Wednesday, April 17, 2013
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Court Upholds Caltrans Minority Contracting Program
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday rejected a challenge to the California Department of Transportation’s affirmative action contracting program.
The panel said a district judge’s ruling in favor of Caltrans is non-appealable because the San Diego Chapter of Associated General Contractors—which sued to invalidate the program in 2009—did not show that any of its members had been, or would be, injured by the program and therefore lacked standing. If it could reach the merits, the panel said, it would rule—as District Judge John Mendez of the Eastern District of California did—that the program survives strict scrutiny in light of the long history of discrimination in transportation contracting in California.
Caltrans’ Disadvantaged Business Enterprise program, as revised in 2009, gives preferences to African American-, Native American-, Asian-Pacific American-, and women-owned firms on certain transportation contracts. While most affirmative action programs in state government are prohibited by Proposition 209, part of the state Constitution, that measure includes an exception when race- or gender-based preferences are a condition of obtaining federal funds.
A 2005 law—the Safe, Accountable, Flexible, Efficient Transportation Equity Act—authorizes the Department of Transportation to distribute billions of dollars to states for transportation projects, subject to a requirement that at least 10 percent of that money go to “disadvantaged business enterprises” as defined by DOT regulations. The Ninth Circuit, however, ruled that affirmative action programs under a prior version of the act were unconstitutional unless the state could show that there was a pervasive history of discrimination in its contracting, and that the programs were narrowly tailored to benefit the victims of that discrimination.
In 2006, Caltrans responded to that ruling—Western States Paving Co. v. Washington State Department of Transportation, 407 F.3d 983 (9th Cir. 2005)—by suspending the DBE program’s race- and gender-conscious elements pending a study of the impact and existence of discrimination.
In 2007, the firm contracted to conduct that study reported broad disparities between the amount of contract dollars that DBEs should have received and those they actually did receive. The firm also gathered a great deal of anecdotal evidence regarding race and gender discrimination.
On the basis of that study, Caltrans sought approval from DOT for its new DBE program, including affirmative action elements. DOT granted approval in April 2009, and the contractors group sued two months later.
After the plaintiff appealed Mendez’s decision, Caltrans commissioned a new disparity study which concluded that discrimination continues in the state transportation contracting industry against African Americans, Native Americans, Asian-Pacific Americans, Hispanic Americans, and women. As a result, Caltrans asked the DOT for approval to add preferences for Hispanics to the program, which sets an overall goal of 12.5 percent of contract dollars to DBEs, of which 9.5 percent will be achieved through race- and gender-conscious measures.
Senior Judge Jerome Farris, writing yesterday for the panel, said the study was sufficient for Caltrans to conclude that the specified groups had been “systematically discriminated against in publicly-funded contracts.” He also rejected the contractors’ argument that unverified anecdotal evidence cannot be relied on in determining whether discrimination exists.
Judges Sidney R. Thomas and N. Randy Smith joined in the opinion.
The case is Associated General Contractors of America, San Diego Chapter, Inc., v. California Department of Transportation, 11-16228.
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