Cone Corp. v. Florida Dept. of Transp.
| Decision Date | 08 January 1991 |
| Docket Number | No. 89-3694,89-3694 |
| Citation | 921 F.2d 1190 |
| Parties | 55 Empl. Prac. Dec. P 40,518, 59 USLW 2442, 36 Cont.Cas.Fed. (CCH) 76,001 The CONE CORPORATION, C.H. Barco Contracting Co., Asphalt Pavers, Inc., etc., et al., Plaintiffs-Appellants, v. FLORIDA DEPARTMENT OF TRANSPORTATION, Ben G. Watts, Secretary of the Department of Transportation; and Bob Martinez, Governor of the State of Florida, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Herbert P. Schlanger, Atlanta, Ga., for Cone Corp.
Robert B. Baker, Jr., Southeastern Legal Foundation, Inc., Atlanta, Ga., for O.B. Brooks et al.
Harry F. Chiles, Asst. Atty. Gen., Dept. of Legal Affairs, Tallahassee, Fla., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Florida.
Before TJOFLAT, Chief Judge, ANDERSON and CLARK, Circuit Judges.
This is an appeal from an order of the district court declaring unconstitutional on fourteenth amendment equal protection grounds a Florida statute, Fla.Stat. Sec. 339.0805 (1989), and the regulations promulgated thereunder, Fla.Admin.Code Ann. ch. 14-78 (1989), that created a set-aside and minority business participation program for contracts awarded by Florida's Secretary of Transportation (the Secretary), the head of the Florida Department of Transportation (FDOT). 1 In its order, the district court 2 noted that this statute and the regulations had been modeled after a nearly identical federal statute, the Surface Transportation and Uniform Relocation Assistance Act of 1987 (STURAA), Pub.L. No. 100-17, Sec. 106(c), 101 Stat. 132, 145, and the regulations promulgated thereunder, 49 C.F.R. Secs. 23.61-69 (1989), which require a state to have a set-aside and minority business participation program if it wants to receive federal funds for highway construction projects, and that the federal statute contained no equal protection infirmity under the fifth amendment. Concluding that the Florida statute and regulations are "the end result of, and thus necessarily a part of," a valid federal program, the court upheld the Florida statute to the extent that it serves as a vehicle for obtaining federal highway construction funds. In sum, the district court concluded that Fla.Stat. Sec. 339.0805 and the regulations promulgated thereunder are, at once, both constitutional and unconstitutional on their face--depending on the source of the funds that the Secretary may be using to implement the program created by the statute and regulations.
We vacate the district court's order and direct the district court, on receipt of our mandate, to dismiss the case without prejudice. 3 We do so without reaching the merits because the plaintiffs, all of whom are engaged in the highway construction business in Florida, lack standing to pursue their claims.
We organize the opinion as follows. In part I, we summarize in subpart A the provisions of the federal set-aside and minority business participation program and, in subpart B, its Florida counterpart. In part II, we set forth the plaintiffs' claims, as presented in their amended complaint, and the district court's dispositive order. In part III, we determine that the plaintiffs lack standing.
Congress authorized the appropriation of federal funds to aid states in highway construction under STURAA. 4 STURAA and the federal regulations thereunder direct that states that want to receive federal funds for highway construction must have set-aside and minority business participation programs to ensure that minority businesses have the maximum opportunity to compete for the contracts involving federal funds. Section 106(c)(1) of STURAA provides:
Except to the extent that the Secretary determines otherwise, not less than 10 per centum of the amounts authorized to be appropriated under [STURAA and the prior highway aid appropriations act, the Surface Transportation Assistance Act of 1982] after the date of the enactment of this Act shall be expended with small businesses owned and controlled by socially and economically disadvantaged individuals.
Pub.L. No. 100-17, Sec. 106(c)(1), 101 Stat. at 145 (emphasis added). 5
A small business owned and controlled by a socially and economically disadvantaged individual, or a disadvantaged business enterprise (DBE), 6 49 C.F.R. Sec. 23.62, is, almost invariably, a small business owned or controlled by a member of a minority group or a woman. Women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, and Asian-Indian Americans are presumptively socially and economically disadvantaged. Id. 7
This statute and the regulations thereunder impose three requirements on states that want to receive federal highway funds. First, each state must set and meet an annual goal, which the Federal Highway Administration (FHWA) of the United States Department of Transportation (USDOT) must approve, for DBE participation in highway construction projects funded with federal grants. Id. Secs. 23.61, .64, .66. 8 The FHWA always approves a goal of ten percent or more. Id. Sec. 23.66(a). It may approve a goal of less than ten percent if the state justifies the goal by showing that the state is making all appropriate efforts to increase DBE participation in federal aid contracts, and, despite these efforts, a goal of less than ten percent represents a reasonable expectation for DBE participation given the availability of DBEs in the state. Id. Sec. 23.66(b). 9 Florida each year has set and met a DBE goal of ten percent.
Second, each state that wants to receive federal highway funds must agree not to discriminate on the basis of race, sex, color, or national origin in the award of federally assisted contracts, id. Secs. 23.7, .41(a), .43(a)(2), while at the same time making every reasonable and necessary effort to insure that minority businesses have the maximum opportunity to compete for and perform contracts, id. Secs. 23.1(a), .41(a), .43(a)(1). These requirements become part of every initial financial assistance agreement between the state and the federal government under which the state receives federal funds and every subsequent contract between the state and any contractor that involves the expenditure of federal funds. Id. Sec. 23.43(a).
Third, each state that wants to receive federal highway funds must develop a minority business enterprise (MBE) 10 program, which the FHWA must approve before it will grant any highway aid funds, and which becomes part of every financial assistance agreement between the state and the FHWA. Id. Secs. 23.41(a)(3)(i), .41(b)-(c), .43(b). To receive FHWA approval, the state's MBE program must include, among other features, 11 a set-aside procedure that limits competition for certain contracts to MBE and DBE prime contractors, id. Sec. 23.45(k), and a minority business participation procedure under which the state requires each prime contractor that enters into a contract involving federal funds to meet (or demonstrate a good faith effort to meet) a goal, set by the state, for DBE subcontractor participation in that contract, id. Sec. 23.45(g)(ii). 12
A state that fails to comply with any of these three requirements may lose all or part of its federal highway funds. Id. Sec. 23.68(b), (e)(1); id. Sec. 23.43(b)-(c); 23 C.F.R. Sec. 1.36 (1990). Two provisions of the federal regulations, however, allow states to escape certain of these requirements and still receive federal funds. First, as discussed above, the FHWA may approve an overall DBE participation goal of less than ten percent if the state justifies the goal. 49 C.F.R. Sec. 23.66(b). Second, in "appropriate circumstances," a state may receive federal funds even if it does not have an MBE program or deviates from the MBE program requirements. Id. Sec. 23.41(f). 13 An additional provision allows individual third parties within the states to challenge the presumption that a member of a minority group or a woman is socially and economically disadvantaged. Id. Sec. 23.69. Theoretically, a state also may avoid the federal requirements by choosing not to apply for federal funds.
Florida law specifically authorizes the Florida Secretary of Transportation to obtain federal highway funds and "to make all contracts and do all things necessary to cooperate with the United States Government in the construction of roads under the provisions of such Acts of Congress and all amendments thereto." Fla.Stat. Sec. 339.05. As the district court noted, the Florida set-aside and minority goal participation program seems to be based on the federal scheme, and most likely was enacted in part to allow Florida to receive federal aid highway funds, although the Florida program never explicitly states that it was instituted in response to the federal scheme. The language of the Florida statute and regulations echoes the federal scheme, and the Florida program contains several references to federal definitions and programs. See, e.g., id. Sec. 339.0805 ().
This summary of the federal DBE program, however, is useful only as background material for a consideration of the Florida program and as evidence of the manner in which Florida's Secretary of Transportation might be expected to act in order to receive federal funds. The merits of the federal program are not before us; the plaintiffs have sued no federal defendant and have alleged no way in which the Florida statute or regulations could be considered "a part of" the federal statutory scheme, as the district court found, so that the constitutional validity of that scheme could save the other when federal aid is being used. We recognize, of course, that if the State of Florida were to lose this federal aid because of its failure to meet the federal DBE and MBE requirements, the consequences would be heavy. In fiscal year 1987-88, the federal highway aid funds received by the FDOT and awarded to contractors...
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