# Opposition Brief — Ellis v. Card

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1992
- **Citation:** 506 U.S. 939

## Text

(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

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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.
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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-
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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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(IIT)

IV

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

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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
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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.

-

3

“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

4

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.

5

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

6

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

7

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-

8

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-

——————

9

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).

10

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

11

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.

12

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.

KENNETH W. STARR
Solicitor General

JOHN R. DUNNE
Assistant Attorney General

DAVID K. FLYNN
THOMAS E. CHANDLER
Attorneys

SEPTEMBER 1992

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