Metropolitan News-Enterprise


Wednesday, September 15, 2004


Page 1


C.A.: Utility Affirmative Action Program Violates Proposition 209


By KENNETH OFGANG, Staff Writer/Appellate Courts


The Sacramento Municipal Utility District’s minority contracting rules violate Proposition 209, the Third District Court of Appeal ruled yesterday.

A divided panel upheld a Sacramento Superior Court injunction barring SMUD from continuing to enforce the requirements of its 1998 Equal Business Opportunity Program. In doing so, the justices rejected the district’s claim that the program is necessary to maintain federal funding under Title VI of the Civil Rights Act of 1964, which would exempt it under the terms of the 1996 initiative.

Proposition 209 prohibits the state from discriminating, or granting “preferential treatment,” on the basis of race, sex, color, ethnicity, or national origin in the fields of employment, education, or contracting.

C&C Construction, Inc. challenged SMUD’s program. The contractor’s attorneys, from the Pacific Legal Foundation, argued that race-based “participation goals” and “evaluation credits,” as well as other features of the program, ran afoul of the initiative, as interpreted in Hi-Voltage Wire Works, Inc. v. City of San Jose (2000) 24 Cal.4th 537.

Among other things, the program gave minority contractors a price advantage, gave prime contractors a leg up in the evaluation process if they used at least eight percent African American or Asian and Pacific American subcontractors, and imposed specific requirements for minority outreach.

SMUD argued that it could not eliminate the lingering effects of past discrimination against minority contractors without maintaining the program.

Necessity Argued

Since Title VI bars recipients of federal funding from discriminating on the grounds of race and ethnicity, and implementing regulations apply to SMUD and other publicly owned utilities, the program was necessary to maintain federal funding, the district argued. It was supported in the Court of Appeal by a number of amici, including the American Civil Liberties Union, the Sacramento Human Rights/Fair Housing Commission, minority business groups, and the League of California Cities.

But Superior Court Judge Richard K. Park rejected the argument and granted the plaintiff’s motion for summary judgment. Justice George Nicholson, writing for the Court of Appeal yesterday and joined by Justice Vance Raye, said the trial judge was correct.

Under the exemption, Nicholson emphasized, SMUD must show that abandonment of the program “would result” in the loss of federal funding. The district, he said, failed to present substantial evidence to support such a showing.

The justice acknowledged that SMUD’s studies confirmed that there had been discrimination against minority contractors in the past. The district, however, “made no attempt in its disparity studies to identify federal laws and regulations and to test factual findings against those laws and regulations,” Nicholson wrote.

“Nor did it study whether race-neutral programs would suffice,” the justice added.

Justice Coleman Blease argued in dissent that SMUD’s program should be upheld under the Supremacy Clause of the U.S. Constitution and the Proposition 209 maintenance-of-federal-funding exemption.

Dissent’s Reasoning

C&C Construction, the dissenting justice argued, was claiming to be a victim of racial discrimination or illegal racial preferences, but did not resort to federal administrative remedies for discrimination in contracting programs. Such proceedings, rather than litigation in state courts, are the means of determining what steps a regulated entity like SMUD must take in order to avoid the loss of its federal funds under Title VI, the dissenting justice declared.

But Raye, in a separate concurrence, said the application of Proposition 209 to the case was a “simple” task that did not require Blease’s “creative constitutional commentary.”

There was not, Raye said, “a shred of evidence that termination of SMUD’s race preference policy will result in a loss of eligibility for a single federal program or a single federal dollar—no evidence, for example, of threats to terminate from federal enforcement officials, no citation to even a single instance where a federal agency has determined an entity ineligible based on a failure to implement racial preferences.”

If SMUD wishes to rely on the federal-funding exemption in order to maintain its race-based affirmative action programs, the justice added, the district “must seek a definitive edict from the appropriate federal program agency that such a policy of racial preference is required in order to maintain eligibility for the affected program.”

The case is C&C Construction, Inc. v. Sacramento Municipal Utility District, 04 S.O.S. 5005.


Copyright 2004, Metropolitan News Company