
60 L.Ed.2d 208 (1979).

The DOT identifies eight sources of authority for the
regulations:

(1) Section 905 of the Railroad Revitalization and
Regulatory Reform Act of 1976;

(2) Title VI of the Civil Rights Act of 1964;

(3) Section 30 of the Airport and Airway Devel-
opment Act of 1970;

(4) The Urban Mass Transportation Act of 1964;

(5) The Federal Property and Administrative Ser-
vices Act of 1949;

(6) Title 23 of the U.S. Code (relating to federal
highways and highway safety);

(7) Executive Order 11625;
(8) Executive Order 12138.

27 a

49 C.F.R. § 23.1(b).

Whether some of these sources of “authority” could be
construed to allow the DOT to enact an affirmative action
program is questionable, at the very least. However, we
need address only the Airport and Airway Development
Act of 1970 (AADA) because we conclude section 30 of the
Act authorizes the DOT to enact its MBE program. That
section provides:

The Secretary shall take affirmative action to assure
that no person shall, on the grounds of race, creed,
color, national origin, or sex, be excluded from
participating in any activity conducted with funds
received from any grant made under this chapter.
The Secretary shali promulgate such rules as the
Secretary deems necessary to carry out the purposes of
this section and may enforce this section, and any
rules promulgated under this section, through
agency and department provisions and rules
which shall be similar to those established and in
effect under Title VI of the Civil Rights Act of
1964.

49 U.S.C.App. § 2219 (emphasis added).

For two reasons we believe the quoted passage may be
fairly interpreted as a congressional delegation of the power
to enact a program such as the MBE Program at issue here.
First, the actual language of the statute indicates a broad
delegation of power to the DOT to create regulations neces-
sary to ensure there is no discrimination by recipients of
federal funds under the AADA. Second, the statute en-
dorses rules similar to those established under Title VI of
the Civil Rights Act of 1964, 42 U.S.C. § 2000d, and those

28 a

rules condone, and in some cases require, race-conscious
regulations and/or action. See 49 C.F.R. § 21.5(b)(7).

Having decided that the DOT acted within the bounds
of properly delegated congressional authority in creating
the MBE regulations, we next must determine the proper
standard by which to evaluate the constitutional validity of
the DOT regulations. The district court relied on the plural-
ity opinions in Wygant v. Jackson Board of Education, 476 U.S.
267, 106 S.Ct. 1022, 90 L.Ed.2d 260, reh’g denied, 478 US.
1014, 106 S.Ct. 3320, 92 L.Ed.2d 728 (1986), and U.S. v.
Paradise, 480 U.S. 149, 107 S.Ct. 1053, 94 L.Ed.2d 203 (1987),
to conclude that the strict scrutiny standard “applies to
racial classifications that operate against non-minorities.”
S.J. Groves & Sons Co., 696 F.Supp. at 1485 and n. 8. Our
assessment of relevant case law tells us that the resolution of
the proper standard to be applied to the DOT regulations is
difficult. After wading through the morass of often
conflicting majority, plurality and dissenting opinions that
deal with race-conscious affirmative action programs issued
by the members of the Supreme Court, we conclude that the
district court, quite understandably, applied the incorrect
standard.

In Fullilove, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902
(1980), the Supreme Court reviewed the constitutionality of
an MBE program contained in section 193(f)(2) of the Public
Works Employment Act of 1977. The principal opinion in
Fullilove, written by Chief Justice Burger, id. at 472, 100 S.Ct.
at 2771, although stating that the program must be subject
to “close examination,” did not explicitly set out the appli-

29a

cable standard."* Instead, in upholding the constitutionality
of the program the opinion noted the unique remedial au-
thority of Congress under section five of the Fourteenth
Amendment and the deference to which Congress is entitled
when it acts pursuant to that provision, id. at 472 & 483, 100
S.Ct. at 2771 & 2777, the abundant evidence available to
Congress of past discrimination in the construction indus-
try, id. at 458-67, 100 S.Ct. at 2764-69, and the provision for
waivers of the MBE requirements where no MBEs were
available or where an MBE sought to unfairly take advan-
tage of its position by charging exorbitant prices. Id. at 487-
88, 100 S.Ct. at 2779-80.

A plurality of the Court in Wygant employed strict
scrutiny in analyzing the constitutionality of a local school
board’s policy of extending preferential protection against
lay-offs to minority employees. Wygant, 476 U.S. at 273-74,
106 S.Ct. at 1846-47. In Local 28 of Sheet Metal Workers’ Inter-
national Association v. EEOC, 478 U.S. 421, 106 S.Ct. 3019, 92
L.Ed.2d 344 (1986), the constitutionality of a court-ordered
affirmative action program was at issue. A plurality of the
Court noted that “[w]e have not agreed ... on the proper
test to be applied in analyzing the constitutionality of race-
conscious remedial measures ... We need not resolve the

'8 In analyzing fragmented Supreme Court opinions where no single de-
cisional rationale has gained approval of the majority of the Court, lower
federal courts should view the Court's holding “as that position taken by
those Members who concurred in the judgments on the narrowest
grounds.” Marks v. United States, 430 U.S. 188, 193, 97 S.Ct. 990, 993, 51
L.Ed.2d 260 (1977) (quoting Gregg v. Georgia, 428 U.S. 153, 169 n. 15, 96
S.Ct. 2909, 2923 n. 15, 49 L.Ed.2d 859 (1976)). Following this rule, the
opinion written by Chief Justice Burger is the principal opinion in
Fullilove.

30a

dispute here, since we conclude that the relief ordered in
this case passes even the most rigorous test...” Local 28, 478
US. at 480, 106 S.Ct. at 3052. A plurality of the Court came
to the same conclusion in Paradise, where the constitutional-
ity of a court-ordered promotion scheme was at issue.
“[A]lthough this Court has consistently held that some ele-
vated level of scrutiny is required when a racial or ethnic
distinction is made for remedial purposes, it has yet to reach
consensus on the appropriate constitutional analysis.[] We
need not do so in this case, however, because we conclude
that the relief ordered survives even strict scrutiny analy-
sis...” Paradise, 480 U.S. at 167, 107 S.Ct. at 1064. In short, at
least until 1989, no five members of the Supreme Court had
agreed (at least in the same case) upon the proper standard
for reviewing affirmative action programs.”

19 The variety of standards put forth by the various members of the Court
is somewhat astonishing. See, e.g., Paradise, 480 U.S. at 187 n. 2, 107 S.Ct. at
1075 n. 2 (Powell, J., concurring) (“all government imposed affirmative
action plans must be closely scrutinized”); id. at 197, 107 S.Ct. at 1080
(O’Connor, J., dissenting) (rejecting version of strict scrutiny applied by
plurality because it “adopts a standardless view of ‘narrowly tailored’ far
less stringent than that required by strict scrutiny.”); Wygant, 476 U.S. at
274, 106 S.Ct. at 1847 (Powell, J., plurality opinion) (means chosen must
be narrowly tailored to achieve a compelling governmental interest); id. at
284, 106 S.Ct. at 1852 (O’Connor, J., concurring) (same); id. at 301-02, 106
S.Ct. at 1861 (Marshall, J., dissenting) (remedial use of racial measures is
permissible if it serves “ ‘important governmental objectives’ ” and is
“substantially related to achievement of those objectives’” (quoting Uni-
versity of California Regents v. Bakke, 438 U.S. 265, 359, 98 S.Ct. 2733, 2783,
57 L.Ed.2d 750 (1978)); id. at 313, 106 S.Ct. at 1867 (Stevens, J., dissenting)
(both public interest served by racial classification and means employed
must justify adverse effects on the disadvantaged group); Fullilove, 448
U.S. at 507, 100 S.Ct. at 2789 (Powell, J., concurring) (review should not be
Strict in theory and fatal in fact); id. at 491, 100 S.Ct. at 2781 (Burger, J.,

3la

Oe, ee

In City of Richmond v. ].A. Croson Co., 488 U.S. 469, 109
S.Ct. 706, 102 L.Ed.2d 854 (1989), a majority of the Court
seemed to settle on a strict scrutiny standard for all gov-
ernment measures containing racial classifications. In Cro-
son, the court held an MBE program developed by Rich-
mond unconstitutional. Croson, 488 U.S. at 505, 109 S.Ct. at
727. Justice Scalia noted his agreement with the Court’s con-
clusion that “strict scrutiny must be applied to all govern-
mental classification by race, whether or not its asserted
purpose is ‘remedial’ or ‘benign.’ ” Id. at 520, 109 S.Ct. at 735
(Scalia, J., concurring). Several commentators agreed that a
single standard had finally been settled on.”°

principal opinion) (“Any preference based on racial or ethnic criteria
must necessarily receive a most searching examination to make sure that
it does not conflict with constitutional guarantees”); id. at 537, 100 S.Ct. at
2805 (Stevens, J., dissenting) (“Racial classifications are simply too perni-
cious to permit any but the most exact connection between justification
and classification”); Bakke, 438 U.S. at 291, 98 S.Ct. at 2748 (1978) (Powell,
J., joined by White, J.) (“Racial and ethnic distinctions of any sort are
inherently suspect and thus call for the most exacting judicial
examination”).

20 See, e.g., Freeman, Antidiscrimination Law: The View from 1989, 64
Tul.L.Rev. 1407, 1432 (1990) (“remedial racial classifications are
henceforth to be treated as ‘suspect’ and subjected to the same ‘strict
scrutiny’ applied in racial discrimination cases.”); Fried, Affirmative Action
After City of Richmond v. J.A. Croson Co.: A Response to the Scholars’
Statement, 99 Yale L.J. 155, 156 (1989) (“For the first time a majority of the
Court holds unequivocally that racial classifications ... must pass strict
scrutiny and be justified by a compelling governmental purpose”);
Rosenfeld, Decoding Richmond: Affirmative Action and the Meaning of
Constitutional Equality, 87 Mich.L.Rev. 1729, 1731 (1989) (“a majority on
the Court for the first time has settled on a single standard-the strict
scrutiny test”); Sullivan, City of Richmond v. J.A. Croson Co.: The Backiash
Against Affirmative Action, 64 Tul.L.Rev. 1609, 1611 (1990) (“the Court

32a

If Croson were the Supreme Court's latest word on this
question, we would probably agree that the district court, in
applying the strict scrutiny standard to the DOT regula-
tions, had proceeded correctly. However, Croson is not the
Court’s most recent treatment of affirmative action. On the
final day of the Court’s last Term, Metro Broadcasting, Inc. v.
FCC, __ U.S.___, 110 S.Ct. 2997, 111 L.Ed.2d 445 reh’g
denied, __~*U.S. __, 111 S.Ct. 15, 111 L.Ed.2d 829, was
decided. Although the issue is hardly free of doubt, our
reading of Metro Broadcasting leads us to conclude that the
Supreme Court would utilize an intermediate level of
scrutiny in evaluating the DOT regulations. With the benefit
of the opinion in Metro Broadcasting, which of course was
decided after the district court issueq its orders in this case,
we conclude that the district court qrred in subjecting the
regulations to the most stringent strict\scrutiny standard.

In Metro Broadcasting, the Court considered the ques-
tion “whether certain minority preference policies of the
Federal Communications Commission violate the equal
protection component of the Fifth Amendment.” /d. at__,
110 S.Ct. at 3002. One of the challenged policies awards an
enhancement for minority ownership and participation in
management in evaluating applications for new broadcast
licenses. Id. at __, 110 S.Ct. at 3004-05. The second chal-
lenged policy allows distress sales to be resolved with a
noncompetitive hearing, if the buyer is a minority enter-
prise. Id. at ___, 110 S.Ct. at 3005. The Court upheld both
policies, applying intermediate scrutiny in doing so. Id. at

invalidated the Richmond plan under a standard of strict scrutiny upon
which a majority coalesced.”); see also Washington, Minor Set-Aside
Programs After City of Richmond v. J.A. Croson Co., 19 Stetson L.Rev. 833,
841-42 (1990).

33a

alee

___, 110 S.Ct. at 3002. The Court held “that benign race-con-
scious measures mandated by Congress[]-even if those
measures are not ‘remedial’ in the sense of being designed
to compensate victims of past government or societal dis-
crimination-are constitutionally permissible to the extent
that they serve important governmental objectives within
the power of Congress and are substantially related to
achievement of those objectives.” Id at ___, 110 S.Ct. at
3008-09.

The majority opinion” made it clear that Croson “does
not prescribe the level of scrutiny to be applied to a benign
racial classification employed by Congress.” Id. at ____, 110
S.Ct. at 3009. The opinion instead relied on Fullilove, assert-
ing that a “majority of the court in Fullilove did not apply
strict scrutiny to the race-based classification at issue.” Id. at
___, 110 S.Ct. at 3008. A clear demarcation between affirma-
tive action programs developed by state and local govern-
ments and those developed at the direction of Congress was
drawn. “It is of overriding significance in these cases that
the FCC’s minority ownership programs have been specifi-
cally approved-indeed mandated-by Congress.” Id.

Therefore, it seems to us that the Court has created a
dual inquiry for evaluating affirmative action programs.
First, we must determine whether a state or local govern-
ment has developed the program, or whether Congress has
authorized the program’s creation. If the former, a court
must strictly scrutinize the program. That is, the means cho-

7 Justice Brennan wrote the majority opinion; he was joined by Justices
White, Marshall, Blackmun and Stevens. Justice Stevens also filed a con-
curring opinion, but specifically joined both the opinion and judgment of
the Court. See Metro Broadcasting, __. U.S. at __, 110 S.Ct at 3028
(Stevens, J., concurring).

34a

sen must be narrowly tailored to achieve a compelling gov-
ernmental interest. If the latter, however, then an intermedi-
ate level of scrutiny is appropriate. The program must serve
an important governmental interest and the means must be
substantially related to the achievement of that objective.
Because Congress authorized the creation of the MBE pro-
gram contained in the DOT regulations, the district court
should have applied an intermediate level of scrutiny in
evaluating the regulations. We will therefore remand the
case for reconsideration in light of the appropriate standard.
In the interest of judicial economy, however, we will ad-
dress the County’s other defenses.

b. Reliance

Fulton County’s next defense is that it should not be
held liable for violating the Equal Protection Clause when,
in creating the 1982 MBE Program, it was only relying on
presumptively valid federal regulations. The short answer
to this defense is that the County is not being held liable for
the violation of any federal right. Rather, its potential
liability is based on violation of the Georgia low-bid statute.
The question remains, however, whether Fulton County’s
reliance on what it believed were constitutional federal
regulations is a defense in this suit.

We note initially that we have trouble allowing a local
government to plead reliance on federal regulations when
the local government voluntarily relied on those regulations.
Fulton County argues as though the federal government
forced it to apply for a grant under the AADA. Obviously,
the County could have chosen other means to raise the
funds to repair the Brown Field runway. On the other hand,
the County argues that as far as it was aware, the AADA

35a

——————————————————

grant program and the accompanying DOT regulations that
the County was required to comply with in order to qualify
for the grant, were valid exercises of federal authority. Pre-
sumably then, the County’s argument is actually that it has
a right to rely on federal regulations (at least until they are
declared invalid) to preempt conflicting state law.

The County’s defense is foreclosed by the recent
Supreme Court decision in American Trucking Ass’ns v.
Smith, __ U.S. ___, 110 S.Ct. 2323, 110 L.Ed.2d 148 (1990). In
that case, five justices rejected the notion that “the constitu-
tionality vel non of [a statute or regulation] turns on whether
state officials in a particular state could have anticipated
that such a [statute or regulation] would violate the Consti-

tution ....” Id. at ____, 110 S.Ct. at 2345 (Stevens, J., dissent-
%ing).” As Justice Scalia explained,

To hold a governmental act to be unconstitutional
is not to announce that we forbid it, but that the
Constitution forbids it; and when, as in this case,
the constitutionality of a state statute is placed in
issue, the question is not whether some decision
of ours “applies” in the way that a law applies; the

‘question is whether the Constitution, as inter-
preted in that decision, invalidates the statute.
Since the Constitution does not change from year
to year; since it does not conform to our decisions,
but our decisions are supposed to conform to it;
the notion that our interpretation of the Constitu-
tion in a particular decision could take prospective
form does not make sense.

2 The four dissenters and Justice Scalia (concurring in the judgment)
took this position.

36a

The court acknowledges the county's request for summary judgment
that on this count plaintiff could not recover lost profits and overhead.
However, the county has cited absolutely no Georgia authority for the
proposition that profits and overhead are not recoverable by a
disappointed bidder, if the county breaches its promise. The cases cited
by the defendant for this proposition both deal with bidders for contracts
to be let by the United States, and state the rule in Court of Claims cases
that lost profits and overhead are not recoverable. Keco Industries Inc. vs.
United States, 428 F 2d 1233 (Ct.Cl. 1970); Collins & Company vs. Claytor 476
F. Supp. 407 (N.D .Ga. 1979) Whatever the rule is with respect to claims
against the United States, these cases have no application to the case
wherein it was Fulton County who solicited the bids. That would be
controlled by Georgia law, and the defendant has cited none. The motion
for summary judgment on this point is DENIED without prejudice, and
defendant may renew it within thirty (30) days from the date of receipt of
this order if it so desires.

We

|

was forced to comply in order to obtain funds for this fed-
eral project. Plaintiff has conceded that, as regards the air-
port project, even if the defendant’s actions violated the
low-bid statute, that statute would be preempted.

As plaintiffs point out, in order for federal regulations
to preempt a state statute, the regulations must be rooted in
a congressional delegation of authority and be enacted pur-
suant to the procedures mandated by Congress. In Chrysler
Corporation vs. Brown, 441 U.S. 281, 295-308 (1979), the Court
held that properly promulgated, substantive agency regula-
tions have the “force and effect” of law and preempt con-
flicting state laws. Chrysler, 441 U.S. at 295-96. For regula-
tions to have the “force and effect” of law, the Court contin-
ued, the regulations must flow from a congressional dele-
gation of authority and comply with any procedural re-
quirements imposed by Congress. Id. at 301-03. Overall, the
reviewing court must reasonably be able to conclude that
the issued regulations were contemplated in the grant of
rule-making authority by Congress. Id. at 308.

The question of the validity of the DOT regulations
with which Fulton County purportedly complied in enact-
ing the airport program is therefore pertinent to this case in
determining the preemption issue. To explain, the parties’
arguments flow as follows. Plaintiffs contend that the air-
port program violates the Georgia Constitution,‘ the

* The court notes that Count Ill of the third amended complaint contains
a claim under the due process clause of the Georgia Constitution. Both
parties’ cross-motions for summary judgment refer to “Count III” in the
captions to their cross-motions; however, neither party discusses due
process concepts at all in their briefs, and no authority is provided as to
why either side should be granted summary judgment on due process
claims. The court acknowledges that it is possible that there is a

31¢c

Georgia low-bid statute, the equal protection clause of the
Federal Constitution, and Title VI (42 USC §2000d). The
defendant has responded to plaintiffs’ contentions by argu-
ing that the program was enacted in compliance with fed-
eral regulations. From this, defendant draws two inferences:
first, plaintiffs’ state law claims are preempted; and second,
plaintiffs’ federal claims fail because no intent to discrimi-
nate motivated the defendant to enact the program. In re-
sponse, the plaintiff alleges that the DOT regulations are not
valid, so that preemption does not apply to the state claims.
Without the DOT regulations to support the program,
plaintiff further argues, the program constitutes intentional

typographical error in the main complaint, such that plaintiff intended to
assert a claim under the equal protection clause of the Georgia
Constitution. The complaint does not refer to the records “due process”
or “equal protection” rather, the complaint refers to Article I, Section 1,
Paragraph 1, of the Georgia Constitution. That is the due process pro-
vision; however, Article I, Section 1, Paragraph 2, is the equal protection
provision of the Georgia Constitution, which the parties have discussed.
To the extent that plaintiffs attempt to state a claim under the equal pro-
tection clause of the Georgia Constitution, the court notes that as a matter
of Georgia law, Georgia’s Constitution incorporates by reference all of the
standards in cases that discuss the federal equal protection clause.
McDaniel vs. Thomas, 248 Ga. 633, 638 (1981), citing State of Georgia vs.
Sanks, 225 Ga. 88 (1969). To the extent that plaintiff intended to assert a
claim for equal protection violations under the Georgia Constitution, the
issue shall be discussed below. Plaintiff may have ten (10) days from the
date of receipt of this order to amend the complaint to refer to the equal
protection clause of the Georgia Constitution, if that is what plaintiff
intended. If, however, plaintiff intended what it said, and meant to state a
claim under the due process clause of the Georgia Constitution, then both
motions for summary judgment are DENIED, on the grounds that there is
no argument or authority in support of either motion.

32¢

ee

race-conscious discrimination which does not satisfy the test
set out in South Florida Chapter, discussed above.

There is no dispute in this case that the airport program
was enacted solely to comply with federal regulations.
These regulations, discussed above, require recipients of
federal funds for airport renovation to enact a minority
business plan for the project. There is no evidence of record,
or argument by plaintiffs, that the defendant’s program
failed to comply with the regulations in any respect. Thus,
in order to determine the state law issue raised by this case,
the court will have to determine the validity of the federal
regulations. If they are not valid, they cannot preempt the
low-bid statute. If, however, the regulations are valid, they
preempi the low-bid statute. Having determined what the
issue is, the court concludes that it will defer deciding it. For
the reasons discussed below, the court believes the Federal _
Department of Transportation should be joined in this ac-
tion as a defendant, pursuant to Fed. R. Civ. P. 19(a).
Therefore, in the interest of having a full record on which to
decide the question of the validity of the regulations, the
court will defer consideration of the cross-motions for
summary judgment on the state law claims relating to the

airport program.
b) The Federal Claims

The amended complaint asserts two federal claims as
regards the airport program: First, the complaint alleges
that the program violates Title VI of the Civil Rights Act, 42
USC §2000d, and second, the complaint alleges that the pro- .
gram violates the equal protection clause of the United
States Constitution. To redress these alleged wrongs, plain-

33-¢

tiff seeks only money damages. The parties have cross-
moved for summary judgment on these two counts.

The defendant had to have known, in enacting the air-
port program, that it was discriminating on the basis of race.
The question is whether this is-authorized, constitutionally
permissible discrimination, since the program was enacted
to comply with a federal regulation requiring it. The defen-
dant had a choice of seeking or not seeking federal funding
for the project. By choosing ta seek such funding, the defen-
dant has cast its lot with the validity of the Federal
Department of Transportation regulations. To the extent
that the regulations embody a valid affirmative action pro-
gram, the defendant is not liable. However, if the regula-
tions are not valid, the defendant would be liable under
South Florida Chapter. See also Paradise vs. Prescott, ___ F.2d
__, Nos. 84-7053, 84-7564 (11th Cir., August 12, 1985), and
Contractors Association vs. Secretary of Labor, 442 F.2d 159 (3d
Cir.), cert. denied, 404 U.S. 854 (1971).

Pragmatic concerns with the impact of resolution of
this issue have led the court to raise the issue of compulsory
joinder of the Federal Department of Transportation sua
sponte. See Provident Tradesmens Bank & Trust Co. vs.
Patterson, 390 U.S. 102, 111 (1968). If plaintiffs obtain the
monetary relief they seek from Fulton County, because this
court determines that the regulations are invalid, and
therefore plaintiffs also obtain a declaration that such pro-
grams violate the low-bid statute, the defendant will be in
an intolerable position. Having been held liable for comply-
ing with the federal regulations once, Fulton County would
naturally be reluctant to comply with those regulations
again. However, if the Federal DOT is not made a party to
this lawsuit, they will persist in demanding compliance

_ |

with the regulations.’ Thus, Fulton County would either
have to forego obtaining federal funding for important
public works projects, or be obligated to pay damages if
they do.

It is this dilemma which compels the court to turn to
Rule 19(a) of the Federal Rules of Civil Procedure, which pro-
vides, in pertinent part, as follows:

A person who is subject to service of process and
whose joinder will not deprive the court of
jurisdiction over the subject matter of the action
shall be joined as a party in the action if ... (2) he
claims an interest relating to the subject of the
action and he is so situated that the disposition of
the action in his absence may (i) as a practical
matter impair or impede his ability to protect that
interest, or (ii) leave any of the persons already
parties subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obli-
gations by reason of his claimed interest.

This rule is to be applied by looking to the pragmatic,
practical implications of the litigation. Challenge Homes, Inc.
vs. Greater Naples Care Center, Inc., 669 F.2d 667, 669 (11th
Cir. 1982). Thus, even if DOT would not be bound by the
court’s judgment in this case, it should be joined if that
judgment may practically impact upon DOT. Id. at 670.

5 Despite these regulations having been determined to be invalid in
Central Alabama Paving, Inc. vs. James, 499 F. Supp. 629 (M.D. Ala. 1980),
the DOT has continued to enforce them, and obtained a judgment that
they are valid in M. C. West, Inc. vs. Lewis, 522 F. Supp. 338 (M.D.Tenn.
1981).

35¢

Applying the Rule 19(a) criteria, the court determines
that the DOT does have an interest in the subject matter of
this litigation which would be affected by resolution of this
case. A judgment for plaintiffs would constitute preceden-
tial authority that DOT’s substantive regulations are invalid.
That could have far-reaching implications for the DOT. In
Boles vs. Greeneville Housing Authority, 468 F.2d 476 (6th Cir.
1972), Judge Tuttle of this circuit sitting by designation held
that the Department of Housing and Urban Development
was a necessary party under Rule 19(a). The plaintiffs in
Boles sued an urban renewal project, alleging that the plan
for the project, which HUD had approved, violated HUD
regulations and the statute under which they were promul-
gated.

In order to grant the relief sought by the
[plaintiffs] this court would be compelled to hold
in effect that ... [HUD] misconceived its function
and prerogatives under the Urban Renewal Act.
To make such a determination without joining
HUD is to deprive it of the right to defend the
integrity of its administrative decisions in these
areas which so intimately affect its policies and
procedures.

465 F.2d at 479. Therefore, the court concluded that HUD
was “necessary” under Rule 19(a)(2)({i). See Guesnon vs.
McHenry, 539 F.2d 1075, 1078 (Sth Cir. 1976) (citing Boles
with approval). See also McCowen us. Jamieson, 724 F.2d 1421,
1424 (9th Cir. 1984) (Secretary of Agriculture “necessary”
under Rule 19(a)(2)(i) where plaintiff challenges actions of a
defendant who merely followed Secretary's regulations).

In addition to Rule 19(a)(2){i), the court concludes that
the DOT is necessary under Rule 19(a)(2)(ii). As noted
above, the defendant in this action stands a substantial risk
of incurring inconsistent obligations if DOT is not made a
defendant. That is also a ground for Rule 19 joinder. See
Pegues vs. Mississippi State Employment Service, 57 F.R.D. 102
(N.D.Miss. 1972) (where federal regulations inconsistent
within junctive relief sought by plaintiff, federal agency a
necessary party).

In Young vs. Pierce, 544 F. Supp. 1010 (E.D.Tx. 1982), the
court held that HUD was a proper defendant to an action
under Title VI alleging that the agency was permitting dis-
crimination in a federally funded housing project. The court
noted:

To the extent a plaintiff asserts that the federal
agency is violating the terms of the federal statute
... then the action is properly brought against the
agency. In such a circumstance, the agency is a
partner in discrimination, and may be held
responsible for this complicity.

544 F. Supp. at 1015 (cites omitted). Thus, to the extent that
plaintiffs may prevail on their constitutional and Title V1
claims as to Fulton County, DOT may also be liable. See
Central Alabama Paving, supra, in which the Federal DOT
was brought in via a third-party complaint filed by the de-
fendant.

The court is not deciding, by any means, any questions
of the potential liability of DOT in the case at bar. Rather,
the court merely observes that under Rule 19, DOT is a nec-
essary party to the litigation, and should be joined. The
court would benefit from having DOT’s views on the valid-

37 ¢

ity of its regulations, since Fulton County has expressly
disclaimed responsibility for defending them. Moreover,
this is not solely an action for money damages, since the
discussion regarding the low-bid statute and preemption
has wide-ranging future implications due to its precedential
effect. To grant the relief plaintiffs request under state law,
the court would have to declare the regulations invalid.
Therefore, pursuant to Rule 19(a), the court DIRECTS that
the Secretary of Transportation be joined in this action as a
defendant. Fulton County, as the party most gravely im-
pacted by DOT’s absence, is DIRECTED to accomplish ser-
vice of process within twenty days from the date of receipt
of this order. In lieu of a complaint, Fulton County may
serve a copy of this order with the summons. Consideration
of the cross-motions for summary judgment on Counts II
through V is DEFERRED.

The following schedule will control progress of the
next phase of this litigation:
1) DOT to be served by Fulton County within

twenty (20) days from the date of receipt of this
order.

2) The plaintiffs and Fulton County may serve any

complaints they intend to press against DOT not
later than November 1, 1985.

3) The DOT’s time for answering or otherwise
pleading will be controlled by the provisions of
the Federal Rules of Civil Proceduze.

4) Not later than Decembe; 1, 1985, the plaintiffs,
Fulton County, and the DOT shall meet pursuant
to LR 235-2, and 235-3, and file a settlement

38 ¢

certificate and preliminary statement. The parties
shall additionally comply with LR 201-1.

5) A conference is hereby set for the 7th day of
January, 1986, at 10:00 a.m. , in chambers. The
court would like to discuss at that time a
discovery schedule, and briefing schedule on the
issues remaining in the case. Should the parties
desire, the court will also discuss settlement of the
remaining issues.
C. CONCLUSION.

Count-by-count, this order holds as follows. On Count
I, defendant’s motion for summary judgment is DENIED.
On Counts II through V, consideration of the parties’ cross-
motions for summary judgment is DEFERRED pending
joinder of the DOT and further briefing. On Counts VI, VIL,
and VIII, plaintiffs’ motion for summary judgment is
GRANTED, and defendant's cross-motion for summary
judgment is DENIED the defendant is hereby ENJOINED
and RESTRAINED from enforcing the 1984 MBE
Resolution.

IT ISSO ORDERED this 30th day of September, 1985.
‘/s/ J. OWEN FORRESTER
UNITED STATES DISTRICT JUDGE

39¢

Cy

Appendix D

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

S.J. GROVES & SONS COMPANY
and JASPER CONSTRUCTION
COMPANY,
Plaintiffs,
vs. : CIVIL ACTION
: NO. C82-1895A
FULTON COUNTY, et al.,
Defendants.

ORDER

This action is before the court on cross motions for
summary judgment by the plaintiffs and defendant Ful-
ton County on counts II through V of the plaintiffs’
complaint and on the federal defendants’ motion to dis-
miss the county’s cross claim for damages. For the reasons
set out below the plaintiffs’ motion for summary judg-
ment is GRANTED IN PART and DENIED IN PART, the
county’s motion for summary judgment is DENIED, and
the federal defendants’ motion to dismiss the cross claim
is GRANTED.

L CROSS MOTIONS FOR SUMMARY JUDGMENT
ON COUNTS II THROUGH V.

Counts II through V allege that the county’s rejection
of the plaintiffs’ bid on the Fulton County Airport-Brown
Field project violated Georgia’s low bid statute, the equal
protection clause of the Georgia Constitution, Title VI of

1d

the Civil Rights Act of 1964, and the equal protection
clause of the fourteenth amendment. In its September 30,
1985 Order the court, inter alia, deferred these cross mo-
tions pending resolution of the validity of the federal de-
fendants’ MBE regulation. Reliance on a valid federal
regulation would have provided a defense to the plain-
tiffs’ claims against the county in counts II through V — a
valid federal regulation would preempt the state low bid
statute and the state constitution and would be consistent
with Title VI and the fourteenth amendment. However,
in its March 30, 1987 order the court held that the federal
defendants’ MBE regulation violated the equal protection
component of the fifth amendment. The question to be
decided on these cross motions is whether any defenses to
the plaintiffs’ claims in counts II through V remain
available to the county.

A. Count II — Georgia Low Bid Statute.

The county advances two arguments in support of its
contention that the state low bid statute should not be
applied in this case.’ First, the county argues that the fed-
eral regulation, even if invalid, preempts the state statute.
As the court previously noted, however, the regulation’s
validity is critical to the preemption argument: “If [the
regulation is} not valid, [it] cannot preempt the low bid

'The court previously discussed at length the county's argument that
its MBE requirement did not violate the low bid statute at all because
the county had the authority to enact race-conscious contracting re-
quirements. See September 30, 1985 Order, at 12-25. The court con-
cluded that “Georgia law provides no authority for the county’s ac-
tions,” id. at 25, and that the airport program’s MBE requirements vio-
lated the low bid statute unless that statute had been preempted by fed-
eral law.

2d

statute.” Id. at 36. Not one of the cases cited by the county
is to the contrary; all of the cases cited dealt with local
governments’ reliance on valid federal regulations.

Second, the county argues that the state statute is
preempted by the fourteenth amendment; that is, the
county argues that the equal protection clause not only
permitted but affirmatively required the county to im-
pose its MBE program. However, even assuming that the
fourteenth amendment may sometimes require affirma-
tive action and thereby preempt state low bid statutes, this
is not such a case. By the county’s own admission, the
fourteenth amendment requires affirmative action only
to remedy “identified effects of discrimination by a public
body.” Brief in Support of Fulton County’s Motion, at 11
(emphasis supplied). No prior discrimination by Fulton
County in its public contracting has been established here.
While the county vigorously contends that MBEs suffer
from the effects of “past discrimination,” the county has
pointed to no evidence of such past discrimination by
Fulton County.

Conscious of the deficiency, the county relies on the
Eleventh Circuit’s decision in South Florida Chapter of
the Associated General Contractors of America, Inc. v.
Metropolitan Dade County, 723 F.2d 846 (11th Cir. 1984),
in which the court upheld Dade County’s MBE contract-
ing program against an equal protection challenge by
non-minority contractors. As the county emphasizes,
“there was no finding by the district court and the circuit
court that the Dade County government had engaged in
discriminatory practices.” Brief of Defendant Fulton
County in support of its Cross Motion for Summary
Judgment on Counts VI, VII and VIII (filed March 4,

3d

1985), at 18. The county’s implied argument is that the
lack of such a finding in South Flerida Chapter obviates
the need for such a finding in this case.

The county's reliance on South Florida Chapter is
misplaced for two reasons. First, the Eleventh Circuit in
South Florida Chapter did not hold that Dade County’s
affirmative action program was constitutionally required
in spite of state law requiring acceptance of the low bid;
the court merely upheld the affirmative action program
as a constitutionally permissible exercise of the county’s
authority under state law that allowed the county to
waive competitive bidding when doing so was in the
county’s best interest. See 723 F.2d at 850. In short, if a
black contractor had sued Dade County or Fulton County
on the facts presented in South Florida Chapter and in
this case, he would not prevail because he would not
have established intentional discrimination by the coun-
ties. See Washington v. Davis, 426 U.S. 229, 239 (1976). If
there has been no violation of the fourteenth amend-
ment, the fourteenth amendment does not mandate af-
firmative action and therefore does not preempt state law
to the contrary. Second, much of the evidence relied on
by the Eleventh Circuit in South Florida Chapter tends to
establish only societal discrimination, “that is, discrimi-
nation not traceable to [Dade County’s] own actions.”
Wygant v. Jackson Board of Education, 106 S.Ct. 1842, 1854
(1986) (O’Connor, J., concurring). For example, the court
noted the district court’s findings that “past discrimina-
tory practices had impeded the development of black
businesses” and that “there had been identified discrimi-
nation against Dade County black contractors at some
point prior to the county's present affirmative action pro-

4d

gram,” while at the same time acknowledging that “the
present county government had not engaged in discrimi-
natory practices.” 723 F.2d at 853. It is doubtful that such
evidence, which explicitly lacks “some showing of prior
discrimination by the governmental unit involved,”
Wygant, 106 S.Ct. at 1847, provides sufficient justification
for racial classifications (Opinion of Powell, J.). As Justice
Powell wrote for the plurality in Wygant:

No one doubts that there has been serious racial
discrimination in this country. But as the basis
for imposing discriminatory legal remedies that
work against innocent people, societal
discrimination is insufficient and over-
expansive.

106 S.Ct. at 1848 (original emphasis).

B. Counts III, IV and V — State Equal Protection, Title
VI, and Federal Equal Protection.

As the court noted in its September 30, 1985 Order,
the conclusion that the county’s MBE program violated
the state low bid statute makes it unnecessary to decide
the state constitutional issue. See Georgia Branch, Asso-
ciated General Contractors of America, Inc. v. City of At-
lanta, 253 Ga. 397, 398 (1984). The parties’ cross motions
on that issue were denied in the previous order and are
again denied.

The county argues that it cannot have violated the
state and federal constitutions or Title VI because it lacked
a discriminatory intent. The court previously has rejected
the argument, noting that the “defendant had to have
known, in enacting the airport program, that it was dis-
criminating on the basis of race.” September 30, 1985

5d

Order, at 37. The court explicitly held in that order that if
the DOT regulation was not valid the defendant would be
liable under South Florida Chapter on the plaintiffs’
equal protection and Title VI claims. Id. However, as the
county correctly points out, the plaintiffs are entitled only
to the cessation of any discriminatory activity, not to any
monetary relief, on their equal protection and Title VII
claims. Drayden v. Needville Independent School Dis-
trict, 642 F.2d 129, 133 (5th Cir. 1981).

C Other Defenses.

The county asserts three other defenses to the plain-
tiffs’ claims, none of which have merit. First, the county
argues, relying on Fahey v. Mallonee, 332 U.S. 245 (1946),
that the plaintiffs are estopped from challenging DOT's
MBE regulation because they have received benefits un-
der that regulation. The estoppel argument is inapplicable
because the plaintiffs have not received any benefits un-
der the particular grant at issue (the Fulton County Air-
port-Brown Field project), nor under the authorizing
Statute at issue (the Airport and Airway Development Act
of 1970). Moreover, any benefits received by the plaintiffs
on other projects under other statutes subject to the MBE
regulation are not of the same nature as the benefits re-
ceived in Fahey, where a savings and loan challenged the
constitutionality of the act under which it was created. In
fact, it seems incorrect to speak of any but minority-
owned contractors as beneficiaries of the MBE regulation.
The regulation was not designed to nor does it benefit in
any way those non-minority contractors who perform
contracts subject to its provisions.

6d

Second, the county argues that the plaintiffs have
waived their right to object to the MBE regulation by
submitting a bid on the Fulton County Airport project
without objecting to the MBE requirements. “[A] waiver
of constitutional rights in any context must, at the very
least, be clear.” Fuentes v. Shevin, 407 U.S. 67, 95 (1971)
(original emphasis). The “waiver” asserted here is not at
all clear and the county’s argument must be rejected.

Finally, the county argues that the court’s decision
holding the DOT MBE regulation unconstitutional
should not be retroactively applied against the county.
However, the court cannot agree with the county that its
decision establishes “a new principle of law.” Chevron
Oil Company v. Huson, 404 U.S. 97, 106 (1972). The deci-
sion does not overrule “clear past precedent on which
litigants may have relied,” nor does it decide “an issue of
first impression whose resolution was not clearly fore-
shadowed.” Id. The DOT’s MBE regulation had been in-
validated by one court, Central Alabama Paving, Inc. v.
James, 499 F. Supp. 629 (M.D.Ala. 1980), and upheld by
another, M. C. West, Inc. v. Lewis, 522 F.Supp. 338
(M.D.Tenn. 1981). Moreover, many of the court’s reasons
for invalidating the regulation have been basic principles
of affirmative action law since University of California
Regents v. Bakke, 438 U.S. 265 (1978), at the latest.

7The county's non-retroactivity argument would also fail the second
and third prongs of the analysis outlined in Chevron Oil Company if
the court’s decision had announced a new principle. “Retroactive” ap-
plication would not retard the operation of the decision and would not
produce “substantial inequitable results.” Id. at 107. The fact that the
county had imposed its own MBE requirement for public contracting
prior to its acquiescence to the DOT's requirement and that the

7d

II. FEDERAL DEFENDANTS’ MOTION TO DISMISS
FULTON COUNTY’S CROSS CLAIM.

When the federal defendants were joined as parties
to this action Fulton County asserted a cross claim against
the federal defendants seeking money damages for any
amounts the county might be ordered to pay the plaintiffs
in this lawsuit. This court has no jurisdiction over that
claim because of the provisions of the Tucker Act, 28 USC
§1346(a)(2), which provides in pertinent part,

The district courts shall have original
jurisdiction, concurrent with the court of

claims, of: ... any other civil action or claim
against the United States, not exceeding $10,000
in amount.

The above-quoted language by implication “renders
exclusive the Court of Claims’ jurisdiction over claims
against the United States exceeding” $10,000. Keller v.
Merit Systems Protection Board, 679 F.2d 220, 222 (11th
Cir. 1982). Fulton County’s argument that this court’s
order requiring the joinder of the federal defendants su-
persedes any jurisdictional objections is meritless. First,
this court does not have the authority, even if it sought to
do so, to expand its jurisdiction sua sponte. Second, the
order in question merely required the joinder of the fed-
eral defendants; it did not require the assertion by the
county of a cross claim against the federal defendants.
Pursuant to 28 USC §1631, the county’s cross claim against

county’s acceptance of federal funds, and the MBE requirements at-
tached as a condition of receipt, was the county’s voluntary choice
takes much of the force out of the county’s argument that retroactive
application of the court's decision would be inequitable.

8d

the federal defendants will be transferred to the Court of
Claims.

Ill. CONCLUSION.

In summary, the plaintiffs’ motion for summary
judgment on counts II through V is GRANTED as to
counts II, IV and V but DENIED as to count III. Defendant
Fulton County’s motion for summary judgment on the
same counts is DENIED as to all counts. The federal de-
fendants’ motion to dismiss the county’s cross claim for
damages is GRANTED and that claim is TRANSFERRED
to the court of claims pursuant to 28 USC §1631.

SO ORDERED, this 1st day of April, 1987.

/s/J. OWEN FORRESTER
UNITED STATES DISTRICT JUDGE

Appendix E

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

S.J. GROVES & SONS COMPANY,
and JASPER CONSTRUCTION
COMPANY,
Plaintiffs,
vs. CIVIL ACTION
NO. C82-1895A
FULTON COUNTY, et al.,
Defendants.

ORDER

This action is before the court on the plaintiffs’ re-
quest for injunctive relief against the federal defendants
and on the parties’ supplemental briefs addressing the
applicability of the Eleventh Circuit’s decision in H. K.
Porter Company, Inc. v. Metropolitan Dade County, 825
F.2d 324 (11th Cir. 1987), petition for cert. filed, 56
U.S.L.W. 3462 (U.S. January 12, 1988) (No. 87-1001).' In its
previous order granting the plaintiffs’ motion for
summary judgment and denying the federal defendants’
motion for summary judgment, the court held that
Subpart C of the Department of Transportation’s MBE
regulation, 49 C.F.R. §§23.01, et seq. (hereinafter “Subpart
C” or “the regulation”), is unconstitutional because it
violates the fifth amendment’s equal protection

* On January 19, 1988 the Supreme Court invited the Solicitor General
to file briefs in the case expressing the views of the United States. 56
U.S.L.W. 3482.

le

component. The plaintiffs now ask this court to enter an
injunction permanently prohibiting the application and
enforcement of Subpart C against the plaintiffs. The
defendants urge the court to reconsider its previous order
in light of H. K. Porter Company. The court will decline
both requests, ror the reasons discussed below.

Plaintiffs’ Request for Injui.ctive Relief

The circumstances under which permanent injunc-
tive relief is appropriate are well established:

To be entitled to permanent injunctive relief
from a constitutional violation, a plaintiff must
first establish the fact of the violation. He must
then demonstrate the presence of two elements:
continuing irreparable injury if the injunction
does not issue, and the lack of an adequate rerm-
edy at law. If the plaintiff makes such a showing,
the court may grant injunctive relief, but the re-
lief must be no broader than necessary to rem-
edy the constitutional violation.

Newman v. State of Alabama, 683 F.2d 1312, 1319 (11th
Cir. 1982) (citations omitted). In this case, the court
concludes that the plaintiffs have not established their
entitlement to injunctive relief.

As a pre|iminary matter, the court notes that the fed-
eral defendants’ opposition to the plaintiffs’ request for
injunctive relief mischaracterizes the scope of the court’s
previous order. According to the federal defendants, the
court found the MBE regulation unconstitutional only as
applied to the Airport and Airway Development Act of
1970, now found at 49 USC §§2201, et seq. Though the
MBE regulation, particularly Subpart C, was applied in

2e

this case via the AADA, Counts IX and X of the plaintiffs’
complaint assert a facial challenge to the constitutionality

of the regulation. The court’s holding that the regulation

is not justified by a compelling governmental interest

and that it is not narrowly tailored to further any such
interest applies to any project where an MBE requirement

is imposed pursuant to Subpart C. Of course, to the extent
that an MBE requirement is imposed pursuant to Subpart
D, as for highway and mass transit projects for which
funds are appropriated under the Surface Transportation

Assistance Act of 1982, Pub.L. 97-424, 96 Stat. 2097, 2100

(1983), or the Surface Transportation and Uniform

Relocation Assistance Act of 1987, Pub.L. 100-17 (April 7,

1987), the court’s previous order does not govern.

Compare H. K. Porter Company, Inc. v. Metropolitan

Dade County, 825 F.2d 324 (11th Cir. 1987).

Injunctive relief is unwarranted because the plain-
tiffs’ injury is not likely continuing. An initial question is
whether the court has power to issue a nationwide in-
junction in appropriate cases. By virtue of its personal ju-
risdiction over the defendants in this case, it is clear that
the court does have such power. See Waffenschmidt v.
MacKay, 763 F.2d 711, 716 (Sth Cir. 1985).

A second question is whether the court may include
other persons or entities within the injunction’s protec-
tion or must limit it to the plaintiffs. The answer to this
question is not without doubt.? Controlling cases ap-

2 Some cases limit the scope of injunctive relief to the particular
plaintiff before the court. See Ameron, Inc. 0. U.S. Army Corps of
Engineers, 787 F.2d 875, 888 (3d Cir. 1986) (in the absence of a certified
class action, plaintiff entitled only to relief for itself; district court's en-
try of declaratory judgment of constitutionality serves only as prece-

3e

prove injunctive relief that extends beyond the particular
plaintiff. See Carmichael v. Birmingham Saw Works, 738
F.2d 1126, 1136 (11th Cir. 1984) (“injunctive relief may
benefit individuals not party to the action, and ...
classwide injunctive reiief may be appropriate in an
individual action”); Professional Association of College
Educators v. El Paso County Community College District,
730 F.2d 258, 274 (5th Cir. 1984) (an injunction “is not
necessarily made overbroad by extending benefit or
protection to persons other than prevailing parties in the
lawsuit — even if it is not a class action — if such breadth
is necessary to give prevailing parties the relief to which
they are entitled”); Meyer v. Brown and Root
Construction Company, 661 F.2d 369, 374 (5th Cir. 1981)
(“Injunctive relief which benefits non-parties may
sometimes be proper even where the suit is not brought
as a Rule 23 class action”). See also Hodel v. Virginia
Surface Mining and Reclamation Association, 452 U.S.
264 (1981) (district court permanently enjoined
enforcement of central provisions of Surface Mining
Control and Reclamation Act of 1977; Supreme Court
reversed on the merits but did not address propriety of in-
junctive relief); Davis v. Richardson, 342 F.Supp. 588
(D.Conn. 1972) (district court enjoined enforcement of
provision of Social Security Act).

dent for subsequent cases); Baeder v. Heckler, 768 F.2d 547, 553 (3d Cir.
1985) (in context of an individual's claim for disability benefits, district
court lacked authority to issue an injunction aimed at controlling the
government's behavior in every disability case in the country). See
also Ali v. Playgirl, Inc., 447 F. Supp. 723 (S.D.N.Y. 1978) (noting that
New York law does not allow injunctions to extend out of state due to

4e-

The plaintiffs in this case are willing to accept an in-
junction limited to the federal defendants’ enforcement
of the MBE regulation against them, but that approach
raises problems in addition to those identified in the
above-cited cases. A nationwide injunction protecting
only the plaintiffs in this case would grant to the plain-
tiffs a competitive advantage over every other bidder on
projects to which Subpart C is applied.

These preliminary questions raised by the plaintiffs’
request for injunctive relief need not be resolved, how-
ever, because the plaintiffs have not established their en-
titlement to permanent injunctive relief under the stan-
dards set out in Newman. It is doubtful whether the
plaintiffs have shown “continuing” injury by their asser-
tions of likely future injury on other, discrete construc-
tion projects. The injury here is not continuing in the
sense that prison overcrowding, for example, can be a
continuing injury. See Newman, 683 F.2d 1312. Nor is it
likely that the injury is truly susceptible of repetition. In
all likelihood, this case will be appealed. If plaintiff pre-
vails, it is doubtful that the government will continue
enforcement of these regulations. McCarthy v. Briscoe,
553 F.2d 1005, 1007 (5th Cir. 1977).

®
For the foregoing reasons, the plaintiffs’ request for
injunctive relief is DENIED.

concern for possible conflicts between New York law and the law of
other jurisdictions.)

5e

Effect of H. K. Porter Company.

The court concludes that the Eleventh Circuit’s deci-
sion in H. K. Porter Company has no effect on the court’s
previous analysis of the MBE regulation under either the
compelling interest or narrowly tailored prongs, and the
court therefore declines to reconsider its previous dispo-
sition of the parties’ motions for summary judgment.

First, the authorizing statute at issue in H. K. Porter
Company is materially different from the AADA, the au-
thorizing statute at-issue here. The court in H. K. Porter
Company concluded that the STAA “reqguire[d] that mi-
nority percentage goals be established as an absolute con-
dition precedent to the receipt of federal funds.” 825 F.2d
at 331 (emphasis added). The relevant portion of the
STAA required the Secretary of Transportation to “take
affirmative action to assure compliance with” the Act’s
prohibition on discrimination in any activity funded un-
der the Act. 49 USC §1615(a)(2). In addition, the court in
H. K. Porter Company relied heavily on the legislative
history of the STAA, where a House Committee Report
stated the Committee’s awareness of and support for a
DOT initiative requiring that percentage goals for minor-
ity participation be established. 825 F.2d at 325, citing H.R.
Rep. No. 95-1485, 95th Cong., 2d Sess., reprinted in 1978
U.S. Code Cong. & Ad. News 6575, 6647.

Unlike the STAA, neither the language nor the lep-
islative history of the AADA require an MBE program.
The statutory language of the AADA is quite similar to
that of the STAA, see 49 USC §2219, but there is nothing
akin to a House Report specifically supporting minority
percentage requirements in the legislative history of the

6e

ADAA. The defendants point only to isolated comments
by two individual representatives, which are entitled to
little weight. See Garcia v. United States, 469 U.S. 70, 76
(1985) (“[T]he authoritative source for finding the
Legislature’s intent lies in the Committee Reports on the
bill.... We have eschewed reliance on the passing com-
ments of one Member and casual statements from the
floor debates.... Committee Reports are ‘more authorita-
tive’ than comments from the floor”) (citations omitted).

Second, the defendants’ interpretation of H. K. Porter
Company brings that case into conflict with the earlier
Eleventh Circuit decision in South Florida Chapter of
Associated Contractors of America v. Metropolitan Dade
County, 723 F.2d 846 (11th Cir.), cert. denied, 469 U.S. 871
(1984). If such a conflict exists, the court is obligated to
follow the earlier decision. See Bonner v. City of Prichard,
661 F.2d 1206, 1209 (11th Cir. 1981) (en banc); Davis v.
Estelle, 529 F.2d 437, 441 (5th Cir. 1976). The defendants
interpret H. K. Porter Company to allow Congress’
findings underlying the Public Works Employment Act
(PWEA) at issue in FuHilove v. Klutznick, 448 U.S. 448
(1980), to be imputed to the DOT’s regulation under the
AADA. South Florida Chapter, on the other hand,
requires the government body seeking to impose
minimum percentage goals to show “that adequate
findings have been made to ensure that the
governmental body is remedying the present effects of
past discrimination rather than advancing one racial or
ethnic group’s interest over another.” 723 F.2d at 851-52.
The adequate findings requirement was satisfied in South
Florida Chapter because the district court found that
“there had been ‘identified discrimination against Dade

7e

County black contractors at some point’” by the Dade
County Government. Id. at 853. The Supreme Court
subsequently imposed the same findings requirement
imposed in South Florida Chapter:

This Court never has held that societal discrim-
ination alone is sufficient to justify a racial clas-
sification. Rather, the Court has insisted upon
some showing of prior discrimination by the
governmental unit involved before allowing
limited use of racial classifications in order to
remedy such discrimination. ... [T]he relevant
analysis in cases involving proof of dis-
crimination by statistical disparity focuses on
those disparities that demonstrate such prior
governmental discrimination.

Wygant v. Jackson Board of Education, 106 S.Ct. 1842, 1847
(1986) (Powell, J.) (emphasis added). See also id. at 1854
(O’Connor, J., concurring) (“I agree with the Court that a
governmental agency’s interest in remedying ‘societal’
discrimination, that is, discrimination not traceable to its
own actions, cannot be deemed sufficiently compelling to
pass constitutional muster under strict scrutiny”).

Other courts have likewise consistently required
findings of past discrimination by the governmental unit
now seeking to prefer MBEs. See, e.g., Michigan
Roadbuilders Association, Inc. v. Milliken, 834 F.2d 583,
589 (6th Cir. 1987) (“If the state had not engaged in
discrimination against racial and ethnic minorities in
awarding contracts to supply the state with goods and
services in the past, then it cannot assert in praesenti that
it has a compelling interest in preferring MBEs in the

8e

award of such contracts”); J]. A. Croson Company v. City of
Richmond, 822 F.2d 1355, 1360 (4th Cir. 1987), petition for
cert. filed, 56 U.S.L.W. 3462 (U.S. January 12, 1988), prob.
juris. noted, 56 U.S.L.W. 3568 (U.S. February 23, 1988) (No.
87-998). (“For a locality to show that it enacted a racial
preference as a remedial measure, it must have had a
firm basis for believing that such action was required
based on prior discrimination by the locality itself”);
Associated General Contractors of California v. City and
County of San Francisco, 813 F.2d 922, 930 (9th Cir. 1987)
(“At a minimum, the state or local government must be
acting to remedy government-imposed discrimination,
perpetrated by it or by one of its departments or
divisions”); ® Edinger and Son, Inc. v. City of Louisville,
Kentucky, 802 F.2d 213, 216 (6th Cir. 1986) (“Thus, the City
should be required to present evidence of invidious
discrimination”); United States v. Starrett City Associates,
56 U.S.L.W. 2504 (2d Cir. March 15, 1988) (noting that the
use of quotas generally should be based on some history
of racial discrimination or imbalance within the entity
seeking to employ them).

Uphol¢ing the regulation in this case withou: inde-
pendent findings of discrimination, by merely imputing
to the DOT in this case the congressional findings under-
lying the PWEA, would not satisfy the findings require-
ment of Wygant and South Florida Chapter because there
would be no way “to ensure that the governmental body
is remedying the present effects of past discrimination
rather than advancing one racial or ethnic group’s inter-
est over another.” 723 F.2d at 851-52. If the defendants’
interpretation of H. K. Porter Company is correct, the
Supreme Court’s approval of the PWEA in Fullilove

9e

effectively did away with the compeiling interest analysis,
at least as applied to “benign” racial preferences in
government contracting. The PWEA was adopted by
Congress and governed the disbursement of particular
funds for only five months, see April 1, 1987 Order at 25,
but the defendants’ interpretation of H. K. Porter
Company makes the findings underlying the PWEA
valid forever and for all legislation or administrative
action. Such an interpretation ignores the obvious gap in
the relative authority and competence of Congress versus
an administrative agency. See Order at 21-23 and notes 19-
21. See also J. A. Croson Company, 822 F.2d at 1360
(“Localities cannot disregard the line between remedial
measures and political transfers by adopting the Fullilove
program as though it were boilerplate’) (emphasis
supplied).

The defendants’ interpretation also ignores regional
variations in the need for such race-conscious remedies
— in many localities, such as the defendant Fulton
County, the groups defined as “minorities” in the MBE
regulation make up a majority of the population and of
the governing officials. The Secretary of Transportation
obviously recognized the reality of such local variations
and therefore declined to specify a national minimum
percentage goal for minority participation in DOT con-
tracts. Instead, each recipient of federal aid is responsible
to set its own numerical goal by determining “the poten-
tial availability of MBEs in desired areas of expertise.” 49
Fed.Reg. § 23.45(g)(1). The defendants’ interpretation of H.
K. Porter Company would allow the DOT to sidestep its
responsibility under Wygant and South Florida Chapter
to point to findings that DOT or Fulton County had in the

10e

past discriminated against minority contractors. In that
event, this court would have no assurance that the de-
fendants were not “advancing one racial or ethnic group’s
interest over another.” 723 F.2d at 851-52. As the court
noted in its previous order:

Since the days of the civil rights struggles in the
sixties two things at least have changed. First,
many of the recipients are governed by
“minorities,” as is the case with Fulton County.
Second, there are many more MBEs that are

- well financed and professionally accomplished.
To insist, for example, that black leaders should
give favor to well-situated black businessmen
does infinitely more to legitimize cronyism
than to remedy any vestigial effect of discrimi-
nation in some locales.

Order at 25 n. 23.

Finally, H. K. Porter Company does not change the
conclusion that the DOT’s MBE regulation is unconstitu-
tional because it is not narrowly tailored. The MBE pro-
gram upheld in H. K. Porter contained safeguards not pre-
sent in the program at issue here. The court in H. K.
Porter Company concluded that the MBE program was
necessary to remedy past discrimination. 825 F.2d at 330.
Here, by contrast, no such discrimination has been
established, see Order at 29, 31, and other remedies do
exist. Id. at 29. Moreover, the program in H. K. Porter
Company was limited to one construction contract, since
the plaintiffs in that case challenged only the county’s
MBE program and not the underlying federal regulations.
825 F.2d at 330-31. Here, the regulation has no durational

lle

limit and is subject to little or no reevaluation. See Order
at 26-28.

In addition, as the previous order explained more
fully, the DOT’s MBE regulation at issue here also lacks
critical safeguards present in the MBE programs approved
in Fullilove and South Florida Chapter. The DOT’s MBE
regulation fails to provide either an administrative com-
plaint procedure for reporting unjust participation by
enterprises that are not bona fide MBEs or a special
waiver to avoid dealing with an MBE whbu is attempting
to exploit the remedial aspects of the program by charging
an unreasonable price, i.e., a price not attributable to the
present effects of past discrimination. Order at 24. Also,
the DOT’s MBE program is based on an over-inclusive
definition of “Minority Business Enterprise” due to its
failure to insist on a combination of minority status and
disadvantage. See Order af 25-26. Courts cannot ignore
any longer the fact that there are now mature minority
enterprises which have overcome the effects of past
discrimination and are capable of being fully competitive,
nor can they ignore political and other abuses in such
programs which cause the funds set aside for
disadvantaged MBEs to be used for purposes other than to
remedy the present effects of past discrimination.

In summary, H. K. Porter Company does not affect
this court’s conclusion that the DOT failed to establish a
compelling interest in promulgating its MBE regulation

> The court in H. K. Porter Company inexplicably considered the find-
ings requirement as part of its narrowly tailored analysis, although
Wygant makes it clear that the findings requirement is part of the
compelling interest analysis. 106 S.Ct. at 1847-49. See also Michigan
Roadbuilders, 834 F.2d at 589-94 and cases cited.

12e

because: (1) the legislative history of the authorizing
statute at issue in H. K. Porter was materially different
from that of the AADA, and (2) the defendants’
interpretation of H. K. Porter conflicts with South Florida
Chapter, which this court is bound to follow in the event
of such a conflict. Regardless of H. K. Porter’s effect on
this court’s compelling interest analysis, H. K. Porter does
not affect the narrowly tailored analysis because the
DOT’s MBE regulation lacks critical safeguards that were
present either in H. K. Porter Company or in Fullilove,
United States v. Paradise, 107 S.Ct. 1053 (1987), or South
Florida Chapter. It is still true that “[t]he regulation gives
little assurance that it will not be misapplied and gives
virtually no assurance that its operation will be limited to
accomplishing its remedial objective,” Order at 33, and
the regulation is therefore unconstitutional. Accordingly,
the court declines to reconsider its previous order
granting the plaintiffs’ motion for summary judgment
on Counts IX and X of their complaint and denying the
federal defendants’ motion for summary judgment on
the same counts.

Conclusion

“The plaintiffs’ request for injunctive relief is
DENIED. The court declines to reconsider its April 1, 1987
order. The Judgment prepared and entered by the Clerk of
the Court on April 1, 1987 and amended on April 9, 1987,
which was withdrawn and vacated by this court’s May 29,
1987 order, is hereby reinstated in its entirety. Pursuant to
Rule 54(b), the court directs the entry of a final judgment
as to Counts IX and X of the plaintiffs’ complaint because
there is no just reason for delay.

13e

SO ORDERED, this 22nd day of April, 1988.

/s/ J. OWEN FORRESTER
UNITED STATES DISTRICT JUDGE

14e

Appendix F

PART 23—PARTICIPATION BY MINORITY BUSINESS

ENTERPRISE IN DEPARTMENT OF
TRANSPORTATION PROGRAMS

SUBPART A—GENERAL

SEC.

23.1 PURPOSE.

23.3 APPLICABILITY.

23.5 DEFINITIONS.

23.7. DISCRIMINATION PROHIBITED.
SUBPART B—{RESERVED]

SUBPART C—DEPARTMENT OF TRANSPORTATION
FINANCIAL ASSISTANCE PROGRAMS

23.41
23.43
23.45
23.47

23.49
23.51

23.53
23.55

GENERAL.

GENERAL REQUIREMENTS FOR RECIPIENTS.
REQUIRED MBE PROGRAM COMPONENTS.
COUNTING MBE PARTICIPATION TOWARD
MEETING MBE GOALS.

MAINTENANCE OF RECORDS AND REPORTS.
CERTIFICATION OF THE ELIGIBILITY OF
MINORITY BUSINESS ENTERPRISES.
ELIGIBILITY STANDARDS.

APPEALS OF DENIALS OF CERTIFICATION AS
AN MBE.

SUBPART D—{RESERVED]
SUBPART E—COMPLIANCE AND ENFORCEMENT

SEC.
23.71
23.73

[RESERVED]
COMPLAINTS.

Tf

23.75 COMPLIANCE REVIEWS OF RECIPIENTS.

23.77 [RESERVED]

23.79 [RESERVED]

23.81 CONCILIATION PROCEDURES FOR FINANCIAL
ASSISTANCE PROGRAMS.

23.83 ENFORCEMENT PROCEEDINGS FOR
FINANCIAL ASSISTANCE PROGRAMS.

23.85 EMERGENCY ENFORCEMENT PROCEDURE.

23.87 WILLFUL PROVISION OF INCORRECT
INFORMATION.

SCHEDULE A—INFORMATION FOR DETEKMINING
MINORITY BUSINESS ENTERPRISE ELIGIBILITY

SCHEDULE B—INFORMATION FOR DETERMINING
JOINT VENTURE ELIGIBILITY

Autuorrry: Sec. 905 of the Railroad Revitalization and
Regulatory Reform Act of 1978 (45 U.S.C. 803); sec. 30
of the Airport and Airway Development Act of 1970,
as amended (49 U.S.C. 1730); sec. 19 of the Urban
Mass Transportation Act 1964, as amended (Pub. L.
95-599); Title 23 of the U.S. Code (relating to
highways and highway safety); Title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d et seq.); The
Federal Property and Administrative Services Act of
1949 (49 U.S.C. 471 et seq.); Executive Order 11625;
Executive Order 12138, unless otherwise noted.

Source: 45 FR 21184, Mar. 31, 1980, unless otherwise
| noted.

2f

SUBPART A—GENERAL
§ 23.1 Purpose.

(a) The purpose of this part is to carry out the
Department of Transportation’s policy of supporting the
fullest possible participation of firms owned and con-
trolled by minorities and women, (MBEs) in Department
of Transportation programs. This includes assisting MBEs
throughout the life of contracts in which they participate.

(b) This part implements in part section 905 of the
Railroad Revitalization and Regulatory Reform Act of
1978 (45 U.S.C. 803); section 30 of the Airport and Airway
Development Act of 1970, as amended (49 U.S.C. 1730);
section 19 of the Urban Mass Transportation Act of 1964,
as amended (Pub. L. 95-599); Title VI of the Civil Rights
..ct of 1964 (42 U.S.C. 2000d et seq.); the Federal Property
and Administrative Services Act of 1949 (40 U.S.C. 471 et
seq.); and Title 23 of the U.S. Code (relating to highways
and highway safety). This regulation supersedes all DOT
regulations issued previously under these authorities,
insofar as such regulations affect minority business
enterprise matters in DOT financial assistance programs.

§ 23.2 Applicability.

This part applies to any DOT program through
which funds are made available to members of the public
for accomplishing DOT’s purposes. Contracts and subcon-
tracts which are to be performed entirely outside the
United States, its possessions, Puerto Rico, and the North
Mariana Islands, are exempted from this part.

§ 23.5 Definitions.

“Affirmative action” means taking specific steps to
eliminate discrimination and its effects, to ensure
nondiscriminatory results and practices in the future, and
to involve minority business enterprises fully in contracts
and programs funded by the Department.

“Applicant” means one who submits an application,
request, or plan to be approved by a Departmental official
or by a primary recipient as a condition to eligibility for
DOT financial assistance; and “application” means such
an application, request, or plan.

“Compliance” means the condition existing when a
recipient or contractor has met and implemented the
requirements of this part.

“Contract” means a mutually binding legal
relationship or any modification thereof obligating the
seller to furnish supplies or services, including
construction, and the buyer to pay for them. For purposes
of this part, a lease is a contract.

“Contractor” means one who participates, through a
contract or subcontract, in any program covered by this
part, and includes lessees.

“Department” or “DOT” means the Department of
Transportation, including its operating elements.

“DOT-assisted contract” means any contract or
modification of a contract between a recipient and a
contractor which is paid for in whole or in part with DOT
financial assistance or any contract or modification of a
contract between a recipient and a lessee.

4f

“DOT financial assistance” means financial aid
provided by the Department or the United States Railroad
Association to a recipient, but does not include a direct
contract. The financial aid may be provided directly in the
form of actual money, or indirectly in the form of
guarantees authorized by statute as financial assistance
services of Federal personnel, title or other interest in real
or personal property transferred for less than fair market
value, or any other arrangement through which the
recipient benefits financially, including licenses for the
construction or operation of a Deep Water Port.

“Departmental element” means the following parts
of DOT:

(a) The Office of the Secretary (OST):

(b) The Federal Aviation Administration (FAA);

(c) The United States Coast Guard (USCG);

(d) The Federal Highway Administration (FHWA);

(e) The Federal Railroad Administration (FRA);

(f) The National Highway Traffic Safety
Administration (NHTSA);

(g) The Urban Mass Transportation Administration
(UMTA); ;

(h) The St. Lawrence Seaway Development
Corporation (SLSDC); ard

(i) The Research and Special Programs
Administration (RSPA).

“Joint venture” means an association of two or more
businesses to carry out a single business enterprise for
profit for which purpose they combine their property,
capital, efforts, skills, and knowledge.

\

5f

“Lessee” means a business or person that leases, or is
negotiating to lease, property from a recipient or the
Department on the recipient’s or Department's facility for
the purpose of operating a transportation-related activity
or for the provision of goods or services to the facility or
to the public on the facility.

“Minority” means a person who is a citizen or lawful
permanent resident of the United States and who is:

(a) Black (a person having origins in any of the black
racial groups of Africa);

(b) Hispanic (a person of Mexican, Puerto Rican,
Cuban, Central or South American, or other Spanish
culture or origin, regardless of race);

(c) Portuguese (a person of Portuguese, Brazilian, or
other Portuguese culture or origin, regardless of race);

(d) Asian American (a person having origins in any
of the original peoples of the Far East, Southeast Asia, the
Indian subcontinen

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_1910%3A2. Public record. Not legal advice.