SPEAKERS CONTENTS INSERTS Tables
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OVERSIGHT OF CIVIL RIGHTS DIVISION OF THE U.S. DEPARTMENT OF JUSTICE
SUBCOMMITTEE ON THE CONSTITUTION
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FEBRUARY 25, 1998
Serial No. 144
Printed for the use of the Committee on the Judiciary
Page 2 PREV PAGE TOP OF DOCFor sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
Page 3 PREV PAGE TOP OF DOCJOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
THOMAS E. MOONEY, Chief of Staff-General Counsel
JULIAN EPSTEIN, Minority Staff Director
Subcommittee on the Constitution
CHARLES T. CANADY, Florida, Chairman
HENRY J. HYDE, Illinois
BOB INGLIS, South Carolina
ED BRYANT, Tennessee
WILLIAM L. JENKINS, Tennessee
Page 4 PREV PAGE TOP OF DOCBOB GOODLATTE, Virginia
BOB BARR, Georgia
ASA HUTCHINSON, Arkansas
ROBERT C. SCOTT, Virginia
MAXINE WATERS, California
JOHN CONYERS, Jr., Michigan
JERROLD NADLER, New York
MELVIN L. WATT, North Carolina
KERI FOLMAR, Chief Counsel
JOHN H. LADD, Counsel
ROBERT J. CORRY, Counsel
C O N T E N T S
February 25, 1998
Canady, Hon. Charles T., a Representative in Congress from the State of Florida, and chairman, Subcommittee on the Constitution
Clegg, Roger, General Counsel, Center for Equal Opportunity
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Davis, Martha, Legal Director, NOW Legal Defense and Education Fund
Hinton, Charles M., Jr., City Attorney, Garland, TX
Kennedy, Michael, General Counsel, Associated General Contractors of America
Lee, Bill Lann, Acting Assistant Attorney General, Civil Rights Division, United States Department of Justice
Pottinger, Stan, Former Assistant Attorney General for Civil Rights, U.S. Department of Justice
Rosenberg, Morton, American Law Division, Congressional Research Service
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Clegg, Roger, General Counsel, Center for Equal Opportunity: Prepared statement
Davis, Martha, Legal Director, NOW Legal Defense and Education Fund: Prepared statement
Hinton, Charles M., Jr., City Attorney, Garland, TX: Prepared statement
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Kennedy, Michael, General Counsel, Associated General Contractors of America
Lee, Bill Lann, Acting Assistant Attorney General, Civil Rights Division, United States Department of Justice: Prepared statement
Rosenberg, Morton, American Law Division, Congressional Research Service: Prepared statement
OVERSIGHT OF CIVIL RIGHTS DIVISION OF THE U.S. DEPARTMENT OF JUSTICE
WEDNESDAY, FEBRUARY 25, 1998
House of Representatives,
Subcommittee on the Constitution,
Committee on the Judiciary,
The subcommittee met, pursuant to notice, at 10:06 a.m., in Room 2141, Rayburn House Office Building, Hon. Charles T. Canady [chairman of the subcommittee] presiding.
Present: Representatives Charles T. Canady, Henry J. Hyde, Bob Inglis, William L. Jenkins, Bob Goodlatte, Bob Barr, Asa Hutchinson, Robert C. Scott, John Conyers, Jr., Melvin L. Watt, and Sheila Jackson Lee.
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Staff present: Keri Folmar, Chief Counsel; Robert J. Corry, Counsel; Brett Shogren, Research Assistant; Michael Connolly, Staff Assistant; Julian Epstein, Minority Staff Director, and Brian Woolfolk, Minority Staff.
OPENING STATEMENT OF CHAIRMAN CANADY
Mr. CANADY [presiding]. The subcommittee will be in order.
The subcommittee convenes today for oversight of the United States Department of Justice Civil Rights Division. The Civil Rights Division was founded over 40 years ago to do the critically important job of enforcing the civil rights laws for all Americans. The Division continues to do important work in combating illegal discrimination. Yet in certain respects the Division has strayed from its core mission.
Historically, the Civil Rights Division fought hard to ensure that all Americans were afforded equal protection of the law without regard to race or skin color. But during the current Administration, the Civil Rights Division aggressively defends Federal programs that divide and classify Americans on the basis of their race, skin color, and sex, even in the face of court decisions such as Adarand v. Pena, holding these programs presumptively unconstitutional.
The Civil Rights Division formerly honored those laws and Government actions that bring Americans together. Now, when the people of the nation's most racially diverse State, California, came together and decided to transcend discriminatory preferences based on race and sex, it was the Civil Rights Division that argued in court against the people and their vision of equality. It was the Civil Rights Division which sought to prevent the people of California from implementing a consistent policy against discrimination on the basis of race and sex.
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Historically, the Civil Rights Division sought to break down racial segregation in our nation's schools. Today, the Civil Rights Division fights for racially segregated academic programs such as the National Science Foundation's Minority Graduate Research Fellowships, and the U.S. Coast Guard's Minority Officer Recruitment Effort. The Department of Justice even sponsors the racially segregated Louis L. Redding Fellowship Program reserved for minority students only.
Historically, the Civil Rights Division was at the forefront of protecting the voting rights of all Americans. Now, the Civil Rights Division seeks to deny Americans their right to cast their votes in geographically-sensible voting districts and seeks to impose illogical, distorted, racially-gerrymandered districts.
In the past, the Civil Rights Division fought against a system where Americans would lose their jobs because of the color of their skin. Over the past few years, the Civil Rights Division repeatedly switched sides in litigation to argue that Sharon Taxman, an innocent public school teacher in Piscataway, New Jersey, should have been fired for no reason other than the color of her skin.
In the past, the Civil Rights Division worked hard to ensure that all Americans, regardless of their race, could count on police officers to protect them from crime. Now, the Civil Rights Division is engaged in a concerted strategy to deprive local governments of the tools, tests, and resources they need to properly assess the qualifications of potential law enforcement officers.
Page 9 PREV PAGE TOP OF DOC The Division is in a unique position to forge a new consensus on civil rights, one consistent with our nation's fundamental principle of equality, and one that can be supported by the vast majority of Americans, who strongly believe that the time has run out for Government policies that sort, classify, and divide Americans along racial lines. The Civil Rights Division has thus far failed to make progress and move beyond the preference policies that violate fundamental American principles and are rejected by the American people.
Racial preference for anyone is the antithesis of the American creed. Racial preference was wrong in the past when it was embodied in the system of segregation and it is wrong now when it is embodied in the system of preferences. If our history as nation teaches us anything, it teaches us that granting benefits to individuals on the basis of their race is inherently pernicious.
Government policies that discriminate on the basis of race and gender send a powerful message from the Government to the American people that we should judge one another on the basis of race and gender. That is exactly the wrong message for the Civil Rights Division or any other agency of Government to send to the American people. That is a message that only reinforces prejudice and discrimination in our society.
Eventually, I'm convinced, discriminatory preferences will come to an end. And when we look back, we will wonder why the United States Department of Justice supported the differential treatment of human beings on the basis of their immutable characteristics, and stood on the wrong side of history.
With that observation, I'll recognize Mr. Scott for any comments he has.
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Mr. SCOTT. Thank you, Mr. Chairman. Mr. Chairman, discrimination is still rampant and Government has a moral obligation to remedy discrimination. There's a difference between a preference and rules to stop discrimination. The Justice Department's Civil Rights Division is a primary institution charged with engaging this very important task. I'd like to take the opportunity to formally welcome Mr. Bill Lann Lee to the Subcommittee on the Constitution. This is the first of what I expect to many appearances before the subcommittee, serving in your capacity, Bill, as acting, and hopefully soon to be Assistant Attorney General for Civil Rights. I hope to speak for all on the subcommittee when I say that we look forward to establishing a strong and productive partnership, and developing ways in which we can more effectively ensure that all Americans are treated with respect and dignity. Your challenge is great. Your work is cut out for you.
A recent study by the Fair Housing Council found that minorities are discriminated against 40 percent of the time that they attempt to rent apartments. A similar study conducted by employment testers of the Fair Employment Council and Urban Institute revealed that African Americans and Latino job applicants suffer blatant and easily identifiable discrimination one our of every five times they apply for a job. In addition, women still make only 70 cents for every dollar made by men in the same professions. We could go on and on. Individuals with disabilities continue to face open, obvious and extensive discrimination. Police brutality, selective prosecution, and racial profiling remain parts of our criminal justice system.
Although your challenge is great, I'm confident that you and your very able-bodied and dedicated staff will meet this challenge with a sense of honor and skill that have become the mainstay of the Civil Rights Division, and I look forward to your remarks. Thank you, Mr. Chairman.
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Mr. CANADY. Thank you. Are there other members wishing to make an opening statement? Okay. We will now proceed to our first panel which consists of Mr. Lee.
On our first panel this morning the subcommittee will hear from the Honorable Bill Lann Lee, Acting Assistant Attorney General of Civil Rights at the United States Department of Justice. Mr. Lee, we want to thank you for being here with us today. I understand that you'll need about 10 minutes for your testimony, and without objection, you will have 10 minutes. And, of course, your full written statement, also without objection, will be made a part of the permanent hearing record. Again, we thank you for being here. We look forward to your presentation.
Mr. Lee, I don't think the microphone is on. You need to flip the switch there.
STATEMENT OF BILL LANN LEE, ACTING ASSISTANT ATTORNEY GENERAL, CIVIL RIGHTS DIVISION, UNITED STATES DEPARTMENT OF JUSTICE
Mr. LEE. Thank you for cluing me in.
Chairman Canady, Mr. Scott, Members of the subcommittee, thank you very much for the opportunity to appear before you today. I'm pleased to come here to discuss the important work of the Civil Rights Division. I'm also pleased to come here to present our request for an authorization for Fiscal Year 1999.
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Civil rights remains the unfinished business of America. Time and again we are reminded that America is not the land of opportunity for people who are victims of discrimination. I've been a civil rights lawyer for 23 years, and I'm aware of the tremendous progress we have made since Brown v. Board of Education, since the enactment of landmark bipartisan civil rights legislation in the 1960's and 1970's, and since the enactment of the Americans with Disabilities Act in 1990. We have made considerable progress in the struggle for equal opportunity and we have done so on a bipartisan basis.
But discrimination remains a vexing problem for our nation. As Mr. Scott pointed out, right here in the Washington metropolitan area, a 1996 study found that black applicants for rental housing encountered discrimination 44 percent of the time, Hispanics encountered discrimination 37 percent of the time. Think about these figures, Mr. Chairman. Nearly halfhalfthe time a black renter went out in this area to find an apartment or home for rent, he or she was likely to be discriminated against, treated unfairly, treated differently. If you're Hispanic, it was one-third of the time. All this 30 years after the passing of the Fair Housing Act.
Recently the FBI released statistics showing that there were 9,000 hate crimes in 1996, the latest year we have statistics. And we all know that's under-reported.
I've been on the job as Acting Assistant Attorney General since the middle of December. During this time, the Division has carried on its work, and I've been impressed the by breadth and depth of its work. I've been impressed by the professionalism, the commitment, and the integrity of the lawyers and staff in the Civil Rights Division. As someone who has watched the work of the Division from the outside, I have a new appreciation for what the Division does. Virtually all of the work we do is nuts and bolts law enforcement.
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I'd like to give you a flavor of what we do. Just since I started, in Idaho we indicted three men who engaged in racially motivated attacks against Mexican Americans, including children as young as the age of 9. In Mobile, Alabama, we settled a housing discrimination case against one of the largest housing providers in the area for steering black applicants away from apartments that they wanted. In Hawaii, we settled a case making it possible for blind persons with guide dogs to visit the State for the first time. In Sacramento, we obtained a guilty plea from a serial arsonist who had burned eight health clinics in four different states. In New Mexico, we entered into an agreement with county government to ensure that members of the Navajo nation are able to exercise their right to vote. And in Dallas, Texas, we obtained a guilty plea from a man who entered a Jewish congregation, took out a shotgun and shot up the place, yelling anti-Semitic slurs. These are just a few of the reasons why we need a strong and effective Civil Rights Division today.
Although all of the work of the Civil Rights Division is critically important, I intend to emphasize three priorities: hate crimes, housing and lending discrimination, and enforcement of the Americans with Disabilities Act. I'd like to tell you a little something about each.
First, fighting hate crimes. Last week, we brought in the hate crime coordinator for each United States Attorneys' Office, along with the FBI and ATF agents. That's 93 United States Attorneys' Offices. They came for a comprehensive day of training to implement the Attorney General's hate crimes initiative. We are looking forward to making sure that local working groups to be established at the local U.S. Attorney's Offices provide a focus for hate crimes enforcement.
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I co-chair the National Church Arson Task Force which coordinates the Federal response to this problem. Last Congress, every Member of this subcommittee supported important legislation to help us combat church arsons. More than 500 church burnings have been investigated. Burning of a house of worship offends some of the most fundamental ties that bind us together as a civil society, and law enforcement must respond vigorously to these crimes.
Combating discrimination in housing and lending is another priority. Finding a place to live is a fundamental element of the American dream. Yet finding a place to live without confronting discrimination is something that too many minority citizens find to be impossible. Our fair housing testing program has been very successful in rooting out the problem of housing discrimination.
You can't buy a home if you can't get a loan. That is why our fair lending work is so important. The cases are difficult and complex, but they bring tangible results. They give minority home buyers a fair chance to get the loan they need to get the housing they can afford. Alan Greenspan, chairman of the Federal Reserve, recently noted that discrimination is patently immoral but is now increasingly seen as unprofitable. Because of our fair lending work, many lending institutions have begun to reexamine old practices. They have found that opening markets to all people of whatever background is not only morally right, it is good business as well.
Finally, enforcing the Americans with Disabilities Act is a high priority. As envisioned by Congress, we have provided extensive education to let people know what their rights and responsibilities are under the ADA. In this way, we can address problems before they happen. We intend to keep up our technical assistance efforts because, frankly, we all benefit from that effort. We also plan to emphasize enhanced enforcement through mediation and litigation to fulfill the bipartisan promise of the ADA.
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How we get the job done is often as important as what we accomplish. Throughout my career, I believed it better to resolve cases through conciliatory means whenever possible. Litigation should be a matter of last resort. I prided myself on reaching settlements which benefitted both the parties and the public interest. I believe in obtaining remedies that will effectively cure discrimination.
And those remedies must remain in place until the problem is solved, but no longer. It is important that court decrees last no longer than necessary to do the job. That is why in the past year, the Division has actively sought to modify or terminate a number of decrees in which court ordered relief has achieved its goal and is no longer necessary. For example, we requested to terminate a consent decree in an employment discrimination case involving the Pompano Police Department in Florida. That is because we recognize that the city has substantially complied with the decree and the objectives of the decree have been met. We did the same thing in Kansas City, Kansas, and just the other day the court accepted arguments in San Diego as well.
Mr. Chairman, may I have a few more minutes?
Mr. CANADY. Sure, please proceed.
Mr. LEE. I strongly believe that in civil rights controversies it is often important to lower a temperature in a community, if not in our nation as a whole. That is why I've always promoted negotiation over confrontation, settlements over struggle. On civil rights issues, tensions often run high, and a settlement sends the right message, the message that the parties have a mutual agreement to justice. But where the process has failed, I believe that we need to move strongly to obtain an effective remedy.
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As you know, the Division's funding has remained virtually flat since 1995. Yet its enforcement responsibilities have expanded substantially. In the past few years, we've been tasked to investigate and prosecute church arsons, protect those who seek access to reproductive health care facilities, redress patterns of police misconduct and enforce the motor voter law. In 1999, we're asking for an increase of some $7 million. This increase is focused on enhancing important programs within the Divisionfighting crime, improving enforcement of our disability laws, and coordinating Federal civil rights programs.
For me, fighting discrimination is not simply and abstract interest. It is something that I've learned from my personal experience. I'm the son of Chinese immigrants. My father, William Lee, came to this country in the 1930's to seek the American dream. My mother, Pui Jen Lee, followed him.
My parents, unhappily, did not find a grand opportunity in America; they found racial prejudice. They started their own business, a laundry, Lee's Hand Laundry, in New York City near Harlem. My father would open that laundry at 7 o'clock every morning 6 days a week, and he'd close that laundry at 9 o'clock every night. To this day I can vividly recall the smell of the dirty clothes, huge piles of dirty clothes, that customers would bring in, that my parents would take in.
My brother and I wanted to help out. The reason I remembered the smell is that it was our job to sort that dirty laundry. The clean work in that laundry was ironing. We were never permitted to do that. My parents never wanted us to get comfortable in that laundry. They wanted us to pursue the American dream.
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My father volunteered at the age of 35 for the United States Air Force during the second World War. He was over age, but he wanted to demonstrate something. He demonstrated through sweat and blood his loyalty to this country. The rest of his unit was white menactually, they were boys, far younger than him, and many from the south. Yet my father told me that it was in the Army that he learned for the first time what it felt like to be an American because he was treated equally. Though he had a sixth grade education, he found that he often wrote letters home for those men.
When he returned from the war, my father found that in New York City, where he lived, little had changed. He continued to be referred to by racial slurs and worse. Searching for an apartment while wearing a uniform, he was turned down and told to his face that it was because he was Chinese. He went back to the laundry, but he continued to believe that his children would have a better chance.
I heeded my parents' adviceactually, I was happy to leave that laundryand I went to Yale on a scholarship. I arrived at school alone on a Trailways bus carrying my single suitcase. I watched as the other freshman unloaded their possessions from the family cars. I always wore white shirts back then, not because I meant to dress well but because that's what customers left at my parents' laundry. I had an endless supply of white shirts.
I looked different. I felt different. I was different. But I always hoped that the promise of equal opportunity and fairness would ring true for me. I believed that civil rights law embody the promise of equal opportunity and fairness that my parents believed in. I believe that the lives of my parents and countless other Americans would have been very different had the civil rights laws been in the effect at that time, and had they been enforced.
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Fairness. Equality. That is all the civil rights laws provide for. That's all the Civil Rights Division works for giving people a fair chance, unimpeded by prejudice and exclusion.
Thank you, Mr. Chairman. I look forward to answering your questions.
[The prepared statement of Mr. Lee follows:]
PREPARED STATEMENT OF BILL LANN LEE, ACTING ASSISTANT ATTORNEY GENERAL, CIVIL RIGHTS DIVISION, UNITED STATES DEPARTMENT OF JUSTICE
Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to appear before you today to discuss the important work of the Civil Rights Division and to present the Division's authorization request for Fiscal Year 1999. As I am sure you will agree, our Nation's commitment to civil rights is both a hallmark and a measure of our democratic ideal.
The Civil Rights Division has requested $71,594,000 for Fiscal Year 1999. This request represents a $6,905,000 increase over the Division's 1998 enacted budget. With this budget we will be able to solve problems better and turn to litigation only as a last resort. It is my belief and it has been my experience that the best resolution of a civil rights controversy is often what the parties can work out themselves. The focus on improved coordination of federal civil rights enforcement among federal agencies will help make this possible. The Civil Rights Division will take the lead role in coordination. Enhanced coordination will lead to more consistent enforcement of the civil rights laws, broader dissemination of best practices and improved data collection.
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This budget is focused on enhancing important programs within the Division, including combating hate crimes, improving our enforcement of the laws prohibiting discrimination on the basis of disability, ensuring non-discriminatory access to housing and coordinating federal civil rights programs.
Since 1995, the Division's funding has remained virtually flat eventhough the Division's enforcement responsibilities have expanded substantially with the passage of legislation relating to the investigation and prosecution of church arsons, the protection of women and health care providers who seek access to reproductive health care facilities, the redress of patterns and practices of police misconduct and the National Voter Registration Act, known as the motor voter law. Despite this statutory expansion of our responsibilities, we have maintained an effective enforcement program by tightening our belts even more.
As you know, the Civil Rights Division is the primary agency within the federal government charged with the enforcement of federal civil rights laws. The Division's authority derives both from federal statutes and from formal delegations from the Attorney General. Many of the laws we enforce originated here in this Subcommittee, and were passed on a bipartisan basis. While there can be legitimate disagreement regarding specific enforcement decisions, I hope that we all will agree that discrimination based on race, color, religion, sex, national origin, disability, familial status and other factors continues to be a serious problem in far too many areas of American life. Vigorous enforcement of our civil rights laws, therefore, must remain a national priority.
The Civil Rights Division will continue to enforce aggressively the Nation's civil rights laws. The Division will continue to speak out about the scourge of discrimination and will continue to do all it can to advance equality, opportunity and fair play for all Americans.
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As Acting Assistant Attorney General, initially I plan to focus on three priorities: fighting hate crimes, battling housing and lending discrimination, and attacking discrimination against persons with disabilities. We already have vigorous programs in these areas, but we can and will do more.
Hate crimes remain one of the most important social and law enforcement challenges we face today; witness the increase in the number of reported violent hate crimes committed on the bases of race, gender, sexual orientation, disability, national origin and religion. Together with our colleagues at the Department of Housing and Urban Development, we are waging the war against discrimination in housing and lending, a key priority for both Departments. And aggressive enforcement of the Americans with Disabilities Act further enables us to help all Americans participate fully in life.
As you know, I have been on the job as Acting Assistant Attorney General since the December 15, 1997. During this time, the Division has carried on its work, and I have been impressed by its breadth and depth, and of the committed professionalism and integrity of the Division's employees. As someone who had watched the Division from the outside, I now have a new appreciation for the wide range of activities of the Division.
The vast majority of the work we do is nuts-and-bolts law enforcement: fighting discrimination everyone would agree must be addressed, such as prosecuting hate crimes, enforcing the Americans with Disabilities Act, fighting on behalf of victims who are denied housing simply because of the color of their skin, and ensuring that individuals can exercise their right to vote. Some of the matters I have seen since I came to the Division illustrate how discrimination remains a compelling problem that continues to vex our nation. In Sacramento, California, a member of a white supremacist gang was sentenced to 13 years in prison for attacking an African American and a Hispanic when they entered a convenience store. In Mobile, Alabama, we settled a housing discrimination lawsuit against one of the largest housing providers in Mobile, who was steering black applicants away from the apartments they desired. And because of our recent settlement with the State of Hawaii, persons who are vision impaired and require the assistance of seeing-eye-dogs now can travel to Hawaii without having to quarantine their guide-dogs for four months.
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With this background, I would like to review some of the highlights of the Division's work during the past year.
The prosecution of criminal civil rights violations continues to be one of the Division's most active practice areas and one of its highest priorities. In Fiscal Year 1997 alone, the Criminal Section of the Civil Rights Division reviewed close to 11,000 complaints, and brought 77 new criminal cases charging 189 defendants. This represents the most defendants ever charged in a single year, in cases involving hate crimes, official misconduct, such as police brutality, and other alleged criminal civil rights violations.
The President and the Attorney General have made it clear that they view hate crimes as one of the most important law enforcement challenges facing our Nation today. During the past year we prosecuted 43 defendants successfully, obtaining either a conviction or guilty plea. A number of prosecutions charged members of organized hate groups, such as the Ku Klux Klan, and various racist Skinhead gangs. For example, three members of the skinhead group, known as the Skin White Power, pled guilty to burning a cross in the front yard of an African-American woman in Lake Havasu, Arizona. In Los Angeles, California, three skinhead members of the Nazi Low Riders were charged with both assaulting an eighteen-year-old African-American man as he was getting into his car in the parking lot of a Blockbuster video rental store, and attacking a sixteen-year-old African-American man as he was walking along a street in Lancaster.
Police and other official misconduct continues to receive the Division's attention. During the past year, 67 law enforcement officers, including police officers, deputy sheriffs, state and federal prison correctional officers, a state constable and a federal immigration officer were charged with abusing their authority and depriving individuals of constitutional rights, such as the right to be free from unwarranted assaults, illegal arrests and searches. Most recently, a Palisades Park, New Jersey, police officer and two civilian co-defendants were convicted of conspiring to carry out a scheme to burglarize and steal property from various residences and business establishments in the town. These three convictions followed earlier convictions and guilty pleas by four other Palisades Park police officers involved in the burglary scheme.
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Since June of 1996, and continuing to this day, the Civil Rights Division has been at the forefront of the Federal government's extraordinary efforts to address the troubling number of fires that have occurred at black churches and other houses of worship across the country. Along with officials of the Department of the Treasury, the Division's prosecutors have played leading roles within the National Church Arson Task Force and have directed the government's efforts to investigate and prosecute those responsible for these heinous crimes. Since 1995, arrests of 258 suspects have been made in connection with 197 fires at churches and other houses of worship. Working in collaboration with the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco and Firearms, the Community Relations Service, and other Federal, state and local law enforcement agencies, the Civil Rights Division will continue to lead the government's fight against these despicable crimes.
FAIR HOUSING AND LENDING
Fair housingthe right to live wherever one wants and can affordlies at the heart of the American dream. Yet for far too long, invidious discrimination in the housing market has prevented many Americans from turning that dream into reality. With alarming frequency, unlawful discrimination pervades both the rental and the home-buying segments of the housing market. The results of testing done in the Washington metropolitan area by a private group vividly illustrates the magnitude of this problem.
On April 8, 1997, the Fair Housing Council of Greater Washington issued an annual report based on extensive testing, by which pairs of equally qualified applicants of different races or national origins apply for housing at the same location under similar circumstances. The testing indicated that blacks encounter discrimination 44% of the time in their search for rental housing and 33% of the time in their attempts to purchase a home. According to the report, Latinos will encounter discrimination 37% of the time in their search for rental housing and 42% of the time in their attempts to purchase a home.
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We have stretched the limited resources of our Housing Section by focusing the Section's energies on broad-based ''pattern and practice'' cases that address system-wide discrimination in the housing market. We have successfully brought U.S. Attorneys into the effort to enforce the Fair Housing Act on behalf of individual complainants. The Division has developed precedent-setting pattern and practice cases through the use of our testing program, which has enabled the Division to root out and prove countless examples of discriminatory housing practices that otherwise might have gone undetected or unpunished.
Fair housing testing has been a major tool for gathering evidence of housing discrimination. Since its creation in 1992 through the end of FY 1997, the Department's testing program has resulted in the filing of 39 pattern or practice cases. It has proved to be a very cost effective enforcement mechanism in view of the very significant relief obtained in these cases. At the end of FY 1996, 21 of the 33 cases then filed had been successfully resolved through consent decree or after trial, and over $2.5 million had been awarded in these cases in the form of damages, civil penalties and other equitable relief designed to compensate for discrimination and promote fair housing. In FY 1997 an additional six cases were filed. More significantly, 12 additional testing cases were resolved in FY 1997 with a record increase in monetary relief obtained, totalling over $3.5 million.
Our fair lending program is designed to combat discrimination in lending, especially mortgage lending. Since initiating this program in 1992, the Section has received an increase in referrals of matters from bank regulatory agencies which also have responsibility for enforcing the fair lending laws. We also have brought important cases attacking property insurance discrimination.
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The fair lending and property insurance initiatives involve some of the most complex investigation and litigation in the Civil Rights Division. These cases require significant resources. Cases in both areas have had a very significant impact on improving both lending opportunities for minorities and the availability of property insurance in predominantly minority communities. For example, a Wall Street Journal article published in early 1996 made note of this progress, emphasizing more vigorous enforcement of fair lending laws by both the Justice Department and the bank regulatory agencies. This Section's enforcement program has been in the forefront of this federal effort.
As recently stated by Alan Greenspan, Chairman of the Federal Reserve, ''too many barriers still prevent the free flow of capital and people to their most productive employment.'' ''Discrimination,'' he said, ''is patently immoral, but it is now increasingly being seen as unprofitable.'' The ability to obtain a loan and to obtain insurance are preconditions to home ownership. The denial of either is devastating and particularly so when that denial is a result of discrimination.
Since 1992, 13 cases have been initiated attacking discrimination by financial institutions in the underwriting, marketing and pricing of loans. In FY 1997, three such cases were filed. Each of the fair lending cases have been resolved by consent decrees, and in virtually all cases such decrees have been significant and widely publicized. In FY 1997, three important settlements were entered. The first involved a case against the First National Bank of Dona Ana Co., New Mexico, alleging discrimination against Hispanics in the underwriting of loans, and included monetary relief of $585,000. The second resolved a case against the First National Bank of Gordon, Nebraska, alleging discrimination against Native American customers who were charged significantly higher interest rates on consumer loans than white customers, and included monetary relief of $275,000. The third occurred in a case against Albank FSB of Albany, New York, alleging the refusal to grant loans in minority areascommonly referred to as redlining practicesin areas of Connecticut and Westchester County, New York. The consent decree included the provision of discounted loans in these areas which will provide below market rate loans costing the bank almost $9 million.
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In our initiative attacking discrimination in the area of property insurance, we filed and settled simultaneously a very significant race discrimination case against the Nationwide Insurance Company in FY 1997. The consent decree settling the case provides monetary relief estimated at $13.2 million, and injunctive relief which will increase the availability of property insurance in minority neighborhoods. The Nationwide decree combined with a recent case against the American Family Insurance Co., which was settled two years ago, resulted in important changes in underwriting policies of insurance companies that will make insurance available to previously excluded individuals.
The Civil Rights Division has made great strides in implementing the Americans with Disabilities Act (ADA), a comprehensive law that Congress enacted in 1990 with wide bipartisan support to protect the fundamental rights of persons with disabilities. The Division enforces the ADA's prohibition of discrimination against people with disabilities in public employment, government services, and places of public accommodations. The ADA affects 6 million businesses and non-profit agencies, 80,000 units of state and local government, and 52 million people with disabilities.
As envisioned by the Congress, the Department has promoted voluntary compliance with the ADA by providing technical assistance regarding the Act's requirements and engaging in extensive outreach efforts. The ADA Information Line receives up to 150,000 calls annually seeking information and publications on the ADA. The Information Line now includes a fax-on-demand service allowing the public to have ADA publications faxed directly to their homes or offices 24-hours a day. The Division's popular ADA Home Page on the World Wide Web receives up to 100,000 hits per week.
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The Division continues to develop new technical assistance materials on topics such as hiring police officers, restriping parking lots, and common errors and omissions in new construction and alterations. It is also increasing the number of current titles translated into a variety of languages, including Chinese, Korean, Spanish, Tagalog, and Vietnamese. Through the ADA technical assistance grant program, the Division has placed an ADA Information File containing 95 ADA publications in 15,000 local public libraries throughout the country, and continued projects in 26 States to educate businesses or state and local government officials about the ADA and the resources available to help them comply. The Division has also produced public service announcements for radio and television.
We have been extremely successful in our enforcement of the ADA, and we have achieved many of our most important successes without having to resort to costly litigation. Since 1990, the Division has reached voluntary agreements with businesses and local governments in more than 600 matters involving state and local government entities and the private sector. The resolution of these complaints has resulted in the removal of physical barriers, the provision of auxiliary aids, and the elimination of discriminatory policies in a wide variety of settings, including hotels, restaurants, retail stores, stadiums, town halls, courts, and prisons.
A number of recent cases will serve as models for ADA compliance throughout the country. Under a consent decree, the Friendly Ice Cream Corporation will engage in an aggressive barrier-removal program to increase accessibility throughout its chain of 704 restaurants in 15 States. In a case against Denver, Colorado, the Department won a jury award of $300,000 on behalf of a police officer who was denied reassignment as a reasonable accommodation after he was injured in the line of duty. Since our last authorization request, under a comprehensive settlement agreement, Walt Disney World agreed to provide a wide range of auxiliary aids to ensure effective communication for persons who are deaf or hard of hearing, including sign language interpreters and captioning at specified shows, performances, and rides. We also entered an agreement with the State of Hawaii that makes it easier for persons who use seeing eye dogs to visit the state with their dogs. As a result of a nationwide program of compliance reviews, numerous local governments have agreed to provide the necessary training and equipment to ensure direct access to their emergency 911 systems to users of TDD's (telecommunications devices for the deaf). In addition, many people with disabilities have gained access to businesses and government agencies as a result of the Department's expanded program of alternative dispute resolution in which ADA complaints are referred to trained mediators.
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The enforcement of the Voting Rights Act is a barometer of the health of the Nation, for it involves the intersection of two fundamental values: that no one should be discriminated against because of his or her race, and that our Nation is a democracy in which the right to vote of citizens is not restricted, and all votes are given full value. The Division's Voting Section has a crucial role in our society in assuring that the foundation of our democracythe right to vote and to participate fully in our electoral processis made available to all citizens, regardless of race, color, language, literacy, disability, or other irrelevant factors.
Under Section 5 of the Voting Rights Act, which remains the cornerstone of the Act, the Division reviewed 3,820 submissions containing 13,920 changes of voting practices and procedures in FY 1997. Each proposed voting change received our individual attention, to make sure that discriminatory changes were not implemented. In January, for example, the Attorney General objected to a Louisiana statute that would have frozen voting precinct lines during the crucial period following the 2000 census. After the Census, the state and its parishes, cities, and school boards will be drawing new districting plans; the statute would not have allowed precinct changes that may be necessary for compliance with the Voting Rights Act. Freezing the precinct boundaries in this manner would have prohibited some jurisdictions from drawing fair voting plans. Also during FY 1997, 554 federal observers protected minority voting rights at 251 polling places during 53 elections held in 10 different states.
In an manner consistent with new standards enunciated by the Supreme Court, we are vigorously defending minorities' voting rights. In January, the Supreme Court summarily affirmed a district court's ruling that Illinois's majority-Hispanic Congressional District is constitutional. The district court had accepted our argument that drawing a majority-Hispanic district in Chicago and Cook County was necessary to prevent a violation of Section 2 of the Voting Rights Act, and that the Supreme Court's most recent analysis supported the court's prior finding.
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The Civil Rights Division remains vigilant in enforcing the National Voter Registration Act (NVRA) and continues to protect minority voting rights from a variety of kinds of discrimination. For example, in a major decision, in March 1997, the Supreme Court unanimously agreed with us that Mississippi's decision to limit NVRA voters to participation in federal elections involves changes in voting practices and procedures subject to Section 5 review. Of all the states, Mississippi alone excluded NVRA voters from participation in state and local elections. Subsequently, in October 1997, the district court granted the joint motion of all parties to hold proceedings in abeyance to give the Mississippi legislature the opportunity to enact remedial legislation. A bill is now pending that would allow voters to register once and be eligible to participate in all elections.
In January, a district court in New York City accepted the settlement agreement in our case challenging the racially-based actions of white poll officials in a New York City community school board election. These officials gave white voters ballots on which the poll workers had written the name of a white write-in candidate and urged voters to vote for her. The settlement requires the white write-in candidate, who was victorious, to run again in a fairly conducted election, bans the participation in the rerun election of the poll workers in question, and requires the board of election to closely monitor the polling places involved during the elections to be held this year and in 1999.
Earlier this month, we filed suit against Bernalillo County, New Mexico, for unlawfully abridging the voting rights of Navajo voters. In a consent decree filed with the complaint, the county agreed to remedy the failure to effectively communicate election and voting information in Navajo to residents of the Cañoncito Chapter of the Navajo Nation as required by Section 203 of the Voting Rights Act. Bernalillo County will hire a Native Language Coordinator, and, in consultation with the Navajo Chapter, the Pueblos in the area, and the Civil Rights Division, has developed an operations manual regarding the provision of information and assistance to voters who speak Native American languages.
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The Civil Rights Division is responsible for enforcing Title VII of the Civil Rights Act of 1964 with respect to state and local governments. We have authority to bring lawsuits involving either individual acts of employment discrimination or patterns or practices of discrimination. Because we try to focus our limited resources on cases that will have the greatest systemic impact, we have sought to increase the number of ''pattern and practice'' cases in our caseload.
Since January 20, 1993, we have brought 64 new lawsuits alleging employment discrimination. We have obtained relief totaling more than $15 million for approximately 2,000 victims of discrimination since the beginning of 1996.
One of the Division's most recent significant achievements in this area was the voluntary resolution of a pattern or practice disparate treatment case against the Arkansas Department of Corrections. As the result of our suit, the Department of Corrections has eliminated its policy of excluding women from most jobs in male inmate facilities. Under the terms of the settlement, the Department of Corrections created a $7.2 million back pay fund for approximately 1,600 victims and will hire up to 400 of them with full seniority and pension benefits.
Other employment discrimination matters successfully concluded by the Division within the past year include a case against the East Baton Rouge, Louisiana, Parish School Board which had been denying female janitors access to higher paying jobs. The School Board agreed to change its policy, establish a $95,000 back pay fund, and to offer ten women higher paying positions. We also obtained a supplemental order in a case against the Beaumont, Texas, Housing Authority. There, we determined that the Housing Authority violated the original consent order by taking retaliatory action against an employee who reported alleged sexual harassment by a supervisor against another employee. We obtained back pay for the victim of retaliation and injunctive provisions designed to ensure that this type of discrimination does not occur again.
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In another case, we obtained an order remedying discrimination against pregnant employees at Arkansas State University. The University had treated a pregnant employee differently than other temporarily disabled employees by firing her when it learned that some of her job duties would have to be restricted due to her pregnancy. In the settlement, the University agreed to make whole monetary relief and to reform its policies with regard to the treatment of pregnant employees.
The Employment Litigation Section also has been involved in the defense of a variety of federal affirmative action programs. Consistent with the Supreme Court's decision in Adarand Constructors v. Pena, we have defended those programs that are narrowly tailored to serve the government's compelling interest in redressing the effects of past or present discrimination.
OFFICE OF SPECIAL COUNSEL FOR UNFAIR IMMIGRATION RELATED EMPLOYMENT PRACTICES
Through the Office of Special Counsel (OSC), the Civil Rights Division protects United States citizens and other legally authorized workers from immigration-related employment discrimination in hiring, firing and referring for a job. Since FY 1988, OSC has obtained over $1.8 million in back pay and $1.2 million in civil penalties.
OSC carries out its responsibilities through an administrative enforcement program, with appeals to the circuit courts, and through an extensive public education and outreach effort. Emerging public awareness and debate over the issue of illegal immigration underscores and heightens the need of the Civil Rights Division to remain vigilant in its protection of the rights of U.S. citizens and legal immigrants who suffer discrimination for ''looking or sounding foreign.''
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OSC's enforcement role is carried out primarily through the processing of charges of discrimination and the initiation of independent investigations of patterns or practices of discrimination. Increasingly, OSC relies upon its Early Intervention Program as an alternative to the charge process by providing guidance to employers in order to prevent discrimination or bringing together the worker and employer where matters may be resolved faster, less expensively and more effectively for all parties than by administrative action.
OSC also maintains a vigorous public education program that is designed to inform both employers and workers of their rights and responsibilities under the Immigration and Nationality Act (INA). In addition to employer and employee telephone hotlines which answer thousands of calls on the requirements of the INA, OSC offers grants to employer associations, community-based organizations and governmental entities to assist in public education and outreach. OSC is also enhancing its working relationships for the referral of charges among OSC, the Equal Employment Opportunity Commission, the Department of Labor and state and local anti-discrimination agencies to better serve the public and stretch our limited enforcement resources.
The Civil Rights Division remains committed to eliminating vestiges of segregation in elementary and secondary education as well as in state institutions of higher education.
The Section monitors the more than 400 school districts currently covered by desegregation orders in over 200 desegregation cases in which the United States is a party. As a result of our compliance activities, the Section regularly achieved a number of consent decrees and favorable decisions that enhance desegregation in affected school districts throughout the country. For example, in a large Florida school district, officials proposed zone lines for a new high school. After careful review, the Section found that the proposed attendance area placed unreasonable transportation burdens on minority students. Following negotiations, the parties agreed to a consent decree adopting alternative zone lines and committing the district to create an International Baccalaureate magnet program at a designated high school to further desegregation through voluntary student transfers.
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Of particular note was the consent agreement reached with the Kansas City, Kansas, School District. The agreement encompasses a comprehensive plan, promisingafter 24 yearsto achieve full desegregation of the schools in the district. Given the magnitude of the plan and a good faith commitment from the district to fully implement the plan, the court dismissed the case. Additionally, the Section reached a settlement in its longstanding enforcement efforts in cases involving San Juan County, Utah, schools to provide appropriate services and programs to address the educational needs of Native American students.
The Division continues its longstanding work breaking down barriers for women in higher education. As a result of the Supreme Court's decision in United States v. Virginia, where the Court agreed with the position of the United States, female students are now enrolled in the Virginia Military Institute (VMI). In the case against the Citadel in South Carolina, the district court approved a consent decree incorporating a comprehensive plan that is fully funded and contains specific timetables for the assimilation of women at The Citadel.
The Civil Rights Division, through our Special Litigation Section, continues to enforce the important rights protected by the Civil Rights of Institutionalized Persons Act (CRIPA). In addition, the Special Litigation Section has civil enforcement responsibilities for the Freedom of Access to Clinic Entrances Act, and for the prevention of patterns or practices of police misconduct.
Page 33 PREV PAGE TOP OF DOC We have used our CRIPA authority to remedy the most egregious conditions in our Nation's public institutions. Recently, we have focused on abuse and neglect in nursing homes and juvenile correctional institutions, while continuing our efforts to remedy inadequate treatment in institutions for persons who are mentally retarded or mentally ill, sexual victimization of women prisoners, and the unmet mental health needs of inmates and pre-trial detainees. We work closely and cooperatively with states and localities. Our recent achievements include settlements on the remedies needed for 20 juvenile correctional facilities in Puerto Rico, as well as multiple mental retardation facilities in Tennessee and Wisconsin.
Our efforts in correctional settings have been guided by the Prison Litigation Reform Act. We have defended challenges to the Act's constitutionality and have ensured that the relief we seek fits the Act's mandates. In addition, the Section has evaluated all on-going CRIPA investigations, as well as all consent decrees and litigated orders in its active cases, in light of the statute. We have dismissed several long-standing consent decrees and ensured that court orders remain in place as long as necessarybut only as long as necessary.
For example, we agreed to terminate relief and court jurisdiction in four of our cases because sufficient improvements had been made in the affected institutions. Since passage of the PLRA, consent decrees have been dismissed in matters concerning four Mississippi facilities, one facility and Alabama and one facility and California.
In 1994, Congress gave us authority to bring litigation to remedy patterns or practices of police misconduct. We have used that authority carefully to focus on serious, systemic problems in law enforcement. And when we have found problems, we have worked closely to resolve them without impeding legitimate efforts to control crime. The Section recently obtained consent decrees to remedy systemic misconduct in municipal police departments in Pittsburgh, Pennsylvania and Steubenville, Ohio. Moreover, the Section initiated new investigations of state and local police departments throughout the country to investigate allegations of widespread use of excessive force and discriminatory traffic stops.
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Our civil cases under the Freedom of Access to Clinic Entrances Act deal with physical obstructions and threats of force aimed at persons seeking to obtain or provide reproductive health services. We have continued to work closely with the offices of the United States Attorneys and State Attorneys General in prosecuting FACE violations. During Fiscal Year 1997, the Department filed three new civil cases under FACE and was successful in obtaining relief in four on-going FACE cases. The injunctions we obtained address the unlawful conduct without interfering with First Amendment rights.
COORDINATION AND REVIEW
The Civil Rights Division plays a lead role in coordinating the government's efforts to combat unlawful discrimination by recipients of federal funds. Federal law prohibits programs funded by federal tax dollars to allow or foster discrimination, and we have worked hard to reinvigorate these laws as passed by Congress. The Coordination and Review Section of the Civil Rights Division is responsible for coordinating the government-wide enforcement effort to prohibit discrimination in programs and activities that receive federal financial assistance.
The Civil Rights Division's Coordination and Review Section has taken numerous steps to strengthen the implementation of Executive Order 12250, which gives the Attorney General authority to ensure the effective and consistent governmentwide enforcement of various civil rights statutes, including Title VI and Title IX, that prohibit discrimination on the basis of race, color, national origin, sex, and religion in programs that receive Federal financial assistance.
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In June, 1997, on the 25th anniversary of Title IX of the Education Amendments of 1972, President Clinton announced plans to reinvigorate the enforcement of this landmark statute, which prohibits discrimination on the basis of sex in federally assisted education programs. A major piece of this initiative is the promulgation of regulations to enforce Title IX by the 25 agencies that provide Federal financial assistance to education programs, yet do not have an enforcement regulation. The Coordination and Review Section drafted a proposed Notice of Proposed Rulemaking (NPRM) in the form of a common rule, which all 25 agencies have agreed to participate in issuing. In addition, the Section consulted with Federal agencies, consistent with the President's directive, as they developed their Title IX enforcement plans.
The President also announced his intention to issue an Executive Order that would prohibit discrimination on the basis of race, color, national origin, and sex in federally conducted education and training programs. The President directed the Department of Justice to collect inventories of such programs from the Executive departments and agencies and, based on such information, to draft an order for his review. The Coordination and Review Section solicited and received responses regarding federally conducted education programs from over 90 agencies and is drafting the Executive Order.
The Section also continued its initiatives to reinvigorate the enforcement of Title VI, which prohibits discrimination on the basis of race, color, and national origin in federally assisted programs. The Section developed and distributed a Title VI radio public service announcement, recorded by television correspondent Ed Bradley and actor Edward James Olmos, to more than 600 minority-market stations. The Section developed and continues to distribute a Title VI brochure, and maintains a toll-free Title VI telephone information line.
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Mr. Chairman, and members of the Subcommittee, I hope that this overview is helpful to your understanding of the work of the Civil Rights Division. I would be pleased to answer any questions that you may have.
Mr. CANADY. Thank you.
Mr. Scott, you're recognized.
Mr. SCOTT. Mr. Chairman, I'd like to defer to the gentleman from North Carolina.
Mr. CANADY. The gentleman from North Carolina will be recognized.
Mr. WATT. Thank you, Mr. Chairman, and I want to join the chairman and ranking member in welcoming my longtime friend, Bill Lann Lee, to the Judiciary's Subcommittee on the Constitution, and thank him for putting in perspective what some of these kind of hot-button issues are sometimes about at their most basic level, and sharing with us his own personal experiences. Sometimes those have the greatest impact on our attitudes toward a civil rights division, a civil rights law, an affirmative action bill, and the ability to share in the American dream that some of our citizens, I'm convinced, take for granted a lot more readily than others of us have the opportunity to take for granted. It always is interesting to me that when I was growing up, I would always see many legislators advocating overt racial discrimination in many ways, and now the cry seems to be, maintain the status quo that has been gained by that overt discrimination, by being color-blind. Let's just be color-blind all of a sudden, and hope that all of our problems will have solved themselves. Problems that took decades and centuries to build up, our colleagues would like to see disappear in a 20 or 30 year period since the policies, the official policies of the Federal Government and State and local Governments have changed.
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So I welcome you here and appreciate the power of your presentation. Let me ask you about the Fair Housing Act since that was one of the items that you plan to emphasize during your tenure. And it's ironic that there's a markup coming on a bill this afternoon in this subcommittee. I wonder if you might take a minute or two to describe some of the results of the recent field test of fair housing that your Department has been doing. What findings, if any, has your Department made about the pervasiveness of discrimination in housing?
Mr. LEE. Yes, Mr. Watt. Unhappily, what we have found is that
Mr. WATT. That's the first time I have ever heard you call me ''Mr. Watt.'' [Laughter.]
It's all right, you can still call me ''Mel.''
Mr. LEE. I'm happy to call you ''Mr. Watt.''
It's an unhappy experience that we have but, frankly, one of the powerful tools that the Supreme Court has given us in the enforcement of the Fair Housing Act, which is in its 30th year, by the way, is the use of testing. And it's a scientific way of demonstrating whether there are problems that a renter or a seller of a home has with respect to treating people differently. And so we have a way of finding out if there are problems in a very objective way, and the unhappy result is that throughout the country there are problems in area after area, in rental housing, in the purchase of housing, in small units and large units.
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And we have conducted these housing tests throughout the country in order to find out the level of discrimination. Unhappily we have had to file cases in many areas.
The importance of housing discrimination work is that we give Americans the chance to become part of the middle class; to buy or rent a home, to have the ability to go to good schools, to live in neighborhoods where there are good supermarkets and other services. That's something that is denied to many of our citizens. And so that's a very important part of our work and I believe it's a part of the Civil Rights Division's work that helps us bind the country together.
Mr. CANADY. The gentleman's time has expired. Without objection the gentleman will have three additional minutes.
Mr. WATT. Thank you, Mr. Chairman. Let me just follow up on that question and ask you if you have had the opportunity to review the bill that we're preparing to mark up this afternoon, H.R. 3206, and ask you whether there any things in H.R. 3206 that would help further address the problem of racial or housing discrimination that you confirmed exists in your field tests, and, alternatively, whether there are things in this bill that might hinder that work.
Mr. LEE. Well, I understand that the bill has been in the present form for about 2 weeks, and we've had a preliminary occasion to look at it, and the Department is planning to send a formal letter this afternoon. We've been working hard to try to meet the deadlines.
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But our initial impression is that the Justice Department has in the past indicated some serious concern about similar bills, and we think it would be appropriate to have hearings on this bill and to proceed, perhaps, in a more deliberate fashion in order so that everyone can be heard on this. The Fair Housing Act is a very important law for the reasons I've indicated. As I say, we are working on trying to get something up to give the committee our best opinion but I think clearly we feel that there's a need for more time to consider the ramifications of this law.
Mr. WATT. Thank you, Mr. Chairman. I yield back the balance of my time.
Mr. CANADY. Thank you.
Mr. HYDE. Is the appropriate greeting for you Mr. Lann Lee or Mr. Lee.
Mr. LEE. Mr. Lee.
Mr. HYDE. Mr. Lee, all right. Mr. Lee, you mentioned the use of testing or testers.
Mr. LEE. Yes.
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Mr. HYDE. I want to make sure I understand. Testers are people who go out representing themselves as wanting to purchase or rent a property but they really aren't what they represent themselves to be. They just want to see if they're going to be treated fairly and with equal protection of the law, correct?
Mr. LEE. That's correct.
Mr. HYDE. So it's kind of a sting operation. Is that correct?
Mr. LEE. Well, it's a way to test the proposition whether people will be treated fairly or treated differently, and the Supreme Court has approved the use of that technique for, I think, about 20 years.
Mr. HYDE. Oh, sure, sting operations are under scrutiny these days and I just wanted to figure out the difference between the benign, beneficent, legitimate, illegitimate expression of, you aren't what you purport to be, but it's constitutional and it's good. So, all stings aren't bad, I guess is whatat least I'm reaching that conclusion.
Mr. LEE. I guess that's true. All stings aren't bad. [Laughter.]
Not the sting operations in the Civil Rights Division, certainly.
Mr. HYDE. A sting on the left is okay, but God forbid you should use one on the right. Okay. Thank you. No further questions. [Laughter.]
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Mr. CANADY. Mr. Inglis?
Mr. INGLIS. Thank you, Mr. Chairman. I had a question, Mr. Lee, about the decision that the Department made involving a Clemson University student, Travis Kidd, who filed suit against the National Science Foundation's Minority Graduate Research Fellowships. Mr. Kidd alleges that he was denied the opportunity to participate in one of the 150 fellowships because of his race.
And it's interesting to me that the Department conceded that Mr. Kidd was denied because of race, but then argued that Mr. Kidd had no standing because he would have been rejected for the fellowship if the decision had become dependant on his academic record. In other words, if they had gotten to that level. It is that a correct interpretation of what the Department did?
Mr. LEE. Well, I'd like to explain what the Department did in the following way. The Department has an obligation to defend statutes that authorize the programs that Congress has enacted. And that's the situation we're in here, to raise every reasonable argument in defense of a congressional enactment.
Federal courts are courts of limited jurisdiction. We are obliged to point out to the court when there is a standing problem, and in our view there was a very obvious standing problem that went to whether the courts had jurisdiction of the matter. The matter is in litigation and we are looking at that program and working with the National Science Foundation to figure out whether that program is constitutional, how, if it is, it could be done in a way that may be better.
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Mr. INGLIS. It may be consistent with what the chairman was just saying about stings on the left or the right and what Chairman Canady was saying, at the outset of this hearing. Can you imagine that that result might have different in the opposite situation? Would the Department have taken the same position, arguing against standing if say a member of minority group had been discriminated against?
Mr. LEE. Yes, sir.
Mr. INGLIS. Somehow, I don't know, I guess you can say that. I sort of doubt it. But, I think it would of course run counter to a politically correct notion that that's not okay, but this one seems to be politically correct to deny this student whoI assume he's Caucasian. I don't know that though. But to deny him access to this scholarship program, it's really, I think, what Chairman Canady was speaking of at the beginning. The Civil Rights Division was originally empowered with going out to make sure that all people were allowed to compete as you so eloquently said in your opening statement. And now we've got quite the different situation, don't we. The Department is standing for segregation.
Mr. LEE. Well, I'd like to say this: In my prior life I sometimes sued the Federal Government, and I got hit with a lot of standing defenses, and they were legitimate; in some cases, they weren't.
In this situation, as an official of the Department of Justice, we have an obligation to defend laws that Congress has enacted to authorize these kinds of programs. In defending those programs, if an individual is unqualified, in fact, for this program, which is the situation we're in, then that raises questions as to the jurisdiction of the court.
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Mr. CANADY. Without objection, the gentleman has three additional minutes.
Mr. INGLIS. Thank you, Mr. Chairman. Would you now ask this Congressyou're appearing before the Congress, the Judiciary Committeeto change that law? In other words, you're basically making the argument
Mr. CANADY. Would the gentleman yield?
Mr. INGLIS. I'd be happy to.
Mr. CANADY. What is the specific law under which this scholarship is authorized?
Mr. LEE. The specific law authorizes the National Science Foundation to seek to address the shortage of minorities in the sciences and math, which is a problem that's been with us for several decades.
Mr. CANADY. But does the law specifically authorize a preference based on race or ethnic background?
Mr. LEE. No, the law tell us
Mr. CANADY. So what you're really defending is a regulation.
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Mr. LEE. No, we are defending a Federal agency's efforts to enforce a Federal congressional law. Now, as I pointed outwell, let me say this
Mr. CANADY. But there's not a specific authorization of this particular program. I just want to be clear about that.
Mr. LEE. Okay, no. I'm sorry, I misunderstood your question. This program has been in effect for several decades. Congress gets reports on a regular basis from the National Science Foundation of what they're doing to enforce the congressional mandate, so
Mr. CANADY. But there's not a specific authorization of the preferential policy of allowing people to get scholarships simply based on their color?
Mr. LEE. But people are not getting scholarships based on their color. What's happening here is that we have a program that Congress knows about, has approved of, and reauthorized, year after year.
Now, in this situation, as I pointed out, we are looking at that program and trying to work with the National Science Foundation because there is a real, compelling need in this situation. There is a dearth of minorities in science and math, there are almost no black and Hispanic scientists and mathematicians in the country. And it's been a problem that Congress has recognized year after year. So we're trying to come up with way to address that problem that comport with Adarand and the other controlling law that we have. Now that's what the ongoing post-Adarand effort has been.
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Mr. CANADY. Thank you, Mr. Inglis.
Mr. INGLIS. Thank you, Mr. Chairman.
Mr. CANADY. Mr. Barr.
Mr. BARR. Thank you, Mr. Chairman. Mr. Lee, there was a report issued last week that was very critical of juvenile facilities in Georgia, and I know you're familiar with the fact that our governor was not given the courtesy of receiving a copy of that, or even a phone call, apparently, from the Department before the report was given to the press. And to say that he was little bit surprised would be an understatement. How did that report get out? Was it given to the press? Was it released by the Department, or did somebody release it without authorization?
Mr. LEE. The report was not released by the Department of Justice. What happened was that the Atlanta Constitution, as I recall, managed to obtain a copy of the report, ran a story and the governor at that point had not seen the report. And it's a very regrettable incident and our office has talked to the governor's office, and we've explained the situation. I think they understand at this point that what happened was a miscommunication.
Just yesterday, I met with representatives of the governor's office, the state attorney general, and the commissioner who deals with juvenile justice, and we've agreed to try to work together. What happened, unfortunately, was that this is a situation where the Department of Justice received an extraordinary amount of cooperation from the State of Georgia and its officials in trying to work out a problem that basically, we'd like to all work together on, which is getting a better juvenile justice system. So now we're back on track and we're looking forward to working together to try to take care of this problem. And I think that the State of Georgia has some problems but also, I understand, has come far in the last couple years in the operation of its juvenile justice system.
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Mr. BARR. What steps have been taken to discover the source of the leak and take action against thoseI'm presuming that this a leak the Administration can blame on Ken StarrI'm presuming this is not a leak that the Administration can blame on the governor's office, but would clearly by an improper release of information by the Department. If that is correctif it's not, I mean, if it is someone else, I'd like to know. But if that's correct, what steps are you taking to ensure that the source of the leak is discovered, appropriate action taken, and that it will not happen again?
Mr. LEE. Well, Mr. Barr, let me say, there was no leak. These are public documents. The problem in this case was that a letter was sent to the State officials, and apparently it was sent to the attorney for the governor, not the governor himself. But there was no leak because these are not confidential documents.
Mr. BARR. Okay, so what happened is, the report was not sent to the governor whom you've, I think correctly, describedthe State has been cooperative in trying to remedy some of these problems, and then the first that the governor finds out about it is a scathing headline in the Atlanta Journal Constitution 1 day last week. Is there not a procedure in the Department, particularly when you're dealing with something at this high of a level, and particularly where you're dealing with a State official, the chief executive who has been cooperative, is there not some sort of procedure in place that would ensure that the first person that does know about it, the release of such a report, is the governor?
Mr. LEE. There is now, sir. I have taken steps to deal with this problem. After this incident came to light, I called the governor's office, I apologized for this unfortunate series of events that led to him being put in this very embarrassing position because he did read about it a week after a letter was supposed to have gotten to him. Now I don't know all the ins and outs, but that doesn't matter. From now on, we're going to make sure that we'll address the letter to the governor, it will be sent to the governor, and I will, whenever I can, try to call, particularly, as you say, in this kind of situation where the governor of the State of Georgia has been so cooperative.
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Mr. CANADY. The gentleman's time has expired. Without objection, the gentleman will have 3 additional minutes.
Mr. BARR. Thank you, Mr. Chairman. Just to conclude on this, then. Of course the headline last week was very critical, in the Atlanta paper, of the State of Georgia. Would you personally do everything you can to ensure that what you just said here today, and that is that Georgia has been very cooperative in the effort to resolve these problems regarding the status of juvenile justice and juvenile detention in Georgia, are being corrected, that while some problems do remain, progress has been made?
Mr. LEE. Yes, we are working with the State and we think that, as I said, we're trying to get back on track because the irony is that in the offing, potentially, is, actually, a model kind of situation in which the specific civil rights law we're talking about, CRIPA, can be used to set a sort of model. So the State of Georgia can be a model for the rest of the country, and that's what we're all working toward. And it was really unfortunate that we had this big bump in the road in the way we did, but from all the indications I've had from the meeting yesterday and from the prior communications with the governor's office, we're going to go ahead. The governor is a big man.
Mr. BARR. One final question, if you could, please, address the issue of the Vacancies Act. We've had testimony here, and exchanges of letters, both the full committee has, and I have personally, on the issue of the Vacancies Act. Is it your view the Vacancies Act does not apply to the Department of Justice, and if that is your view, what legal authority to you cite for that?
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Mr. LEE. Well, first let me say that I'm not a scholar of these issues. My understanding is that I was not appointed under the Vacancies Act. I was appointed Acting Assistant Attorney General under this other legislation that's specific to the Department of Justice. I think it's 28 U.S.C. 509 and 510. This is the legislation that's been used by the Department of Justice for the last 70 years, whether the Administration has been Republican or Democratic, it doesn't matter. This is the legislation that enables the Attorney General to fill positions on an acting basis so that law enforcement can continue. As I say, I'm not an expert on this, but we've supplied all the documents. And this is not, as you know, a partisan issue. Some of the most eloquent people who have spoken on this issue have been former Attorney General William Barr and Assistant Attorney General Theodore Olsen in the Reagan years about this issue.
Mr. BARR. On the Vacancies Act?
Mr. LEE. About the authority of the Department of Justice to use this other statute, 28 USC sections 509 and 510.
Mr. BARR. Can I ask for unanimous consent just for one more minute, Mr. Chairman?
Mr. CANADY. Without objection, the gentleman will have one additional minute.
Mr. BARR. Is this an effort to circumvent the Vacancies Act?
Page 49 PREV PAGE TOP OF DOC Mr. LEE. Oh, no. This is a statute that
Mr. BARR. I'm talking about the way it's used, not the factI know the statute exists.
Mr. LEE. Oh, no, the President renominated me in the beginning of this session of Congress.
Mr. BARR. Right; I know.
Mr. LEE. So the President and the administration, as far as I understand it, respect
Mr. BARR. Could this, though, if one takes the use of the interim appointment to the logical conclusion, it could very easily become the exception that completely nullifies the Vacancies Act, though, wouldn't it?
Mr. LEE. Well, I'm an individual who
Mr. BARR. Which raises some interesting questions.
Mr. CANADY. If the gentleman would yieldnot only nullifies the Vacancies Act, but nullifies the constitutional authority of the Senate to give advice and consent with respect to presidential nominees.
Page 50 PREV PAGE TOP OF DOC Mr. LEE. I have the greatest respect for the Constitution, for the authority of the Senate to advice and consent that's stated in the Constitution. As I pointed out, I'm an individual whose nomination was actually sent back to the United States Senate at the beginning of this term. There is obviously a big dispute that's been going on for about 70 years between the Executive branch and the Legislative branch, but I don't want you to misunderstand my position. My position is the President has renominated me. I look forward to having the Senate consider my nomination once again.
Mr. CANADY. Okay, thank you. The gentleman's additional time has expired.
Mr. CONYERS. Thank you, Chairman Canady.
I want to join those in welcoming the Acting Assistant Attorney General for Civil Rights. We're delighted to have you here.
Could I yield a small amount of time to our member, Sheila Jackson Lee, who is present?
Mr. CANADY. If you do desire to do so, although she appears to be on the phone at the moment.
Mr. CONYERS. Oh, she's not here? Well, I yield to the gentlelady
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Mr. CANADY. Without objection.
Mr. CONYERS [continuing]. From Texas briefly.
Ms. JACKSON LEE I thank the gentleman very much, and I thank the chairman, and I thank the ranking member, for their kindness.
Let me applaud your work, Mr. Lee, and thank you for your presence, albeit an interesting appointment process, for the work that you are continuing to do.
Let me also place on the record the belief and understanding that you have done everything that you needed to do in this process, and we cannot control the Senate processes in a hope that you're not penalized, and that we are able to give you the kind of respect and support that is necessary.
Having to be in another markup, let me apologize for not being here at the beginning. I have two questions, and I'd appreciate the opportunity to hear your response.
One is, let me applaud the testing program that you have with respect to fair housing. Just yesterday I was reading an article about Judge Gabrielle Kirk McDonald, who serves on the international courtindicated that her mother in New York some many years agoshe wouldn't want me to say ''many years ago''went to an apartment; her mother was very fair
Page 52 PREV PAGE TOP OF DOC Mr. CONYERS. You know, I hate to do this, after you told me what a gentleman I was to allow you to bring a brief greeting
Ms. JACKSON LEE And I'll end it by saying that the testing is excellent for fair housing, and conclude by not asking a question, but submitting one in writing.
Thank you, Mr. Chairman.
Mr. CONYERS. Right. You see where that's going, Witness. So we would like you to respond to that as early as you can.
The question that I wanted to put to you has to do with the resourcing and staffing in comparison with the volume of complaints and petitions for assistance that would go appropriately to your Division, and I think that the committee, the full committee, has in contemplation a review of the Department of Justice authorizing budget. So that may be coming up, and I'd like you to keep that in mind, because I've been advised by staff that you're short of people for testing for the housing situations; that complaints and allegations about police misconduct and brutality still overwhelm your office. I think that your preparing for that oversight and authorization hearing would be very, very important, when that comes sometime this year.
Now at 3 o'clock today we're going to be marking up H.R. 3206, the Fair Housing Amendment Acts of 1998, and like many titles of bills that are anti-civil rights, they have a civil rights title. So that unless you read the substance, it sounds like a civil rights measure.
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Here we have with, as far as I know, no hearing on this measurewe're having a markup on legislation that would strip protection from all people with disabilities, limit housing opportunities for abused, neglected, and special needs children, would substantially expand the First Amendment protections, so-called, and add procedural requirements concerning administrative complaints and State exhaustion requirements that have never before appeared in civil rights legislation.
It seems to me thatI'm going to ask the chairman if
Mr. CANADY. The gentleman's time has expired. Without objection, the gentleman will have three additional minutes.
Mr. CONYERS. Thank you, Mr. Chairman.
I'm going to ask the chairman to carefully review with me, if he can, whether departures of this magnitude should be given a very careful airing, because they're going to turn some existing legislation, and I think congressional intent, on its head. It's a very disturbing event, and I think it will have profound implications on the Civil Rights Division of the Department of Justice.
Mr. LEE. As I testified earlier, the Department has conducted a preliminary review of the new proposal, and we have some serious concerns. We will be sending a letter this afternoon. We did strongly oppose the earlier version of this bill, but there have been some substantial additions, I understand.
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Mr. CONYERS. That's right.
Mr. LEE. So I wanted to speak carefully on that. But I do agree, Mr. Conyers, with the thrust of your remarks, and we are talking about a very important civil rights statute, the Fair Housing Act of 1968. It would be wise to perhaps proceed in a little more deliberate fashion and to have some hearings, and the Department certainly hopes that that will occur. The Department is very willing to work with the subcommittee and see to what extent some of the concerns in the proposal can be met
Mr. CONYERS. Yes.
Mr. LEE [continuing]. Without having new legislation.
Mr. CONYERS. Well, currently, this year I'm enjoying excellent relationships with the subcommittee chairman, and he may yield to my entreaties. But in the event that he doesn't, I would hope that your letter reaches us before the time of the scheduled subcommittee markup.
Mr. LEE. Sir, you've told me it's 3 o'clock. Yes.
Mr. CONYERS. Okay. Now I'm happy to hear Mr. Barr inquiring about the source of leaks. That always inspires me to continue my job of inquiring about the source of leaks coming out of the Independent Counsel, which are coming out at an almost torrent rate, like every other day, according to my measurements. So I'm going to make Bob Barr privy to a letter that I sent the chairman of the full committee, Henry Hyde, that would call upon us to conduct oversight hearings on the subject of leaks coming outI'll throw in the Department of Justice as well as the Independent Counsel.
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I thank you very much, Mr. Chairman, for additional time.
Mr. CANADY. Thank you, Mr. Conyers.
The gentleman from Arkansas, Mr. Hutchinson.
Mr. HUTCHINSON. Thank you, Mr. Chairman. I apologize for coming in late. I was in the Crime Subcommittee. But I want to thank Mr. Lee for his attendance today and his testimony. I want to ask a question in regard to the California Civil Rights Initiative, Proposition 209.
What is your Division and the Department of Justice presently doing in reference to the litigation that has challenged Proposition 209?
Mr. LEE. We are not doing anything. That litigation has been concluded.
Mr. HUTCHINSON. And was the Department involved in the litigation in any way?
Mr. LEE. The Department files an amicus curiae brief in support of the plaintiff's position in that case, and that position was rejected by the ninth circuit.
Page 56 PREV PAGE TOP OF DOC Mr. HUTCHINSON. And, of course, that position was in opposition to the expressed will of the people of California, as reflected in their vote in favor of Proposition 209; is that correct?
Mr. LEE. That's right. Proposition 209 was enacted, I believesince I'm from California, I know the numbers54 percent, I believe.
Mr. HUTCHINSON. Is that not a huge decision by the Department of Justice to go against the reflected will of the people of a State such as California, to take a position contrary to the will of the people?
Mr. LEE. Well, that was done before I arrived, sir, but I think it was a decision that was not taken lightly. Whenever we're talking about taking a position on a constitutional matter, which is what this was, you always have to think twice, and then again. I think the Department of Justice, from what I can see, thought about it very carefully. There was a Supreme Court precedent that the Department felt applied. It was a big constitutional issue involving the 14th Amendment. I believe the Department of Justice acted appropriately, but, of course, as I pointed out, the ninth circuit didn't see it that way.
Mr. HUTCHINSON. Just to get a flavor for your viewpoints on these issues, as you know, the Federal bureaucracy is replete with preference programs and instances where preferences, based upon race, would be granted. These are being periodically challenged in court.
One, do you believe there's going to be a point within the next decade that we can simply move away from decisions based upon race? And, secondly, is there any ongoing review by the Department of Justice, your Division, in regard to the race-based programs and preference programs within the different agencies of the Federal Government?
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Mr. LEE. If I can tackle the second question first
Mr. HUTCHINSON. As long as you'll get to the first one.
Mr. LEE. The Department has actually filed an extensive letter from the Associate Attorney General, Ray Fisher, which details the efforts of the Department of Justice with respect to the post-Adarand review. After the Adarand decision was decided a couple of years ago, the Department of Justice instituted a very big process of giving legal guidance to Federal agencies. There's been a governmentwide effort involving all the Federal agencies.
The letter which I refer you to points out that under the guidance of the Department of Justice, from the Associate's office, I think there have been about four huge programs which involved set-asides, called The Rule of Two, talking about programs of NASA, the Department of Education, the Department of Energy actually, and others, The Rule of Two involved billions of dollars which were suspended and terminated. There are also 15 programs set forth in this letter in which we point out there were major changes in how those programs were done.
Mr. HUTCHINSON. I thank you. Could you address the first part of the question?
Mr. CANADY. Without objection, the gentleman will have three additional minutes.
Page 58 PREV PAGE TOP OF DOC Mr. HUTCHINSON. We thank you, Mr. Chairman.
Mr. LEE. Thank you, Mr. Chairman.
I hope that there will come a day when we don't need affirmative action programs, but I, frankly, don't think that will happen soon, unless we have some major changes in how we as a people see this problem. I think that I believe the American people as a whole recognize that there has been an unfortunate history of exclusion and discrimination, and that we need to move forward. I hope
Mr. HUTCHINSON. You speak of remedial, either legislation or regulations?
Mr. LEE. That's right. I'm speaking about programs that Congress has enacted to address this compelling interest, that States and localities have enacted, and they've done that as a matter of popular will, and they've done that because of felt concerns that there are problems.
I think it's a good thing to talk about how we should address those issues, and
Mr. HUTCHINSON. Are you saying that race-based programs were established based upon popular will?
Mr. LEE. Yes, sir. The post-Adarand review consists of programs that were dictated by Congress or authorized by Congress. So this is not a situation in which the Department of Justice has created programs. The United States Congress, over several decades, has created programs to address the compelling interest of curing prior discrimination exclusion.
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Mr. HUTCHINSON. I was contrasting that to a vote of the people. The chairman's been very indulgent here, but you mentioned affirmative action programs. I, again, have always looked at affirmative action in terms of outreach, making sure that employers will reach out and make employment opportunities available to people regardless of race, and that is critical. But I distinguish that from race-based preferences and set-asides, and so I fully support the affirmative action under that first definition, but I do hope that we can, as a country, move beyond the race-based decisionmaking in hiring.
I thank the Chair. Thank you, Mr. Lee.
Mr. CANADY. Thank you, Mr. Hutchinson. Mr. Scott is recognized.
Mr. SCOTT. Thank you, Mr. Chairman.
I wanted to get back to racial discrimination in employment for a minute. You mentioned that in prior years the discrimination was blatant and easily identifiable. How do you discover racial discrimination in employment today?
Mr. LEE. First, let me say that in the cases that the Civil Rights Division brings in the employment area there are still the obvious indications of discrimination. We have filed cases, very recently in fact, against entities where there's a hostile environment on the basis of race or sex. We're talking about cases in which there have been really sort of gross sexual innuendos and things that are very overt. We're talking about cases in which black firemen have had to submit to being subject to racial slurs, having a Confederate flag flung in their face, things of that kind.
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Mr. SCOTT. Well, if you have a discreet bigot who's just discriminating, but not talking about it, what do you do about that?
Mr. LEE. Well, we have to look at whether we're talking about an individual or we're talking about a pattern of some kind. The Department of Justice has been looking at the patterns, and we try to bring cases that will help as many people as possible and to address concerns that are not just particular to a place, but also are illustrative of the kinds of the problems that exist elsewhere. It is our hope that from a law enforcement point of view, other employers, other municipalities will see that something is wrong, illegal, violative of law, and will take heart and make appropriate changes.
We need to do a lot more because, from what I've seenand this has been a shock to me, coming into the Department of Justicethe kinds of civil rights cases we do are civil rights cases where the facts are atrocious. We're talking about law enforcement of a kind that no one legitimately should object to. We're talking about situations, as I said, with really in some ways very crude things happening.
Now there are situations where there are things that violate the law under title VII like the use of tests and other matters which may appear neutral on their face. But, as the Supreme Court has told us since Griggs v. Duke Power in 1971, these can be a problem unless they are justified by being based on qualification and being good selection tools.
Mr. SCOTT. Now once you have determined that someone has been discriminating, what kind of remedies are available to you? And how often do you find that there is a change in personnel? After you have caught a company, for example, discriminating, how often do they change personnel to fix that or how often do you have to deal with the same people that you have found to be discriminating, and what do you do to remedy the discrimination?
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Mr. LEE. Well, I'm not sure I could give you a global answer on that, but my personal situation is it does differ from employer to employer and from area to area. But I think that the important thing is to get across the point that the civil rights laws should be meaningful; they are important; they should be taken seriously. So no matter how an individual feels, that individual knows that he or she is bound to enforce the law; that his actions are accountable under the law.
Mr. SCOTT. How do youwhat do you mean accountable?
Mr. LEE. The civil rights laws ultimately have an educational role.
Mr. SCOTT. I mean, if you findif you catch someone discriminating, and you want to remedy the discrimination, how can you hold them accountable? How do you know they've stopped discriminating?
Mr. LEE. We monitor situations in which there are remedial decrees in order to make sure that the remedies, in fact, are enforced.
Mr. CANADY. The gentleman's time has expired. Without objection, the gentleman will have three additional minutes.
Mr. SCOTT. And can you do that without counting?
Page 62 PREV PAGE TOP OF DOC Mr. LEE. That is the accounting. And then sometimes there are extraordinary cases in which an individual is a bad actor, and I have found personally that employers, when they realize an individual is a bad actor, often do take them to account. From a defense point of view, that is useful because you often want to remove the source of your vulnerability as a defense matter. So I think those are good things under our civil rights laws, to help employers understand that they need to follow the law, but also, when there is a proven case, a problem of the kind you're talking about, they need to take action against the supervisor or whatever other official is responsible.
Mr. SCOTT. Now you alluded to police situations. Can you explain what racial profiling is?
Mr. LEE. Racial profiling, as I understand it, is a situation, let's say, in which every black person in a town is subject to a traffic stop or a pedestrian stop of some kind. I think that that raises serious concerns because of the stereotyping that's involved.
Mr. SCOTT. In fair housing, you mentioned lending. What do you do about lenders that you have found to be discriminating?
Mr. LEE. We try to work with those lenders. We try to work with them to come up with ways for them to do business that are both profitable and that abide by their obligations under the law. I think that what I said about Chairman Greenspan's remarks are very important. We want to make sure that the market does, in fact, work, and that race does not distort, whether it's the credit market, the mortgage market, or whatever else, you want to make sure that the good things we have in this country are not artificially barred to a certain group.
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Mr. SCOTT. Now I guess we have time for one more question. On fair housing, do you find evidence of discrimination against the handicapped?
Mr. LEE. Yes.
Mr. SCOTT. Could you
Mr. LEE. That's been a growing problem.
Mr. SCOTT. Thank you. I yield back.
Mr. CANADY. Thank you.
Mr. Lee, let me follow up on the question that Mr. Scott asked about racial profiling. In a case decided in the sixth circuit, United States v. Harvey, the Department defended the conviction of a defendant in a case where the arresting officer testified that he had stopped the defendant's car because, quote ''almost every time that we have arrested drug traffickers from Detroit, they're usually young black males driving old cars.'' That was cited in the dissenting opinion.
What is specifically the Department's position regarding law enforcement's use of race-conscious profiles of suspects in criminal cases?
Mr. LEE. Mr. Chairman, that is a work-in-progress in the sense that it's a big issue, and we're trying to bring all the components of the Department of Justice together on this issue.
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Mr. CANADY. Well, are you familiar with the United States v. Harvey case that I just cited?
Mr. LEE. Yes, and you were quoting from the dissent.
Mr. CANADY. Based on where you are in your work-in-progress, would the Department take a different position today in that case than it took at the time the case was being litigated?
Mr. LEE. Well, I have to say, I am familiar with the case, but not as familiar as I could be to answer that question. Let me just say this: Racial profiling is a big problem, and we recognize it's a big problem, but we also have a need to make sure that law enforcement, proper law enforcement, continues. So if we know the race of a suspect, that's important information, and that should be used
Mr. CANADY. Well, of course, I don't think that's what is typically
Mr. LEE. Right.
Mr. CANADY [continuing]. Understood by racial profiling.
Mr. LEE. That's right. Now what we're trying to do is get at what most of us understand is racial profiling, which was using stereotyping to round up whole groups of people, to stop them on highways, things of that kind. That is wrong, and it is violative of the 14th Amendment. But what we'd like to do is have the opportunity to think about this important issue, to have all the components of the Justice Department, which include the Criminal Division, Civil Division, Civil Rights Division, and I must also point out, the FBI, and other components. Because I think you've raised a legitimate question, and I think we should have a consistent policy.
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Mr. CANADY. Okay. Well, I appreciate that. I hope that we will have an opportunity to work on this issue in evaluating it as the Department continues with its work-in-progress on this.
Mr. LEE. And we look forward to working with you on that.
Mr. CANADY. Let me shift gears here and refer you to a statement that was made recently by Calvin Jenkins, the Small Business Administration's Associate Director of the Minority Enterprise Program, in a deposition given in connection with a case challenging the constitutionality of the SBA's 8(a) program. In this deposition, Mr. Jenkins had been designated by the SBA as its most knowledgeable person on the subject of the SBA program. In his deposition, Mr. Jenkins testified that he knew of no instance of any discrimination by any Federal contracting officer against any person connected with any designated minority groups that are entitled to presumption of social advantage under the 8(a) program.
Do you know of any instance of discrimination by any Federal contracting officer or agent?
Mr. LEE. Well, as the answer to that question I believe states, we don't know of it because we, in a sense, have not looked for that answer. The basis for the kinds of programs that Congress has enacted in this areaI'm referring to affirmative action programsis not necessarily that there is a remedial basis in terms of discrimination by Federal officials. What Justice O'Connor said in Crosen, I believe, is what has guided Congresswhich is the Federal Government or State Government should not be an unwitting, even passive participant in private discrimination.
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Mr. CANADY. Well
Mr. LEE. What Congress did, in enacting these laws, is go through and establish that there was a huge record of discrimination against minority contractors in the private sector.
I'm sorry to interrupt.
Mr. CANADY. So you're sayingwithout objection, I'll have three additional minutesso you're saying that it's the Department's position that the preferential programs, however you want to designate them, can be justified under the Adarand decision on the basis of discrimination that has taken place in the private sector? Is that correct? That's contrary to things I've read in the ruleor the post-Adarand review materials.
Mr. LEE. No. As far as I know, the post-Adarand materials, particularly a very long and somewhat compelling study that was published in The Federal Register by the Department, lays out what the Department gleaned from years of congressional hearings, which was that there was a history of prior discrimination exclusion by private actors. The Federal Government was not trying to get into the business of facilitating that or perpetuating that.
Mr. CANADY. Well, we would certainly agree with that, but, again, back to my original question. You don't know of any specific instance of discrimination in Federal contracting by the Federal Government?
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Mr. LEE. You've asked that question, and we've said we don't have that information.
Mr. CANADY. Well, would that be of interest? Don't you thinkin trying to establish that there is a compelling justification for preferential programs, if that had existed, wouldn't that be helpful in making your case?
Mr. LEE. Yes, sir, but
Mr. CANADY. Well, the absence ofso I think if it would be helpful in making your case, it may also be relevant to know that it's not there.
Mr. LEE. Well, I wanted to be very precise, which is the Supreme Court and the Congress seem to have recognized that the basis for these programs is that no one wanted to get a State Government or Federal Government involved in perpetuating private discrimination. Now I agree, if there was discrimination by a city or a Federal Government, that would be of importance, yes.
Mr. CANADY. Well, give mecan you give me a specific example of the Federal Government perpetuating private discrimination?
Mr. LEE. Oh, yes, The Federal Register report that I referred to
Page 68 PREV PAGE TOP OF DOC Mr. CANADY. Well, give me a specific example of that.
Mr. LEE. Okay, well, I'm not sure it's as specific as you would want, but
Mr. CANADY. Well, I'd like something specific.
Mr. LEE. There's a long history of problems with bonding. There's a long history of problems with minority contractors not being able to get
Mr. CANADY. But give me a specific example of how the actions of the Federal Government have perpetuated that.
Mr. LEE. Well, I'd have to go deeper into the hearing materials
Mr. CANADY. But you're telling me, after all this time, after the Adarand decision has come down, you can't give me a specific example that would justify the continuation of these programs?
Mr. LEE. No. What I'm saying is that the Congress relied on information about the breadth of these discriminatory actions
Mr. CANADY. Without objection, I'll give myself one additional minute.
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Mr. WATT. Reserving the right to object, unless you're going to give everybody else one additional minute. I would just point out
Mr. CANADY. Well, those
Mr. WATT. May I just point out to you that there's a whole history of rank discrimination in the Department of Agriculture, and maybe the chairman should not
Mr. CANADY. Well, if the gentleman wishes to objectdoes the gentleman object?
Mr. WATT. No, go right ahead.
Mr. CANADY. Okay. Because others who have requested that courtesy have been extended that on both sides of the aisle here. I think you were dozing at the time that occurred.
Mr. WATT. I've just extended it to the gentleman. I just wanted him to be aware that
Mr. CANADY. I appreciate that.
Mr. WATT [continuing]. There are official Federal discrimination which is documented.
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Mr. CANADY. Well, I'm asking Mr. Lee to give me a specific example of how actions of the Federal Government have perpetuated discrimination. And I don't want general references to the congressional record. If it's there, cite me to where it is, if you know, and if you don't, could you come back and cite that to me? I'm just asking.
Mr. LEE. Well, Chairman, I'd like to answer the question this way: Congress was presented with a lot of information, a lot of it anecdotal, but a lot of it was objective and statistical, as well as other kinds of information. Congress came to the conclusion that there was, as Mr. Watt points out, a long history of discrimination against minority contractors in the private sector. That is what motivated it to try to do a better job of recognizing that there was a problem, and to try to extend to minority and women contractors the benefits of Federal procurement.
Mr. CANADY. Well, I don't think I've gotten an answer to my question, but this is something we'll have an opportunity to pursue at length.
Let me just say, Mr. Lee, I do appreciate your being here. There are other issues that I hope we're going to be able to work together on, specifically, on some religious liberty issues
Mr. LEE. Right.
Mr. CANADY [continuing]. That we've discussed when we met a couple of weeks ago. I hope that we will be able to work together to advance the cause of religious liberty, because I think we do have a consensus on that.
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Mr. SCOTT. Mr. Chairman, I'd ask unanimous consent that Mr. Lee be allowed to answer in a little more detail your last question, because the justification for affirmative action is obviously an ongoing situation, and if there is no justification for affirmative action, if there is no ongoing discrimination, then of course it opens all of these programs up to criticism. There's obviously a great deal of evidence, and although he couldn't come up with specific examples off the top of his head, you've got the Department of Agriculture and we've got suits all up and down the Federal Government about discrimination. In the review of the affirmative action programs, they have to go through and come up with more specifics. So I would just ask unanimous consent that he be allowed to answer your last question in writing.
Mr. CANADY. Without objection, I will eagerly await getting the specifics in writing.
Again, I don't challenge the fact that there have been instances of discrimination by certain Federal employees in some circumstances. The question here related specifically to Federal procurement, and I'd be interested to see what the evidence is. I don't think isolated incidents justify the extensive regime of preferences.
With that, I will conclude
Mr. HYDE. Mr. Chairman, I abbreviated my question time, and I now regret that. I wonder if I might have an opportunity to ask one more question. I don't mean by saying one more that it's necessarily abbreviated, but I do have a question I'd like to put to Mr. Lee.
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Mr. CANADY. Without objection, the gentleman will have two additional minutes.
Mr. HYDE. Mr. LeeI'll try to hurry through this because it's kind of longwhen one first begins to study the Constitution in school, and when one suddenly becomes a part of this wonderful Government, this representative democracy, you begin to defer to the Constitution, to respect it, and especially respect those people who helped put it together.
Then in the real world you find a lot of the Constitution is symbolic, that it is not followed, at least the language isn't followed. The 10th amendment, an important amendment, you find it's more honored in the breach than in the observance. The Commerce Clause has been used to erase a lot of the functions of States. They become administrative districts of the Federal Government. The Court found a right to abortion as a fundamental constitutional right, something no one saw for a couple of hundred years.
And then you get the 14th and the 5th Amendment. ''No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be deprived of equal protection of the law.''
And you think you know what that means, but you find out in the real world, uh-uh, you're not even close. Equal protection of the lawwhat I'm really getting at is, shouldn't we amend our Constitution to say that, unless you are a member of an officially-prescribed socially-disadvantaged class, you're more equal?
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I look at the list of ethnic groups in Federal Regulation 43600: ''Black Americans; Hispanic Americans; Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei''I see where the Sultan of Brunei could be a disadvantaged person under this regulation''Japan, China (including Hong Kong), Taiwan, Laos, Cambodia, Vietnam, Korea, the Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal); and members of other groups designated from time to time. . . .''
Well, God, that gives a group of people special consideration, and it seems to denigrate the notion of equal protection of the law. So I'm just wondering if we oughtn't to have a constitutional revision committee and update our Constitution to say some people are more equal than others, don't you think?
Mr. CANADY. Without objection, the gentleman will have one additional minute, so Mr. Lee can respond.
Mr. LEE. Mr. Hyde, my view of this matter is that we have these civil rights laws that were enacted pursuant to the 14th amendment, the Commerce Clause, and other authority. The genius of these laws is they actually protect every American. I'm talking not only about statutes that provide protections against those who are a certain religion, a certain race or ethnicity, but also familial status, disabilitythose kinds of factors that all of us can come to subject to.
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I believe that, from my vantage point as a law enforcement official, what I can do to help bring this country together is to enforce our civil rights laws and make it very clear that the civil rights laws, in fact, protect all Americans, and the 14th Amendment guarantee of equal protection of the laws and due process is something for all Americans. I hope I can do that.
I don't pretend to give you advice on whether there should be a constitutional revision committee.
Mr. HYDE. Well, I don't want to prolong this. Your position is eminently clear, but when you discriminate in favor of this person, you may very well discriminate against this person. So this person will get the choice, and I don't see that as equal protection of the law, but we're told these are temporary. As long as human nature is human nature, there's going to be discrimination. I think we have to get to a spiritual level to ever eliminate that, and we're going to have some people more equal than others, and that's what I'm not comfortable with.
Mr. LEE. Well, I happen to agree with you. I think we do need to get to a spiritual level, and I think that we need to think about what larger issues are raised by equal protection of the laws. I think that has to do with what this country stands for, and what it stands for is giving everyone a chance. Now, I agree with you, that can be difficult to achieve sometimes, especially in times of scarcity. In fact, we've spent our time as a nation trying to make that true. We've extended protections of the laws to larger and larger groups of people, and I think that's a positive development. It's not an easy task, but I think the Civil Rights Division tries its best to do that. We have laws that we are obliged to enforce and we're proud to do that. But I think we understand that there is a larger mission and a larger reason we have these laws and why we have the Constitution, and that is to have a country that we can all be proud of. I agree with you, we need to think about these larger and more spiritual issues. We have to think about our ideals.
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Mr. CANADY. Mr. Lee, on that transcendent note, we will conclude this panel. Again, we do thank you for being here. We anticipate that we will be having additional oversight hearings that will focus on specific issues, as the Congress moves along this year. So we'll look forward to working with you in connection with those. Thank you for being here today.
Mr. LEE. Thank you, Mr. Chairman. I look forward to that. Thank you.
Mr. CANADY. Thank you.
Now if the members of the second panel would come forward to take your seatsyes, you can go ahead and be seated there. We just have two panels. So this is the second and final panel.
I wanted to thank all of you for being with us here today.
First to testify on our second panel today will be Roger Clegg. Mr. Clegg comes to us from the Center for Equal Opportunity, where he serves as General Counsel. Mr. Clegg served as Deputy Assistant Attorney General in the Civil Rights Division of the U.S. Department of Justice from 1987 to 1991.
Next will be Ms. Martha Davis. Ms. Davis is Legal Director of the NOW Legal Defense and Education Fund.
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Third we will hear from Morton Rosenberg. Mr. Rosenberg is a specialist in American public law in the American Law Division of the Congressional Research Service. Mr. Rosenberg has authored a CRS memorandum entitled, ''Validity of the Designation of Bill Lann Lee as Acting Assistant Attorney General for Civil Rights.''
Then the subcommittee will hear from Charles M. Hinton, Jr. Mr. Hinton comes to us from the City of Garland, Texas, which he has served as city attorney since 1982.
Next will be Mr. Stan Pottinger. Mr. Pottinger was Assistant Attorney General for Civil Rights and Special Assistant to the Attorney General during his time at the U.S. Department of Justice under Presidents Nixon, Ford, and Carter.
Finally, this morning we will hear from Michael Kennedy. Mr. Kennedy is General Counsel to the Associated General Contractors of America.
We appreciate your being with us here today. We will ask that you do your best to summarize your testimony in no more than 5 minutes. We won't enforce strict adherence to the 5-minute rule, unless some member demands it.
And, without objection, your full written statements will be made a part of the permanent record of the hearing.
Page 77 PREV PAGE TOP OF DOCSTATEMENT OF ROGER CLEGG, GENERAL COUNSEL, CENTER FOR EQUAL OPPORTUNITY
Mr. CLEGG. Thank you, Mr. Chairman.
My name is Roger Clegg, and I am the general counsel for the Center for Equal Opportunity, which is a nonprofit, section 501(c)(3) research and educational organization. It is devoted to civil rights, bilingual education, and immigration policy issues. As you noted, I also served in the Civil Rights Division as a Deputy for 4 years.
I very much appreciate the opportunity to testify before your subcommittee on the very important topic of the Justice Department's Civil Rights Division. It is an understatement to call the subject of these hearings important. There is, in my view, no domestic issue facing our Nation that is of greater consequence than the writing, interpretation, and enforcement of our civil rights laws. And the Civil Rights Division has more significant responsibilities in this area than any other Federal agency. It is, therefore, enormously important that the Division do its job well.
I am therefore sorry to say, Mr. Chairman, that the Division is not doing a good job. Civil rights laws originally were intended to bring our country together, and you heard Mr. Lee in the summation of his testimony today say that he viewed his job at the Civil Rights Division as trying to bring this country together. Unfortunately, the way that these civil rights laws are now being enforced promotes irrational and unfair practices and is driving Americans apart.
Page 78 PREV PAGE TOP OF DOC In my prepared statement, I talk about four separate areas that I believe are especially deserving of this subcommittee's scrutiny and concern. Those four areas are, first, the Civil Rights Division's support of the use of preferences based on race, ethnicity, and sex. Second, and closely related to that, is the Department's very heavy-handed use of disparate impact theory. Third is its insistence on enforcing civil rights laws in a way that transforms the civil rights laws from being not only about social equality, but also a kind of economic, and a very onerous kind of economic, regulation. And, finally, I talk about the way that the United States has changed in the last 40 years, and the way in which these changes make the current policies of the Division's voting section and the educational opportunities section, in particular, unfair to those entities in the States they regulate.
Let me just say a brief word or two about each of those four areas, and then I will rely on my prepared statement, which has been submitted for the record.
On the issue of preferences, this administration, including the Civil Rights Division, loves them. I list no less than 17 different instances in which, from day one, the Clinton administration has supported the use of these preferences. Doubtless, there are more. In fact, I heard about some more this morning during the testimony.
In my view, these preferences cannot be justified either as a matter of law or as a matter of policy. Is it ironic that when you had your oversight hearings last year you heard some very persuasive criticism by Michael Carvin of the position taken by the Justice Department in attacking the constitutionality of Proposition 209. That position, of course, failed to persuade either the full U.S. Court of Appeals for the Ninth Circuit or the U.S. Supreme Court. Nonetheless, the President has now appointed as acting head of the Division a man who filed a brief that reached the same conclusion as the brief that you heard criticized.
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I understand that Michael Kennedy, the general counsel of the Associated General Contractors of America, will be testifying today about the administration's record with respect to preferences in Federal contracting. No one knows more about this issue than Mr. Kennedy, so I will gladly defer to him in this area.
I would make one comment, however. The administration has embarked on a mammoth study to see how best to amend the over 160 preferences now used by the Federal Government. But since the use of preferences is so hard to justify, especially after the Supreme Court's Adarand decision, I would ask why it wouldn't make more sense to end, or at least to suspend, all these preferences until after the study is completed.
I indicated that closely related to the issue of preferences is the disparate impact theory of discrimination. The basic idea here is that if someone uses criteria that do not result in something close to proportional representation, then he can be sued for violating the civil rights laws, even though there is no allegation or evidence of discriminatory intent, and no allegation or evidence that people were treated differently because of race, ethnicity, or sex.
This theory is subject to abuse in two ways. First, it can intimidate employers or other businesses into adopting preferencesquotasto make sure that their numbers come out right and that they won't get sued. Second, it can discourage employers and businesses from using criteria that they believe will provide the greatest efficiency and productivity.
Page 80 PREV PAGE TOP OF DOC Mr. Chairman, you heard testimony last year about the Division's abuse of disparate impact theory and its challenges to the use of written exams by police and fire departments. You're going to hear additional testimony today about how the Division has failed to change that policy. I would add only that written exams are not the only kind of selection device that is being challenged by the Division, nor is the Division's use of disparate impact theory any longer limited to the employment area. It is spreading. It is now being used in the housing area, as well as in the environmental law area.
I mentioned that civil rights laws have become a kind of economic regulation. There is no area where this is more easily seen than the Americans with Disabilities Act. The economic impact of the ADA on American businesses is quite severe. I should add, however, that ultimately the solution to the excesses of the ADA must lie with Congress. I believe that the position taken by the Justice Department in a number of cases cannot be justified. On the other hand, the fact is that this body passed a statute, the Americans with Disabilities Act, that was neither well-drafted nor well-thought-out. Now that it has been in effect for several years, it is appropriate for Congress to be considering how best to narrow its scope.
Finally, with respect to the voting rights section and the educational opportunities section, I think it is quite ironicand you alluded to this, Mr. Canady, in your opening remarksthat the Civil Rights Division, when it was begun 40 years ago, had as a job, had as its principal focus, ensuring equality of rights and ensuring that people were not treated differently because of race.
One of the areas that was a focus of the Division in its early days was ensuring that people were not denied the right to vote because of the color of their skin, and that when congressional districts and other legislative districts were drawn, that they were not drawn in a way that unfairly gerrymandered those districts against black citizens. Now, unfortunately, the work of the voting section consists primarily of ensuring, through the application of vote dilution theory, that districts are gerrymandered to ensure safe seats for minority officials.
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Mr. Chairman, this is bad enough when the districts are for members of the statehouse or the city council, but now the section is trying to ensure that elected judges also have racially-identifiable constituencies focus on race. This, as I said, problematic for political branches, but it is especially objectionable for the judiciary. Do we want judges to view themselves as principally responsive to a constituency of a particular race? Is that the judicial role?
With respect to the educational opportunities section, we have seen that the Division continues to supervise over 500 school districts throughout the country some 40 years after Brown v. Board of Education. Mr. Chairman, this simply cannot be an appropriate state of affairs. If these school districts have not desegregated, then the Civil Rights Division has not been doing its job. On the other hand, as I believe to be the case, if these school districts have desegregated, the Division's continued role of supervising these school districts cannot be justified.
Mr. Chairman, thank you very much for the opportunity to testify.
[The prepared statement of Mr. Clegg follows:]
PREPARED STATEMENT OF ROGER CLEGG, GENERAL COUNSEL, CENTER FOR EQUAL OPPORTUNITY
Mr. Chairman, my name is Roger Clegg, and I am the general counsel for the Center for Equal Opportunity, a nonprofit Section 501(c)(3) research and educational organization that is devoted to civil rights, bilingual education, and immigration policy issues. I was a Deputy Assistant Attorney General in the Civil Rights Division from 1987 to 1991.
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I very much appreciate the opportunity to testify before your subcommittee on the very important topic of the Justice Department's Civil Rights Division. It is an understatement to call the subject of these hearings ''important.'' There is, in my view, no domestic issue facing our nation that is of greater consequence than the writing, interpretation, and enforcement of our civil rights laws. And the Civil Rights Division has more significant responsibilities in this area than any other federal agency. It is, therefore, enormously important that the division do its job well.
I am therefore sorry to say, Mr. Chairman, that the Division is not doing a good job. Civil rights laws originally were intended to bring our country together, and to eliminate irrational and unfair practices. As these laws are now being enforced, however, they promote irrational and unfair practicesand they are driving Americans apart.
Let me begin with the issue of preferences. This administrationincluding the Civil Rights Divisionloves them. Here is just a brief review of the administration's record to date. It has:
promised a cabinet that ''looks like America'' and openly used its EGG criteria (ethnicity, gender, and geography) in making all appointments, no matter how much this slowed down the process;
vowed, through Zoe Baird and Kimba Wood all the way to Janet Reno, that the next Attorney General would be someone ''wearing a skirt'';
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repeatedly nominated figures from the civil rights establishment, diehard defenders of preferences, including ''quota queen'' Lani Guinier and the current acting head of the division;
included racial and ethnic preferences in its ill-fated health plan;
reversed the Bush administration's policy of limiting the use of racially exclusive scholarships;
defended the quota policies of the city of Birmingham, Alabama;
adamantly defended the use of racial gerrymandering, both before and after the Supreme Court struck down the practice;
issued a series of internal orders to ensure that career civil-service positions would be quota-correct;
used the Justice Department, the Equal Employment Opportunity Commission, and the Department of Labor's Office of Federal Contract Compliance Programs to pressure employers into meeting numerical goals for women and minorities;
switched sides in the Piscataway, New Jersey, litigation in order to defend a race-based layoff;
defended the use of the Department of Transportation's preference program for minority subcontractors all the way to the Supreme Court in the Adarand case, where it was dealt a stunning defeatbut not so stunning that it has not continued to defend the preference on remand in district court, where it lost, and has now appealed that loss to the U.S. Court of Appeals for the Tenth Circuit;
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steadfastly resisted eliminating any other contracting preferences, despite the Supreme Court's ruling;
defended the University of Texas law school's use of racial and ethnic preferences and pressured schools to ignore the court decision rejecting those preferences (until, under fire, the administration reversed itself);
flatly limited participation in at least one armed service scholarship program to members of minority groups; and
attacked the constitutionality of California's Proposition 209, which did no more than ban state discrimination, including preferences.
On this last item, it is ironic that, when you had your oversight hearings last year, you heard some very persuasive criticism by Michael Carvin of the position taken by the Justice Department in attacking the constitutionality of Proposition 209. That position, of course, failed to persuade either the full U.S. Court of Appeals for the Ninth Circuit or the U.S. Supreme Court to reconsider the panel decision upholding the law. Nonetheless, the President has now appointed as the acting head of the Division a man who filed a brief that reached the same conclusion as the brief you heard criticized.
Let me note that the administration encourages the use of preferences both overtly and covertly. For instance, last week there were stories in the New York Times and the Washington Times about an agreement signed by the administration and the Big Three automakers that will increase the amount of minority set-asides. The newspapers did not have to do much digging to unearth this story. The administration issued a press release headlined ''Vice President and SBA Administrator Announce Pact with Big Three Automakers/Agreement Will Boost Minority Business Contracts by $3 Billion in Three Years.'' The first sentence read: ''Vice President Al Gore and Administrator Aida Alvarez of the U.S. Small Business Administration (SBA) today announced an unprecedented agreement with the ''Big Three'' U.S. automakers that will increase subcontracting awards to minority businesses by nearly $3 billion over the next 3 yearsa 50 percent increase over current levels.'' The administration added that the agreement helps the automakers ''leverage their commitment'' to minority businesses by ''encouraging'' first-level contractors to ''increase opportunities for minority firms when they contract out,'' and that ''the auto industry agreement could serve as a model for similar pacts between small business and other industry groups.''
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On the other hand, probably few people noted that the Division signed a consent decree on April 14, 1997, which was filed in court on June 19, 1997, in its lawsuit against the Arkansas Department of Corrections (ADC) for sex discrimination in employment. Fewer still know about paragraph 5 of the consent decree, which requires the ADC to ''seek in good faith to achieve the employment of women in correctional officer positions at correctional institutions housing male offenders in numbers approximating their application for, and ability to qualify for, such positions. Absent explanation, the parties expect the ADC to hire women for entry-level [positions] . . . at a rate that approximates the female applicant flow for such positions. . . . It is also expected that the ADC will promote women . . . at least in proportion to their representation in the class of qualified employees applying for promotion.'' Paragraph 6 then provides: ''Failure to obtain an particular female applicant flow or hiring or promotion rate is not by itself a violation of this Decree, but may prompt an inquiry by the United States.'' I suspect that no one has any doubt that these provisions are telling the ADC to meet its quota, or else. Assuming that it makes sense to have female prison guards in male prisons, there is still no justification for quota hiring. Incidentally, this case was pointed to by the administration's witness at your last oversight hearing as ''[o]ne of the Division's most significant recent achievements. . . .'' Of course, the administration did not mention the quotas.
I understand that Michael Kennedy, the general counsel of the Associated General Contractors of America, will be testifying today about the administration's record with respect to government contracting. No one knows more about contracting issues than Mr. Kennedy, so I will gladly defer to him in this area.
Page 86 PREV PAGE TOP OF DOC I would make one comment, however. The administration has embarked on a mammoth ''study'' to see how best to ''mend'' the over 160 preferences now used by the federal government. But, since the use of preferences is so hard to justify after the Supreme Court's Adarand decision, wouldn't it make more sense to endor at least suspendall these preferences until after the study is completed?
Closely related to the issue of preferences is the ''disparate impact'' theory of discrimination. The basic idea here is that, if someone uses criteria that do not result in something close to proportional representation, then they can be sued for violating the civil rights laws, even though there is no allegation or evidence of discriminatory intent and no allegation or evidence that people were treated differently because of race, ethnicity, or sex, or any other prohibited classification. The burden is on the defendant to show a judge or jury that the criteria meet the ''business necessity'' requirement.
This theory is subject to abuse in two ways. First, it can intimidate employers or other businesses into adopting preferencesquotasto make sure that their ''numbers come out right'' and they won't get sued. Second, it can discourage employers and businesses from using criteria that they believe will provide the greatest efficiency and productivity.
Mr. Chairman, you heard testimony last year about the Division's abuse of disparate impact theory in its challenges to the use of written exams by police and fire departments. It does not appear that this testimony had much effect, at least on the Civil Rights Division. Less than a month after your hearings last spring, the Division filed on June 17, 1997, its appeal from its loss in district court in the matter of the Torrance, California, police and fire departments, about which you had heard extensive testimony. And less than a month after that, on July 8, 1997, the Division filed a complaint and a consent decree regarding the disparate impact that written exams had in the police and fire departments of Fullerton, California. I also understand that you will be hearing today from someone discussing the same kind of lawsuit filed recently, on February 6, by the Division against Garland, Texas.
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Nor are written exams the only selection device challenged by the Division. For instance, the Division also recently sued the Philadelphia area's regional transit police for discriminating against female applicants by requiring them to be able to run 1.5 miles in less than 12 minutes. The Department says this requirement is ''unrelated to job performance'' and wants different standards for men and women.
Moreover, the Division's use of disparate impact theory has now spread to the housing area. I am appending to my testimony a paper recently published by the Center for Equal Opportunity criticizing this extension. During the Reagan administration, the Division's positionstated in a brief to the U.S. Supreme Courtwas that disparate impact theory should not be applied to the Fair Housing Act.
The Division also filed an amicus brief last spring in the U.S. Court of Appeals for the Third Circuit, in Chester Residents Concerned for Quality Living v. Seif, supporting the right of private plaintiffs to bring a disparate impact cause of action when a permit was issued for a solid-waste facility in a predominantly black community. The district court had ruled that the plaintiffs had to show intent. (The court of appeals declined to hear this interlocutory appeal.) Bill Lann Lee, before he came to head the Division, was an early advocate of the use of disparate impact in the environmental area, so the government's policies in this area deserve watching.
In light of the bad effects of the disparate impact theoryit encourages preferences and discourages merit-based criteriait should be used only sparingly. That is not the Division's current policy, however.
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CIVIL RIGHTS LAW AS REGULATION
The civil rights laws, particularly when misapplied, can also compromise the efficiency and productivity of business in other ways. Indeed, it is important to recognize that antidiscrimination law is not just a social issue but, increasingly, an economic issue. It is a kind of government regulation, and it can be very expensive.
Perhaps the best example of this is the Americans with Disabilities Act. Mr. Chairman, the Civil Rights Division has been very aggressive in its interpretation of the ADA. For instance, the Division recently has:
Forced the Pontiac, Michigan, fire department to hire a firefighter who was blind in one eye;
Argued that the ADA covers the terms and conditions of a company's insurance policies;
Forced the state of Oregon to see to it that no business sells lottery tickets unless it provides access to the lottery for wheelchair users. Under the agreement, announced by the Division last September 16, Oregon has enacted an administrative rule that requires grocery stores, convenience stores, gas stations, and anyone else who sells tickets to ''remove barriers of access'' for patrons who use wheelchairs. The Division recently forced the state of New Hampshire to take similar measures;
Taken the position that the ADA applies to prison inmates;
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Argued that the National Collegiate Athletic Association is covered by the ADA, and that its high-school core course and test score requirements violate the rights of a learning disabled athlete; and
Forced two Mississippi county courts to ensure that deaf individuals are allowed to participate fully as jurors. A county judge had argued that the case before him was too technical for a deaf juror and that an interpreter would distract the other jurors, but the Division declared, ''A prospective juror's deafness does not render him or her incapable of performing the duties of a juror.''
I should add, however, that ultimately the solution to the excesses of the ADA must lie with Congress. The fact is that this body passed a statute that was neither well drafted nor well thought out. Now that it has been in effect for several years, it is appropriate for Congress to begin considering how best to narrow its scope.
CHANGED TIMES: VOTING AND EDUCATION
Mr. Chairman, I would like to conclude with the suggestion that this Subcommittee pause a moment and give some serious thought to the role that the Civil Rights Division ought to be playing now, in 1998. I think that this would be a worthwhile exercise, because this is a very different world that when the Division was started forty years ago. Perhaps the best way to begin this exercise is by considering the work of the two sections of the Division whose worlds have changed the most: the Voting Section and the Educational Opportunities Section.
Page 90 PREV PAGE TOP OF DOC When the Voting Rights Act was first passed in 1965, the disenfranchisement of blacks in the South was systematic, deliberate, and deeply rooted. Thirty-three years later, that is no longer the case. The Voting Section no longer has to focus on ensuring that black people can vote, or even that districts are not gerrymandered against them. Now the work of the section consists primarily of ensuringthrough the application of ''vote dilution'' theorythat districts are gerrymandered to ensure ''safe seats'' for minority officials. Sometimes this work piles absurdity on top of absurdity. In a Motion to Affirm that Mr. Lee recently filed with the Supreme Court in King v. State Board of Election, the Division cited, with approval, an expert's testimony that the aim of that litigation now was to create a ''Hispanic-majority district that would not violate the integrity of three existing African-American majority districts'' (page 23). The Supreme Court itself has begun to indicate its loss of patience with the Division's heavy-handed approach. And an article in this week's New Republic discusses whyto the liberals' surpriseit is turning out that racial gerrymandering is simply unnecessary for protecting minority voting rights.
The Division's gerrymandering is bad enough when the districts are for members of the statehouse or the city council. But now the Section is trying to ensure that elected judges also have racially identifiable constituencies. For instance, in 1997 the Section said that the city of Shreveport, Louisiana, would not be allowed to annex some adjacent areas unless it changed its city court elections to result in more black-elected judges. Was the current system gerrymandered against such judges? Apparently not: the two city judges are now elected at large, with a majority vote requirement.
As voting rights expert Michael B. Wallace has written, ''the premise of dilution cases [is] that elected officials have, and ought to be responsive to, racially defined constituencies. This is problematic for the political branches, but especially dubious for the judiciary.'' Do we want judges to view themselves as principally responsive to a constituency of a particular race? Is that the judicial role?
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The world of the Division's Educational Opportunities Section also has changed. In the sixties and early seventies, de jure school segregation was a major national problem and desegregation was a national priority. It made sense to devote a lot of attention, personnel, and money to this issue.
But consider the situation now, many years later. Last May, when the acting head of the Division testified here, she said the Section now did three things: (1) it ''monitors cases involving approximately 500 school districts located in states that formerly had de jure segregation''; (2) it has ''pursued several cases to enforce the rights of language minority students''; and (3) it ''continue[s] to seek gender equity in cases involving VMI and The Citadel.''
Let's think about these three activities. As to the first, it strikes me as a very odd situation that now, some 44 years after Brown v. Board of Education, there should be 500 school districts that are still under federal court order and still monitored by the Civil Rights Division. Are these school districts not yet desegregated? If they are not, then this is inexcusable. What has the Division been doing? But if these school districts are in fact desegregated, they should not still be under federal court order. This is inexcusable, too. The Supreme Court has made it clear that federal supervision of local schools is not supposed to last forever. Among other things, it would mean that these school districts would be barred not only from assigning students on the basis of neighborhood schools and assigning teachers on the basis of their respective preferences, it would also make it difficult or impossible to adopt reforms such as charter schools or school vouchers.
Page 92 PREV PAGE TOP OF DOC The Division continues to second-guess the decisions of local school districts still under desegregation orders. Just in the last year, for instance, it has filed appellate briefs doing just that in Valley v. United States, United States v. Ridley, Liddell v. Special School District of St. Louis County (part of St. Louis's 27-year-old desegregation case), and Buckley v. Board of School Commissioners of the City of Indianapolis.
The second activity of the Educational Opportunities Section means, I suspect, helping the Education Department's Office for Civil Rights in its efforts to intimidate school districts into using failed and often discriminatory bilingual education programs. For instance, the Denver public school system recently decided that it wanted to move away from bilingual education programs toward English-as-a-Second-Language programs. The latter are more effective in teaching children English and, therefore, more popular among Hispanic parents, but they are anathema to the educational establishment and special-interest groups and, therefore, the Office for Civil Rights. OCR has now asked the Civil Rights Division to sue the Denver Public Schools on its behalf.
And the third activity of the Section, the lawsuits against VMI and The Citadel, is a good example of the mischief that bureaucrats get into when they don't have enough to do. I am ashamed to say that this litigation was started under the Bush administration. I recommended at the time against suing VMI, predicting that the government would probably win, but that it would be a waste of the government's time and the taxpayers' money, because the world be worse off, not better off, when the dust had settled. I have not changed my mind.
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My purpose in this testimony, Mr. Chairman, is to highlight those areas where the work of the Civil Rights Division has been the most troubling in this administration. In light of this record, and in light of the Division's new head, I think these are also the areas that bear a close watch for the remainder of the administration.
Mr. Chairman, thank you again for the opportunity to testify before this Subcommittee. I look forward to any questions you have.Judicary Homepage
Mr. CANADY. Thank you, Mr. Clegg.
As you can hear, there is a vote proceeding on the floor of the House. The subcommittee will stand in recess, so that the Members can go vote, and we will reconvene immediately following this vote.
Mr. CANADY. The subcommittee will be in order. I apologize for the interruption. I think we should be able to get finished with the testimony from the members of this panel before we have another interruption.
So we will proceed. Ms. Davis?
STATEMENT OF MARTHA DAVIS, LEGAL DIRECTOR, NOW LEGAL DEFENSE AND EDUCATION FUND
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Ms. DAVIS. Thank you, Mr. Chairman and members of the committee. I'm Martha Davis. I'm the legal director of the NOW Legal Defense and Education Fund, which is the oldest national legal advocacy organization committed to protecting women's rights. We were founded in 1970.
I'm happy to be here today to talk about the Civil Rights Division of the Department of Justice because I believe that it's one of the most important divisions of our Government, and one of the best. Its symbolic importance is clear, and has been spoken about this morning. The Division's very existence sends a strong message about the Government's commitment to civil rights laws and to their vigorous enforcement. But the Division's work goes far beyond symbolismin areas from voting rights and fair housing to disability rights and employment discrimination, the Division has assisted individuals in attaining redress and has sent a strong message of deterrence to those who would ignore civil rights laws.
Much of the recent attention on the Division has centered on affirmative action, but that singular focus distorts the picture and ignores the breadth of the Division's work, some of which Mr. Lee alluded to this morning. Let me review briefly the breadth of that work in the women's rights area alone, not to mention the other areas within the Division's purview.
One area where the Division has been particularly effective is in enforcement of the Freedom of Access to Clinic Entrances Act, both in the criminal and civil spheres. Enacted in 1994, FACE establishes criminal and civil sanctions for violence at reproductive health clinics. The importance of FACE's strong enforcement was tragically underscored just a few weeks ago by the fatal bombing of a clinic in Birmingham, Alabama. Yet, only a few days later, the Division announced the successful prosecution of another FACE violator, an arsonist who pleaded guilty to firebombing seven clinics on the West Coast. The Division's dogged prosecution of this crime sends a strong law-and-order message to those who see violent property damage, and even murder, as acceptable. And the Division's work in this area is critical if we are to avoid yet more tragedies like the one in Birmingham.
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Another area where the Division has well-served its mission is in its work on defining hate crimes and educating prosecutors about the significance of these violations. Working with a bipartisan coalition in Congress, led in the House by Representatives McCollum, Conyers, and Schumer, the Division has assisted in efforts to amend the existing hate crime statute to encompass crimes motivated by gender, disability, and sexual orientation. This is not an unprincipled crusade. The Division has been quite measured in its approach, and the proposed amendment would permit Federal prosecution only when local authorities cannot or will not act.
Further, the Division has taken the initiative within the Justice Department, as Mr. Lee mentioned this morning, to educate prosecutors regarding hate crimes, and just last weekend invited U.S. attorneys from around the country for a session addressing issues raised by those crimes.
Finally, as I mentioned in my written statement, the Division's leadership extends to sex discrimination and harassment in housing, an area of civil rights law of which even many lawyers are unaware, but which particularly impacts poor women with few housing options, who may feel they have no other recourse but to submit to a landlord's discrimination and harassment, including quid pro quo harassment, in order to keep an affordable apartment.
The Division's leadership and technical assistance in the areas of employment rights and equal educational opportunity for women and girls are also critically important, and this is only within the women's rights area. I'm sure that similar statements would be made by advocates who work with individuals in the areas of disability rights, civil rights, and other areas, if they were here to testify.
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In conclusion, it would be unrealistic to pretend that recent debates concerning the Division's leadership and the prolonged transition in that leadership have had no effect on the Division, but the Division has weathered these exigencies remarkably well. The breadth and depth of its bread-and-butter work of enforcing the Nation's civil rights laws speaks for itself. But as someone who has had the chance to observe the Division's work and its impact, I'm pleased to have the opportunity to endorse and underscore the importance of that work to women and to all who care about civil rights.
[The prepared statement of Ms. Davis follows:]
PREPARED STATEMENT OF MARTHA DAVIS, LEGAL DIRECTOR, NOW LEGAL DEFENSE AND EDUCATION FUND
The Civil Rights Division of the U.S. Department of Justice has a significant role to play in protecting citizens from illegal discrimination and enforcing a broad range of civil rights laws. Under its current leadership, the Division is performing that role admirably.
Within the Justice Department, the Division serves as a catalyst for ensuring that civil rights enforcement is given a high priority, commensurate with the high priority put on civil rights by this Administration and the American people. In courts across the country, the Division has enforced a full spectrum of civil rights laws. In the area of women's rights, for example, these range from the Freedom of Access to Clinic Entrances Act, which bans violence at reproductive health clinics, to Title IX of the Education Amendments of 1972, which ensures gender equity in education. In each instance, the Division articulates the particular interest of the United States in protecting the civil rights of its citizens.
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On some occasions, the Division takes a more conservative view of civil rights enforcement than the activist approach that advocates such as the NOW Legal Defense and Education Fund would urge. However, the importance of the Division's work to the ongoing enforcement of the nation's civil rights laws and protection of citizens from violations of their civil rights is unassailable. The Senate's speedy confirmation of Bill Lann Lee as Assistant Attorney General for Civil Rights and Congressional appropriation of increased funding for the operation of the Division are two additional steps that would immediately enhance the Division's already impressive record.
STATEMENT OF NOW LEGAL DEFENSE AND EDUCATION FUND(see footnote 1)
Mr. Chairman and members of the Committee,
Thank you for the opportunity to testify today regarding the Civil Rights Division of the U.S. Department of Justice. It is a pleasure to offer this testimony, since under its current leadership, the Division deserves high marks for its involvement in a broad range of civil rights enforcement efforts. Further, I am privileged to follow the testimony of the Acting Assistant Attorney General for Civil Rights, Bill Lann Lee, whose personal story of overcoming adversity and whose life-long record of protecting the civil rights of U.S. citizens are both well known.
The Division's Broad Range of Civil Rights Enforcement Efforts
Page 98 PREV PAGE TOP OF DOC Recent debates concerning the Division's work have focused almost exclusively on the single issue of affirmative action. While promoting inclusion of women and minorities in all levels of the workplace is an important aspect of the Division's work, this singular focus has to tended provide a distorted picture of the Division's activities and responsibilities. In fact, the Division's work is much broader than that singular focus would suggest, and encompasses protection of a wide range of civil rights of all citizens.
In the area of women's rights alone, the Division is active in areas ranging from prosecuting arsonists at reproductive health clinics, to promoting equal educational opportunity for women and girls, to protecting women from gender-based hate crimes. For example:
Prosecuting Violence Against Reproductive Health Clinics: The Division is the lead prosecuting agency involved in enforcement of the Freedom of Access to Clinic Entrances Act (FACE), 18 U.S.C. §248, which bars violence at reproductive health clinics. The fatal bombing in Birmingham last month makes clear how critical FACE is to ensuring the safety of clinic workers, doctors and patients. As recently as February 11, the Division secured a guilty plea from Richard Thomas Andrews, who firebombed seven clinics in the western United States over a period of three years from 1992 to 1995. The dogged prosecution of this case sends a clear message to those who feel that their personal beliefs justify violent destruction of property and even murder.
Providing Redress for Hate Crimes: The Division has also played an active role in defining new areas of civil rights which require redress through the criminal justice system. For example, the Civil Rights Division is a leader in efforts to work with Congress on bipartisan bills pending in both the House and Senate that would address hate crimes at the federal level by amending the existing statute to include crimes motivated by gender, disability, and sexual orientation. The bipartisan House bill is sponsored by Representatives McCollum, Conyers and Schumer. Significantly, the Division's approach to hate crimes has been appropriately sensitive to states' concurrent jurisdiction; federal criminal prosecution would be available only when local state authorities are unable or unwilling to prosecute. Further, the Division has taken a lead in providing training and assistance to local U.S. Attorneys handling hate crimes covered by existing law.
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Enforcing the Fair Housing Act: The Division's record of enforcement of the Fair Housing Act is similarly impressive. While few members of the public, or even lawyers, are aware of the protections that the Fair Housing Act provides to individuals discriminated against in housing on the basis of sex, the Division has repeatedly provided redress to those experiencing such discrimination. For example, between 1990 and 1996, the Division participated in approximately twenty cases involving sexual harassment in housingan issue that is particularly salient for low income women who have little possibility of moving if their landlord or superintendent embarks on a campaign of such threats and harassment.
Ensuring Equal Access to Educational Opportunities: The Division has long monitored enforcement of Title IX of the Education Amendments of 1972, 20 U.S.C. §1681(a), ensuring that women and girls have equal access to public educational opportunities. Title IX's impact on opportunities for girls is significant and measurable; we need only look to the Gold Medal for the U.S. Women's Hockey Team in the Olympics to see how far Title IX has brought us since 1972. However, Title IX reaches all aspects of educationnot just sportsand we have far to go before we can claim to have achieved full equality. In particular, sexual harassment in schools continues to operate as a barrier to equal education for girls and boys. Recognizing this, the Division has participated in a number of cases addressing this issue. For example, in Murrell v. School District No. 1, currently pending in the Tenth Circuit Court of Appeals, the Division has argued that a school's failure to take action following a boy's sexual assault and ongoing harassment of one of his female classmates, violates both the U.S. Department of Education's guidelines regarding school responsibility to address sexual harassment and the school's obligations under Title IX.
Page 100 PREV PAGE TOP OF DOCOf course, the Division's achievements beyond the women's rights spherein combating race discrimination, enforcing disability rights, protecting voting rights, and its other areas of responsibilityare equally significant, reflecting the breadth and depth of the Division's dedication to enforcing the civil rights laws.
In sum, the Division is involved in a wide range of civil rights issues of critical importance to Americans. Its approach to civil rights is measured, and builds on this nation's longstanding commitment to ensuring equal opportunity for all. In some instances, the Division serves as a catalyst within the government, promoting attention and care to these issues. In others, the Division acts as a leader in its own right in enforcing and protecting civil rights.
The Division's Work on Affirmative Action
The Division's work on affirmative action, while only a small component of its overall efforts, is an important aspect of its work. In particular, affirmative action measures that enhance diversity in the workplace are critically important to women seeking equal opportunity in the job market.
The Division has taken what NOW LDEF would characterize as a cautious, measured view of the current law. The Division's position in prior casesthat non-remedial, diversity-based affirmative action is permissible under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq.enjoys considerable support in the law.(see footnote 2) The Division has gone no farther in articulating the basis for affirmative action programs than the Supreme Court precedent squarely permits.
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Given the civil rights at stake when employers ignore the imperative of moving beyond stereotypes in hiring and promoting, the Division's attention to the role of affirmative action in advancing diversity is well-justified.
Specifically, in the absence of diversity policies to combat gender stereotyping, such stereotyping frequently affects the perception of women's role in the workforce.(see footnote 3) Research shows, for example, that managers more frequently rank women below men when evaluating the performance of identical subjects in controlled experiments.(see footnote 4) Such stereotyping creates and sustains glass ceilings that keep women from senior, policy-making posts.(see footnote 5)
Gender stereotypes also confine many women to separate and unequal ''women's work.''(see footnote 6) Further, when work is performed mostly by women, employees earn lower salaries than when work is performed mostly by men.(see footnote 7) Thus, stereotyping also helps ensure that equal pay for equal work remains a distant goal.(see footnote 8)
By hiring only ''token'' numbers of women, many employers perpetuate gender stereotyping. For example, research shows that when women are a small minority in the workforce, their performance ratings are consistently lower than those of their male counterparts, even after controlling for education, experience, and ability.(see footnote 9)
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Diversity in the workforce helps reduce stereotyping and promotes understanding of individual talents and abilities. Stereotyping decreases in diverse work environments as people learn to appreciate their co-workers' similarities and differences.(see footnote 10) Symphony orchestras, for example, were long made up exclusively of men.(see footnote 11) When orchestras eliminated discrimination in hiring by holding auditions behind a screen, representation of women increased dramatically. As the percentage of women rose above token levels and neared half of the orchestra, musicians of both genders reported better interpersonal relations, job security, orchestra structure, and organizational stability. At the end of the study, researchers noted a ''now-familiar pattern: an initial decline [in attitudes] followed by an upturn.''(see footnote 12)
Unless employers take active measures to advance women, however, men continue to hold the vast majority of management roles and rank-and-file positions in male-dominated jobs.(see footnote 13) A comprehensive diversity plan helps break down such stereotyping and ensures more equity in the workplace. The Division's work to promote such affirmative action plans is thus a critical component of promoting women's civil rights.
It would be unrealistic to suggest that the Civil Rights Division's work has not been hindered by the recent debates concerning its leadership. This is unfortunate, given the importance of the Division's mission. However, under Bill Lann Lee's leadership as Acting Director, the Division has pursued a measured and sound approach to civil rights enforcement, ensuring that citizens' civil rights are protected and defended in a broad range of areas. The Senate's speedy confirmation of Bill Lann Lee as Assistant Attorney General for Civil Rights and Congressional appropriation of increased funding for the operation of the Division are two additional steps that would immediately enhance the Division's already impressive record.
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Mr. CANADY. Thank you, Ms. Davis.
STATEMENT OF MORTON ROSENBERG, AMERICAN LAW DIVISION, CONGRESSIONAL RESEARCH SERVICE
Mr. ROSENBERG. Thank you, Mr. Chairman. If I could borrow a couple of moments that Ms. Davis kindly didn't use, there is some[Laughter.]
Mr. CANADY. Ms. Davis is to be highly commended. She will probably be commended above all others here for her brevity. [Laughter.]
Mr. ROSENBERG. Certainly over me. [Laughter.]
Mr. CANADY. As you know, we're not strictly enforcing the 5-minute rule.
Mr. ROSENBERG. Thank you.
As you noted in introducing us, in January I prepared a general distribution memo from CRS in which I concluded that the designation of Mr. Bill Lann Lee as Acting Assistant Attorney General for Civil Rights in the Department of Justice failed to comply with the provisions of the Vacancies Act, a statute that supplies the exclusive means for temporarily filling advice-and-consent positions in all Executive departments and agencies. As a consequence, I concluded that it is likely that a reviewing court would hold that Mr. Lee is unlawfully occupying the civil rights position. I'm here today at the subcommittee's request to explain my reasons for that conclusion.
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You have, each of you, the rather lengthy memo that I prepared on January 14. You also have the statement that I submitted. What I would like to focus on in my testimony today is the important constitutional issue that is raised here from an historical perspective, an approach I believe that will illuminate Congress' longstanding concern with protecting the Senate's confirmation prerogative and demonstrate that at no time did Congress, by inadvertence or by design, as the Department of Justice suggests, relinquish to the Executive authority to fill vacant advice-and-consent positions for uncertain periods of time to be determined at the whim of the President.
Congress first addressed the problem of vacant offices in 1792, when it gave President Washington full authority to authorize, and I quote, ''any person at his discretion,'' unquote, to perform the duties of the Secretaries of War, State, and Treasury, or any advice-and-consent officer in those departments until a successor was appointed or the disability creating the absence ended. No time limit was specified for the tenure of such acts.
Congress, rather quickly, rethought that position, and its generous grant of discretionary authority to the President, and in 1795, only 2 1/2 years later, amended the 1792 act with this proviso: ''that no one vacancy shall be supplied in the manner aforesaid for a longer term than 6 months.'' I have been unable to determine as yet what brought about that abrupt limitation, but in no time in our history since that time has there been a vacancies law that did not have a limitation on the tenure of a temporary appointment.
In 1863, Congress expanded the provision of the 1795 act to cover all the heads of then-existing departments and the advice-and-consent officials within them. The single 6-month limitation on such a temporary designation was maintained.
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In 1868, Congress then revisited the vacancies issue, and established the statutory framework which is essentially the same today. It provided for two methods, and only two methods, for temporarily filling vacancies. Either the first assistant or the principal deputy of the absent incumbent could perform the duties of the officeby operation of lawor the President could designate the head of another department or a person who holds an advice-and-consent position to perform those duties. In either event, the acting official could perform those duties for one single 10-day period. The statute specifically stated that it was to be the exclusive method for temporarily filling such vacancies other than the proper use of a recess appointment.
The clear purpose of the Vacancies Act, which is evidence from its legislative history, was to preclude the extended filling of any office in an Executive or military department, subject to Senate confirmation. And during the first century of its operation, Attorneys General opinions strictly construed and strictly adhered to its limitations and recognized the Act's preemptive, and at times Draconian, effect.
None of those opinions have ever been repudiated or modified officially. The unbroken line of opinions from 1880 to 1977 reflect the understanding that there could be only one limited period of occupancy per vacancythat is, you could not piggyback the then 30 days of temporary appointment of a first assistant with 30 days of a presidential designation, and that a pending nomination did not toll the limitation period. Once the time period was exhausted, those Attorneys General's opinions stated, the office had to remain vacant and the powers and duties of that office could not be lawfully exercised.
Page 106 PREV PAGE TOP OF DOC The Act was understood by Attorneys General to apply in this rigid manner whether bureau chiefs or the heads of Cabinet departments were involved. The only recourse of a President, if the Vacancies Act was unavailable, was the nomination process or a recess appointment.
One opinion of that series of opinions will suffice to illustrate the attitude of strict adherence to the letter and the spirit of that law. During a vacancy in the Office of the Secretary of State in 1920, the Under Secretary of State served as Acting Secretary for the then-30-day statutory period. Since a nomination had been submitted during that period to the Senate, the Under Secretary asked the Attorney General whether he could continue to serve until the completion of the pending confirmation proceedings of his successor. The Attorney General replied that the 30-day limitation applied whether the Under Secretary was acting as a consequence of being a first assistant or by virtue of a presidential designation, and that because of the expiration of the statutory periodI quote''It is probably safer to say that you should not take any action in any case out of which legal rights might arise which would be subject to review by the courts.''
In 1973, however, the Department of Justice began to aggressively take the position that the Vacancies Act only provides one possible method of filling certain positions on an interim basis, and that some departments and agencies, including the Department of Justice, have statutory authority to assign duties and powers of positions on a temporary basis outside the Vacancies Act. The Department of Justice asserts that it has just such authority under section 509 of title 28, which provides that all functions of other officers of the Department of Justice, and all functions of agencies and employees of the Department of Justice, are vested in the Attorney General; and also under section 510, which permits the Attorney General from time to time to make such provisions as he considers appropriate authorizing the performance by any other officer, employee, or agency of the Department of Justice of any function of the Attorney General.
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It also contends that those special statutory provisions also make the time limitations of the Vacancies Act on the filling of vacant positions inapplicable to the Department. A special authority
Mr. CANADY. Mr. Rosenberg, could you try to
Mr. ROSENBERG. Sure.
Mr. CANADY. An objection has been raised by a member of the subcommittee
Mr. ROSENBERG. Certainly.
Mr. CANADY. So if you could try to conclude in the next 2 or 3 minutes
Mr. ROSENBERG. I'll summarize the rest. Yes.
That special authority is said to derive from the 1870 legislation that established the Department of Justice. If you look very carefully at the 1870 legislation, there is no substantial authority for that. Section 14 of that legislation dealt with, indeed, the assignment of duties to attorneys in the Department. However, a close examination of that legislative history makes it quite clear that what was happening at that time, and the reason for the Justice Department being created, was that there was a total fragmentation of law enforcement activities in the United States at that time.
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The Attorney General had no authority over U.S. Attorneys; it had no authority over private attorneys who were hired to enforce the laws; it had no authority over the law offices that were established in many of the departments which had direct authority over the United States attorneys at that time.
What happened under the 1870 act is that everything was consolidated in the new Justice Department, and law administration in the United States was focused and devolved upon the Attorney General for the first time in our history. The reason for that clause was not, as is evident from the legislative history and the language of Section 14 in itself not to deal with vacancies, but to deal with the administration of the new authorities that were being established at that particular time.
Therefore, the rationale of the Department of Justice with respect to the implicit allowing of the Vacancies Act to go by the wayside just does not have substantial legislative authority. The effect of the theory of the Justice Department is to allow, let's say, the Assistant Attorney General for the Criminal Division to now serve for in excess of 29 months, which is longer than the recess appointments clause would have allowed the President to make a temporary assignment under that constitutional authority. In addition, the theory covers all departments of the Government, and allows each one of them, as they have been doing recently, to make temporary appointments without any limitation.
[The prepared statement of Mr. Rosenberg follows:]
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PREPARED STATEMENT OF MORTON ROSENBERG, AMERICAN LAW DIVISION, CONGRESSIONAL RESEARCH SERVICE
My name is Morton Rosenberg. I am a Specialist in American Public Law in the American Law Division of the Congressional Research Service. In January of this year I prepared a general distribution memorandum in which I concluded that the designation of Mr. Bill Lann Lee as Acting Assistant Attorney General for Civil Rights in the Department of Justice failed to comply with the provisions of the Vacancies Act, a statute that supplies the exclusive means for temporarily filling advice and consent positions in all executive branch departments and agencies. As a consequence, I concluded that it is likely that a reviewing court would hold that Mr. Lee is unlawfully occupying the Civil Rights position. I am here today at the Subcommittee's request to explain my reasons for that conclusion.
I understand that you all have copies of my rather lengthy study. In my testimony today I will briefly review the specifics of Mr. Lee's designation and describe how it is consistent with the controversial practice of the Justice Department and other Executive Branch departments and agencies in filling vacant advice and consent positions without regard to the Vacancies Act. I will detail the provisions of the Vacancies Act and the Justice Department's legal rationale for ignoring it, and then explain the reasons that I believe supports the conclusion that the Act was intended by Congress to be the exclusive vehicle for temporarily filling vacant advice and consent positions in the Executive Branch, and that the failure to adhere to its requirements and limitations presents a significant threat to the Senate's confirmation prerogative.
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The circumstances leading to Mr. Lee's designation are as follows. Effective January 20, 1997, the incumbent Assistant Attorney General for Civil Rights, Deval L. Patrick, resigned. He had received Senate confirmation on March 22, 1994. On January 21, 1997, Isabelle Katz Pinzler, who had served since 1994 as Deputy Assistant Attorney General for Civil Rights, a position not subject to Senate advice and consent, was designated by Attorney General Reno ''to perform the functions and duties of and to act as Assistant Attorney General in charge of the Civil Rights Division''. On July 21, 1997, after Pinzler had served 181 days as acting head of the Division, President Clinton submitted Lee's nomination for Assistant Attorney General for Civil Rights to the Senate. Pinzler continued to serve as the acting Division head. The nomination was referred to the Judiciary Committee but never came before the Committee for an official vote, and pursuant to Senate Rule XXXI the nomination was returned to the President on November 13, 1997 on the imminent adjournment of the first session of the 105th Congress. On December 15, 1997, the President announced the resignation of Pinzler and the naming of ''Bill Lann Lee to the post of Acting Assistant Attorney General for Civil Rights and Counselor to the Attorney for Civil Rights Enforcement''. In fact, the designation was made by Attorney General Reno by a departmental order dated the same day, following approval of a request by her to the Office of Personnel Management, pursuant to 5 U.S.C. 3134 (1994), for authority to employ Lee as a non-career Senior Executive Service employee with title of ''Principal Deputy Assistant Attorney General and Counselor to the Attorney General, Civil Rights Division.''
The Constitution directs how officials who will exercise substantial authority under the laws are to be selected. Under the Appointments Clause, Art. II, sec. 2, cl. 2, the President is vested with the authority to appoint all officers of the United States, subject to Senate confirmation , but Congress, by law, may vest the appointment of inferior officers elsewhere, i.e., in the President alone, in the courts of law, or in the heads of departments. The President may also, under certain circumstances, fill vacancies in such offices through ''recess appointments'' which expire at the end of the next session of the Congress in which they were issued. Art. II, sec. 2, cl. 3. Over the years, Congress has established a legislative scheme to protect the Senate's constitutional role in the confirmation process by limiting the time during which vacant advice and consent positions may be filled by temporary designees before a nomination is forwarded to the Senate; requiring that filling of vacancies by recess appointments be promptly followed by submissions of presidential nominations for such positions; and prohibiting the payment of salary of recess appointees who have been rejected by a vote of the Senate.
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II. THE VACANCIES ACT
The Vacancies Act, as amended, 5 U.S.C. 33453349 (1994), provides two methods for the temporary filling of vacancies created by the death, resignation, sickness or absence of the head of an Executive agency or military department, or the head of a bureau thereof, whose appointment is not vested in the head of the department or in the President alone. Section 3345 provides that when the head of an Executive agency or military department dies, resigns or is sick or absent, unless otherwise directed by the President under section 3347, his first assistant shall perform the duties of the office until a successor is appointed or the absence or sickness stops. Section 3346 provides that when an officer of a bureau of an Executive or military department whose appointment is not vested in the head of the department dies, resigns, or is sick or absent, unless otherwise directed by the President under section 3347, his first assistant shall perform the duties of the office until a successor is appointed or the absence or sickness stops.
Section 3347 provides that, instead of a detail under sections 3345 or 3346, the President may direct the head or another officer of an executive or military department, whose appointment is vested in the President, subject to Senate confirmation, to perform the duties of the office until a successor is appointed or the absence or sickness stops. But the President is specifically precluded from using the authority of this section as a means for temporarily filling a vacancy in the office of Attorney General.
Section 3348 limits the time during which a vacancy may be temporarily filled under sections 3345, 3346, and 3347 to no more than 120 days. There are two exceptions. If a first or second nomination to fill the position has been submitted, the position may be filled under sections 3345, 3346 or 3347 until the Senate confirms the nomination or until 120 days after the Senate rejects the nomination or it is withdrawn. Second, if the vacancy occurs during an adjournment sine die of the Congress, the 120 period of temporary filling begins when Congress next convenes. Further, a person temporarily filling a position under sections 3345, 3346 or 3347 who is nominated for the position cannot serve more than 120 days after his nomination is either rejected or withdrawn.
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Finally, section 3349 makes the methods described in the preceding sections the sole means for filling the vacancies described therein, except in the case of a vacancy occurring during a recess of the Senate.
The clear intent of the Vacancies Act from its outset was to prevent the President from delaying sending forth nominations for advice and consent positions which could thereby evade the Senate confirmation prerogative, and to provide the exclusive means for temporarily filling vacancies in covered positions unless Congress explicitly provided a superseding mechanism. Only two options are available under the statute: either a first assistant or a presidential designee who has previously received Senate confirmation may serve for a strictly defined and limited period. Prior to 1988 the period was 10 days ( until 1891) and then 30 days. An unbroken line of Attorney General and Office of Legal Counsel opinions from 1880 through 1977 reflect the understanding that there could be only one limited period of occupancy per vacancy (a first assistant's and a presidential designee's service could not be piggybacked) and that a pending nomination did not toll the limitation period. Once the time period was exhausted the office had to remain vacant and the powers and duties of the office could not be lawfully exercised. The Act has been understood by DOJ to apply in this rigid manner whether bureau chiefs or the heads of cabinet departments were involved. The only recourse of a President if the Vacancies Act was unavailable was the nomination process or to a recess appointment.
Thus in 1880, upon the resignation of the Secretary of the Navy, the President designated the Secretary of War to act in his stead pursuant to the Act. Upon the expiration of the statutory 10 day period, the Secretary of the Treasury inquired of the Attorney General whether any one could sign requisitions for payments on behalf of the Navy. The Attorney General held that the vacancy having been filled once for the statutory period, the power under the Act is exhausted: ''It would not . . . be in the power of the President, after such ten days designate another officer, or the same officer, to act for an additional period of 10 days''. The only recourse for the President was ''to his constitutional power of appointment''. Absent such an appointment, no one could exercise the duties and powers of the office. 16 Op. Atty. Gen. 596, 597 (1880). That opinion was thereafter followed in the cases of the deaths of a Postmaster General, 17 Op. Atty. Gen. 530 (1883), the Sixth Auditor in the Treasury Department, 18 Op. Atty. Gen 50 (1884), and two Treasury secretaries, 18 Op. Atty. Gen. 58 (1884); 20 Op. Atty. Gen. 8 (1891). In the latter opinion, it was argued that the 10 day limitation applied only to presidential designations and not to temporary assignments by operation of law. The Attorney General held that such a reading ''would place no limitation upon the time which the 'first or sole assistant' might fill the vacancy, which does not seem consistent with the expressed legislative purpose''. The Attorney General also rejected the possibility that a 10 day occupation of an office by a first assistant could be followed by a presidential 10 day detail. 20 Op. Atty. Gen. at 10.
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This latter conclusion was reconfirmed by Acting Attorney General C.B. Ames in a situation involving a vacancy in the Office of Secretary of State. The Undersecretary of State served as acting Secretary for the 30 day statutory period and inquired whether he could serve further until the completion of the pending confirmation of a successor. The Acting Attorney General concluded that the 30 day limitation applied whether the Undersecretary was acting as a consequence of being a first assistant or by virtue of a presidential designation, and that because of the expiration of the statutory period ''[i]t is probably safer to say that you should not take action in any case out of which legal rights might arise which would be subject to review by the courts''. 32 Op. Atty. Gen. 139, 141 (1920). See also, Olympic Fed. Sov. & Loan v. Office of Thrift Supervision, 732 F. Supp. 1183, (119798), appeal dismissed as moot, 903 F. 2d 837 (D.C. Cir. 1990) (''These opinions show that the Attorney General and other senior government officials have, for the last 100 years, interpreted the Vacancies Act as giving the President authority to make interim appointments only when the express conditions of the Act are satisfied . . . [and] show that Congress has been on notice for more than a century that the Vacancies Act is generally strictly and narrowly interpreted. If Congress intended the Act to serve a more general purposeto allow the President to fill any vacancy, however createdas the government contends, Congress had ample opportunity to amend the statute to give effect to that intent.'').
III. THE CONFLICTING POSITIONS OF THE DEPARTMENT OF JUSTICE AND THE COMPTROLLER GENERAL
DOJ has since 1973 taken the position that the Vacancies Act only ''provides one [possible] method for filling certain positions on an interim basis'', and that some departments and agencies, including DOJ, ''have statutory authority to assign duties and powers of positions on a temporary basis outside the Vacancies Act''. DOJ asserts that it has such authority under Section 509 of title 28, which provides that ''[a]ll functions of other officers of the Department of Justice and all functions of agencies and employees of the Department of Justice are vested in the Attorney General'', and under Section 510 which permits the Attorney General ''from time to time to make such provisions as he considers appropriate authorizing the performance by any other officer, employee, or agency of the Department of Justice of any function of the Attorney General''. It also contends that those ''special statutory provisions'' also make the time limitations of the Vacancies Act on the filling of vacant positions inapplicable to the Department. This special authority is said to date from the establishment of the Department in 1870.
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In the past DOJ has denied the applicability of the Vacancies Act, relying on Sections 509 and 510, with respect to vacancies in the offices of FBI Director and Assistant Attorney General for the Criminal Division, and the Departments of Health and Human Services, Education, and Labor, with the apparent encouragement and support of DOJ, have adopted the same rationale with respect to administrative provisions in their own enabling legislation that similarly vests all powers and functions of the departments in their heads and allows discretionary delegations to subordinate officers and employees.
With an equal degree of persistence and consistency, the Comptroller General of the United States has disputed DOJ's position. The Comptroller argues that the language and history of the Vacancies Act establishes that it is the exclusive authority for the temporary filling of vacant positions which require presidential appointment with the advice and consent of the Senate unless there is specific statutory language providing another means for filling the particular vacancies. Neither the DOJ provisions, nor similar provisions in other department enabling statutes, which have common origins, the Comptroller General argues, have either the requisite specificity or legislative purpose to effect a displacement of the scheme of the Vacancies Act.
In 1973 the Comptroller General had his first occasion to address the applicability of the Vacancies Act to the Department of Justice. At issue was the question whether Acting FBI Director L. Patrick Gray was holding his position contrary to the 30-day limitation period of the Vacancies Act. It will be recalled that upon the death of Director J. Edgar Hoover the provisions of Public Law 90351, 28 U.S.C. 532 note, took effect. That act made the office of Director subject to Senate confirmation but up to the time of the opinion the President had not forwarded a nomination to the Senate and Mr. Gray had served as acting Director for in excess of nine months.
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At that time, the Justice Department, in a letter to the Comptroller General dated January 10, 1973, took the position that Congress intended that vacancies occurring within the Department were to be treated differently from vacancies in executive offices in a general manner, while the Title 28 provisions concerning vacancies speak specifically to the Department of Justice. In particular, the Department pointed to sections 508510 of Title 28. Section 508 authorizes the Attorney General to designate the order of succession amongst assistant attorneys general and the Solicitor General should the offices of Attorney General and Deputy Attorney General become vacant. As previously discussed, under section 509, virtually all functions of the officers, employees and agencies of the Department are vested in the Attorney General, including the functions of the F.B.I. And under section 510, the Attorney General has the authority to delegate the performance of the functions vested in him to ''any other officer, employee, or agency of the Department.'' Under the authority of these sections the Department promulgated a regulation (28 C.F.R. 0.132(d)) under which the Associate Director of the FBI serves as Acting Director in the event of a vacancy in that position. From these authorities it was argued that Congress meant to exempt the Department from the operation of the Vacancies Act.
The Comptroller General found the argument to be without substance. Opinion B150136, February 22, 1973. He reasoned as follows: Sections 508510 were derived from (and codify) previous reorganization plans. Section 508 finds its origin in Reorganization Plan No. 4 of 1953, Sections 509 and 510 in Reorganization Plan No. 2 of 1950. The legislative history of Reorganization Plan No. 2 makes it clear that its primary purpose was to establish clear and direct lines of authority and responsibility for the management of the Department and to make the Attorney General clearly responsible for the effectiveness and economy of administration of the Department. Indeed, Senate Report No. 1683, 81st Cong., 2nd Sess., states specifically that ''Plan No. 2 does not give to the Department of Justice any more powers, authority, functions or responsibilities than it now has''.
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Further, the Comptroller General noted, the wording of Plan No. 2 is similar to the wording of the reorganization plans approved in 1950 and to other Executive agency reorganizations approved by Congress in subsequent years. The Department's argument, the Comptroller reasoned, if carried out to its logical limits, would render nugatory the applicability of the Vacancies Act to virtually all Executive agencies, a result plainly not explicitly intended by the Congress, and certainly not intended to be so by implication. It was also noted that 5 U.S.C. 905(a)(5)(the Reorganization Act of 1949 which provided the authority for promulgating reorganization plans) prohibited any reorganization plan from having the effect of ''increasing the term of any office beyond that provided by law for such office,'' a restriction which, to be meaningful, would have to apply to the 30 day limit put on temporary appointments to positions requiring Senate confirmation.
The Comptroller General concluded that, ''our opinion is that the service of Mr. Gray as Acting Director of the Federal Bureau of Investigation is subject to provisions of 5 U.S.C. 33453349, and that his continued service in that position is prohibited since he has performed the duties thereof in excess of 30 days.''
In 1975 the Comptroller General confronted a similar situation at DOJ, this time involving the designation by the Attorney General of John C. Keeney as acting Assistant Attorney General for the Criminal Division, who held the position in excess of the 30-day limitation. The Comptroller again rejected DOJ's claim that the Vacancies Act was inapplicable, referring to his 1973 ruling in the L. Patrick Gray matter and concluding that ''Section 510, while permitting [the Attorney General] to delegate his functions, does not in our opinion supersede the provisions of the Vacancies Act''. Opinion B150136, February 19, 1976.
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The next Vacancies Act problem addressed by the Comptroller involved seven advice and consent positions at the Department of Health and Human Services held by acting officials for periods ranging from seven to 33 months. Reorganization Plan No. 1 of 1953, 67 Stat. 631, vested all powers, duties and function of all officers and agencies in the Secretary and provided in Section 6 that ''The Secretary may from time to time make such provisions as the Secretary deems appropriate authorizing the performance of any of the functions of the Secretary by any other officer, or by any agency or employee, of the Department.'' Noting that the provisions of Section 6 were virtually the same as those contained in 28 U.S.C. 510, the Comptroller referenced his 1973 and 1976 DOJ decisions and concluded that the purposes of the reorganization plans in the DOJ cases were no different from the one dealing with HHS (''to provide clear and direct lines of authority and responsibility for management of the Department, and to make the Secretary clearly responsible for the effectiveness and economy of administration of the Departments'') and thus provided no basis for a different result. The position of the Department, the Comptroller stated, ''would, in effect, virtually nullify the statutory provisions contained in the Vacancies Act.'' The Comptroller pointedly indicated that some of the positions under review had been without a nominee for two years or more, which ''appears to be precisely the sort of 'unreasonable' delay the Vacancies Act was enacted to prevent.'' 65 Op. Comp. Gen. 626, 63133 (1986). See also Opinion B220522.2, October 17, 1986 (holding Vacancies Act applicable to temporary appointments at the Departments of Labor and Education).
DOJ has recently stated that the source of the presumed authority of the Attorney General to assign without regard to the limitations of the Vacancies Act the duties and powers of a vacant Department office on an interim basis derives from the original legislation establishing the Department of Justice in 1870. More particularly, it is argued that Sections 509 and 510, which are asserted to derive from Section 14 of the 1870 enabling legislation, are so broad and flexible and address the assignment of duties in the Department so much more specifically than the Vacancies Act, they provide ample authority, outside the Vacancies Act, for the temporary assignment of duties of Department officers when their positions become vacant. See, Letter to the Honorable Strom Thurmond from Andrew Fois, Assistant Attorney General, Office of Legislative Affairs (July 10, 1997).
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DOJ's contention, however, does not appear to be substantiated by close scrutiny of the debates on the 1870 bill and the language of the measure as passed, and is inconsistent with the subsequent legislative development of the administrative structure of the Department. The singular purpose of the 1870 legislation was to bring order out of the chaos which fragmentation and dispersal of legal authority throughout the federal government over time had engendered. As succinctly put by Representative Jenckes, the principal sponsor of the bill, ''It is for the purpose of having a unity of jurisprudence, if I may use that expression, in the executive law of the United States, that this bill proposes that all the law officers herein provided for shall be subordinate to one head''. 42 Cong. Globe 3036 (April 27, 1870).
The debates concerning Section 14 make it evident that it was not a provision designed to override the recently enacted Vacancies Act. Its purpose was purely administrative, to establish a chain of command and to allow the Attorney General flexibility in organizing the new department which would have transferred to it a myriad of new substantive authorities and responsibilities and new personnel from other executive departments, a purpose consonant with the centralization of legal business control in a law department. See 42 Cong. Globe 3065, 3066 (Rep. Lawrence). It is certainly not the type of explicit exemptive provision that would take it out from under general legislation like the Vacancies Act which was itself meant to be preemptive in nature. Further, the presence of the Section 2 provision making the new Solicitor General that Attorney General's chief (or first) assistant with the authority to act in his stead in the event of a vacancy in that office, is an indication of not only a congressional awareness of the Vacancies Act, but of an intent to utilize it to further its purpose of unifying the governmental law functions in one agency, in this instance by protecting the Attorney General's office from potential presidential intrusions in case of a vacancy. By directing that the Solicitor General act as the temporary head of the department in case of a vacancy, it precluded presidential use of the alternative method of filling a vacancy, designation of another advice and consent official from another agency.
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IV. THE CONGRESSIONAL RESPONSE
Following the 1986 challenges by the HHS, Labor and Education Departments, the Comptroller General requested that Congress address the growing compliance problem it was facing. The Senate Governmental Affairs Committee took the lead in the congressional response, proposing two significant amendments. First, the Act would be amended to cover all executive departments and agencies, thereby overruling a 1973 court ruling limiting its coverage to executive and military departments. Second, Section 3348 was re-written to allow 120 days, rather than 30, for a temporary designation to fill a vacancy. The new provision was designed to give the President more time to find a nominee and at the same time emphasize the centrality and importance of the Senate's confirmation prerogative. Thus if a nomination is sent forward, the time limitation is abated during the period during which it is under consideration. Only if the nomination is rejected or withdrawn does the clock start ticking again on the temporary assignee. In its report, the Senate Committee expressed the belief that in this manner it was dealing with the interpretative controversy between DOJ and the Comptroller General. By giving more leeway to the President to find a nominee and tying the time limitation on ''actings'' to the prompt forwarding of nominations, the Committee believed it made more effective and clear the Section 3349 declaration that the Act's provisions are the sole means for filling vacancies in covered agencies. See Senate Report, No. 100317, 100th Cong., 2d Sess. 14 (1988).
A 1989 opinion by DOJ's Office of Legal Counsel acknowledged the Senate Committee's disagreement with its ''longstanding view that the Vacancy Act does not extinguish other general authorities relating to the appointment of officers'', but characterized the Committee's explanation of the statutory changes as an improper and unsuccessful effort to ''alter the proper construction of a statute through subsequent legislative history.'' 13 O.L.C. 173, 175 (1989).
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The OLC opinion, however, unduly diminishes the value and weight of the Committee's report. This is not a case of re-enactment of legislation without change in which a subsequent Congress states in a report what it believes an earlier Congress intended. Here, the Senate Committee carefully considered a long-festering problem that affected the body's constitutional prerogatives, proposed changes that would, in the least intrusive but most direct way, address the problem, and explained clearly and without ambiguity what it was attempting to accomplish. The Committee's explanation, including its rejection of the DOJ position, is inextricably linked with the proposed legislation that ultimately become law. The new provisions passed both Houses without objection. The Senate report, issued first in the process, was before both Houses throughout the legislative deliberations. In such circumstances the Supreme Court has repeatedly acknowledged the great weight its places on report language. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 38081 (1969)(''Subsequent legislation declaring the intent of an earlier statute is entitled to great weight in statutory construction.''); Thornburg v. Gingles, 478 U.S. 30, 44 n.7 (1986) (''We have repeatedly recognized that the authoritative source for legislative intent lies in the committee reports on the bill''.). Committee reports are well-regarded because, in the words of Justice Harlan, they represent the ''considered and collective understanding of those Congressmen involved in drafting and studying the proposed legislation.'' Zuber v. Allen, 396 U.S. 168, 186 (1969), quoted with approval in Garcia v. United States, 469 U.S. 70, 76 (1984).
V. SUMMARY AND CONCLUSIONS
Congress' historic attention to the protection of the Senate's confirmation prerogative accords with the Supreme Court's view of the high importance the appointments process has in our constitutional scheme of balanced, separated powers. The Court has made it clear that ''the principle of separation of powers is embedded in the Appointments Clause'', Freytag v. Commissioner of Internal Revenue, 501 U.S. 868, 882 (1991), and most recently emphasized that the Clause ''is more than a matter of 'etiquette or protocol', it is among the significant structural safeguards of the constitutional scheme''. Edmond v. United States, 117 S.Ct. 1573, 1579 (1997). See also, Confederated Tribe of Siletz Indians of Oregon v. United States, 110 F.3d 688, 696 (9th Cir. 1997) (''The Appointments Clause serves as a guard against one branch aggrandizing its power at the expense of another''.). DOJ's position in the instant situation misconceives the import of the constitutionally mandated appointment process and the carefully circumscribed roles that the President and the Senate play in that process, and unlawfully undermines the Senate's constitutional prerogative.
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The Appointments Clause, in directing the President to submit all nominations for officers of the United States for Senate approval, has been held to have preempted presidential discretion with respect to the filling of vacant advice and consent positions. The Supreme Court has consistently ruled that the ''Take Care'' clause is not a source of presidential power but rather a direction to the Chief Executive to assure the executive bureaucracy is fulfilling Congress' will, and all courts that have addressed the claim that the President has inherent authority under the ''Take Care'' clause to temporarily fill vacant advice and positions have rejected it. The Vacancies Act is part of a legislative scheme to assure that the Executive does not evade and thereby undermine the Senate's confirmation prerogative. The legislative history of the 1868 Act, as amended, makes it clear that it is meant to be the exclusive vehicle for temporarily filling advice and consent positions in all departments and agencies in the government. It currently provides that such vacant positions may be temporarily filled for 120 days by either the first assistant of a departed incumbent or by the designation by the President of an officer who has received Senate confirmation. The acting individual may serve for only one 120 day period unless the President submits a nomination during that period. In that event the acting may continue to serve until the nominee is confirmed, rejected or withdrawn. In the event of a rejection or withdrawal the allowable acting period is extended for another 120 days. The legislative history of the Vacancies Act and its interpretation and application by Attorneys General and Comptrollers General since its passage establish that the failure of the President to submit a nomination during the statutory period precludes any further temporary filling of the vacancy.
The Department of Justice contends that its authorizing legislation, which vests all powers and functions of the Department in the Attorney General and allows her to delegate these powers and functions to such officers and employees as she deems necessary, supersedes the Vacancies Act and permits her to fill vacant advice and consent positions for an indeterminant period. A review of the legislative history of the provisions asserted to be the basis of the supersession does not provide the necessary explicitness and clarity to support the claim. In fact, the debates on the establishment of the Department in 1870 indicate that the provision said to be the original source of the authority had a wholly different purpose and did not in any way address the problem of vacant advice and consent positions. Moreover, the subsequent development of the relevant Department administrative provisions clearly establishes that Congress intended that the Vacancies Act would apply to DOJ. Further, it is to be noted that DOJ's notion of the nature of superseding legislation would reach thirteen executive departments, in addition to DOJ, which have similar administrative chain of command and delegation provisions, as well as countless independent agencies.
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Finally, the effect of the application of DOJ's supersession policy has been, since 1996, the designation of innumerable individuals who have served as ''actings'' in advice and consent positions well beyond the Vacancies Act's permissible 120 day period without the submission of a nomination by the President. At present, the acting head of the Department's Criminal Division has served in excess of 21 months, a period far in excess of that which he could have served had he received a recess appointment. Similar situations exist at other executive departments. For instance, there are currently 9 vacant advice and consent positions at the Commerce Department that are being filled by actings. Of the 9, 7 have occupied the offices in excess of 120 days. No nominations have been submitted for any of the 9. One of the acting offices has served since March 3, 1995, a period just short of three years.
On the basis of the foregoing, we believe it would likely be found by a reviewing court that the Vacancies Act is exclusive authority for filling vacant positions in the Department of Justice and that the designation of Bill Lann Lee to be Acting Assistant Attorney General for Civil Rights violates the Act since the allowable 120 period to serve as an acting under the Vacancies Act was exhausted by the 181 days served by his predecessor acting, Isabelle Katz Pinzler, during which time no nomination for the position was submitted to the Senate by the President. As a consequence, it is likely the position would be declared vacant until the appointments process is completed or the President makes a recess appointment.
Mr. CANADY. Thank you, Mr. Rosenberg.
Page 123 PREV PAGE TOP OF DOCSTATEMENT OF CHARLES M. HINTON, JR., CITY ATTORNEY, GARLAND, TX
Mr. HINTON. Thank you, Mr. Chairman. I am Charles M. Hinton, Jr. I'm the city attorney for the City of Garland, Texas, and have been for some years.
The City of Garland, Texas was recently sued by the Justice Department, the Civil Rights Division, and what I would like to convey to the committee is that the information that I heard from Mr. Lee this morning, representing the way that the Civil Rights Division operates, is contrary to the information and the individuals that we have dealt with and how that Department has dealt with the City of Garland over a period of some 4 years, and I will just start out with one thing, by saying I certainly empathize with Mr. Barr and the State of Georgia, and the way the City of Garland was informed that they were going to file a lawsuit against us was the release of an AP news release that went out at 4:30 or 4:45 on a Friday afternoon. I believe it was February the 6th. I was out on business for the city. I called; I was asking, what's going on, as everyone does who has an office or a law office? Everything's fine. It's 4:15; it's 4:20; everything's fine. Then I get off the plane in Dallas, and I find out that this news release has been released, and then the Justice Department, the spin doctors, or whoever they are that they have over there, paint the City of Garland with this brush, and if there's nothing else, we can never correct what they've done and the damage that they've done to the city by the way they have slandered and defamed the good citizens of Garland and that city.
But, again, it was mentioned by Mr. Lee this morning aboutwhen it was asked, well, what do you look for; what do you look for? And the example he gave you was, well, firefighters and the Confederate flag and the sheets. That incident happened three-and-a-half years ago. Mr. Chairman, that happened three-and-a-half years ago, and what they leave out of the press release, and they don't tell youand Mr. Lee didn't tell you here this morningwas that those firefighters that were involved in that, the white firefighters, were suspended without pay. The captain who was on charge of duty that day resigned. He resigned after he received his suspension. Furthermore, not 2 months ago, the city manager of the city fired two white employees. One was a long-term supervisor of the city; the other was an employee who was involved in a racial insensitive issue, and they were terminated. They didn't talk to us about that.
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And I'd like to go back about this period of time that I've been talking to the Justice Department about how they want to talk to you and negotiate things. I send them cases. I tell them, these are the problems that we face in the fifth circuit. We have the Hopwood decision. We have a civil service statute which requires us to select from the top-down, and that's reinforced by the Hopwood.
Mr. Hyde said, honored more in the breach than the observance. Well, in my visit with the representatives of that Department, their gorge rises when you mention Hopwood, and they're looking for some way to set Hopwood aside. That's the law in the fifth circuit. That's the law I have to abide by.
I received nothing from that entity. I received nothing about how I can comply with Hopwood. The Justice DepartmentI will refer you back to the testimony that you received from the attorney representing Torrence in May of last year and the problems that they encountered with the Justice Department, the money they had to spend. We're just now starting out on that journey. Only our problem is more attenuated because we have a civil service statute which has been upheld by State court, and we have the Hopwood decision. But they don't offer any way for us to do it. They're interested not in justice, in my opinion. They're interested in numbers. Simple numbers, that's all they're interested in.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Hinton follows:]
Page 125 PREV PAGE TOP OF DOCPREPARED STATEMENT OF CHARLES M. HINTON, JR., CITY ATTORNEY, GARLAND, TX
Mr. Chairman and Members of the Subcommittee:
My name is Charles M. Hinton, Jr. and I am the City Attorney for the City of Garland, Texas. Some years ago, my client, the City of Garland, was approached by the Civil Rights Division of the Department of Justice for information relating to allegedly discriminatory hiring practices within the City's police and fire departments. The City spent untold hours in gathering documents, statistics and other information for the Department of Justice. Last August, the Department of Justice formally accused the City of discrimination in its hiring practices within its police and fire departments. The Department of Justice threatened to sue the City. At the same time, the Department offered a means by which the City could avoid being embroiled in a lengthy and expensive lawsuit with the Department of Justice. If the City would only enter into a consent decree under which the City would abandon its requirement that its police officers and firefighters possess a certain degree of cognitive ability, the Department of Justice would forgo a lawsuit. In fact, it was intimated, the Department could even help the City obtain the sort of tests that the Department favorstests that supposedly measure job ability without relying on cognitive ability. The City of Garland declined to participate in the Department's ongoing experiment in social engineering. The Department of Justice has now filed suit against the City.
When I say ''experiment in social engineering'' I do not mean to disparage the laudable goals of affirmative action and increased diversity within the police and fire department workforces. The City of Garland has successfully endeavored to build among its employees a richly diverse workforce. Overall, the City employs minorities in greater proportions than the population of the City. But the Department of Justice has ignored those successes and has instead chosen to focus solely on the City's police and fire departments for the reason thatunder the law of Texasapplicants to the City's police and fire departments must take and pass a written examination. Because that written examination tests the cognitive ability of the applicants, the Department of Justice says the test is bad. Because the City has determined that cognitive ability is important to the sort of police and fire departments that the City desires to maintain, the Department of Justice has determined that the City intentionally discriminates against minorities. Because the City has refused to participate in the experiment in social engineering being touted by the Department of Justice, it now finds itself in the midst of a battle with the largest, most powerful and best funded lawfirm in the world.
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As you know, the City of Torrence, California was involved in a very similarif not identicallawsuit with the Department of Justice. Mr. Wayne S. Flick spoke before this Committee in May, 1997 and he very aptly described the problems that he experienced in his dealings with the Department, not the least of which was the apparent lack of any factual or legal basis for the Justice Department's allegations. I will not use my limited time before the Committee to rehash what Mr. Flick has already laid out for the Committee, but I will say that the situation in Garland differs from the Torrence experience in an important respect because, from what we understand, the hiring procedures used by Torrence were not mandated by law. In Garland, the opposite is true.
From the beginning, the City has repeatedly informed the Department of Justice thateven if it desired to do what the Department is demandingit cannot do so under both state and federal law.
As I previously mentioned, the City of Garland is required, by Chapter 143 of the Texas Local Government Code, to administer a written examination to all applicants for positions on the City's police and fire departments. Texas law requires successful police and fire applicants to possess reasonable measures of cognitive ability. Applicants must be able to read and write the English language. Applicants must demonstrate, through the written examination, a basic knowledge of the qualifications for fire fighting or police work. The law expressly requires the examination to ''inquire into the applicant's general education and mental ability''. Accordingly, the City uses civil service examinations that have been prepared by a nationally recognized firm. The same tests used by the City are used by many law enforcement and fire fighting agencies throughout Texas and the United States.
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Texas law further requires that applicants be chosen in rank order based upon the results of the examination. In other words if, for example, the City has openings for ten police officers and if one-hundred applicants pass the written examination, the City is limited to the applicants who scored the top ten grades on the test. The City may not skip down to lower-scoring applicants even for the purpose of increasing workplace diversity. This is a simplification of Texas law, but it accurately represents the requirements imposed on the City.
In an earlier affirmative action effort, several years ago, the City initiated a program that selected qualified applicants in other than rank order by skipping over higher scoring applicants in favor of minority applicants. At the time, federal law did not clearly declare that practice illegal. However, a group of firefighters in the City of Tyler, Texas succeeded in having the practice declared unlawful under state law. As such, the City abandoned the practice.
Today, not only does state law tie the City's hands, federal law adds a constitutional imprimatur to the rank-order hiring required by Texas law. Texas is located in the jurisdiction of the U.S. Fifth Circuit Court of Appeals. In 1996, the Fifth Circuit decided a case styled Hopwood, et al. v. State of Texas, 78 F.3d 932 (5th Cir. 1996) cert denied.XXU.S.XX, 116 S.Ct. 2581, 135 L.Ed.2d 1094. The Hopwood decision holds that, under the Constitution, selections based on racial preferences are absolutely forbidden except under the most limited circumstances. While the Department of Justice may vehemently disagree with that decision, it is nonetheless the law in the Fifth Circuit. Hopwood only bolsters what Texas law already requires.
Page 128 PREV PAGE TOP OF DOC In modern law enforcement, police officers are much more than security guards. Modern firefighting and paramedic techniques must take into account the technological advances our nation so freely produces. Whether mandated by law or not, a local government should be free to make a policy determination that its police officers and fire fighters must possess a basic level of cognitive abilityan ability not necessarily at the level chosen by the Department of Justice. Garland, like Torrence also does psychological testing but only after the cognitive test mandated by state law is passed. This psychological test is administered in compliance with the Americans with Disabilities Act. The City should be free to hire only qualified public safety employees whose skills lessen the possibility of harm to the public. The Department of Justice is not empowered by Title VII or any other law to impose its vision of a suitable level of cognitive ability on the law enforcement and fire fighting agencies of the States. As the situation in Torrence and Garland show, however, the Department of Justice is attempting to do just that.
Mr. CANADY. Thank you, Mr. Hinton.
Our next witness, Mr. Pottinger. I'm sorry we have you on the end of the table there.
STATEMENT OF STAN POTTINGER, FORMER ASSISTANT ATTORNEY GENERAL FOR CIVIL RIGHTS, U.S. DEPARTMENT OF JUSTICE
Mr. POTTINGER. Oh, that's quite all right, probably not inappropriate.
Page 129 PREV PAGE TOP OF DOC Thank you, Mr. Chairman, for this invitation to be here. Not to be outdone by Ms. Davis, but I have no written statement whatsoever. So I will be very short in a couple of remarks, and then be pleased to take any questions, if there are any directed my way.
It depresses me greatly to realize that I am old enough to have been at the birth of many of the programs that are being discussed here todayaffirmative action, which began in its modern form with the Nixon administration in 1970, 1968-70, with the Philadelphia plan; school desegregation, which hasn't been discussed a great deal here today, in which the dual school system was dismantled in the 70'sactually mostly in the year 1970and which I would be pleased to talk about as it impacts some of the questions that I've heard from the panel; housing discrimination, and the like.
I would like to take just 1 second to extend my regards to Chairman Hyde, who was always very, very good to me and courteous, and when he was a critic, he was always fair, and when he supported us, he supported us magnificently, and I do appreciate having a chance to appear before him and the panel in that regard.
And the same vein I would like to say hello to Congressman Conyers. I feel as though I grew up with him. I was young when he became a Congressman; I've been told he may leave soon, and I want to pay my respects to him as well for the years of his support and friendship.
Mr. SCOTT. Do you know something that we don't? [Laughter.]
Mr. POTTINGER. Well, no, I didn't mean to suggest that there was a time schedule with that.
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Mr. CANADY. Don't be too eager over there. [Laughter.]
Mr. POTTINGER. The last thing I want to say in the sense of a perspective is this: The guts of what the Civil Rights Division does is something that is pretty much beyond criticism by virtually everybody on this panel and most people in America. The guts of it's mission is to take specific fact situations where there is, as Bill Lann Lee suggested, usually a crude level of evidence, and to demonstrate that problem and then try to effect appropriate relief.
What has happened in the field of affirmative action, just to take that as the hot point, the hot button, is not that there has been a wholesale abandonment of this pattern that I'm speaking of. If you look at the Duke Power case, and I have talked to many people around the country about affirmative actionwhat you will find is that in the State of Georgia at that particular time Duke Power Company did not permit black people to apply for positions at Duke Power. At that time it happened to bar men, but it could have been women, as well. They couldn't be janitors. The way in which that was achieved was to require a high school diploma, without which you simply couldn't be a janitor.
Now I have not found one occasion in all of my discussions about that case around the United States, not a single person, Democrat, Republican, white, black, or otherwise, who objects to the notion that the court that this policy was said, wrong, and that the appropriate remedy was to go out and find qualified black applicants who can be janitors, and who, indeed, became janitors. No one has objected to that level of affirmative action. By the way, it was called affirmative action.
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We have gone from that into other forms of remediation where the level of proof is different. Let me just to end my comments that, in time, that change of the burden of proof has shifted, but the basic mission of the Division remains the same, which is to find discrimination as a predicate for relief.
Mr. CANADY. Thank you, Mr. Pottinger.
Our final witness, Mr. Kennedy.
STATEMENT OF MICHAEL KENNEDY, GENERAL COUNSEL, ASSOCIATED GENERAL CONTRACTORS OF AMERICA
Mr. KENNEDY. Thank you, Mr. Chairman. That's a fine note to take up from, the predicate for relief.
As my testimony indicates, my name is Michael Kennedy, and I'm the General Counsel of the Associated General Contractors of America. I would like to begin today by thanking you for this opportunity to express the Association's views. AGC is a nationwide trade association, founded in 1918. It has 101 chapters and approximately 33,000 members across the United States, including nearly 8,000 of the Nation's leading general contractors. These firms perform many different types and kinds of work, encompassing everything other than single-family homes.
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For well over a decade, AGC has remained at the very center of the national debate over set-asides and other special preferences in Federal, State, and local procurement. Set-asides and other special preferences impose a heavy and fundamentally-unfair burden on the small family firms that continue to dominate the construction industry. These measures give the Government's social objectives equal, if not greater, weight than the engineering and economic objectives that construction firms are geared to meet. They denigrate the industry's many accomplishments, and wrongly imply that almost anyone can meet the competition and assume the risk necessary to succeed in the construction industry.
AGC strongly opposes special preferences in Federal, State, and local procurement. But with equal force and in equal measure, it supports equal opportunity. And for that precise reason, AGC has found the courts supportive of its cause.
In 1989, in the Croson case, the Supreme Court endorsed AGC's legal position on special preferences in State and local procurement. In 1995, in the Adarand case, the Supreme Court also endorsed AGC's legal position on special preferences in Federal procurement. The Supreme Court expressly held that Federal preferences, like their State and local counterparts, are subject to strict scrutiny.
One might have expected the Civil Rights Division to respond promptlyfor Adarand went to the very core of its mission. It was a decision based on the Constitution, and it went to the very nature of the civil rights that the Constitution protects. It reaffirmed that civil rights are personal rights guaranteed every American on an individual basis, and in the process, it raised grave doubts about the many Federal preferences for minority business enterprises.
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By everyone's account, strict scrutiny is an extremely tough standard. It is the same legal standard that would apply to any intentional Federal or State discrimination against minority business enterprises.
The Civil Rights Division has, however, been quite slow to respond. It took nearly a year to fashion a timid proposal to establish benchmarks for the industries that contract with the Federal Government. The Division took another year to respond to the public comments on that proposal. Nearly 3 years after Adarand came down, the Division has yet to take any action on even that proposal. The benchmarks have yet to appear, and lacking any further guidance, the Federal contracting and funding agencies are now proposing to expand the Federal preferences for minority and women business enterprises.
Nevertheless, there are several reasons to question whether the Federal Government can justify any special preferences for minority or women business enterprises in the construction industry. Census data reveals that this industry has been quite open to such firms. In fact, they have been entering the construction industry in record numbers. Between 1982 and 1992, the number of African American firms in construction with employees increased 112 percent. The number of Hispanic firms increased 292 percent. The number of Asian and Native American firms increased 225 percent, and the number of women business enterprises increased 380 percent.
The readily available data on Federal and federally-funded procurement raised equally serious questions about the Civil Rights Division's great delay in responding to Adarand. Between Fiscal Year 1991 and 1996, the percentage of small minority business participation in all defense construction has ranged from a low of 10.5 to a high of 18.4 percent, or two to three times the goal set by Congress.
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Comparing apples to apples, and looking at only the work awarded to small businesses by the Defense Department in each of the same 6 years, the numbers are even more impressive. One finds that small minority businesses have performed somewhere between 19.5 and 41.4 of the small business defense construction between 1991 and 1996.
The readily available data on highway construction is equally difficult to square with the notion that the Federal Government has a compelling interest in imposing special preferences on the construction industry. In Fiscal Year 1989 to 1997, the percent of small minority and women business participation in Federal aid highway construction ranged from 13.5 to 16.1 percent. When put into context, these numbers are even more impressive. In fact, prime highway contractors typically perform at least 48 percent of their contracts with their own employees. This means that the participation levels that I'm reading to you come out of the 52 percent of the work devoted to materials and subcontracts. Under these circumstances, I'm driven to the conclusion that prime highway contractors are actually awarding at least 24 percent of all subcontracts and material contracts to small minority and women business enterprises.
Nevertheless, almost 3 years after Adarand came down, the Civil Rights Division remains silent. It has yet to address these or any of the other statistics that I have included in my testimony. It has yet to explain the census or other data readily available to everyone. It has even failed to produce the benchmarks that it proposed in May 1996.
In sum and substance, the Civil Rights Division has failed to exercise leadership, and in the absence of such leadership, the Departments of Defense and Transportation have continued to give or require preferential treatment for minority and women business enterprises in the construction industry. In fact, in recent months these agencies have actually proposed to expand their programs, adding prime contract bid preferences to their current arsenals.
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In closing, let me emphasize that AGC is, and will remain, committed to an equal opportunity for all construction firms. AGC welcomes the growth and development of minority women business enterprises in the construction industry, and actively encourages their participation in the association itself. In an effort to forge new relationships, AGC has repeatedly met, and will continue to meet, with the National Association of Minority Contractors, Women Construction Owners and Executives, and the Owners' Council of the National Association of Women in Construction, and other representatives.
If it had the interest and the will, the Civil Rights Division could encourage these relationships. It could also encourage the Federal contracting and funding agencies to roll up their sleeves and begin to focus on real business development.
In March 1997, AGC announced a model mentor protege program for the construction industry, widely known as the Stempel Plan. In the past year, AGC has repeatedly sought the administration's support for this program. In the weeks and months ahead, it will continue to do so. If nothing else, the Civil Rights Division should support the Stempel Plan.
Thank you again for the opportunity to testify. I would be pleased to answer any questions you may have.
[The prepared statement of Mr. Kennedy follows:]
PREPARED STATEMENT OF MICHAEL KENNEDY, GENERAL COUNSEL, ASSOCIATED GENERAL CONTRACTORS OF AMERICA
Page 136 PREV PAGE TOP OF DOC Good morning. My name is Michael Kennedy and I am the General Counsel of the Associated General Contractors of America (AGC). Let me begin by thanking you for this opportunity to express the association's views on the Civil Rights Division of the U.S. Department of Justice.
AGC is a nationwide trade association founded in 1918. It has 101 chapters and approximately 33,000 members across the United States, including nearly 8,000 of the nation's leading general contractors.(see footnote 14) These firms perform many different types and kinds of work, encompassing everything but single family homes. AGC members have constructed the majority of the nation's commercial buildings, factories, warehouses, highways, bridges, airports, dams, waterworks, waste treatment facilities, defense facilities and multi-family housing projects. AGC members also prepare sites for housing development, and install the needed utilities.
As you can imagine, the association's members are an extraordinarily diverse group of businesses. Some perform all or nearly all of their work with their own employees. Others subcontract most of their work. Some are heavily invested in equipment. Others own little. Some engage many of the seventeen construction trades. Others engage only a few. Some work year round. Others have a limited construction season. Some perform only public work. Others work for private owners. Some work under collective bargaining agreements. Others are entirely open shop.
There are, however, some common denominators, and with your indulgence, I would like to touch on a few, for they may begin to explain AGC's policy on special preferences in government contracting. As many of you are well aware, AGC has long opposed set-asides and other special preferences in federal, state and local procurement.
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First, the vast majority of AGC members are small family businesses. The association's members include the nation's largest general contractors but many more of its members are small firms that may employ several family members. Husbands, wives and cousins have long worked side-by-side, and in many cases, they continue to do so. These firms are not large impersonal corporations. They are people, with names and faces, and mortgages to pay.
Second, AGC's members share a great pride in the public and private infrastructure they have put in place. These men and women do not merely dream of great and wonderful things. They actually get them done. Roads, bridges, schools and hospitals do not simply grow. Wastewater treatment plants do not simply spring from our collective desire for a cleaner environment. They all have to be constructed.
AGC's members also share at least two experiences. One is competition. And the other is risk. Both permeate the construction industry, and influence its views.
The construction industry may well be the nation's most competitive. In the public sector, the competitive bid system has long required sealed bids for most if not all construction contracts. It has also required public officials to open those bids publicly, and to award each contract to the lowest responsive and responsible bidder. The private sector is less structured, because private owners are spending their own money, but even there, competition is fierce. Few private owners are willing to pay more than absolutely necessary, and to determine that price, private owners also solicit several competing bids or proposals.
All construction contractors also experience risk. It simply does not matter that every construction project is unique. Contractors still have to predict the ultimate cost of the road, bridge or building. They have to calculate quantities and costs for thousands of items, including the labor that a project will require. They have to gamble on site conditions, on weather, and on changes in the price of labor and material. They have to count on subcontractors, suppliers and others beyond their direct control. They have to count on the owner to make timely payments. To get a performance bond, they typically have to give their surety a legal claim to their personal assets, including their home.
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For well over a decade, AGC has remained at the very center of the national debate over set-asides and other special preferences in federal, state and local procurement. These four factors may begin to suggest the reasons. Set-asides and other special preferences impose a heavy and fundamentally unfair burden on small family firms interested in public work. These measures give the government's social objectives equal if not greater weight than the engineering and economic objectives that construction firms are geared to meet. They denigrate the industry's many accomplishments, implying that almost anyone can do the work. Ignorant of the competition and risk that make construction a tough and demanding industry, public officials confuse volume with profit, and assign the construction industry a disproportionate share of the blame for the larger failures of American society.
AGC strongly opposes special preferences in federal, state and local procurement, but with equal force, it supports equal opportunity. And for that precise reason, AGC has found the courts supportive of its cause. In 1989, in the Croson case,(see footnote 15) the Supreme Court endorsed AGC's legal position on special preferences in state and local procurement. In 1995, in the Adarand(see footnote 16) case, the Supreme Court also endorsed AGC's legal position on special preferences in federal procurement. The Supreme Court expressly held that federal preferences, like their state and local counterparts, are subject to ''strict scrutiny.''
The Adarand case grew out of a specialty contractor's bid for a subcontract to construct the guardrails for a new stretch of highway running through federal lands in Colorado. The Federal Highway Administration had promised to pay the prime contractor a bonus for subcontracting at least 10% of the project to small ''disadvantaged'' businesses.(see footnote 17) The Supreme Court held that the bonus had to meet the same legal standard already being applied to special preferences in state and local procurement. The Court declared that ''all racial classifications, imposed by whatever federal, state, or local governmental actor, must be analyzed by a reviewing court under strict scrutiny.''(see footnote 18) The Court emphasized that the Constitution contemplates ''congruence between the standards applicable to federal and state racial classifications.''(see footnote 19) In other words, wherever they originate, racial preferences are constitutional only if they further a compelling government interest and are narrowly tailored to that end.(see footnote 20)
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One might have expected the Civil Rights Division to respond promptly, for Adarand went to the very core of its mission. It was a decision based on the Constitution. And it went to the very nature of the civil rights that the Constitution protects. It reaffirmed that civil rights are personal rights guaranteed every American, on an individual basis. And in the process, it raised grave doubts about the many federal preferences for minority business enterprises. By everyone's account, ''strict scrutiny'' is an extremely tough standard. It is the same legal standard that would apply to any intentional federal or state discrimination against minority business enterprises. It is a standard that state and local preferences have consistently failed to meet, even after their sponsors have spent huge sums on ''disparity studies.''(see footnote 21)
In fact, to this day, the Civil Rights Division will search in vain for any final ruling, by any federal court that any set-aside or other preference for minority business enterprises, at any level of government, satisfies ''strict scrutiny.'' In Associated General Contractors v. Coalition for Economic Equity, 950 F. 2d 1401 (9th Cir. 1991), the Ninth Circuit held that it was not an abuse of discretion for a district court to deny a preliminary injunction against a local preference program, in light of the locality's ''disparity study.'' The court did not, however, render a final decision on the merits. Instead, it remanded the case for further proceedings. The only federal court to come closer to upholding a special preference procurement program was the U.S. District Court for the District of Colorado. It was, however, reversed on appeal. See Concrete Works of Colorado, Inc. v. City and County of Denver, 35 F.3d 1513 (10th Cir. 1994).
The Civil Rights Division has, however, been quite slow to respond. It took nearly a year to fashion a timid proposal to establish ''benchmarks'' for the industries that contract with the federal government.(see footnote 22) The division took another year to respond to the public comments on that proposal.(see footnote 23) Nearly three years after Adarand came down, the division has yet to take any action on even that proposal. The ''benchmarks'' have yet to appear, and lacking any further guidance, the federal contracting and funding agencies are now proposing to expand the federal preferences for minority and women business enterprises.
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Nevertheless, there are several reasons to question whether the federal government can justify any special preferences for minority or women business enterprises in the construction industry. Census data reveals that this industry has been quite open to such firms. In fact, they have been entering the construction industry in record numbers.(see footnote 24) Between 1982 and 1992, the percentage of minority and women business enterprises in the construction industry increased from 6.3% to 16.7%. During that period, in the construction industry:
The federal preferences cannot, in any event, provide their own legal justification. ''Strict scrutiny'' requires a ''firm basis in evidence'' for concluding that remedial action is necessary. In the absence of such evidence, the federal government lacks a compelling interest in resorting to racial classifications. Even if the construction industry's performance could be attributed to the federal preferences, the fact remains that the federal government lacks any evidence of any contemporary problems broad or deep enough to justify future preferences for minority or women business enterprises in the construction industry.
the number of African American firms with employees increased 112%;
the number of Hispanic firms with employees increased 292%;
the number Asian and Native American firms with employees increased 225%; and
the number of women business enterprises with employees increased 380%.(see footnote 25)
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The readily available data on federal and federally funded procurement raise equally serious questions about the Civil Rights Division's great delay in responding to Adarand. Congress has set a 5% ''objective'' for defense procurement from small minority businesses.(see footnote 26) Excluding all subcontracts, and counting only prime contracts, such firms have still accounted for at least 10% of all defense constructionand frequently, over 15%in each and every year since FY 1991. In its latest report to Congress, the Department of Defense (DOD) reveals that:
in FY 1991, small minority firms performed 10.5% of all defense construction;
in FY 1992, such firms performed 13.3% of all defense construction;
in FY 1993, such firms performed 16.5% of all defense construction;
in FY 1994, such firms performed 15.6% of all defense construction;
in FY 1995, such firms performed 18.4% of all defense construction; and
in FY 1996, after DOD had suspended the ''rule-of-two,''(see footnote 27) small minority businesses still performed 16.1% of all defense construction.
Many defense construction projects are too big for any small business to perform, whatever the race of its ownership. The small business size standard for a general construction contractor is $17 million.(see footnote 28) A firm with less than $17 million in annual volume cannot hope to bond a $50 million or $100 million project. Such a firm has to concentrate on a very different segment of the defense construction market. Comparing apples to apples, and looking at only the work awarded to small businesses in each of the same six years, the numbers are even more impressive. DOD reports that:
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in FY 1991, small minority businesses performed 19.5% of all of the defense construction awarded to small businesses;
in FY 1992, small minority businesses performed 26.4% of all such work;
in FY 1993, small minority businesses performed 33.6% of all such work;
in FY 1994, small minority businesses performed 35.2% of all such work;
in FY 1995, small minority businesses performed 41.4% of all such work; and
in FY 1996, after DOD had suspended the ''rule-of-two,'' small minority businesses still performed 36.4% of all such work.(see footnote 29)
The readily available data on the highway construction industry is equally difficult to square with the notion that the federal government has a compelling interest in imposing special preferences on the construction industry. While the Department of Transportation (DOT) contracts for little highway construction, it funds a large portion of the state contracts for such work. In the process, it requires the states to establish ''goals'' for contracting and subcontracting to small minority and women business enterprises.(see footnote 30) In 1994, the General Accounting Office (GAO) reported that the states had either met or exceeded their ''goals'' for federal-aid highway construction ''93 percent of the time'' in the five fiscal years running from 1989 through 1993.(see footnote 31)
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The overall nationwide ''goal'' for federal-aid highway construction is 10%. If the states had all kept their individuals ''goals'' to 10%, the highway construction industry would have done even better. Fifteen of the states had set even higher ''goals'' for one or more of those years. In addition, in each year, the total contracting and subcontracting to small minority and women business enterprises well exceeded 10%. The Federal Highway Administration reports that:
in FY 1989, the total contracting and subcontracting to such firms was 14.8%;
in FY 1990, the total was 14.3%;
in FY 1991, the total was 14.6%;
in FY 1992, the total was 14.2%; and
in FY 1993, the total was 16.1%.
In more recent years, the highway construction industry has continued to perform well. The Federal Highway Administration also reports that:
in FY 1994, the total contracting and subcontracting to small minority and women businesses was 15.4%;
in FY 1995, the total was 15.7%; and
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in FY 1996, the total was14.8%.
In FY 1997, the percentage dropped to 13.5%, but the total dollars awarded to small minority and women business enterprises still increased from $2.06 billion to $2.25 billion.(see footnote 32)
On their face, these statistics belie any claim that the highway construction industry has systematically excluded minorities or women business enterprises. When put into context, they are even stronger. The Federal Highway Administration has informed AGC that materials and subcontracts account for approximately 90% of the work awarded to minority and women business enterprises in the federal-aid highway construction industry. The 1992 Census of Construction Industries reveals, however, that highway, street, bridge, tunnel and utility contractors typically put only half of their contract dollars into those two areas. They typically put 32.5% percent of a contract into materials, and they typically subcontract only 19% of their work.(see footnote 33)
The relatively low percentage of the work subcontracted to other firms may be a product federal and state requirements that highway construction contractors perform at least 50% of their work with their own employees. In addition, much highway construction requires heavy equipment in which prime contractors are heavily invested.
Excluding the prime contracts awarded to small minority and women business enterprises, the work awarded to such firms in each of the last four years ranged from a low of 12.1% in FY 1997 to a high of 14.1% in FY 1995. Those numbers came, however, out of something less than 52% of the work. It necessarily follows that small minority and women business enterprises are regularly and consistently performing at least 24% total that goes into materials and subcontracts. If nothing else, the competitive bidding statutes make it extremely difficult for state officials to discriminate against minorities or women business enterprises. These numbers make it equally difficult to discern a legally defensible basis for the subcontracting requirements that the Department of Transportation continues to impose on the federal-aid highway construction industry.
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Neverthless, almost three years after Adarand came down, the Civil Rights Division remains silent. It has yet to address these or any of the other statistics that I have included in my testimony. It has yet to explain the census and other data readily available to everyone. It has even failed to produce the ''benchmarks'' that it proposed in May of 1996.
In sum and substance, Civil Rights Division has failed to exercise leadership, and in the absence of such leadership, the Departments of Defense and Transportation have continued to give or require preferential treatment for minority and women business enterprises in the construction industry.
In fact, in recent months, they have even proposed to make the current situation far worse. In May of 1997, the Department of Defense, the General Services Administration and the National Aeronautics and Space Administration jointly proposed to add several new preferences to the Federal Acquisition Regulation.(see footnote 34) The most pernicious would be a prime contract bid preference for small minority businesses.(see footnote 35) Another would be an ''evaluation factor'' that gave a competitive advantage to any prime contractor that agreed to subcontract a larger percentage of its work to small minority businesses. Yet another would be an ''incentive payment'' much like if not identical to the clause that lay at the heart of the Adarand case.(see footnote 36)
In May of last year, the Department of Transportation also proposed to increase its demands on the construction industry.(see footnote 37) Like DOD and the other federal contracting agencies, the Department of Transportation proposed to add prime contract bid preferences to its current arsenal. Among other things, DOT also proposed:
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to require the states to base their future ''goals'' on a headcount of minority and women business enterprises, without regard to the size of those firms, or any other measure of their capacity;
to require the states artificially to inflate their ''goals'' by an entirely speculative estimate of the additional work that the preferred group of firms would be able to perform ''but for'' past discrimination; and
to limit the use of certain specialty subcontractors to achieve future ''goals.''(see footnote 38)
Finally, on August 14, the Small Business Administration (SBA) proposed dangerous changes in the affiliation rules that have long applied to the 8(a) program.(see footnote 39) Behind the banner of what it called a mentor-protégé program, SBA also hid a proposal to permit graduated firms to own up to 33% of certified firms, and otherwise continue to enjoy the 8(a) program's benefits.(see footnote 40)
Without any meaningful guidance on the nature or scope of the problems that they have a compelling interest it addressing, the federal contracting and funding agencies are very obviously lost.(see footnote 41) The Department of Defense did suspend the ''rule-of-two''(see footnote 42) but its only other action betrays its great confusion. In April of 1996, DOD implemented a ''test program''(see footnote 43) requiring all construction contractors to state the cost of their bonding on the face of every bid. If a small minority business submits a bid, but fails to submit the low bid, the contracting officer must subtract the cost of bonding from every bid. If the small minority contractor would then be the low bidder, the contracting officer must add the same cost back to every bidand then give the small minority business a 10% bid preference.
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Before responding to the DOT's proposal, AGC requested Dr. George LaNoue, the nation's leading expert on ''disparity studies,'' to analyze the appendix. Dr. LaNoue found that it could not begin to establish a compelling interest in the special preferences in federal and federally funded procurement. Also attached is a copy of Dr. LaNoue's report.
The problems with this program are many. The most obvious is that it does not discourage, much less remedy, the very discrimination that it presupposes. The program does not deter any surety from discriminating against its minority clients. Quite to the contrary, the program requires a subsidy for any such discrimination. It simply assures sureties that they can charge minorities more without increasing anyone's risk of losing business.
In closing, let me emphasize that AGC is and will remain committed to an equal opportunity for all construction firms. AGC welcomes the growth and development of minority and women business enterprises in the construction industry.
In an effort to forge new relationships, AGC has repeatedly met and will continue to meet with the National Association of Minority Contractors, Women Construction Owners and Executives, the Owners Council of the National Association of Women in Construction and other representatives. If it had the interest and will, the Civil Rights Division could encourage these relationships. It could also encourage the federal contracting and funding agencies to roll up their sleeves and begin to focus on real business development. In March of 1997, AGC announced a model mentor-protégé program for the construction industry, widely known as the Stempel Plan. In the past year, AGC has repeatedly sought the Administration's support for this program. In the weeks and months ahead, it will continue to do so. If nothing else, the Civil Rights Division should support the Stempel Plan.(see footnote 44)
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Thank you again for the opportunity to testify. I would be pleased to answer any questions you may have.
Mr. MARK GROSS,
|The Associated General|
|Contractors of America,|
|Washington, DC, July 22, 1996.|
Office of the Assistant Attorney
General for Civil Rights,
Re: Proposed Reforms to Affirmative Action in Federal Procurement
DEAR MR. GROSS: The Associated General Contractors of America (AGC) has long been and remains the leading representative of the nation's construction industry. Its 33,000 members include 8,000 of the general contractors engaged in the construction of buildings, highways, bridges, tunnels, airports, factories, warehouses, shopping centers and a wide range of other public and private projects, including but not limited to water conservation and waste treatment facilities.
On behalf of these firms, AGC has reviewed and welcomes the opportunity to comment on the various ideas that the Department of Justice published in the Federal Register on May 23, 1996. AGC's members are directly affected by the special preference programs that the Department has proposed to change.
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As a threshold matter, AGC recognizes and accepts that the Department has little interest in a public discussion of its claim to a ''compelling interest'' in preferential treatment for minority and women business enterprises. The Department treats the matter as a strictly legal one, better left to the courts, and perhaps that is the case. AGC would, however, suggest that broad and open-ended charges of unlawful bias and discrimination against such firms are offensive and unhelpful. At the end of the day, it is the federal preference programs that continue to discriminateagainst thousands of small construction firmssolely and exclusively because their owners are neither minorities nor women. Implying that these other firms are engaged in some kind of unlawful effort to keep minorities and women out of the construction industry is merely to add moral insult to their economic injury.
In the recent past, the Administration has acknowledged that the injury to these other construction firms is serious. As the Administration explained in July of 1995, in the report on its initial review of the federal affirmative action programs:
[W]hile DOD's overall goal for SDBs was only 5 percent, more than 35 percent of all DOD construction awards went to SDBs, and more than two-thirds of these were awarded under sheltered competition. Moreover, in ten States, more than 40 percent of all construction contracts awarded to small business were awarded to SDBs. [Affirmative Action Review, Report to the President, George Stephanopoulos and Christopher Edley, Jr., July 19, 1995, at 6566.]
If fully implemented in good faith, the Department's latest ideas could reduce the excessive burdens that the federal preference programs have unfairly imposed on the construction industry. As noted below, these ideas would do little to make minority or women businesses stronger or more competitive. As do the current programs, the new measures disregard the basics of business development. But these measures do invite the construction industry to believe that the Administration is prepared to take at least the minimum steps necessary to reduce the size and scope of the economic injury to the non-minority firms that the federal programs disfavor. And to that extent, the new ideas are welcome.
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Following are thoughts and comments on each of the discrete areas that the Department has addressed.
The Administration's first report on affirmative action also acknowledged that the federal preference programs are too open to wealthy individuals. That report candidly acknowledged that, ''[i]n a September 1994 audit of 50 larger §8(a) firms, the SBA Inspector General found that 35 of the 50 owners had a net worth in excess of $1 million. . . .'' Id., at 67, note 85.
Nevertheless, the Small Business Administration (SBA) continues to define ''economic disadvantage'' in excessively generous terms that easily encompass the vast majority of all Americans. Within the meaning and for the purposes of the 8(a) program, the SBA has defined that term to include anyone with a net worth of less than $250,000, not counting the individual's home or business. 13 CFR §124.106(a). The SBA also permits that very limited measure of an individual's net worth to climb as high as $750,000, while still getting 8(a) contracts. 13 CFR §124.111(a).
AGC encourages the federal government to define ''economic disadvantage'' in realistic terms that take all of an individual's assets into account. The threshold should include the net worth of the individual's home and business. As necessary to account for the differences within and among industry categories, the threshold may have to vary from business owner to another. The threshold could be somewhat higher for those engaged in capital intensive lines of business. But once again, the threshold should be based on all of an individual's assets.
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The federal government should also coordinate its certification process and standards with those established by other levels of government. And it should involve the relevant industries in the certification process. As AGC originally recommended in January of 1994:
Certification regulations should be uniform for all federal, state and local construction contracting agencies, and the authority to certify businesses should be centralized in a single board in each state, comprised primarily of industry representatives.
AGC supports the proposal to end self-certification. It would, however, suggest that the recommended procedures for future certification are cumbersome and confusing. AGC finds it preposterous to presume that each and every member of a minority racial group is ''economically disadvantaged.''
AGC recommends that the Administration base any benchmarks on the real capacity of the Small Disadvantaged Businesses (SDBs) in the relevant industry and market area. The Administration should also go well beyond the two-digit SIC codes for the construction industry, setting a different benchmark for each of its four-digit codes. The Administration should also set different benchmarks for the construction industry in each state, and should revise those benchmarks every two years.
For several reasons, the Administration should also abandon any effort to inflate its benchmarks by any estimate of what the capacity would be in the absence of any past discrimination. Any such estimate would be highly speculative. The process would invite political manipulation. And the results would encourage corruption. By definition, the process would push the benchmarks beyond the real capacity of the SDBs in the relevant area. It would create a vacuum that the legitimate firms could not fill. And in doing so, it would provide an unwelcome opportunity for others to take advantage of the system.
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Because many if not most construction firms have no interest in direct federal work, the estimate of capacity should begin with the SDBs that have actually bid for federal contracts or subcontracts at some point in the last three years. The benchmark should be equal to the aggregate capacity of those firms. If a firm is bondable, the federal government may assume that its capacity is equal to its maximum aggregate bonding capacity. If a firm is not bondable, the federal government should determine its profitability and debt-to-worth ratio, and then apply an appropriate multiplier to either its working capital or its net worth.
In sum, the benchmarks should be based on the underlying financial strength of the truly interested firms, and not census data or other raw estimates of the size of the firms that perform federal work.
AGC strongly encourages the Department to start working on alternatives to the credits, set-asides, and other preferences that its proposals would perpetuate, not only because such measures are fundamentally unfair to the many firms that they disfavor, but also because they are ineffective. They are too superficial to have any lasting impact on the stability, financial strength or competitiveness of minority or women business enterprises. They have little impact on such, firms' profitability, working capital or net worth. To the contrary, they often cause a firm to grow too rapidly, straining its financial and other resources, and ultimately forcing it into bankruptcy. Set-asides and other preferences redirect cash flow, and to that extent, they produce winners and losers, but they disregard the fundamentals of business growth and development.
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It is extremely difficult to identify all of the necessary elements of a program to develop minority businesses in all of the many industries with which the federal government does business. In fact, it is likely that these elements will vary from one industry to another. There is, however, nothing to gain and much to lose from disregarding this difficulty. All business developmentincluding but not limited to minority and women business developmentis difficult to sustain. It is greatly affected by the vagaries of not only federal procurement but also the business cycles of a free market. Unless and until the Administration acknowledges these facts, and candidly addresses them, it cannot, however, hope to impact the nation's economic future.
Limits on Special Preferences
When and how the new benchmarks would actually limit the special preferences in federal procurement is impossible to gauge. What the Justice Department would give with one hand the Commerce Department could just as easily take with the other. The recommended standards are both vague and subjective, and the Commerce Department would have much if not unbridled discretion to do whatever it pleased.
AGC would like to believe that the Commerce Department would make honest and good faith effort judgments, and perhaps it would, but the long history is one of abuse. The Department of Defense and other federal agencies have long taken advantage of the construction industryand the relatively large number of SDBs that it sustainsto meet their overall goals for SDB participation. They have driven up the amount of federal work set-aside in this industry, making it less necessary for them to look elsewhere. Before AGC could support this approach, it would need much more assurance that the Administration really means what it appears to be saying.
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Outreach and Technical Assistance
AGC regrets that the Department has made outreach and technical assistance mere afterthoughts. While unglamorous, they are, in fact, key to any serious effort to make SDBs more competitiveand less dependent on special preference programs.
More than two years ago, AGC recommended that public owners retain individuals experienced in the technical aspects of construction and/or the management of construction firms to provide assistance to the minority and women business enterprises in the construction industry. AGC also made it clear that public owners must provide the funding necessary for such assistance.
Today, AGC would simply emphasize that such assistance must be industry specific. In the case of construction, it should include both administrative and technical assistance.
AGC encourages and promotes the growth and development of small, minority and women business enterprises and seeks to increase their participation in the construction industry and the association itself. AGC has a great wealth of experience and expertise at its disposal, and taking advantage of both, AGC has developed real alternatives to the ineffective government programs for such firms, and would welcome an opportunity to meet with the Department to discuss and explore their features.
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In doing so, however, AGC is and will remain committed to an equal opportunity for all construction firms to compete for all available work, without regard to size, race, gender or any other factor unrelated to price or performance. Discrimination has no place in the federal procurement systemor anywhere else in America.
|Michael E. Kennedy, General Counsel|
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I. THE PROPOSED NEW U.S. DOT DBE REGULATIONS AND COMPELLING INTEREST
On May 30, 1997, the U.S. Department of Transportation issued for comment proposed rules for the ''Participation by Disadvantaged Business Enterprise [DBE] in Department of Transportation Programs.'' 62 Fed. Reg. 29548 (1997). DOT suggested that since: ''. . . this proposal is intended, in large part, to conform to the legal requirements enunciated in Adarand, the Department also seeks comments on the extent to which it succeeds in doing so.'' Id., at 29558. These comments are in response to that invitation.
The proposed DOT rules suggest a number of complex administrative changes which may affect the implementation of the DBE program. These rules will affect a wide variety of federally-assisted transportation construction programs administered by highway authorities, transit districts, and airports, among others. The DOT proposal does not, however, analyze whether there remains any longer a compelling interest for the DBE program, though the proposal recognizes that federal race conscious programs, such as its DBE program, are subject to strict scrutiny. This means they must have a compelling basis and must be narrowly tailored. The proposal merely states, ''We believe that this statute is Constitutional . . .'' and refers to materials earlier gathered by the Department of Justice. (Id., at 29548)
Page 157 PREV PAGE TOP OF DOC These materials were first published on May 23, 1996, when the Department of Justice issued its ''Proposed Reforms to Affirmative Action in Federal Procurement.'' (61 Fed. Reg. 2604226050, 1996). This document recognized that:
In Adarand, the Supreme Court had extended strict judicial scrutiny to federal affirmative action programs that use racial or ethnic criteria as a basis for decision making. In procurement, this means that any use of race in the decision to award a contract is subject to strict scrutiny. Under strict scrutiny, any federal program that makes race a basis for contract decision making must be narrowly tailored to serve a compelling governmental interest. (at 26042)
With regard to the two-pronged test of a compelling interest and narrow tailoring, the proposal states:
. . . the Justice Department takes as a constitutionally justified premise that affirmative action in federal procurement is necessary and that the federal government has a compelling interest to act on that basis in the award of federal contracts. (Ibid)
To support its position, a footnote in the proposal makes reference to an Appendix where ''a preliminary survey of evidence establishing the compelling interest'' is located. That document, Appendix A, ''The Compelling Interest for Affirmative Action in Federal Procurement: A Preliminary Survey'' is found at 61 Fed. Reg. 2605026063 (1996).
In short, the Justice Department's position, on which the Department of Transportation relies, was that, while changes were required by Adarand on the narrow tailoring dimensions of race conscious federal procurement programs, the compelling interest had already been appropriately established and required no further comment.
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Nevertheless it is clear that the compelling interest and narrow tailoring components of the Adarand/Croson strict scrutiny test are inextricably linked and that the compelling must be established first. As the Eleventh Circuit has recently said;
. . . if a [race conscious) program is not grounded on a proper evidentiary basis, then all of the contract measures go down with the ship, irrespective of any narrow tailoring or substantial relationship analysis.'' (Engineering Contractors Association of South Florida v. Metropolitan Dade County, September 2, 1997, at 1617.) Consequently, it is DOJ's Appendix A, which is the focus of my comments. This is a particularly important task because of the many new federal court decisions rendered since Appendix A was issued. These decisions have added clarity to the standards required of race conscious programs to meet strict scrutiny in the post-Croson and Adarand era.
Appendix A is important not only because it provides the underpinning for current Administration proposals to maintain race and ethnic preferences in modified forms, but because it is the basis of the Administration's legal argument in the many court cases where such preferences in procurement are being challenged around the country. For that reason, it is important to analyze this Appendix, to compare it to contemporary legal standards, to understand what it includes, and what it leaves out.
The omissions in DOT's proposal and DOJ's Appendix A are substantial. Despite the fact that more than two years have passed since the Supreme Court's decision in Adarand v. Pena, 515 US 200, 1995, and despite the fact that the Justice Department and other federal agencies have devoted a considerable amount of their formidable resources to responding to Adarand, the federal government still has not produced:
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1. Any findings about whether there has been any discrimination by any federal agency in the contemporary procurement process;
2. Any findings about whether any state DOT agency or any other state agency has discriminated in the award of federal contract dollars;
3. Any findings about whether there has been any underutilization of qualified, willing and able MBE contractors in federal procurement or federally assisted procurement as prime contractors or subcontractors. The federal government has completed no disparity study that could create the ''proper findings'' the judiciary requires of governments before they employ race conscious measures;
4. Any findings about whether, when MBEs bid on contracts, they are proportionately successful. No study of who bids on federal contracts has been released;
5. Any statistical analysis of whether the particular racial and ethnic groups granted presumptive eligibility are in fact disadvantaged because of patterns of deliberate exclusion or discrimination in recent years;
6. Any evaluation of the effectiveness of existing federal race neutral programs or the possibility of creating new ones;
7. On May 23, 1996, the Justice Department proposed ''benchmark limits'' for each industry which were intended to represent the ''level of minority contracting that one would reasonably expect to find in a market absent discrimination or its effects,'' and to control the decision of whether race conscious means were necessary in federal procurement related to that industry. (61 Fed. Reg. 26042, 26045, 1996). These benchmark limits still have not been produced. (''Response to Comments to Justice Departments Proposed Reforms to Affirmative action in Federal Procurement,'' 62 Fed. Reg. 25650. 1997) The Department apparently thought such benchmark limits were essential to narrow tailoring and stated:
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Application of the benchmark limits ensures that any reliance on race is closely tied to the best available analysis of the relative capacity of minority firms to perform the work in questionor what their capacity would be in the absence of discrimination.'' (61 Fed. Reg. 26042, 26049, 1996)
Given this premise, the failure to develop the benchmark limits suggests federal goals are not narrowly tailored.
In its ''Response to Comments to Justice Departments Proposed Reforms to Affirmative action in Federal Procurement,'' the Justice Department affirmed that Appendix A was still its statement of compelling interest. (62 Fed. Reg. 25648, 25653, 1997) Without the necessary factual predicates indicated above, Appendix A is essentially a legal brief arguing obsolete theories, rather than a reflection of any new research or analysis in the post-Croson and Adarand, era. While analytically distinct, as a functional matter in crafting a program, compelling interest and narrow tailoring are interlocked. Without findings about the particular source and character of the discrimination to be remedied or the effectiveness of race neutral programs, defining narrowly tailored remedies is impossible. Thus, if the case for a compelling interest is not made in considerable detail, fine tuning the implementation of the program is legally irrelevant.
II. THE DEPARTMENT OF JUSTICE'S APPENDIX ON COMPELLING INTEREST
The Appendix is not particularly long for a legal brief (about 15 pages of three columns each), but in its footnotes it refers to an enormous amount and variety of hearings, reports, books and articles going back to 1964. These documents would certainly fill an entire bookcase, and it is doubtful that any single human being has read all of them. Indeed, that appears to be part of the strategy: to overwhelm legislators, judges, and the general public with so much material that it convinces by shear volume. (For example, most references to Congressional documents do not contain page cites, as though,the whole of a report or hearing was relevant to the Administration's legal case.) So far, that tactic has been successful. In the decision on the remand in Adarand v. Pena, the district court held that the MBE preferential subcontracting provision was unconstitutional because it was not narrowly tailored. The court, however, in a statement it carefully labelled obiter dicta, thought that the materials in Appendix A provided a compelling interest, although it conceded it did not understand the Supreme Court's Adarand decision to be clear on the scope of Congressional powers (At 3438). In the Adarand remand, there was essentially no discovery or expert testimony regarding the Appendix, so its contents were not really examined. Nevertheless, the Administration's case as reflected in the Appendix must eventually not only withstand examination, but, when properly challenged in a judicial proceeding, strict scrutiny.
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If the purpose of the Appendix had only been to demonstrate that there has been racial and ethnic discrimination in the American economy, this mélange of documents would be sufficient, as would any basic understanding of American history. It is obvious that such discrimination has occurred.
To provide the necessary empirical support for the range of racial and ethnic preferences in federal procurement programs requires much more specificity. In particular, since the device these programs employ is ''presumptive eligibility'' in which all members of certain designated racial and ethnic groups are considered to be ''socially disadvantaged'' and therefore eligible for preferences, evidence regarding discrimination against each group is necessary. The Administration's position seems to be that, although some adjustments in the implementation of preferences in federal and federally-assisted procurement regulations are necessary to meet legal narrow tailoring standards, the compelling interest part of the test can be established by the mass of generalized materials in the Appendix. Such is not the law. The compelling interest for the scope and form of a racial preference must be established prior to any consideration of narrow tailoring.
The U.S. Eleventh Circuit in its recent (September 2, 1997) decision in Engineering Contractors Association v. Metropolitan Dade County summarized the applicable legal standard as follows:
The existence of each [of] the programs, including all of its component parts, must withstand the appropriate level of constitutional scrutiny if that program is to be upheld. Either a program is grounded on a proper evidentiary factual predicate or it is not. If it is, then that program sails on to the next stage of the analysis, where each component contract measure is tested against the ''narrow tailoring'' and ''substantial relationship'' requirements. On the other hand, if a program is not grounded on a proper evidentiary basis, then all of the contract measures go down with the ship, irrespective of any narrow tailoring or substantial relationship analysis. (at 1617) (italics in the original)
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Although the purported purpose of the Appendix is to establish a compelling interest for racial and ethnic preferences, there is an extraordinary lack of a discussion of judicial standards about the necessary factual predicate. Neither Croson's nor Adarand's statements about the evidence necessary to establish compelling are discussed in any detail. Many of the lower court cases about compelling interest and narrow tailoring are not mentioned at all. The many decisions in which race and ethnic conscious procurement programs have been struck down as unconstitutional are neither cited, distinguished, nor even discussed.
At the core of the Croson decision is the Supreme Court's attempt to differentiate between the types of evidence that are sufficient to create a compelling basis for the ''extreme case'' or ''last resort'' remedy of racial and ethnic preferences and those that are not. For example the Court criticized: mere recitation of a benign or compensatory purpose (488 U.S. at 490), absence of particularized findings (498), generalized assertions of discrimination (498 and 500), ill-defined wrongs (498), amorphous claims of past discrimination (499), sheer speculation (499), simple legislative assurances (500), highly conclusionary statements (500), legislative or executive pronouncements of necessity (501), unsupported assumptions (502), extrapolation of discrimination (505), past societal discrimination (505), random inclusion of racial groups (506), ''completely unrealistic'' assumptions (509), and unthinking stereotypes and racial politics (510) as bases for the use of racial classifications.
In Shaw v. Hunt (''Shaw IV) Chief Justice Rehnquist, writing for the Court, cited Croson five times (488 U.S. at 499, 500, 505, 507, and 509) to affirm the need that discrimination be clearly identified, thus establishing ''a 'strong basis in evidence' to conclude that remedial action was necessary before'' the government embarked on a preferential policy. (116 S. Ct. 1894, 190203 (1996) (emphasis in the original text)
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Therefore, while the Appendix makes reference to 29 Congressional hearings from 19801995 and occasionally quotes something someone said in those hearings, that in itself does not constitute a compelling basis for racial preferences. The Appendix insists that Congress is entitled to deference, but in the way it cites material from hearings and reports, it makes no distinction between findings that represent a Congressional consensus, the views of a single committee or the partisan majority on a particular committee or subcommittee, the views of a single Congressman representing constituents, the views of advocacy organizations or individuals. Nor does the Appendix distinguish between statements that might have been accurate 15 years ago, but are not accurate today.
Uncritical deference to Congressional statements is not consistent with the skepticism required by Adarand, where constitutional rights are concerned. Deference was the judicial posture in the now-discredited 1980 Fullilove decision (448 U.S. 448 (1980), but the Supreme Court said in Adarand, ''. . . to the extent (if any) that Fullilove held federal racial classifications to be subjected to a less rigorous standard, it is no longer controlling.'' Adarand III, 515 U.S. 200, 235
The kind of deference to Congress advocated in the Appendix would be an abdication of separation of powers and the court's role in judicial review. In Adarand, the Court stated that acts of any legislature employing race conscious remedies should be reviewed from the perspective of skepticism, consistency and congruence. In taking this position, the Court drew from decisions invalidating federal, race-conscious actions as well as local, race-conscious actions. The Court specifically held that equal protection under the Fifth Amendment and the Fourteenth Amendment are the same, and modern jurisprudence draws equal protection principles from cases involving both amendments. In Adarand, the Court concluded:
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''Taken together these propositions lead to the conclusion that any person of whatever race has the right to demand that any governmental actor subject to the Constitution justify any racial classification subjecting that person to unequal treatment under the strictest judicial scrutiny. ''Adarand, 115 S.Ct. at 2111.
The Adarand Court went on to quote Justice Powell's conclusion about the need for strict scrutiny in Bakke that:
Political judgments regarding the necessity for the particular [racial or ethnic] classification may be weighed in the constitutional balance, but the standard of justification will remain constant. This is as it should be, since those political judgments are the product of rough compromises struck by contending groups within the democratic process. When they touch upon an individual's race or ethnic background, he is entitled to a judicial determination that the burden he is asked to bear on that basis is precisely tailored to serve a compelling governmental interest. Bakke, 438 U.S. at 299, Adarand, 515 U.S. 200, 22425.
It is logically impossible for a court to use strict scrutiny to review the legislative ''rough compromises struck by contending groups'' with skepticism and deference at the same time. As the Supreme Court declared in Croson:
The factfinding process of legislative bodies is generally entitled to a presumption of regularity and deferential review by the judiciary. See Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483, 488489 (1955). But when a legislative body chooses to employ a suspect classification, it cannot rest upon a generalized assertion as to the classification's relevance to its goals. See McLaughlin v. Florida, 379 U.S. 184, 190192 (1964). A governmental actor cannot render race a legitimate proxy for a particular condition merely by declaring that the condition exists. See id. At 193; Wygant, supra, at 277. The history of racial classifications in this country suggests that blind judicial deference to legislative or executive pronouncements of necessity has no place in equal protection analysis. See Korematsu v. United States, 323 U.S. 214, 235240 (1944) (Murphy, J., dissenting) (488 U.S. at 500501 (1989)).
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The Korematsu case, of course, was the result of the internment of Japanese-Americans, which had the support of both Congress and the Executive branch.
In the recent series of voting rights cases, Shaw v. Reno, 113 S.Ct. 2816 (1993), Miller v. Johnson, 515 U.S. 900 (1995), Bush v. Vera, 116 S. Ct. 1941 (1996), and Shaw v. Hunt, 116 S.Ct. 1894 (1996), the Supreme Court held that the specific use of race conscious criteria in redistricting were still unconstitutional despite general findings of discrimination by Congress in the Voting Rights Act and the interpretations of that Act by the Justice Department.
The key to the use of a race conscious remedy is as the Court pointed out in Croson:
Proper findings . . . serve to define the scope of the injury and the extent of the remedy necessary to cure its effects. Such findings also serve to assure all citizens that the deviation from the norm of equal treatment of all racial and ethnic groups is a temporary matter, a measure taken in the service of the goal of equality itself. (488 U.S. at 510)
Finally Justice O'Connor concluded that the judiciary has a responsibility to examine those findings because:
Absent searching judicial inquiry into the justification for such race-based measures, there is simply no way of determining what classifications are ''benign'' or ''remedial'' and what classifications are in fact motivated by illegitimate notions of racial inferiority or simple racial politics. (Croson, 488 U. S. at 493)
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A recent unanimous decision by the Ninth Circuit summarized the law as follows:
For a racial classification to survive strict scrutiny in the context before us, it must be a narrowly tailored remedy for past discrimination, active or passive, committed by the governmental entity making the classification. City of Richmond v. JA. Croson Co., 109 S.Ct.706, 716,720 (1989). ''Findings of societal discrimination will not suffice; the findings must concern prior discrimination by the government unit involved.'' Id. At 716,717; and see Associated General Contractors v. City and County of San Francisco, 813 F. 2d 922,930 (9th Cir., 1987)
The burden of justifying different treatment by ethnicity or sex is always on the government. ''[A]ny person of whatever race has the right to demand that any governmental actor subject to the Constitution justify any racial classification subjecting that person to unequal treatment under the strictest judicial scrutiny. ''Adarand, 115 S. Ct. At 2111. (Monterey Mechanical Co. v. Wilson, et. al., 97 Daily Appellate Report, at 11469, September 4, 1997)
In a country as large and diverse as ours, unfortunately there will always be incidents of discrimination. In the millions of economic transactions that take place monthly, we cannot expect all of them to be totally free of bias, any more than we can expect that they will be totally free of crime. If particular, even egregious, examples of discrimination or crime occur, we dare not suspend our constitutional rights to combat them or we shortly will have no rights.
Page 167 PREV PAGE TOP OF DOC While there are still unanswered questions about the exact evidence required for a race conscious remedy, it must reflect the kind of persistent patterns of deliberate exclusion which the Court identified in Croson and Adarand. Moreover, these decisions and those of lower courts about minority business preference programs have made other principles clear. For example:
(1) While anecdotal materials and legislative hearings may be useful supplements, a government must have valid statistical evidence to defend a race-conscious program.
(2) Such evidence must exist for each group included in a preference program.
(3) Such evidence must exist for each industry covered by a preference program.
(4) Race neutral remedies must be used and evaluated before turning to race conscious remedies.
Each of these principles will be discussed in turn.
A. Statistical Foundations
A substantial amount of the materials in Appendix A is anecdotal. The requirement that a race conscious program must rely basically on valid statistical findings, however, has been clear in the law at least since Coral Construction v. King County, 941 F.2d at 919 (9th Cir. 1991). Since then, this holding has been reaffirmed a number of times by various Courts, most recently by the Eleventh Circuit which summarized the law as follows:
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Several circuits, including this one, have discussed the value and significance of anecdotal evidence in evaluating whether the government established a sufficient factual predicate to justify a race conscious or gender-conscious affirmative action program. We have found that kind of evidence to be helpful in the past, but only when it was combined with and reinforced by sufficiently probative statistical evidence. Engineering Contractors Association of South Florida v. Metropolitan Dade County.(at 68)
In Croson, the Court articulated the standards for the necessary statistical test. The keystone of any statistical analysis is the creation of ''disparity ratios'' based on appropriate data. Justice O'Connor made a specific statement about the kind of data that should be considered and the method for comparing that data to determine a disparity. She said:
Where there is a significant statistical disparity between the number of qualified minority contractors willing and able perform a particular service and the number of such contractors actually engaged by the locality or the locality's prime contractors, an inference of discriminatory exclusion could arise. (emphasis added, Croson, 488 U.S. at 509)
The underlined parts of Justice O'Connor's test for statistical analysis in Croson, as quoted, identify several crucial requirements which must be satisfied if a public body desires to use statistical analysis to demonstrate the ''extreme case'' where some form of narrowly tailored remedy might be necessary to break down ''patterns of deliberate exclusion.'' (Croson, 488 U.S. at 509).
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Put simply, the Administration has not begun to meet that test. The Administration has no idea of how many minority and non-minority firms are ''qualified,'' ''willing and able to perform'' the thousands of particular services the federal government requires as either prime or subcontractors.
Lacking such required information, the Appendix resorts to such generalizations from the 1987 census as:
Minorities make up more than 20 percent of the population; yet minority-owned businesses are only 9 percent of all U.S. businesses and receive less than 4 percent of all business receipts.
Minority firms have, on average, gross receipts that are only 34% of nonminority firms.
The average payroll for minority firms with employees is less than half that of nonminority firms with employees. (at 26054)
Apart from the fact that these statistics have nothing to do with federal procurement and are a decade old, they mask the differences among various minority groups; they do not control for the size or qualifications of firms; and they mix data from corporations which are not owned by any group with data from firms which can be identified by race and ethnicity of their owners. Furthermore, comparison of business participation rates of a particular group to their proportion of the general population has not been considered an appropriate legal standard since Hazlewood and Croson. (488 U.S. at 501502.)
Page 170 PREV PAGE TOP OF DOC (For a more complete discussion of the law on the use of business formation and revenue statistics to support race and ethnic preferences in government procurement programs, see section V of this report.)
B. Group Specific
One of the major clarifications of equal protection rules established in Croson was that there had to be separate findings of discrimination against each individual group granted racial, ethnic, or gender preferences. All over the country, local jurisdictions have sought to narrowly tailor race conscious programs by restricting eligibility to those groups for which specific evidence of discrimination existed. For example, the revised Richmond, Virginia MBE procurement program which once encompassed all the groups in federal guidelines, now includes only African-Americans.
The proposed DOT regulations comment briefly on the groups currently benefited in by its race and ethnic preferences as follows:
We recognize that the inclusion of persons of European Spanish and Portuguese origin is controversial, but absent legislative direction to the contrary, we believe it necessary to leave the definition unchanged. Congress has determined that Asian-Americans are presumptively disadvantaged (a judgment that can be supported by a substantial history of discrimination against many Asian groups in this country), and the Department could not exclude them even if it wanted to. (62 Fed. Reg. 29548, 29550, 1997)
No census or any other data were cited to support the assertion that these groups are socially disadvantaged, nor is there support in Appendix A for this assertion.
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Although the Justice Department has recognized the necessity of group-specific narrow-tailoring, federal race-conscious plans in employment, no similar concession has been made regarding procurement. On February 29, 1996, a Justice memorandum to General Counsels of federal agencies stated:
. . . if an agency's statistics were to reveal underutilization only in the hiring and promotion of African-Americans, the agency would be justified in focusing remedial action on African-Americans, but not on Hispanic-Americans, Native-Americans or Asian-Americans. Treating minorities as a single group raises concerns; remedial action in federal employment can be targeted only at specific groups determined to have a need for special focus. John R. Schmidt, Associate Attorney General,'' Post-Adarand Guidance On Affirmative Action in Federal Employment,'' February 29, 1996, p. 17.
Appendix A, however, does not even discuss the question of group specific remedies in connection with procurement, though the constitutional principle is the same. Given the prominence of judicial rulings requiring evidence of discrimination against specific groups, the failure of Appendix A to confront the issue must surely reflect more of a political judgement than a legal analysis.
This issue was raised first in 1980 in Fullilove v. Klutznick by the dissenters, but it was ignored by the majority. Justices Stewart and Stevens dealt specifically with the issue of the fairness of the way in which groups were chosen for preferences. Justice Stewart commented:
Page 172 PREV PAGE TOP OF DOCIn today's society, it constitutes far too gross an oversimplification to assume that every single Negro, Spanish-speaking citizen, Oriental, Indian, Eskimo, and Aleut potentially interested in construction contracting currently suffers from the effects of past or present racial discrimination. Since the MBE set-aside must be viewed as resting upon such an assumption, it necessarily paints with too broad a brush. Except to make whole the identified victims of racial discrimination, the guarantee of equal protection prohibits the government from taking detrimental action against innocent people on the basis of the sins of others of their own race. (448 U.S. at 530 (1980)
Justice Stevens was specifically critical of the way Congress had approached the problem:
The statutory definition of the preferred class includes ''citizens of the United States who are Negroes, Spanish-speaking, Orientals, Indians, Eskimos and Aleuts.'' All aliens and all nonmembers of the racial class are excluded. No economic, social, geographical or historical criteria are relevant for exclusion or inclusion. There is not one word in the remainder of the Act or in the legislative history that explains why any Congressman or Senator favored this particular definition over any other or that identifies the common characteristics that every member of the preferred class was believed to share. Nor does the Act or its history explain why 10% of the total appropriation was the proper amount to set aside for investors in each of the six racial subclasses. 448 U.S. at 535536 (1980)
In Croson, the position that the Constitution required justification for the inclusion of each separate group granted preferences was adopted by a majority of the Supreme Court. Justice O'Connor wrote:
Page 173 PREV PAGE TOP OF DOCThe random inclusion of racial groups, that, as a practical matter, may never have suffered from discrimination in the construction industry in Richmond suggests that perhaps the city's purpose was not in fact to remedy past discrimination. . . . The gross overinclusiveness of Richmond's racial preferences strongly impugns the city's claim of remedial motivation. (469 U.S. at 506.)
The concept that there has to be a specific evidentiary basis for each preferred group has now been incorporated in a number of lower court opinions.
As the Fifth Circuit declared: ''A broad program that sweeps in all minorities with a remedy that is in no way related to past harms cannot survive constitutional scrutiny.'' Hopwood v. State of Texas, 78 F.3d 932, 951 (5th Cir. 1996).
Applied to preferential procurement program, the Third Circuit in Contractors Association of Eastern Pennsylvania v. City of Philadelphia decided that summary judgment could be granted which prohibited the inclusion of women, Asian Americans, Hispanics, and Native Americans in Philadelphia's MWBE programs because of a lack of statistical and anecdotal evidence regarding those groups (6 F. 3d 990, 1993). The decision about African Americans was reserved for a trial, which when it occurred concluded that preferences for African American contractors were not warranted either (893 F.Supp. 419, E.D. Pa. 1995) That decision was later affirmed by the Third Circuit. (91 F.3d 586, 1996, cert. denied, 117 S.Ct. 953 (1997).
A similar ruling was made recently in Prior Tire v. Atlanta Public School District, where the Court held a price preference program unconstitutional for women, Hispanics, and Asian-Americans (reserving for as yet an unscheduled trial, judgment about the inclusion of African-Americans) because:
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As discussed, the Court is required by Croson to examine under the strict scrutiny standard the inclusion of each minority group in an affirmative action plan. (No. 195CV825JEC, S.D. Ga. (1997) at 27).
In Engineering Contractors Association of South Florida v. Metropolitan Dade County, both the District and the Eleventh Circuit were careful to analyze both the statistical and anecdotal evidence for each of the three groups covered by the County preference program before determining that a sufficient predicate did not exist for providing preferences to any of them. See also Monterey Mechanical v. Wilson at Daily Appellate Report, 11464, 1146970, Ninth Circuit, September 3, 1997.
Federal procurement programs with preferences consider business owners from certain racial and ethnic groups as ''presumptively socially disadvantaged'' and eligible for preference. These groups are generally defined as:
Black (a person having origins in any of the original racial groups of Africa; Hispanic (a person of Mexican-American, Puerto Rican, Cuban, Central or South American, or other Spanish or Portuguese origin or culture, regardless of race; Native American (an American Indian, Eskimo, Aleut or Native Hawaiian.); Asian-American (Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, Taiwan, Laos, Cambodia, (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, Nauru, India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands and Nepal).
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(The process for selecting these particular groups is examined in George R. La Noue and John C. Sullivan, ''Presumptions for Preferences: The Small Business Administration's Decisions on Groups Entitled to Affirmative Action,'' Journal of Policy History, Vol. 6, No. 4, Fall 1994.)
Some of the groups on the presumptively eligible list have been in this country since its beginning; some are very recent arrivals. Some are relatively poor; some are relatively affluent. Some have very high rates of business formation; some very low. Some have well-documented histories of discrimination; some are virtually invisible. These groups have nothing in common at all, except that they have lobbied to be included and they have been considered by the bureaucracy to be ''people of color.''
Two 1997 federal district courts have reviewed the concept of presumptive eligibility in federal programs and each has found that the concept was not narrowly tailored. In Houston Contractors Association v. Metro Transit Authority, the Court, commenting on the concept of presumptive eligibility, which Metro borrowed wholly from federal regulations, declared:
Like all distinctions based on race and sex, Metro's classification of disadvantaged business enterprises is a blunt instrument. It is both over- and under-inclusive. The program designates groups and defines control and ownership, fixing the groups who win and lose in its allocation of public resources. The judiciary reviews distinctions by race and sex meticulously because none of them has been found to have a rational basis, except in political preference and social convention. The eradication of barriers is a noble goal, but it will not be achieved by creating new barriers.
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A. Class presumption v. Individual Reality
While it is true that statistically members of these groups are more likely to be unable to participate fully in the economy because they suffer from the effects of past discrimination, Metro presumes that all bidders associated with ''disadvantaged'' are actually disadvantaged. Legislative presumptions are at best a convenience and at worst a cloak. (954 F.Supp. 1013, 1018 (S.D. Tex. 1996)
In the remand of Adarand v. Pena, the District Court took a similar position:
I agree that Congress' national jurisdiction allows it, where appropriate, to determine that discriminatory barriers exist with reference to specific groups. However, before making such, the requirement of narrow-tailoring mandates that Congress ''inquire[d] into whether or not the particular [entity] seeking a racial preference has suffered from the effects of past discrimination. . .'' Croson, 488 U.S. at 508 (distinguishing its facts from those in Fullilove.)
In the passage the district court quoted from Croson, it is clear that the Supreme Court thought that there should be an inquiry into whether a particular MBE firm or firm owner seeking a benefit from a preference program ''has suffered from the effects of past discrimination by the city or prime contractors'' and that the administrative convenience of not making an individualized inquiry ''cannot justify a rigid line drawn on the basis of a suspect classification.'' (Croson, 488 U.S. at 508).
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The district court in the Adarand remand struck down the MBE subcontracting compensation clause (SCC) which provided a bonus to prime contractors preferring MBE subcontractors over non MBE subcontractors. The court enjoined the Secretary of Transportation from:
administering, enforcing, soliciting bids for, or allocating any funds under the SCC program. This effectively precludes the implementation of the statutes or regulations that grant presumptive eligibility for government preferences in contracting on the basis of race, i.e., the use of presumptions of social and economic disadvantage in [sect.] 8(d) of the Small Business Act 72 Stat. 384, as amended, 15 U.S.C. [sect.] 631 et seq. (SBA) and the use of percentage goals found in and promulgated pursuant to [sect. 644 (g) of the SBA, the Surface Transportation and Uniform Relocation Assistance Act of 1991, Pub. L. No. 102240, 105 Stat. 1914 (ISTEA). These enactments, either per se, or through their implementing regulations, allow presumptive eligibility for ''preferred status'' in federal subcontracts based on race. (At 4).
The Court went on to comment that some of the tortured language in the presumptive eligibility regulations about whether a person was really identified with a particular group:
are illustrative of Justice Stevens' comments that 'the very attempt to define with precision a beneficiary's qualifying racial characteristics is repugnant to our constitutional ideals,' Fullilove, 448 U.S. at 53435, n.5 (Stevens J. dissenting). (At 2223, fn. 100).
Page 178 PREV PAGE TOP OF DOCThe district court concluded:
Contrary to the [Supreme] Court's pronouncement that strict scrutiny is not ''fatal in fact,'' I find it difficult to envisage a race-based classification that is narrowly tailored. By it's very nature, such a program is both underinclusive and overinclusive. This seemingly contradictory result suggests that the criteria are lacking in substance as well as in reason.
The statutes and regulations governing the SCC program are overinclusive in that they presume that all those in the named minority groups are economically and in, some acts and regulations, socially disadvantaged. The presumption is false, as is its corollary, namely that the majority (caucasians) as well as members of other (unlisted) minority groups are not socially and/or economically disadvantaged. By excluding certain minority groups whose members are economically and socially disadvantaged due to past and present discrimination, the SCC program is underinclusive. (at 5960).
In its Appendix, the Administration makes no attempt to defend the decision to include some groups and exclude others. In fact, the Clinton Administration inherited this list from the pre-Croson and Adarand era, but it has not provided a compelling basis for the inclusion of each group on the list as the law now clearly requires. In fact, the Appendix does not even discuss the issue.
C. Industry Specific
In its various capacities, there are few, if any, types of construction, commodities or services that the federal government does not directly purchase or subsidize state and local government purchases where preferential requirements have not been attached. The history, composition, and patterns of discrimination in various sectors of the economy are different. Consequently, there must be established a compelling interest for creating preferential procurement in each of those types of purchases. While the Administration has stated that ''benchmark limits'' at the two-digit SIC code level are necessary so that remedies are narrowly tailored, it has not conceded that the compelling interest must also be established narrowly. To the contrary, the Appendix while referring occasionally to a particular industry, basically implies that the whole of the American economy is so infected by discrimination that federal MBE preferences attached to any type of purchase are defensible because of generalizations about our history, culture or economy.
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There is no judicial support for that sort of sweeping premise as a factual predicate for racial and ethnic preferences. Widespread discrimination has existed at times and places in our national history, perhaps none more flagrant than government-required segregation in Richmond, the cradle of the Confederacybut that did not justify a race preference in contemporary construction procurement. Nor did various forms of societal discrimination in housing, education or employment create the necessary predicate. Nor were ''generalized assertions of discrimination of past discrimination in an entire industry,'' because as the Supreme Court declared:
Relief for such an ill-defined wrong could extend until the percentage of public contracts awarded to MBEs in Richmond mirrored the percentage of minorities in the population as a whole. (Croson, 488 U.S. at 498)
Generalizations about history, society or entire industries cannot lead to a narrowly-tailored remedy. If the assertion of marketplace discrimination suffices as the predicate for a racial preference, then as Justice O'Connor stated in Croson, quoting her opinion in Wygant v. Jackson:
In the absence of particularized findings, a court could uphold remedies that are ageless in their reach into the past, and timeless in their ability to affect the future. (488 U.S. at 498)
As lower courts have grappled with the sufficiency of various disparity studies, the issue of how industry specific the findings have to be has not been fully resolved. There is little doubt that separate findings have to be made for at least, commodities, services, and construction. In the Adarand remand, the Court, while affirming that Congress could make national findings, agreed that they must be specific to an industry (and spoke of ''federal construction contracting.'' at 42).
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But even a cursory examination would demonstrate that these categories (commodities, services, and construction) include an enormous variety of components. In fact, the Bureau of the Census divides the economy into sixty-six different two-digit SIC codes, including three for construction, SIC 15 building, SIC 16 heavy and highway, and SIC 17 special trades. The Census further divides the economy into more than 375 four digit SIC codes, including 24 for construction alone.
The issue of whether construction should be considered as an aggregate category or in its more functional specialities was considered in Engineering Contractors Association of South Florida v. Metropolitan Dade County. The district court stated:
Firms that build hospitals (SIC 15) do not compete for County contracts with firms that lay asphalt (SIC 16) or firms that install plumbing (SIC 17), therefore comparisons between these disparate entities would not produce a reliable portrait of County contracting trends. (943 F.Supp at 1560)
In addition, to legal considerations there must be some empirical reality in determining the level at which statistical analysis is made. There is no reason to assume that if there is discrimination affecting the procurement of computers, there will be similar discrimination in the procurement of foodstuffs, or if there is discrimination in the procurement of architectural service, there will be discrimination in the procurement of medical services, or if there is discrimination in the procurement of apartment remodeling, there will be discrimination in the procurement of bridge building.
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This reality has been demonstrated in every disparity study that has examined utilization at the two-or four-digit level. For example, the State of Texas study reported two-digit SIC code disparities with the result that disparities that appeared in some construction categories did not appear in others. Overall, there was an enormous variety of under- and overutilization of MBEs in the items purchased by the state. MWBEs were in fact overutilized in about 25% of the categories (Texas Disparity Study: A Report to the Texas Legislature as Mandated by H.B. 2626, 73rd Legislature,'' Appendix H)
The Administration has conceded the need to narrowly tailor its preferences by creating ''benchmark limits'' at the two digit SIC code level, but has not yet done so. 62 Fed. Reg. 25650 (1997)
D. Race Neutral
In Croson, the Supreme Court found that one requirement of a narrowly tailored program is that race-neutral programs be implemented and evaluated before turning to race-conscious remedies. Justice O'Connor stated: ''In determining whether race-conscious remedies are appropriate, we look to several factors, including the efficacy of alternative remedies.'' She went on to say:
Many of the barriers to minority participation in the construction industry relied upon by the city to justify a racial classification appear to be race-neutral. If MBEs disproportionately lack capital or cannot meet bonding requirements, a race-neutral program of financing for small firms would, a fortiori, lead to greater minority participation. (Croson, 488 U.S. at 507)
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Furthermore, Justice O'Connor wrote:
Even in the absence of evidence of discrimination, the city has at its disposal a whole array of race-neutral devises to increase the accessibility of city contracting opportunities to small entrepreneurs of all races. Simplification of bidding procedures, relaxation of bonding requirements, and training and financial aid for disadvantaged entrepreneurs of all races would open the public contracting market to all those who have suffered the effects of past societal discrimination or neglect. Many of the formal barriers to new entrants may be the product of bureaucratic inertia more than actual necessity, and may have a disproportionate effect on the opportunities open to new minority firms. Their elimination or modification would have little detrimental effect on the city's interests and would serve to increase the opportunities available to minority business without classifying individual on the basis of race. The city may also act to prohibit discrimination in the provision of credit or bonding by local suppliers and banks. Business as usual should not mean business pursuant to the unthinking exclusion of certain members of our society from its rewards. (Croson, 488 U.S. at 50910)
Finding that a problem of racial or ethnic discrimination exists does not, then, lead to the conclusion that a race conscious remedy is necessary. The Eleventh Circuit has summarized the law as follows:
. . . we flatly reject the County's assertion that ''given a strong basis in evidence of a race-based problem, a race-based remedy is necessary.'' That is simply not the law. If a race-neutral remedy is sufficient to cure a race-based problem, then a race conscious remedy can never be narrowly tailored to the problem. See, Croson, 488 U.S. at 509), (holding that affirmative action program was not narrowly tailored where ''there does not appear to have been any consideration of the use of race-neutral means to increase minority business participation in city contracting.; id. at 509 (plurality opinion) (reserving race-conscious remedies for the ''extreme case when to break down patterns of deliberate exclusion''); see also, e.g., United States v. Paradise, 480 U.S. 149, 171, (1987) (''In determining whether race-conscious remedies are appropriate we look to several factors, including the efficacy of alternative remedies . . .''). Supreme Court decisions teach that a race conscious remedy is not merely one of the many equally acceptable medications the government may use to treat a race-based problem. Instead it is the strongest of medicine, with many potentially harmful side effects, and must be reserved for those severe cases that are highly resistant to conventional treatment.
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The Court then found that the County's conclusion that race-neutral solutions were ineffective was ''entitled to little or no weight.'' The Court specifically faulted the County for failing to reduce barriers in its procurement process for smaller firms and for not taking ''any action whatsoever to ferret out and respond to instances of discrimination if and when they have occurred in the Counties own contracting process.'' (at 77)
Thus, the race neutral programs a government should try before implementing a race conscious program are of two types: (1) to reduce the unnecessary barriers firms (small and minority) face in its procurement process (see also Coral Construction v. King County, 941 F. 2d at 923); and (2) to create effective legal sanctions against discrimination connected to its procurement process and to vigorously enforce them. (see also Engineering Contractors Association of South Florida v. Metropolitan Dade County, 943 F. Supp at 158083).
Both such efforts should be fairly evaluated before there is consideration of race conscious remedies. While the federal government does reconsider its procurement process from time to time, and it does have laws making discrimination illegal, it has not evaluated their effectiveness in connection with the strict scrutiny test Adarand and Croson require. For example, the Appendix states in urging Congressional deference:
The relevant congressional findings encompass a broad range of problems confronting minority-owned business. They include ''deficiencies in working capital, inability to meet bonding requirements, disabilities caused by an inadequate 'track record,' lack of awareness of bidding opportunities, unfamiliarity with bidding procedures, pre-selection before the formal advertising process, and the exercise of discretion by government procurement officers.'' (at 26052)
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The reference for this statement is the Fullilove opinion decided in 1980. Surely some of these conclusions need to be re-examined after 17 years.
The examples the Appendix cited contain three types of issues. Problems related to the lack of competitiveness of minority firms, barriers in the procurement system, and possible discrimination in contract administration. The Appendix does not discuss whether all these problems still exist or how this administration has attempted to respond to them.
Problems of working capital, bonding, track record, and understanding the complexities of the procurement process affect many small, new firms. Whether these are currently distinctive problems for minority firms has not been subject to serious evaluation. If there are current examples of preselection or other types of discretion exercised by federal procurement officers that exhibit bias against minority firms, they have not been identified. If such exist, the first responsibility of the Administration would be to correct them and, if they were purposeful, to sanction those involved. While no examples of anti-minority firm discrimination by federal officials have been identified, there are thousands of federal contracts that have been set-aside for minority firms, or which have given preference to those firms.
Rather than discussing any discriminatory actions in the federal procurement process for which the Administration would be responsible, the Appendix focuses on discriminatory behavior by labor unions, employers, and by lenders. What is not made clear is what the Administration thinks is the relevance of this information, much of which dates back to the Sixties and Seventies. No local procurement preference program has been upheld because of evidence about employment, bonding or lending discrimination, though such arguments have frequently been advanced. It is difficult to see why a preference in a federal procurement program is a narrowly-tailored remedy or an effective sanction, if a union, employer, or a bank somewhere in America is discriminating. The perpetrator is not affected; only the nonminority firms who wish to bid on the federal contracts will be injured. There is no specific link between the minority firms preferred and the firms affected by the particular union, employer or banking discrimination. In federal programs, preferred minority firms do not have to show they have been discriminated against. The presumption of social disadvantage includes them all.
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In conclusion, it is clear that the generalized and often dated assertions in Appendix would not be sufficient for a state and local government to withstand a challenge on equal protection grounds. The Justice Department's position is apparently that Congress need not be very specific when it makes a finding of compelling interest.
But Congress' authority under section 5 of the Fourteenth Amendment is to implement equal protection not to undermine it. Therefore, to require states or prime contractors on federally-subsidized contracts to commit racial discrimination must be subject to the strictest scrutiny to be certain those actions are necessary remedies and not the result of partisan or interest group politics or obsolete data or misidentification of the problem. Consequently the legal standards requiring statistical evidence identifying the underutilization of qualified, willing and able MBE firms that are group and industry specific must be applied to federal programs. Furthermore, there must be a genuine evaluation of the use of race-neutral alternatives, lest the misuse of race-conscious means so evident in our nations's past occur again. Finally, race conscious measures must be, out of fundamental fairness as well as law, be narrowly tailored to impact only those industries, groups, and geographical regions where ''patterns of deliberate exclusion'' have been documented an the ''extreme case'' of a race conscious remedy is necessary. Croson, 488 U.S. at 509.
III. THE URBAN INSTITUTE REPORT
Failing to produce its own federal disparity study, the Justice Department apparently decided to fund a report which examines a compilation of state and local disparity studies.(see footnote 45) Such studies provide no information on the federal procurement process, which firms are ''qualified,'' ''willing and able to perform particular services'' in federal contracts, or what their utilization has been. The report was completed by the Urban Institute and released in October 1996 with considerable publicity. According to the report's authors, ''The purpose of the study was to provide information bearing on the need for programs that assist minority-owned firmsincluding affirmative action in procurement.'' (report, p. i)
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Titled ''Do Minority-Owned Businesses Get a Fair Share of Government Contracts?'' (hereafter report) the Institute report(see footnote 46) answered its own question with a resounding ''no,'' but its data and analysis fall far short of the standards the courts are requiring to establish a governmental compelling interest for the use of race, ethnic or gender conscious remedies.
A. Disparity Studies
The report's data source is a compilation of the results of 58 disparity studies commissioned after the Supreme Court decided City of Richmond v. Croson in 1989. In that decision, the Court said:
Where there is a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by the locality or the locality's prime contractors, an inference of discriminatory exclusion could arise. (Croson, 488 U.S. at 509)
About 130 such disparity studies have been completed by state and local governments at a cost of over $55,000,000. These studies range widely in the political contexts in which they were instigated and received, the accuracy and comprehensiveness of the data on which they are based, and the quality of the analysis in the study.(see footnote 47)
The Institute report's bibliography cites none of these works, nor any of the many of law review articles which have commented on Croson's legal standards.
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The Institute report, however, takes all studies in its sample at face value and finds that there were:
substantial disparities between the share of contract dollars received by minority-owned firms and the share of all firms they represent. Based on their number, minority-owned firms received only 57 cents for every dollar they would be expected to receive. (italics in original) (study, p. i)
Such an overly simplistic conclusion is incorrect as a matter of social science and law in a number of respects.
1. The report concedes that MWBEs are smaller and newer firms than non-MWBEs (report, p. ii). Since no one would reasonably expect that small, new firms would receive as many dollars from government contracting as larger, well-established firms, the Institute's premise for comparison in terms of ''expected'' dollars is false. As the Eleventh Circuit recently declared:
Because they are bigger, bigger firms have a bigger chance to win bigger contracts. It follows that, all other factors being equal, and in a perfectly nondiscriminatory market, one would expect the bigger (on average) non-MWBE firms to get a disproportionately higher percentage of total construction dollars awarded than smaller MWBE firms. (Engineering Contractors Association of South Florida v. Metropolitan Dade County, September 2, 1997, 46)
2. In comparing minority firms to non-minority owned firms or ''majority-owned'' firms as the report sometimes describes the latter category, the report combines the receipts of firms actually owned by white men with large publicly-traded stock corporations which have no race or gender.
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3. The report is written in a legal vacuum. The authors apparently used no legal standards in evaluating the methodologies or conclusions in the disparity studies in their sample. None of the disparity studies on which the report relied has been upheld by the courts as a basis for race-conscious remedies, while several have been found to be specifically invalid, and many more have been based on techniques or data sources criticized by the courts.
4. In measuring the availability of firms, the report depends on headcounts of MWBEs in the disparity studies without considering the size or qualifications of these firms, or whether they have ever bid on public contracts. This is not consistent with the law. (See Section IV.)
5. The Institute report measures utilization only in terms of dollars received and never examines contracts awarded. Since there are more small contracts than large ones, smaller, newer MWBE firms are likely to win a higher proportion of contracts than dollars. Almost all disparity studies which have examined both dollars and contracts reflect the greater MWBE success rate in contract awards, but the Institute Report does not describe this reality. Courts analyzing disparity have been examining both contract and dollar awards to determine if a disparity really exists.
6. Read carefully, rather then demonstrating a single national pattern of disparities for MBE utilization, the report shows there are many different outcomes of underutilization, overutilization, and appropriate utilization in different industries, different regions of the country, and for different groups. The average utilization figure (57%) the report calculates, covering many different studies, different time frames, and different types of contracts is meaningless when there is no control for the qualifications, sizes or specializations of MBEs and non MBEs.
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7. The report provides no support for the specific race, ethnic or gender preferences proposed by US DOT in the area of highway and transit construction. No data is provided by the report on disparities in highway construction and such data rarely exists in disparity studies.
8. The report notes that MWBEs already receive 95% of their ''expected'' construction subcontracting dollars. If that number is accurate, it reflects an existing parity that does not support the imposition of subcontracting requirements in U.S. DOT or other federal contracting programs.
9. The report's authors concede that they cannot determine whether the disparities they found were caused by discrimination or other factors. (report, p.63)
The study authors seem to be aware that Croson and Adarand have changed the law regarding the use of race based governmental programs, but there is no discussion of the extent of that change or of the restrictions courts have placed on the kind of evidence that can be used to create a compelling basis for such programs. In one of its few legal comments, the report states, ''In the Croson case Justice O'Connor noted that ''gross statistical disparities'' constitute ''prima facie proof of a pattern or practice of discrimination'' in the employment context,'' (report, p. IX) In the next sentence, however, the Justice added:
But it is equally clear that [w]hen special qualifications are necessary to fill particular jobs, comparisons to the general population [rather than to a smaller group of individuals who possess the necessary qualifications) may have little probative value.'' (Croson 488 U.S. 469, 501, quoting Hazlewood School District v. United States, 433 U.S. 299, 307308.)
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Later, in her opinion, she criticized Richmond for not knowing ''. . . how many MBEs in the relevant market are qualified to undertake prime or subcontracting work in public construction projects.'' (Croson, 488 U.S. at 502)
A number of the disparity studies on which the Urban Institute report relies have been found invalid as a predicate for local race conscious remedies and have been heavily criticized as social science by the courts that have reviewed them. Many other disparity studies are currently the focus of litigation.
For example, three months before the report was issued, a federal district court in Columbus, Ohio overturned a proposed MWBE ordinance. The Court found that the disparity study by the BBC consulting company and its partner, the Minority Business Enterprise Legal Defense and Educational Fund, Inc., was not only flawed conceptually, but was an example of research aimed at proving a particular result the City desired in commissioning the study. (AGC v. Columbus, 936 F.Supp. 1363, 1431 S.D., Ohio 1996). Nevertheless, the Institute included Columbus BBC study, as well as 14 other studies completed by BBC, with essentially the same methodology in its sample.
In its Columbus decision, the Court chose to make these comments about what it called the ''predicate study industry'':
IX. THE PREDICATE STUDY INDUSTRY
Plaintiffs' expert witness, George R. La Noue, Ph.D. is a Professor of Political Science and the Director of the Policy Sciences Graduate Program at the University of Maryland. With one hundred and thirty doctoral students, this is the nation's largest Ph.D. program in public policy administrationa discipline which analyzes the kinds of assumptions and data which are used to form and implement public policies. Dr. La Noue is also the director of a project on civil rights and public contracts which contains one of the largest collections of disparity studies, legal opinions and research articles on minority business enterprise programs in the country.
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Dr. La Noue testified that in the aftermath of Croson, a disparity study industry has developed which as of May of 1995 had produced between $40 and $45 million dollars worth of studies with more being commissioned every month. According to La Noue, this industry is dominated by consulting firms which specialize in disparity studies. There is very little participation by the kinds of organizations usually involved in independent research on major public policy issues, such as universities, large independent research organizations, or the Big Eight accounting firms.
According to La Noue, the branch of the consulting industry involved in disparity studies is characterized by results-driven research where the client makes it clear that it has a particular outcome in mind. La Noue believes this is true because local governments that are willing to spend large amounts of money on disparity studies usually do so because they are interested in having race- and gender-conscious programs. Race- and gender-neutral programs do not require such studies. Thus, he opines, that in order to survive the industry, a consulting firm needs to frequently find a basis to support race- and gender-conscious programs.
La Noue gave two specific examples where studies which did not support race-based remedies were rejected. The first example involved a city of Miami Study which found no underutilization of blacks and Hispanics but underutilization of women. According to La Noue, the mayor of Miami stated publicly that this is not what the city expected to find, and after receiving much criticism, the consultant Peat, Marwick announced that it would not do any more disparity studies. His second example was a Los Angeles study which found that blacks were not underutilized but that Hispanics were. Reportedly, the Los Angeles city council rejected the Study. La Noue believes it did so because ''it was a politically impossible result.''
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Dr. La Noue testified that studies produced by the disparity study industry often follow certain common patterns. He says they frequently calculate availability on the basis of the total number of M/FBE firms in a given industry without consideration of differences in qualifications or willingness and ability to provide particular services. Where bidding is involved, they often omit information about the bidding process and ignore data which shows firms actually submitted bids. Studies produced by these firms often focus on selective time periods, presenting data from a time frame that is most advantageous to the conclusions of the study, while ignoring larger patterns. Another characteristic of these studies is that they avoid making findings of discrimination against any specific person, agency, contractor, supplier, bonding company or bank, with the consequences that no one is in a position to rebut the findings. Finally, La Noue says that these studies usually either ignore or fail to adequately evaluate race- and gender-neutral remedies.
The disparity studies in this case and the facts and circumstances surrounding them tend to confirm Dr. La Noue's opinions about the disparity study industry. BBC's failure to determine the number of qualified M/FBE prime contractors, its failure to study the award of prime contracts based upon the city's bidding records, its decision to combine prime and subcontracts in its disparity analysis and its use of availability data which it initially considered unreliable, to support a finding of underutilization of M/FBEs, are all examples of results-driven research. Furthermore, the city's choice of Beatty and MBELDEF as its outside consultants exemplifies a local government's willingness to employ advocates of race- and gender-based preferences to conduct disparity studies. (936 F.Supp. at 143031)
A month before the Institute report was released, a federal court in Miami struck down a Dade County MWBE program and criticized the disparity study produced by MRD Consulting which is included in the Institute sample. The Court said:
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Plaintiff's have produced both evidence of race-neutral explanations for the disparities reflected in defendants' statistical analyses and evidence of flaws in the data and methodology that underlie defendant's statistics and make the numerical disparities neither significant nor actionable. (Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 943 F.Supp. 1546, 1584 (S.D. Fla. 1996), affirmed by the Eleventh Circuit on September 2, 1997.
Other disparity studies included in the Institute sample which are currently under litigation include the BBC and NERA studies for Denver (Concrete Works v. City and County of Denver), the Blue Ribbon Panel study for the City of Chicago (Chicago Builders Association v. Chicago), the NERA and AD Jackson studies for the State of Maryland (Klein v. Glendenning), the NERA New York City study (North Shore v. New York City), the TEM study for the state of Florida (Phillips & Jordan v. Watts), and the DJ Miller study for the Memphis/Shelby County consortium. (AGC v. Shelby County)
A number of other disparity studies have been redone because the jurisdictions have lost confidence in the validity of their earlier studies. Still other jurisdictions have never implemented race conscious goals because of doubts about the validity of their disparity study findings.
On the other hand, none of the studies in the Institute sample have ever been upheld by a court. In short, disparity studies are not necessarily a reliable data base for statistical conclusions about MBE ''fair shares'' of state and local public procurement.
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B. Availability Calculations
The report authors did ask the question ''How Does the Quality of Disparity Studies Affect Our Results?'' because ''press accounts and court opinions'' have questioned the quality of individual disparity studies.'' (report, p. vii-viii) The authors expressed confidence that quality was not a problem, however, because they considered only the quantitative results of the studies and because they focused on the same outcome variables the percentage of government contract dollars received by MBEs in each study.
Finally the report concluded that:
. . . the methods used by the disparity study authors in their quantitative analysis are remarkably consistent. Although there are differences across the studies in the sources of data used and in the definition of available firms, each study reports on the same outcome (i.e. the percentage of government contract dollars awarded to minority owned firms compared to the percentage of all available firms that are minority-owned) (report, p. vii)
Obviously, if there are differences in the availability portion of the equation, then the methods are not consistent. The fact is that while there is substantial similarity among various studies done by the same consultants, there are great methodological differences among the studies completed by different firms.
About five firms [Browne, Bortz and Coddington (BBC), D J Miller, Mason Tillman Associates (MTA), MGT of America, and National Economic Research Associates (NERA)] have completed 60% of all the disparity studies in the country and there is no agreement among them about the appropriate methodology to be used. Each occupies a different market niche and they are fierce critics of each other's methodologies.
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A major issue is the definition of availability. As Rodney Strong, Esq., author of the recent Atlanta School Board disparity study has said:
The determination of the availability of businesses for public contracting is crucial to a good disparity study. If availability is miscalculated then all inference statistics, including disparity indexes, will be in error.(see footnote 48)
The study also acknowledged that, ''One of the most common themes of the recent court decision is that ''available'' firms must have the ''qualifications'' to perform work for a local jurisdiction.''(see footnote 49)
In its response to New York City's request for a proposal for a disparity study, NERA stated:
Availability analysis is the Achilles heel of Croson disparity studies for several reasons. The availability estimate is critical for determining whether there are disparities. Yet the measure of availability suggested by the Croson majoritythe percent of available and qualified firms that are minority-owned tends to be lower because discrimination has impeded the development of minority businesses. It is uncertain whether the Court would insist on this measure of availability. Further complicating the measurement of availability is the fact that reliable data on the number and qualifications of minority firms are sorely lacking. A number of the Croson disparity studies that have been done thus far use availability estimates that are inappropriate and which we do not believe would survive a legal challenge. A defective availability analysis can make a Croson disparity study worthless. (emphasis added) (NERA proposal at 3)
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Nevertheless, no consensus has emerged among disparity study authors about measuring availability. Two of the consulting firms, MGT and NERA, almost always use census data to calculate availability. MTA, on the other hand, specifically rejects the use of census data and prefers to rely on lists and surveys. BBC uses census data as well as lists, and surveys. D.J. Miller purports to consider seventeen different sources of availability including general population, but in the end generally uses local lists of certified MWBEs (minority- and women-owned business enterprises) and compares that number to the numbers of non-MWBE firms that have bid on prime contracts or won subcontracts.
The only concept these firms agree on is that availability is merely a matter of counting heads. Each firm that is considered available is treated as equally available,(see footnote 50) rather than viewing availability as a relative concept in which some firms are more qualified, willing, and able than others, depending on specifications of various contracts.
Since MWBE firms are generally smaller, newer firms with fewer qualifications, and tend to be focused in subcontracting specialties, this head count approach overstates their relative availability, particularly for prime contracting. Statistical disparities, like the ones the Institute found, therefore, will almost always appear, if a headcount comparison is used. Croson's statistical test, in contrast, by requiring the measurement of the qualifications, willingness, and ability of firms, anticipates that problem. By setting out the parameters of comparison in order to control for differences in utilization caused by differences in the characteristics of firms, rather than by discrimination in the contracting selection process, false conclusions about the causes of a disparity can be avoided. To defend their market niches, the consulting firms often engage in sharp criticism of the techniques used by their competitors. For example, NERA, which uses census data, said about the use of lists as means of measuring availability:
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Some have suggested using directories of minority and woman-owned businesses, lists of bidders with government agencies, and other business directories to calculate availability. There are problems, however, with relying on such lists. These lists are difficult and expensive to compile, they are invariably incomplete and the accuracy of other data in the lists is generally poor.(see footnote 51)
MGT, which also uses census data, has commented on lists for determining availability:
Reviews of existing lists, while appearing at first glance to provide a sound database, in reality do not. Not all firms place themselves on lists. Firms do not have to place their names on vendor lists in order to receive contracts or purchases. Firms change names. Firms go out of business, but their names remain on lists. The lists do not always indicate how long the firms have been in business. Many M/WBE firms do not seek certification, often due to time and expense involved. There is difficulty in determining if the compiled lists are complete, making the results vulnerable to attack. In summary, no way exists to develop a statistically reliable measure of the numbers and percentages of M/WBE firms in the relevant market areas over time from existing lists(see footnote 52)
Finally, Dr. Edward Davis, who has worked on DJ Miller studies, acknowledged:
Defining a measure of estimation for availability based on the vendor list has appeal in that MBE/FBE and non-minority, male-owned firms are treated the same. The major limitation with this approach is that there is not uniformity in the manner by which, vendor lists are developed. Sometimes, the lists represent firms that have done business over a period of time; other times, they represent firms that have requested a vendor number, often requiring only that the firm complete and submit a form to the agency. In either case, some agencies purge these lists with relative frequency, removing firms that have not been active for a period of time, usually 18 months to two years. Other agencies have not purged the lists in ten years or more. The timing of such purging has an obvious impact on availability estimates.(see footnote 53)
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Jurisdictions rarely have comprehensive lists of all purchasing-relevant businesses. The lists they maintain usually contain little detailed information about company characteristics. There is less need for construction firms to be on bidder or vendor lists, since they typically receive their information about contract opportunities from other sources.(see footnote 54) For affirmative action reasons, local jurisdictions often try to recruit as many MWBEs to be on vendor lists as possible, which means that as a measure of actual availability lists frequently are skewed toward overinclusion of MWBEs.(see footnote 55)
Conversely, the firms that use lists or surveys have freely criticized the use of census data to measure availability. BBC said:
Finally, it is impossible to determine from the Census data a clear sense of which firms are actually capable and willing to do business with the city of Phoenix. For example, the true availability of women-owned firms ready, willing and able to do business with the City is likely to be less than 28 percent of all firms. [28% was what raw census data showed].(see footnote 56)
D.J. Miller reported:
The first 16 estimates of availability rely upon Census data which must be used with some caution. Because a business meets one or two or three criteria of availability does not mean that business qualifies as available. For example, a business' mere location within the relevant market area does not automatically mean the business meets the greater standard of availability. That is it may be ready and able, but not willing to participate.(see footnote 57)
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MTA has made seven different criticisms of the accuracy and comprehensiveness of census counts of businesses and concluded:
Determining availability from outdated information can potentially deflate or exaggerate availability. As well as being outdated, discrepancies exist in census data as a result of several methodological and reliability inconsistencies. More importantly, a company's interest in contracting with an entity cannot be established from Census information. Thus the difficulties associated with the census preclude an accurate assessment of M/WBEs.(see footnote 58)
Census data measures the universe of all businesses. It cannot be used to determine the much smaller subset of firms which are ''qualified'' and ''willing and able'' to engage in public contracting for a particular jurisdiction. Furthermore, since the census surveys of minority- and women-owned businesses are conducted only every five years, and then not completely published for four years after that, census data will always be out of date.(see footnote 59) Moreover, it is now certain that the 1987 Census surveys of Minority and Women owned businesses overcounted those businesses with employees. As Dr. David Evans, who has directed many NERA studies based on 1987 census data, recently testified:
I have explored these issues in detail with representatives of the Census Bureau. Although census analysts have determined that the procedures they followed in preparing the 1987 minority [and women-owned business] census probably resulted in an overcount, they cannot at this time determine the precise magnitude. When asked if the overcount was more likely to closer to 5% or 50%, they indicated 5%. The Census bureau does not have the resources to conduct the necessary analysis to provide a more specific estimate.(see footnote 60)
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At least half of the 58 disparity studies in the Urban Institute sample rely in whole or in part on the 1987 census data containing the overcount of M/WBE firms. Obviously, any calculation that purports to consider how many procurement dollars these firms should expect to receive will be wrong if the available data are wrong. These errors are compounded in studies that have attempted to project growth rates of MWBEs from 1987 to the time of the study.(see footnote 61)
Finally, and most importantly, all of these sources yield only headcounts of firms, which cannot properly measure the relative qualifications, willingness and ability of businesses to participate in public contracting.
Given the potentially fatal defects in all of the usual modes of measuring availability, many disparity studies simply overlook or misstate the qualified, willing and able requirement.(see footnote 62) Nevertheless, the courts in reviewing disparity studies in a wide variety of fields have insisted on controlling for these relevant variables before reaching a finding that a disparity was caused by discrimination. This reality can be seen by reviewing the decisions in Section IV, but it is also worth examining two recent decisions which invalidated disparity studies that were included in the Institute sample. These decisions also suggest how availability should be measured in the award of prime construction contracts.
C. The Columbus Decision
Page 201 PREV PAGE TOP OF DOC Many of the issues regarding the appropriate measure of availability have been addressed in detail by an August 26, 1996, federal court decision in AGC v. City of Columbus, where the Court ruled that a proposed program providing various benefits to black- and female-owned construction contractors was unconstitutional.(see footnote 63)
The Columbus disparity studies were substantial and complex documents. They were prepared at different times by a local consultant, State Senator Otto Beatty, and the national team of BBC and MBELDEF. There were seven studies in the Columbus case, produced over a five year period at a cost of about $700,000.(see footnote 64) Consequently, almost all of the various techniques for measuring disparities were at issue in the case, and federal Judge James Graham's 183 page opinion with a 54 page appendix is by far the most thorough judicial evaluation of the different methods for ascertaining availability.
The BBC/MBELDEF studies used 1987 census data in two different versions as a measure of availability, but considered a bidders' registration file (BRF) list and the results of a telephone survey as well. These different sources yielded substantially different availability estimates. Census data confined to the construction industry showed a 3% availability for MBEs, while examining various construction-related activities showed 4.7% MBEs. FBEs were about 5% in both census calculations. The BRF list included 23.7% MBEs and 10.9% FBEs in construction, while the survey produced 3.5% MBEs and 11.3% FBEs.
The Court was concerned about the differences in these availability estimates and stated: ''The four methods of calculating availability are inconsistent and contradictory, they cannot all be correct or equally reliable''(see footnote 65)
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The Court next addressed each separate availability source. Census data, the Court found, even if the comparisons were apples to apples, was inadequate because, ''It is apparent, however, that not all of the construction firms in the Columbus MSA are qualified, willing and able to bid on city construction contracts.''(see footnote 66)
There is no basis for the assumption that all construction firms in business are capable of performing construction services for the city. . . . City ordinances require bid bonds and performance bonds on all contracts for public improvements. Clearly not every firm ''in business'' can meet the financial requirements to obtain such bonds. Id. The Court later said ''. . . census data probably overstates the proportions of available M/FBEs . . .'' Id. at 1391.
The Court also rejected the bidders list because it had:
several limitations which renders it essentially useless for determining the total number of construction firms which are qualified to provide construction services to the city and the proportion thereof which are M/FBEs.(see footnote 67)
Among the list's defects was the fact that it included firms far beyond the Columbus MSA. The list was not normally used to solicit construction bids and the heavy representation of MFBEs on it was in part the result of active recruitment of M/FBEs by the bureaucracy and the magnet effect that the previous set-aside had created.(see footnote 68)
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Nor did the Court find that the telephone survey was a sufficient basis for determining availability. The survey asked only whether firms would be interested in future city work. It did not ask whether they had, in fact, ever performed work for the city, or bid, or could comply with bonding and insurance requirements, the Court concluded that the survey was ''. . . of no value in determining whether the respondent is qualified to bid on prime contracts.''(see footnote 69)
After considering at length census data, the BRF list and the telephone survey, the Court concluded:
None of these measures of availability purported to measure the number of M/FBEs who were qualified and willing to bid as prime contractors on city construction projects. In order to be selected as a successful bidder on a prime contract, a firm must be deemed responsible and it must be capable of providing a bid bond and a performance bond. The anecdotal evidence collected by the city clearly showed that only a fraction of all construction firms are capable of meeting these requirements. Generally, only large firms with substantial net worth and a significant history of success in the construction business are able to qualify for bonding. BBC never attempted to determine how many firms in the Columbus MSA have such qualifications or how many M/FBE firms in the Columbus MSA are so qualified. There is no basis in the evidence for an inference that qualified M/FBE firms exist in the same proportions as they do in relation to all construction firms in the market. To the contrary, as BBC acknowledged ''M/FBEs tend to be smaller and perhaps less likely to have the capabilities to provide goods, services and construction for the City.''(see footnote 70)
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The Court then stated its view of the proper measure of availability:
The city maintains records of all firms which have submitted bids on prime contracts. This would be a ready source of information regarding the identity of the firms which are qualified to provide contracting services as prime contractors. BBC does not explain why it did not use this data. On prime contracts only the firms which submit bids are ''available.''(see footnote 71)
The Court finally rejected the concept of creating disparity ratios based on headcounts of firms and expected dollars outcomes. Judge Graham stated:
The use of statistical methods to investigate possible discrimination in the award of construction contracts on the basis of the amount of dollars awarded is also inappropriate in the instant case because there are relatively few contracts and relatively few firms seeking those contracts, and the amounts of the contracts vary greatly. There is no basis for the assumption that the award of contracts on a nondiscriminatory basis will result in parity in the distribution of dollars.(see footnote 72)
None of the disparity studies in the Institute's sample are consistent with this judicial opinion.
D. The Dade County Decisions
The most recent full evaluation of disparity studies and concepts of availability by a federal court occurred in Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 943 F.Supp. 1546 (S.D. Fla. 1996) decided September 17, 1966. The district court decision was unanimously affirmed by the Eleventh Circuit on September, 2,1997. Like Columbus, Dade County presented as defense of its MWBE program multiple studies, conducted over a period of years. The County's most recent program set construction goals at 15% for black-owned firms, 19% for Hispanic-owned firms and 11% for women-owned firms. The program was slated to last until MWBEs received the same proportion of County expenditures as the their proportion.of firms in particular market segments. To achieve this, the County authorized set-asides, sub-contractor goals, and bid preferences for M/WBEs. Federal District Court Judge Kenneth Ryskamp, however, found the disparity studies insufficient and permanently enjoined the County:
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from enforcing the race, ethnicity, and gender-conscious measures, as they pertain to construction projects only, contained in the aforementioned Ordinances.(see footnote 73)
The first Dade County disparity study, completed in 1991 by Dr. Andrew Brimmer, was a six-volume, 850 page study that cost $300,000. The statistical core of the study consisted of using 1982 census data to compare the proportion of black-owned construction firms in three SIC codes with the proportion of overall revenues they received to create disparity ratios. After a three day trial focused on that study, however, the County elected to settle with the plaintiff contractors and paid them $490,000.(see footnote 74)
The County then decided to expand its program to include Hispanic- and women-owned businesses as well as black-owned firms and commissioned Dr. Manuel Caravajal, an economist at Florida International University, to conduct another disparity study.
In his first attempt, Dr. Carvajal completed a regression analysis, but when that effort was criticized, he conducted additional regressions in anticipation of trial.
In his opinion, Judge Ryskamp made few comments on the Brimmer study(see footnote 75) or the earlier Caravajal work, but focused on the research prepared for trial which was termed the defendants ''most compelling data'' and which was the focus of Caravajal's trial testimony.(see footnote 76) This work concentrated on firms that bid on County prime construction contracts classified by two-digit SIC codes and by size of contracts and included 130 tables covering more than 920 pages.
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The census data used in both studies simply represent individuals or firms located in Dade County which list themselves as being in the business of construction. The census data do not identify whether these entities have ever done work specifically for the County, or to what degree their reported sales or income stems from private sources versus public sources, much less whether the earnings are primarily a result of work done for Dade County versus Broward County, Palm Beach County, or some other Florida locale, or even sites outside Florida. This lack of specificity makes it difficult, if not impossible, to draw accurate conclusions concerning whether Dade County is itself a participant in gender, racial, or ethnic discrimination to the extent that justifies its use of face, ethnicity, and gender-conscious remedial programs. Engineering Contractors Association, 943 F.Supp. at 157374.
In its evaluation of this work, the Court accepted the need to examine the data by two-digit SIC codes, which contains a separate code for heavy and highway construction because:
. . . these data are more likely to reflect the realities of competition in the construction industry. Firms that build hospitals (SIC 15) do not compete for County contracts with firms that lay asphalt (SIC 16) or firms that install plumbing (SIC 17), therefore comparisons between these disparate entities would not produce a reliable portrait of County contracting trends.(see footnote 77)
Plowing through this data in exhaustive detail, the Court found that, despite some variations, MWBEs received about as many contract awards as their percentage of bids, although many fewer dollars. Judge Ryskamp noted that:
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Essentially, defendants are asserting that, despite the fact that BBEs are getting their fair share of County construction contracts, the County award process is biased in a way that results in BBEs getting a disproportionate share of lower dollar contracts.(see footnote 78)
The Court found, however, that the record at a number of places showed that MWBE were smaller and newer firms. This conclusion was buttressed by an analysis done by the defendants in which contracts were stratified in to three categories: those under $500,000, between $500,000 and $2,999,999, and over $3,000,000. Not surprisingly, most MWBEs bid on smaller contracts. For example, only one BBE compared to 86 non-MWBEs bid on contracts over $3,000,000. Consequently the Court stated:
It is important to note that the average capital construction contract let by Dade County is worth approximately $3 million. In order to bid and win a large contract, it is reasonable to assume that a firm must be sufficiently large and established to achieve the financing, bonding and insurance requisites necessary to put forth a successful bid. Given this, it is likewise reasonable to conclude that larger firms may, on average, have higher dollar contract awards. Concomitantly, smaller firms would be expected to have smaller average dollar awards. If, as the evidence indicates, MWBEs tend to be, on average, smaller, and non-MVMEs tend to be larger, this could account for disparities in the average size of the County contract awarded.(see footnote 79)
Aware of this problem, the defendants tried to use regression analysis to prove that even when controlling for size MWBEs received fewer dollars, but the Court found the data inadequate to test the hypothesis and the results inconclusive.
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Concluding that the County's prime contracting analysis did not create a strong basis in evidence for an MWBE program, the Court turned to the analysis of subcontracting. The County, however, had not collected or at least did not release any data on the utilization of MWBE subcontractors on its prime contracts. The Court noted that Croson had criticized Richmond's failure to have subcontractor data.(see footnote 80) Faced with this reality, the disparity-study authors then attempted to compare the average total receipts of MWBE and non-MWBE firms which had filed subcontractors' release of lien forms. But this pool of firms was not a valid source of subcontractor availability, because many firms worked as subcontractors on some jobs and prime contractors on others. Furthermore, their revenues could come from any geographical sourcenot just Dade County, any government or any private clients, so these revenue figures were not relevant to measuring potential discrimination on Dade County subcontracts.
In summary, the Court found none of the statistical analysis persuasive because it did not control for the necessary variables. Judge Ryskamp declared:
Every expert economist who testified in this case stated unequivocally that the existence of numerical disparities do not lead to the conclusion that discrimination exists. This is because simple disparity indices do not account for the myriad factors that can legitimately result in disparities, such as the availability of MWBEs that are actually qualified to perform the contract requirements, the size of a firm, which will impact the dollar value of contracts which can be successfully bid for, the capacity of a firm to handle multiple County contracts at the same time, etc. Only when these and other factors which affect the qualifications, ability, and willingness of a firm to compete for County construction work are taken into account through using appropriate data and performing regression analyses can the County accurately determine whether there are actual disparities in the number of willing able and qualified MWBEs and the amount of work they are performing in the local construction industry.(see footnote 81)
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Croson requires, the Judge concluded, that any disparity study should ''filter out'' of any statistical analysis such factors as a deficiency in working capital, inability to meet bonding requirements, unfamiliarity with bidding procedures and disparity caused by inadequate track records because, ''These problems face any new entrant into the construction industry.''(see footnote 82)
E. The Urban Institute Report's Conclusion
None of the studies in the Institute's sample are consistent with the judicial requirements stated above, or with the law as outlined in Section IV or V of these comments.
Without referring to any judicial decisions, the Institute report's conclusion does recognize some of the problems the courts have identified. The overwhelming practice in construction contracting is that awards are made on the basis of sealed competitive bids to the qualified low bidder. As the Columbus Court recognized, for these contracts, only firms that actually submit bids are actually available for selection.
Nevertheless, examination of bidding data almost never occurs in the disparity studies the Urban Institute relied on. Yet as the report acknowledges:
The bidding process warrants special consideration. Governments at all levels could easily and systematically collect data on the number of minority and nonminority bid solicitations, the number and type of unsolicited bids received etc., making it possible to analyze the differences between winning and losing bids. Examining of these data could prove very helpful in understanding why minority firms are losing out in the bidding process. (report, p. 66)
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Moreover the report concludes that:
Finally, the measurement of disparities needs to be improved so that we can better distinguish between disparities due to discrimination and due to differences in the qualifications of minority- and majority-owned firms. We need to identify what characteristics identify firms that are qualified to do government work, including the role of firm size and experience. (report, p.66)
Distinguishing between disparities caused by discrimination and those caused by differences in firm qualifications or size or specializations is exactly the step the disparity studies on which the Institute report relied have failed to take. Perhaps as a consequence, the Institute report concedes, ''The wide disparities presented here [in the report] do not necessarily translate into proof of discrimination on the part of state and local governments.'' (report, p.63)(see footnote 83) If that is true, then the report's finding that MWBEs received 95% of their ''expected'' subcontractor dollars do not support a finding that there was discrimination in the award of subcontracts by prime contractors either.
If the report's aggregate data does not support a finding of discrimination, a close reading of the tables in the report show there is no reason to believe there is a national pattern of disparities on which federal preferential procurement programs should be based. For example, Table 11.2 shows the median outcome of disparities for each MBE group in three categories (studies which show disparities under 000.8, 0.81.2 and over 1.2). A disparity of 1.0 represents perfect parity, but following EEOC and judicial standards, a disparity must be less than .8 before it will be considered probative of an inference of discrimination.(see footnote 84) Table II.2 shows that for construction, the disparity for African-Americans owned firms was over 0.8 in 36% and over 1.2 in 22% of the studies reviewed. For Latinos, the comparable figures were 40% over 0.8 and 22% over 1.2; for Asians, 37% over 0.8 and 27% over 1.2; and for Native Americans, 45% over 0.8 and 32% over 1.2. There are also different patterns geographically. All MBE groups were over 0.8 or were overutilized as an average in the Midwest disparity studies. (Table II.3)
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Another apparent anomaly (Table II.5) is that when the report compared studies counting all firms as available with studies that purportedly counted only firms that were ready, willing and able, (RWA) it found that the median utilization was .99 or no disparity for studies that counted all firms as available and .56 for studies that used RWA. The report did not really understand why that result occurred, but the result is a reflection of the way disparity studies misdefine RWA. In the first place, the Croson standard is not ''ready,'' meaning being in business, but ''qualified,'' meaning possessing particular characteristics required by the jurisdiction, such as bonding, licenses or by specific contracts, such as skilled personnel, experience or equipment. (See Section IV of this comment) No disparity study on which the Urban Institute report relies has controlled for the differences of qualifications of MBE and non MBE firms or for differences in their abilities or capacities either. When the studies used RWA, it was most often to base availability on an apples to oranges comparison unfair to non MBEs. For example, sometimes studies based availability on vendor lists in which MBEs, but not non MBEs, were solicited to join. Or, in the case of DJ Miller studies, availability was based for MBEs on whether they were on a certified list, but availability for non MBEs was based on whether they actually won a contact or bid.
Nevertheless, the report recommends against ''Repealing affirmative action policies'' because that would ''limit the policy tools available to government aimed at rectifying disparities.'' (report, p.64)
The authors do not seem to realize that under Adarand and Croson, the government may not use race-conscious policies except as ''extreme measures'' to remedy identified discrimination. Simply rectifying disparities which may or may not have been caused by discrimination is not a permissible reason for using racial preferences.
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If the report does not make a finding of discrimination in the award of prime contracts by state and local governments, it does find there are barriers to the participation of MBEs in their access to these contracts. The report lists these barriers:
1. Failure of government to break contracts down into smaller projects so that minority firms, which tend to be smaller, can compete;
2. Extensive granting of waivers for minority subcontracting requirements to majority contractors;
3. Ineffective screening for false minority fronts;
4. Limited notice of contract competition;
5. Bid shopping on the part of majority prime contractors, who disclose minority firms' subcontracting bids to their majority competitors so they can be underbid. (report, p. iii).
It is worth discussing each of these barriers, though, as the authors concede, ''Our understanding of barriers to business formation is based mostly on research focusing on African Americans.'' (report, p.36) The business formation experiences of Hispanics and Asians Americans are in fact quite different.
(1) Governments are not required to break down large contracts into small projects so that MBEs can compete. Sometimes that may be a good policy; sometimes that may lead to inefficiencies and additional, costs to the taxpayers on projects.
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(2) The problem of granting of extensive waivers from MBE subcontracting requirements is surely not an example of discrimination against MBEs. Some of those requirements were illegal, as courts have found in Philadelphia, Columbus, Dade County, Atlanta, San Diego, the District of Columbia and the State of California. Even if the basic goal requirement was valid, it is widely recognized that a feature of constitutionally-required narrow tailoring is that waivers be granted where there is limited MBE availability.
(3) The problem of ineffective screening for false majority fronts can sometimes be caused by an overworked bureaucracy or an unclarity in when joint ventures or mentorships which are encouraged have crossed an appropriate line. In any event, without the institution of race-conscious programs in the first place, the problem of fronts would not exist. Fronts cannot be used as a compelling basis for creating preferential programs.
(4) Limited notice of contract competitions is rarely a problem in construction contracting, where not only is there public notice of contract possibilities in local newspapers or the forums, but such contracts are listed in private publications such as the Dodge Reports. Surely, if there is a problem in publicizing contracting opportunities, government can solve that problem though race neutral means.
(5) Finally, the authors list bid shopping as a barrier for MBEs. This practice in which prime contractors seek the lowest price from potential subcontractors affects all subs, regardless of race. Although it can sometimes be unethical, at other times it may legitimately result in lower prices for public construction. In any event, it is not a cause for race-conscious remedies. If as the report asserts, the bid shopping is done to undermine specifically MBE bids, that would create the basis for a jurisdiction to sanction those prime contractors engaging in that behavior. That such a practice exists, however, is based purely on unverified anecdotes from a few disparity studies. No court has ever concluded this form of bid shopping exists, let alone that it is a ''pattern of deliberate exclusion'' which is the basis for even a narrowly tailored race conscious remedy. (Croson, 488 U.S. at 509)
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All the report's information about ''barriers'' comes from the anecdotal sections of disparity studies, although the authors said their report was based only on the statistical data contained in the disparity studies ''because statistical results are less likely to be affected by the bias of the disparity studies' authors.'' (report, p. vii) The bias of authors, respondents, and methods in the anecdotal section has been of substantial concern to courts which have recently reviewed anecdotal evidence. (Prior Tire Company v. Atlanta Public Schools (No. 195CV825JEC, March 24,1997), Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 943 F. Supp. 1546 (S.D. Fla. 1996), Contractors Association of Eastern Pennsylvania v. Philadelphia, 893 F. Supp. 419 (E.D. Pa. 1995), affirmed 91 F.3d 586, (3rd Cir. 1996) cert. denied and AGC v. Columbus, 936 F. Supp. 1363 (S.D. Ohio 1996). This concern about the misuse of anecdotal evidence can best be summarized by the Court in the Dade County case:
Without corroboration, the Court cannot distinguish between allegations that in fact represent an objective assessment of the situation, and those that are fraught with heartfelt, but erroneous, interpretations of events and circumstances. The costs associated with the imposition of race, ethnicity, and gender preferences are simply too high to sustain a patently discriminatory program on such weak evidence. (943 F. Supp. at 1584)
Although the report refers to practices adverse to MBEs that ''are documented'' in disparity studies, in fact these studies contain only allegations of such practices. When questioned under oath, the authors of disparity studies concede they do not know whether the allegations are accurate. (For example, Andrew Brimmer in Capelletti v. Dade County, Franklin Lee in AGC v. Columbus, and David Evans in North Shore v. New York City). None of the disparity studies in the Institute sample have ever attempted to verify the anecdotes they report. The inappropriate nature of anecdotal work in disparity studies is described at great length in AGC v. Columbus. (936 F.Supp. at 14261428). The Court also suggested standards for such material, None of these studies in the Institute's sample have met those standards. No MBE program has ever been upheld on the basis of anecdotal evidence when that evidence was exposed to discovery and trial.
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To summarize,* the Urban Institute report's major conclusion that MBEs receive only 57% of expected dollars is based on studies that are flawed in the way the MBE availability data was gathered and analyzed. It is not a reliable source on which to base any policy conclusion. It certainly does not meet the strict scrutiny test the Supreme Court required for the predicates for race conscious programs in Croson and Adarand.
*For a discussion of the report's arguments regarding MBE business formation and revenues, see Section V. of these comments.
IV. EXISTING JUDICIAL PRINCIPLES ON NECESSARY FACTORS IN CALCULATING DISPARITIES
The need to consider differences in the characteristics of competing firms that might affect disparities in outcomes of the competition is a well-established legal precedent. In Croson, the Supreme Court required that the statistical analysis consider whether firms were ''qualified,'' ''willing and able to perform a particular service'' in determining whether a disparity was caused by discrimination or a legitimate selection factor. (488 U.S. at 509)
Although the national disparity study consultants consistently fail to measure the qualifications of the firms they consider available, many courts in different contexts have asserted the need to consider qualifications in determining availability in calculating disparities. Obviously, if a disparity is caused by a selection process fairly reflecting different qualifications, that outcome is not discrimination. This is a particularly critical consideration in public construction contracting, since jurisdictions usually require contractors to have generic qualifications such as bonding, licenses, and insurance, as well as specific qualifications for particular contracts, before a job can be awarded. Consequently it is useful to review what courts have said about the need to consider qualifications in different arenas.
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In Croson, Justice O'Connor summarized the relevant law by quoting Hazlewood School District v. United States,(see footnote 85) for the proposition that gross statistical qualifications can show a prima facie case of discrimination, but ''[w]hen special qualifications are necessary to fill particular jobs, comparisons to the general population [rather than to a smaller group of individuals who possess the necessary qualifications] may have little probative value.''(see footnote 86) Later she criticized Richmond for not knowing ''how many MBEs in the relevant market are qualified to undertake prime or subcontracting work in public construction projects.''(see footnote 87)
The legal principle regarding qualifications was first developed in public employment cases, where many positions require that applicants possess particular qualifications. In Hammon v. Barry (selection of firefighters), for example, the D.C. Circuit Court of Appeals said:
Under the case law, the critical comparative group is that of the qualified applicant pool which may or may not be the entire work force in the area. Thus, when the job qualifications involved are ones that relatively few possess, statistical presentations that fail to focus on those qualifications do not have significant statistical probative value. (emphasis in original)(see footnote 88)
In Long v. Saginaw (selection of police officers), the Sixth Circuit asserted the need to address the question of qualifications because the City's proposed statistical pool drawn from the census:
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failed to disclose the constant age, educational background, general physical fitness, and capabilities of its members and other material factors which would have afforded a basis from which meaningful statistical comparisons could have been fixed, thus disregarding the principles voiced by the Supreme Court in Hazlewood.(see footnote 89)
In another Sixth Circuit case, United Black Firefighters Assn. v. City of Akron, the Court, citing Croson, said that:
To evaluate adequately any statistical data, there must be  evidence of the basic qualifications of a fire lieutenant and  a determination, based on these qualifications, of the relevant statistical pool with which to make the appropriate comparisons.(see footnote 90)
A more recent Sixth Circuit opinion decided en banc, Aiken v. Memphis, (selection of firefighters and police officers) states that:
'Special qualifications,' then, winnow out a large enough portion of the general workforce to create a real possibility that the qualified workforce for the position will have a materially different racial composition than that of the general workforce.(see footnote 91)
In the post-Croson era, the emphasis on considering the actual qualifications needed in measuring disparities has spread to other areas. In Poberesky v. Kirwan,(see footnote 92) the Fourth Circuit struck down a program of race-based scholarships at the University of Maryland College Park. In evaluating whether the program was remedial, the Court confronted the issue of which qualifications should have been considered by the trial judge in determining whether there was disparity in the admission of African-American students to the University. The Court said:
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As to the underrepresentation, our decisions and those of the Supreme Court have made clear that the selection of the correct reference pool is critical. The district court must first determine as a matter of law whether it is appropriate to apply a pool consisting of the local population or whether another pool made up of people with special qualifications is appropriate. In the employment context, this determination is made by looking at the job requirements. If the job is an unskilled one, the general population is more likely the relevant pool. If, however, the job requires some special skills or training, the relevant pool is made up of only those people who meet the criteria. E.g., Johnson v. Transportation Agency, 480 U.S. 616, 63132, 107 S. Ct. 1442, 145152, 94 L. Ed.2d 615 (1987); Maryland Troopers Assn v. Evans, 993 F.2d 1072, 107677 (4th Cir. 1993).(see footnote 93)
In evaluating the qualifications for university admission, the Circuit went on:
The district court also should have determined as a matter of fact that part of the population which possessed the qualifications. . . . The fact that the numbers are not in the record is not a sufficient basis, however, for rejecting the pool. The pool must be determined based on the qualifications, not by determining which numbers exist in the record and then adoption of the corresponding qualifications which is one way of characterizing what occurred in the district court.(see footnote 94)
Another type of higher education issue dealing with the measurement of qualifications was also recently decided in the Fourth Circuit. After a disparity study conducted by Virginia Commonwealth University had found that female faculty were underpaid compared to male faculty, the university awarded salary pay raises to the women identified as undercompensated. Male faculty plaintiffs disputed the validity of the study because it omitted the variables of performance, productivity, merit, and administrative experience, though the University had conceded that salaries were based, in part, on those factors. After a district court upheld the salary plan, the Fourth Circuit reversed and remanded, holding that ''Bazemore(see footnote 95) and common sense require that any multiple regression analysis must include all the major factors as on which pay is determined.''(see footnote 96)
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In the area of public contracting, the Tenth Circuit in Concrete Works v. City and County of Denver, reiterated the need to consider qualifications so strongly that the opinion underlined the appropriate language:
Where special qualifications are necessary, the relevant statistical pool for purposes of demonstrating discriminatory exclusion must be the number of minorities qualified to undertake the particular task. (Emphasis in original)(see footnote 97)
B. Ability or Capacity
In addition, courts have been wary of attributing disparities in contract awards to discrimination when they may be caused by differences in the ability or size of construction firms. For example, in Michigan Road Builders v. Blanchard, the Sixth Circuit found that:
. . . the relative lack of MBEs doing business with the state was coupled with the objective reality that most MBEs were small businesses. Small businesses, as a result of their size, were unable to effectively compete for state contracts. Consequently, most MBEs, as a result of their size, were unable to effectively compete for state contracts. (emphasis in original)(see footnote 98)
The D.C. Circuit voiced a similar concern in O'Donnell v. District of Columbia, which held that the District of Columbia's MBE program was unconstitutional because its statistical basis was flawed. The Court noted a number of non-discriminatory reasons MBEs might not bid: (1) they were too small to take on large scale projects; (2) they were fully occupied on other projects; (3) District contracts may not have been as lucrative as other contracts available; or (4) they may not have the expertise needed to perform the contracts.(see footnote 99)
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In Concrete Works, the Tenth Circuit suggested a formula that might be used for adjusting headcount availability to account for the varying capacities of different size firms:
To use an example to illustrate this point, if MBEs represent 10 percent of the total number of firms in the market and receive 5 percent of the total city contract dollars, the disparity index would be .5, and it could be inferred from this that discrimination exists. However, if all the MBEs were small firms averaging only one-fourth the size of the average firm in the market, then the award of 5 percent of the total city contract dollars could be argued not to reflect underutilization of the capacity of MBEs in the market to do the work because they represent only 2 1/2% of the capacity. (Emphasis in original)(see footnote 100)
In the recent decision in Engineering Contractors Association of South Florida v. Metropolitan Dade County, the Eleventh Circuit emphasized the need to control for the differences in sizes of MBE and non MBE firms. The district court had pointed out that:
In order to bid and win a large contract, it is reasonable to assume that a firm must be sufficiently large and established to achieve the financing, bonding and insurance requisites necessary to put forth a successful bid. Given this, it is likewise reasonable to conclude that larger firms may, on average have higher dollar contract awards. Concomitantly, smaller firms would be expected to have smaller average dollar awards. If, as the evidence indicates, M/WBEs tend to be on average, smaller, and non-M/WBEs tend to be larger, this could account for the disparities in the average size of the County contracts awarded.
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The strength of this logic has not been lost on the defendants. Recognizing that the size and experience of a firm can impact both the likelihood of being awarded a contract and the dollar value of the contract awarded, defendants attempted to account for these factors by performing a regression analysis. (943 F. Supp. 1546, 1564 (S. D. Fla. 1996))
Indeed, whenever the defendants had run regression analysis to control for the size of firms, the disparities it had found earlier almost always disappeared or became statistically insignificant.
Consequently, the Circuit said:
Because they are bigger, bigger firms have a bigger chance to win bigger contracts. It follows that, all other factors being equal, and in a perfectly non-discriminatory market, one would expect the bigger (on average) non-MWBE firms to get a disproportionately higher percentage of total construction dollars awarded than smaller MWBE firms. The County's own expert admitted as much. (At 46)
Firm size is relevant to expected revenues. Census data shows a clear relationship between the number of employees and revenues in various industries. In construction, for example, in 1992 two-thirds of all the construction firms in the United States had no employees, but they generated less than 8% of all construction revenues. On the other hand, the top 2% of all construction firms measured by employee size (all firms with 20 or more employees) garnered more than half of all construction revenues.(see footnote 101) Consequently, it is highly unrealistic to test for discrimination by creating disparity ratios which assume that firms of vastly different sizes should produce equal revenues.(see footnote 102)
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C. Particular services
Courts have also been concerned that a disparity caused by differences in the types of specializations M/WBEs hold and the types of specializations jurisdictions are purchasing or employing might falsely be attributed to discrimination. Therefore, courts have not wanted to base conclusions on categories that were overinclusive. Thus, Croson calls for comparisons of firms that can ''perform a particular service.''
This is the reason a Texas federal district court in Bilbo Freight Lines v. Morales faulted a state commissioned disparity study which combined interstate, intrastate, and local trucking into a single category. The Court struck down legislation conferring preferential treatment to MFBEs applying for trucking licenses, declaring, ''A much more narrow study on the availability factor (i.e., those in the relevant market qualified and desiring intrastate authority) could have been conducted.''(see footnote 103)
The problem of overinclusiveness in determining disparities in MBE programs was also commented on by the Ninth Circuit in Associated General Contractors v. San Francisco which said:
findings that would justify classifications based on race, potentially impairing the constitutional rights of those who are disadvantaged by them must be drawn much more precisely and based on more carefully selected and finely tuned-data than those upon which the city relies here.(see footnote 104)
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Similarly, the Sixth Circuit criticized the use of a census category it regarded as overinclusive in an employment study by stating that an ''undifferentiated workforce statistic could not be used ''to support a prima facie case of employment discrimination.''(see footnote 105)
Dr. Andrew Brimmer, author of the Philadelphia disparity study, recognized the problem of overinclusion in his deposition in Contractors Association of Eastern Pennsylvania.
Q. What else could a statistical disparity reflect, if not discrimination because of the ownership of the firm?
A. Could reflect a number of differences. First, the difference could reflect a number of factors.
Q. What are they?
A. One might be the lack of contracting firms in that area.
Q. How would that create a statistical disparity?
A. Because if you look at a total number such as contracts, you notice in the statistics that's a global description, ''construction.'' Construction is broken down into a number of different segments: heavy construction, mechanical, and so on. And minority firms may not be present in those subcomponents of the industry. So as you look at a global figure, you would miss, counting all of those boxes would have zeroes in them. So the lackthe variation in the availability of minority-owned firms across industry segments would also help to explain some of that.(see footnote 106)
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The Texas state disparity study provides another indication of this phenomena. This study examined construction disparities in three different SIC codes: building 15, heavy and highway 16, and special trades 17. When the disparity ratio was made for the combined construction category, WBEs were underutilized. But when an analysis was made for each separate category, WBEs were overutilized in SIC 16, where by far the most money was spent.(see footnote 107)
In construction, MBEs are more likely to be concentrated in special trades which are most active in the private than in the public sector. In Texas in 1987, for example, MBEs were 64% of painters, wallpapers, and decorators (SIC Code 1721) and only 7% of the heavy and highway contractors (SIC 1611).(see footnote 108)
The issue of considering different types of construction was considered in Engineering Contractors Association of South Florida v. Metropolitan Dade County. When the County's disparity study reported statistics on construction as a whole, disparities existed which disappeared when the data was disaggregated SIC 15, SIC 16, and SIC 17. The Court decided that comparing the disaggregated data was the fairest approach because this data:
. . . are more likely to reflect the realities of competition in the construction industry. Firms that build hospitals (SIC 15) do not compete for County contracts with firms that lay asphalt (SIC 16) or firms that install plumbing (SIC 17), therefore comparisons between these disparate entities would not produce a reliable portrait of County contmcting trends.(see footnote 109)
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Further, the Court noted:
In addition, the aggregated data may not be accurate due to a phenomena known as ''Simpson's Paradox.'' This occurs when categories of disparate entities are grouped together for statistical purposes. When aggregated, the data may indicate that disparities exist, even though when disaggregated, the disparities disappear. The more heterogeneous the groups the less likely the disparity analysis will be reliable.(see footnote 110)
Drs. Richard Boyle and David Rhodes of the University of New Mexico have created a model based on national census data that illustrates the problem of overinclusiveness and Simpson's Paradox. It demonstrates how the concentration of MBEs in SIC Codes, where there is comparatively little public purchasing, exaggerates their availability when different specialties are combined in one availability total. This leads to a finding of disparities, even if perfect proportionality exists in purchases from each group in each SIC code.(see footnote 111)
In sum, the legal principles requiring consideration of qualifications, willingness, ability, and particularity of service in disparity analysis are well established in case law and supported by social science reality.
V. BUSINESS FORMATION AND REVENUES
It is common in disparity studies and other reports about the role of minority businesses to note that there are fewer MBEs than might be expected from the proportion of minorities in the population and that the revenues of MBEs are less than those of non-MBEs. It is then often asserted that the cause of these results is discrimination.
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Is it possible to make reliable estimations of the effects of discrimination on business formation and revenues of particular groups? I have discussed the difficulties in this idea in some detail in ''But for Discrimination: How Many Minority Businesses Would There be?'' with John C. Sullivan, Columbia Human Rights Law Review, Vol. 12, No. 1, Winter 19921993, at 93133. Our conclusion was that it was impossible to quantify what the effects of past discrimination might be on the business formation rates for various groups.
The initial assumption in the work on business formation is that but for discrimination, all persons with certain similar educational, familial, and financial characteristics would form businesses at the same rate regardless of their group identities. This is contrary to the assumption the Supreme Court adopted in Croson. This is not the assumption of many scholars who have looked at this issue. It is not consistent with the facts, even when one examines business formation rates among the same racial and ethnic groups.
In Croson, the Court restated its previous admonition from Sheet Metal Workers v. EEOC, 478 U.S. 421, 494 (1986) that the assumption ''minorities will choose a particular trade in lockstep proportion to their representation to the local population'' was ''completely unrealistic.'' (488 U.S. at 507) The Court also pointed out that, ''Blacks may disproportionately be attracted to other industries than construction.'' (488 U.S. at 503)
Sociologists and others who have examined the role of ethnicity in vocational selection from an international perspective have found that proportional representation among groups almost never occurs. Dr. Thomas Sowell has written:
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The even distribution or proportional representation of groups in occupations or institutions remains an intellectual construct defied by reality in society after society. Nor can this all be attributed to exclusions or discrimination, for often some powerless or even persecuted minorities predominate in prosperous professions. Race and Culture: A World View, New York: Basic Books, 1994, p. 2.
Although many disparity studies calculate comparisons in business formation rates by controlling for various owner characteristics through regression analysis, some such as the National Economic Research Associates (NERA) studies concede that cultural factors (which are not quantifiable) play a role in business formation. The NERA New York City study states:
The calculations [on expected business formations] have several limitations. First, the CPS [Current Population Surveys] provides fairly limited data on personal characteristics that might be associated with going into self employment. If there are other important characteristics and if whites tend to have these characteristics relatively more so than African-Americans, then the differences between the estimated African-American self-employment rates could be due to these characteristics rather than discrimination. Second, it is impossible to determine whether the under-representation of minorities in self-employment is due to contemporary discrimination the effects of past social discrimination or cultural differences between ethnic groups. (emphasis added) (''The Utilization of Minority and Women-Owned Business Enterprises by1he City of New York'' at 6768)
Because of the possibility of cultural differences, NERA does not make a comparable analysis of business formation for women. NERA studies often state:
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We have not taken a similar approach for women because the formation of businesses by women over time is linked with their voluntary participation in the workforce. Changes in woman labor force participation over time make it very difficult to discern the extent to which the under-representation of woman-owned businesses is due to discrimination or the changing role of women in the work force. (New York study at 63, fn. 91)
Finally, NERA and other studies often acknowledge that there are actually more Asian-American owned businesses than the study's formula would predict. (New York study at 67)
NERA also has admitted that:
We recognize that some of the observed differences in the expected African-American self-employment rates may be attributable to factors we can not observe in the data, such as detailed education levels, training, family and work background that are conducive to the establishment of businesses. Consequently on the basis of this analysis alone, we can not be certain that the difference between the actual and expected rate of African-American self-employment is due to discrimination. (emphasis supplied) (New York study at 6364)
The hypothesis that discrimination is the cause of differences in business formation rates among different ethnic groups would be more plausible, if there were consistency within the groups, but that turns out not to be true. For example, consider Asian-Americans. (Table A) By 1990, the leading ethnic group forming businesses in the United States was Korean-Americans. Their rate of 73.66 businesses per thousand persons was almost twice the national average. On the other hand, Chinese-Americans were exactly at the national average. Similarly, there are major differences within the Hispanic category and within European or white categories. The high rates of business formation among both Koreans and Armenians would appear to have more to do with immigration patterns and cultural factors than any assumption that these groups were the beneficiaries of positive discrimination. (For a more extensive discussion of the issue of comparisons within affirmative action categories, see George R. La Noue and John C. Sullivan ''Deconstructing the Affirmative Action Categories,'' American Behavioral Scientist, (forthcoming)
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Arguments about business formation rates as justification for MBE programs have been made in several recent cases without success. In AGC v. Columbus, the Court analyzed statistical evidence in a disparity study about business formation rates and firm revenues and concluded:
BBC's evaluation of the rates of business ownership and self-employment by ethnicity and gender is based on the assumption that in the absence of discrimination, individuals of both sexes and all ethnic backgrounds will form businesses and seek employment in all sectors of the economy in the same proportion as they are represented in the total population. There is no basis for this assumption. See Croson, 488 U.S. at 507, 109 S.Ct. at 729 (assumption that minorities will choose a particular trade in lockstep proportion to their representation in the local population is ''completely unrealistic''). As the Supreme Court noted in Croson, 488 U.S. at 503, 109 S.Ct. at 72627, a lack of minority participation may also be explained by career and entrepreneurial choices, and blacks may be disproportionately attracted to industries other than construction.
In his book Preferential Policies, an International Perspective 128129, 132 (1990), Dr. Thomas Sowell stated:
Much of what has been thought to be knowledge in this area is reiterated assumption, unchecked against any facts, though often dressed in the garb of statistical formulae, having the appearance of scientific objectivity.
* * * * * *
What would the average Englishman be like today ''but for'' the Norman conquest? What would the average Japanese be like ''but for'' the enforced isolation of Japan for two and a half centuries under the Tokugawa shoguns? What would the Middle East be like ''but for'' the emergence of Islam? In any other context besides preferential policy issues, the presumption of knowing the answers to such questions would be regarded as ridiculous, even as intellectual speculation, much less as a basis for concrete governmental action.
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The idea that large statistical disparities between groups are unusualand therefore suspicion is commonplace, but only among those who have not bothered to study the history of racial, ethnic, and other groups in countries around the world.
The city did not have strong or convincing statistical evidence of discrimination in the private sector of the Columbus construction market. (936 F. Supp. at 1410)
Similarly in Engineering Contractors Association of South Florida v. Dade County, the District Court considered a regression analysis produced for the defendants that sought to determine whether discrimination impacted the number of M/WBE construction companies formed in south Florida. The Court concluded:
With regard to Wainwright's business formation analysis, while this analysis may indicate that a general, societal type of discrimination is possibly affecting the rate that minorities and women tend to form businesses in the construction industry, it is not the type of particularized evidence that is required to provide a strong basis in evidence for the County's race and ethnicity-conscious contract award process, which is aimed at M/WBEs which are already in business and qualified to perform the work. (943 F. Supp. at 1574)
In its recent affirmation of the District Court's decision in that case, the Eleventh Circuit went out of its way to reinforce the point that cultural values may affect business formation decisions. The Circuit said:
In a pluralistic and diverse society, it is unreasonable to assume that equality of opportunity will inevitably lead different groups with similar human and capital characteristics to make similar career choices. See Local 28 of Sheet Metal Workers International Assn v. EEOC, 478 U.S. 421, 494 (1968). . . . ''Similarly situated'' women, men, blacks, whites, Native Americans, Italian-Americans, and every other group that might be listed all bring their own values and traditions to the socioeconomic table, and may reasonably be expected to make voluntary choices that give effect to those values and traditions. As the Supreme Court recognized in Croson, the disproportionate attraction of a minority group to non-construction industries does not mean that discrimination in the construction industry is the reason. See 488 U.S. at 503. (Engineering Contractors Association, Eleventh Circuit at p. 59)
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In Middleton v. City of Flint, the Sixth Circuit summarized the state of the law as follows:
Thus, as implied by the Supreme Court's holdings in Croson and Adarand, a plan is constitutionally unsupportable when it is driven, at bottom, by nothing but the bare assumption that representation of various groups in specific employment categories should be derived from general proportions, even with whatever ''adjustments'' the experts, litigants, or courts may think appropriate. (92 F.3d 396, 407 (6th Cir. 1996))
No race conscious procurement program has ever been upheld, because minorities in general formed fewer firms than expected or that their average revenues were lower than non-minority firms. The research on firm revenues often controls for the characteristics of owners, but not for much more relevant fact such as firm size, qualifications or specializations. If a small MBE painting company has less revenues than a large non-MBE heavy and highway contractor, that is not necessarily caused by discrimination.
Even if the revenue disparity could be attributed to discrimination, such statistical results do not permit the identification of who committed the discrimination or what the narrowly-tailored remedy would be. Should the law ever reflect a theory that disparities in business formation rates or firm revenues warrant remedial preferences, what line could be drawn to prevent government intervention until the proportions of firms and their revenues in each industry was the same for each politically protected racial or ethnic group?
Moreover, arguments based on a snapshot of the number of businesses owned by a particular group at a particular time are based on the wrong perspective. They confuse the measure of existing businesses with trends that would better reflect the contemporary marketplace. If we want to understand what is going on currently, we need to examine the trends in business formation rates, not the total number of existing businesses. The latter may reflect generations of business formation. That is why the Eleventh Circuit in Engineering Contractors Association of South Florida v. Metropolitan Dade County took note of current trends in construction firm formation and declared:
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If the construction market itself were discriminatory, it is difficult to understand how the 19821987 growth rate of MWBE firms in that market accelerated so much compared to that of non-MWBE firms. (At 60)
A similar trend exists in the national growth rate trends for construction companies. Using the same format the Eleventh Circuit found probative in the Dade County case, (at 60) Table B compares growth rate for each category of MWBE firms and non-MWBEs. In each case, the growth in business formation of MWBEs is substantially higher than that of MWBEs. Overall MWBEs were 6.3% of the headcount of construction firms with employees nationally in 1982 and 16.7% of these firms in 1992. This means that MWBEs gained 1% of the market share each year during that decade. During this period, at least 73,971 new MWBE construction firms were created or at least 36.5% of all new construction companies established. Looking at the question another way, during 19821992 comparing firms with employees, the number of black-owned construction firms grew by 112% compared to 67% for all types of black-owned businesses; for Hispanics 292% in construction compared to 189% overall; for Asians and Native Americans 225% in construction compared to 177% overall and for women 380% compared to 162% overall. The growth rate of business formation for each MWBE category was higher in construction than for the economy as a whole. These data suggests that the contemporary construction industry is not closed to new MWBE entrants.
VI. ABOUT THE AUTHOR
Since 1972, George R. La Noue has been a Professor of Political Science at the University of Maryland, Baltimore County and from 1979 to 1997 served as the Director of the Policy Sciences Graduate Program of the University of Maryland Graduate School, Baltimore. Policy Sciences is an interdisciplinary program consisting principally of economics, political science, and sociology. It is the largest campus-based Ph.D. program in public policy or public administration in the country. In the summer of 1997, after eighteen years as Director, he began a sabbatical as Visiting Scholar at the Institute of Governmental Studies at the University of California, Berkeley. He will return to the University of Maryland as a Professor and coordinator of the legal policy tracks and educational policy tracks of the graduate program.
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Dr. La Noue is also Director of the Project on Civil Rights and Public Contracts at the University. The Project contains one of the largest publicly accessible collections of disparity studies, legal opinions, and research articles on minority business enterprise (MBE) programs in the country. This library contains about 60,000 pages of materials and is accessed regularly by governments, consultants, litigators, professors, and journalists.
Dr. La Noue received a bachelor's degree in political science and history (magna cum laude) from Hanover College in 1959, and a, Masters and Ph.D. from Yale University in Political Science in 1961 and 1966 respectively. He has been awarded the Woodrow Wilson, the Danforth, the Public Administration, and the Swedish-American Bicentennial Fellowships.
Dr. La Noue has taught American government, social science research methods, constitutional law, and civil rights law for more than thirty years at Columbia University, the American University, the University of Chicago, the University of Miami, and the University of Strasbourg (France), as well as the University of Maryland.
In 1972, he served as assistant to the Executive Director of the United States Equal Employment Opportunity Commission and later became the U.S. Department of Labor's chief trial expert in litigation involving equal pay for women in universities. Dr. La Noue has published four books and dozens of articles on issues of public policy and law. Recently, his research has focused on the appropriate legal and social science standards for post-Croson disparity studies. These Croson-related publications have appeared in the Annals of the American Academy of Political and Social Sciences, The Public Interest, The Columbia Human Rights Law Review, the Journal of Policy History, the Journal of Urban Affairs, and The Public Historian. The National League of Cities has published his ''Local Officials Guide to Minority Business Programs and Disparity Studies: Responding to The Supreme Court's Mandate in City of Richmond v. Croson'' (first edition 1991, second edition 1994). A law journal article titled ''Standards for the Second Generation of Croson Inspired Disparity Studies'' was published by the American Bar Association in 26 The Urban Lawyer 485 (Summer 1994). An article on race-neutral programs in public contracting (coauthored with John Sullivan) was published by the Public Administration Review in July 1995. In the Fall of 1997, three new Croson-related publications will appear. The Harvard Journal of Law and Public Policy will publish his article, ''Who Counts: Measuring the Availability of Minority Businesses after Croson.'' The Albany Law Review will publish, ''The Impact of Croson on Law and Public Policy'' and the American Behavioral Scientist will publish, ''Deconstructing the Affirmative Action Categories.''
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Dr. La Noue has appeared as plaintiffs expert witness in several cases involving challenges to minority business preferences which have resulted in judicial decisions finding these programs unconstitutional. (Prior Tire Company v. Atlanta Public Schools (No. 195CV825JEC, March 24, 1997); Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 943 F. Supp. 1546 (S.D. Fla. 1996), affirmed by the Eleventh Circuit, September 2, 1997; Contractors Association of Eastern Pennsylvania v. Philadelphia, 893 F. Supp. 419 (E.D. Pa. 1995), affirmed 91 F.3d 586, (3rd Cir. 1996) cert. denied, and AGC v. Columbus, 936 F. Supp. 1363 (S.D. Ohio 1996).
Dr. La Noue has also worked with several governments to produce disparity studies more consistent with appropriate social science methods and legal principles. He was retained by the City of Albuquerque to assist in drafting a Request for Proposal (RFP) for a disparity study, and to evaluate responses to that RFP. For a consortium of seven governments, including the State of Oregon and the City of Portland, he helped design the RFP for a disparity study, evaluated responses to the RFP, and worked with the jurisdictions and the study team in developing the study. He was also retained by the State of Texas to ''monitor'' the completion of its $1,000,000 disparity study, and he has worked with the General Services Commission of that State on subsequent implementation of an M/WBE program. Currently he is working with the City of West Palm Beach (Fla.) and a consortium of governments in the Nashville, Tennessee area assisting them in the design and implementation of their disparity studies.
Dr. La Noue has taught seminars on how to prepare disparity studies at the national conventions of the National Institute of Government Purchasers in July 1994 and the National League of Cities in December 1994. He has been appointed by the National Institute of Government Purchasers to serve on its Universal Public Purchasing Council which certifies government purchasing officers in the United States and Canada.
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Mr. CANADY. Thank you, Mr. Kennedy.
Mr. WATT. Thank you, Mr. Chairman. I want to thank these witnesses for the testimony, and thank Mr. Rosenberg for his history lesson about something that I think we don't have a whole heck of a lot to do with over here, but it was interesting history; and correct Mr. Pottinger: Griggs v. Duke Power came out of North Carolina, not Georgia, and I'm happy to have been with the law firm that litigated that case back in the early seventies. So I was glad to hear you put it in perspective.
Let me take issue with one point that Mr. Clegg made that seems to me to glorify the good old days, and anybody who has some notion that civil rights laws historically have brought this country together, as opposed to being designed to address discrimination, has a different conception, I think, than history will bear out. All of these lawshistorically, we can talk about the good old days and try to glorify what was going on 30, 40 years ago, but the truth of the matter is no civil rights gain that I'm aware of has ever been made without some substantial confrontation and conflict. And while it may well be that the longer-term objective is to, as you say, bring our country together, the short-term impact has always been, and continues to be, very confrontational. So I don't think we ought to lose sight of that.
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I also had some concerns about what appeared to be the implication of what you were sayingis that somehow this administration has plopped these preferences or programs or laws down into the middle of today's politics and is somehow on the cutting edge of what's happening, or what has happened historically, in the civil rights area. I'm glad Mr. Pottinger corrected that impression. This has been a long, ongoing struggle, and I doubt that there is any preference that you could point to, Mr. Clegg, that exists in our Federal Government today that was not put into place during some other administration.
The fact that Adarand was decided and this administration had the burden, or carried the burden, of trying to apply a different standard that was articulated in Adarand puts them at the center of either doing away with those preferences or programs or laws that Congresses have put in place, and policies that prior administrations have put in place, but the choice is either to terminate them, as you say, which I'm sure you would love to have done, or to try to bring them in compliance with the law. And I would submit to you that terminating them would bury all of our heads in the sand and have us ignore age-old problems that have existed
Mr. CANADY. The gentleman's time has expired. Without objection, the gentleman will have three additional minutes, and he can one more after that, if he asks
Mr. WATT. No, I don'tI think I've probably lectured Mr. Clegg long enough on some of these issues, and I apologize to him for not putting it in the context of a question.
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Mr. Hinton, I'm trying to do this in a balanced way while showing some identification with your frustrations in how the Justice Department has dealt with you, but I hope that in the context of what you are saying in the way you were dealt with we don't lose sight of the fact, the underlying complaint that the Justice Department was dealing with. The notion that black employees ought to be subjected to people wearing sheets and waving in their face the Rebel flag and being insulted on a daily basis, I think needs to be reflected in the record. And while I'm not defending the handling of your case by the Justice DepartmentI think Mr. Barr raised good points about the way they deal with Georgia. I'm sure you raised good points about the way they dealt with you from a public relations perspectivethose dealings don't overshadow the basic goal that it was important for the Justice Department to try to right. I hope that you and your city, town, have made a substantial commitment to correcting those inequities that gave rise to the necessity to file this lawsuit. And if you haven't, I hope you will as time goes on.
I'll yield back, Mr. Chairman.
Mr. HINTON. Mr. Chairman, could I make one quick response, please?
Mr. CANADY. The gentleman's time has expired. I will recognize you when it's my turn in a minute, unless the gentleman
Mr. WATT. I'd be happy to have him
Mr. CANADY. Without objection, the gentleman will have one additional minute.
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Mr. WATT. I wasn't trying to stop him from responding. I just saw my light was on.
Mr. CLEGG. I would like to respond, too.
Mr. CANADY. Okay, without objection, the gentleman will have two additional minutes, and Mr. Hinton and then Mr. Clegg.
Mr. HINTON. Thank you.
Mr. WATT. Mr. Chairman, I'm not asking for two additional minutes. If that's going to set a precedent, maybe we ought notbecause I don't want to disadvantage everybody else. So
Mr. CANADY. I'm certain you wouldn't.
Mr. WATT. I hope this is not being done based on some unanimous consent request that I have made. I have not made such a request.
Mr. CANADY. We'll just grant you time to answer, since the gentleman apparently doesn't want you to answer.
The gentleman from Georgia, Mr. Barr.
Page 239 PREV PAGE TOP OF DOC Mr. BARR. Thank you, Mr. Chairman.
Mr. Rosenberg, I've read your paper here and some of the earlier work, and your title is specialist in American public law of the Congressional Research Service. I presume that makes you somewhat familiar with the terms of the U.S. Constitution?
Mr. ROSENBERG. Yes, sir.
Mr. BARR. And as I think you very correctly point out in your remarks, and I know in some of your earlier writing, the appointment authority is found entirely, I believe, in Article II, Section 2, Clauses 2 and 3, of the Constitution. Is that correct?
Mr. ROSENBERG. Yes, sir.
Mr. BARR. There is no appointment authority elsewhere in the Constitution? Over the years has Congress, in its appropriate legislative role, considered and enacted legislation to address the appointments clause within the context of the Constitution to address problems that have cropped up?
Mr. ROSENBERG. Yes, that's the thrust of why I was trying to bring out the historical context in which Congress has consistently, from the earliest days, attempted to protect Congress'the Senate's confirmation power. They've done it through the statutes that I told you about from Washington's time, through the 1988 amendments to the Vacancies Act. In 1973, when the Justice Department started to act upon its theory that the Vacancies Act didn't apply, the Controller General attempted to challenge those views; he issued a series of opinions, both with respect to the Justice Department and other agencies of the Government, that the Vacancies Act had to apply to them, which were to no effect, and the Controller General turned to Congress again and said, ''Help. I can't do anything about this.''
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And in 1988, it attempted to address the problem. It changedit expanded the Vacancies Act to apply not only to Executive departments and military departments, but also to all agencies of the Executive branch.
Mr. BARR. Would that include the Department of Justice?
Mr. ROSENBERG. Yeswhich was always covered.
And then, it amended section 3348; 3348, prior to that time, simply had a 30-day time limitation on either a first assistant serving or a presidential designation serving. Congress changed that to 120 days, and further provided that if the President submitted a nomination within that 120-day period, then that 120-day period would be tolled until Congress finished its work on the nomination process.
The legislative history that accompanied that change made it very clear that it was rejecting the Justice Department's theories in those cases that the Controller General had challenged in at least six instances and it specifically adopted the Controller General's view of the efficacy of the Vacancies Act at that time.
In addition, not only has Congress addressed temporary filling of advice-and-consent positions, it has also addressed the recess appointments clause, and concerns about abuses of that authority. What they've done essentially is, also, since the 1860's, and more recently in 60 or 70 years of appropriations bills, to refuse to pay recess appointees who are rejected, and also limited the pay of recess appointees under certain circumstances. So that there is a whole history of Congress addressing the issue of the integrity of the appointments process, and it is contrary to the theories of the Justice Department.
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Mr. BARR. With regard to Mr. Lee's appointment, how does that fit in this scheme? Is his appointment consistent with the intent of Congress and with the intent of the Constitution or is it just an appointment that is contrary to both the intent of the Constitution and the will of the Congress, as reflected in law?
Mr. CANADY. The gentleman's time has expired. Without objection, the gentleman will have two additional minutes.
Mr. ROSENBERG. The position to which he now has been assigned became vacant early in January 1997. At that point, the first deputy or principal deputy, Ms. Pinzler, was designated as the acting. She served 181 days as an acting before Mr. Lee was first nominated. Under those circumstances, the history of the Vacancies Acts and how it has been interpreted by Attorneys General, as I mentioned, made it clear that the Vacancies Act provisions were then exhausted after 120 days. As a consequence, the Vacancies Act could not be used. But, of course, the Justice Department doesn't claim that it is being used, because it is attempting to use its other alleged authority. I reject the notion that the other authority is efficacious, since the Vacancies Act was meant to be, as was reaffirmed in 1988, to be the exclusive authority for filling such vacancies. So, therefore, the period having been exhausted, they cannot use the Vacancies Act, and the only
Mr. BARR. So the answer to my question is, yes, it is an appointment that
Mr. ROSENBERG. Yes. It's an unlawful appointment.
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Mr. BARR. Thank you.
Mr. ROSENBERG. It's a designation.
Mr. BARR. One further question: Is the real problem here not one so much of politics as it is of the constitutional issue that we've already addressed, but is there not a potential real practical problem where you have an administration official serving in a policymaking executive position with fairly far-reaching powers, such as Mr. Lee, making decisions that thereafter could be legally and successfully challenged based on the unlawfulness of his appointment, and render those decisions that he has made null?
Mr. CANADY. The gentleman's time has expired. The gentleman will have one additional minute.
Mr. ROSENBERG. The difficulty with challenges to decisions that Mr. Lee will make is that the statutes, as I understand them, that he is enforcing do not give him specifically the authority to make such decisions. They give it to the Justice Department or to the Attorney General. So, therefore, if he files a complaint, for instance, and somebody above him, like the Attorney General, signs that complaint, the case law that is applicable here would say that he actually wasn't making that decision; so they can't be challenged. It's going to be very difficult to challenge some decisions that he is making in the Department.
Mr. BARR. So the real issue here is the unlawful designation circumventing the will of the Congress and the intent of the Constitution?
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Mr. ROSENBERG. Yes.
Mr. BARR. Thank you.
Mr. CANADY. Thank you.
Mr. HUTCHINSON. Following up on Mr. Barr's questions, the remedy would be someone filing suit to challenge that designation?
Mr. ROSENBERG. Yes, sir. Someone willthe someone, as far as I'm aware, is going to have to be either the Judiciary Committee of the Senate or the Senate itself.
Mr. HUTCHINSON. And why do you say that? Because they are the ones that have standing?
Mr. ROSENBERG. Yes.
Mr. HUTCHINSON. A taxpayer would not?
Mr. ROSENBERG. No, not unless there is something that he's doing that issomething that he does that injures that particular taxpayer, and I'm not aware right now of any action he can take under the laws that is going to raisethat is going to give injury standing.
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Mr. HUTCHINSON. I'm chasing a rabbit right now, but in Arkansas any taxpayer can file a lawsuit challenging the expenditure of State funds if it is unconstitutionally being
Mr. ROSENBERG. You can't do that under the Federal Constitution.
Mr. HUTCHINSON. Well, that was my question.
Mr. ROSENBERG. There's a myriad of decisions saying that general taxpayer interest in how the money is spent does not give you standing.
Mr. HUTCHINSON. And to remedy that, would you have to change the Constitution of the United States?
Mr. ROSENBERG. Yes.
Mr. HUTCHINSON. Not a statutory designation?
Mr. ROSENBERG. No. Congress cannot simply, as they did in the Item Veto case, give standing to Members of Congress or to people if they are not personally injured.
Mr. HUTCHINSON. Okay.
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Mr. ROSENBERG. It has to be this constitutional injury.
Mr. HUTCHINSON. Thank you very much, Mr. Rosenberg.
Mr. Kennedy, let me get to a question I wanted to askand this is not rabbit-chasing. When Mr. Lee was testifying, he indicated in response to one of my questions that there were 15 programs, I think, that he said had been terminated based upon the Department of Justice's review of Government set-aside programs and preference programs. Of course, the Court in Adarand indicated that any such program should be viewed with strict scrutiny, should be narrowly-tailored, and there's a real question in my mind as to whether the Department of Justice review is sufficient and whether the department has really pursued the direction and mandate of Adarand.
Are you familiar with the Department of Justice's review, and do you believe that there has been an adequate review of Federal agency programs dealing with set-asides and preferences?
Mr. KENNEDY. Well, the short answer is, no, I don't believe there's been an adequate review. I'm not going to profess to be familiar with all of the details of what they've done. I've tried to follow it. It is voluminous.
I think the fundamental problem is that the administration has not set about the serious problem of trying to identify the problems that it would have these programs address. If you look at its materials that it has produced, claiming to provide a compelling interest in these programs, they're extremely broad; there is no precision. Just who is it who was discriminating? The question earlier that the chairman asked about whether Federal contracting officers are discriminatingwell, of course, prime contract set-aside programs and bid preferences are an appropriate response to that kind of discrimination because they affect that particular class of decisionmaker, but other kinds of programs do not. And if the problem lies elsewhere, then bid preferences and set-asides are not appropriate.
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In essence, the administration has to try to narrowly tailor the problem before it's figured out what the problem is. As a result, we see it going off in the dark. It would have you believe that housing discrimination and problems with police departments can justify setting aside highway contracts. It would have you believe that discrimination by a locality in Connecticut can justify a program in the State of Utah.
I don't know howit makes much of its effort to narrowly tailor these Federal programs, but unless or until it's identified with particularity the problems that it intends to address, I don't know how it can really do that. Ultimately, you're left with a situation where these programs are proposed to continue until the society has rid itself of discrimination. I don't know when that will be. The last time someone suggested that societal discrimination in and of itself is enough to justify these kinds of measures, Justice Powell responded that societal discrimination could justify remedies that are ageless in their reach into the past and timeless in their ability to affect the future. Unless or until we get a better handle on just what it is the Government proposes to remedy, I don't think we can know what a narrowly-tailored remedy would look like.
Mr. HUTCHINSON. Thank you.
Mr. CANADY. The gentleman's time has expired. Without objection, the gentleman will have three additional minutes.
Mr. HUTCHINSON. I'd like to ask one more question, if I could; then I'll yield back the rest of that 3 minutes.
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But, Mr. Kennedy, you cited some statistics between 1982 and 1992, that there was 112 percent increase of African American firms in construction, and some other statistics along that way, showing that there's been significant progress and that there's been good participation by minority-owned firms as well as women in construction. Now, based uponand I guess one could argue thathas progress been made because of set-asides?
But the other aspect of the question, I believe that there should be women in construction, if they want to be. They should have all the rights, and it's not just a ''good old boy's club'' that excludes either minorities or women in construction. What sense do you have that, if we just do away with set-asides and preferences and quotas, that we're going to be able to continue, as we have during the last 10 years, a growth pattern of women in construction or minorities in construction?
Mr. KENNEDY. Well, in answer to your first question, when you look at this growth, these numbers that I've put in front of you are all based on the census data, which covers the entire construction industry and not simply that portion that performs public, much less Federal, work.
If you'll examine one of my footnotes, you'll find that, in fact, in 1994, 44 percent of all construction went into private residential work. Another 28 percent went into private nonresidential construction. Only 26 percent of all construction in that particular year was public works of any kind, and the Federal portion of that would be even smaller.
So looking at this, you cannot explain this broad growth across the board in minority and women business development simply by looking at the Federal set-aside programs. They're not big enough to explain this growth.
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And I guess, for much the same reason, I don't have any doubt that the growth of minority and women business enterprises in the construction industry will continue, with or without Federal involvement. It is an open industry. It is a competitive industry. It is a family-oriented industry, and it's the kind of place where minority and women business enterprises have been successful. And, quite frankly, I'll put our record up against any other industry in the country, and suggest that if the rest of the American economy were doing as well as the construction industry, we would be much further down the road to finding that these programs are not even politically controversial.
Mr. HUTCHINSON. Thank you very much, and I thank the Chair.
Mr. CANADY. Thank you.
Mr. SCOTT. Thank you, Mr. Chairman.
Mr. Rosenberg, you mentioned the tolling of the time if an appointment has been made subject to confirmation, if the name has been submitted
Mr. ROSENBERG. During the 120-day period.
Mr. SCOTT. During the 120and it would have tolled the period?
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Mr. ROSENBERG. That's right, and that will last for as long as the nomination is being considered by the Senate. If there is a rejection or a withdrawal, then there's an opportunitythen the period starts again
Mr. SCOTT. Please
Mr. ROSENBERG [continuing]. And there is still another opportunity for the President to have another nomination which will toll the second period. But after two tollings
Mr. SCOTT. Mr.
Mr. ROSENBERG [continuing]. That's it.
Mr. SCOTT. Mr. Lee's name has been submitted to the Senate for confirmation. Does that not toll the period?
Mr. ROSENBERG. Not in my view.
Mr. SCOTT. Okay.
Mr. ROSENBERG. The period was exhausted by Ms. Pinzler's 181-day acting period, and under the history of the clause, its intention, and the way I understand it
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Mr. SCOTT. Well, let me
Mr. ROSENBERG [continuing]. You get one 120-day period.
Mr. SCOTT. Okay. Mr. Clegg, are you familiar with this appointment process?
Mr. CLEGG. No.
Mr. SCOTT. When you were appointed, how were you appointed?
Mr. CLEGG. I was not appointed the acting head of the Civil Rights Division. I was a Deputy Assistant Attorney General.
Mr. SCOTT. Is that subject to confirmation?
Mr. CLEGG. No.
Mr. SCOTT. Was your predecessor subject to confirmation?
Mr. CLEGG. My predecessor as Deputy Assistant Attorney General?
Mr. SCOTT. Mr. Hartman? Was he your predecessor?
Page 251 PREV PAGE TOP OF DOC Mr. CLEGG. Not in the Civil Rights Division, no. He was in the Environment and Natural Resources Division.
Mr. SCOTT. Is that subject to confirmation?
Mr. CLEGG. The head of the Environment and Natural Resources is subject to Senate confirmation, yes, sir.
Mr. SCOTT. And did you succeed Mr. Hartman?
Mr. CLEGG. I did succeed Mr. Hartman for a period of
Mr. SCOTT. About a month?
Mr. CLEGG [continuing]. A few weeks.
Mr. SCOTT. Okay.
Mr. CLEGG. But, after that, then
Mr. SCOTT. How was Mr. Hartman in that position?
Mr. CLEGG. How long was Mr. Hartman in that position?
Page 252 PREV PAGE TOP OF DOC Mr. SCOTT. Right.
Mr. CLEGG. I don't know. I don't recall.
Mr. SCOTT. About a year?
Mr. CLEGG. I don't think he was there that long, but it could have been. It was several months.
Mr. SCOTT. Was he ever confirmed?
Mr. CLEGG. No, sir, I don't believe so.
Mr. SCOTT. And that was in the Bush administration?
Mr. CLEGG. That's correct.
Mr. SCOTT. You indicated that the ADA imposes significant financial hardship on businesses?
Mr. CLEGG. That's correct.
Mr. SCOTT. What would youwould you repeal the requirement that reasonable accommodations be made for people with wheelchairs, because of the financial hardship?
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Mr. CLEGG. I think that there are a number of problems with the way the American with Disabilities Act is currently working, and I think that one of the things
Mr. SCOTT. Well, a requirement that you make your workplace accessible imposes a financial hardship. Should we repeal that provision?
Mr. CLEGG. I think in some circumstances, yes.
Mr. SCOTT. You are aware that the lieutenant governor of Virginia required reasonable accommodations so that he could get the wheelchair that he uses to the podium of the Virginia State Senate?
Mr. CLEGG. Yes, I believe I read something about that in the paper. But I'm sure those accommodations would have been made, whether they had been required by Federal law or not.
Mr. SCOTT. So then, if you're elected lieutenant governor, you get a reasonable accommodation?
Mr. CLEGG. No.
Mr. SCOTT. And if you're not aMr. Hinton, let me ask you a couple of questions about Garland. Is Garland's population, as of the 1990 census, about 12 percent Hispanic and 9 percent black?
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Mr. HINTON. Those sound correct. I don't have them before me, Mr. Scott.
Mr. SCOTT. Fire department, 1 percent Hispanic, 2 percent black?
Mr. HINTON. I don't have those figures before me, either.
Mr. SCOTT. Sound about right?
Mr. HINTON. No, I would not agree to that. I can tell you the number of firefighters that are in the minorities. I have that available to me, but I do not have the percentages.
Mr. SCOTT. How many?
Mr. HINTON. Bear with me, sir.
Mr. CANADY. The gentleman's time has expired. The gentleman will have three additional minutes.
Mr. SCOTT. I was hoping you wouldn't start the 3 minutes until[Laughter.]
Page 255 PREV PAGE TOP OF DOC Mr. HINTON. I apologize.
Mr. SCOTT. Thank you, Mr. Chairman.
Mr. HINTON. In the fire department, we have 6 blacks and 4 Hispanics, 4 American Indians, 1 Asian. In the police department, we have 2 Asians, 10 blacks, 13 Hispanics, 2 Native Americans, and 253 White.
Mr. SCOTT. In the police department? And how many are there altogether in the fire department?
Mr. HINTON. For a total in the fire department, there are 225.
Mr. SCOTT. Compared to the other six departments in Dallas County with more than 100 police officers, does Garland have the lowest percentage of minorities?
Mr. HINTON. No, I do not believe so, sir. I believe there are other surrounding municipalities that have over 100 officers who have fewer minorities than the city of Garland does.
Mr. SCOTT. And you acknowledge the incident in the fire department where the white firefighters displayed a Confederate flag and dressed in white sheets to taunt black co-workers, and they were suspended with pay? Did I understand that? Or without pay?
Page 256 PREV PAGE TOP OF DOC Mr. HINTON. They were suspended with pay. Thank you for giving me an opportunity to correct that. Theythe supervisor was suspended for 15 days and resigned after that.
Mr. SCOTT. Mr.
Mr. HINTON. I'm sorrywithout pay. They were suspended without pay.
Mr. SCOTT. Mr. Kennedy, you mentioned numbers of minority participation in contracting. Could you give us some of the numbers that would havegive us some idea of what those numbers would have looked like before the Civil Rights Acts were enforced? Since my time is running out, I think we all know what those numbers would look like.
Mr. KENNEDY. I'm not sure I would agree that we know what those numbers would look like. The short answer, Mr. Congressman, is that I do not know.
Mr. SCOTT. Okay. In Richmond and other areas, do minorities suffer lingering effects of discrimination
Mr. KENNEDY. WhatI'm not sure that I understand
Page 257 PREV PAGE TOP OF DOC Mr. SCOTT [continuing]. In the contracting business?
Mr. KENNEDY [continuing]. The question. Lingering? By whom?
Mr. SCOTT. Do theydo minorities suffer discrimination in lending?
Mr. KENNEDY. I would not know.
Mr. SCOTT. Do they suffer discrimination in bonding?
Mr. KENNEDY. I would not know.
Mr. SCOTT. Does your 13.5 to 16.5 percent include women as well as small businesses and minority businesses?
Mr. KENNEDY. The data I provided on the Defense Department is limited to small minority businesses. The data I provided on the Department of Transportation includes small minority and women businesses. Women are not included in the programs run by DOD.
Mr. SCOTT. Is small minority one category or is it small and minority?
Mr. KENNEDY. It's small minoritysmall and minority. You have to be a small business to qualify for any of their preferences, and, in addition, you have to be a minority business. If you are a large business owned by a minority, you do not qualify.
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Mr. SCOTT. And if you are a small business not owned by a minority, you would not qualify?
Mr. KENNEDY. You are excluded from their preference program.
Mr. SCOTT. Well, there are white disadvantagedyou can qualify, but you're not givingyou're not counting that as a minority?
Mr. KENNEDY. I believe that there are something on the order of one-tenth of 1 percent of the 8(a) contractors are not minorities.
Mr. CANADY. The gentleman's time has expired.
Mr. SCOTT. Okay, thank you, Mr. Chairman.
Mr. CANADY. I'll now recognize myself.
I wanted to start off with Mr. Clegg, and I want to give you an opportunity to respond to Mr. Watt's comments. But before that, I'd like to ask you to comment on the administration's efforts to establish a factual basis, which is necessary to satisfy the requirements for a compelling governmental interest in remedying discrimination under the Adarand decision. You might be familiar with the appendix that has been produced by the Department of Justice in which they purport to establish a compelling, although they more seem to assume it than to establish it. Could you comment on those efforts?
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Mr. CLEGG. The most important point to make is a point that Mr. Kennedy made, which is that the application of strict scrutiny to a program is the strictest kind of scrutiny that the Supreme Court recognizes. It is very difficult for a program to pass strict scrutiny. The evidence that has to be produced in order to justify a racial preference has to be extremely compelling and clear.
I have seen no such evidence produced by the Justice Department. And given the difficulty of coming up with that evidence, and given the failure of the Department to come up with that evidence, and given the unfairness in human terms of discriminating against people because of the color of their skin, which is what these preferential programs doit seems to me that what the administration should do is suspend all of these programs until it completes this review, which is lasting an inordinate amount of time. These programs should be suspended until the administration pinpoints those programs that it believes can be mended, rather than ended.
That seems to me to be the fair way and the logical way to proceed, when the Supreme Court has instructed the Government that programs based on racial preferences are presumptively unconstitutional. The presumption is against these programs. I don't understand why, nearly 3 years after the Supreme Court has made that very clear, these programs continue merrily along.
Mr. CANADY. I don't understand that, either. And just to comment on what you've said, it is amazing to me that the administration cannot do anything more to articulate a basis for these programs than they have. I would have thought that they could have scrounged up something, but when I asked the question of Mr. Lee, he basically can't give me any specific examples. He wants to talk about congressional hearings. Well, if they're congressional hearings that establish the factual basis, show me the facts in the congressional hearings. As some people may notice, sometimes there are things in congressional hearings that don't actually fall under the category of ''fact.''
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So just to make a broad reference to congressional hearings that may have taken place really doesn't get you anywhere, and it's amazing to me that the administration can't point to some things along the way, and to have the SBA official, who supposedly has the most knowledge about the 8(a) program, unable to indicate any example of discrimination by a Federal contracting officer, I find very interesting.
The whole premise for the system of preferences that is in place is a view that the American people and the American Government are pervasively racist. That's the foundation.
I'll grant myself three additional minutes.
Obviously, there are examples of discrimination in our society, and I'm certain these can be found some examples of discrimination by the Government. But there's nothing like a pattern of discrimination by the Federal Government. That cannot be shown. I think the inability of the administration to articulate a basis for its policies is very telling.
Do you have any further comments?
Mr. CLEGG. I would just add to that that, even in those instances where past discrimination can be pointed to, it baffles me why the appropriate remedy for that past discrimination is more discrimination and why the appropriate solution to that problem is the use of preferences. What should be done in those instances is to go after the practices that are discriminatory, to punish the people who are discriminating, to fire them or demote them or suspend them or whatever is appropriate in a given circumstance. But it does not improve race relations; it does not end discrimination, to pile a preference program on top of the discrimination that has already occurred.
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This is another reason why it seems to me that, while this review is going on, it makes no sense at all to continue the discriminatory policies. Even if some kind of justification can be stitched together does not mean that it should be, and that the preferences should be usedeven if legally they are barely permissible.
Mr. CANADY. Well, I think that's also a very important point for us to understand. I don't think the administrationthis administration or any other administrationcan meet the standard that the Supreme Court has established. Beyond that, there is the broad policy issue for the Congress to consider: What should we have as the policy of the Federal Government? Can we, in fact, have a successful policy of fighting discrimination by practicing discrimination? And I agree with your view that that is a dead-end. That is a policy in contradiction with itself, and it's a policy that only reinforces prejudice and discrimination in our society, as I've said in my opening comments.
I think we've got to step back from this and recognize the history of discrimination in this country, which was a reality; recognize that we have made great progress, and ask ourselves, how do we move forward? And I am absolutely convinced that we can best move forward by getting the Federal Government out of the business of dividing the American people into groups based on their biological characteristics, and that's what I think we need to pursue as the policy of this Governmentending the use of preferences.
Ms. DAVIS. I wonder if I could reclaim my 30 seconds, sir[Laughter.]
Page 262 PREV PAGE TOP OF DOC just to say that in my written testimony I submitted some information about the way that stereotypes affect women in hiring, and I commend that written testimony to you. I didn't address it in my spoken testimony today, but I think that it's very pertinent to the discussion you're having.
Mr. CANADY. Okay, I appreciate that, and that's something we'll look at.
The final point that I'll make in response to that is that I believe that the system of preferences, in effect, reinforces stereotypes, because, unfortunately, many people who fall into preferred groups, who have significant accomplishments, are assumed to have those accomplishments only because of the system of preferences, which in many cases is contrary to fact, but that overshadows their accomplishments, and that is an injustice to the very people who are supposed to be benefiting from this system.
Well, with that, I will conclude. I want to thank all of you for taking the time to be with us today. Your testimony has been very valuable to the subcommittee, and we will look forward to hearing from some of you again in the future, I'm sure. Thank you very much.
The subcommittee is adjourned.
[Whereupon, at 1:25 p.m., the subcommittee adjourned subject to the call of the Chair.]
(Footnote 1 return)
NOW Legal Defense and Education Fund is the oldest, national legal advocacy organization committed to protecting women's rights, founded in 1970.
(Footnote 2 return)
See, e.g., Johnson v. Transportation Agency, 480 U.S. 616 (1986); United Steelworkers v. Weber, 443 U.S. 193 (1979).
(Footnote 3 return)
See, e.g., Madeline E. Heilmann et al., Sex Stereotypes: Do They Influence Perceptions of Managers?, 10 J. SOC. BEHAV. & PERSONALITY 237, 247 (1995) (finding that women managers are characterized more negatively than men managers); Katherine A. Dodge et al., Requisite Management Characteristics Revisited: Two Decades Later, 10 J. SOC. BEHAV. & PERSONALITY 253, 259 (1995) (replicating and expanding on twenty-five years of research into employees' perceptions of middle managers to find continuing pro-male bias among male subjects).
(Footnote 4 return)
See Asya Pazy, Persistence of Pro-Male Bias Despite Identical Information Regarding Causes of Success, 38 ORGANIZATIONAL BEHAV. & HUM. DECISION PROCESSES 366, 373 (1986).
(Footnote 5 return)
See GLASS CEILING COMMISSION, GOOD FOR BUSINESS: MAKING FULL USE OF THE NATION'S HUMAN CAPITAL 143 (1995) (in Fortune 200 companies, only 5% of senior managers are women). In 1996, women made up only 10% of corporate officers in Fortune 500 companies and held only 10.2% of seats on corporate boards. See 1996 Catalyst Census of Women Corporate Officers and Top Earners, FACT SHEET (Catalyst, New York, N.Y.), Oct. 23, 1996; Women Board of Directors of the Fortune 500, CATALYST CENSUS (Catalyst, New York, N.Y.), March 31, 1996, at 6. The glass ceiling also affects promotions to lower-level supervisory positions. See Marina A. Adler, Male-Female Power Differences at Work: A Comparison of Supervisors and Policymakers, 64 SOC. INQUIRY 37, 45 (1994).
(Footnote 6 return)
See, e.g., Joan E. Manley, Sex-Segregated Work in the System of Professions: The Development and Stratification of Nursing, 36 SOC. Q. 297 (1995) (nursing's low status in the 19th century allowed women to enter the field, but resulting gender segregation prevents nurses from negotiating higher professional status).
(Footnote 7 return)
See Matt L. Huffman & Steven C. Valasco, When More is Less: Sex Composition, Organizations, and Earnings in U.S. Firms, 24 WORK & OCCUPATIONS 214, 23839 (1997). This finding is unaffected by firm size, government regulation, public-sector status, written policies, or robust internal labor markets. See id. at 237.
(Footnote 8 return)
Twenty-four years after Congress outlawed the income gap, women earn two-thirds as much as men. See Equal Pay Act of 1963, Pub. L. No. 8838 §3, 77 Stat. 56 (1963), codified as amended at 29 U.S.C. §206(d) (1994 & Supp. 1997); BUREAU OF THE CENSUS, U.S. DEP'T OF COMMERCE, STATISTICAL ABSTRACT OF THE UNITED STATES 471 (1996). Studies show that gender-neutral theories cannot account for pay and promotion disparities between men and women. See, e.g., Linda K. Stroh et al., All the Right Stuff: A Comparison of Female and Male Managers' Career Progression, 77 J. APPLIED PSYCHOL. 251, 257 (1992) (finding significant disparities in men's and women's salary progression even after controlling for education, ambition, family status, and geographic mobility).
(Footnote 9 return)
See Paul R. Sackett et al., Tokenism in Performance Evaluation: The Effects of Work Group Representation on Male-Female and White-Black Differences in Performance Ratings, 76 J. APPLIED PSYCHOL. 263 (1991).
(Footnote 10 return)
See, e.g., Anne Locksley et al., Sex Stereotypes and Social Judgment, 39 J. PERSONALITY & SOC. PSYCHOL. 821, 830 (1980); Anne Locksley et al., Social Stereotypes and Judgments of Individual:'' An Instance of Base Rate Fallacy, 18 J. EXPER. SOC. PSYCHOL. 23, 38 (1982); Kenneth A. Rasinski et al., Another Look at Sex Stereotypes and Social Judgments: An Analysis of the Social Perceiver's Use of Subjective Probabilities, 49 J. PERSONALITY & SOC. PSYCHOL. 317, 32123 (1985).
(Footnote 11 return)
See Claudia Golin & Cecilia Rouse, Orchestrating Impartiality: The Impact of ''Blind'' Auditions on Female Musicians, Working Paper No. 376, Industrial Relations Section, Princeton University (1997).
(Footnote 12 return)
(Footnote 13 return)
See Susan Vernon-Gerstenfeld & Edmund Burke, Affirmative Action in Nine Large Companies: A Field Study, PERSONNEL J., Apr. 1985, at 54, 5559.
(Footnote 14 return)
Most of the association's other members are specialty contractors, and the remainder are material and service providers.
(Footnote 15 return)
City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989).
(Footnote 16 return)
Adarand Constructors v. Pena, 515 U.S. 200 (1995).
(Footnote 17 return)
As do other federal programs, this program presumed that racial minorities, and only such minorities, are disdvantaged.
(Footnote 18 return)
Id., at 235.
(Footnote 19 return)
Id. at. 226.
(Footnote 20 return)
In June of 1997, the U.S. District Court for the District of Colorado responded with a ruling that the relevant provisions of Intermodal Surface Transportation and Efficiency Act (ISTEA) and the Small Business Act ''are unconstitutional as applied to highway construction in the State of Colorado.'' The Department of Transportation has now appealed that ruling to the Tenth Circuit.
(Footnote 21 return)
Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 122 F.3d 895 (11th Cir. 1997); Contractors Association of Eastern Pennsylvania, Inc. v. City of Philadelphia, 6 F.3d 586 (3d Cir. 1966), cert. denied, 117 S.Ct. 953 (1997); Houston Contractors Association v. Metropolitan Transit Authority of Harris County, 1997 WL 713909 (S.D. Tex. Nov. 13, 1997); Associated General Contractors of America v. City of Columbus, 936 F. Supp. 1363 (S.D. Ohio 1996).
(Footnote 22 return)
61 Fed. Reg. 26041 (1996). Attached for the record is a copy of the comments that AGC provided to the Civil Rights Division on July 22, 1996.
(Footnote 23 return)
62 Fed. Reg. 25648 (1997).
(Footnote 24 return)
No doubt, some will attribute the construction industry's performance to the special preferences that the federal government has put into effect. The statistical facts, however, belie that notion. The federal and federally funded construction markets are too small a percentage of the total. In 1994, for example, the total value of new construction put in place was $508 billion, according to the U.S. Department of Commerce. Forty-four percent of that total ($237 billion) went into private residential construction, including the construction of single family homes. Another 28% ($141 billion) went into private nonresidential construction. All public works construction, at all levels of government, accounted for no more than 26% ($130 billion) of all new construction put in place.
(Footnote 25 return)
By comparison, the number of all other construction firms with employees increased only 36%.
(Footnote 26 return)
See 10 U.S.C. §2323. The authorized program is commonly known as the 1207 Program because it originated in §1207 of the National Defense Authorization Act for Fiscal year 1987, Pub. L. No. 99661. The statute and implementing regulations refer to small ''disadvantaged'' businesses but minority business enterprises, and only such firms, are presumed to be ''disadvantaged,'' within the meaning and for the purposes of this particular program.
(Footnote 27 return)
See 60 Fed. Reg. 54954 (1995). The ''rule-of-two'' required contracting officers to set aside construction contracts exclusively for small minority businesses whenever they could reasonably expect at least two of these firms to bid for the work. DOD suspended the rule only after confirming that it had disregarded the discriminatory effect of its minority contracting practices. The second attachment is a 1995 letter from the Department of the Air Force to the Honorable Jim McCrery. This letter confirms that Barksdale Air Force Base set aside 100% of its construction contracts in FY 1994. The letter goes on to assert that even these set-asides were ''not disproportionate'' in their impact on the construction industry.
(Footnote 28 return)
See 13 C.F.R. §121.601.
(Footnote 29 return)
The third and fourth attachments are charts included in DOD's ''Report in Response to 10 U.S.C. §2323(i), Fiscal Year 1996.'' The third attachment is Chart No. 18 and the fourth attachment is Chart No.3. Chart No. 18 summarizes the data on the construction industry. Chart No. 3 shows that small minority businesses account for a far larger amount of defense acquisition and procurement than the prime contract data would suggest. If the construction industry reports included subcontracts, it is likely that the numbers for the construction industry would be even higher.
(Footnote 30 return)
Intermodal Surface Transportation Efficiency Act of 1991, Pub. L. No. 102240. The statute and implementing regulations refer to ''disadvantaged'' business enterprises but minority and women business enterprises, and only such firms, are presumed to be ''disadvantaged,'' within the meaning and for the purposes of this particular program.
(Footnote 31 return)
GAO/RCED94168, at 3.
(Footnote 32 return)
The Federal Highway Administration's reports can be obtained from its Office of Civil Rights.
(Footnote 33 return)
The 1992 data on standard industrial classification codes 1611, 1622 and 1623, 162910, 162920, 162930 and 1629NSK indicates that these contractors performed $93.7 billion worth of construction, that they spent $30.5 billion of that total on materials, including fuel, and that they subcontracted $17.9 billion of that total to other firms.
(Footnote 34 return)
62 Fed Reg. 25786 (1997).
(Footnote 35 return)
In sum and substance, that measure would require contracting officers to take 10% off the top of any bid or proposal submitted by a small minority business, for the purpose of determining the low bidder.
(Footnote 36 return)
When otherwise applicable, the bid preference and the ''evaluation factor'' would be mandatory, but the ''incentive payment'' would be left to the discretion of the contracting agency. The bid preference would apply to all procurements, whether bid or negotiated. The ''evaluation factor'' and the ''incentive payments'' would, however, be limited to negotiated work. The ''evaluation factor'' would also be limited to construction contracts expected to exceed $1 million.
(Footnote 37 return)
62 Fed. Reg. 29547 (1997).
(Footnote 38 return)
In public statements, DOT has claimed that its proposal would encourage the states to use race neutral measures to meet their ''goals.'' Nothing in the proposal would, however, excuse the states from doing so.'' In addition, the preamble concedes that ''it will probably be necessary to use race-conscious means,'' and even more to the point, that ''[t]he Department does not . . . intend to say that race-neutral means must be used 'before' race-conscious measures. . . .'' Id., at 29559.
(Footnote 39 return)
62 Fed. Reg.43584 (1997).
(Footnote 40 return)
In public statements, SBA has touted its proposal to change the burden of persuasion imposed on any non-minority seeking 8(a) certification from ''clear and convincing'' to ''preponderance of the evidence.'' Id., at 43600. The legal significance of this change is very limited, for ''strict scrutiny'' applies to any and all racial preferences, however great or small they may be. The practical significance of this change remains more than elusive.
(Footnote 41 return)
These agencies have made no independent attempt to produce any evidence of past discrimination in the federal or any other marketplace. Nor have they made any other effort to define the nature or scope of the problems that they hope to address. Instead, they have cited and sought to rely on an appendix, in the nature of a legal brief, at the back of the Civil Rights Division's original proposal to establish ''benchmarks.'' See 61 Fed. Reg. at 26050. The appendix does not, however, provide the practical guidance that the federal contracting and funding agencies require. In fact, the division's proposal to establish benchmarks was based on that very premise.
(Footnote 42 return)
See note 14, supra.
(Footnote 43 return)
61 Fed. Reg. 18686 (1996).
(Footnote 44 return)
The last attachment to this testimony is a one-page summary of the Stempel Plan.
(Footnote 45 return)
The report was also funded by the Rockefeller Foundation. The Clinton administration has used the Urban Institute for other policy research including immigration studies.
(Footnote 46 return)
The Project Manager for the report was Pamela Loprest.
(Footnote 47 return)
For discussions of the phenomena of post-Croson disparity studies see, Mitchell Rice, Government Set-Asides, Minority Business Programs and the Court, Public Administration Review, March/April, 1991, 114122; Patrick D. Halligan, ''Minority Business Preferences and Ad Hoc Hypotheses: A Comment on Coral Construction v. King County.'' 10 Construction Law 26 (November 1990; John Lunn and Huey L Perry, ''Justifying Affirmative Action: Highway Construction in Louisiana,'' 46 Industrial and Labor Relations Review, 464479 (April 1993); George R. LaNoue and John Sullivan. ''But for Discrimination How Many Minority Businesses Would There Be?'' 24 Columbia Human Rights Law Review, (Winter 1992); George R. La Noue, ''Local Officials Guide to Minority Business Programs and Disparity Studies: Responding to The Supreme Court's Mandate in City of Richmond v. Croson,'' published by the National League of Cities (first edition 1991, second edition 1994) and George R. La Noue, ''Standards for the Second Generation of Croson Inspired Disparity Studies,'' published by the American Bar Association in 26 The Urban Lawyer 485 (Summer 1994).
(Footnote 48 return)
Rodney Strong, ''The Atlanta Public School Disparity Study,'' July 17, 1997, p.38.
(Footnote 49 return)
(Footnote 50 return)
NERA is a partial exception. Using census data, NERA weights firms by the geographic area and the two digit SIC (Standard Industrial Code) they are in. While this is an improvement over simple headcounting, it still assumes that all firms in a particular geographical area in the same SIC code are equally qualified, willing, and able.
(Footnote 51 return)
State of Texas Disparity study: A Report to the Texas Legislature as mandated by H. B. 2626, 73rd Legislature, December 1994, p. xviii.
(Footnote 52 return)
Disparity Study of Palm Beach County School District, MGT, February, p. 311.
(Footnote 53 return)
''Atlanta Public Schools, MFBE Procurement Study,'' May 1995, p. 65.
(Footnote 54 return)
Generally all large contracts will be advertised in local general circulation newspapers and often in the minority press as well. In addition, the Dodge reports provide information on contracts and many jurisdictions and construction associations have plan rooms where contract specifications may be examined.
(Footnote 55 return)
The Court noted in AGC v. Columbus that, ''The City's MFBD (Minority Female Business Development] Division actively recruited minority firms to submit BRF registration forms but did not recruit majority firms.'' 936 F. Supp. at 1390.
(Footnote 56 return)
City of Phoenix Disparity study, p. IV2.
(Footnote 57 return)
''Disparity Study for Memphis/Shelby County Intergovernmental Consortium,'' October 1994, p. V9.
(Footnote 58 return)
Alameda County Transportation Authority, June 1994, p.28.
(Footnote 59 return)
For example, the 1996 NERA Los Angeles study, ''An analysis of the Utilization and Availability of Minority and Women-owned Businesses in the Los Angeles Metropolitan Area'' was based on 1987 census data.
(Footnote 60 return)
Report of the Defendants' Expert, North Shore Concrete and Associates v. The City of New York, et al., June 18, 1997, p.38.
(Footnote 61 return)
In the Texas disparity study, NERA was estimated that minority-owned construction firms with employees had grown annually by 9.3 between 1987 and 1990. (p.60, fn.94) When the 1992 census data was published, it showed that black-owned construction firms in the state had actually declined by 12.6% between 1987 and 1992, while Hispanic-owned construction firms grew by 6% annually.
(Footnote 62 return)
For example, in its Alameda County Transportation Authority (ACTA) study, MTA stated that because it could not gather data on the qualifications or capacities of businesses ''all businesses, majority and M/WBEs, that indicated an interest in working on ACTA funded work were assumed to be able.'' p.29. Similarly, D. J. Miller uses the term ''ready'' as a substitute for ''qualified,, but defines ''ready'' as ''simply means that the business exists'' thus dramatically diluting the meaning of the qualifications concept. ''Disparity Study for Memphis/Shelby County Intergovernmental Consortium,'' October 1994, p. V9.
(Footnote 63 return)
936 F.Supp. 1363 (S.D. Ohio).
(Footnote 64 return)
John Fulty, ''City Agency Urges Lobbying to Save Program,'' Columbus Dispatch, August 30, 1996, p.38. The article estimates the city's legal fees added another $700,000 to the cost of defending the MBE program.
(Footnote 65 return)
936 F. Supp at 1396. The Court also implied the consultant was manipulating the data to achieve the result of underutilization.
(Footnote 66 return)
Id. at 1396. The Court further stated:
(Footnote 67 return)
Id. at 1390.
(Footnote 68 return)
(Footnote 69 return)
Id. at 1395.
(Footnote 70 return)
Id. at 1389.
(Footnote 71 return)
Id. at 1389.
(Footnote 72 return)
At 1400. The court noted that the plaintiff's expert found that on ten of the largest contracts awarded during the period studied by BBC, not a single M/FBE submitted a bid.
(Footnote 73 return)
943 F.Supp. at 1551.
(Footnote 74 return)
Capelleti Brothers, Inc., et al v. Metropolitan Dade County, 900678 (S. D. Fla. 1990).
(Footnote 75 return)
Brimmer did not appear during the trial and the Judge dismissed his analysis by stating:
(Footnote 76 return)
Id. at 1560.
(Footnote 77 return)
Id. at 1560.
(Footnote 78 return)
Id. at 1563.
(Footnote 79 return)
Id. at 1564.
(Footnote 80 return)
Id. at 1567.
(Footnote 81 return)
Id. at 158283.
(Footnote 82 return)
Id. at 1555.
(Footnote 83 return)
This is consistent with the admission of Dr. David Evans, the director of NERA disparity studies, that NERA has never found in more than two dozen disparity studies that it conducted the jurisdiction involved had created a pattern of discrimination against MWBEs. Deposition of the Defendants' Expert, North Shore Concrete and Associates v. The City of New York, et al., July 21, 1997, p.104.
(Footnote 84 return)
For a discussion of the .8 or 80% concept, see Engineering Contractors Association of South Florida v. Metropolitan Dade County, Eleventh Circuit, (pp.3839)
(Footnote 85 return)
433 U.S. 299 (1977) .
(Footnote 86 return)
Croson, 488 at 501. See also Peightal v. Metropolitan Dade County, 940 F.2d 1394 (1991) where the 11th Circuit applying Croson in the employment context said, ''But where special qualifications are necessary, the relevant statistical pool for purposes of demonstrating discriminatory exclusion must be the number of,minorities qualified to undertake the particular task.'' 940 F.2d at 1402.
(Footnote 87 return)
488 at 502 .
(Footnote 88 return)
813 F.2d 412, 427, n.31 (1987).
(Footnote 89 return)
911 F.2d 1192, 1199 (1992).
(Footnote 90 return)
976 F.2d 999, 1011 (1992).
(Footnote 91 return)
37 F.3d 1155, 1165 (1994).
(Footnote 92 return)
38 F.3rd 147, 156157, (1994), Affirmed en banc, December 30, 1994, cert. denied, 1995 U.S. Lexis 3511.
(Footnote 93 return)
38 F.3d at 156157.
(Footnote 94 return)
Id., at 156157, fn.4
(Footnote 95 return)
Bazemore v. Friday, 478 U.S. 385 (1986).
(Footnote 96 return)
84 F.3d 672 (4th Cir. 1996).
(Footnote 97 return)
36 F.3d 1513, 1528 (10th Cir. 1994).
(Footnote 98 return)
834 F.2d 583, 592 (6th Cir. 1987).
(Footnote 99 return)
963 F.2d 420, 426 (D.C. D.C. 1992). Justice Ginsberg, then sitting on the D.C. Circuit bench, concurred in this decision.
(Footnote 100 return)
36 F.3rd at 1528, fn.22.
(Footnote 101 return)
Bureau of the Census, Census of Construction Industries, United States Summary-1992, Table 8, p. 2712.
(Footnote 102 return)
However, many disparity study consultants make such an assumption. See, for example, MTA's proposal to the Nashville METRO RFP: ''Under a fair and equitable system of awarding contracts, we would expect that the proportion of contract dollars awarded to ethnic/gender-owned enterprises to equal the proportion of those firms in the relevant market area. If these proportions are not equal, or if a disparity exists between these proportions, a statistical test of significance would allow us to determine the likelihood or probability that the disparity is due to chance. If there is a very low probability that the disparity is due to chance, the Court states than an inference of discrimination can be made.'' (p.34).
(Footnote 103 return)
C. A. No. H 33308, (D. Tex. 1994), p.11.
(Footnote 104 return)
813 F. 2d 922, 933 (1987).
(Footnote 105 return)
Long v. City of Saginaw, 911 F.2d 1192, 11991200 (1992).
(Footnote 106 return)
Brimmer deposition, March 8, 1994, p. 45.
(Footnote 107 return)
State of Texas Disparity study: A Report to the Texas Legislature as mandated by H. B. 2626, 73rd Legislature, December 1994, appendix H.
(Footnote 108 return)
Special tabulation by the Census Bureau, based on 1987 Surveys of Minority and Women-owned Businesses and County Business Patterns-Texas.
(Footnote 109 return)
943 F.Supp. at 1560 (S.D.Fla.1996)
(Footnote 110 return)
(Footnote 111 return)
''Detecting Discrimination: Analyzing Racial disparities in Public Construction,'' 25 Social Science Research, 400422 (1996). The authors found that MBEs were 5.6% of the total of construction companies with employees in the country in 1987. If they received 5.6% of the dollars, that would amount to $4.03 billion. On the other hand, considering the SIC codes the MBEs were in and the pattern of public expenditures, MBEs should expect to receive only $2.43 billion if there were perfect proportionality. Aggregating MBEs, therefore, into a single construction category for availability to investigate utilization equity would create a false disparity.