Western States Paving v. Washington State, 03-35783.
| Decision Date | 09 May 2005 |
| Docket Number | No. 03-35783.,03-35783. |
| Citation | 407 F.3d 983 |
| Parties | WESTERN STATES PAVING CO., INC., Plaintiff-Appellant, v. WASHINGTON STATE DEPARTMENT OF TRANSPORTATION; City of Vancouver, Washington; Clark County, Washington; Douglas MacDonald, Defendants-Appellees, United States of America; U.S. Department of Transportation; Federal Highway Administration, Defendants-Intervenors-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Gary E. Lofland, Lofland and Associates, Yakima, WA, argued the cause for the appellant.
Lisa J. Stark, United States Department of Justice, Washington, DC, argued the cause for appellees United States of America, U.S. Department of Transportation, and Federal Highway Administration; R. Alexander Acosta, Assistant Attorney General, Mark L. Gross, United States Department of Justice, Washington, DC, and Jeffrey A. Rosen, Paul M. Geier, and Edward V.A. Kussy, United States Department of Transportation, Washington, DC, were on the brief.
Steve E. Dietrich, Assistant Attorney General, Olympia, WA, argued the cause for appellee Washington State Department of Transportation; Christine O. Gregoire, Attorney General, Olympia, WA, was on the brief.
E. Bronson Potter, Senior Deputy Prosecuting Attorney, Vancouver, WA, argued the cause for appellee Clark County.
Alison J. Chinn, Assistant City Attorney, Vancouver, WA, was on the brief for appellee City of Vancouver.
Appeal from the United States District Court for the Western District of Washington (Tacoma); Ronald B. Leighton, District Judge, Presiding. D.C. No. CV-00-05204-RBL.
Before: McKAY,* O'SCANNLAIN, and BEA, Circuit Judges.
We must decide whether the Transportation Equity Act for the 21st Century, which authorizes the use of race- and sex-based preferences in federally funded transportation contracts, violates equal protection, either on its face or as applied by the State of Washington.
Western States Paving Co. ("Western States") is an asphalt and paving contractor based in Vancouver, Washington. The company is owned by a white male. In July 2000, Western States submitted a bid for subcontracting work on the City of Vancouver's "NE Burton Road Project." The project was financed by federal transportation funds provided to the Washington State Department of Transportation ("WSDOT") under the Transportation Equity Act for the 21st Century ("TEA-21"). In order to comply with TEA-21's minority utilization requirements, the State mandated that the city obtain 14% minority participation on the project.1 The prime contractor was bound by this requirement and rejected Western States' bid in favor of a higher bid from a minority-owned firm.
In August 2000, Western States submitted a subcontracting bid on Clark County's "Padden Parkway (East Leg)" project, which was substantially financed with TEA-21 funds. In distributing these funds to Clark County, the WSDOT imposed a 14% minority utilization requirement. The prime contractor did not select Western States, even though its bid was $100,000 less than that of the minority-owned firm that was selected. The prime contractor explicitly identified the contract's minority utilization requirement as the reason that it rejected Western States' bid.
Western States filed suit against the WSDOT, Clark County, and the City of Vancouver in the United States District Court for the Western District of Washington. Western States sought a declaratory judgment holding TEA-21's minority preference program to be a violation of equal protection under the Fifth and Fourteenth Amendments of the U.S. Constitution, either on its face or as applied by the State of Washington. Western States also requested damages under 42 U.S.C. §§ 1981, 1983, and 2000(d) and relief under Washington state law. The United States, the U.S. Department of Transportation ("USDOT"), and the Federal Highway Administration intervened to defend TEA-21's facial constitutionality. Although the federal government took no position regarding Western States' as-applied challenge, it acknowledged that the Dist. Ct. Oral Argument Tr. 48.
The district court held that TEA-21's minority preference program is constitutional both on its face and as applied, and granted the defendants summary judgment on that basis. In rejecting the facial challenge, the district court determined that Congress had identified significant evidence of discrimination in the transportation contracting industry and that TEA-21 is narrowly tailored to remedy such discrimination. The district court rejected Western States' as-applied challenge because it concluded that Washington's implementation of TEA-21 comports with the federal program's requirements. The court did not require Washington to demonstrate that its minority preference program independently satisfies strict scrutiny. The district court also held that Western States' claims under Washington law are without merit. Western States timely appealed.2
TEA-21 was enacted by Congress in 1998 and is the most recent in a series of federal transportation statutes providing for race- and sex-based contracting preferences.3 Pub.L. No. 105-178, 112 Stat. 107 (1998). TEA-21 was initially scheduled to expire on September 30, 2003, but—pending permanent reauthorization—it has been temporarily renewed several times and is now due to lapse on May 31, 2005. Surface Transportation Extension Act of 2004, Part V, Pub.L. No. 108-310, 118 Stat. 1144.
The pertinent provision of TEA-21 provides that, "[e]xcept to the extent that the Secretary [of Transportation] determines otherwise, not less than 10 percent of the amounts made available for any program under titles I, III, and V of this Act shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals." § 1101(b)(1), 112 Stat. at 113. The specifics of this minority preference program are set forth in regulations promulgated by the USDOT. See 49 C.F.R. pt. 26 (1999).
The regulations seek "[t]o create a level playing field on which [disadvantaged business enterprises] can compete fairly for DOT-assisted contracts." Id. § 26.1(b). A disadvantaged business enterprise ("DBE") is defined as a small business owned and controlled by one or more individuals who are socially and economically disadvantaged. Id. § 26.5. Although the term "socially and economically disadvantaged" is race- and sex-neutral on its face, the TEA-21 regulations presume that Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, and women are socially and economically disadvantaged.4 Id. § 26.67(a). This presumption of disadvantage is rebutted where the individual has a personal net worth of more than $750,000 or a preponderance of the evidence demonstrates that the individual is not in fact socially and economically disadvantaged. Id. § 26.67(b). Firms owned and controlled by someone who is not presumed to be disadvantaged (i.e., a white male) can qualify for DBE status if the individual can demonstrate that he is in fact socially and economically disadvantaged. Id. § 26.67(d).
The regulations do not establish a nationwide DBE program centrally administered by the USDOT. Rather, the regulations delegate to each State that accepts federal transportation funds the responsibility for implementing a DBE program that comports with TEA-21. The regulations accordingly explain that the 10% DBE utilization requirement established by the TEA-21 statute is merely "aspirational" in nature. Id. § 26.41(b). The statutory goal "does not authorize or require recipients to set overall or contract goals at the 10 percent level, or any other particular level, or to take any special administrative steps if their goals are above or below 10 percent." Id. § 26.41(c).
The TEA-21 regulations instead delineate a two-step process that a State must follow to set a DBE utilization goal that reflects its "determination of the level of DBE participation [that] would [be] expect[ed] absent the effects of discrimination." Id. § 26.45(b). In establishing this goal, a State must first calculate the relative availability of DBEs in its local transportation contracting industry. Id. § 26.45(c). One acceptable means of making this determination is by dividing the number of ready, willing, and able DBEs in a State by the total number of ready, willing, and able firms. Id. § 26.45(c)(1). Under step two, a State is required to adjust this base figure upward or downward to reflect the proven capacity of DBEs to perform work (as measured by the volume of work allocated to DBEs in recent years) and evidence of discrimination against DBEs obtained from statistical disparity studies. Id. § 26.45(d)(1). A State may also consider discrimination against DBEs in the bonding and financing industries, as well as the present effects of past discrimination. Id. § 26.45(d)(2)-(3). The final, adjusted figure represents the proportion of federal transportation funding that a State must allocate to DBEs during the forthcoming fiscal year. Id. § 26.45(e)(1). A State must submit its DBE program to the USDOT for review by August 1 of each year. Id. § 26.45(f)(1).
The TEA-21 regulations expressly prohibit States from apportioning their DBE utilization goal among different minority groups (e.g., allocating 5% to Black Americans, 3% to Hispanic Americans, 0% to Asian Americans, etc.); rather, an undifferentiated goal that encompasses all minority groups is required. Id. § 26.45(h). A State must meet the maximum feasible portion of this goal through race-neutral means,5 including informational and instructional programs targeted toward all small businesses. Id. § 26.51(a)-(b). A State must use race-conscious contract...
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