Cache Valley Elec. Co. v. State of Utah Dept. of Transp., 97-4042

• Decision Date: 07 July 1998
• Docket Number: No. 97-4042,97-4042
• Citation: 149 F.3d 1119
• Parties: 42 Cont.Cas.Fed. (CCH) P 77,333, 98 CJ C.A.R. 3668 CACHE VALLEY ELECTRIC COMPANY, a Utah corporation, Plaintiff--Appellant, v. STATE OF UTAH DEPARTMENT OF TRANSPORTATION and Charles K. "Chuck" Larson, its civil rights manager, Defendants--Appellees, United States Department of Transportation, Defendant--Intervenor--Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1119

149 F.3d 1119

42 Cont.Cas.Fed. (CCH) P 77,333, 98 CJ C.A.R. 3668

CACHE VALLEY ELECTRIC COMPANY, a Utah corporation Plaintiff--Appellant, v. STATE OF UTAH DEPARTMENT OF TRANSPORTATION and Charles K "Chuck" Larson, its civil rights manager Defendants--Appellees United States Department of Transportation, Defendant--Intervenor--Appellee.

No. 97-4042.

United States Court of Appeals, Tenth Circuit.

July 7, 1998.

George A. Hunt (Carolyn Stevens Jensen appearing with him on the briefs), Williams & Hunt, Salt Lake City, Utah, for Plaintiff--Appellant.

Rebecca K. Troth (Isabelle Katz Pinzler, Acting Assistant Attorney General, Mark L. Gross, Lisa J. Stark, Attorneys, on the brief), Washington, DC, for Defendants.

Before BRISCOE, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and LUCERO, Circuit Judge.

LUCERO, Circuit Judge.

Cache Valley Electric Company ("CVE"), a Utah corporation that regularly bids on electrical contracts let by the Utah Department of Transportation ("UDOT"), sued the United States Department of Transportation ("DOT"), UDOT, and Charles K. Larson, UDOT's civil rights manager, ¹ seeking to enjoin further operation of the Disadvantaged Business Enterprise ("DBE") program because of its use of racial and gender preferences. We affirm the district court's determination that CVE lacks standing to bring the present action.

I

Through the DBE program, it has been the longstanding policy of the United States Department of Transportation to expend "not less than 10 percent of the amounts authorized to be appropriated" for certain federal highway programs "with small business concerns owned and controlled by socially and economically disadvantaged individuals." Intermodal Surface Transportation Efficiency Act of 1991, Pub.L. No. 102-240, § 1003(b)(1), 105 Stat. 1914, 1919 (1991) ("ISTEA"); Surface Transportation and Uniform Relocation Assistance Act of 1987, Pub.L. No. 100-17, § 106(c)(1), 101 Stat. 132, 145 (1987) ("STURAA"). As a recipient of funds from the United States Department of Transportation for use in DOT-assisted contracts, UDOT is required to maintain an approved DBE program. See 49 C.F.R. § 23.41(a)(3). In this regard, UDOT establishes an annual overall DBE participation goal for UDOT projects financed with federal funds, and, to achieve that goal, identifies which projects have subcontracting opportunities for DBEs and determines the appropriate DBE participation goal for each. See Appellant's App. at 284.

To qualify to participate in the DBE program, a business must be both "small," see ISTEA § 1003(b)(2)(A) (stating that no entity may qualify as DBE if its "average annual gross receipts over the preceding 3 fiscal years" exceeds $15,370,000); 59 Fed.Reg. 67,367, 67,367 (1994) (increasing the revenue limit to $16,600,000 to adjust for inflation), and "owned and controlled by socially and economically disadvantaged individuals," id. § 1003(b)(1). Both the ISTEA and its predecessor statute, the STURAA, define "socially and economically disadvantaged" in accordance with section 8(d) of the Small Business Act ("SBA"), see 15 U.S.C. § 637(d), and its implementing regulations. See ISTEA § 1003(b)(2)(B); STURAA § 106(c)(2)(B). Under the SBA, "[s]ocially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities." 15 U.S.C. § 637(a)(5). Economically disadvantaged individuals are defined as "socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged." Id. § 637(a)(6)(A).

The statute also establishes a presumption that "Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and other minorities" are socially and economically disadvantaged. 15 U.S.C. § 637(d)(3)(C); see ISTEA § 1003(b)(2)(B); STURAA § 106(c)(2)(B). Both the ISTEA and the STURAA add women to that presumptive group. See ISTEA § 1003(b)(2)(B); STURAA § 106(c)(2)(B). Although the presumption is rebuttable, the burden is on the challenging party. See 49 C.F.R. §§ 23.62, 23.69; id. pt. 23, subpt. D, app. C. Those not entitled to a presumption of social and economic disadvantage may nonetheless attain DBE status by satisfying the race- and gender-neutral criteria established in the regulations. See 13 C.F.R. §§ 124.105(c)(1), 124.106; 49 C.F.R. pt. 23, subpt. D, apps. A & C.

Under UDOT's implementation of the ISTEA and relevant implementing regulations, a bid on federal highway projects is deemed responsive only if the requisite percentage of DBE participation is attained or, if that is not possible, by the bidder certifying that good faith efforts were used in an attempt to attain the stated goal. See Appellant's App. at 39-40. Under UDOT's scheme, "DBE status must be granted to any DBE contractor by UDOT prior to bid opening." Id. at 42.

In the winter of 1995, UDOT solicited bids on two separate projects that would be at least partially funded by the federal government. CVE's owners are not members of groups presumed to be disadvantaged and the company cannot qualify as a DBE because its gross revenues exceed the statutory limit to qualify as a "small" business. CVE submitted the lowest bid to the prime contractor for the electrical work to be done on each of those two projects. In both cases, however, the prime contractor that ultimately won the contract selected the next lowest bid in an attempt to satisfy the DBE percentage goal. Both prime contractors attested that but for the DBE program they would have used CVE to perform the needed electrical work. CVE filed this action shortly thereafter. The company seeks a declaration that the DBE program is unconstitutional and an injunction prohibiting UDOT from presuming certain minority groups to be socially and economically disadvantaged.

II

The district court ruled that CVE did not have standing to pursue the current action. We review this determination de novo. See Wilson v. Glenwood Intermountain Properties, Inc., 98 F.3d 590, 593 (10th Cir.1996). In order to have standing, CVE must demonstrate: (1) an "injury in fact," meaning the "invasion of a legally protected interest that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal relationship between the injury and the challenged conduct," meaning that the "injury fairly can be traced to the challenged action of the defendant, and has not resulted from the independent action of some third party not before the court; and (3) a likelihood that the injury will be redressed by a favorable decision," meaning that "the prospect of obtaining relief from the injury as a result of a favorable ruling is not too speculative." Northeastern Fla. Chapter of the Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 663-64, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993) (internal quotations and citations omitted).

In this type of equal protection case, "injury in fact" is defined as "the inability to compete on an equal footing in the bidding process." Id. at 666, 113 S.Ct. 2297. "When the government erects a barrier that makes it more difficult for members of one group to obtain a benefit than it is for members of another group," a plaintiff establishes injury by showing "the denial of equal treatment resulting from the imposition of the barrier, not the ultimate inability to obtain the benefit." Id. In addition, to prove its injury is "imminent" such that it may seek forward-looking relief, CVE must make "an adequate showing that sometime in the relatively near future it will bid on another government contract that offers financial incentives to a prime contractor for hiring disadvantaged subcontractors." Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 211, 115 S.Ct. 2097, 132 L.Ed.2d 158 (1995). Under this framework, we agree with the district court that plaintiff has demonstrated an injury in "its inability to compete for government subsidized contracts on an equal footing with businesses classified as DBEs pursuant to the Section 8(a) program." ² Moreover, pointing to the two contracts that it lost as a result of the DBE program and relying on its representation that it will continue to apply for UDOT electrical subcontracts in the relatively near future, CVE has also established that its injury is "imminent."

Having defined its injury as the inability to compete on equal footing, plaintiff must also demonstrate that such injury is "fairly traceable" to the disputed conduct of defendants--namely, the use of allegedly unconstitutional race and gender preferences--and that the relief sought--namely, the elimination of the disputed preferences--will provide redress for the injury claimed. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "Traditionally, redressability and traceability overlap as two sides of a causation coin." Dynalantic Corp. v. Department of Defense, 115 F.3d 1012, 1017 (D.C.Cir.1997). Though CVE points to Adarand as dispositive on both causation and redressability, we do not find Adarand controlling. In Adarand, the standing analysis was limited to a detailed discussion of how to demonstrate an injury of sufficient imminence to satisfy standing requirements for forward-looking relief. See id. at 210-12, 115 S.Ct. 2097. Although Adarand 's definition of injury necessarily impacts whether a plaintiff will be able to demonstrate traceability and redressability, Adarand offers no analysis on these points, instead merely stating "that Adarand has standing to bring this lawsuit." See id. at 212, 115 S.Ct. 2097. Thus, although the plaintiff in Adarand made a challenge similar to CVE's, the Adarand Court is silent on what impact the severability...