Opposition Brief — Ellis v. Card

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(3)

No. 92-81

—

OFFICE GF

OCTOBER TERM, 1992

STEPHEN B. ELLIS, PETITIONER

Vv.

ANDREW H. Carp, JR,

SECRETARY OF TRANSPORTATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

KENNETH W. STARR

Solicitor General

JOHN R. DUNNE

Assistant Attorney General

DAVID K. FLYNN

THOMAS E. CHANDLER

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 514-2217

HE CLERK

In the Supreme Court of the United States

BEST AVAILABLE COPY}

BHI NSE RE NAR SEEN ER ELLEN BLEW tee he

ahs

QUESTION PRESENTED

The Surface Transportation Assistance Act of 1982,

Pub. L. No. 97-424, § 105(f), 96 Stat. 2100 (1983), and the

Surface Transportation and Uniform Relocation Assis-

tance Act of 1987, Pub. L. No. 100-17, § 106(c), 101 Stat.

145-146 (1987), together with their implementing regula-

tions, required States receiving federal highway funds to

allocate a portion of those funds to disadvantaged-busi-

ness enterprises (DBEs), including primarily minority-

and women-owned businesses. The question presented is

whether the State of Utah’s implementation of that fed-

erally mandated DBE program violated the Equal Pro-

tection Clause.

(I) ;

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

City of Richmond v. J. A. Croson Co., 488 U.S.

ania neh akiucks deudaheeen ti venahadanaae 6, 8, 10, 11

Fullilove v. Klutznick, 448 U.S. 448 (1980) ............... 2, 6, 8

Harrison & Burrowes Bridge Constructors, Inc. v.

Cuomo, No. 89-CV-447 (N. D.N. Y. Oct. 1, 1991) ...... 9

Milwaukee County Pavers Ass’n v. Fiedler, 922 F.2d

419 (7th Cir.), cert. denied, 111 S. Ct. 2261 (1991) .... 7,9, 12

Tennessee Asphalt Co. v. Farris, 942 F.2d 969 (6th Cir.

a GA do ca ceniaicsunesuvelammesibhaen 7, 9, 10

United Fence & Guard Rail Corp. v. Cuomo, No. 88-CV-

is chendndserdidasaneedasnesncnctcinns 9

Constitution, statutes, and regulations:

U.S. Const. Amend. XIV (Equal Protection Clause)........ 5, 7, 10

Intermodal Surface Transportation Efficiency Act of

1991, Pub. L. No. 102-240, 105 Stat. 1914 «00.0.0... 2

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Public Works Empioyment Act of 1977, Pub. L. No. 95-28,

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Surface Transportation Assistance Act of 1982, Pub. L.

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Regulations—Continued: Page

Surface Transportation and Uniform Relocation

Assistance Act of 1987, Pub. L. No. 100-17, 101 Stat.

132

§ 106(c), 101 Stat. 145-146

49 C.F.R.:

Pt. 23, Subpt. D

Section

App. C

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23.45(g)(5)

23.45(g)(7)

23.45(g)(8)

23.62

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23.64(d)

23.64(e)

23.65

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45 Fed. Reg. 21,187 (1980) (49 C.F.R. 23.45(g)(4))

Miscellaneous:

48 Fed. Reg. (1983):

p. 33,442

p. 33,443

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In the Supreme Court of the Giited States

OCTOBER TERM, 1992

No. 92-81

STEPHEN B. ELLIS, PETITIONER

Vv.

ANDREW H. CARD, JR.

SECRETARY OF TRANSPORTATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 25-35) is

reported at 961 F.2d 912. The opinion and judgment of

the district court (Pet. App. 1-24) are reported at 753 F.

Supp. 329.

JURISDICTION

The judgment of the court of appeals was entered on

April 10, 1992. The petition for a writ of certiorari was

filed on July 9, 1992. The jurisdiction of this Court is in-

voked under 28 U.S.C. 1254(1).

(1)

STATEMENT

1. a. In 1988, Congress enacted the Surface Trans-

portation Assistance Act of 1982 (STAA), Pub. L. No. 97-

424, 96 Stat. 2097 (1983), which authorized federal funds

for interstate highway construction projects. Section

105(f) of that Act provided that “[e]xcept to the extent

that the Secretary determines otherwise, not less than

10 per centum of the amounts authorized to be appropri-

ated under this Act shall be expended with small busi-

ness concerns owned and controlled by socially and eco-

nomically disadvantaged individuals.” 96 Stat. 2100.’ Un-

der the STAA, the term “socially and economically dis-

advantaged individuals” presumptively included Black

Americans, Hispanic Americans, Native Americans,

Asian-Pacific Americans, or Asian-Indian Americans. 48

Fed. Reg. 33,442 (1988).

The STAA expired after four years, and in 1987

Congress enacted the Surface Transportation and Uni-

form Relocation Assistance Act of 1987 (STURAA), Pub.

L.. No. 100-17, 101 Stat. 182 (1987). Section 106(c) of the

STURAA established a ten-percent disadvantaged-busi-

ness enterprise (DBE) program similar to that previ-

ously established in the STAA. 101 Stat. 145-146.’

Under the United States Department of Transporta-

tion (DOT) regulations applicable to STURAA, a

' Section 105(f) was modeled after Section 103 of the Public

Works Employment Act of 1977, Pub. L. No. 95-28, 91 Stat. 116-117

(1977), which created a minority business enterprise (MBE)

program at the Department of Commerce. See Fullilove v.

Klutznick, 448 U.S. 448, 453-454 (1980). This Court upheld the fa-

cial constitutionality of the MBE provision of the Public Works

Employment Act in Fullilove v. Klutznick.

* The STURAA expired in 1991, and that year Congress en-

acted the Intermodai Surface Transportation Efficiency Act of

1991, Pub. L. No. 102-240, 105 Stat. 1914 (1991), which contains a

similar ten-percent DBE goal. § 1003(b), 105 Stat. 1919-1921.

“disadvantaged business” is defined as a small business

concern at least 51% owned and managed by “socially and

economically disadvantaged individuals.” 49 C.F.R. 23.62.

The regulations define “socially and economically

disadvantaged individuals” by establishing a rebuttable

presumption that such individuals include women, Black

Americans, Hispanic Americans, Native Americans,

Asian-Pacific Americans, and Asian-Indian Americans,

or any other minorities or individuals found to be disad-

vantaged by the Small Business Administration. /bid.

The regulations provide that, in appropriate circum-

stances, non-minority firms that are owned by socially

and economically disadvantaged individuals may be in-

cluded in the set-aside program as well. See 49 C.F.R.

23.62 (“Recipients [of federal funds] * * * may deter-

mine, on a case-by-case basis, that individuals who are

not [members of the designated groups] are socially and

economically disadvantaged.”); see also 49 C.F.R. Pt. 23,

Subpt. D, App. C. Likewise, the regulations provide that

minority-owned firms may be denied preferential treat-

ment under certain circumstances. 49 C.F.R. 23.69.

Each recipient of federal highway funds is required to

establish a “challenge procedure” permitting third par-

ties to challenge an individual’s entitlement to disadvan-

taged status. 49 C.F.R. 23.69(a). Businesses that are

owned by persons presumed to be disadvantaged may lose

their presumptive DBE status if ii is determined that

the owners are not in fact socially and economically dis-

advantaged. /bid.

b. The DOT regulations require States receiving fed-

eral highway funds to set annual goals for the use of

DBEs in federally assisted highway construction pro-

jects. 49 C.F.R. 23.64. The STAA and the STURAA

each established a nationwide goal of ten-percent partici-

pation by DBEs, but the regulations permit States to de-

viate upward or downward from the ten-percent annual

goal in certain circumstances. 49 C.F.R. 23.64(d) and (e).

In setting its annual goal, a State must consider the

number and types of contracts to be awarded, the number

of DBEs available to compete for those contracts, and the

results of past efforts to contract with DBEs. 49 C.F.R.

23.45(g)(5); see also 49 C.F.R. 23.45(g)(1).

A State seeking approval of an annual goal of less than

ten percent must submit.a “justification” setting forth

specific information, including efforts taken to locate

DBEs and to make such businesses aware of contracting

opportunities. 49 C.F.R. 23.65. Federal officials may ap-

prove the lower goal if they find that the recipient is

making “all appropriate efforts” to increase DBE partic-

ipation to the ten-percent level, and the lower goal repre-

sents a reasonable expectation for DBE participation

given the availability of DBEs presently eligible to work

on federally assisted projects. 49 C.F.R. 23.66(b); see

also 49 C.F.R. Pt. 28, Subpt. D, App. D (“Justification for

Requests for Approval of Overall Goals of Less Than

Ten Percent.”). If a State is unable to meet its goal us-

ing DBEs from the same geographic area in which it

generally seeks contractors or subcontractors, it must

expand its search to a “reasonablly| wider geographic

area.” 49 C.F.R. 23.45(g)(8)."

ce. The State of Utah elected to receive federal high-

way funds under STAA and STURAA, and accordingly

the State became a participant in the federal DBE pro-

gram. Utah’s DBE plan “mirrors the federal statutory

and regulatory structure in every significant respect.”

Pet. App. 28. Utah’s plan established a ten-percent an-

nual goal, and the State has never sought approval for an

% The regulations also require States to establish DBE-partici-

pation goals for each individual prime contract. 49 C.F.R.

23.45(g)(2)(ii) and (7). Petitioner does not challenge that aspect of

the federal DBE program.

annual goal of less than ten percent. /d. at 32 & n.4. The

parties stipulated that Utah has never made any findings

of past discrimination against DBEs in Utah’s public

construction industry, and that in 1984 minorities made

up approximately 7.6% of the State’s total population.

C.A. App. 245-246. According to petitioner, less than two

percent of the firms available for subcontract work in

Utah are DBEs. Pet. 6.

2. Petitioner is a white male landscape subcontractor.

Pet. App. 2. In 1986, petitioner submitted a quote of

$13,250 for landscaping work on a federally assisted

highway project sponsored by the Utah Department of

Transportation (UDOT). That project was subject to

the ten-percent DBE goal, and the subcontract was

awarded to Milsap Landscaping, a DBE, which had sub-

mitted a quote of $18,750 for the same work. Id. at 5;

C.A. App. 247. Similarly, in 1988, petitioner submitted a

quote of $131,204 for landscaping work on another UDOT

project. That project also was subject to the ten-percent

DBE goal and the landscaping subcontract was therefore

awarded to Gallegos & Shelton, a DBE, which had sub-

mitted a quote of $134,286. Pet. App. 5; C.A. App. 247.

3. In July 1987, petitioner filed an action for declara-

tory and injunctive relief against officials of the United

States Department of Transportation and the Utah De-

partment of Transportation (UDOT), alleging that the

federal DBE program as applied by Utah violated the

Equal Protection Clause of the Fourteenth Amendment.

Pet. App. 27-28. Subsequently, the parties filed cross-

motions for summary judgment, including a joint stipula-

tion of facts. Petitioner stipulated that the federal

statutes and implementing regulations are facially law-

ful and constitutional. Jd. at 28.

In October 1990, the district court issued its decision

granting the defendants’ motion for summary judgment

and denying petitioner’s motion for summary judgment.

ileal

Pet. App. 1-22. The court rejected petitioner’s argu-

ment that the case was governed by City of Richmond v.

J.A. Croson Co., 488 U.S. 469 (1989), and thus that the

State had to make specific findings of discrimination to

implement the federal program. Pet. App. 11-16. The

court concluded that the case was properly analyzed un-

der Fullilove v. Klutznick, 448 U.S. 448 (1980), which in-

volved a challenge to a similar federal program, and not

Croson, which involved a program enacted by a city. Pet.

App. 16. The court explained that “[t]his case would be

properly analyzed under Croson if the State of Utah had

enacted a DBE program based on its own initiative.

However, the only reason the State has its DBE pro-

gram is because Congress required it to have such a

program as a condition for the State to receive federal

highway funds.” /d. at 13. The court added that “there

is nothing in Fullilove to suggest that states which

elect to participate in the program by accepting federal

funds are thereby obligated to make findings of past dis-

crimination in addition to the determination already

made by Congress and the President.” Id. at 14.

The district court also held that Utah’s adherence to a

ten-percent DBE goal did not render the program uncon-

stitutional as applied, despite the State’s low minority

population. Pet. App. 16-20. The court noted that there

was no evidence that Utah was unable to meet its ten-

percent goal, and thus the State would not have been en-

titled to obtain a waiver of the ten-percent requirement

under the applicable DOT regulations. Jd. at 17-20.

Moreover, petitioner had stipulated that those regula-

tions were facially valid. Jd. at 17. Accordingly, the

court concluded that the State was under no obligation to

seek a waiver. Jd. at 19.

4. The court of appeals affirmed. Pet. App. 25-35.

Noting that petitioner had conceded the facial validity of

the applicable federal statutes and regulations, the court

concluded that petitioner claimed only “that Utah’s im-

plementation of the federal plan—specifically Utah’s

failure to seek a waiver from the ten-percent annual goal

[—] is unconstitutional” under this Court's Croson deci-

sion. /d. at 32. In the court’s view, the dispositive ques-

tion in determining whether Croson applied in this con-

text was whether the State’s failure to seek a waiver was

the equivalent of a local government’s decision to enact

its own racial set-aside program. I[bid.

In analyzing that question, the court of appeals first

noted that the applicable DOT regulations permit is-

suance of waivers only where a State is unable to attain

the ten-percent goal. Pet. App. 32-33. Utah has consis-

tently achieved that goal, and thus would not be entitled

to a waiver under the terms of the regulations. Jd. at 34.

Thus, Utah’s “failfure]” to obtain a waiver was merely

the result of the DOT regulations that petitioner had

stipulated to be facially valid. Jd. at 34-35. Relying on

Milwaukee County Pavers Ass’n v. Fiedler, 922 F.2d

419 (7th Cir.), cert. denied, 111 S. Ct. 2261 (1991), and

Tennessee Asphalt Co. v. Farris, 942 F.2d 969 (6th Cir.

1991), the court reasoned that the State’s decision to

~ comply with federal law could not give rise to a violation

of the Fourteenth Amendment. Accordingly, the court of

appeals concluded that “the Croson decision does not ap-

ply to this appeal, and the State of Utah is not required

to make factual findings to justify its inability to seek a

waiver of the ten-percent set-aside goal.” Pet. App. 35.

ARGUMENT a

This case does not involve a challenge to the constitu-

tionality of the federal DBE program as a whole; peti-

tioner has stipulated that the federal statutes and regu-

lations are lawful and constitutional on their face. Pet.

App. 32. Petitioner also acknowledges that Utah imple-

mented the federal statutes and regulations in accor-

dance with their terms. Pet. 6. Nevertheless, petitioner

argues that Utah’s adherence to the facially valid provi-

sions of the federal program was unlawful.* There is no

conflict among the circuits on that question, however,

nor is the decision below inconsistent with any decision

of this Court. Accordingly, further review is not war-

ranted.

1. Petitioner contends (Pet. 7-18) that the court of ap-

peals erred in concluding that this case is governed by

Fullilove v. Klutznick, 448 U.S. 448 (1980). Instead, peti-

tioner argues, the State of Utah was not permitted to

implement the DBE program created by STAA and

STURAA until the State had satisfied the stricter stan-

dards applicable to state-sponsored racial set-aside pro-

grams as set forth in C°ty of Richmond v. J.A. Croson

Co., 488 U.S. 469 (1989). As petitioner concedes, how-

ever, the question whether Croson or Fullilove applies

to a State’s implementation of a federally mandated DBE

program is one “of first impression” in this Court. Pet.

7, 15. Moreover, the court of appeals’ decision on this is-

sue is in accord with the decisions of both other courts of

appeals that have addressed this question.°

' Petitioner also asserts (Pet. 8 n.3) that “(t]he UDOT program

is strictly a race-based program since the only basis for qualifying

as a so-called ‘DBE’ is race.” That assertion is incorrect. Under

STURAA, women-owned business enterprises (WBEs) were pre-

sumptively entitled to DBE treatment. 49 C.F.R. 23.62. Similarly,

under STAA, separate percentage goals were set for WBEs. See

45 Fed. Reg. 21,187 (1980) (codified at 49 C.F.R. 23.45(g)(4)); see

also C.A. App. 247 (noting separate one-percent WBE goal). More-

over, under both STURAA and STAA, individuals who were not

members of groups presumptively entitled to preferential treat-

ment could nonetheless qualify for DBE status on a case-by-case ba-

sis. 49 C.F.R. 23.62; 48 Fed. Reg. 33,442 (1983).

® The same issue is currently pending before the Second Circuit

in Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo, No.

91-9090, and United Fence & Guard Rail Corp. v. Cuomo, No. 91-

——————

In Milwaukee County Pavers Ass’n v. Fiedler, 922

F.2d 419, cert. denied, 111 S. Ct. 2261 (1991), the Seventh

Circuit addressed a similar challenge to Wisconsin’s

implementation of the STURAA program. In that case,

plaintiffs conceded the validity of the federal statute and

regulations both on their face and as applied. 922 F.2d at

423. In view of that concession, the court of appeals

rejected plaintiffs’ arguments that Wisconsin was

required to make its own findings of prior discrimination

or seek a waiver of the ten-percent goal before im-

plementing the set-aside program. The court stated:

These arguments * * * are inconsistent with the

contractors’ decision not to challenge the validity of

the federal or statute or regulations. Insofar as the

state is merely complying with federal law it is act-

ing as the agent of the federal government and is no

more subject to being enjoined on equal protection

grounds than the federal civil servants who drafted

the regulations. * * * If the state does exactly what

the statute expects it to do, and the statute is con-

ceded for purposes of the litigation to be constitu-

tional, we do not see how the state can be thought to

have violated the Constitution.

Id. at 423.

Similarly, in Tennessee Asphalt Co. v. Farris, 942

F.2d 969 (6th Cir. 1991), the plaintiffs challenged Ten-

nessee’s implementation of the STAA program, but con-

ceded the facial validity of the federal statute and regula-

tions. 942 F.2d at 972. Plaintiffs argued that Tennessee

9098 (argued together Mar. 2, 1992). The district court in those

cases rejected arguments similar to those made by petitioner here.

Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo, No. 89-

CV-447 (N.D.N.Y. Oct. 1, 1991), and United Fence & Guard Rail

Corp. v. Cuomo, No. 88-CV-306 (N.D.N.Y. Oct. 1, 1991).

violated the Equal Protection Clause by adhering to the

ten-percent set-aside prescribed in the statute in the ab-

sence of any evidence of past discrimination in the State.

Ibid. Citing Milwaukee Pavers, the Sixth Circuit re-

jected this argument, stating:

|W hile it is true that Tennessee may opt not to par-

ticipate in the federal program at all, if the state de-

cides to accept highway funds, it must meet the 10%

DBE requirement, or fulfill the federal requirements

for a variance by showing 10% participation is not

possible despite good faith efforts. In other words,

* * * Tennessee has no discretion to either accept

the 10% DBE requirement or apply for a variance.

Rather, it may only apply for a variance by establish-

ing under federal standards that it cannot comply

with the 10% requirement. Thus, every aspect of

participation in the federal highway program is man-

dated by Congress.

Id. at 975.

The decision below is entirely consistent with T'en-

nessee Asphalt and Milwaukee Pavers. Moreover, it

does not conflict with this Court’s holding in Croson.

Croson involved the constitutionality of a 30% minority

set-aside program enacted by the City of Richmond to

remedy discrimination in the local construction indus-

try. Applying strict scrutiny, the Court invalidated the

city’s set-aside program, ruling that it was not justified

by a compelling state interest because the city had failed

to identify sufficient evidence of past discrimination. 488

U.S. at 498-506. In addition, the Court held that the 30%

set-aside was not narrowly tailored to achieve the stated

remedial purpose because it was “not linked to identified

discrimination in any way.” Id. at 507.

The set-aside program invalidated in Croson was the

result of a purely local initiative, and accordingly that

case provided no opportunity to address the question of

the standards applicable to a State’s implementation of a

federally mandated racial classification in a federally

assisted program. That question therefore remains an

open one after Croson. Given the absence of any circuit

conflict on that question, no further review is

warranted.°

2. Petitioner challenges Utah’s failure to seek a

waiver of the annual ten-percent DBE goal (Pet. 7-12),

asserting that the district court’s interpretation of the

waiver provision rendered it “of no force and effect.” Pet.

11. What petitioner ignores, however, is the fact that

Utah could not have qualified for a waiver, because the

DOT regulations permit a State to select a goal of less

than ten percent only if the State can demonstrate that

the ten-percent level is not reasonably attainable. 49

C.F.R. 23.66(b); 23 C.F.R. Pt. 23, Subpt. D, App. D; 48

Fed. Reg. 33,443, 33,452 (1983). It is undisputed that

Utah has been able to attain ten-percent DBE participa-

tion in its highway contracts, and thus it would have

been futile for the State to apply for a waiver. Pet. App.

34.

In essence, petitioner’s real quarrel is with the waiver

procedure itself, not with the State of Utah’s decision

6 Petitioner also asserts that the States may not “implement

race-based programs by piggy-backing on the findings made by

Congress.” Pet. 15 (citing Croson, 488 U.S. at 504). Petitioner’s

reliance on this aspect of Croson is misplaced. The Court in Cro-

son rejected the proposition that a state or local government could

implement its own set-aside program in reliance on congressional

findings (see 488 U.S. at 504), but nothing in the Court’s opinion

indicates whether the same rule would apply to a State that

chooses to implement a federally mandated DBE program based

upon the type of congressional findings found sufficient in

Fullilove. Croson simply does not address the validity of a State’s

implementation of a federally mandated racial set-aside program,

and thus it is not controlling in this context.

not to seek a waiver pursuant to that procedure. But by

stipulating that the DOT regulations establishing the

waiver procedure are facially valid, and by directing his

challenge solely against the State’s implementation of

the federal program, petitioner has eschewed any oppor-

tunity to challenge the validity of the waiver procedure

in this Court. Cf. Milwaukee Pavers, 922 F.2d at 425.

Accordingly, petitioner’s challenge to the State’s failure

to seek a waiver is without merit, and does not warrant

review.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.