Adarand Constructors, Inc. v. Skinner

• Decision Date: 21 April 1992
• Docket Number: No. 90-C-1413.,90-C-1413.
• Citation: 790 F. Supp. 240
• Parties: ADARAND CONSTRUCTORS, INC., Plaintiff, v. Samuel K. SKINNER, et al., Defendants.
• Court: U.S. District Court — District of Colorado

790 F. Supp. 240

ADARAND CONSTRUCTORS, INC., Plaintiff, v. Samuel K. SKINNER, et al., Defendants.

No. 90-C-1413.

United States District Court, D. Colorado.

April 21, 1992.

William Pendley, Denver, Colo., for plaintiff.

Stephen Taylor, Asst. U.S. Atty. and John Dunne, Asst. Atty. Gen., U.S. Dept. of Justice, Washington, D.C., for defendants.

MEMORANDUM OPINION AND ORDER

CARRIGAN, District Judge.

Plaintiff Adarand Constructors, Inc. (Adarand), a Colorado corporation, commenced this action to challenge the constitutionality of the federal Disadvantaged Business Enterprise (DBE) program. Defendants are Samuel K. Skinner, Secretary of the Department of Transportation (DOT); Thomas D. Larson, Administrator of the Federal Highway Administration (FHA); Louis N. MacDonald, Administrator of Region VIII of the FHA; and Jerry Budwig, Division Engineer of the Central Federal Lands Highway Division (CFLHD). Presently pending is the plaintiff's motion for summary judgment seeking a permanent injunction against the DOT, the FHA and the CFLHD and a declaratory judgment ruling the federal DBE program unconstitutional both on its face and as applied. Also pending is the defendants' cross motion for summary judgment seeking a ruling that the DBE program and its implementation are constitutional.

The parties have fully briefed the issues and oral argument would not materially facilitate the decision process. An amicus curiae brief has been filed by The Rocky Mountain Enterprise Legal Defense Fund. Jurisdiction exists under 28 U.S.C. § 1331 and § 1343.

I. Facts and Procedure.

On September 11, 1989, Adarand¹, a non-DBE guardrail subcontracting business submitted the lowest subcontract bid for a portion of guardrail work on the West Delores County, Colorado highway project. Plaintiff's bid was rejected and a DBE who had submitted a higher bid was awarded the subcontract.

This action was brought under 42 U.S.C. §§ 1983 and 2000d to challenge the constitutional validity of the DBE program promulgated under federal highway funding provisions of the Surface Transportation Assistance Act of 1982, Pub.L. No. 97-424 § 105(f), 96 Stat. 2097 (STAA) and the Surface Transportation and Uniform Relocation Assistance Act of 1987, Pub.L. No. 100-17 § 106(c), 101 Stat. 132 (STURAA). See also 49 C.F.R. §§ 23 et seq. Specifically, the plaintiff challenges the DBE program² as administered by the CFLHD within Colorado.

II. Analysis.

STAA and STURAA create federal programs designed to benefit socially and economically disadvantaged business enterprises. Section 105(f) of STAA and § 106(c) of STURAA both provide in pertinent part: "except to the extent that the Secretary determines otherwise, not less than 10 per centum of the amounts authorized to be appropriated under this Act shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals as defined by section 8(a) of the Small Business Act (15 U.S.C. § 637(a))." Pub.L. 97-424 § 105(f), Pub.L. 100-17 § 106(c).

The CFLHD, as a recipient of federal highway funds, participates in this program.³ Discrimination based on race, color, national origin or sex in the award or performance of federal contracts under STAA and STURAA is prohibited, and participating agencies are directed to "take all necessary and reasonable steps ... to ensure that minority business enterprises have the maximum opportunity to compete for and perform contracts." 49 C.F.R. §§ 23.7 and 23.43. States or federal agencies may award less than ten percent of such contracts to DBE's upon application to and approval by the Secretary of Transportation. 49 C.F.R. §§ 23.64(e), 23.65 and Part 23 Subpart D, Appendix D (1989).

Federal regulations promulgated in response to STAA and STURAA define DBE's as small businesses which are at least fifty-one percent owned and managed by disadvantaged individuals.⁴ 49 C.F.R. § 23.62. These businesses qualify for DBE designation as well as preferential consideration in the award of subcontracts on federal highway projects. Id. Such businesses must be certified annually as "disadvantaged" and they maintain that status unless and until decertified by the participating state or agency. 49 C.F.R. § 23.51. Businesses not entitled to be presumed eligible for DBE status may apply and, upon sufficient showing, become certified by the Small Business Administration or the state as qualified for that status. Small Business Act § 8(a), 15 U.S.C. § 637(a).

Plaintiff's motion for summary judgment seeks a declaratory judgment and permanent injunction against the DOT, the FHA and the CFLHD until specific findings of discrimination are made by the defendants as allegedly required by City of Richmond v. Croson, 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989). Defendants' motion for summary judgment seeks a ruling that the DBE program and its implementation are constitutional under Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980) and Metro Broadcasting v. F.C.C., 497 U.S. 547, 110 S.Ct. 2997, 111 L.Ed.2d 445 (1990).

Summary judgment is proper if the pleadings, depositions and affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Fed.R.Civ.P. 56. The party opposing a properly supported summary judgment motion may not rest upon the mere allegations of the complaint, but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). Because no genuine issues of material fact are here disputed, this matter is ripe for decision on the pending cross motions for summary judgment.

In Croson, the Supreme Court held that, when instituting race-conscious measures, states and local government entities must make findings of prior discrimination. Croson, 488 U.S. at 490, 109 S.Ct. at 719. Because no specific findings were made as to past discrimination, the City of Richmond's thirty percent minority set-aside program failed to satisfy strict scrutiny analysis and, therefore, was held unconstitutional.

Defendants distinguish Croson from the instant case noting that, unlike Croson, the defendants here are all federal actors. Defendants note that Justice O'Connor, in part of the Croson opinion in which she was joined by Chief Justice Rehnquist and Justice White, distinguished Croson from Fullilove by noting that "Congress may identify and redress the effects of society-wide discrimination and need not make specific findings of discrimination." Id. Defendants argue that Fullilove controls here.

In Fullilove, the Court, in upholding a federal funding program, stated that deference to the legislative authority of Congress under the Commerce Clause, the Spending Clause and the Civil War Amendments was appropriate. Fullilove, 448 U.S. at 475-478, 100 S.Ct. at 2773-2775 (citations omitted). The Court specifically stated that:

"a program that employs racial or ethnic criteria, even in a remedial context, calls for close examination; yet we are bound to approach our task with appropriate deference to the Congress, a coequal branch charged by the Constitution with the power to `provide for the general Welfare of the United States' and `to enforce, by appropriate legislation' the equal protection guarantees of the Fourteenth Amendment". Id. at 472, 100 S.Ct. at 2771 (citations omitted).

Similarly, in the more recent decision of Metro Broadcasting, the Supreme Court upheld the constitutionality of a federal agency minority preference program stating that:

"benign race-conscious measures mandated by Congress — even when those measures are not `remedial' ... are constitutionally permissible to the extent that they serve important government objectives within the power of Congress and are substantially related to the achievement of those objectives." Metro Broadcasting, 110 S.Ct. at 3000.

The Court found of "overriding significance" the fact that the minority program was "specifically approved — indeed, mandated—by Congress." Id. at 3008-09. See also Michigan Road Builders Ass'n, Inc. v. Blanchard, 761 F.Supp. 1303, 1314 (W.D.Mich.1991) (upholding a state's application of the STAA and STURAA programs).

Croson is readily distinguishable from Fullilove and Metro Broadcasting. Croson did not address the issue of congressional action but decided what procedures state and local government entities must follow in evaluating minority public works programs. Croson specifically provided "that because Congress may identify and redress the effects of society wide discrimination does not mean that, a fortiori, the States and their political subdivisions are free to decide that such remedies are appropriate." Croson, 488 U.S. at 490, 109 S.Ct. at 719.

It is clear under these cases that race-conscious classifications established by Congress are subject to a standard of review different from that applicable to similar classifications prescribed by state and local governments. The Supreme Court has declared:

"Croson cannot be read to undermine the decision in Fullilove. In fact much of the language and reasoning in Croson reaffirmed the lesson of Fullilove that race-conscious classifications adopted by Congress are subject to a different standard than such classifications prescribed by state and local governments." Metro Broadcasting, 110 S.Ct. at 3009.

The overriding distinction between the program upheld in Fullilove and the instant program, when compared to the program held unconstitutional in Croson, is undoubtedly the congressional mandate behind the Fullilove program and this one. Further, the ruling and effect of Fullilove are clearly acknowledged in Croson. Croson, 488 U.S. at 491, 109 S.Ct. at 719.

Thus Fullilove, Croson and Metro Broadcasting teach...