773 F.3d 257 (D.C. Cir. 2014), 14-5076, Associated Builders & Contrs., Inc. v. Shiu

Docket Nº14-5076
Citation773 F.3d 257
Opinion JudgeTatel, Circuit Judge :
Party NameASSOCIATED BUILDERS AND CONTRACTORS, INC., APPELLANT v. PATRICIA A. SHIU, ET AL., APPELLEES
AttorneyMaurice Baskin argued the cause and filed the briefs for appellant. Stephanie R. Marcus, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Stuart F. Delery, Assistant Attorney General, Ronald C. Machen, Jr., U.S. Attorney, and Marleigh D. Dover, Atto...
Judge PanelBefore: GARLAND, Chief Judge, TATEL, Circuit Judge, and GINSBURG, Senior Circuit Judge.
Case DateDecember 12, 2014
CourtUnited States Courts of Appeals, United States Court of Appeals (District of Columbia)

Page 257

773 F.3d 257 (D.C. Cir. 2014)

ASSOCIATED BUILDERS AND CONTRACTORS, INC., APPELLANT

v.

PATRICIA A. SHIU, ET AL., APPELLEES

No. 14-5076

United States Court of Appeals, District of Columbia Circuit

December 12, 2014

Argued October 3, 2014

Page 258

[Copyrighted Material Omitted]

Page 259

Appeal from the United States District Court for the District of Columbia. (No. 1:13-cv-01806).

Maurice Baskin argued the cause and filed the briefs for appellant.

Stephanie R. Marcus, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Stuart F. Delery, Assistant Attorney General, Ronald C. Machen, Jr., U.S. Attorney, and Marleigh D. Dover, Attorney.

Daniel F. Goldstein was on the brief for amici curiae American Association of People with Disabilities, et al. in support of appellees.

Before: GARLAND, Chief Judge, TATEL, Circuit Judge, and GINSBURG, Senior Circuit Judge.

OPINION

Page 260

Tatel, Circuit Judge :

Section 503 of the Rehabilitation Act of 1973 requires that certain government contractors " take affirmative action to employ and advance in employment qualified individuals with disabilities." Until recently, the Department of Labor's implementing regulations required government contractors to " invite" individuals offered jobs to advise the contractor whether they believed they were covered by the Act. Doubting that the existing regulations were sufficiently advancing the employment of qualified individuals with disabilities, the Department revised the regulations to require contractors to extend this invitation to job applicants, as well as to analyze the resulting data. The revised regulations also adopt a " utilization goal" to serve as a target for the employment of individuals with disabilities. In this case, a trade group representing federal contractors challenges these regulations, arguing that they exceed the Department's statutory authority and are arbitrary and capricious. The district court rejected both challenges, as do we.

I.

Congress enacted the Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq., " to empower individuals with disabilities to maximize employment, economic self-sufficiency, independence, and inclusion and integration into society," as well as " to ensure that the Federal Government plays a leadership role in promoting the employment of individuals with disabilities." 29 U.S.C. § 701(b). Section 503 of the Act provides that government contracts for more than $10,000 " shall contain a provision requiring that the party contracting with the United States shall take affirmative action to employ and advance in employment qualified individuals with disabilities." 29 U.S.C. § 793(a). The statute directs the President to implement section 503 through regulations, id., and the President has delegated that

Page 261

authority to the Secretary of Labor, who has in turn delegated it to the Office of Federal Contract Compliance Programs (OFCCP). 41 C.F.R. § 60-1.2.

The regulations in effect prior to the challenged rulemaking required contractors to " prepare and maintain an affirmative action program." 41 C.F.R. § 60-741.40. Specifically, the regulations required them to ensure that job standards do not improperly exclude individuals with disabilities, to publicize their affirmative-action plan, to engage in steps to recruit qualified individuals with disabilities, and to audit the effectiveness of the program. See Superseded OFCCP Rule on Affirmative Action for Qualified Individuals with Disabilities, 41 C.F.R. § § 60-741.40 to -.47 (Effective Prior to Mar. 24, 2014). The regulations also required contractors to " invite" individuals offered jobs to inform the contractor if they believed they were covered by the Act. Id.

By 2010, OFCCP had become concerned that the section 503 regulations were not sufficiently advancing the employment of qualified individuals with disabilities. See Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors; Evaluation of Affirmative Action Provisions Under Section 503 of the Rehabilitation Act, as Amended, 75 Fed. Reg. 43,116 (July 23, 2010). OFCCP was especially worried that individuals with disabilities had lower workforce participation rates and higher unemployment rates than those without disabilities. Id. After seeking public comment on how to strengthen the regulations, id., OFCCP issued a Notice of Proposed Rulemaking in December of 2011. See Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals With Disabilities, Notice of Proposed Rulemaking, 76 Fed. Reg. 77,056 (Dec. 9, 2011). In response to hundreds of comments on a variety of issues, OFCCP made some modifications and issued the Final Rule on September 24, 2013. See Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals With Disabilities, Final Rule, 78 Fed. Reg. 58,682, 58,685 (Sept. 24, 2013) (to be codified at 41 C.F.R. pt. 60-741) (" Final Rule" ).

The Final Rule makes several significant changes, two of which are challenged here. First, it obligates contractors to extend the invitation to self-identify to all job applicants and to analyze the resulting data. This new requirement is implemented by section 741.42(a) of the Final Rule, which requires contractors to invite job applicants to indicate whether they have a disability, 41 C.F.R. § 60-741.42(a), and by section 741.44(k), which requires analysis of the data collected, along with the number of job openings, the total number of applicants, the number of applicants hired, and the number of applicants hired who have disabilities, id. § 60-741.44(k).

Second, section 741.45 of the Final Rule introduces a 7 percent " utilization goal" for the employment of individuals with disabilities. For employers with 100 or fewer employees, the goal applies to the employer's entire workforce, while for employers with more than 100 employees, the goal applies to each job group within the workforce. The goal establishes " a benchmark against which the contractor must measure the representation of individuals" with disabilities. Id. § 60-741.45. " The goal is not a rigid and inflexible quota which must be met" but rather " is intended solely as a tool." Final Rule at 58,706.

To calculate the utilization goal, OFCCP used data from the American Community Survey (ACS), a detailed view of U.S. households produced by the Census Bureau. See Final Rule at 58,703. OFCCP began by estimating that " 5.7% of the

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civilian labor force has a disability." Id. at 58,704. (A member of the civilian labor force is either presently working or unemployed and looking for work.) Id. According to OFCCP, this percentage would be higher absent discrimination on the basis of disability. Id. at 58,704-06. OFCCP therefore compared the percent of the civilian labor force with a disability to the percent of the general population with a disability who identify as having an occupation, from which it derived what it called a " discouraged worker" effect of 1.7 percent. Id. Adding that figure to 5.7 percent, OFCCP arrived at 7.4 percent, which it rounded down to 7 percent in order to " avoid implying a false level of precision." Id. at 58,705.

Taken together, these two requirements, OFCCP explained, are " an important means by which the Government can contribute to reducing the employment disparity between those with and without disabilities." Id. at 58,684. The new provisions " are designed to bring more qualified individuals with disabilities into the Federal contractor workforce and provide them with an equal opportunity to advance in employment." Id. at 58,685.

Appellant, Associated Builders and Contractors, Inc. (ABC), a " national trade association representing" members from " construction and industry-related firms," has many members that are government contractors and therefore subject to section 503. Appellant's Br. 15. ABC sued in the United States District Court for the District of Columbia, challenging the Final Rule as both beyond OFCCP's statutory authority and arbitrary and capricious. Id. at 16. Rejecting both arguments, the district court granted summary judgment to OFCCP. Associated Builders & Contractors, Inc. v. Shiu, No. 13-1806, 30 F.Supp.3d 25, 2014 WL 1100779 (D.D.C. Mar. 21, 2014). We review the district court's grant of summary judgment de novo, " according no particular deference to the judgment of the District Court." Association of Private Sector Colleges and Universities v. Duncan, 681 F.3d 427, 440-41, 401 U.S.App.D.C. 96 (D.C. Cir. 2012) (citation and internal quotation mark omitted).

II.

Because the Rehabilitation Act vests the executive branch with rulemaking authority, we proceed under the familiar two-step framework of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In accordance with that decision, we determine first " whether Congress has directly spoken to the precise question at issue," and " if the statute is silent or ambiguous with respect to the specific issue," we ask whether the agency's interpretation " is based on a permissible construction of the statute." Id. at 842-43.

For ABC " to prevail under Chevron step one, [it] must do more than offer a reasonable or, even the best, interpretation; it must show that the statute unambiguously forecloses" OFCCP's interpretation. Village of Barrington, Illinois v. Surface Transportation Board, 636 F.3d 650, 661, 394 U.S.App.D.C. 353 (D.C. Cir. 2011). ABC argues that the word " qualified" as used in section 503--" take affirmative action to employ and advance in employment qualified individuals with disabilities" --expressly limits affirmative action to...

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9 practice notes
  • Affirmative Action for Individuals With Disabilities in Federal Employment
    • United States
    • Federal Register January 03, 2017
    • 3 Enero 2017
    ...at 29 CFR 1614.203(b)). \43\ See Management Directive 713, supra note 10. \44\ Cf. Assoc. Builders & Contractors, Inc. v. Shiu, 773 F.3d 257, 261, 263-64 (D.C. Cir. 2014) (finding regulations that strengthened Section 503 affirmative action requirements on federal contractors valid unde......
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    ...about the likely impact of the rule); Associated Builders & Contractors, Inc. v. Shiu, 30 F.Supp.3d 25, 47 (D.D.C.), aff'd, 773 F.3d 257 (D.C. Cir. 2014) (holding the agency's certification of ‘no impact' was reasonable because the agency “justified its conclusi......
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    ...\46\ See Associated Builders & Contractors, Inc. v. Shiu, 30 F. Supp. 3d 25, 44 (D.D.C. 2014), aff'd, 773 F.3d 257 (D.C. Cir. 2014), cert. denied, 135 S. Ct. 2836 (U.S. June 15, 2015) (``Indeed, many disabilities would have little effect on employment by construction contractors. For ex......
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    ...a willingness to uphold administrative rules that burden employers. For example, in Associated Builders & Contractors, Inc. v. Shiu, 773 F.3d 257 (D.C. Cir. 2014), Judge Garland voted to uphold a rule promulgated by the Department of Labor’s Office of Federal Contract Compliance Program......
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    • United States
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    • 10 Marzo 2021
    ...about the likely impact of the rule); Associated Builders & Contractors, Inc. v. Shiu, 30 F.Supp.3d 25, 47 (D.D.C.), aff'd, 773 F.3d 257 (D.C. Cir. 2014) (holding the agency's certification of ‘no impact' was reasonable because the agency “justified its conclusi......
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    ...the agency’s interpretation “‘is based on a permissible construction of the statute.’” Associated Builders and Contractors, Inc. v. Shiu, 773 F.3d 257, 262 (D.C. Cir. 2014) (quoting Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 567 U.S. 837, 842–43 [17] This regulation applies......
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    ..." 'is based on a permissible construction of the statute.'" Associated Builders and Contractors, Inc. v. Shiu, 773 F.3d 257, 262, 413 U.S.App.D.C. 239 (D.C. Cir. 2014) (quoting Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-4......
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3 firm's commentaries
  • Who is Merrick Garland and What Does His Nomination Mean for Labor and Employment Law?
    • United States
    • JD Supra United States
    • 17 Marzo 2016
    ...a willingness to uphold administrative rules that burden employers. For example, in Associated Builders & Contractors, Inc. v. Shiu, 773 F.3d 257 (D.C. Cir. 2014), Judge Garland voted to uphold a rule promulgated by the Department of Labor’s Office of Federal Contract Compliance Program......
  • Who Is Merrick Garland And What Does His Nomination Mean For Labor And Employment Law?
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    ...a willingness to uphold administrative rules that burden employers. For example, in Associated Builders & Contractors, Inc. v. Shiu, 773 F.3d 257 (D.C. Cir. 2014), Judge Garland voted to uphold a rule promulgated by the Department of Labor's Office of Federal Contract Compliance Program......
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    • JD Supra United States
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    ...recognized and suggest he would likely uphold administrative rules. For example, in Associated Builders & Contractors, Inc. v. Shiu, 773 F.3d 257 (D.C. Cir. 2014), Judge Garland voted to uphold a rule promulgated by the Department of Labor's Office of Federal Contract Compliance Program......
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  • Apprenticeship Programs; Equal Employment Opportunity
    • United States
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    • 19 Diciembre 2016
    ...\46\ See Associated Builders & Contractors, Inc. v. Shiu, 30 F. Supp. 3d 25, 44 (D.D.C. 2014), aff'd, 773 F.3d 257 (D.C. Cir. 2014), cert. denied, 135 S. Ct. 2836 (U.S. June 15, 2015) (``Indeed, many disabilities would have little effect on employment by construction contractors. For ex......
  • Affirmative Action for Individuals With Disabilities in Federal Employment
    • United States
    • Federal Register January 03, 2017
    • 3 Enero 2017
    ...at 29 CFR 1614.203(b)). \43\ See Management Directive 713, supra note 10. \44\ Cf. Assoc. Builders & Contractors, Inc. v. Shiu, 773 F.3d 257, 261, 263-64 (D.C. Cir. 2014) (finding regulations that strengthened Section 503 affirmative action requirements on federal contractors valid unde......

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