U.S. v. Mississippi Power & Light Co., 75-2590

• Decision Date: 06 June 1977
• Docket Number: No. 75-2590,75-2590
• Citation: 553 F.2d 480
• Parties: 14 Fair Empl.Prac.Cas. 1730, 14 Empl. Prac. Dec. P 7603 UNITED STATES of America, Plaintiff-Appellee, v. MISSISSIPPI POWER & LIGHT COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 480

553 F.2d 480

14 Fair Empl.Prac.Cas. 1730, 14 Empl. Prac.

Dec. P 7603

UNITED STATES of America, Plaintiff-Appellee, v. MISSISSIPPI POWER & LIGHT COMPANY, Defendant-Appellant.

No. 75-2590.

United States Court of Appeals, Fifth Circuit.

June 6, 1977.

E. Grady Jolly, Michael Farrell, Sherwood W. Wise, Jackson, Miss., for defendant-appellant.

Robert E. Hauberg, U. S. Atty., L. A. Smith, III, Asst. U. S. Atty., Jackson, Miss., Louis G. Ferrand, Jr., David L. Rose, Employment Section, U. S. Dept. of Justice, Civil Rights Div., Washington, D. C., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before AINSWORTH and CLARK, Circuit Judges, and HUGHES, ^* District Judge.

AINSWORTH, Circuit Judge:

The United States brought this suit in 1974 to compel the compliance of appellant, Mississippi Power & Light Company (MP&L), with the equal opportunity obligations of Executive Order 11246, as amended, ¹ and the implementing rules and regulations, 41 C.F.R. § 60-1.1 et seq. The district court held that MP&L is a government contractor subject to the Executive Order and the rules and regulations adopted pursuant thereto. The court held, moreover, that MP&L violated the Executive Order by denying the Government access to the company's premises and books. Therefore, the court issued a general injunctive order, permanently enjoining MP&L from failing or refusing to comply with the Order, so long as the company has not obtained an exemption from the program's coverage, and from refusing to allow the General Services Administration (GSA) or other appropriate federal agencies to conduct compliance reviews of MP&L and to have access to the company's premises and books. In a subsequent order, the district court stayed the injunctive order, pending appeal to this court.

This case presents the question whether the Government can impose the equal opportunity obligations of the Executive Order on a state-franchised public utility which, pursuant to its franchise, sells substantial amounts of electricity to the Government and enjoys an apparent near-monopoly in its area in the sale of electric utility service, even though the company has not agreed to be bound by the Executive Order. For the reasons stated in United States v. New Orleans Public Service, Inc. (NOPSI), 553 F.2d 459, the companion case which we also decide today, we hold that the Government can compel the company's compliance. Consistent with our opinion in NOPSI, we affirm the opinion of the district court, but set aside the court's general injunctive order.

MP&L is a public utility franchised by the Mississippi Public Service Commission to supply electricity to a substantial portion of the western half of Mississippi. The area covered by the company includes the cities of Jackson and Vicksburg. MP&L is the primary supplier of electric energy in that area, the company's franchise requiring that MP&L sell electricity to any consumer (including the Federal Government) requesting it. Thus, MP&L presently sells over $100,000 worth of electric service annually to various government agencies (including the GSA) with facilities in the state. The Government asserts that MP&L enjoys a "monopoly" under its franchise. The district court's opinion does not address this point. However, MP&L itself admits that "the government had no alternative source of electrical service." This fact triggers the policy we today announce in NOPSI, and we need not inquire further into the structure of the particular utility market or the precise details of MP&L's franchise.

The facts fully support the district court's resolution of the issue whether MP&L is a government contractor subject to the Executive Order. The company admits that it has written and unwritten agreements to provide electric service to various federal agencies at fifteen different facilities, including the Post Office and Courtroom facilities at Jackson, Vicksburg and Greenville, and the Peoples-Newman Building in Vicksburg. Under these contracts, the company has supplied the Government for many years, and each of the facilities receives over $10,000 worth of electricity annually. The district court took particular note of the contracts for the Post Office and Courtroom facilities at Jackson and Vicksburg. The Government stated that the total value of those contracts, which were written, has been greater than $50,000 since 1973. MP&L admits that, while those contracts were executed in 1950, they have been amended through rate changes since the effective date of the Executive Order. However, MP&L states that only one of the contracts that for the Greenville Post Office and Court House has been executed since the Order's effective date and that none of the contracts contains the equal opportunity clause required by the Executive Order. MP&L asserts that it is not subject to the Order because it has never contractually agreed to be bound by it. We incorporate herein the reasoning of NOPSI insofar as is necessary to reject appellant's contention. The Government attempted to conduct compliance reviews of MP&L in 1972 and 1973, but the company responded that it was not subject to the Order. MP&L admits that it denied access to its premises to GSA officials in 1972. ² Having found that the Executive Order was applicable to MP&L, the district court was clearly correct in holding that the company's refusal to comply with the Order constituted a violation of that mandate.

In this appeal, the company raises a number of issues. Specifically, MP&L makes the following assertions: (1) that the Government's stated cause of action is not one upon which relief can be granted because said cause is neither authorized by statute nor recognized at common law; (2) that the Secretary of Labor exceeded his authority in issuing 41 C.F.R. § 60-1.4(e) ³ because the regulation runs contrary to common-law contracts principles and principles of government-contract law; (3) that the district court opinion in the NOPSI case, which was adopted by the trial court herein, held erroneously that a contract provision not agreed to by the parties is incorporated into the contract when a government regulation requires the provision's inclusion in the contract; (4) that the provisions in the Executive Order and implementing regulations ⁴ for Government access to a contractor's books and records contravene the company's fourth amendment rights; (5) that the regulatory provision ⁵ for Government access to a contractor's premises also violates the fourth amendment, and is void not only for that reason but also because it was beyond the authority of the Secretary of Labor; (6) that the NOPSI court erred in holding that 41 C.F.R. § 60-1.4(e) makes NOPSI subject to the Executive Order, pursuant to the company's unwritten contracts with the Government, and that the same principle applies herein with respect to MP&L (7) that the NOPSI court erroneously held that a company such as NOPSI is subject to the Executive Order by virtue of 41 C.F.R. § 60-1.4(d); ⁶ (8) that the Government has violated its own rules and regulations, 41 C.F.R. § 60-2.2(c), ⁷ by failing to give MP&L a 30-day show cause notice prior to instituting this action, and therefore is estopped from pursuing this case; and (9) that the district court erred in holding that the Executive Order has the force and effect of law. MP&L's contentions are similar, although not identical in all respects, to those of the appellant in NOPSI. We find that, with the exception of MP&L's eighth assertion supra and some others which are without merit and do not require discussion, all of the preceding contentions are disposed of by our NOPSI opinion.

MP&L's argument that the Government violated its own regulations by failing to issue a 30-day show cause notice before instituting this action is also lacking in merit. MP&L relies on 41 C.F.R. § 60-2.2(c). The version of that regulation which was in effect at the time this suit was commenced directed the issuance by the compliance agency of such a notice in the situation where the Government has found that "a contractor has no affirmative action program or has deviated substantially from an approved affirmative action program or that his program is not acceptable." 41 C.F.R. § 60-2.2(c) (1974). The Government argues that this requirement is inapplicable to the situation at bar. According to the Government, the 30-day show cause notice must be issued only where the federal compliance agency has determined to seek cancellation or termination of an existing contract or debarment of a contractor from future contracts. The correctness of this position is obvious from the language of the regulation, see id. § 60-2.2(c)(1) and (2) which is quoted in the margin. ⁸ This suit was not invalid ab initio under that version of the regulation in effect at the time this suit was commenced. Our decision as to this issue is buttressed by the present version of the regulation, which reflects a recent amendment. See 42 Fed.Reg. 3454, 3457, 3462 (1977). The requirement of a 30-day show cause notice has been explicitly limited to the situation where the Government contemplates administrative enforcement. ⁹ As the Labor Department's accompanying comments thereto indicate, ¹⁰ the regulation was changed to make clear that the provision is inapplicable when judicial enforcement is contemplated. Those comments specifically endorse the district court's opinion herein, and we, similarly, decline to reverse it on the ground of the show cause issue.

For the foregoing reasons, we affirm the opinion of the district court holding that MP&L is a government contractor covered by the Executive Order. We find for the Government as to each of the issues raised by MP&L on appeal, and we incorporate herein our decision in NOPSI insofar as it pertains to the issues in the instant case.

Accordingly, in the exercise of our equitable discretion and...